On December 15, 2014, the United States Supreme Court resolved a circuit split in holding that a defendant need not supply evidence of the amount in controversy in its notice of removal under the Class Action Fairness Act (“CAFA”). In Dart Cherokee Basin Operating Co. v. Owens, No. 13-719, 574 U.S. __ (2014), the plaintiff, Owens, filed a putative class action in Kansas state court alleging defendants had underpaid royalties to putative class members under certain oil and gas leases. The defendant, Dart, filed a notice of removal with the U.S. District Court for the District of Kansas pursuant to CAFA. To establish diversity jurisdiction under CAFA, defendants must show, among other things, that the amount in controversy exceeds $5 million.
In Laffitte v. Robert Half International, Inc., No. BC321317, ___ Cal.App.4th ___ (Oct. 29, 2014; pub. ord. Nov. 21, 2014), the California Court of Appeal affirmed a $19,000,000 settlement that included an attorneys’ fee award of one-third the settlement amount. Mark Lafitte filed a wage and hour class action suit against Robert Half International alleging violations of the Labor and Business and Professions Codes. The parties settled, and the terms provided that Robert Half would pay a gross settlement amount of $19,000,000, of which class counsel’s attorneys’ fees would be no more than 6,333,333.33. Additionally, the proposed settlement included a “clear sailing” provision assuring that Robert Half would not oppose the court’s fee award if the amount was less than or equal to the specified amount.
On December 8, 2014, U.S. District Court Judge Lucy Koh of the U.S. District Court for the Northern District of California granted defendant Dole’s motion for summary judgment of the plaintiff’s false labeling claims in Brazil v. Dole Packaged Foods, LLC. The court granted summary judgment on the ground that the plaintiff had failed to present sufficient evidence that the challenged “All Natural Fruit” label was likely to mislead reasonable consumers. As one of few summary judgment opinions in “All Natural” cases, this opinion provides valuable insight into issues that arise on the merits of such claims.
Over the last several months, Judge Richard Posner has authored a triumvirate of opinions reversing the district courts’ approval, over objections, of consumer class action settlements—Eubank v. Pella Corp., 753 F.3d 718 (7th Cir. 2014), Redman v. RadioShack Corp., 768 F.3d 622 (7th Cir. 2014), and Pearson v. NBTY, Inc., No. 12-1245, 2014 WL 6466128 (7th Cir. Nov. 19, 2014)—each of which could charitably be described as scathing. Among other things, Judge Posner takes aim at the manner in which a settlement is valued for purposes of determining attorney’s fees (administration costs and cy pres awards are not part of the value to the settlement class), the method of calculating attorney’s fees (a ratio based on actual value to the class, not the maximum potential value), and the manner and content of notice to the class as well as the claims process (simplification is key). While the class action bar awaits the impact of these decisions, there are several key lessons to be learned.
Back in February, the California Court of Appeal in Hataishi v. First American Home Buyers Protection Corp., 223 Cal. App. 4th 1454 (Feb. 21, 2014), dealt a significant blow to call recording class actions across California. The Court held that plaintiffs asserting claims under California Penal Code section 632 (“Section 632”) had to establish that the telephone calls that were monitored or recorded were “confidential” – meaning that the plaintiffs had an objectively reasonable expectation that their calls were not being overheard or recorded. Applying this standard classwide was impossible. Each individual’s objectively reasonable expectations would turn on individualized inquiries, including the length of the class member’s experience with the defendant, whether the class member had ever been notified that her calls with the defendant may be monitored or recorded, and each class member’s experience with other businesses that record or monitor calls. We asked then whether call recording class actions were doomed.
On November 6, 2014, U.S. District Court Judge Lucy Koh of the U.S. District Court for the Northern District of California granted in part defendant Dole’s motion for decertification in Brazil v. Dole Packaged Foods, LLC. In May of 2014, the court had granted certification of classes under both Federal Rule of Civil Procedure 23(b)(2) and Rule 23(b)(3). In its November 6 opinion, the court decertified the 23(b)(3) damages class because the plaintiff’s damages model failed to satisfy Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), and left certification of the 23(b)(2) injunction class intact. The court’s analysis of the plaintiff’s damages model provides guidance on the weaknesses and pitfalls of using a hedonic regression model to measure damages.
In Romulus v. CVS Pharmacy, Inc., No. 14-1937, 2014 U.S. App. LEXIS 20548 (1st Cir. Oct. 24, 2014), the First Circuit Court of Appeals clarified the conditions triggering a defendant’s 30-day window to remove a case to federal court under the Class Action Fairness Act, 28 U.S.C. § 1332, when the earlier, initial pleading did not disclose a basis for CAFA removal. The First Circuit, in a case of first impression in the circuit, held that this 30-day window begins only when a plaintiff’s “amended pleading, motion . . . or other paper” provides either a clear statement that the damages sought exceed $5 million or information sufficient to allow a defendant to calculate an amount-in-controversy exceeding $5 million.
Beyond the usual substantive advice—maintaining effective compliance and document management systems, for example—our class action defense team suggests that companies implement the following relatively straightforward procedural tips to avoid class actions.
May 2014 was an active month for evaporated cane juice (“ECJ”) litigation in the U.S. District Court for the Northern District of California. Six courts issued opinions that involved the application of the primary jurisdiction doctrine to ECJ claims. The primary jurisdiction doctrine allows courts to stay or dismiss a complaint without prejudice, pending the resolution of an issue within the special competence of an administrative agency. Many defendants have moved to dismiss ECJ claims based on this doctrine.
In Lanovaz v. Twinings North America, Inc., 2014 WL 1652338, Case No. C-12-02646-RMW (N.D. Cal. April 24, 2014), the court granted-in-part and denied-in-part a motion for class certification in a false advertising case about tea labels. The plaintiff alleged that the defendant’s tea was “misbranded” because it advertised the tea as a “Natural Source of Antioxidants.” The plaintiff claimed that this advertising was misleading and violated California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act. The plaintiff contended that, although the tea indisputably contained flavonoids (a type of antioxidant), the Food & Drug Administration does not allow advertising about flavonoids because it has not established a recommended daily dose. Plaintiff sought class certification under Rule 23(b)(2) (for an injunctive class) and Rule 23(b)(3) (for a damages class) of the Federal Rules of Civil Procedure.