Archive for March, 2008

Here are some recent informative and in some cases entertaining posts from class action-oriented blogs:

The folks at CAFAlawblog.com conjure a Seinfeld favorite in an entertaining summary of an insurer’s unsuccessful attempt at CAFA removal:


Class Action Defense Blog discusses a California federal court’s recent Colorado River abstention analysis in several class actions in light of parallel proceedings in a Delaware case.


UCLPractitioner reports on the latest California Proposition 64 “injury-in-fact” decision:


The D&O Diary comments on the importance of opt outs in resolving securities class actions:


Carlton Fields’ Class Action Blog discusses recent First Circuit decision regarding merits inquiries in assessing class certification:


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The executive committee of the Colorado Bar Association’s Litigation Section recently approved our request to form a Class Actions, Derivative Suits, and Mass Torts Subsection.  We will be holding an initial social gathering in late May and sponsoring our first luncheon CLE program sometime in June.  If you are a CBA member interested in participating in this Subsection, please contact me at pkarlsgodt@bakerlaw.com.

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Now that the Class Action Fairness Act is a few years old, it may be easy to forget about the requirement that certain state and federal officials be given notice of class action settlements in federal court. However, the consequences of forgetting to do so could be disastrous.

The official notification requirement, codified at 28 U.S.C. 1715, requires that notice be given to an “appropriate Federal official” and an “appropriate State official.” In most cases, this means the United States attorney general and either the state official primarily responsible for regulating the defendant or the state attorney general if there is no regulator. The notice must be given within “10 days after a proposed settlement of a class action is filed in court.” 28 U.S.C. 1715(b). The notice must contain various materials, which are specified in Section 1715(b).

If the required notice is not given, the settlement becomes subject to possible collateral attack: “A class member may refuse to comply with and may choose not to be bound by a settlement agreement or consent decree in a class action if the class member demonstrates that the notice . . . has not been provided.” 28 U.S.C. 1715(e)(1).
A few government agencies have provided guidance on the manner in which the notice should be given, but many have not. The Federal Reserve has issued guidelines on how notice is to be given in certain banking cases in which it is the “appropriate Federal official.” http://www.federalreserve.gov/boarddocs/SRLETTERS/2007/SR0707.htm.  The California Attorney General has also issued guidelines. http://ag.ca.gov/contact/court.php.  I recently sent an inquiry to the DOJ to ask whether there were any specific guidelines for service on the United States Attorney General but did not receive a response.

Many professional class action administrators have developed protocols for complying with the official notice requirement, so a defense lawyer is not completely without resources to ensure compliance. However, given the potential consequences of not complying with the requirement, it is a good idea for counsel to monitor this process by asking to whom and how the administrator intends to give the notice.

Curiously, although CAFA required officials to be notified of class action settlements, it provided no guidance on what the government officials should do once notified. A few state officials that I have interviewed or heard speak at seminars following CAFA have stated that they are not likely to get involved in most class action settlements after receiving the required notice.  One would assume that this attitude would change in a case in which the governmental entity has been pursuing related or parallel proceedings against the defendant involving the same subject matter.

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According to an editorial submitted to the Newport Beach & Costa Mesa newspaper Daily Pilot, a California state senator has introduced legislation that would encourage but not require judges in class action settlements to withhold a “reasonable portion” of an attorneys fee award until an acceptable number of class members are identified.  Senator Tom Harman, of the 35th District, says that his bill is intended to combat the problem of judges awarding excessive percentages of settlement funds to nonparty charities because class members are not be identified.  Senator Harman says that this practice is currently being followed by Judges in Alameda County, California and that “it seems to be working well.”  It is unclear whether the payment of the withheld portion of the fee would be contingent on proof that the class members are given notice or whether it would instead be based on payment to class members.  It is also unclear from the article what percentage notice or participation would be required to justify the payment of the withheld portion of the fee.  Here is a link to the editorial: http://www.dailypilot.com/articles/2008/03/15/opinion/dpt-commentary031508.txt

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U.S. District Court Judge Wiley Daniel has granted class certification in a case filed by the ACLU against the Garfield (Colorado) County Jail alleging various constitutional violations arising from jail treatment of prisoners.   For a detailed report on the ruling with comments from both the ACLU and the Garfield County Sherriff, see this Post Independent article: http://www.postindependent.com/article/20080315/VALLEYNEWS/443706000.

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A key issue in the well-publicized fight between President Bush and leaders in the House of Representatives over the proposed Bill to extend the federal government’s terrorism surveilance authority is the inclusion of provisions giving retroactive immunity.  See, e.g. http://www.cnbc.com/id/23609777/for/cnbc. Bush supports the Senate Bill, which includes the immunity provision and has threatened to veto any alternative legislation that the House might propose that does not include immunity. Various telecommunications companies face class actions alleging that they acted illegally in assisting the NSA in intercepting telephone and Internet communications and other private information about their customers. At least 40 cases were transferred to a single federal court, the United States District Court for the Northern district of California, by the Multidistrict Litigation (MDL) Panel. The website for consumer advocacy group Electronic Frontier Foundation, one of the plaintiffs, has an excellent database of the court filings in the various lawsuits. http://www.eff.org/cases/att.

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As a native of Western Montana, a news story that caught my eye today was a report that mining company R.W. Grace & Co. agreed to pay the United States $250 million for EPA cleanup costs associated with asbestos contamination in the town of Libby, Montana. See, e.g. www.washingtonpost.com/wp-dyn/content/article/2008/03/12/AR2008031200975.html. Today’s agreement involved reimbursement under the Superfund environmental cleanup law, not for civil liability, but R.W. Grace & Co. had previously been the subject of a civil class action and individual civil suits arising from its alleged acts in causing the contamination. The company then filed for Chapter 11 bankruptcy protection, which resulted in various proof of claim deadlines being established for various personal injury and other claims pending before the bankruptcy filing, including those raised in the class action.  See www.graceclaims.com for information about the bankruptcy deadlines.  Today’s agreement is still subect to bankrupcy court approval.

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The Chicago Tribune business section has an interesting article today about the number of lawuits filed as a result of the subprime mortgage crisis. According to the article, there were 278 subprime-related filings in federal courts alone last year, nearly half of which were borrower class actions. Here is a link to the article. http://www.chicagotribune.com/business/chi-tue-law-notebookmar11,0,4663671.story.

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My article on claims-made class action settlements is out today on Product Liability 360.  Click here for the link.  http://productliability.law360.com/Members/ViewArticlePortion.aspx?Id=49658&ReturnUrl=..%2fsecure%2fViewArticle.aspx?Id=49658.  This is a fee service (not mine) but you can sign up for a free trial.

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This article by Henry Gottlieb in the New Jersey Law Journal, available on Law.com provides a good summary of the decision and explains its potential impact on similar pending class actions seeking insurance benefits for the treatment of eating disorders.  http://www.law.com/jsp/article.jsp?id=1204212425418

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