Justia Class Action Opinion Summaries

Plaintiff filed suit in California state court under the California Labor Code Private Attorneys General Act of 2004 (PAGA), Cal. Lab. Code 2698-2699.5, and then removed to district court. The issue presented on appeal was whether the district court had subject matter jurisdiction over the removed action. In Urbino v. Orkin Services, the court held that potential PAGA penalties against an employer may not be aggregated to meet the minimum amount in controversy requirement of 28 U.S.C. 1332(a). The remaining issue was whether a district court may instead exercise original jurisdiction over a PAGA action under the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. 1332(d), 1453, 1711-15. The court held that PAGA was not sufficiently similar to Rule 23 to establish the original jurisdiction of a federal court under CAFA. Accordingly, the district court could not exercise jurisdiction over this removed PAGA action under CAFA. And because, in light of Urbino, there was no federal subject matter jurisdiction under section 1332(a), plaintiff's motion to remand should have been granted. The court reversed and remanded with instructions to grant the motion. View "Baumann v. Chase Investment Services" on Justia Law

McMahon apparently did not pay a 1997 utility bill. In 2011, LVNV purchased the debt, then $584.98. LVNV retained a collection agency, Tate, which sent a letter that said nothing about when the debt was incurred or the four-year Illinois statute of limitations. The district court dismissed McMahon’s classwide allegations, but did not dismiss his individual claim. McMahon ignored two settlement offers. The court found that the proposed settlement offered McMahon complete recovery for his individual claim, that it was made prior to class certification, and that it had the effect of depriving McMahon of a personal stake in the litigation. The Seventh Circuit consolidated appeals and held that, in some circumstances, a dunning letter for a time‐barred debt could mislead an unsophisticated consumer to believe that the debt is enforceable in court, and thereby violate the Fair Debt Collection Practices Act, 15 U.S.C. 1692. The court also held that the McMahon case is not moot. View "McMahon v. LVNV Funding, LLC" on Justia Law

The Securities Litigation Uniform Standards Act of 1998, 15 U.S.C. 78bb(f)(1), forbids large securities class actions “based upon the statutory or common law of any State” in which plaintiffs allege “a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security,” and defines “covered security” to include only securities traded on a national exchange. Plaintiffs filed civil class actions under state law, contending that defendants helped Stanford and his companies perpetrate a Ponzi scheme by falsely representing that uncovered securities (certificates of deposit in Stanford Bank) were backed by covered securities. The district court dismissed, reasoning that, for purposes of the Act, the Bank’s misrepresentation that its holdings in covered securities made investments in its uncovered securities more secure provided the requisite “connection” between the state-law actions and transactions in covered securities. The Fifth Circuit reversed. The Supreme Court affirmed, holding that the Act does not preclude the state-law class action. The Court noted the Act’s basic focus on transactions in covered, not uncovered, securities, and that use of the phrase “material fact in connection with the purchase or sale” suggests a connection that matters. A connection matters where the misrepresentation makes a significant difference to someone’s decision to purchase or to sell a covered security, not an uncovered one; the “someone” making that decision must be a party other than the fraudster. The Act and the underlying Securities Exchange Act of 1934 and the Securities Act of 1933, are intended to protect investor confidence in the securities markets, not to protect persons whose connection with the statutorily defined securities is more remote than buying or selling. A broader interpretation of “connection” would interfere with state efforts to provide remedies for ordinary state-law frauds. This interpretation does not curtail the Securities and Exchange Commission’s enforcement powers under 15 U S.C. 78c(a)(10). The SEC brought successful actions against Stanford and his associates, based on the Bank’s fraudulent sales of certificates of deposit. View "Chadbourne & Parke LLP v. Troice" on Justia Law

In 2008, defendant faxed tens of thousands of unsolicited advertisements, violating the Telephone Consumer Protection Act, 47 U.S.C. 227. After defendant’s insurer intervened, a second proposed class action settlement was reached. The insurer, Continental, agreed to make $6.1 million available to class members. The total is approximately equal to the number of faxes sent (110,853) times per-fax damages offered by Continental ($55.03) with an attorney fee award of 1/3 the total amount: $2,033,333.33. The district court preliminarily approved the settlement and 24,389 of the 28,879 class members were successfully notified; five requested exclusion. None objected. Only 1,820 returned a claim form, seeking damages for 7,222 unlawful fax transmissions, so that Continental would pay out only $397,426.66 of the $6.1 million, with the remainder, less attorney fees and incentive awards, to revert. Despite the relatively meager final payout to class members, plaintiffs’ attorneys continued to demand more than $2 million. The district court employed the lodestar method, rather than the percentage method, applying a risk multiplier of 1.5 to arrive at a final fee award of $1,147,698.70. After arguments on appeal, the attorneys sought to dismiss. The Seventh Circuit declined to dismiss and affirmed the reduced fee award. View "Americana Art China Co., Inc. v. Foxfire Printing & Packaging, Inc." on Justia Law

Plaintiffs filed suit against Michaels on behalf of California store managers, alleging that Michaels had improperly classified the managers as exempt from overtime. After Michaels removed the case to federal district court under the Class Action Fairness Act (CAFA), 28 U.S.C. 1453, the district court remanded back to state court. The district court concluded that the amount-in-controversy requirement was not met because plaintiffs expressly disclaimed any recovery for the class over $4,999,999.99. In Standard Fire Insurance Co. v. Knowles, the Supreme Court held that attempted damages waivers, such as plaintiffs', were ineffective, and would not defeat removal under CAFA. Michaels then removed the case again under CAFA and the district court remanded on the basis that the removal ran afoul of CAFA's 30-day time limit. In the alternative, the district court held that Michaels failed to carry its burden to demonstrate that the amount-in-controversy exceeded $5,000,000. The court concluded that the case was not moot; because the two thirty-day removal periods were nonexclusive, Michael's second CAFA removal was timely; and the district court's finding that defendant failed to prove that the amount-in-controversey requirement was met was clearly erroneous under the preponderance of the evidence standard. Accordingly, the court reversed and remanded. View "Rea v. Michaels Stores" on Justia Law

Wellness filed a putative class action in state court seeking a declaration that the form language Allstate used in the class members' personal injury protection insurance policies did not clearly and unambiguously indicate that payments would be limited to the levels provided for in Fla. Stat. 627.736(5)(a). The district court subsequently granted Wellness' motion to remand, concluding that the value of the declaratory relief was too speculative for purposes of satisfying the Class Action Fairness Act's (CAFA), 28 U.S.C. 1332(d)(2), amount-in-controversy requirement because Allstate had failed to show that declaratory judgment in this case necessarily triggered a flow of money to plaintiffs. The court concluded, however, that Allstate had carried its burden of establishing an amount in controversy that exceeded $5 million and Wellness did not provide any evidence to rebut Allstate's affidavit or controvert its calculations. Here, the amount that would be put at issue is the amount that the putative class members could be eligible to recover from Allstate in the event that they obtain declaratory relief. Accordingly, the court reversed and remanded. View "South Florida Wellness, Inc. v. Allstate Ins. Co." on Justia Law

More than 13 years ago, lawyers around the country began class actions challenging the installation of fiberoptic cable on property without landowners’ consent. The cases began to settle on a state-by-state basis, leaving the lawyers to allocate awarded and expected attorney’s fees. The lawyers informally grouped themselves based on their negotiation and litigation positions. The Susman Group participated in mediation and agreed to a fee division, but balked at signing a written agreement, ostensibly because Susman disliked its enforcement terms. The district court held that Susman is bound by the agreement despite his failure to sign. The Seventh Circuit affirmed, reasoning that, given the parties’ lengthy course of dealing, Susman’s failure to promptly object to the written agreement can objectively be construed as assent. A finding that Susman’s refusal to sign was a case of “buyer’s remorse” rather than a genuine objection to the enforcement terms in the agreement was supported by the record. View "McDaniel v. Qwest Commc'ns Corp." on Justia Law

Plaintiff filed a putative class action suit against Home Depot alleging violations of California's Unfair Competition Law, Cal. Bus. & Prof. Code 17200; the California Consumer Legal Remedies Act, Cal. Civ. Code 1770; and common-law theories of unjust enrichment and money had and received. Plaintiff alleged that Home Depot automatically imposed a ten percent surcharge for a damage waiver on tool rentals in California stores, and although that fee was to be optional, Home Depot failed to inform customers of their ability to decline the surcharge. The court concluded that it had jurisdiction over the appeal despite plaintiff's stipulation on dismissal after the negative class action ruling. The court also concluded that the district court did not abuse its discretion in denying class certification because the record did not show that the requirements of Rule 12(b)(3) were satisfied where common questions did not predominate over individual issues in any of plaintiff's claims. Accordingly, the court affirmed the district court's denial of class certification. View "Berger v. Home Depot" on Justia Law

ComEd closed its Zion nuclear power plant in 1998. A decommissioned nuclear must be “decommissioned” and not be dangerously radioactive. Decommissioning is supervised by the Nuclear Regulatory Commission, which requires the operator to finance the decommissioning. The details of the trust fund are left to the state agency, in this case the Illinois Commerce Commission, which (220 ILCS 5/9‐201.5(a)), authorized ComEd to create a trust to be funded by $700 million in charges levied by ComEd on its customers. The Act entitles ComEd customers to the return of money not spent when the decommissioning is completed. In 2001, with the permission of the ICC, ComEd transferred ownership of the Zion plant and the trust assets, to ComEd’s parent, Exelon. Neither Exelon nor its subsidiary is a public utility. Ordinarily the utility (ComEd) would have owned the plant after shutting it down, but transaction costs would be reduced by uniting financing and decommissioning in the same company. After several transfers, plaintiffs brought suit, claiming that the trust funds are being misused in violation of the Illinois Public Utilities Act and common law of trusts. The district court, without deciding whether to certify a class, dismissed. The Seventh Circuit affirmed, noting that that none of the plaintiffs are beneficiaries of the trust. View "Pennington v. ZionSolutions LLC" on Justia Law

Scott alleged that Westlake repeatedly called her cell phone using an automated dialer in violation of the Telephone Consumer Protection Act, 47 U.S.C. 227, and sought, for herself and a putative class, statutory damages of $500 for each negligent violation and $1500 for each intentional violation, injunctive relief, and attorney fees. Before she moved for class certification, Westlake sent Scott’s attorney an offer to pay Scott $1500 (the statutory maximum) “for each and every dialer-generated telephone call made to plaintiff.” Westlake agreed to pay costs and to entry of an injunction. The message concluded by warning Scott that, in Westlake’s opinion, its offer rendered her case moot. The next day, Scott moved for class certification and declined the offer, stating that there was “a significant controversy” concerning how many dialer-generated calls Westlake had placed to her phone, so the offer was inadequate and did not render her case moot. The district court dismissed, finding that Westlake had offered Scott everything she sought, depriving the court of subject matter jurisdiction, but retained jurisdiction to enforce compliance with the offer and directed the parties to conduct discovery to determine how many calls Scott received from Westlake. The Seventh Circuit reversed, finding that the case is not moot. View "Scott v. Westlake Servs., LLC" on Justia Law