Class-Action

Video: Odometer Roll-Back Fraud — Our Chicago Class Action Lawyers and Consumer Protection Attorneys Fight for Consumer Rights

August 11, 2013 | Peter S. Lubin and James V. DiTommaso

AOL reports:

Buying a used car is already risky business, and this story of fraud in New York will have you double checking your paperwork.

Matin Jarmuz used Craigslist.com to sell his 1992 Toyota Camry. According to Jarmuz’s Craigslist post, at 21-years-old and 200,000 miles the Camry still had a smooth, quite ride. He sold the car quickly to Chris Sciolino for $900 cash. Jarmuz thought he had made a good deal, until other Craigslist users alerted him that his old Camry was up for sale again by the same man he just sold it to, only this time listed at $1,800 and with 79,000 miles.

Odometer fraud is a serious problem in the U.S. In a 2002 study the National Highway Traffic Safety Administration determined that close to half a million cars are sold each year with false odometer readings, at a cost of more than of $1 billion dollars annually. Since the study was done, the Office of Odometer Fraud Investigations has seen an escalation in cases. Fixing an odometer is a federal crime, one made much easier on newer cars where, instead of cracking open a dashboard, sellers just need to hack the onboard computer.

Our Chicago auto fraud lawyers have spoken with many consumers who have been cheated through an odometer roll-back. A car with a odometer roll-back is generally considered unmerchantable as the real mileage can not be verified.

Seventh Circuit Affirms Class Certification in Wage Claim – Ross v. RBS Citizens, NA

August 10, 2013 | Peter S. Lubin and James V. DiTommaso

Employees of a bank with multiple branch locations throughout Illinois sued to recover unpaid overtime wages under both the federal Fair Labor Standard Act (FLSA) and the Illinois Minimum Wage Law (IMWL). After the district court certified two classes of plaintiffs, the defendant bank appealed the certification to the Seventh Circuit Court of Appeals. Based in part on a U.S. Supreme Court decision clarifying the requirements for class certification, the Seventh Circuit affirmed the district court’s order. Ross, et al v. RBS Citizens, N.A., 667 F.3d 900 (7th Cir. 2012).

The plaintiffs alleged in their lawsuit that the bank had several “unofficial” policies that allowed it to deny overtime pay to employees, id. at 903, such as using “comp time” instead of overtime wages or altering employee timesheets. They also alleged that some assistant bank managers (ABMs), while officially exempt from eligibility for overtime pay, spent most of their time on non-exempt work. The plaintiffs therefore sought to certify two classes: non-exempt employees who were entitled to overtime compensation, and ABM employees who performed non-exempt work and were entitled to overtime pay. A class action requires four basic elements: “numerosity, commonality, typicality, and adequacy of representation.” Id.; Fed. R. Civ. P. 23(a). The district court certified both classes under Rule 23(b)(3) of the Federal Rules of Civil Procedure (FRCP), which applies to cases where the issues affecting all class members supersede those affecting individual members, and where a class action is the best way to resolve the conflict.

Court Dismisses ATM Fee Lawsuit Due to Prior Class Action Settlement Agreement

August 1, 2013 | Peter S. Lubin and James V. DiTommaso

An Illinois court dismissed a lawsuit against a bank alleging deceptive fees for debit card transactions, ruling that a prior settlement in a class action lawsuit, of which the plaintiff was a class member, barred the suit. Schulte v. Fifth Third Bank (“Schulte 2”), No. 09 C 6655, statement (N.D. Ill., Jun. 15, 2012). The plaintiff acknowledged being part of the class, and by accepting the terms of the settlement agreement, the court held, the plaintiff had released the bank from any further claims related to ATM fees.

The original lawsuit alleged that the defendant “resequenced” debit card transactions during a posting period in an order from highest to lowest, rather than in chronological order. Schulte v. Fifth Third Bank (“Schulte 1”), 805 F.Supp.2d 560, 565 (N.D. Ill. 2011). This meant that the balance of the customer’s account drew down faster, leading to more overdrafts and associated fees. A class action lawsuit commenced in November 2009, and the U.S. District Court for the Northern District of Illinois approved a class settlement agreement in July 2011.

The Schulte 1 settlement applied to customers of the defendant from October 21, 2004 to July 1, 2010. The court applied a five-part test established by the Seventh Circuit Court of Appeals for determining if a class action settlement is fair:

Class Certification Granted in Lawsuit Brought by Identity Theft Victim Against Credit Reporting Agency – Osada v. Experian

July 28, 2013 | Peter S. Lubin and James V. DiTommaso

A consumer sought to certify two classes in a lawsuit against a credit reporting agency, after the agency allegedly refused to remove negative information from his credit report that was the result of identity theft. The lawsuit asserted various claims under the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. The court certified one of the two classes in Osada v. Experian Information Solutions, Inc., No. 11 C 2856, slip op. (N.D. Ill., Mar. 28, 2012), finding that it met the requirements contained in Rule 23 of the Federal Rules of Civil Procedure.

According to the court’s opinion, the plaintiff learned in late 2008 that unknown parties had taken out two mortgage loans in his name in a total amount greater than $600,000. He contacted the defendant, Experian, regarding how the fraudulent loans would affect his credit report. He also filed a police report, but did not send a copy to Experian. When each mortgage eventually went into foreclosure, the courts handling those matters reportedly realized that identity theft was a factor. The plaintiff submitted an identity theft affidavit to the Federal Trade Commission (FTC) in late 2009 and wrote to Experian in early 2010 requesting removal of the mortgages from his credit report. He attached the FTC affidavit, the police report, and proof of residence to his request.

Federal Court Dismisses Certain State Law Claims in Multidistrict Litigation Case Alleging ATM Overdraft Fee Fraud

July 26, 2013 | Peter S. Lubin and James V. DiTommaso

A federal judge denied most of a motion to dismiss brought by multiple banks in a consolidated case alleging overdraft fee fraud. In re Checking Account Overdraft Litigation, 694 F.Supp.2d 1302 (S.D. Fla. 2010). The Judicial Panel on Multidistrict Litigation (JPML) consolidated multiple claims into a single matter in the Southern District of Florida in order to deal efficiently with common pretrial matters. The plaintiffs asserted causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing (“GFFD covenant”), and many individual causes asserted common law breach of contract claims and state law consumer protection claims. The defendants filed an omnibus motion to dismiss, which the trial court granted in part and denied in larger part. The court dismissed claims under certain state consumer statutes, as well as claims based on the laws of states in which no plaintiffs lived.

The central issue of the litigation was the ordering of ATM transactions from highest to lowest, regardless of the order in which the account holder performed the transaction. This allegedly reduced the account holder’s total account balance more quickly, garnering more overdraft fees for the defendants. At the time the court rendered its order on the omnibus motion to dismiss, the litigation consisted of fifteen separate complaints, each brought against an individual bank. All of the fifteen complaints pending at the time of the court’s order involved breach of GFFD covenant claims. Five complaints were filed in California as putative class actions on behalf of California customers. Eight complaints were filed outside California, putatively on behalf of nationwide classes excluding California. One complaint was filed by a California resident and sought to represent a nationwide class. The final complaint was filed by a Washington resident on behalf of a class of Washington customers. According to the JPML, the consolidated litigation has involved one hundred separate complaints since 2009, with forty-four still involved as of March 5, 2013.

U.S. Supreme Court Rules that Arbitration Agreement Bars Class Action and Class Arbitration Claims – AmEx v. Italian Colors Restaurant

July 25, 2013 | Peter S. Lubin and James V. DiTommaso

The United States Supreme Court recently ruled that federal law does not permit a court, based on a finding that individual arbitration is cost-prohibitive for a plaintiff, to strike a class arbitration waiver clause in a contract. American Express Co., et al. v. Italians Colors Restaurant, et al (“AmEx”), 570 U.S. ___, No. 12-133, slip op. (Jun. 20, 2013). The decision builds on prior decisions that have generally affirmed the enforceability of mandatory arbitration clauses, class arbitration waivers, and class action waivers, even in contracts where the bargaining power between the parties is far from equal.

The plaintiffs in AmEx are businesses that accept payments using American Express credit cards. The contract between the plaintiffs and American Express includes clauses requiring submission of all disputes to arbitration and waiving class arbitration procedures. The plaintiffs brought a federal antitrust class action lawsuit against American Express, claiming that the company engages in various monopolistic practices. The defendant brought a motion to compel arbitration under the contract and the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq. In response, the plaintiffs offered an economist’s declaration stating that the cost of arbitration for an individual merchant asserting a federal antitrust claim would exceed any possible recovery.

Class Action Bans Found Improper By Massachusetts’ Highest Court But New Supreme Court Decision Under Cuts that Ruling

July 13, 2013 | Peter S. Lubin and James V. DiTommaso

With the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion having left many judges and class action attorneys frustrated with the current state of class action lawsuits, a new decision by the Massachusetts Supreme Judicial Court has reawakened hope for plaintiffs to achieve justice in a court of law. According to the new decision by the Court, a class action ban, as part of an arbitration agreement, is only enforceable if the plaintiff cannot provide compelling evidence that the ban on class actions would prevent them from obtaining a remedy under state law.

The Court recently ruled in two cases where the plaintiffs tried to prove that the class action bans in the relevant arbitration agreements were unenforceable. In Feeney v. Dell Inc., the Court ruled in favor of the plaintiffs, having found that they provided sufficient evidence that the ban on class actions would prevent them from pursuing their claims. In another case, Machado v. Systems4 LLC, the Court upheld the class action ban present in the arbitration agreement, having found that the plaintiffs did not provide sufficient evidence that the ban prevented them from obtaining a remedy under state law.

In its decision in Feeney v. Dell Inc., the Court stated that the Supreme Court’s decision in Concepcion did not provide for a general public-policy-based prohibition on class-actions. Instead, the Court decided that the fact that arbitration procedures must not prevent plaintiffs from attaining justice in a court of law remains despite the Supreme Court’s decision in Concepcion.
The Court further denied that this interpretation applies only to federal statutory rights. Instead, it argued that the Federal Arbitration Act does not deny any remedies available under state law. As a result, a state court cannot prevent the Federal Arbitration Act from achieving its intended goals, simply by deciding that certain provisions of an arbitration agreement are unenforceable if those provisions prevent the assertion of claims provided by relevant state laws.

The court therefore decided that the enforceability of class action bans as part of arbitration agreements would be dependent upon “case-specific factual showings” that the ban would prevent plaintiffs from obtaining remedies which are granted to them by state law. In Feeney v. Dell Inc., a case involving small-dollar claims, the court determined that the class action ban would effectively prevent the plaintiffs from pursuing their claims, as individuals are unlikely to pursue lengthy and often costly litigation for insubstantial amounts. The case of Machado v. System4 LLC, on the other hand, consisted of significantly larger monetary claims, of the sort that individuals are likely to pursue in court, even without the added power of a class action. The court, therefore, determined that, in such a case, the class action ban present in the arbitration agreement remained valid.

The Massachusetts Supreme Judicial Court is not alone in this interpretation of the law. The Missouri Supreme Court and the Second Circuit have also recognized that circumstances exist in which a class action ban cannot be upheld in a court of law. However, the Second Circuit’s decision in Amex that a class action ban which prevents the attainment of rights granted by federal law is unenforceable was just reversed by the Supreme Court. The decision that the Supreme Court has reached in Amex undercuts the reasoning using by the Massachusetts Supreme Judicial Court and allows class-action bans in arbitration agreements all over the nation to preclude class actions from proceeding, even if they are the only means of providing a means for protecting the rights at issue. The Supreme Court has provided businesses with a means of protecting themselves from expensive class action litigation.

Court Denies Motion to Dismiss Appeal of Class Decertification, Finding that Plaintiffs Who Already Settled Still Had Standing – Espenscheid v. DirectSat USA

July 12, 2013 | Peter S. Lubin and James V. DiTommaso

In an appeal of the decertification of a class action lawsuit, a federal appeals court denied a motion to dismiss the appeal for lack of jurisdiction, finding that the plaintiffs/appellants, who settled with the defendants after decertification, still had a stake in the litigation. Espenscheid v. DirectSat USA, LLC, 688 F.3d 872 (7th Cir. 2012). The plaintiffs claimed that they were entitled to an “incentive award” or “enhancement fee” for serving as class representatives, but only if the case was certified as a class action. Id. at 874-75. This gave them an ongoing stake in the litigation, they argued, and therefore gave them standing to appeal decertification. The court agreed, finding that dismissing their appeal on standing grounds would not serve judicial economy, as another class member could simply step in and appeal.

Judge Richard Posner, writing for the court, does not say much about the underlying lawsuit, except that it consists of both class action and collective action claims. The three named plaintiffs brought collective action claims against the defendant for alleged violations of the federal Fair Labor Standards Act, and class action claims for supplemental state law claims. The difference between a class action and a collective action under federal law, the court notes, is not particularly relevant to the question at hand.

Illinois Court Dismisses Putative Shareholder Class Action, Finding Lack of Alleged Injuries – Noble v. AAR Corp.

July 10, 2013 | Peter S. Lubin and James V. DiTommaso

An Illinois federal court granted a motion to dismiss in a putative shareholder derivative class action, having already denied the plaintiff’s application for a temporary restraining order (TRO). Noble v. AAR Corp., et al, No. 12 C 7973, memorandum and order (E.D. Ill., Apr. 3, 2013). The plaintiff asserted causes of action for various alleged breaches of fiduciary duty on behalf of the corporation, but the court found that the lawsuit was a direct action, primarily for the plaintiff’s benefit as a shareholder, rather than a derivative one.

The dispute related to a recommendation by the Board of Directors to the shareholders of AAR Corporation, a publicly-traded company, regarding an executive compensation plan. The Board made a unanimous proposal regarding the corporation’s “say on pay” plan, which allowed the shareholders to vote on executive pay as required by Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), 15 U.S.C. § 78n-1. In a seventy-page proxy statement, the Board asked the shareholders to approve an advisory resolution regarding executive compensation at the corporation’s annual shareholder meeting, which was scheduled for October 10, 2012.

The plaintiff filed suit against the corporation and individual Board members, alleging that the Proxy Statement failed to disclose various details about what the Board considered before making its proposal. Noble, memorandum at 5. He claimed that the individual defendants breached their fiduciary duties of good faith, care, and loyalty to the shareholders, and that the corporation aided and abetted these breaches. Id. at 5-6. The defendants removed the case to federal court on October 4, 2012. The following day, the plaintiff filed a motion for a TRO, asking the court to stop the shareholder vote. The court held a hearing on October 9 and denied the motion. On October 10, the shareholders approved the Board’s proposal, with seventy-seven percent of the shares voting in favor. Id. at 1-2.

Class Actions Filed Against Monsanto for GMO Wheat Spreading in the Northwest

July 7, 2013 | Peter S. Lubin and James V. DiTommaso

There are multiple reasons why so many people are up in arms against the rising prevalence of genetically modified organisms (GMOs) in our crops. Aside from the debate as to whether consuming food that has been genetically modified is safe, the issue of contamination is potentially a very serious problem.

Recently, Monsanto has been prominent in the news and in the courts, often depicted as an evil corporation putting the health of the public at risk for the sake of profit. Now the company is facing several lawsuits from farmers who claim that they have suffered financial harm as a result of Monsanto’s genetically modified wheat having been found in a wheat field in Oregon. In late May, the U.S. Department of Agriculture announced that a wheat farmer in Oregon had discovered Monsanto’s genetically modified wheat growing on his farm alongside his conventional wheat.

The announcement was followed by European and Asian buyers quickly backing out of buying American wheat when they heard of the contamination. Consumers in Europe and Asia have much stronger feelings against GMOs than American consumers. Both South Korea and Japan have suspended certain purchases of American wheat. The European Union has said it will increase the testing of produce coming in from the United States.

The announcement made by the Department of Agriculture and the ensuing loss of overseas buyers for American wheat has led to a series of lawsuits against Monsanto. Clarmar Farms, Inc., farmer Tom Stahl, and the Center for Food Safety have filed a lawsuit against Monsanto in the U.S. District Court for the Eastern District of Washington. The lawsuit is seeking class-action status on behalf of other farmers it alleges have been harmed by the lower wheat prices, which have resulted from overseas buyers backing out of buying American wheat.

A similar lawsuit was filed a few days prior by a wheat farmer in Kansas who alleges that he and other farmers have been financially harmed by lower wheat prices as a result of the discovery of Monsanto’s genetically modified wheat in American crops. Two other farmers have also filed similar lawsuits in federal court for the western district of Washington state.

The experimental wheat was initially developed by Monsanto in order to withstand treatments of its Roundup weed killer. The product was never commercialized though, due to widespread industry opposition. International buyers were already threatening to stop buying American wheat if the GMOs ever entered the marketplace. The decision to end attempts at commercializing the wheat was announced in 2004.

The field testing of the genetically modified wheat that Monsanto did in many states was supposed to have kept the experimental wheat from contaminating conventional wheat supplies.
Following the most recent onslaught of lawsuits, Monsanto has said that, when it ended testing on the genetically modified wheat, it ordered the wheat to be destroyed or shipped to the U.S. Department of Agriculture’s seed storage facility in Colorado. Company officials have denied knowing how their wheat could have made its way into a wheat farm in Oregon.

Kyle McCain, an attorney for Monsanto, has called the lawsuits premature. He claims that the wheat “is limited to one field in Oregon, and no such wheat has entered the stream of commerce”. However, the genetically modified wheat has been found in one farm of conventional wheat, it takes no stretch of the imagination to think that the modified wheat has made its way, undetected, onto other farms and into the marketplace. When this possibility is taken into consideration, especially given the claims of GMOs’ potentially harmful effects, it is no wonder buyers overseas are hesitant to buy American wheat.

Monsanto insists that it followed “a government directed, rigorous, well-documented and audited” program when conducting experiments on the genetically modified wheat.
The lawsuit filed in Spokane, Washington, alleges that Monsanto’s failure to contain genetically modified wheat qualifies as “wrongful conduct” which has potentially contaminated “the entire wheat farming and production chain” and puts many wheat farmers at continued risk of harm by cross-pollination with and contamination of their crops. The lawsuit has not named a number for specific monetary damages, but it is seeking compensatory, as well as punitive damages. It also asks that Monsanto be made to decontaminate equipment, storage, and transportation facilities.