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Archive for October 15th, 2008

WordPress has added a nifty new polling feature, so I thought I’d try it out.  Let’s find out who’s reading ClassActionBlawg.  Please click all options that apply.

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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 Blog Post Title of the Week

CAFA Law Blog‘s entries often make me chuckle, but here is one that had me rolling for some reason (probably lack of sleep due to late night blogging): “Plaintiff Gets His Bic Flicked on a CAFA Removal in California”:

http://www.cafalawblog.com/-case-summaries-plaintiff-gets-his-bic-flicked-on-a-cafa-removal-in-california.html 

Class Action Decisions

The Complex Litigator and The UCL Practitioner  both offer commentary on a California Court of Appeal decision addressing the collateral estoppel effect of a final order denying class certification on a subsequent class action brought by a different named plaintiff but raising the same claims:

http://www.uclpractitioner.com/2006/10/new_class_certi.html

http://www.thecomplexlitigator.com/2008/10/procedural-news.html

Class Action Defense Blog summarizes an Eighth Circuit Court of Appeals decision upholding a class arbitration waiver clause:

http://classactiondefense.jmbm.com/2008/10/arbitration_class_action_defen_9.html 

Class Action Trends

Compliance Week provides some excellent commentary on the rise of subprime mortgage litigation in an article that includes quotes on subprime litigation trends from The D&O Diary‘s Kevin LaCroix and one of my law partners, Fritz Chockley:

http://www.complianceweek.com/article/5079/sub-prime-litigation-its-only-just-begun

For synopses of various cases addressing Truth in Lending Act (TILA) issues, including the viability of class actions for rescission of mortgages, see this entry from Foreclosure Combatant.  (Note that the Seventh Circuit Court of Appeals recently overturned the decision in Andrews v. Chevy Chase Bank.  See this September 26 CAB Entry).

http://loanaudit.wordpress.com/2008/10/15/truth-in-lending-act-developments/

Mass Tort Litigation Blog provides information about the speakers scheduled for the upcoming 12th Annual ABA National Institute on Class Actions in New York City:

http://lawprofessors.typepad.com/mass_tort_litigation/2008/10/12th-annual-aba.html

Class Action News

RetiredPlayers.org reports on the commencement of the trial in a class action brought on behalf of former NFL players against the NFL Players’ Association and Player’s, Inc. seeking a share of licensing revenues:

http://retiredplayers.org/2008/10/15/retired-players-class-action-trial-to-begin-next-week/

The D&O Diary reports on what may be the first settlement of a subprime-related securities class action:

http://www.dandodiary.com/2008/10/articles/subprime-litigation/first-subprime-securities-lawsuit-settlement/

Overlawyered provides a link to a Connecticut Employment Law Blog entry updating readers on proceedings in an employment class action filed by several professional wrestlers against WWE and discussing why the case may have broader implications in cases involving the distinction between an employee and independent contractor.  (Aside-There’s still no sign of a consumer fraud class action against professional wrestling on the grounds that it is fake–I know, it would be extremely difficult to prove):

http://overlawyered.com/2008/10/update-wrestlers-class-action-against-wwe/

http://www.ctemploymentlawblog.com/2008/10/articles/decisions-and-rulings/wwe-lawsuit-update-what-you-need-to-know/

Class Action Commentary

Legal Radar comments on the impact of the denial of class certification in cases brought by rice farmers against a seed manufacturer for alleged contamination caused by its genetically modified seeds:

http://www.legalradar.com/2008/10/class-action-ag.html

Pro Publica discusses the challenge facing the plaintiffs in securities class actions filed in the wake of the recent credit crisis in light of the heightened burden of proof in securities class actions under the 1995 Private Securities Litigation Reform Act (PSLRA):

http://www.propublica.org/article/fraud-suits-in-the-pipeline-face-high-burden-of-proof-1014/#When:16:13:01Z

TM&S offers commentary on the “fairness” of the Fair and Accurate Credit Transactions Act of 2003 (FACTA), which has generated controversy by providing a vehicle for class action liability to small business due to technical violations of credit card receipt requirements…

http://www.tmspay.com/2008/10/14/is-facta-really-fair-and-accurate/

… and here’s more insightful FACTA commentary from guest columnist Randy J. Maniloff, writing for Point of Law:

http://www.pointoflaw.com/columns/archives/2008/10/whole-enchilada-inc-v-traveler.php

Class Action Reform

Drug and Device Law follows up on a recent post discussing Michigan Law Professor Adam Pritchard’s idea for corporations to stave off “fraud on the market” securities class actions through amendments to their articles of incorporation:

http://druganddevicelaw.blogspot.com/2008/10/end-of-securities-fraud-class-actions_15.html

International Class Action Law

News Link provides a brief introduction to class action law in India:

http://www.newslink.in/2008/10/15/all-about-the-class-action-lawsuit/

Pogo Was Right responds to a Korea Times article discussing a potential class action suit against an Internet company accused of leaking private consumer information.  The news article includes a description of an interesting dispute resolution procedure to be employed prior to trial:

http://www.pogowasright.org/article.php?story=20081012081754274

With Vigour and Zeal summarizes a report issued by the law firm Fullbright & Jaworski on litigation trends and statistics, including statistics on UK companies facing class actions in the US and on subprime-related class actions:

http://kranenburgesq.com/blog/2008/10/fulbrights-fifth/

Class Action Potpourri

Legal Writing Competitions announces a law student writing competition in which the winner will be selected for publication in Class Action Reports:

http://legalwritingcompetitions.blogspot.com/2008/10/class-action-reports-publication.html

Hair Balls reports on the case of a disgruntled traveler who brought a class action against an airline for having to pay a fuel surcharge for a flight he didn’t take:

http://blogs.houstonpress.com/hairballs/2008/10/guy_sues_continental_airlines.php

Cannabis Liberty muses about the possibility of a class action to vindicate the victims of false positives in drug testing due to their choice of adopting an “organic natural lifestyle”:

http://cannabisliberty.com/2008/10/09/a-class-action-suit-id-like-to-see/

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The Jerusalem Times published an interesting op-ed article today praising a Tel Aviv court’s decision in a consumer class action.  The case arose out of allegations that the defendant had knowingly used a carcinogenic silicon compound to line its milk cartons. 

The class action was brought not on behalf of a class of persons alleged to have been physically harmed by the milk consumption, but rather on behalf of a class of consumers who would not have purchased the defendants’ product had they known about the potential dangers.   The article describes this consumer fraud theory as a “legal innovation” that was pivotal to the outcome in the face of the defendant’s argument that it should not be held liable because the plaintiff could not prove physical harm resulting from exposure to the silicon.  The article goes on to express the hope that the case will be a “watershed which will encourage further class action suits,” arguing that while there is a perceived abuse of class actions in the U.S., Israel suffers “from the opposite problem: not enough class action suits.”

Of course, the “legal innovation” described by the article is nothing new in the U.S.  Faced with the problem of being unable to prove injury or damages for a products liability claim on a class-wide basis, class action lawyers have often turned to consumer fraud theories, especially in recent cases brought against the tobacco and pharmaceutical industries.  My criticism of this tactic is that it is not well-suited to provide redress for those who truly suffered harm.  It seeks to compel the defendant to pay for its infraction, not for the benefit of those harmed by the dangerous product, but for an entirely different class of individuals who can claim at best that they were exposed to the danger (a fact which they would have remained blissfully ignorant but for the lawsuit).

In the Israeli case, the judge apparently found that consumers would not have purchased the defendants’ milk had they been apprised of all the facts.  If there truly were facts to support the conclusion that no reasonable consumer would have bought the product if the true facts had been disclosed, then maybe this is the right outcome.  But there are very few situations where this absolute conclusion is warranted.  Consumers buy products for any number of reasons, even products known to be dangerous or that have known negative health effects.  Tobacco is a clear example.  

Certainly, there is no justification for the kind of conduct as described in the article, and one could argue that the end justifies the means, but relying on a “the public wouldn’t have bought it if they had known it was dangerous” argument in what really should be products liability cases has always struck me as intellectually dishonest.  In these cases, the consumer fraud claim is little more than a pretext for imposing punishment for a bad act that lacks a clear harm or that has only individualized harms that don’t really meet the standards for class action treatment.  If a company is selling a dangerous product that causes physical harm, then tort law provides a civil remedy.  The fact that there may not be a collective remedy for those physical harms does not justify reliance on a legal fiction to create a means for collective redress on behalf of an over-inclusive class of people who weren’t truly harmed by defendant’s bad acts.  Perhaps better government enforcement, not more class action suits, is the answer.

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