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Archive for September, 2008

During a reception yesterday, I met Lance Tanaka, local Denver representative of the American Arbitration Association (AAA), who tipped me off to AAA’s class arbitrations page.  The site has several great public resources for anyone interested in class arbitration rules or cases, including:

If you are interested in the topic of class arbitrations more generally or are trying to find out more information on a specific case that is the subject of class arbitration, check out these essential resources.  Many thanks to Lance for the tip.

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The Seventh Circuit Court of Appeals’s highly anticipated Truth In Lending Act (TILA) class action decision in Andrews v. Chevy Chase Bank, No. 07-1327 (7th Cir., Sept. 24, 2008) was finally issued Wednesday.  The court reversed the district court’s class certification decision and joined the First and Fifth Circuit Courts of Appeals in holding that the TILA’s rescision remedy (at the risk of oversimplification, the right to back out of the deal), is not suitable for class-wide treatment.  The case involves claims by a Wisconsin couple that their mortgage lender violated TILA, 15 U.S.C. § 1635, by misrepresenting facts in selling them an adjustable rate mortgage (ARM) of the type that is the center of the current subprime lending crisis.  The opinion, authored by Judge Diane S. Sykes, is available for download on the court’s website.

As usual, Class Action Defense Blog has already posted a thorough summary of the decision, so rather than repeating the nuances of the decision here, I’ll direct you to that post.

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The blog Wait A Second!, which covers civil rights issues in the Second Circuit, posted a synopsis today of a recent New York federal court decision in which a class action defendant was sanctioned as a result of communications with class members following a class certification order.   The case, Romano v. SLS Residential, Inc., 07 Civ. 2034 (SCR) (S.D.N.Y.), involves allegations of fraud and mistreatment of patients by a mental health care facility.  According to the synopsis, the court ordered the defendant to pay $35,000 in sanctions due to, among other things, the defendant’s actions in contacting class members and telling them that their mental health records would become part of the public record unless they opted out of the class.  The court also reportedly voided exclusion requests received following the improper contact and ordered corrective notice to be sent to class members.

The case appears to have involved particularly egregious conduct, but it serves as a more general reminder about the dangers of post-certfication contact with class members.  Certain types of contact cannot be avoided, especially where there is an ongoing relationship between the defendant and class members, but post-certification communications between a defendant and class members that involve the lawsuit itself are usually prohibited unless approved in advance by the court.  In fact, during the exclusion period following certification of a Rule 23(b)(3) class, there are certain restrictions even on what the attorneys appointed as class counsel may say to class members as they consider whether to opt out. 

Both Newberg on Class Actions and the Manual for Complex Litigation  provide extensive information on what types of communications with class members are permitted at each phase of a class action.  It is a good idea for a lawyer or party on either side of a class action to consult these sources and the authorities cited in them before undertaking to initiate contact with absent class members.

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Wales Online reported today on the increasing number of UK pension funds taking part as a lead plaintiff or “active participant” in securities class actions, which have to be pursued in other countries since the UK does not currently have a class action procedure.  The data comes from the National Association of Pension Funds, a UK assocation that provides resources to fund managers and trustees.  NAPF has reported a large increase in the number of pensions that have been involved as in a class action during the past year.  The report’s key findings included that of 23% of pension funds have now “actively participated” in a class action, while 73% participated in some form to collect a settlement.   In 2007, the NAPF published a guide for trustees of UK pension funds discussing the benefits of getting involved with securities class action litigation in the U.S. and other jurisdictions that have a securities class action procedure (specifically mentioned are Canada, Australia, and the Netherlands).  The guide, entitled Securities Litigation-Questions for Trustees is available at the NASP website.

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Here are some blog entries from the week that was that might be of interest to class action practitioners:

Class Action Decisions

The UCL Practitioner quotes a recent California Court of Appeal decision reversing a trial court’s order denying class certification on the ground that the court had not allowed pre-certification discovery of the identity of possible replacement class representatives under Pioneer Electronics v. Superior Court, 40 Cal. 4th 360 (2007) (link to opinion provided by Class Action Defense Blog):

http://www.uclpractitioner.com/2008/09/new-class-certi.html

CAFA Law Blog provides a synopsis of a Louisiana federal court decision addressing the time for removal under CAFA and the non-applicability under CAFA of the “first-served” rule, which provided that all defendants had to join in a removal petition within 30 days from the date that the first defendant was served with process:

http://www.cafalawblog.com/-case-summaries-eastern-district-of-louisiana-says-no-go-noto-refusing-to-remand-cafa-case-back-to-state-court-on-timeliness-issue.html

Class Action Defense Blog summarizes a California opinion upholding the dismissal of a claim for attorneys fees under a fee sharing agreement that was not disclosed prior to another court’s ruling on a fee award in an underlying class action settlement:

http://classactiondefense.jmbm.com/2008/09/attorney_fees_class_action_def_1.html

Delaware Corporate and Commercial Litigation Blog discusses a Delaware Chancery Court decision allowing objectors limited discovery in evaluating the fairness of a class action settlement:

http://www.delawarelitigation.com/2008/09/articles/chancery-court-updates/limited-discovery-allowed-for-objectors-to-class-action-settlement/

Class Action News

Jurist reports on a class action lawsuit filed against the NSA, President Bush, Vice President Chaney, and other government officials for actions in connection with their warrantless surveillance program to gather consumer information from telecommunications companies:

http://jurist.law.pitt.edu/paperchase/2008/09/class-action-lawsuit-filed-over-us.php

Tribune Company issues a press release regarding an ERISA class action filed by various reporters, editors, and other employees of the LA Times, a case covered in various blog entries last week.  (See last week’s CABWR)…

http://www.tribune.com/pressroom/releases/2008/09172008.html

… and more on the case from Southern California Public Radio:

http://www.publicradio.org/columns/kpcc/kpccnewsinbrief/2008/09/la-times-employees-file-class.html

Point of Law reports on the settlement of long-standing litigation against the New York City’s homeless programs by consolidating all pending litigation into a single class action settlement:

http://www.pointoflaw.com/archives/2008/09/nyc-settles-maj.php

Class Action Commentary

A Seattle Supersonics fan provides an insider’s view of a heated battle over a subpoena issued by the defendant to a founder of the fan-organized lobbying group, Save our Sonics, in a putative class action for alleged deceptive marketing practices filed on behalf of Sonics ticketholders against the ownership group that recently moved the team to Oklahoma City, from Seattle Center Arena Reboot:

http://seattlecenterarenareboot.blogspot.com/2008/09/dispatches-from-tenth-circle-sonics-fan.html

The Complex Litigator offers commentary on developments in California case law regarding the preclusive effect of a denial of class certification:

http://www.thecomplexlitigator.com/2008/09/johnson-v-gla-1.html

Spam Notes comments on a recent class action settlement involving alleged text messaging spam and addresses the issue whether text messaging spam falls within the purview of the Telephone Consumer Protection Act of 1991 (TCPA):

http://spamnotes.com/2008/09/23/do-text-messgaes-fall-within-the-tcpa.aspx?ref=rss

Practice Tips

Drug and Device Law Blog offers a “Multidistrict Litigation Compendium,” which includes a clarification of the distinction between the MDL process and class certification:

http://druganddevicelaw.blogspot.com/2008/09/multidistrict-litigation-compendium.html

Class Action Trends 

Mass Tort Litigation Blog offers a link to an ABA Litigation News Section Report discussing a trend in courts ordering a full evidentiary Daubert hearing to assess the admissibility of expert testimony at the class certification stage of a class action:

http://lawprofessors.typepad.com/mass_tort_litigation/2008/09/daubert-hearing.html

The D&O Diary discusses the “dark new phase” of litigation spawned from the subprime economic crisis:

http://www.dandodiary.com/2008/09/articles/subprime-litigation/litigation-wave-inflection-point/

… and for loads of content on various other legal issues implicated by the financial crisis and proposed bailout, see http://www.theracetothebottom.org/.

Real Lawyers Have Blogs updates a previous story about a plaintiffs’ class action law firm that hired a PR firm to post a message on the social networking website Twitter seeking potential class representatives.  The update reports that the PR firm retracted the post following media and public reaction, but defended its use of Twitter to generate publicity about a potential class action as in the public interest…

http://kevin.lexblog.com/2008/09/articles/social-networking-1/pr-firm-retracts-twitter-post-looking-for-class-action-plaintiffs/

… and another brief commentary on the story from Overlawyered:

http://overlawyered.com/2008/09/using-twitter-to-scare-up-class-action-plaintiffs/

International Class Action Law

Securities Docket and Bankruptcy Information Centre discuss issues facing two British pension funds in pursuing securities class action claims against the now bankrupt Lehman Bros. investment bank:

http://www.securitiesdocket.com/2008/09/22/uk-pension-funds-in-lehman-bros-securities-class-action-weighing-options/

http://bankruptcy.org.uk/bankruptcy-news/pension-funds-review-status-of-lehman-class-action-ipecom/ (quoting article from IPE.com)

Legal Pad LA discusses a class action for life insurance benefits filed on behalf of a putative class of descendants of victims of the Armenian genocide of World War I against a foreign insurer in federal court in California:

http://www.lalegalpad.com/2008/09/descendants-of.html

ElectEcon takes issue with a Canadian usury law that formed the basis of a Ontario court’s decision holding a Canadian Satellite TV company’s late fees illegal in a class action decision impacting millions of customers: 

http://www.eclectecon.net/2008/09/consumer-protec.html

Remember the Midwest comments on an article in Australian newspaper The Age discussing a possible trend in securities class actions arising out of a company’s failure to disclose facts concerning its carbon emissions.  (for a ClassActionBlawg entry discussing the same article, click here):

http://rememberthemidwest.blogspot.com/2008/09/class-action-climate.html

Multinational Corporations links to a Business Day South Africa article reporting on developments in a case filed under the Alien Tort Claims Act against several multinational corporations for their alleged complicity in the former apartheid policy of the South African government:

http://www.multinationalcorporations.info/blog/9675/apartheid-class-action-group-in-us-court-again%C2%A0-business-day-south-africa/

Class Action Politics

Primary Monitor Blog provides a list of issues on which Presidential candidates Barack Obama and John McCain agree, including their support of the Class Action Fairness Act (CAFA):

http://199.125.75.56/primaryblog/voting_records_where_mccain_obama_have_agreed

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An article yesterday in the Australian newspaper The Age quotes Australian “climate change lawyer” Renee Garner as predicting a trend in securities class actions for companies’ failure to disclose information about their carbon output, information that she says will arguably impact on a company’s value given the likely implementation of a Carbon Pollution Reduction Scheme in Australia.

Earlier this month, the Australian government issued a green paper recommending the implementation of a “Carbon Pollution Reduction Scheme” as early as 2009.  See this article at Mondaq.com for a summary of the key points of the green paper.  The implementation of these regulations seems essential to the possible securities theory suggested by Ms. Garner, since it would provide a more direct potential link between a company’s carbon output and its stock value.  For the time being, this theory would not appear to be viable in the U.S. (that’s not to say it won’t be attempted).  However, it may only be a matter of time before legislation involving carbon trading and offsets comes to the U.S., and with it may come climate change securities class actions.

As Ms. Garner also points out in yesterday’s article, climate change litigation against the EPA and other regulatory authorities has already been brought in the United States, as have mass tort cases alleging harm caused by greenhouse gas emissions.  For an informative summary of litigation both in Australia and in the U.S. dealing with climate change issues, see this publication, available at Ms. Garner’s law firm, Freehills.

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Ahoy, Maties!    In honour of Talk Like a Pirate Day, I’d lyke to present ye with a bit o’ pirate law trivia.  No, I’m not talking about software or media piracy.  I mean authentic buccaneers of the Blackbeard variety, aaaarrrrr.

Did you know that the Alien Tort Claims Act, which has been used successfully over the past few years to obtain remedies in U.S. courts for the victims of alleged human rights violations in other parts of the world, was originally intended to combat piracy?  ATCA is one of the nation’s oldest statutes, enacted in 1789 as part of the Judiciary Act to give the United States courts jurisdiction to provide a remedy for the victims of pillaging by pirates.  The law has since been used in class actions brought in U.S. courts against former foreign government leaders accused of torture, murder, and other human rights violations during their time in power. 

The possible remedies under ATCA do not appear to include requiring defendants to “walk the plank” or be “keelhauled,” but they do include the opportunity to obtain quite a bit of “booty.”  ATCA class actions led to multi-million dollar judgments in U.S. courts against the estate of former President of the Philippines, Ferdinand Marcos, and against former officials of the Bolivian government.  Even more recently, ATCA class actions have been filed against multinational corporations for their alleged complicity in governmental actions or policies that violated human rights.  A case against several U.S. companies for their alleged complicity in the South African government’s apartheid has been allowed to proceed under ATCA after the Second Circuit Court of Appeals ruling could not be reviewed by the Supreme Court, which lacked a quorum because of recusals necessitated by the financial interests of four Justices.

Some think that ATCA should be limited to the acts of piracy that the statute was originally enacted to combat.  This PBS article has an interesting chart showing arguments for and against an expansive interpretation of ATCA to encompass a wide range of alleged human rights violations.  For more on the history of ATCA as a Pirate Law, see this Time Magazine article.

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