Class Action Defense Strategy Blog : Class Action Lawyer & Attorney : Sheppard Mullin Law Firm : Antitrust, Securities, Wage & Hour, Consumer Fraud

New FCC Interpretation Of "Express Consent" To Increase TCPA Class Action Liability

Posted on June 11, 2013 by Sheppard Mullin

Plaintiffs frequently sue businesses in class actions for violation of the Telephone Consumer Protection Act of 1991, 47 U.S.C. § 227 (the “TCPA”). The TCPA generally prohibits calls and text messages to cell phones using automated systems or artificial or pre-recorded voice unless the consumer gives "prior express consent." The TCPA imposes statutory penalties of $500 per negligent violation, and up to $1,500 per knowing or willful violation. In class actions, the potential liability usually extends back four years prior to the filing of the complaint. The numbers can get very high, very quickly—for example, at least $500,000 for 1000 calls; at least $5 million for 10,000 calls, etc. Though the TCPA does not authorize attorneys’ fees itself, plaintiffs usually recover them in class actions.

Tags: Federal Class Action

Second Circuit Reverses Class Certification Order, Holding That a Clearing Broker's Alleged Knowledge of Fraud Against Shareholders, Absence Direct Involvement, Is Insufficient to Create a Duty of Disclosure

Posted on April 1, 2013 by Sheppard Mullin

In Levitt v. J.P. Morgan Securities, Inc., No. 10-4596, 2013 WL 1007678 (2d Cir. Mar. 15, 2013), the United States Court of Appeals for the Second Circuit reversed a district court order certifying a class of shareholder fraud plaintiffs in a lawsuit against J.P. Morgan Securities, Inc. and J.P. Morgan Clearing Corporation (“J.P. Morgan”). The decision reaffirms that a clearing broker generally owes no fiduciary duty to the owners of securities that pass through its hands. According to the Second Circuit, absent evidence that the clearing broker instigated or directed the alleged fraud by the securities issuer through high involvement, a plaintiff cannot establish a class-wide presumption of investor reliance sufficient to satisfy the predominance requirement of Rule 23(b)(3) of the Federal Rules of Civil Procedure.

Tags: Securities

United States Supreme Court Holds that Class Action Securities Fraud Plaintiffs Need Not Prove the Materiality of the Alleged False Statements or Omissions to Support Certification of a Class, Resolving Circuit Split

Posted on March 7, 2013 by Sheppard Mullin

In Amgen Inc. v. Connecticut Retirement Plans & Trust Funds, No. 11-1085, 2013 WL 691001 (U.S. Feb. 27, 2013), the United States Supreme Court affirmed the decision of the United States Court of Appeals for the Ninth Circuit holding that a securities fraud plaintiff need not prove that the alleged false statements made by defendants were material in order to invoke the fraud-on-the-market presumption of reliance established by Basic, Inc. v. Levinson, 485 U.S. 224 (1988), at the class certification stage of the proceedings. The 6-3 majority opinion, written by Justice Ginsburg, resolved a split in the Circuits, which had pitted the First, Second, Fifth and, to a certain extent, Third Circuits against the Seventh and Ninth Circuits on this point. The Supreme Court’s decision deprives securities fraud defendants a means of limiting or effectively defeating a securities class action lawsuit at an early stage in the case before the bulk of fact discovery has begun.

Tags: Class Certification, Securities

Class Action Waivers Are Enforceable Despite Any State Statutory Right To A Class Action

Posted on January 18, 2013 by Sheppard Mullin

In Flores v. West Covina Auto Group, --- Cal.Rptr.3d ----, 2013 WL 139200 (Cal.App. 2 Dist. Jan. 11, 2013), the California Court of Appeal extended the U.S. Supreme Court’s landmark decision in AT&T Mobility, Inc. v. Concepcion, 131 S. Ct. 1740 (2011) by holding that the Federal Arbitration Act preempts any right to a class action under the California Consumers Legal Remedies Act (“CLRA”), and class action waivers in arbitration agreements governed by the FAA are therefore enforceable.

Tags: Recent Cases

Making Meyer Lemonade Out Of Meyer Lemons: Ninth Circuit Affirms Provisional Class Certification and Injunction in TCPA Case

Posted on December 4, 2012 by Sheppard Mullin

By Elizabeth Barcohana

In Meyer v. Portfolio Recovery Associates (Oct. 12, 2012), the Ninth Circuit affirmed the Southern District of California’s decision to provisionally certify a class and grant a preliminary injunction against Portfolio Recovery Associates (“PRA”), a debt collector alleged to be in violation of the Telephone Consumer Protection Act (the “TCPA”), 47 U.S.C. § 227, by calling California debtors’ wireless phones without their prior express consent.

Tags: Class Certification

The Ninth Circuit Holds That The TCPA Prohibits Automated Calls Even When They Do Not Refer To Any Specific Good Or Service

Posted on October 31, 2012 by Sheppard Mullin

In Chesbro v. Best Buy Stores, LP, No. 11-35784, 2012 WL 4902839 (9th Cir. Oct. 17, 2012), the Ninth Circuit reversed the Western District of Washington’s grant of summary judgment in favor of Best Buy Stores, LP ("Best Buy") on claims that Best Buy placed automated telephone calls to plaintiff Michael Chesbro’s home in violation of the Telephone Consumer Protection Act of 1991 ("TCPA"), 47 U.S.C. § 227 and Washington statutes. The TCPA prohibits "any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party." However, the FCC has exempted automated calls that do not adversely affect the consumer's privacy rights and do not include any "unsolicited advertisement," pursuant to 47 U.S.C. § 227(b)(2)(B)(ii) and 47 C.F.R. § 64.1200(a)(2)(iii). An "unsolicited advertisement" is defined as "any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person's prior express invitation or permission." 47 U.S.C. § 227(a)(5). Here, the Ninth Circuit rejected Best Buy's argument that its automated calls to Chesbro were not "unsolicited advertisement[s]," holding that such calls need not explicitly mention a good, product, or service, but can nonetheless violate the TCPA if they encourage the listener to make future purchases.

Tags: Class Certification, Federal Class Action

Enforcing Class Action Waivers: A "Major Change In California Law"

Posted on October 12, 2012 by Sheppard Mullin

In Phillips v. Sprint PCS, __ Cal. App. 4th __, 2012 WL 4378199 (1st Dist., Sept. 26, 2012), the California Court of Appeal affirmed a trial court’s decision to reconsider its past order refusing to enforce an arbitration clause including a class action waiver. In doing so, the Court recognized the “major change in California law” wrought by the United States Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011). Under Concepcion, class action waivers contained in arbitration provisions subject to the Federal Arbitration Act (the “FAA”) are enforceable. The FAA preempts contrary state law.

Tags: Consumer

Proposition 37 Permits "Natural" Labeling for Non-GMO Processed Food

Posted on October 8, 2012 by Sheppard Mullin

Proposition 37, the California Right to Know Genetically Engineered Food Act ("Prop 37”), if approved by the voters on November 6, 2012, will provide that food offered for retail sale in California produced with genetic engineering (“GMO food”) is misbranded unless clearly labeled to say it is genetically engineered. Prop 37 also provides that GMO “processed food” may not on its label, store signage, advertising or promotional materials state or imply that the food is “natural” or words of similar import.

Ballot materials prepared by the Legislative Analyst’s Office (LAO) state that Prop 37 could be interpreted to mean “processed food” is subject to the prohibition against “natural” labels, even if it is not produced with genetic engineering. In our view, this is not the correct interpretation of Prop. 37.

Tags: False Advertising

Dennis v. Kellogg Company: Ninth Circuit Court of Appeals Sets Aside Class Action Settlement Because Terms Did Not Meet Legal Standards for Cy Pres Distribution

Posted on September 17, 2012 by Sheppard Mullin

By Judy Suwatanapongched

In Dennis v. Kellogg Company, No. 11-55674 & No. 11-55706, 2012 U.S. App. LEXIS 18576 (9th Cir. Sept. 4, 2012), the Ninth Circuit Court of Appeals reversed the district court’s approval of a class action settlement because the terms of the settlement did not meet the legal standards for cy pres distribution. In particular, the settlement did not (1) sufficiently relate the cy pres distributions to the plaintiff class or the class’s underlying legal claims; (2) identify the ultimate recipients of the cy pres awards; and (3) set forth any limiting restrictions on those recipients or the awards they would receive. Id. at *3.

Tags: Settlements

Unreasonable Reliance: Ninth Circuit Affirms Dismissal of FAL, Fraud and UCL Claims at the Pleading Stage

Posted on September 17, 2012 by Sheppard Mullin

By Sarah Kagan

In Davis v. HSBC Bank Nevada, N.A., No. 10-56488, 2012 WL 3804370 (9th Cir. Aug. 31, 2012), the Ninth Circuit affirmed the dismissal of claims for (1) false advertising in violation of the California Business and Professions Code § 17500, et seq. (“FAL”); (2) fraudulent concealment; (3) “unlawful” business practices in violations of California Business and Professions Code § 17200, et seq. (“UCL”); and (4) “unfair” and “fraudulent” business practices in violation of the UCL, at the pleading stage.

Tags: False Advertising

Class Action Defense Strategy Blog : Class Action Lawyer & Attorney : Sheppard Mullin Law Firm : Antitrust, Securities, Wage & Hour, Consumer Fraud

Published By
Sheppard Mullin Richter & Hampton LLP.

Up-to-date information on class action litigation

New FCC Interpretation Of "Express Consent" To Increase TCPA Class Action Liability

Second Circuit Reverses Class Certification Order, Holding That a Clearing Broker's Alleged Knowledge of Fraud Against Shareholders, Absence Direct Involvement, Is Insufficient to Create a Duty of Disclosure

United States Supreme Court Holds that Class Action Securities Fraud Plaintiffs Need Not Prove the Materiality of the Alleged False Statements or Omissions to Support Certification of a Class, Resolving Circuit Split

Class Action Waivers Are Enforceable Despite Any State Statutory Right To A Class Action

Making Meyer Lemonade Out Of Meyer Lemons: Ninth Circuit Affirms Provisional Class Certification and Injunction in TCPA Case

The Ninth Circuit Holds That The TCPA Prohibits Automated Calls Even When They Do Not Refer To Any Specific Good Or Service

Enforcing Class Action Waivers: A "Major Change In California Law"

Proposition 37 Permits "Natural" Labeling for Non-GMO Processed Food

Dennis v. Kellogg Company: Ninth Circuit Court of Appeals Sets Aside Class Action Settlement Because Terms Did Not Meet Legal Standards for Cy Pres Distribution

Unreasonable Reliance: Ninth Circuit Affirms Dismissal of FAL, Fraud and UCL Claims at the Pleading Stage