Class-Action

USA Today Reports:”NCAA seeks to block class action in O’Bannon case”

October 24, 2012 | Peter S. Lubin and James V. DiTommaso

USA Today reports that the NCAA is seeking dismissal of the class action claims by former players including Oscar Robertson because the NCAA’s lawyers claims plaintiffs have changed their legal theories too many times. This potential class action claims that the NCAA has unfairly profited from the players images without paying them for these valuable rights. The article states:

Lawyers defending the NCAA in an anti-trust lawsuit related to the use of college athletes’ names and likenesses say the case should not be certified as a class action, in part, because the plaintiffs changed their legal strategy in a way that is unfair and could mean the NCAA has wasted “significant time and money” responding to the suit.

To read the full article click here.

Supreme Court To Address Standards For Class Certification in Securities Fraud Actions and Whether Plaintiffs Need to Prove “Fraud On The Market” Claim to Certify a Class-Action

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

The Supreme Court in Amgen, Inc. v. Connecticut Retirement Plans & Trust Funds has recently agreed to decide on whether federal courts in certifying a securities class must decide in order to certify the class whether the fact of damages claims regarding a “fraud on the market” have merit or are true. Federal courts generally didn’t decide the merits of the case in class actions at the time of class certification. However, in the wake of the Supreme Court’s decision the Walmart class action corporate defendants and business interests have urged the Court to make Plaintiffs prove their case at the class certification stage.

An excellent article discussing the Supreme Court’s decision to hear Amgen and its ramifications can be reviewed by clicking here. The article explains the significance of the Supreme Court’s decision to hear the case as follows:

For over 20 years, the “fraud on the market” theory, which the Supreme Court endorsed in Basic Inc. v. Levinson, 485 U.S. 224 (1988), has been a key tool for plaintiffs in class action securities fraud litigation under Section 10(b) of the Securities Exchange Act and SEC Rule 10b-5. The theory posits that the price of a security trading in an efficient market reflects all publicly available information about that security. Based on that premise, the theory gives rise to a rebuttable presumption that investors rely on material misrepresentations reflected in market prices at the time they transact. Without this presumption, plaintiffs purporting to assert class action securities fraud claims would have difficulty showing reliance on a class-wide basis, and hence satisfying the typicality and predominance prerequisites to class certification under Fed. R. Civ. P. 23(a) and 23(b)(3). Decisions as to class certification strongly influence the balance of leverage as between plaintiffs and defendants in class actions generally. Thus, the showing plaintiffs must make in order to invoke the “fraud on the market” theory is a critical issue in securities litigation.

The impact of the Supreme Court’s decision in Amgen could go well beyond securities actions and make it more difficult to ever certify any type of class action.

California Court Limits Removal under Class Action Fairness Act – Westwood Apex v. Contreras

July 26, 2012 | Peter S. Lubin and James V. DiTommaso

“Location, location, location” isn’t just a mantra for real estate agents and house hunters. When it comes to litigation, venue is an important issue to consider for both plaintiffs and defendants alike. In Westwood Apex v. Contreras, the Court of Appeal for the Ninth Circuit explains an important federal law bearing on venue and, in particular, a class action defendant’s ability to change it.

Westwood Apex, a subsidiary of the for-profit higher-education institution Westwood College (Westwood) which operates campuses in 14 states including California, filed a breach of contract action against Jesus Contreras in state court, seeking to recover roughly $20,000 in unpaid student loan debt. In response, Contreras filed a class action counterclaim on behalf of all current and former Westwood students against the school as well as a number of affiliated entities alleging fraud as well as unfair and deceptive business practices in violation of various California consumer protection laws.

All of the counterclaim defendants except Westwood filed a notice of removal, transferring the action to a federal court, the District Court for the Central District of California. The Defendants asserted that removal was appropriate under a federal law called the Class Action Fairness Act (CAFA). The law grants federal courts jurisdiction over class action lawsuits where the amount in controversy exceeds $5 million and the opposing parties are minimally diverse (at least one plaintiff must live in a different state than one defendant).

After issuing an order to show cause as to why the case should not be removed, the District Court remanded the case back to the state court, ruling that CAFA does not permit a counterclaim defendant to remove an action to federal court. On appeal, the Ninth Circuit upheld this decision and the underlying reasoning.

Enacted in 2005, CAFA – codified at 28 U.S.C. § 1453 – was intended to fight perceived abuses (so-called “junk lawsuits”) in the class action litigation process. Although the statute allows “any defendant” to remove a qualifying class action, the Court held that it does not extend the removal power to counterclaim defendants. “[A] counterclaim defendant who is also a plaintiff to the original state action may not remove the case to federal court,” the Court ruled, citing the Supreme Court’s 1941 decision in Shamrock Oil & Gas Corporation v. Sheets as well as the Ninth Circuit’s more recent opinion in Progressive West v. Preciado (2007). As a result, the Court upheld the District Court’s ruling, leaving the action in state court.

Chicago Class Action Attorneys at DiTommaso Lubin Obtain Certification of a Class Action Against Abercrombie & Fitch For Refusing to Honor Promotional Cards Which Say on Their Face They Have No Expiration Date

July 25, 2012 | Peter S. Lubin and James V. DiTommaso

The law firm of DiTommaso Lubin on behalf of a class of Abercrombie & Fitch customers recently obtained certification of a class-action against Abercrombie regarding $25 promotional cards with no expiration date on the face of the cards. Abercrombie will not honor the cards any longer. Customers obtained the cards in a promotion which required a $100 purchase to receive the $25 cards. The cards came in a paper sleeve which stated a short use period of just a few months. However, the card itself stated that it had no expiration date.

The Federal District Court for the Northern District of Illinois certified a nationwide breach of contract class action based on the Class’s position that the card is a contract. It is the Class’s position that contractual term of no expiration date on the card itself trumps the sleeve either because the sleeve is mere advertising or because when two terms in a contract conflict the contract should be construed against the entity that drafted it — in this case Abercrombie & Fitch. The Court has not yet made a decision on the merits of the case. You can read the Court’s decision by clicking here. The 7th Circuit Federal Court of Appeals rejected Abercrombie’s request to hear an immediate appeal on the class-certification decision.

DiTommaso Lubin is also representing a consumer of Abercrombie’s sister company Hollister in an identical putative class action lawsuit involving the same promotion. The Court has not yet certified a class in that case.

If you are a member of the class alleged in Hollister case, you can contact DiTommaso Lubin for additional information about participating as a class representative.

7th Circuit Reverses its Decision in Sears Class-Action

May 2, 2012 | Peter S. Lubin and James V. DiTommaso

The Thorogood lawsuit against Sears, characterized by the 7th Circuit as purportedly “near frivolous,” concerned marketing of a clothes dryer. It was certified and later decertified as a class action on the ground that no issues could be resolved in a single, class-wide evidentiary hearing, and was ultimately dismissed. Murray, a member of the proposed class, who did not become a party, filed a “copycat” class action, using the same attorney. Following a third visit to the Seventh Circuit, the district court enjoined the Murray suit as defiant of the decertification. The Supreme Court remanded. The Seventh Circuit consolidated the Thorogood and Murray cases for its fourth opinion. On the merits, the court stated that “One would have to have a neurotic obsession with rust stains (or be a highly imaginative class action lawyer) to worry about Sears’ drum,” and that it would “unsay nothing,” in its previous opinions, but vacated the injunction. “We were wrong. The Supreme Court’s decision—rendered after we ordered the injunction … although it does not refer to the All Writs Act, inclines us to doubt that Murray, not having been a party to the Thorogood suit, can nevertheless be bound by a ruling in it, including the ruling decertifying the class.” You can view the 7th Circuit’s decision here.

Combining Two or More Classes into One Toxic Contamination Action – Thomas v. Wilbert & Sons, LLC

April 5, 2012 | Peter S. Lubin and James V. DiTommaso

In Thomas v. Wilbert & Sons, LLC, Louisiana’s First Circuit Court of Appeals tackles the tricky situation in which two or more certified classes are combined for trial. While such a scenario can be procedurally complicated, the basic class certification principles – including that a court considering class action certification request or challenge not concern itself with the likelihood of success on the merits of an action – remain the same.

The plaintiffs, residents of a trailer home park in or around Plaquemine, Louisiana, brought the action against the defendants Dow Chemical Company (Dow), Wilbert & Sons, L.L.C. (Wilbert) and other parties claiming that the plaintiffs were injured when Dow allegedly contaminated the Plaquemine aquifer, which provides groundwater to the local area via wells. The plaintiffs seek damages for personal injury due to exposure to the contaminated water as well as property damages – alleging that the contamination damaged their wells and devalued their property – and punitive damages.

While this action was pending, a second group of plaintiffs – which the court refers to as the Robichaux plaintiffs – filed a similar action in neighboring Iberville Parish in March 2002. These plaintiffs did not sue Wilbert, but sought punitive damages and injunctive relief from the state of Louisiana. The Robichaux plaintiffs attained class certification status before the Thomas plaintiffs. In 2007, the Thomas plaintiffs were certified as a class as follows: “[a]ll persons or entities who or which sustained damages to their real property since 1985 due to vinyl chloride, its successors or derivatives in the Plaquemine aquifer, or who were exposed to the drinking water supply at the [trailer home park] which occurred on or before and since the year 1997 near or in Plaquemine…”
The two actions were then consolidated for trial. At this time, the Robichaux plaintiffs appealed the court’s decision to certify the Thomas plaintiffs, arguing that the decision prejudiced their rights as the members of a previously certified class.

Class Action Lawsuits for Water Contamination – Osarczuk v. Associated Univs. Inc.

March 8, 2012 | Peter S. Lubin and James V. DiTommaso

Toxic contamination class actions often include claims by plaintiffs asserting a whole host of problems, from serious health and medical conditions to wide-scale property damage. In Osarczuk v. Associated Univs. Inc., the New York Supreme Court for Suffolk County considered the additional economic damages caused when drinking water is contaminated.

The plaintiffs, a number of people living near the Brookhaven National Laboratory in Upton, New York, brought an action against the defendant, the laboratory’s owner and operator, alleging that the defendant unlawfully emitted toxic substances such as trichloroethane, tritium, strontium-90, uranium, argon-41 and cesium-137 into the air, soil and ground water near the lab. This, according to the plaintiffs, caused health problems, including cancer, nausea, headaches, and various immune conditions, to people living in the surrounding area as well as property damage and economic damage as a result of being forced to switch water sources. The plaintiffs sought both compensatory and punitive damages for the injuries incurred.

The plaintiffs also asked the court to certify a plaintiff class (broken into various sub-classes) consisting of people who live or work within a 10-mile radius of the lab and who have suffered personal injury or property damage as a result of the alleged pollution.

Class certification allows one or more members of a class of similarly situated plaintiffs to sue on behalf of all class members. Under New York law, a class may be certified only where: (1) the class is so numerous that joinder of all members is impracticable; (2) the class shares common questions of law or fact which predominate over any questions affecting only individual members; (3) the class representatives’ claims are typical of those of the class; (4) the representative parties will fairly and adequately protect the interests of the class; and (5) a class action is superior to other available methods for the fair and efficient adjudication of the controversy. A plaintiff seeking class certification bears the burden of proving that these requirements have been met, but need not prove that it is likely to succeed on the actual merits of the lawsuit.

The court determined that the plaintiffs satisfied each of the requirements for class certification, but limited the class to those persons living in the proscribed radius who allege to have suffered either property damage as a result of the contamination or financial loss when they were forced to switch from free local well water to that provided by the local water authority when the wells allegedly became contaminated. In so doing, the court noted that these class members share common questions regarding both their damages, including the costs attendant with switching to another water source, as well as the defendant’s legal liability for these and other injuries.

Federal Court Indicates Equitable Tolling Only Available in FLSA Cases When There is Evidence of Deception by Defendants

December 1, 2011 | Peter S. Lubin and James V. DiTommaso

DiTommaso Lubin handles wage and hour class action litigation on a regular basis, and many of our clients’ claims are based upon violations of the Fair Labor Standards Act (FLSA). Our Schaumburg unpaid overtime attorneys were interested to see a recent class-action brought by restaurant workers alleging violations of the FLSA.

Cao v. Wu Liang Ye Lexington Rest., Inc. is a suit filed by twenty-four employees of two restaurants in New York City. The employees worked as waiters, delivery workers, and a food packer for Defendants and filed suit for unpaid minimum and overtime wages, illegal tip deductions, expense reimbursement for the purchase and maintenance of bicycles and uniforms. Plaintiffs also sought statutory liquidated damages, prejudgment interest, and attorneys’ fees. Plaintiffs filed for default, which was granted by the Court. Plaintiffs subsequently submitted their damages calculations and Defendants opposed Plaintiffs’ application for damages on the basis that Plaintiffs’ calculations were inflated and Defendants’ violations of the FLSA were not willful.

The Court addressed Defendants’ arguments by first discussing the applicable law. The limitations period for FLSA claims is generally two years, but is three years for defendants that willfully break the law. The Court then ruled that the three year statute of limitations was applicable because Defendants defaulted and therefore admitted Plaintiffs’ willfulness allegations. The Court also found the longer statute of limitations applied because Defendants admitted that they did not try to learn about the FLSA’s requirements until just prior to the commencement of the lawsuit. Plaintiffs argued that they should receive unpaid wages for the entirety of their employment under the doctrine of equitable tolling due to the fact that Defendants failed to post a notice explaining the FLSA in plain view of employees. The Court saw no reason to extend Plaintiffs’ claims beyond the statutory three year period because Defendants’ had not engaged in any sort of deception or other exceptional activity, and prior case law held that equitable tolling only applies in unusual circumstances. The Court finished by granting Plaintiffs damages for unpaid minimum wage, overtime wages, unlawful tip deductions, reimbursement for bicycle expenses, liquidated damages, prejudgment interest, and attorneys’ fees.

The Court denied reimbursement for uniform expenses because most of the clothing worn by employees could be “worn as a part of the employees’ ordinary wardrobe.” Plaintiffs did also wear a red vest that could be considered outside an ordinary wardrobe, but there was no evidence in the record that Plaintiffs’ incurred expenses obtaining or cleaning the red vests.

Cao v. Wu Liang Ye Lexington Rest., Inc. provides future wage and hour litigants with several lessons when it comes to preparing damages applications. First and foremost, courts are unlikely to apply equitable tolling to extend the FLSA’s statute of limitations in the absence of intentional deception or fraud by defendants. Additionally, this case serves as a reminder that employees should keep accurate records of work related expenses if they wish to recover damages under the FLSA.

The Commonality and Numerosity Requirements in Missouri Class Action Certification – Doyle v. Fluor Corp.

October 20, 2011 | Peter S. Lubin and James V. DiTommaso

“Commonality” and “Numerosity” are two of a handful of factors that most courts consider in deciding whether to allow a toxic dumping lawsuit to proceed as a class action. In Doyle v. Fluor Corp., a Missouri appellate court explains these requirements and how they should be applied in a particular matter.

Plaintiffs brought the action alleging that Defendants, owners and operators of a smelting (the process by which metal is extracted from ore) business in Herculaneum, Missouri, released lead, heavy metals and other toxic substances into the air, which in turn caused damage to real property in the surrounding area. Plaintiffs sought damages under theories of negligence, private nuisance, strict liability, and trespass. The trial court granted Plaintiffs’ motion to certify the matter as a class action with the class representatives suing on behalf of nearly 400 people who “own and occupy” residential real property in the area near Defendants’ operation.

On appeal, the Court of Appeals for Missouri’s Eastern District upheld the decision to certify the class. A class may be certified under Missouri law where: 1) the class is so numerous that joinder of all members is impracticable; 2) common questions of law or fact exist among the class; 3) the claims or defenses of the representative parties are typical of that of the class; and 4) the representative parties are able to fairly and adequately protect the class’ interest. In addition, a court considering certification must also determine that the common factual or legal questions “predominate over any questions affecting only individual members” and that a class action is more suitable than other methods to fairly and efficiently adjudicate the issue.

In affirming the trial court’s decision, the court noted that the “commonality” requirement does not mean that all issues in a particular action be common to all class members, but instead that the common issues predominate over the others. “A single common issue may be the overriding one in a matter, despite the existence of numerous remaining individual questions,” the court ruled. In this case, several of the action’s central issues were shared among the class, including whether Defendants were responsible for emitting toxic metals in to the air; whether such an act constitutes negligence; and whether the pollution caused property in Herculaneum to be contaminated.

Class Action Certification in Toxic Pollution Cases: It’s Not Whether You Will Win or Lose, but How You Will Play the Game – Price v. Martin

October 8, 2011 | Peter S. Lubin and James V. DiTommaso

A recent ruling out of Louisiana makes clear that in determining whether a group of plaintiffs in a toxic contamination case should be permitted to bring their claims as a class action, the question is not whether the plaintiffs can ultimately win the case, but whether they’ve simply met the basic requirements for class certification.

Price v. Martin, Louisiana’s Third Circuit Court of Appeal affirmed a trial court’s certification of the plaintiff class in an action alleging that the defendants – local railroad tie manufacturers – contaminated the property surrounding their operation, finding that the plaintiffs met the certification requirements regardless of the likelihood of their success on the merits of their claims.

The plaintiffs are persons residing in Alexandria, Louisiana, near the Dura-Wood Treating Company facility, owned by defendants at various times over a 66-year period. They claim that Dura-Wood’s creosote-treated railroad tie operation contaminated soil, sediments, groundwater and buildings in the surrounding area, damaging the plaintiffs’ property. Following a flurry of motions, the trial court granted certification of the plaintiffs’ class action, allowing representative parties to sue on behalf of roughly 4,700 landowners in the allegedly contaminated area. The appeals court upheld the decision, finding that “[t]he trial court applied the correct legal standard in deciding to certify this class.”
The court quoted the state Supreme Court’s decision in Dukes v. Union Pacific R.R. Co. in describing the nature of class action lawsuits in Louisiana:

A class action is a nontraditional litigation procedure which permits a representative with typical claims to sue or defend on behalf of, and stand in judgment for, a class of similarly situated persons when the question is one of common interest to persons so numerous as to make it impracticable to bring them all before the court. Ford v. Murphy Oil U.S.A., Inc., 96-2913 (La. 9/9/97), 703 So.2d 542, 544. The purpose and intent of class action procedure is to adjudicate and obtain res judicata effect on all common issues applicable not only to persons who bring the action, but to all others who are “similarly situated.” Id.

The court further determined that the plaintiffs satisfied Louisiana’s numerosity, commonality, typicality, adequacy and class definition requirements for certification. Although the facility at issue had three owners who engaged in varying operations using different chemicals over the 66-year period during which the contamination allegedly took place, the court held that “one factual issue is common to the potential class—whether defendants’ off-site emissions caused property damage to the residences in the area surrounding the plant. This issue will not be resolved by examining individual residences in the area. Rather, the elevated toxin levels must be shown on an area-wide basis as emanating from the defendants’ facility.”