Justia Class Action Opinion SummariesArticles Posted in U.S. 3rd Circuit Court of Appeals
Erie Ins. Exch. v. Erie Indem. Co
Exchange is a reciprocal insurance exchange, under 40 PA. STAT. 961. Members purchase insurance policies and receive indemnification for losses out of Exchange’s pool of funds. A 2012 Complaint alleged that Exchange is owned by subscribers and has no independent officers or governing body; that Indemnity is a public corporation that serves as Exchange’s attorney-in-fact; that Indemnity is permitted to retain up to 25% of Exchange’s premiums; that the balance of premiums is to be used for insurance losses and operational costs and may be distributed to Exchange members as dividends at Indemnity’s discretion; that members who pay premiums in installments must pay service charges and are subject to late payment and policy reinstatement fees; that, beginning in 1997, Indemnity began to retained for itself service charges paid to Exchange, which belonged to Exchange; and that, beginning in 2008, Indemnity misappropriated fees, totaling more than $300 million. The complaint was filed for Exchange by certain members and “on behalf of” all other members. Contending that the words “on behalf of” converted the case into a class action, Indemnity removed the case to federal court. The district court remanded to state court. The Third Circuit affirmed, stating that the case was brought under state rules that bear no resemblance to Rule 23 in that they allow for suits by entities, not a conglomerate of individuals, and does not meet the statutory definition of “class action.” View "Erie Ins. Exch. v. Erie Indem. Co" on Justia Law
In re: Asbestos Prod Liab. Litig.
The 12 plaintiffs are represented by CVLO, which serves as counsel in approximately 2000 cases pending in multidistrict asbestos litigation. The CVLO cases represent the second largest land-based group of cases to remain in the litigation. The district court dismissed the plaintiffs’ cases, for failure to comply with orders requiring submission of medical reports and histories of exposure to asbestos in compliance with “generally accepted medical standards [that] call for information regarding duration, intensity, time of onset, and setting of exposure to asbestos.” The Third Circuit affirmed, characterizing the court orders as “typical … in the context of the management of multidistrict litigation.” In dismissing plaintiffs’ cases, the court considered and weighed the relevant factors, viewing the dilatory and prejudicial aspects as outweighing all others. The flaw in the submissions went to the very heart of the “meritorious” aspect, making the weighing of that factor impossible. View "In re: Asbestos Prod Liab. Litig." on Justia Law
Abraham v. St Croix Renaissance Grp., LLLP
SCRG purchased a St. Croix alumina refinery in 2002. The plaintiffs (more than 500 individuals) alleged that for 30 years, the facility refined bauxite, creating mounds of the by-product, red mud. Hazardous materials, including chlorine, fluoride, TDS, aluminum, arsenic, coal dust ,and other particulates were buried in the red mud, outdoors, in open piles, as high as 120 feet and covering up to 190 acres. Friable asbestos was also present. The substances were dispersed by wind and erosion. According to the plaintiffs, SCRG purchased the site knowing about the contamination, did nothing to abate it, and allowed it to continue. The district court remanded to the Superior Court of the Virgin Islands, finding that the action did not qualify as a “mass action” under the Class Action Fairness Act, 28 U.S.C. 1453(c)(1), because all the claims arise from an event at a single facility, with resulting injuries confined to the Virgin Islands. The Third Circuit affirmed. An event, under CAFA, encompasses a continuing tort, resulting in a regular or continuous release of hazardous chemicals, where no superseding occurrence or significant interruption breaks the chain of causation. Congress intended to allow state or territorial courts to adjudicate claims involving truly localized environmental torts with localized injuries. View "Abraham v. St Croix Renaissance Grp., LLLP" on Justia Law
In re: Baby Products Antitrust Litig.
Antitrust class actions alleged that defendants conspired to set a price floor for baby products. The court initially approved a settlement. Notice was sent to putative class members informing them of their right to submit a claim, opt out, or object. The deadline for submitting claims expired; the court approved the settlement and an allocation plan. Defendants deposited $35,500,000 into a settlement fund. After payment of attorneys’ fees and expenses, the remainder was slated for distribution to the settlement class. Claimants are entitled to different levels of compensation. The remainder would go to charitable organizations proposed by the parties and selected by the court. The Third Circuit vacated, stating that cy pres distributions are permissible, but inferior to direct distributions to the class, because they only imperfectly serve the purpose of compensating class members. The district court did not adequately consider that about $14,000,000 will go to class counsel, roughly $3,000,000 will be distributed to class members, and the rest, approximately $18,500,000 less administrative expenses, will be distributed to cy pres recipients. The court also needs to consider the level of direct benefit to the class in calculating attorneys’ fees. View "In re: Baby Products Antitrust Litig." on Justia Law
In Re: Diet Drugs Prod. Liab. Litig.
Between 1994 and 1997 Wyeth’s predecessor sold fenfluramine and dexfenfluramine, prescription weight loss drugs. After the drugs were linked to valvular heart disease and an FDA public health advisory, Wyeth withdrew the drugs from the market in 1997. Thousands of individuals filed suit; the cases were consolidated. In 1999, Wyeth entered into a Settlement Agreement; in 2000, the court certified the class, approved the Agreement, and retained jurisdiction. The Agreement enjoins class members from suing Wyeth for diet drug-related injuries, but allows class members to sue Wyeth if they can demonstrate that they developed PPH (a condition that deprives the lungs of oxygen) at a specified level through the use of the diet drugs. In 2011, Cauthen sued, alleging that she developed PPH. She produced a pulmonary consultation prepared by Fortin, a cardiologist. Because Cauthen’s report showed that lung capacity of less than 60 percent of predicted at rest, Wyeth sought to enjoin the state court lawsuit for failing to satisfy the precondition provided by the Agreement. Dr. Fortin asserted that comparing individual lung capacity with average capacity of persons having a similar demographic profile is not determinative in diagnosing PPH. The district court enjoined the suit. The Third Circuit affirmed. View "In Re: Diet Drugs Prod. Liab. Litig." on Justia Law
Benjamin v. PA Dep’t of Pub. Welfare
Named plaintiffs are five individuals with mental retardation who are institutionalized in intermediate care facilities (ICFs/MR) operated by the Pennsylvania Department of Public Welfare; they allege violation of the Americans with Disabilities Act and Rehabilitation Act by failing “to offer and provide the opportunity to receive services in integrated, community settings that are most appropriate settings to meet their needs. Plaintiffs claimed that there are approximately 1,272 individuals who reside in five ICFs/MR. The district court certified the class, denied a motion to dismiss, denied a motion to intervene brought by nine institutionalized individuals who oppose community placement, and granted final approval to a settlement agreement. The Third Circuit vacated in part, holding that the court abused its discretion by denying intervention as of right pursuant to Federal Rule of Civil Procedure 24(a)(2) in the remedy stage of this litigation as well as with respect to final approval of the settlement agreement. The intervenors may also challenge certification of the class. View "Benjamin v. PA Dep't of Pub. Welfare" on Justia Law
In Re: Pharmacy Benefit Mgrs. Antitrust Litig.
AdvancePCS is a prescription benefits manager for plans sponsored by employers, unions, and others and is retained to achieve savings by negotiating discounts from drug manufacturers, providing mail order service, contracting with retail pharmacies, and electronic processing and paying of claims. Plaintiffs are retail pharmacies that entered into agreements with AdvancePCS that include an agreed reimbursement rate and an arbitration clause. In 2003, plaintiffs filed suit, asserting that AdvancePCS engaged in an unlawful conspiracy with plan sponsors to restrain competition in violation of the Sherman Act, 15 U.S.C. 1; that AdvancePCS used the economic power of its sponsors to reduce the contractual amount it pays below levels prevailing in a competitive marketplace; and that the agreements impose other limitations. For almost a year, AdvancePCS litigated without mentioning arbitration. After denial of a motion to dismiss and reconsideration, AdvancePCS filed an answer with affirmative defenses, then sought to compel arbitration. The court granted the motion. Plaintiffs did not initiate arbitration, but sought dismiss pending appeal. A different judge vacated the order compelling arbitration. The Third Circuit remanded with directions to reinstate the order compelling arbitration. On remand, a third judge granted dismissal. The Third Circuit ruled in favor of plaintiffs, holding that AdvancePCS waived its right to arbitrate. View "In Re: Pharmacy Benefit Mgrs. Antitrust Litig." on Justia Law
Zavala v. Wal Mart Stores, Inc.
Wal-Mart cleaning crew members sought compensation for unpaid overtime and certification of a collective action under the Fair Labor Standards Act, civil damages under RICO, and damages for false imprisonment. The workers, illegal immigrants who took jobs with contractors and subcontractors Wal-Mart engaged to clean its stores, alleged: Wal-Mart had hiring and firing authority over them and closely directed their actions such that Wal-Mart was their employer under the FLSA; Wal-Mart took part in a RICO enterprise by transporting and harboring illegal immigrants, encouraging illegal immigration, conspiracy to commit money laundering, and involuntary servitude (18 U.S.C. 1961(1)(F)); Wal-Mart‘s practice of locking some stores at night and on weekends, without always having a manager available with a key, constituted false imprisonment. Over eight years and multiple opinions, the district court rejected final certification of an FLSA class and rejected the RICO and false imprisonment claims on several grounds, and rejected the false imprisonment claim on the merits. The Third Circuit affirmed. Plaintiffs were not “similarly situated” under the FLSA, 29 U.S.C. 626(b). View "Zavala v. Wal Mart Stores, Inc." on Justia Law
Marcus v. BMW of N. Am., LLC
In 2007, Marcus leased a 2007 BMW from a dealership in New Jersey. Marcus suffered four “flat” tires during his three-year lease. Each time, he drove his car to a BMW dealership in New York and had the tire replaced. BMW billed Marcus between $350 to $390 for parts, labor, fees, and taxes. In each instance, the run-flat tires (RFT) worked as intended. Marcus sued Bridgestone, asserting consumer fraud, breach of warranty, and breach of contract claims. He claims that Bridgestone RFTs are “defective” because they: are highly susceptible to flats, punctures and bubbles, and fail at a significantly higher rate than radial tires or other run-flat tires; cannot be repaired, only replaced, in the event of a small puncture; and are “exorbitantly priced.” He claimed RFT-equipped BMWs cannot be retrofitted to operate with conventional tires, and that they are difficult to replace. The district court certified the suit under FRCP 23(b)(3) as an opt-out class action on behalf of all purchasers and lessees of certain model-year BMWs equipped with Bridgestone RFTs sold or leased in New Jersey with tires that have gone flat and been replaced. The Third Circuit vacated. Marcus’s claims do not satisfy the numerosity and predominance requirements. View "Marcus v. BMW of N. Am., LLC" on Justia Law
In Re: K-Dur Antitrust Litigation
Schering held a patent on the controlled release coating applied to potassium chloride crystals for treatment of potassium deficiencies. Potential generic manufacturers filed an abbreviated application for approval (ANDA),Hatch-Waxman Act, 21 U.S.C. 301-399, asserting that the Schering patent was invalid or would not be infringed by their new generic drugs. Schering’s subsequent infringement suits were resolved through agreements in which it paid the generic manufacturers to drop patent challenges and refrain from producing a generic drug for a specified period. Congress amended Hatch-Waxman to require pharmaceutical companies who enter into such settlements to file for antitrust review. The FTC filed an antitrust action with respect to Schering’s settlements. Plaintiffs sued on behalf of a class of purchasers of the drug. The Third Circuit affirmed the district court’s certification of the class, but reversed its presumption that Schering’s patent was valid and gave Schering the right to exclude infringing products until the end of its term, including through reverse payment settlements. The court directed use of a “quick look rule of reason analysis” based on economic realities of the settlement rather than labels. The court must treat any payment from a patent holder to a patent challenger who agrees to delay entry into the market as prima facie evidence of unreasonable restraint of trade, rebuttable by showing that the payment was for a purpose other than delayed entry or offers some pro-competitive benefit. View "In Re: K-Dur Antitrust Litigation" on Justia Law