Archive for April, 2008

Here are some blog posts of interest to class action lawyers from this past week.  Special thanks this week to Kimberly Kralowec of The UCL Practitioner and Scott Leviant of The Complex Litigator for adding links to ClassActionBlawg.com on their blogrolls…

The Complex Litigator critiques the continued use of coupon settlements in class action settlements:


The UCL Practitioner summarizes the latest decision on what constitutes restitution recoverable under the California UCL and Proposition 64:


Carlton Fields’ Class Action Blog highlights the recent Florida Court of Appeals decision in Nelson v. Wakulla County, — So. 2d –, 2008 WL 1774184 (Fla. 1st DCA April 21, 2008), upholding a trial court’s rejection of a proposed class action settlement–a must read for anyone getting ready to finalize a class action settlement.


The D&O Diary reviews a recent paper by Columbia Law School Professor John Coffee regarding the impact of opt outs in securities class actions …


… and discusses the latest trend in subprime-related class actions:


SCOTUS Blog provides an interesting analysis of a petition for writ of certiorari in class action litigation brought against various companies who allegedly aided and abetted the Government of South Africa during the apartheid era.


See this discussion in Appellate Review regarding a split in the federal Circuit Courts of Appeals on whether post-filing events can change whether a class action is removable under the Class Action Fairness Act:


Class Action Defense Blog offers a summary of a recent Seventh Circuit Court of Appeals decision resolving Fair Credit Reporting Act (FCRA) issues arising in three would-be class action lawsuits.


See an April 22 entry in How Appealing for a link to a recent Third Circuit Court of Appeals decision regarding the impact of filing a motion for reconsideration on the deadline for seeking interlocutory review of a class certification order:


Thanks to the folks at Drug and Device Law Blog for posting a link to a great article last week in The Mass Tort Litigation Blog.  The article comments on oral arguments given before the United States Supreme Court in a case involving intriguing issues of non-class-action virtual representation and nonparty preclusion:


Wage Law, The California Wage and Hour Law Weblog summarizes a recent California Court of Appeal decision permitting precertification discovery for the purpose of identifying potential class members who might be suitable replacements for a class representative who lacked standing:


Mortgage Fraud Blog reports on a recent decision by the United States District Court for the Eastern District of Pennsylvania dismissing a mortgage fraud class action complaint filed against several banks for allegedly failing to supervise and monitor a mortgage broker:


Perilocity predicts class action lawsuits against software vendors arising out of identify theft:


Disgusted Beyond Belief vents articulately about common political criticisms that class action lawsuits are generally frivolous and benefit only greedy lawyers and not consumers…


…but the folks at Overlawyered might disagree, as they reiterate their criticism of would-be class action lawsuits filed against Coke in commenting on a recent Missouri Supreme Court decision rejecting class certification in Diet Coke artificial sweetener case:


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There have been a variety of recent news reports about a trial that began today in a “class action” lawsuit against the United States Department of Veterans Affairs, or VA.

The case, now captioned Veterans for Common Sense v. Peake, was filed by two nonprofit groups on behalf of veterans of the Iraq and Afganistan wars and earlier conflicts alleging systemic problems in the VA’s system of providing healthcare services and admistering benefits for veterans with Post Traumatic Stress Disorder (PTSD) and other mental illnesses.  Among the allegations is that delays in the processing of claims and other problems with claims handling and appeals of the denials of those claims have contributed to an “epidemic of suicides” among affected veterans.  A two-week trial to the court began today before Judge Samuel Conti of the United States District Court for the Northern District of California in San Fransisco.  The plaintiffs seek injunctive relief including supervision over VA healthcare services and the administration of VA benefits, including the appointment of a special master to oversee the handling of claims.  The claims appear to include constitutional due process claims and statutory claims under specific federal laws providing for veterans’ medical benefits.  Trial is to the court rather than to a jury because the plaintiffs are seeking an injunction and not money damages.

From a class action practitioner’s perspective, perhaps the most interesting aspect of the case is the fact that it is not a class action at all.  According to a report on Law.com (click here), the case was originally filed as a class action but the plaintiffs’ attorneys ultimately made a strategic decision not to seek class certification.  Rather than seeking certification on behalf of a class of veterans, plaintiffs’ counsel decided to proceed solely on behalf of two nonprofit veterans’ advocacy groups, Veterans for Common Sense and Veterans United for Truth.  In an order dated January 10, 2008, Judge Conti had previously denied the government’s motion to dismiss on the ground that the two groups lacked standing to sue.  (Copy of January 10, 2008 Order).  Rejecting the government’s argument that the two groups were mere advocacy groups who could not sue by themselves without the participation of individual veterans, the court held that the two groups had organizational standing under the principles outlined by the United States Supreme Court in Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 181 (2000) and Warth v. Seldin, 422 U.S. 490, 511 (1975).  Under these principles, an association may sue on behalf of its individual members if

its members would otherwise have standing to sue in their own right, the interests at stake are germane to the organization’s purpose, and neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.

Friends of the Earth, 528 U.S. at 181.  In turn, the participation of individual members is not required when its members face “immediate or threatened injury” as a result of the challenged action and “the nature of the claim and of the relief sought does not make the individual participation of each injured party indispensable to proper resolution of the cause.”  Warth, 422 U.S. at 511.  In applying these standards, the court concluded that

[g]iven the nature of Plaintiffs’ claims, especially in regard to the allegations of systemic legal violations, the Court, at this stage, is not convinced that the individual participation of each injured party will be indispensable to the present action. Plaintiffs’ due process claim will depend largely on the claims adjudication procedures enacted under the VJRA, and not necessarily on individual veteran’s claims. The same is true regarding Plaintiffs’ access to the courts claim. Plaintiffs’ claim for denial of statutorily mandated health care can satisfy this standing requirement if, for example, Plaintiffs demonstrate that the current system under the VJRA leads to system-wide denials of this health care or if the VA fails to recognize and treat PTSD within this two-year period.

January 10, 2008 Order at 6.  However, the Court also suggested that this decision might be subject to later change should future events make clear that the participation of individual veterans would be required.  Presumably, this means that the representative nature of the lawsuit is subject to additional argument and evidence at trial, in addition to the merits of the plaintiffs’ claims.

Copies of the various pleadings, orders, and other filings in the case are available at a website provided by the plaintiff organizations (click here).

Other various articles discussing the case are listed below:









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As the European Union and individual EU countries consider potential reforms for dealing with mass and class action lawsuits (see my previous entries here and here), Canadian class actions are becoming more similar to those in the United States, according to an April 18 report in Canadian Underwriter.ca. The article remarks that significant increases in contingent fee awards in recent Canadian class actions have led to an increase in lawyer-driven lawsuits as opposed to those that are consumer-driven or driven purely by altruistic motives. 

Fair or not, it is clear that many outside the U.S. view the U.S.-style class action system as being driven exclusively by lawyers and greed.  Combating this perception should be an important goal as we consider potential reforms in our own state and federal courts.  Our class action system shares with those being developed considered in other countries the noble objectives of discouraging corporate or government abuse and adequate compensation of consumers.  However, those of us who practice in the U.S. realize that our system is a complex one that has developed over many decades.  Procedures intended to discourage widespread abuse and promote compensation of victims have to be accompanied by incentives for championing those intrests, and they must also be tempered by due process protections of the rights of potential defendants.  Attempts at reform may not always have their desired result.  (See this entry on the latest FJC report on CAFA).  It will be interesting to track new procedures and reforms that are chosen in other countries who have far less experience and history with mass or class actions.  On the one hand, they may have the advantage of being able to start from scratch without having to face pushback from entrenched governmental, institutional, and private interests in maintaining an existing system.  On the other hand, they lack the decades of analysis, testing, and tweaking that our system has undergone.

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For those of you who practice in the Colorado state courts, the CBA weekly newsletter had a snippet today about what constitutes official service through the e-filing system that you’ll want to pay attention to.  I suspect that similar rules applies in other states that have adopted an official e-filing system.  I have never had an issue with not receiving the “convenience” email notice, but this serves as a reminder to check your e-filing inbox periodically to make sure you don’t miss an important filing.

*** E-Filing: What qualifies as Official Service
Some confusion exists about Official E-Service through File & Serve – e-filing in the Colorado state court system. Many File & Serve subscribers rely on e-mail notifications to know that a document has been e-served upon them. Be aware: the e-mail notification feature does not constitute service and is provided by LexisNexis File & Serve solely as a convenience. It is the responsibility of the subscriber to regularly and proactively check the Online Inbox for E-Filed and E-Served documents. Read more details, including some tips, about The Area of Official Service on the CBA’s website.

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The Federalist Society Issues a collection of articles relating to class action law every six months or so.  The latest Class Action Watch was issued in late March 2008 and includes articles on seven topics including “reverse bifurcation“, Cy Pres settlements, FACTA truncation, scheme liability, and class action tolling.  For the full index, click here.

Thanks to the Mass Tort Litigation Blog for tipping me off to this interesting resource.


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As defense lawyers, our instincts tell us to take our shot at a dispositive ruling on the merits if it might allow us to avoid a class certification hearing.  We know that the material facts aren’t in dispute and that we should win on the law, if we can just get the judge to ignore the plaintiffs’ attorneys constant spin and obfuscation and focus on the real legal issues.  The named plaintiff has no case, and consequently, the class has no case either.  We hardly ever answer until our motion to dismiss is denied.  If the motion to dismiss doesn’t work (which is almost always because the judge is overwhelmed and doesn’t want to take a chance at possible reversal by dismissing the case too early) we look for the first opportunity to file a motion to strike, a motion for judgment on the pleadings, a motion for ruling as a matter of law, or if all else fails, a motion for summary judgment.

But contrary to those instincts, filing a summary judgment motion before certification proceedings in a class action can be a lose-lose proposition.  If the defendant loses the motion, there is a good chance that the court won’t look seriously at the issue in another pretrial motion filed after certification, when the facts are likely to be more fully developed.  On the other hand, if the defendant wins, the victory may be a hollow one because the judgment is not likely to be given any preclusive res judicata or collateral estoppel effect as to absent class members.  Thus, winning a pre-certification summary judgment does not guarantee an end to the exposure.  Any other member of the putative class can simply file a class action under the same legal theory in a new case.

Some may consider the mere suggestion heresy, but there are situations where a defense lawyer might even consider counseling a client to stipulate to class certification in order to get a final resolution on the merits of a claim that is binding on all potential plaintiffs.  

Of course, it’s a rare case where the potential reward of guaranteed claim or issue preclusion justifies the risk of a classwide adverse judgment.  Usually, winning a dispositive motion against the named plaintiff promises to mark the end of the litigation for all practical purposes, either because the ruling is likely to dissuade the same or other plaintiffs’ attorneys from spending the time and effort pursuing a similar theory of liability, because the plaintiff is one of very few individuals willing an able to serve as class representative, or because a subsequent class action would be time-barred (this raises the issue of piggybacking of successive class actions, which is a subject for another day).

But even if it is likely in many cases that the potential benefits of filing a dispositive motion before pre-certification will ultimately carry the day, it is always a good idea to first consider the preclusive effect–or lack thereof–of a pre-certification judgment.

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A Federal Judicial Center publication entitled Impact of CAFA on the Federal Courts: Fourth Interim Report was issued in April 2008 and is now available at the FJC website: http://www.fjc.gov/library/fjc_catalog.nsf

The report marks the end of the first phase of a study commissioned by the Judicial Conference Advisory Committee on Civil Rules to analyze the impact of the Class Action Fairness Act of 2005 on the federal courts. 

There are some interesting conclusions reached in the report.  The findings suggest that while CAFA has had an impact on the number of class actions being litigated in federal courts, it may not be working precisely as anticipated.  For example, in general, the report concludes that there has been a significant increase in the number of diversity class actions filed originally in federal courts as compared to the pre-CAFA period.  However, certain types of lawsuits, such as torts-personal injury cases (as distinguished from torts-property damage cases) have not increased.  Moreover, the report concludes that the increase in diversity class actions in federal courts during the period surveyed “has not been driven primarily by removals.”  Instead, the report describes the results regarding the number of diversity cases removed to federal court as “varied.” 

For a link to the full document, click here.

Supplement April 16 9:00 a.m.

Drug and Device Law Blog has posted an extensive analysis of the report’s findings.  Thanks to Mark Herrmann for forwarding the link:


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