Class-Action

Chicago Class Action Attorneys Who Can Help You Decide if You Want to Bring a Class Action Lawsuit

February 15, 2013 | Peter S. Lubin and James V. DiTommaso

Class actions have become increasingly more common in recent years as attorneys are choosing to represent businesses in complex litigation on a contingent fee basis, whereby they do not collect any fees until the plaintiff is successful in its claim.

Contingency class action business litigation is common in massive civil lawsuits involving allegations of unsafe pharmaceuticals, medical malpractice, asbestos claims, trademark infringement, and consumer fraud, to name a few. Most recently class action lawsuits have been filed against a number of large banks and financial institutions regarding allegations of fraudulent benchmark interest rates.

Advantages of Class Action

Toyota Agrees to Settle Unintended Acceleration Class Action

January 23, 2013 | Peter S. Lubin and James V. DiTommaso

After two years, Toyota has finally agreed to settle the class-action lawsuit regarding unintended acceleration in its vehicles. If approved, the settlement, filed in a Federal District Court in California, would make cash payments for the loss of value on vehicles affected by the multiple recalls. The settlement also includes installing special safety features on about 3.2 million cars.
The suit was filed in 2010 after complaints were made to federal regulators that Toyota vehicles were accelerating suddenly and without the driver’s intent, causing accidents and injuries. Toyota has recalled more than eight million vehicles in the U.S. for problems related to pedals that could stick with the throttle open or get hampered by floor mats, which could get entangled in the pedals.

The class-action lawsuit alleged that Toyota’s electronics systems were at fault. A long investigation, conducted by government officials, found no evidence that faulty electronics contributed to the acceleration issues. However, a subsequent review of that investigation, conducted by a branch of the National Academy of Sciences, found that the federal regulators conducting the investigation did not have the expertise necessary to monitor electronic controls in automobiles.

The National Highway Traffic Safety Administration fined the car company more than $60 million for failing to inform regulators of the sudden acceleration issues. Toyota, on the other hand, has largely attributed these acceleration issues to driver error.

The proposed settlement includes a fund of $250 million to pay claims to former owners of cars affected by the acceleration recalls. Because of the large number of claimants though, each will receive a relatively small amount from the settlement. The company has also agreed to install brake override systems on cars whose pedals could stick or become trapped in floor mats. The installation of those systems is already under way, although about 550,000 cars have yet to receive the equipment.

The settlement also provides a customer support program for more than 16 million current Toyota owners who will be eligible for repairs on certain parts for up to 10 years. Additionally, Toyota will contribute $30 million to finance automotive safety research related to driver behavior and unintended acceleration.

The lead law firm for the plaintiffs estimated that the settlement could end up at a total around $1.2 – $1.4 billion. That makes it one of the largest settlements of its kind in automotive history.
One of the reasons people suspect Toyota made the offer is to prepare for the numerous individual personal-injury and wrongful death lawsuits, which are still currently pending in the courts. Of course, another reason to settle is to simply get past this. Before the acceleration issues, Toyota had enjoyed a pristine reputation of quality, safety, and reliability in their vehicles. Following these allegations, the company experienced a drop in sales, particularly in the United States. In 2012 though, the company’s sales in the U.S. rose about 28 percent, which is double the pace of growth for the overall market.

Facebook Settles Class Action Involving Alleged Improper Sale of Its Users Images

January 22, 2013 | Peter S. Lubin and James V. DiTommaso

Amid all the complaints against Facebook using private information, comes a story of success for Facebook users. Last year, five members of the social networking site filed a class action lawsuit against the company for allegedly using personal information, such as images of the users for sponsored stories. The users whose pictures were used did not give permission for Facebook to use their image, and they alleged they were not given the opportunity to opt out of having their image publicly used.

After the California judge informed the lawyers representing Facebook that they would not be able to dismiss the case they agreed to settle. The settlement includes up to $10 for each user who objected to having their image used, and a multimillion dollar donation to charity. Combined with legal fees, the total settlement will run the company about $20 million. Facebook has also said that it will add a tool which allows users to view any of their content which may have been used in sponsored stories and opt out of the process.

The settlement recently moved one step closer to resolution when the U. S. District Court judge in charge of the case determined that the settlement “has no obvious deficiencies” and “appears to be the product of serious” negotiations between the lawyers representing Facebook and the plaintiffs. The case has now been preliminarily approved by the judge.

However, the social networking site may not be finished with the court system just yet. The nonprofit Center for Public Interest Law argued that Facebook should be required to obtain consent before using the names or photos of Facebook users under the age of 18. Its attorney, Robert Fellmeth, has said that he would file a further objection and, if necessary, pursue the case in appellate court.

Regus Sued in Class Action

January 5, 2013 | Peter S. Lubin and James V. DiTommaso

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.

Settlement of Toys “R” Us Class Action Which Alleged That Full Refunds Were Not Provided

December 15, 2012 | Peter S. Lubin and James V. DiTommaso

While this blog frequently discusses issues regarding consumer rights in the event the consumers purchase a faulty product, it is equally important for companies to provide their consumers with full disclosure regarding their return policies. This is the issue at hand in a class action lawsuit against Toys “R” Us for allegedly failing to provide customers with full refunds on items purchased with promotional gift cards or discounts.

Allegedly, Toys “R” Us customers who purchased items from the store that offered free gift cards, buy-one-get-one-50-percent-off discounts or other benefits received less money than the full purchase price when they went to return the items.

Laura Maybaum, the lead plaintiff in the case, purchased $75 worth of Toys “R” Us products and received a $10 gift card. When she later returned one of the toys, the toy company allegedly refused to pay the full purchase price.

Under California law, retailers must give no less than full cash or credit refunds unless a more restrictive policy has been announced.

A California judge has recently approved a $1.1 million settlement in the case. Under the settlement, Class Members will receive a voucher for $10 off a purchase of $50 or more. The toy company has also agreed to provide more disclosure of its return policy for merchandise bought as part of a promotion. One of the ways they intend to do this is by putting the disclosure on point-of-sale displays.

Class Members include all California consumers who purchased toys from Toys “R” Us since January 1, 2008 that qualified for a promotion and then returned one or more items.

Injunction Class Action Certified Against AriZona Ice Tea for Alleged False Use of “Natural” Label

December 14, 2012 | Peter S. Lubin and James V. DiTommaso

As consumers become increasingly health-conscious, we see more lawsuits against food manufacturers who label their products as “natural” when, in fact, they may have highly processed ingredients. Such is the case in a lawsuit currently facing the Northern District of California. Two consumers, Lauren Ries and Serena Algozer have filed a class action on behalf of all similarly situated consumers against AriZona iced tea. They argue that the “natural” label on the beverages is deceptive, because they allegedly contain high fructose corn syrup and citric acid.

Ms. Ries claims she purchased an “All Natural Green Tea” at a gas station because she was thirsty and was looking for an option which would be healthier than soda. Ms. Algozer says she purchased several AriZona iced teas over the years, but neither plaintiff remembers the prices, nor do they have receipts.

Ms. Ries and Ms. Algozer filed for a class action under the Federal Rule of Civil Procedure 23(b)(2). This Rule is a little more lenient than Rule 23(b)(3), under which the commonality hurdle would have been much higher. As it is, potential class members only need to satisfy “minimal commonality” in order to qualify.

While this works in favor of the plaintiffs towards attaining class certification, it prevents them from collecting any monetary damages. The lawsuit was filed seeking an injunction against using the word “natural” on the product’s packaging, as well as restitution for their purchases of the mislabeled iced tea. However, the same “minimal commonality” requirements which allow this class to gain certification also prevent the class from claiming any monetary damages. Therefore, Judge Seeborg of the Northern District of California has partially certified the class for an injunction, but refused to certify the class to seek restitution for their purchases.

California Federal Court Dismisses Class Action Lawsuit Claiming Unpaid Commissions – Park v. Morgan Stanley & Co., Inc.

November 20, 2012 | Peter S. Lubin and James V. DiTommaso

The United States District Court for the Central District of California dismissed a class action claim brought by a financial advisor employed by a major financial services company. In Park v. Morgan Stanley & Co., Inc., the plaintiff claimed breach of contract and violation of California’s Unfair Competition Law (UCL), based on allegations that the defendant failed to pay commissions owed to plaintiff and other employees. The court ruled that the plaintiff failed to plead sufficient facts to support his claim for breach of contract, and that the UCL claim lacked support as a result.

The plaintiff was employed by the defendant as a financial advisor by Morgan Stanley & Co., Inc. Part of his job involved the sale of financial products to investors. He received commission payments from the defendant as compensation for sales, in amounts based on an “applicable commission grid.” This grid was allegedly contained in a “written agreement” between the plaintiff and the defendant that the court described in its order as “unspecified.” According to the plaintiff, the defendant said that it would base commissions on the full amount of revenue received for the financial products sold. The plaintiff alleged that the defendant took a portion of the revenue received before applying the commission grid, thus reducing the total amount of the commissions paid to the plaintiff and other employees.

The plaintiff filed a federal class action lawsuit on November 15, 2011, claiming breach of contract and violations of the UCL. The lawsuit alleged that the defendant’s policies knowingly denied earned compensation to certain employees, resulting in breach of contract and unjust enrichment to the defendant. The defendant filed a motion to dismiss the claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure, asserting that the plaintiff had not stated a cause of action on which the court could grant relief. The court cited precedents from the U.S. Supreme Court and the Ninth Circuit Court of Appeals to establish that, in order to defeat the defendant’s motion, the plaintiff needed to demonstrate enough allegations of fact to make his claims facially plausible. The court found that the plaintiff did not meet this standard, and it granted the defendant’s motion to dismiss.

Posner Decision Breathes New Life Into Class Actions in Sears Front Loading Washer Litigation

November 16, 2012 | Peter S. Lubin and James V. DiTommaso

The Seventh Circuit Federal Court of appeals in a succinct and simply worded opinion by Judge Posner blew much needed fresh air into class action litigation by approving certification of class actions against Sears for front loading washing machines which are allegedly prone to mold or which had an allegedly defective controller. Judge Posner correctly concluded that machines with these type of uniform alleged defects are worth less than machines in correct working order and that consumers are therefore entitled to pursue refunds or other compensation for their alleged damages. Judge Posner correctly noted that class actions make sense to rectify consumer rights involving mass product defects which are essentially uniform but the damage recoveries to individual consumers would be too small to justify litigation. He made short shrift of the parade of claimed individual issues that defendants always claim exist to defeat class certification.

The class action suits which Posner considered involved alleged defects in Kenmore-brand Sears’ washing machines sold in periods beginning in 2001 and 2004. One asserted a defect that causes mold; the other asserted a defect that stops the machine inopportunely. The district court denied certification of the class complaining of mold and granted certification of the class complaining of sudden stoppage. The Seventh Circuit affirmed certification of the stoppage claims and reversed denial of certification for the mold claims. Rule 23(b)(3) conditions maintenance of a class action on a finding “that the questions of fact or law common to class members predominate over any questions affecting only individual members.” The basic question in the litigation is: were the machines defective in permitting mold to accumulate and generate noxious odors? The question is common to the entire mold class, although the answer may vary with the differences in design. The individual questions are the amount of damages owed particular class members. It is more efficient for the question whether the washing machines were defective to be resolved in a single proceeding than for it to be litigated separately in hundreds of different trials.

You can read the full opinion here.

This opinion should swing the pendulum towards the middle again and end trial courts from reflexively finding hypothetical individual issues to destroy the chances of cases that truly justify class action treatment from proceeding which has been occurring all too frequently in recent years. It should breathe new life into class actions which can help protect consumers from mass wrongdoing where the damages are too small to justify individual consumer lawsuits. Without the threat of class actions, business entities have far less incentive to correct mass product defects if a cost benefit analysis would make it easier for them to ignore resolving the issues in a fair manner. However, the Supreme Court’s recent decision to allow businesses, including disreputable ones, to force consumer to sign arbitration agreements eliminating consumer rights to bring class actions allows for an escape hatch from this decision which will continue to harm consumer rights unless Congress acts to prevent forced arbitration of consumer claims. Such congressional action is very unlikely.

Forced arbitration precludes class actions and also forces consumers to arbitrate their individual cases outside of court sometimes in front of rigged or biased arbitration outfits that retain unqualified arbitrators and favor their repeat business customers. While JAMS and American Arbitration Association (“AAA”) are extremely reputable arbitration organizations that provide forums, which in our opinion can be equal or superior to courts, our firm is now seeing sleazy businesses such as used car dealers forcing consumers to arbitrate claims in front of unfair business oriented arbitration organizations that provide kangaroo courts where consumers rights are trampled on and the business firms that pay these organizations are rewarded with unfair and favorable verdicts in cases where the evidence of misconduct is clear cut. Lawyers will avoid taking cases when these incompetent and pro-business arbitration organizations are selected in adhesion contracts created by used car dealers and other disreputable businesses. Without lawyers to represent them, consumers will not only have lost the protection of the court system but they will not be able to retain counsel to even bring their cases. Legislatures need to act to police these private court systems run by disreputable and biased organizations and to ensure that arbitration organizations that hear consumer claims are all legitimate outfits like the AAA and JAMS.

Since so many businesses are forcing consumers to opt out of class actions and to arbitrate claims on an individual basis, the full benefit of Judge Posner’s efficiency analysis for allowing class actions to proceed will unfortunately be lost. Our state and federal legislative bodies need to act to reopen the courthouse doors for vindicating consumer rights by ending mandatory arbitration in consumer contracts or at least to create government oversight bodies to drive out disreputable arbitration outfits that businesses are using to deny consumer rights. The government regulates lawyers and judges, but these disreputable and incompetent arbitration organizations lack the same regulation, which oftentimes means unjust results for consumers.

DiTommaso Lubin’s Oak Brook and Chicago Attorneys Peter Lubin Named 2013 Illinois Super Lawyer as Class-Action, Business Litigation and Consumer Rights Attorneys

November 1, 2012 | Peter S. Lubin and James V. DiTommaso

Super Lawyers named Chicago and Oak Brook business trial attorneys Peter Lubin Super Lawyers in the Categories of Class Action, Business Litigation and Consumer Rights Litigation. DiTommaso Lubin’s Oak Brook and Chicago business trial lawyers have over a quarter of century of experience in litigating complex class action, consumer rights and business and commercial litigation disputes. We handle emergency business law suits involving injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist businesses and business owners who are victims of fraud.

Peter S. Lubin

online at

NPR Reports: “Wal-Mart’s Female Employees File Suit In Tennessee”

October 30, 2012 | Peter S. Lubin and James V. DiTommaso