The United States Supreme Court Rules That Class Arbitration Is Improper When Parties To An Arbitration Agreement Have Not Explicitly Authorized Class Arbitration

Posted on May 11, 2010 by Sheppard Mullin

By Dan Brown

On April 27, 2010, in a closely watched antitrust case with the potential for broad impacts on class action arbitrations, the United States Supreme Court considered the issue “whether imposing class arbitration on parties whose arbitration clauses are ‘silent’ on that issue is consistent with the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq.” Slip op. at 1. See Stolt-Nielsen S.A. et al. v. AnimalFeeds International Corp., 559 U.S. ---, No. 08-1198 (April 27, 2010) (“Stolt-Nielson”).
 

Continue Reading...
Tags:

California's Fourth Appellate District Holds That Named Plaintiffs In Putative Class Actions Alleging Misrepresentation And Deception Under The UCL'S "Unlawful" Prong Must Plead Actual Reliance

Posted on April 30, 2010 by Sheppard Mullin

By Philip F. Atkins-Pattenson and Martin White

On April 19, 2010, California’s Fourth Appellate District decided two companion cases – Durell v. Sharp Healthcare, --- Cal.Rptr.3d ----, 2010 WL 1529322, Cal.App. 4 Dist., April 19, 2010 (NO. D054261) and Hale v. Sharp Healthcare, --- Cal.Rptr.3d ----, 2010 WL 1529329, Cal.App. 4 Dist., April 19, 2010 (NO. D054637) – that mark a potentially significant development in pleading standards under California’s Unfair Competition Law, California Business & Professions Code sections 17200, et seq. (“UCL”). Broadly speaking, both Durell and Hale stand for the proposition that named class plaintiffs alleging a UCL violation under the “unlawful” prong of the statute must now also plead “actual reliance” when the conduct challenged involves “misrepresentation and deception.” Stated another way, plaintiffs alleging unlawful conduct stemming from misrepresentation and deception under the UCL now must actually have relied on the defendant’s alleged misrepresentation; proximate cause or a mere “factual nexus” is insufficient. Both decisions extend the reasoning of the California Supreme Court’s recent decision in In re Tobacco II Cases (2009) 46 Cal.4th 298 (Tobacco II), which addressed the requirements for pleading standing under the UCL’s “fraud” prong, to UCL class actions brought under the “unlawful” prong, at least where the conduct challenged involves misrepresentation and deception.
 

Continue Reading...
Tags:

Fourth District Court of Appeal Confirms that the No "Pick Off" Rule Applies to a Potential UCL Class Action

Posted on April 23, 2010 by Sheppard Mullin

By Jennifer Hoffman

In Wallace v. GEICO General Insurance Company (April 19, 2010) __ Cal.App.4th __, the Fourth District Court of Appeal confirmed that a defendant cannot "pick off" a potential class representative by tendering payment of their claim in a class action alleging violations of California's Unfair Competition Law, Business and Professions Code section 17200 et seq. ("UCL"). The no "pick off" rule stems from the California Supreme Court's holding in La Sala v. American Savings & Loan Ass'n, 5 Cal.3d 864 (1971), that an involuntary settlement of the named plaintiff's claim does not necessarily divest him or her of standing to continue the action on behalf of the class. Under Wallace, as long as the class representative "suffered injury in fact" and "lost money or property" as of the filing of the lawsuit, he or she may still serve as the representative plaintiff in a UCL class action.
 

Continue Reading...
Tags:

Ninth Circuit Makes CAFA Jurisdiction Stick

Posted on April 23, 2010 by Sheppard Mullin

By Neil A.F. Popović

On April 21, 2010, the Ninth Circuit Court of Appeals confirmed that a putative class action removed to federal court under the Class Action Fairness Act (CAFA) does not lose federal jurisdiction just because the court denies class certification. The case, United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union, AFL-CIO, et al. v. Shell Oil Company, et al., No. 10-55269, ___ F.3d ____ (9th Cir. Apr. 21, 2010), began as a putative class action in California state court. Plaintiffs alleged that defendants' oil refineries violated California's Unfair Competition Law, Business & Professions Code § 17200, and failed to provide meal periods, rest periods, timely and accurate wage statements and wages due at the time of termination. Defendants removed the case to federal court under CAFA, 28 U.S.C. § 1332(d)(2), which provides removal jurisdiction if any member of the putative class is diverse from any defendant, if the amount in controversy exceeds $5,000,000.
 

Continue Reading...
Tags:

Seventh Circuit Affirms Dismissal Of Consolidated Class Actions Under The Fair Debt Collection Practices Act Based On Faulty Survey Evidence

Posted on April 21, 2010 by Sheppard Mullin

By Christopher Loveland

In DeKoven v. Plaza Associates (No. 09-2016) and Kubert v. Plaza Associates (No. 09-2249), which were consolidated for decision, the United States Court of Appeals for the Seventh Circuit affirmed the dismissal of class actions brought under the Fair Debt Collection Practices Act regarding allegedly confusing dunning letters. In both cases, the District Court found that survey evidence offered by the plaintiffs’ expert was flawed and entered summary judgment in favor of the defendant, Plaza Associates.
 

Continue Reading...
Tags:

Delaware Chancery Court Dismisses Plaintiffs' Counsel In Merger Class Action, Challenging Credibility Of All Counsel In Connection With Proposed Settlement

Posted on April 21, 2010 by Sheppard Mullin

By John Stigi and Jonathan Moss

In In re Revlon, Inc. Stockholder Litigation, Consol. C.A. No. 4578-VCL, 2010 WL 985732 (Del. Ch. Mar. 16, 2010), the Delaware Chancery Court dismissed a group of law firms that had been appointed to act as co-lead and liaison plaintiffs’ counsel for a putative class of stockholders in an action challenging a corporate merger, and appointed new co-lead counsel with instructions to investigate the conduct of former counsel and the fairness of a proposed settlement negotiated by former counsel. This scathing decision from Vice Chancellor Laster highlights the critical importance for all attorneys of maintaining credibility and “reputational capital” with the Court when, among other things, seeking approval of a settlement of a class or derivative action.
 

Continue Reading...
Tags:

Pfizer: The Court of Appeal Rinses Away the Tobacco II Aftertaste

Posted on March 4, 2010 by Sheppard Mullin

By Paul Seeley and Fred Puglisi

In Pfizer, Inc. v. Superior Court, ___ Cal. App. 4th __ (March 2, 2010), the Court of Appeal, Second District, applied In re Tobacco II Cases, 46 Cal. 4th 298 (2009) ("Tobacco II") to overturn an order granting class certification. The Pfizer opinion resuscitates traditional class certification opposition strategies based on the unfair competition law (the "UCL") even in the wake of Tobacco II's holding.
 

Continue Reading...
Tags:

Ninth Circuit Clarifies When Non-Tipped Employees May Participate In Tip Pools

Posted on February 26, 2010 by Sheppard Mullin

By Jacqueline Binger

In case of first impression for it, the Ninth Circuit clarified the validity of tip pools under the Fair Labor Standards Act ("FLSA") where the tip pool includes employees who are not customarily and regularly tipped. In Cumbie v. Woody Woo, Inc., the Court of Appeals held that where workers make more than the minimum wage and the employer takes no tip credit, tip pools including non-tipped employees do not violate the FLSA. 
 

Continue Reading...
Tags:

The Fourth Circuit Bounces Express Check Class Action Back to State Court Based on Lack of Diversity Jurisdiction

Posted on January 15, 2010 by Sheppard Mullin

By Christopher Loveland

The United States Court of Appeals for the Fourth Circuit in Ferrell v. Express Check Advance of South Carolina, LLC (No. 09-2401) examined the citizenship of limited liability companies for purposes of diversity jurisdiction in a class action. The Plaintiff in Ferrell, a citizen of South Carolina, commenced a class action lawsuit on behalf of “other South Carolina citizens” against four “payday loan” businesses in South Carolina state court. The lawsuit alleged that defendants’ payday loans violated various South Carolina laws. One of the defendants, Express Check Advance of South Carolina, LLC (“Express Check”), removed the case to the United States District Court for the District of South Carolina on diversity grounds, contending that it was a citizen of Missouri and Kansas, and not a citizen of South Carolina.
 

Continue Reading...
Tags:

Federal Circuits Grapple With Standard of Proof and the "Fraud-On-The-Market" Presumption At Class Certification Stage

Posted on October 2, 2009 by Sheppard Mullin

By John Stigi and Jonathan Moss

In recent years, a split among the circuits has developed in federal securities class actions with regard to the procedure and standard of proof required to certify a class. At the class certification stage of the proceedings, district courts are instructed to conduct a “rigorous analysis” of the various requirements set forth in Federal Rule of Civil Procedure 23, while at the same time refrain from deciding issues that go to the substantive merits of the case. This tension, coupled with ambiguity in Circuit-level authority, has created uncertainty among many district courts. Most recently, the United States Court of Appeals for the Sixth Circuit granted interlocutory review in In re Abercrombie Fitch & Co., No. 09-0310 (6th Cir. Aug. 24, 2009), to consider this precise issue. The court, in its order granting review, noted that although the Sixth Circuit had yet to address the issue, its sister circuits, including the First, Second, Fourth and Fifth Circuits, have articulated various different standards to be applied.
 

Continue Reading...
Tags: