Justia Class Action Opinion Summaries

A restaurant and bar in Pennsylvania employed bartenders and servers who participated in a tip pool, which was allegedly distributed in part to a salaried manager, contrary to federal and state wage laws. An employee who worked there from September 2021 to December 2022 filed suit in the United States District Court for the Eastern District of Pennsylvania, alleging violations of the Fair Labor Standards Act (FLSA) and the Pennsylvania Minimum Wage Act (PMWA). The claims centered on the manager’s alleged receipt of tip-pool funds intended for bartenders. The plaintiff sought damages and styled the case as a hybrid action: an FLSA collective action under § 216(b) and a Rule 23(b)(3) class action for the state law claim.The parties stipulated to conditional certification of an FLSA collective, and notice was sent to potential members, ten of whom opted in. After discovery, the parties reached a settlement agreement, proposing a Rule 23(b)(3) class settlement that would release wage-and-hour claims, including unasserted FLSA claims, for all class members who did not opt out. The District Court held a hearing focused on whether class members who had not opted into the FLSA collective could be required to release FLSA claims through the class settlement. The District Court denied preliminary approval, reasoning that § 216(b) prohibited such releases, and denied reconsideration, certifying the legal question for interlocutory appeal.The United States Court of Appeals for the Third Circuit reviewed the certified question de novo. It held that § 216(b) of the FLSA establishes only the mechanism for litigating FLSA claims, not the conditions for waiving them, and does not prohibit the release of unasserted FLSA claims in a Rule 23(b)(3) opt-out class settlement. The Court vacated the District Court’s order and remanded for a full fairness inquiry under Rule 23. View "Lundeen v. 10 West Ferry Street Operations LLC" on Justia Law

A real estate investment trust that specializes in purchasing and leasing properties to cannabis companies was defrauded by one of its tenants, Kings Garden, which submitted fraudulent reimbursement requests for capital improvements. The trust paid out over $48 million based on these requests before discovering irregularities, such as forged documentation and payments for work that was not performed. After uncovering the fraud, the trust sued Kings Garden and disclosed the situation to the market, which led to a decline in its stock price.Following these events, several shareholders filed a putative class action in the United States District Court for the District of New Jersey, alleging violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The shareholders claimed that the trust and its executives made false or misleading statements about their due diligence, tenant monitoring, and the nature of reimbursements, and that these misstatements caused their losses when the fraud was revealed. The District Court dismissed the complaint with prejudice, finding that while some statements could be misleading, the plaintiffs failed to plead facts giving rise to a strong inference of scienter, as required by the Private Securities Litigation Reform Act.On appeal, the United States Court of Appeals for the Third Circuit affirmed the District Court’s dismissal. The Third Circuit held that most of the challenged statements were either non-actionable opinions, not false or misleading, or not sufficiently specific. For the one statement plausibly alleged to be false or misleading, the court found that the facts did not support a strong inference that the statement’s maker acted with scienter. The court also rejected the application of corporate scienter and found no basis for control-person liability under Section 20(a) in the absence of a primary violation. View "Handal v. Innovative Industrial Properties Inc" on Justia Law

Nathan Gault was a party to a divorce action in the Medina County Court of Common Pleas. After the case concluded, the clerk charged him various fees, including a “Clerk Computer Operation” fee. Gault believed he had been overcharged, specifically challenging the additional dollar per page fee assessed for making a complete record of the proceedings. He filed a class-action complaint against the clerk, the county treasurer, and the county itself, alleging that the clerk charged him $125 in computer-operation fees, which was over $100 more than statutorily authorized.The Medina County Court of Common Pleas initially granted judgment on the pleadings for the defendants, finding Gault’s claim barred by res judicata. The Ninth District Court of Appeals reversed, holding that res judicata did not apply because the total amount owed and the methodology for determining the fees were not ascertainable from the final judgment in the divorce action, and the defendants were not parties to the prior proceedings. On remand, the trial court again ruled for the defendants, interpreting the statutes to permit the clerk to charge two dollars per page—one dollar under R.C. 2303.20(H) and an additional dollar under former R.C. 2303.201(B)(1). The Ninth District reversed, concluding that only one additional dollar total could be charged for the service, not one dollar per page.The Supreme Court of Ohio reviewed the case, consolidating a discretionary appeal and a certified conflict. The court held that, under the plain text of former R.C. 2303.201(B)(1), the clerk may charge only one additional dollar total for making a complete record under R.C. 2303.20(H), regardless of the number of pages. The Supreme Court of Ohio affirmed the judgment of the Ninth District Court of Appeals. View "State ex rel. Gault v. Medina Cty. Court of Common Pleas Clerk" on Justia Law

Several individuals brought a class action lawsuit against a group of insurance companies after a data breach compromised the driver’s license numbers of nearly three million people. The breach occurred when hackers exploited the companies’ online insurance quoting platform, which auto-populated sensitive information using data from both customers and third-party sources. The plaintiffs, whose information was compromised, alleged various harms, including time spent monitoring their financial records, increased risk of identity theft, emotional distress, and, for two plaintiffs, discovery of their driver’s license numbers on the dark web.The United States District Court for the Eastern District of Virginia dismissed the consolidated class action complaint, finding that none of the named plaintiffs had standing to pursue their claims. The district court concluded that the alleged injuries were either too speculative or not sufficiently concrete to satisfy Article III’s standing requirements, and granted the defendants’ motion to dismiss under Rule 12(b)(1).On appeal, the United States Court of Appeals for the Fourth Circuit reviewed whether the plaintiffs had standing to bring suit. The Fourth Circuit held that two plaintiffs, who alleged that their driver’s license numbers were actually posted on the dark web, suffered a concrete and particularized injury analogous to the common-law tort of public disclosure of private information. This injury was sufficient to confer standing to seek damages. However, the court found that the other plaintiffs, who did not allege their information was made public, lacked standing because their alleged injuries—such as increased risk of future harm, time spent on mitigation, and emotional distress—were either not imminent or not independently sufficient for standing. The Fourth Circuit therefore affirmed the district court’s dismissal as to those plaintiffs, reversed as to the two plaintiffs with information posted on the dark web, and remanded for further proceedings. View "Holmes v. Elephant Insurance Co." on Justia Law

A Tennessee resident insured by State Farm had her vehicle declared a total loss after an accident. State Farm calculated the payout for her claim using a valuation method provided by Audatex, which included a “Typical Negotiation Adjustment” (TNA) that reduced the value based on the assumption that used cars typically sell for less than their advertised price. The plaintiff argued that this adjustment did not reflect actual market practices and unfairly reduced the payout, constituting a breach of contract and a violation of Tennessee law. She filed a class action on behalf of similarly situated State Farm policyholders in Tennessee who received payouts calculated with the TNA.After the plaintiff filed suit in Tennessee state court, State Farm removed the case to the United States District Court for the Western District of Tennessee. The district court denied State Farm’s initial summary judgment motion but enforced the policy’s appraisal provision, leading to an appraisal process in which the plaintiff ultimately received a higher payout. State Farm then argued that the plaintiff’s claims were moot or lacked standing because she had been paid the appraised value, but the district court rejected this argument, finding her claims for breach of contract and consequential damages survived. The district court certified a class of Tennessee policyholders who received payouts reduced by the TNA, finding the requirements of Federal Rule of Civil Procedure 23 were met.The United States Court of Appeals for the Sixth Circuit reviewed the class certification. The court held that the plaintiff had standing to pursue her claims and that the class satisfied the requirements of numerosity, commonality, typicality, adequacy, predominance, superiority, and ascertainability. The court distinguished its approach from other circuits, emphasizing that common questions about the propriety of the TNA predominated over individualized damages issues. The Sixth Circuit affirmed the district court’s order certifying the class and remanded for further proceedings. View "Clippinger v. State Farm Automobile Insurance Co." on Justia Law

Plaintiff was employed by a staffing company and assigned to work at a warehousing and logistics firm, performing duties as a materials handler and forklift operator. He filed a class action and a separate representative action alleging various wage and hour violations, including claims for unpaid minimum wages, waiting time penalties, and civil penalties under the Private Attorneys General Act (PAGA). The two cases were consolidated. The plaintiff and his direct employer had entered into an arbitration agreement, which referenced the American Arbitration Association (AAA) rules but did not explicitly state that the arbitrator would decide issues of arbitrability.The defendants moved in the Superior Court of Los Angeles County to compel arbitration of the plaintiff’s individual claims, dismiss class allegations, and stay judicial proceedings. They argued that the arbitration agreement was governed by the Federal Arbitration Act (FAA) and that the AAA rules incorporated into the agreement delegated arbitrability issues to the arbitrator. The plaintiff opposed, asserting exemption from the FAA as a transportation worker and arguing that certain claims, including those under PAGA and for unpaid wages, were not arbitrable under California law. The trial court found the FAA did not apply, applied California law, and held that the agreement did not clearly and unmistakably delegate arbitrability to the arbitrator. The court compelled arbitration of some claims but allowed others, including minimum wage and PAGA claims, to proceed in court.On appeal, the California Court of Appeal, Second Appellate District, Division Eight, affirmed the trial court’s order. The court held that, in the context of a mandatory employment arbitration agreement, mere incorporation of AAA rules without explicit language in the agreement is not clear and unmistakable evidence of intent to delegate arbitrability to the arbitrator. The court also held that claims for waiting time penalties based on minimum wage violations and all PAGA claims were not arbitrable under California law when the FAA does not apply. View "Villalobos v. Maersk, Inc." on Justia Law

Three individuals, two of whom were former insureds of an insurance company, financed their insurance premiums through a separate premium finance company. Under the financing agreements, the finance company paid the full premium to the insurer and the insureds made monthly payments to the finance company. Each agreement authorized the finance company to cancel the insurance policy if the insured defaulted on payments. After defaults occurred, the finance company initiated cancellation of the policies. The plaintiffs alleged that the insurer’s procedures for cancellation did not comply with Louisiana law, resulting in ineffective cancellation and breach of good faith.The plaintiffs initially filed a class action in Louisiana state court against the insurer and the finance company, claiming that the insurer had not properly cancelled their policies and had failed to act in good faith. The case was removed to the United States District Court for the Middle District of Louisiana. Both sides moved for summary judgment on whether the insurer’s cancellation procedures satisfied Louisiana statutory requirements. The district court granted summary judgment for the insurer, finding that its procedures complied with state law, and dismissed all claims with prejudice.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed whether the insurer’s procedures strictly adhered to Louisiana law governing cancellation of financed insurance policies. The court held that Louisiana law does not require a signature on the notice of cancellation sent by the premium finance company to the insurer, and that the insurer’s receipt of notice via its computer system satisfied the statutory requirement of “receipt.” The court declined to certify questions of statutory interpretation to the Louisiana Supreme Court and affirmed the district court’s judgment. View "Williams v. GoAuto Insurance" on Justia Law

Noah Gilbert purchased a motor vehicle insurance policy from Progressive Northwestern Insurance Company, initially declining underinsured motorist (UIM) coverage but later adding a UIM endorsement with $25,000 per person and $50,000 per accident limits. The policy included an offset provision, reducing any UIM payout by amounts received from another party’s insurance. Gilbert paid premiums for this coverage but never filed a UIM claim or experienced an accident triggering such coverage. He later filed a putative class action, alleging that Progressive’s UIM coverage was illusory under Idaho law and asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, fraud, and constructive fraud.The District Court of the Fourth Judicial District, Ada County, reviewed cross-motions for summary judgment. The court raised the issue of standing and ultimately held that Gilbert lacked standing because he had not filed a claim or been denied coverage, and thus had not suffered an injury-in-fact. Alternatively, the court found that Gilbert’s claims failed on the merits: there was no breach of contract or bad faith without a denied claim, no damages to support fraud or constructive fraud, and unjust enrichment was unavailable due to the existence of a valid contract. The court granted summary judgment for Progressive and denied Gilbert’s motion for class certification as moot.On appeal, the Supreme Court of the State of Idaho held that Gilbert did have standing, as payment of premiums for allegedly illusory coverage constituted a concrete injury. However, the Court affirmed the district court’s judgment, finding that Gilbert’s claims failed on the merits because he never filed a claim, was never denied coverage, and did not incur damages. The Court also affirmed the dismissal of the unjust enrichment claim, as an enforceable contract provided an adequate legal remedy. The judgment in favor of Progressive was affirmed. View "Gilbert v. Progressive Northwestern Insurance Co." on Justia Law

A group of borrowers in California brought a class action against Flagstar Bank, alleging that the bank failed to pay interest on their mortgage escrow accounts as required by California Civil Code § 2954.8(a). Flagstar did not pay interest on these accounts, arguing that the National Bank Act (NBA) preempted the California law, and therefore, it was not obligated to comply. The plaintiffs sought restitution for the unpaid interest.The United States District Court for the Northern District of California, relying on the Ninth Circuit’s prior decision in Lusnak v. Bank of America, N.A., granted summary judgment for the plaintiffs. The court ordered Flagstar to pay restitution and prejudgment interest to the class. Flagstar appealed to the United States Court of Appeals for the Ninth Circuit, which affirmed the district court’s decision, holding that Lusnak foreclosed Flagstar’s preemption argument. However, the Ninth Circuit remanded the case to the district court to correct the class definition date and the judgment amount due to errors in the statute of limitations tolling and calculation of damages.On remand from the United States Supreme Court, following its decision in Cantero v. Bank of America, N.A., the Ninth Circuit reviewed whether it could overrule Lusnak in light of Cantero. The court held that Cantero did not render Lusnak “clearly irreconcilable” with Supreme Court precedent, and therefore, the panel lacked authority to overrule Lusnak. The Ninth Circuit affirmed the district court’s holding that the NBA does not preempt California’s interest-on-escrow law, but vacated and remanded the judgment and class certification order for modification of the class definition date and judgment amount. View "KIVETT V. FLAGSTAR BANK, FSB" on Justia Law

A consumer defaulted on credit payments, and the debt was assigned to a third-party debt collector. The collector sent a collection letter to the consumer that included mandatory language about debtor rights, but the notice used a smaller type size than required by California law. The consumer, on behalf of himself and a proposed class, filed suit alleging that the collection notices violated the type-size requirements of the Consumer Collection Notice law and, by extension, the Rosenthal Fair Debt Collection Practices Act. The suit sought statutory damages, attorney fees, costs, and injunctive relief.The Superior Court of Lake County granted summary judgment in favor of the debt collector. The court reasoned that the consumer and the class lacked standing to pursue statutory damages because they had not alleged or demonstrated any actual injury, harm, or loss resulting from the violation. The court concluded that civil liability under the relevant statutes could not be imposed without proof of actual or reasonably foreseeable harm.The California Court of Appeal, First Appellate District, Division Three, reviewed the case. The appellate court held that, under the Collection Notice law and the Rosenthal Act, a consumer has standing to seek statutory damages based solely on a statutory violation, regardless of whether the consumer suffered actual injury. The court explained that the statutory scheme authorizes recovery of statutory damages as a penalty to deter violations, not merely to compensate for actual harm. The court distinguished the relevant statutes from others that require proof of injury and rejected the argument that federal standing requirements or the use of the term “damages” limited standing to those who suffered actual harm. The judgment of the trial court was reversed. View "Kashanian v. National Enterprise Systems" on Justia Law