Archive for March, 2010

It’s been a while since his last posting, but Vancouver, B.C. attorney Ward Branch’s latest entry on Class Actions in Canada has been worth the wait.  He has a synopsis on what appears to be every Canadian class action decision of note in recent memory.  If you’re looking to get up to date on the Canadian class action scene, don’t miss it.

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The United States Supreme Court heard oral argument Monday in the foreign cubed securities class action Morrison v. National Australia Bank, Ltd., Case No. 08-1191.  A copy of the transcript is available on the Court’s website.

Professor Hannah L. Buxbaum, Executive Associate Dean for Academic Affairs at the Indiana University Maurer School of Law at Bloomington, has written an excellent guest post on The Conglomerate recapping the oral argument and analyzing the bright-line test proposed by the respondents for determining when U.S. courts can exercise jurisdiction over a dispute involving securities traded on a foreign exchange.

For a summary of the Second Circuit Court of Appeals decision below, see this October 28, 2008 CAB entry.

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While browsing the news today, I came across an informative class action-related snippet on www.lexology.com apparently authored by someone at my firm.  (I’m not sure specifically whom to credit for the tip, I just know it wasn’t me.)  The article summarizes a January 2010 decision authored by Seventh Circuit Court of Appeals Judge Richard Posner regarding the impact of a denial of class certification under the Class Action Fairness Act.  The case is Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805 (7th Cir. 2010).  A full copy of the opinion is available courtesy of the good folks at the CAFA Law Blog.  Here’s a link to the Baker Hostetler article.

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A proposed bill to amend the California Code of Civil Procedure to create a class action rule similar to Rule 23, Federal Rules of Civil Procedure, has apparently failed for the time being.  Among other things, ABX8 38 would have replaced Code of Civil Procedure Section 382 with a rule setting forth more specific, statutory prerequisites to class certification, similar to the requirements set forth in Rule 23.   The legislative findings and declarations section of the bill would have read as follows:

(a) Class action lawsuits are an important and valuable part of
the legal system when they permit the fair and efficient resolution
of legitimate claims of numerous parties by allowing the claims to be
aggregated into a single action against a defendant that has
allegedly caused harm.
(b) The lack of clear standards for the certification and
management of class actions in California has led to abuses of the
class action device that have harmed class members with legitimate
claims as well as defendants who have acted responsibly, and these
abuses have undermined public respect for our judicial system.

However, the bill now has an inactive status.  The last reported legislative history is a March 11, 2010 entry, “died at desk.”

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Are you a company faced with the prospect of having to defend a class action lawsuit that you believe is frivolous?  You have many options, but unfortunately, none of them are all that palatable.  You can settle for big bucks right away, you start paying some superstar class action defense lawyer hundreds of dollars an hour to fight the case for a decade before you settle for big bucks later, you can fight the case to the death in court, you can file for bankruptcy protection, or you can pursue any number of other, more desperate, options (what these might be are best left for another discussion).  But one company is trying a different approach altogether.  According to its blog, Chicago-based Internet company Groupon has responded to a class action lawsuit by “organizing” a class action against itself.  Here is an excerpt from a posting on the company’s blog, Groublogpon, Groupon Corporate Overlord,” entitled Groupon Organizes Class Action Against Itself:

Dear Groupon Customers,

You may or may not have heard that a lawyer named Jay Edelson from a law firm called Edelson McGuire is attempting to organize a class action lawsuit against Groupon, claiming that our deals’ prominently displayed expiration dates somehow “systematically deceive our customers.” As a company with one of the most irrationally liberal customer satisfaction policies on the planet, the idea that we’re systematically deceiving anyone is news to us – hopefully it’s news to you as well.

We can think of two possible explanations for this lawsuit:

  1. The law firm sees an opportunity to exploit our success and make a bunch of money.
  2. We are indeed systematically deceiving our customers, but instead of taking advantage of our 100% open refund policy or telling us about their problems or sharing them in a public forum, our customers are secretly gossiping about them to each other and Edelson McGuire, kind of like Emily Johnson did against me in 9th grade (Emily if you are reading this I want my cabbage patch doll back).

* * *

Here’s the only thing that I think matters about this to you, our customers: We are so not the type of company that needs to be sued to bend over backwards for our customers. . . . So while we obviously think this lawsuit is ridiculous, it’s an opportunity for us to reinforce the fact that there is nothing more important to us than making sure you guys love us.

Thanks for reading,

Andrew Mason, Groupon Corporate Overlord

Whether the company’s public response turns out to be pure PR genius or ends up simply being Exhibit A at trial remains to be seen, but it looks like there will be no shortage of entertainment value along the way.  Corporate counsel and public relations representatives of other companies who face consumer class actions might want to keep an eye on how things play out in this one.

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On February 23, the Supreme Court issued its decision in Hertz Corp. v. Friend, No. 08-1107, in which it adopted the “nerve center” test as the proper approach for determining a corporation’s principal place of business for diversity jurisdiction.  The Court stated that it was adopting a single test among the numerous approaches previously employed by the lower federal courts “[i]n an effort to find a single, more uniform interpretation of the statutory phrase [“principal place of business.”]  The decision promises to bring more predictability to the resolution of an often-litigated issue in the context of removal of class actions under the Class Action Fairness Act of 2005.

For a good synopsis of the decision and its potential impact in the class action removal context, read Karen P. Palmersheim’s article at www.lexology.com entitled Supreme Court’s decision opens doors to lawsuits under the federal Class Action Fairness Act.

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