Melton Family's Expert Discovered the Flaw in GM's Ignition Switch

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Once a mistake in the engineering of a car is made known, the maker of the vehicle has a responsibility to fix the mistake. However, to try to remedy the mistake in new cars, without recalling old cars with the defect, is illegal, and in some cases, potentially fatal. This was allegedly the case with General Motors (G.M.) when it realized that the ignition switch in more than 2 million of its cars was faulty. The car company worked with Delphi, the supplier that made the part, to redesign the part so that the flaw was fixed, but neither party allegedly bothered to alert the public to the flaw, which existed in millions of cars which had already been sold.

When Brooke Melton's Cobalt suddenly shut off, causing her fatal accident in 2010, her family sued G.M. and Mark Hood was hired to investigate the accident. Hood photographed, X-rayed, and disassembled the ignition switch in his attempt to figure out how the engine suddenly shut off. Then he bought a replacement part at a local GM dealership.

Although the replacement switch that Hood bought had the same identification number as the old switch, it contained significant differences. A tiny metal plunger was not included in the replacement part and the switch's spring was more compressed. According to Hood, there was also a difference in the amount of force needed to turn the engine on and off.
As Hood's investigation progressed, he realized that both GM and Delphi had realized the mistake and changed the part some time in 2006 or early 2007. The new part made it less likely that the driver could bump the ignition key, causing the car to cut off power to the engine and deactivate the airbags.

Lance Cooper, the attorney representing the Melton family in the lawsuit, confronted Raymond DeGiorgio, the head switch engineer on the Cobalt, with the differences between the two switches. DeGiorgio acknowledged the differences between the two parts, but said that he could not explain why the new part had not been given a different identification number.
"I was not aware of the detent plunger switch change," he testified in his deposition. "We certainly did not approve a detent plunger switch change."

However, the paper trail tells a different story. In the federal filings for the recent recall of certain G.M. vehicles containing the defect, G.M. confessed than an engineer (whom they did not name) had in fact signed a document in April of 2006 which approved design changes in the switch. Government investigators have since requested that G.M. provide all documents related to the switch change and who within the company approved it.

Since Hood's discovery of the allegedly clandestine part change, G.M. has issued a worldwide recall of 2.6 million vehicles, including Cobalts, Pontiacs, and Saturns. G.M. has said that it will replace the old part with the new one at no cost to vehicle owners. In the mean time, the company's website contains a video which assures consumers that the old switches are still supposedly safe, so long as nothing is attached to the ignition key. A reported 13 deaths have occurred as a result of the faulty switches.

G.M. settled the lawsuit with the Melton family, but it is now facing a class-action lawsuit which consists of all owners of vehicles included in the recall. The research into the faulty part conducted by Hood will likely also play a role in that lawsuit.

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Rapid Cash Sued in Class Action

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Class actions have a number of hurdles to clear before they can attain certification. Those hurdles frequently include the arbitration agreements which companies have grown increasingly fond of including in their contracts. An arbitration agreement is a provision in a contract which states that any dispute between the parties must be settled in arbitration. This usually works in favor of the company as the arbitrator is usually chosen and paid for by the company, and is therefore frequently biased in favor of the company. It also prohibits class actions, which prevents many individuals with small claims from seeking redress, as the cost of arbitration is likely to exceed their claim.

Defendants in class action lawsuits frequently try to force arbitration. Rapid Cash, a loan company, is currently facing a class action lawsuit which alleges that borrowers were subjected to default judgments by the company. Attorney J. Randall Jones is representing the plaintiffs in the class and argues that Rapid Cash waived its ability to require arbitration, and as a result, the case belongs in the district court. Rapid Cash denies that it ever waived that ability and continues to argue that the case should be heard in arbitration.

If Jones succeeds in keeping the case in the district court and obtaining class certification, the class could include almost 16,000 borrowers who were allegedly subjected to default judgment. The class alleges that Rapid Cash failed to provide the required legal notice before subjecting them to default judgment.

One of the defendants included in the lawsuit is On Scene Mediations, a company that Rapid Cash uses to enter default judgments against borrowers. Dan Polsenberg, an attorney representing Rapid Cash, says that the loan company is also unhappy with the conduct of On Scene Mediations and is willing to work with borrowers who claimed nonservice.
However, Rapid Cash claims that borrowers who were wrongfully subjected to default judgments have another legal remedy, which is to go to Justice Court to ask to have the default judgments set aside.

The company also objects to the size of the class, arguing that the parameters for members to become a part of the class are too broad. In addition to 460 borrowers who allegedly never received a notice, the class also includes 7,000 borrowers who were sent letters but never responded, and 8,000 who were sent letters which were returned as undeliverable.
Barbara Buckley, the executive director of the Legal Aid Center, said in a statement why it is so important for plaintiffs to be able to file claims as a class action. "When there are cases of just widespread fraud, it is virtually impossible to have 16,000 separate actions. And having the ability to have one judge decide for one case what the proper recourse is; in some cases it's the only way for consumers to get relief."

Jones said that, if the class does not get certified, only a small fraction of the plaintiffs will be able to get any relief. He pointed out that "These people are the most vulnerable in our society in terms of economic fraud and taking advantage of people in the financial arena. ... You're dealing with a constituency that doesn't have a whole lot of options. So you need this process or else these people really won't get any kind of remedy."

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Facebook Sued in Class Action Over Private Messages

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By now, many people are aware that the things they post online are public. However, most of us still expect the private messages that we send back and forth over the internet to maintain a certain level of privacy. Facebook allegedly violated this right by intercepting private messages which were exchanged via the social media site. According to the complaint, Facebook allegedly scanned private messages which contained URLs "for purposes including but not limited to data mining and user profiling." The lawsuit was filed by two Facebook users who sent messages via the social networking site which contained URLs. The plaintiffs allege that Facebook's practice of scanning private messages and sharing the information it finds violates the Electronic Consumer Protection Act, California's Invasion of Privacy Act, and the California Unfair Competition Law.

The complaint points to the fact that "Facebook touts the privacy of its messaging function as 'unprecedented' in terms of user control and the prevention of unwanted contact." Contrary to this representation, the lawsuit alleges that "When a user composes a Facebook message and includes a link to a third party website (a "URL"), the Company scans the content of the Facebook message, follows the enclosed link, and searches for information to profile the message-sender's web activity. The lawsuit further asserts that Facebook does not do this for the purpose of facilitating the transmission of the messages, but uses the information for its own profit by sharing it with third parties, such as advertisers, marketers, and other collectors of data.

The lawsuit alleges that Facebook's practice of representing its messages as private, while violating that privacy, is especially harmful because users who are led to believe that their communications are private are likely to share information that they would not otherwise provide. This gives Facebook an advantage over their competitors in acquiring information about its users.

To demonstrate how profitable this profiling and data sharing is for Facebook, the complaint noted that, in 2011, the social media company earned $2.7 billion through targeted advertising sales.

The complaint goes on to state that a recent study, conducted at the University of Cambridge, found that "highly sensitive personal attributes," such as sexual orientation, ethnicity, religious views, personality traits, intelligence, use of addictive substances, parental separation, age and gender were predictable with high degrees of success just from what people liked online. Thus racial discrimination could be applied to prevent some candidates from seeing loans that might be advantageous to them, and housing renters and sellers could potentially use big data to discriminate based on gender, all while circumventing the fair housing laws."

The suit was filed in the Northern District of California on behalf of all U.S. users who have sent or received private messages that included a URL in the message. The lawsuit is seeking class certification, an injunction against Facebook to cease their practice of scanning private messages for URLs, and statutory damages, including $100 for each day that Facebook violated the Electronic Communications Act, for each class member. Although the plaintiffs do not yet know how many people are eligible to participate in the class, they do believe that, once all of the damages for the class members are totaled, they will exceed $5,000,000.

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Class Actions Blocked By Arbitration Agreements

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Two recent class action lawsuits in California have provided a reminder that it is always a good idea to read the fine print before signing a contract. The lawsuits were both trying to bring claims under the Telephone Consumer Protection Act (TCPA) in California district courts, rather than in arbitration as laid out by the contracts the consumers had signed. The TCPA puts limits on the types of calls that companies can make to consumers' cell phones.

In the first case, the plaintiff, Miguel Mendoza, had obtained a payday loan from Speedy Cash. When he failed to repay the debt, Mendoza began receiving calls from Ad Astra on his cell phone. Mendoza alleged that, when he did not answer these calls, Ad Astra left "voicemail messages using a pre-recorded or artificial voice." Mendoza alleged that this violated the TCPA and so he filed a class action lawsuit in the Central District of California against Ad Astra, despite having signed a contract in which he waived his right to pursue a class action and agreed to settle any claims in arbitration.

The arbitration clause that Mendoza signed covered a wide variety of claims, including "any claim, dispute or controversy between you and us (or related parties) that arises from or relates in any way to this Agreement."

Mendoza did not dispute the fact that he signed this arbitration agreement, but he did come up with three arguments for why the court should hold the arbitration clause unconscionable. The first is that Ad Astra allegedly lacked the standing to enforce an agreement that Mendoza had signed with Speedy Cash. Ad Astra was an agent of Speedy Cash though, thereby making it a "related party" under to the agreement.

Second, Mendoza argued that his claim was not covered by the arbitration agreement, since he was not alleging monetary damage as a result of Ad Astra's alleged violation of the TCPA. However, the arbitration agreement defined "Claim" under "the broadest possible meaning and includes ... claims based on any ... statute[.]" The agreement also specifically included claims arising out of debt collection activities.

Mendoza's third argument stated that the arbitration clause was unconscionable. The court failed to agree though, pointing out that the contract, "gave plaintiff the unilateral right to reject arbitration at any time within 30 days of signing the contract." Because Mendoza was given this chance to opt out of the arbitration agreement without affection the services he received from Speedy Cash, the court found that the arbitration agreement was enforceable under California law.
A similar class action lawsuit was filed in the Southern District of California wherein the plaintiff, David Sherman, had bought a used car from Rancho Chrysler Jeep Dodge in 2010. In 2013, Chrysler allegedly violated the TCPA by leaving a prerecorded message on Sherman's voicemail, stating that it was the anniversary of his auto purchase and time for "another status review of your ownership experience."

When he bought the car, Sherman signed a "Retail Installment Sales Contract" which included an arbitration clause. Like Speedy Cash's arbitration agreement, Chrysler's contract was very broad, covering "Any claim or dispute, whether in contract, tort, statute, or otherwise ... shall at your or our election, be resolved by neutral, binding arbitration and not by a court action."
Like Mendoza, Sherman also presented three arguments as to why his lawsuit should not be forced into arbitration. Sherman's arguments included: 1) that there was no evidence that Sherman had read the arbitration clause, despite the fact that he had signed the contract, which specifically stated "YOU ACKNOWLEDGE THAT YOU HAVE READ BOTH SIDES OF THIS CONTRACT, INCLUDING THE ARBITRATION CLAUSE ON THE REVERSE SIDE, BEFORE SIGNING BELOW"; 2) that the arbitration clause is unconscionable; and 3) that the clause does not cover the dispute at issue.

Given the very broad terms covered under the arbitration agreement and the fact that Sherman signed the contract, the court rejected these arguments.

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Marketing Company Cannot Escape Class Action Through Arbitration 9th Circuit Rules

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While the law has struggled to catch up with the swift progression of technology in recent years, particularly the increase in internet use, many companies have taken advantage of the ease of acquiring consumers' information. It is easier than ever for companies to gain access to an individual's credit card information. Many companies make deals with each other to share this information, despite the fact that such agreements are illegal.

Many laws, though, remain relevant regardless of whether the transaction took place online or in person. This was demonstrated in one recent class action lawsuit against an online marketing company. The named plaintiffs filed their class action lawsuit against a company which performs background checks. The plaintiffs noticed that regular monthly charges appeared on their credit card for a report which they allege they did not intend to buy. The company performing the background checks said that the consumers were misled into purchasing the subscription of the online marketing company. As a result, the marketing company was added as a third defendant.

The background check company provided space on its website for the marketing company and used a "data pass" method of sharing credit card information which is now allegedly illegal. The marketing company used that shared information to enroll customers in free trial subscription offers which were then converted into a monthly billed subscription.

The marketing company moved to force the lawsuit into arbitration.

The district court ruled that the consumers had entered into a contract with the marketing company, but the court denied the motion to force arbitration.

The plaintiffs appealed and the case went to the Ninth Circuit Court of Appeals. The appellate court noted that, under Washington law, a contract requires mutual assent to its essential terms in order to be considered legally binding. Those essential terms include the names of the parties involved in the contract. The appellate court found that the web page which the consumers used to buy the subscription service did not sufficiently identify the marketing company as the party making the contract with the consumers. The appellate court also remained skeptical as to whether providing an email address and clicking a "yes" button is sufficient to agree to a contract. Such clicks are still new enough that many courts don't quite know how to handle them.

The appellate court also denied the marketing company's motion to force the case into arbitration. The court decided that, since the arbitration provision was on another hyperlink which the consumers did not click on, no valid arbitration agreement took place.

Arbitration agreements have grown increasingly popular with companies in recent years. Consumers and employees alike are both being asked to sign more and more contracts containing arbitration agreements. These agreements tend to favor the company over the individual as they make class actions impossible and the arbitrator is often chosen and paid for by the company. The higher courts have upheld many arbitration agreements in recent years, but not all of the appellate courts have been as favorable to the agreements. Many have been found to be unenforceable and the likelihood of such a finding can only increase if the consumer never even saw the arbitration agreement.

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2014 Outlook For Class Actions in the Supreme Court

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When the Supreme Court agrees to hear a case, the decision that the Court reaches in that case can have long-standing consequences for future rulings in similar cases made by courts all over the country. In recent years, class action lawsuits have been particularly contentious in the courts. In order to attain class certification, a class of plaintiffs is generally required to fulfill four requirements:

1. The class must be large enough to justify combining all of the claims into one lawsuit, generally, this means at least 100 class members;
2. The class must have questions of law or fact in common;
3. The claims of the representative parties must be sufficiently similar to the claims of the rest of the class; and
4. The representative parties must fairly and adequately protect the interests of the class.

Despite these clear requirements, various courts have ruled to certify classes of plaintiffs while other courts have denied certification based on a lack of ability to fulfill the above requirements.
Securities class actions in particular have faced an increasing number of challenges in recent years, leaving shareholders who have been the victims of fraud with little or not outlet for redress.

Halliburton Co. v. Erica P. John Fund

In this case, investors filed a lawsuit against the publicly traded energy company by claiming that it misled them about key information, including its liability in a recent asbestos investigation. The investors allege that such misinformation affected the company's stock prices and ultimately harmed the company's shareholders.

Halliburton is challenging the Supreme Court's decision in 1988 in Basic v. Levinson, in which the Court determined the fraud-on-the-market theory, which has been the basis for most securities class actions ever since. The theory states that, when a public company makes a misrepresentation in an efficient market, that misinformation is carried through the market and affects the company's stock price. An investor purchasing a security is thus presumed to have relied on that misinformation. However, the concept of an efficient market, while largely uncontested in the 1980s, has since come under scrutiny and has recently been questioned by some of the current justices of the Supreme Court. If the Court overturns its decision in Basic v. Levinson, each class member will have to prove that they relied on the misinformation when purchasing or selling company stock.

Plaintiffs' attorneys fear that such a requirement will render class certification for such cases nearly impossible. Some of them have claimed that it could have consequences beyond just securities class actions. Consumer class actions, for example, might also be affected.

The "Washing Machine" Cases

Two separate consumer class actions alleging defective washing machines have made their way through the court system and are currently being petitioned to be heard by the Supreme Court. The defendants in the lawsuit, Whirlpool Corp, and Sears Roebuck & Co., are asking the Supreme Court to overrule the decisions made by lower courts to certify classes of consumers. The plaintiffs against Whirlpool allege that 21 different models of the company's high-efficiency, front-loading Duet clothes washers sold since 2001 have a design defect that results in mold.
Both Whirlpool and Sears argue that the classes fail to meet the predominancy requirements of class certification and that most of the class members were not harmed.
If the Supreme Court agrees to hear the case and rules in favor of the defendants, the decision could have serious consequences on all issue-based class actions. It has the potential to severely limit consumers' ability to bring their grievances against a company.

Securities Litigation Uniform Standards Act (SLUSA)

While rulings made by the Supreme Court can sometimes mean drastic changes in the law, it also frequently means simply clarifying older laws. For example, the SLUSA was enacted in 1998 as a way to prevent shareholders from evading the pleading standards of federal litigation by filing suit in state court, whose pleading standards are usually less rigorous. Specifically, SLUSA prohibits state-based suites alleging fraud "in connection with the purchase or sale" of covered securities.

The current lawsuit arose when investors bought securities which were not covered under SLUSA directly, but were certificates of deposits which were backed by SLUSA-covered securities.

When Robert Allen Standford's $7 billion Ponzi scheme was revealed to the public, the shareholders filed a class action lawsuit alleging fraud. The law firms Proskaur Rose LLP and Chadbourne & Parke LLP were included as defendants in the lawsuit for allegedly aiding the Ponzi scheme.

A Texas federal judge ruled that the investors' claims were precluded by SLUSA. The decision was appealed and went to the Fifth Circuit Court, which found that the claims were only "tangentially related" to SLUSA-covered securities trades. The attorneys representing the law firms are appealing the decision, arguing that the Fifth Circuit Court's decision allows plaintiffs to avoid SLUSA.

If the Supreme Court decides to rule in favor of the defendants, the result could have far-reaching implications on shareholders' ability to file claims.

Mississippi ex rel. Hood v. AU Optronics Corp.

Consumers who have suffered as a result of fraud are not the only ones capable of bringing a lawsuit against a company for violating consumer rights. State attorneys general also have the option of bringing a lawsuit to recover damages on behalf of consumers. These are known as parens patriae cases. At issue in this lawsuit is whether a parens patriae case in which the attorney general is seeking to represent 100 or more consumers should be treated as a class action.

Mississippi's attorney general, Jim Hood, filed a lawsuit against a group of electronics companies for allegedly fixing the price of liquid crystal display panels.
If the Supreme Court rules that parens patriae lawsuits count as class actions, it could give defendants the option of moving such cases to federal court. If the Court rules that these lawsuits cannot be treated as class actions, then the state attorneys' general can keep them in their home courts, which are often more disposed to be favorable to the attorney general.

Carrera v. Bayer Corp. et al.

This lawsuit was filed against Bayer by a consumer who alleges that the pharmaceutical company engaged in deceptive practices by claiming that its One-A-Day WeightSmart could enhance metabolism. Since Bayer does not sell its products directly to consumers, the company has no records of who purchased the vitamin. The defendants therefore claim that the class cannot be certified because the plaintiffs have no way of finding every single class member, despite such a limitation never having been a requirement for class action certification.
The district court certified the class, but the Third Circuit Court of Appeals reversed that decision, saying that the difficulty in determining consumers who belong to the class rendered it ineligible for certification.

If the Supreme Court agrees to hear the case and makes a ruling in line with that of the Third Circuit Court, the decision could affect consumers' ability to file claims. The plaintiffs in the case also argue that such a decision could encourage companies like Bayer not to keep a record of customer purchases.

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Lumber Liquidators Sued on Class Action Over Alleged Contaminated Chinese Flooring

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When a company is publicly owned, it needs to be aware that it has a responsibility, not only to its customers, but also to its shareholders. The recent class action lawsuits against Lumber Liquidators are good examples of this fact.

Shareholders filed a lawsuit against Lumber Liquidators when it came to light that the company had allegedly imported wood from the habitat of an endangered species and sold wood with elevated levels of formaldehyde. This lawsuit demonstrates the fact that selling unsafe materials has the potential to cause harm, not only to the customers who purchase the material, but also the people who have invested money in the company.

Shortly after the shareholders filed their lawsuit against Lumber Liquidators, customers who had purchased wood from the company filed a similar lawsuit.

Lumber Liquidators has been under investigation recently for importing wood from China which was allegedly harvested in Russia from the habitat of the endangered Siberian tiger. Taking lumber from the habitat of an endangered species is in direct violation of the Lacey Act, a conservation law which has been in existence in the United States since 1900. The Act was put in place to protect plants and wild animals from the hazards of industrialization. Among other things, the Act prohibits trading in wildlife, fish, and plants which have been illegally harvested, transported, or sold. In 2008, the Act was amended to include anti-illegal-logging provisions which makes it illegal to take wood from the habitat of an endangered species.
In addition to violating the Lacey Act, the lawsuits allege that Lumber Liquidators sold wood which contained unsafe levels of formaldehyde. According to the Environmental Protection Agency, formaldehyde is an important component in the production of processed wood products and other home goods. However, it has also "been shown to cause cancer in animals and may cause cancer in humans". The gas also has the potential to cause other health problems, including eye, nose, and throat irritation, wheezing and coughing, fatigue, and severe allergic reactions. Because of these health concerns, the federal government has imposed limits on the amount of formaldehyde that it deems safe to use in wood products.

Needless to say, when consumers discovered that the wood they had purchased might not be safe, they expressed serious concerns regarding the matter. The consumers' lawsuit was filed by three consumers who are petitioning the court to be named plaintiffs in the class action lawsuit against Lumber Liquidators. Each of these consumers purchased wood from Lumber Liquidators and had it installed in their homes. They all allege that, at the time that they bought the wood, it was represented as being in compliance with both the Lacey Act and formaldehyde standards. The three plaintiffs allege that they were entirely dependent upon Lumber Liquidators's representation of the wood and that they would not have purchased it if they had known that the wood might contain unsafe levels of formaldehyde.

The consumers' lawsuit has been filed on behalf of everyone in the United States "who purchased and installed wood flooring from Lumber Liquidators Holdings, Inc., either directly or through an agent, that was sourced, processed, or manufactured in China".

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Regus Sued in Class Action for Alleged Hidden Charges

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Although renters usually expect to pay through the owner of the property for utilities, they usually only expect to do so if it is specifically included in the lease. According to a recent class action lawsuit against Regus PLC and its subsidiaries, the company allegedly charged fees to its renters for kitchen amenities, use of the telephones, telecom handsets, and internet activation and access.

According to the complaint, each plaintiff was provided with an "Office Agreement" which listed the location of the office, the duration of the client's entitlement to the office, the amount of the "Initial Payment", the amount of the security deposit, and the monthly payment from that point forward. The agreement allegedly did not "disclose any goods, services, penalties, and/or taxes for which Regus assesses charges and the amounts or methods of calculation of Regus' charges associated with such goods, services, penalties, and/or taxes."

However, once the plaintiffs received their bills, they found charges for things which were never mentioned in the lease. These charges included "amounts for one or more of the following ...: i) 'Kitchen Amenities Fee;' ii) 'Telephone Lines;' iii) 'Telecom Handset;' iv) 'Local Telephone;' v) Internet activation and access charges; vi) taxes; and vii) penalties". The lawsuit refers to these charges collectively as the "Unauthorized Charges". Because of these Unauthorized Charges, the monthly payments made by clients was regularly in excess of what the Office Agreement had provided. However, if clients failed to pay these extra charges, they were allegedly subjected to penalties by Regus.

The lawsuit further alleges that Regus had clients make payment via an automated system in which the charges were automatically applied to the clients' debit card or credit card. This meant that customers frequently got charged by Regus before even seeing a bill or having a chance to dispute the charges.

According to the complaint that was filed, Regus is also guilty of false advertising. Contrary to the experiences of the plaintiffs, the advertisements that Regus put on its website included the following:

"With Regus, you only pay for what you need when you need it"; "No up front capital expenditure required"; and "Flexible terms and one-page agreements." The complaint alleges that the additional fees the plaintiffs were charged directly contradict, not only the leases which were signed by the plaintiffs, but also the advertisements provided by Regus. For example, regarding the kitchen amenities, the lawsuit alleges that "Regus assessed a $30 per person monthly charge to Plaintiff ... in excess of the monthly office payment amount indicated in the Office Agreement. Neither Regus's practice of assessing this charge nor the amount of the charge is disclosed in the Office Agreement or the Fine Print. The charge was assessed regardless of whether any kitchen amenities were used."

As far as the use of the telecom handset for which some plaintiffs were charged, the complaint alleges that

"the retail value of the two handsets provided by Regus does not exceed $99.00, yet Regus charged ... a total of $222.75 (including purported taxes) per month for the use of the handsets during the term of the Office Agreement."

The lawsuit seeks to bring a class action which would include everyone who had an Office Agreement or similar agreement for one of Regus's locations in California and who paid one or more of the Unauthorized Charges between May 8, 2008 and the time that the complaint was filed. The lawsuit is also petitioning for a second New York class which would consist of similarly situated renters in the state of New York. The plaintiffs are currently unaware of just how many people qualify to participate in the classes, but they believe that each class could consist of more than 100 members.

You can view the complaint in the lawsuit here
.

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Bucs Pick Off Class Plaintiff in TCPA / Junk Fax Case

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One of the requirements for filing a class action lawsuit is that the representatives of the class must have a complaint or complaints against the defendant which adequately represent the complaints of the rest of the class members. If a class representative (or representatives) is offered a settlement from the defendant which covers all of the damages to which they are legally entitled, then the plaintiff can no longer represent a class, as their complaint against the defendant would be invalidated.

This was the argument made by Buccaneers Limited Partnership when they filed a motion to dismiss a lawsuit against them. The lawsuit was filed by three dentists, a pest control service, and two others, all of whom allegedly received "unsolicited facsimiles" which were sent "for the purposes of offering for sale game tickets to the Tampa Bay Buccaneers' home football games." Because fax recipients have to pay for the faxes that they receive, including the paper and toner used to print the faxes, solicitations such as these are illegal under the federal Telephone Consumer Protection Act.

The Buccaneers offered to pay the plaintiffs the maximum amount of damages which they would be able to collect under the Telephone Consumer Protection Act. The plaintiffs refused the money and continued with the lawsuit. The Buccaneers then filed a motion to dismiss. Regardless of whether or not the plaintiffs accepted the offer made by the defendants, the mere existence of the offer negates any complaint that the plaintiffs have against the defendant.

The fact that a defendant can invalidate a plaintiff's claim by offering to settle runs the risk of defendants making an offer to plaintiffs to settle the case before the plaintiffs have a chance to make their case for class certification. In order to avoid this, courts have provided plaintiffs with the option of filing for class certification at the same time that they file the complaint. They can then ask the court to wait to make a decision until they have had time to provide evidence that the case should be tried as a class action.

Because the plaintiffs in this case did not file for class certification until after the Buccaneers had already filed their motion to dismiss (and after the Buccaneers had made their offer to settle), the court determined that the plaintiffs no longer had a valid complaint against the defendants. As a result, the plaintiffs were ineligible to represent a class of recipients of facsimiles from the Buccaneers.

Under the relevant statute, the TCPA or Telephone Communications Protection Act, each class member would be entitled to $500 in damages. If all potential 100,000 class members are included, this raises the potential penalty for the defendant to $50 million. If the plaintiffs are able to prove to the court that the defendant violated the TCPA "willfully or knowingly", then the penalty triples to $150 million. As a result, the attorneys' fees would likewise be inflated. The awards to the named plaintiffs in the lawsuit would also rise accordingly. The court therefore determined that the plaintiffs had an ulterior motive in filing the lawsuit and granted the defendant's motion to dismiss.

The same lawyers later filed a class action on behalf of another plaintiff and moved for class certification thus barring another pick off attempt and the class action is now proceeding. This demonstrates that the pick off tactic can sometimes do nothing but delay a class case.

You can view the full court opinion here.

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New Class Action Cases on the Supreme Court's Horizon

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When the Supreme Court agrees to hear a case, the decision that the Court reaches in that case can have long-standing consequences for future rulings in similar cases made by courts all over the country. In recent years, class action lawsuits have been particularly contentious in the courts. In order to attain class certification, a class of plaintiffs is generally required to fulfill four requirements:

1. The class must be large enough to justify combining all of the claims into one lawsuit, generally, this means at least 100 class members;
2. The class must have questions of law or fact in common;
3. The claims of the representative parties must be sufficiently similar to the claims of the rest of the class; and
4. The representative parties must fairly and adequately protect the interests of the class.
Despite these clear requirements, various courts have ruled to certify classes of plaintiffs while other courts have denied certification based on a lack of ability to fulfill the above requirements.
Securities class actions in particular have faced an increasing number of challenges in recent years, leaving shareholders who have been the victims of fraud with little or not outlet for redress.

Halliburton Co. v. Erica P. John Fund

In this case, investors filed a lawsuit against the publicly traded energy company by claiming that it misled them about key information, including its liability in a recent asbestos investigation. The investors allege that such misinformation affected the company's stock prices and ultimately harmed the company's shareholders.

Halliburton is challenging the Supreme Court's decision in 1988 in Basic v. Levinson, in which the Court determined the fraud-on-the-market theory, which has been the basis for most securities class actions ever since. The theory states that, when a public company makes a misrepresentation in an efficient market, that misinformation is carried through the market and affects the company's stock price. An investor purchasing a security is thus presumed to have relied on that misinformation. However, the concept of an efficient market, while largely uncontested in the 1980s, has since come under scrutiny and has recently been questioned by some of the current justices of the Supreme Court. If the Court overturns its decision in Basic v. Levinson, each class member will have to prove that they relied on the misinformation when purchasing or selling company stock.

Plaintiffs' attorneys fear that such a requirement will render class certification for such cases nearly impossible. Some of them have claimed that it could have consequences beyond just securities class actions. Consumer class actions, for example, might also be affected.

The "Washing Machine" Cases

Two separate consumer class actions alleging defective washing machines have made their way through the court system and are currently being petitioned to be heard by the Supreme Court. The defendants in the lawsuit, Whirlpool Corp, and Sears Roebuck & Co., are asking the Supreme Court to overrule the decisions made by lower courts to certify classes of consumers. The plaintiffs against Whirlpool allege that 21 different models of the company's high-efficiency, front-loading Duet clothes washers sold since 2001 have a design defect that results in mold.
Both Whirlpool and Sears argue that the classes fail to meet the predominancy requirements of class certification and that most of the class members were not harmed.

If the Supreme Court agrees to hear the case and rules in favor of the defendants, the decision could have serious consequences on all issue-based class actions. It has the potential to severely limit consumers' ability to bring their grievances against a company.

Securities Litigation Uniform Standards Act (SLUSA)

While rulings made by the Supreme Court can sometimes mean drastic changes in the law, it also frequently means simply clarifying older laws. For example, the SLUSA was enacted in 1998 as a way to prevent shareholders from evading the pleading standards of federal litigation by filing suit in state court, whose pleading standards are usually less rigorous. Specifically, SLUSA prohibits state-based suites alleging fraud "in connection with the purchase or sale" of covered securities.

The current lawsuit arose when investors bought securities which were not covered under SLUSA directly, but were certificates of deposits which were backed by SLUSA-covered securities.

When Robert Allen Standford's $7 billion Ponzi scheme was revealed to the public, the shareholders filed a class action lawsuit alleging fraud. The law firms Proskaur Rose LLP and Chadbourne & Parke LLP were included as defendants in the lawsuit for allegedly aiding the Ponzi scheme.

A Texas federal judge ruled that the investors' claims were precluded by SLUSA. The decision was appealed and went to the Fifth Circuit Court, which found that the claims were only "tangentially related" to SLUSA-covered securities trades. The attorneys representing the law firms are appealing the decision, arguing that the Fifth Circuit Court's decision allows plaintiffs to avoid SLUSA.

If the Supreme Court decides to rule in favor of the defendants, the result could have far-reaching implications on shareholders' ability to file claims.

Mississippi ex rel. Hood v. AU Optronics Corp.

Consumers who have suffered as a result of fraud are not the only ones capable of bringing a lawsuit against a company for violating consumer rights. State attorneys general also have the option of bringing a lawsuit to recover damages on behalf of consumers. These are known as parens patriae cases. At issue in this lawsuit is whether a parens patriae case in which the attorney general is seeking to represent 100 or more consumers should be treated as a class action.

Mississippi's attorney general, Jim Hood, filed a lawsuit against a group of electronics companies for allegedly fixing the price of liquid crystal display panels.
If the Supreme Court rules that parens patriae lawsuits count as class actions, it could give defendants the option of moving such cases to federal court. If the Court rules that these lawsuits cannot be treated as class actions, then the state attorneys' general can keep them in their home courts, which are often more disposed to be favorable to the attorney general.

Carrera v. Bayer Corp. et al.

This lawsuit was filed against Bayer by a consumer who alleges that the pharmaceutical company engaged in deceptive practices by claiming that its One-A-Day WeightSmart could enhance metabolism. Since Bayer does not sell its products directly to consumers, the company has no records of who purchased the vitamin. The defendants therefore claim that the class cannot be certified because the plaintiffs have no way of finding every single class member, despite such a limitation never having been a requirement for class action certification.
The district court certified the class, but the Third Circuit Court of Appeals reversed that decision, saying that the difficulty in determining consumers who belong to the class rendered it ineligible for certification.

If the Supreme Court agrees to hear the case and makes a ruling in line with that of the Third Circuit Court, the decision could affect consumers' ability to file claims. The plaintiffs in the case also argue that such a decision could encourage companies like Bayer not to keep a record of customer purchases.

Continue reading "New Class Action Cases on the Supreme Court's Horizon" »

7th Circuit Overturns and Remands Denial of Class Certification in Fair Debt Collection Practices Act Case

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When class actions are filed, courts need to consider all aspects of the class before determining whether or not it can be certified. This includes whether class members from other states have claims similar enough to the class members of one state, particularly in cases where the lawsuit is filed under a state law. The Seventh Circuit Court of Appeals recently handled a case in which the status of the class was disputed for this reason.

Gwendolyn Phillips was sued by Asset Acceptance, LLC for some outstanding debt that she still had with the company. However, Phillips argued that the lawsuit was invalid because the statute of limitations on the debt had already passed.

Few debtors are aware that a statute of limitations on their debt exists. Even those who do know frequently find that it is cheaper and easier to simply settle the debt rather than try to fight it in court. To try and mitigate these effects, Phillips moved to certify a class action of plaintiffs consisting of debtors who have been sued by Asset Acceptance for debts resulting from the sale of natural gas who have been sued after the statute of limitations has expired. According to the records currently available, the class that Phillips is proposing can consist of as many as 793 members if they all choose to participate. 343 of which are eligible to file claims in the state of Illinois.

Which Illinois statute of limitations applies to this was case disputed between the parties. One statute gives four years as the limitation while the other statute gives five. Phillips claims that the applicable statute is the one that lasts for four years while Asset insists that the five-year statute is the proper one. Regardless, Asset sued Phillips more than five years after her debt had accrued.

The district court ruled that, because Phillips had been sued by Asset after five years, she was an inadequate representative for members of the class who had been sued after only four years. The court therefore shrunk the eligible class members down to less than thirty members, which the judge ruled was too small to justify the numerosity requirement of a class action. The judge therefore dismissed Phillips's motion for class certification.

Phillips appealed the decision and the case went to the Seventh Circuit Court of Appeals. The appellate court rejected the lower court's reasoning that the difference of one year was sufficient to disqualify Phillips as an adequate representative. Rather, the appellate court found that Phillips had no ulterior motive for insisting that the relevant statute lasted for only four years, as she had been sued after five. Therefore, the court found no reason that she should not be an adequate representative for the class.

Further, even if the court had found a significant difference between class members who had been sued after four years as opposed to members who had been sued after five, the court found that certifying a subclass with a second representative made more sense than decertifying the entire class.

In examining the case, the appellate court found that the relevant statute was for only four years, and as a result, Phillips is eligible to represent the entire class of 343 Illinois plaintiffs. Whether or not plaintiffs in other states can be included in the class or subclasses will need further evidence to determine. In the mean time, the appellate court remanded the case back to the district court.

You can view the entire decision here.

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TCPA Texting Class Action Alleges Insurance Carriers Violate Privacy Rights Through Illegal Text Message Campaign

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In 1991, Congress enacted the Telephone Consumer Protection Act (TCPA) which specifically prohibits the use of auto-dialers in making calls to a wireless number without the prior express consent of the person being called. The only exception to this rule is in the case of an emergency. One of the main reasons for this Act is the fact that owners of wireless phones are often charged for their incoming calls as well as the calls that they make. This means that, aside from being annoying and potentially time consuming, the telemarketing calls are also costing their targets money out of pocket.

Despite the institution of this Act, companies appear to be unwilling to cooperate, as evidenced by the fact that companies which use auto-dialers to contact potential customers are still thriving. One of these companies is Variable Marketing, LLC and it has recently been hit with a class action lawsuit alleging violations of the TCPA.

Filed in the District Court for the Northern District of Illinois, the lawsuit names American Automobile Association, Inc.; Farmers Group, Inc.; Government Employees Insurance Company; Nationwide Mutual Insurance Company; State Farm Mutual Automobile Insurance Company; and Variable Marketing, LLC as defendants. All of these defendants allegedly used a lead-generator marketing company (Variable Marketing), to market their services in violation of the TCPA.

The plaintiffs are five consumers who received calls from Variable on their cell phones. When they answered or returned the calls, a pre-recorded message played before they were able to reach a live operator. According to the lawsuit, only one of the five plaintiffs had ever had any business dealings with any of these insurance companies prior to receiving the call and none of them had expressed their consent to receive these calls. The plaintiffs are seeking statutory damages and injunctive relief under the TCPA.

The proposed class is defined as "All persons within the United States who received a non-emergency telephone call from Variable, placed while Variable was acting on behalf of the Insurance Company Defendants, to a cellular telephone through the use of an automatic telephone dialing system or an artificial or prerecorded voice."
This proposed class could end up consisting of tens of thousands of members. Under the law, each of those members is entitled to up to $1,500 for each call that they received from Variable. This brings the total award sought by the plaintiffs to over $5,000,000, not including interest and attorneys' fees.

Despite the fact that Variable is the company which actually placed the calls using an auto-dialer, all of the companies for which Variable did this are responsible for having violated the TCPA. The Federal Communications Commission (FCC), the agency which Congress put in charge of regulating and implementing the TCPA, determined that "a company on whose behalf a telephone solicitation is made bears the responsibility of any violations." According to the FCC, the seller and the telemarketer do not need a contract in order for the seller to be liable. All that the FCC requires is that the telemarketer have "the apparent (if not actual) authority" to make the calls.

A representative of Variable told one of the plaintiffs that he was calling on behalf of "lots of the big [insurance companies], including Geico and AAA." This suggests that Variable was given authority to use the Insurance Company Defendants' trade name, trademark and service marks. This fulfills the requirement of "apparent (if not actual) authority" for holding the insurance companies accountable for the damages incurred as a result of their violation of the TCPA.

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Settlement in Miley Cyrus Jewelry Class Action Alleging Jewelry Has Dangerous Levels of Cadmium

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Many consumers frequently rely on important information provided by the manufacturer of a product in order to determine whether or not to buy that product. If a product does not list a particular ingredient, such as gluten, which is a protein found in many processed foods, consumers will frequently assume that the protein is not present in that product. Only recently have food producers begun to label their products as specifically gluten-free.
Walmart has recently encountered a lawsuit by consumers who purchased jewelry from their stores with Miley Cyrus's brand. The jewelry, which is made by BCBG Max Azria Group Inc., and sold in Walmart stores, allegedly contained cadmium.

Cadmium is a soft metal which is frequently used to stabilize plastics and to prevent corrosion. However, cadmium has been found to have toxic properties and it is included on the European Restriction of Hazardous Substances. This Restriction bans certain hazardous substances in electrical and electronic equipment, although it does allow for certain exemptions and exclusions. Some studies have linked cadmium with lung cancer and prostrate cancer and some people have theorized that the soft metal imitates estrogen and causes breast cancer.

In the past few years, jewelry sold at Walmart and collectible drinking glasses sold at McDonald's have been recalled when it was discovered that these products contained cadmium. In 2010, reports of high levels of cadmium in children's jewelry led to an investigation by the U.S. Consumer Product Safety Commission. Despite the fact that there appears to be little hard evidence available that cadmium is dangerous, there have been enough scares and warnings to make consumers wary of the metal.

The plaintiffs of the current lawsuit against Walmart regarding the Miley Cyrus-brand jewelry say that they never would have purchased the jewelry if they had known that the product contained cadmium. A settlement has been reached in the case, but the defendants continue to deny having done anything wrong and any liability. Anyone who purchased Miley Cyrus-branded jewelry from a Walmart retail store after July 1, 2005 is eligible to participate in the class. Class members have four options:

TO REMAIN IN THE SETTLEMENT: In order to remain in the settlement, purchasers of the jewelry must submit a claim form in order to receive a payment from the settlement. They must also agree to the terms of the settlement which include forfeiting their right to sue the defendants in the future.

TO GET OUT OF THE SETTLEMENT: If class members do not wish to
remain as part of the settlement, they can choose to exclude themselves from the class.

TO REMAIN IN THE SETTLEMENT AND OBJECT: Those who decide to remain in the settlement will have the opportunity to object to the settlement.

APPEAR AND SPEAK AT THE FINAL APPROVAL HEARING: Just because a settlement has been reached between the two parties does not mean that it has yet been finalized. A judge must first grant the settlement court approval. If members of the class choose to do so, they can appear at the approval hearing and speak, or they can have an attorney appear and speak on their behalf. Should they chose one or both of these options, it would be entirely at their own expense.

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US Supreme Court Agrees to Hear Securities Fraud Class Action and to Consider Fraud on the Market Damage Theory

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Class action status is an important tool for plaintiffs in many different types of lawsuits. It gives plaintiffs strength in numbers when filing lawsuits against large corporations. It also allows plaintiffs to collect claims which would normally be too small to justify filing a lawsuit if the plaintiff were left to do so on her own. It is the number of plaintiffs and the subsequently larger claim against the defendant which makes it possible for these plaintiffs to seek redress against defendants.

Many companies utilize illegal business practices and rely on people determining that the small claims are not worth a lawsuit in order to continue those practices. Even if a customer or investor loses a small amount of money, a company that uses the same practice with hundreds of thousands of similarly situated people could potentially rake in millions of dollars illegally.

Despite the fact that class action status is a necessary tool which is provided to plaintiffs in the laws of the United States, the Supreme Court has recently displayed a pattern of ruling against class actions. Such rulings are making it increasingly difficult for plaintiffs to file class action lawsuits which can be upheld in court. As a result of the Supreme Court's recent rulings, lower courts have had to consistently deny plaintiffs class action status in cases which would normally have been allowed to move forward as class action lawsuits.

The Supreme Court has agreed to hear another case in which the parties are disputing whether or not the case can continue as a class action lawsuit. The lawsuit was brought against Halliburton, a publicly traded energy company, by a class action of the company's share holders. The shareholders allege that Halliburton misrepresented its potential liability in asbestos litigation, revenue from construction contracts, and benefits from a merger. According to the lawsuit, shareholders allegedly lost money after the company's stock prices dropped after news about one or more of these factors was revealed.

The plaintiffs in the case are relying on a landmark decision which was made in 1988 in the case of Basic v. Levinson. In that case, the court determined that shareholders have the right to know about a potential merger, even before it happens. The ruling also determined that shareholders don't have to prove that they made investment decisions based on a company's misstatement of facts. Instead, the ruling upheld the concept of "fraud on the market," which assumes that misleading corporate assertions are reflected in a company's stock price.

Halliburton is hoping that the court will overturn the 1988 ruling in their favor, arguing that "Real-world experience has crippled the theoretical underpinnings of Basic". The shareholders, on the other hand, argue that "A reversal of Basic v. Levinson would represent the most radical change in the private enforcement of the federal securities law in a generation and would be a severe blow to investors' rights."

According to Halliburton, even in a well-developed securities market, "stock prices do not efficiently incorporate all types of information at all times." Because of this, the energy company argues, shareholders should not be able to sue a company based on price fluctuations alone.

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NCAA Loses Injunction Ruling in Class Action Regarding Use of Player Images in Video Games

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Generally, when filing a lawsuit, the plaintiff has one of two aims: to reap payment for damages incurred; or for the court to order an injunction against the defendant. Many plaintiffs seek both. In the current case against the NCAA regarding the rights of student athletes, the plaintiffs have managed to gain court approval to move forward as a class to seek one of these goals, but not the other.

U.S. District Judge Claudia Wilken ruled that the plaintiffs can move forward as a class in their lawsuit against the NCAA regarding what student athletes receive in exchange for playing sports for their colleges. However, Wilken denied the motion to certify a class which sought billions of dollars in damages from the NCAA in exchange for improper use of the athletes' names and likenesses in several forms, including live television broadcasts. According to Wilken, the plaintiffs had failed to identify a legitimate method to calculate damages for former players and that was her reason for refusing to certify a class to seek damages.

Sonny Vaccaro had mixed feelings about the ruling. Vaccaro is the form sneaker marketing executive who convinced O'Bannon, a former UCLA basketball star, to file the lawsuit against the NCAA. Vaccaro was disappointed that the class won't be able to pursue damages, but he was optimistic about moving the case forward to elicit changes from the NCAA. According to Vaccaro, O'Bannon said of the ruling, "This is what I wanted ... They'll have rights. I never had rights. I didn't think I would ever have rights." The goal in this lawsuit now is to prevent the NCAA from taking advantage of student athletes in the future and using their names and likenesses, not only on television, but also in things like video games for EA.

Vaccaro also said that the plaintiffs "won in the sense we're going forward, ... Those damages, whatever they would have been, if we win, going forward, there's no limit to what the numbers are in the future.

Vaccaro and O'Bannon aren't the only ones who are pleased with the court's ruling. Michael Hausfeld, one of the attorneys for the plaintiffs, released a statement saying that, "The court's decision is a victory for all current and former student-athletes who are seeking compensation on a going forward basis. While we are disappointed that the court did not permit the athletes to seek past damages as a group, we are nevertheless hopeful that the court's decision will cause the NCAA to reconsider its business practices."

Another attorney for the plaintiffs, Hilary Sherrer, said, "There is a growing public recognition that the NCAA's business practices are unfair and must be changed. The court's ruling is a giant leap in the effort to end these unfair practices."

The NCAA also claimed that the ruling was a victory for their side. They released a statement which says, "We have long maintained that the plaintiffs in this matter are wrong on the facts and wrong on the law. This ruling is one step closer to validating that position".

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HSBC Hit With $2.5 Billion Class Action Judgment

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Some companies might want to make sure to be very careful before making large acquisitions. Otherwise they might find themselves fighting a legal battle for something the company being acquired did years ago. Such is the case for HSBC Holdings Plc, a British bank, which has recently been hit with the largest judgment yet made in U.S. courts. The judgment, a record breaking $2.46 billion, was made against HSBC by U.S. Judge Ronald Guzman following a jury trial in a class action against Household International, which is now a division of HSBC.

According to the class action lawsuit, Household International's chief executive, chief financial officers, and head of consumer lending all made false and misleading statements about the company in order to artificially inflate the company's share price. The lawsuit further alleges that Household International engaged in predatory lending and intentionally concealed the quality of its loan portfolio.

Reports of Household International's lending practices began to reach the public in 2001, which resulted in the company's share prices sinking to the lowest it had been in seven years. The class action lawsuit was filed against Household International in 2002, the same year that HSBC bought out the U.S. lender. Now HSBC is stuck dealing with the lawsuit. A spokesman for the company sounded confident however, saying that HSBC plans to appeal and believes that it has a strong case. Despite its embroilment in the current legal battle, HSBC seems not to regret the purchase of the U.S. lending company. On the contrary, it appears to be eager to continue the battle against the class action lawsuit. The spokesman did add, however, that the matter has been noted in HSBC's regulatory filings. It might affect future acquisitions made by the British bank after all.

The case is notable because securities fraud class actions almost always settle before reaching a jury. Defendants frequently prefer to settle outside of court to avoid the negative media attention as well as to avoid the extremely high judgments. When a class is certified by a judge, it frequently puts pressure on the defendant to settle the case outside of court, given that class action status gives the plaintiffs greater leverage.

Plaintiffs in securities fraud class action lawsuits generally rely on the "fraud on the market" theory as a key tool in their litigation. This is the theory that the price of a security trading in an efficient market reflects all publicly available information about that security. Working on that premise, the theory assumes that investors rely on material misrepresentations which are reflected in market prices at the time that the security is traded. Like most securities fraud class action lawsuits, the one against Household International also relied on evidence that investors and the market relied on unreliable statements provided by high-level executives at Household International. Because of the misrepresentations of the company and its lending practices, investors were led to buy shares which they would not have otherwise purchased, or were led to buy them at a higher price than that at which they would normally have bought them.

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Court Rejects Volvo's Motion to Decertify Class Action Involving Sun Roofs That Leaked Due to a Defective Design

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With the Supreme Court make the criteria for class certification more stringent, cases are still getting certified in the consumer protection and fraud area for products with common design defects. In a recent case against Volvo, a class action of consumers has been certified for a lawsuit against the car company alleging that defective sunroofs leaked, leading to flooding and damage inside the car. The lawsuit was filed in New Jersey U.S. District Court by Joanne Neale and seven other Volvo owners. Each plaintiff experienced an issue with the sunroof drainage system which resulted in damage to the inside of the vehicle. Each of these consumers were told that the sunroof drain was not covered under their warranty and so the cost of fixing or repairing the drain fell on the consumers. For some, this included the cost of whatever damage was cause by the faulty drain, such as replacing the carpeting in the vehicle. The cost of implementing these repairs ranged from $250 to over $1,000. The plaintiffs filed the lawsuit and asked for certification of either a nationwide class or statewide class.

The defective sunroofs allegedly affect Volvo models S40, S60, S80, V50 (model years 2004 to present), and XC90 (model years 2003 to present). The class action includes Volvo owners and lessees in Massachusetts, Florida, Hawaii, New Jersey, California, and Maryland. According to the lawsuit, the defective sunroofs allegedly resulted in damage to the vehicles' interior components, including carpeting and safety-regulated electrical sensors and wiring. The lawsuit further alleges that Volvo knew about the design defect, based on the existence of numerous consumer complaints as well as internal Volvo communications and Technical Service Bulletins which were issued by Volvo in an attempt to deal with the problem.

Volvo filed a motion for summary judgment and to decertify against the plaintiffs saying that the definition of the nationwide class and the definition of the statewide classes were too broad. In their motion to reconsider, Volvo noted a recent Supreme Court decision in which the Court ruled in favor of the defendant, Comcast. In that case, the plaintiffs, a class of current and former Comcast cable consumers, provided an expert witness who testified with hypothetical examples of what cable prices would have been without Comcast's allegedly illegal business practices. The Supreme Court ruled that the methodology used by the expert was unsound and, on that basis, the Court denied the plaintiffs class action status.

The Volvo case, according to the New Jersey U.S. District Court judge, had verty little in common with the Comcast case. In his opinion, Judge Dennis Cavanaugh wrote that "Defendants argue that this court should reconsider its opinion that granted plaintiffs' motion for certification for statewide classes due to the U.S. Supreme Court's decision in Comcast. ... However, this case is entirely distinguishable from Comcast. ... Here, the damages issue is much more straightforward - all class members who purchased defendants' product were allegedly damaged by a design defect." The U.S. District Court therefore saw no reason to decertify the statewide class action in the Volvo case and denied the defendant's motion for to reconsider as well as the motion for summary judgment against the plaintiffs.

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Urban Active Health Club Pays Out $19 Million to Former Members in Class Action Settlement

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CBS News reports:

After more than two years of litigation and negotiation, a federal court out of Ohio has settled a class action lawsuit involving Urban Active and its members. More than 600,000 members from gyms in Kentucky, Ohio, Tennessee, Georgia, Nebraska, North Carolina, and Pennsylvania will receive part of the settlement, anywhere from $5 up to $75.
"It's not uncommon for a class action to just result in $100 or less to each of the people who were affected by it, and that's often because the defendant in those cases will negotiate a settlement without any admission of wrongdoing," explained attorney Matt Ellison with Lexington firm Fowler Bell, "$75 is not that much on its own to a lot of people, but when you add that up, over potentially half a million or more class members, then it really starts to add up to whoever the defendant is."
Urban Active is expected to pay former members more than $19,000,000.

Billing fraud by mass retailers is often suited for class action treatment.

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Class Action Lawsuit Over Johns Hopkins Gynecologist Moves Forward

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CBS News reports:

In a stunning new development, WJZ learns there may be as many as 9,000 victims of a Johns Hopkins gynecologist.

Dr. Nikita Levy killed himself after allegations surfaced that he secretly videotaped his patients during exams.

Mike Hellgren tells us what else his victims claim he did to them.

They say he performed extra exams and touched them inappropriately. Now — a class action settlement process is moving forward in the case, with the lawyers representing the victims praising Johns Hopkins.

Investigators say gynecologist Nikita Levy used a pen camera to record exams at Johns Hopkins’ East Baltimore Medical Center. The FBI is still sifting through thousands of images on Levy’s computer.

There may be 9,000 victims, and their lawyers are now working to settle the class action case through a mediator.

Class actions sometime provide an excellent device to help victims receive treatment for mass traumas such as occurred here. More often individualized injuries from mass torts can be organized into groups of cases for discovery and then bell weather cases can be tried to set a settlement value for the remaining cases. Treating this type of case as a class action is somewhat unusual.

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Ford Settles F Series Truck Class Action

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As with all relationships, business partnerships can sometimes turn out to be more trouble than they are worth. Such was apparently the case in the relationship between Ford Motor Co. and Navistar. Beginning in 1994, Ford had Navistar build every Power Stroke engine used in Ford's F-Series. However, the diesel engines produced by Navistar resulted in dozens of class action consumer lawsuits against Ford for cars it sold with allegedly defective engines.

Ford has now agreed to settle the lawsuits outside of court, which include all of the 2003-2007 Super Duty pickups and E-series vans sold by the car company. At the center of the lawsuit is the diesel 6-liter V-8 engine which allegedly had multiple problems with the fuel system, turbochargers, and other major components. The settlement covers any consumer in the United States who purchased or leased any 2003-2007 Ford vehicle which was equipped with a 6-liter Power Stroke diesel engine and had to replace, repair, or adjust the vehicle's exhaust gas recirculation (EGR) cooler and EGR valve, oil cooler, fuel injectors, or turbocharger before the vehicle reached 135,000 miles or six years of age.

The settlement will reportedly cover half of the full value of all of the claims made by class members in addition to $150,000, which the car company will pay to the 16 named plaintiffs of the case. The total amount of the settlement will depend upon the number of potential class members who decide to file a claim. Each component of the diesel engine has a reimbursement limit. If a class member paid at least a $100 deductible multiple times for repairs under the five-year/100,000 mile engine warranty, Ford will reimburse the consumer $50 for each deductible paid, beginning with the second deductible and going through the fifth. They will pay up to $200 covering no more than four deductible payments. All told, each consumer will be able to claim between $50 and $825 in reimbursements for repairs to their engine and engine components as a result of this settlement.

Despite the long relationship between Ford and Navistar, poor engine quality, high repair costs, and lower customer satisfaction led to the demise of that relationship. Beginning in 2010, Ford replaced the Navistar diesel engine with a new 6.7 liter diesel V-8 which the company designs itself.

Some of the failures of the Navistar 6-liter diesel engines were so severe that Ford was forced to replace entire engines. Ford also had to issue recalls which resulted in the company buying back hundreds of trucks with engines that required extensive and costly repairs. Due to all of these problems, the relationship between Ford and Navistar grew to be more costly to Ford than beneficial. They dramatically increased the warranty costs on Ford vehicles and resulted in litigation with Navistar. However, Navistar was eventually removed from the class action lawsuit which Ford has recently agreed to settle. This leaves Ford with the full burden of costs of the class action lawsuit. Because consumers grouped together in a class action they were finally able to achieve some damages for their defective trucks.

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