Class Action Defense Blog

As Matter of First Impression, Finance Charge by Bank for IRS Refund Anticipation Loan was not “Interest” within the Meaning of 15 U.S.C. § 1615 so District Court Properly Dismissed Class Action Ninth Circuit Holds

Plaintiff filed a class action against Pacific Capital Bank alleging violations of California’s Unfair Competition Law (UCL); the class action complaint alleged that plaintiff obtained a “Refund Anticipation Loan” (RAL) from the Bank secured by her “anticipated federal income tax refund” and authorized the IRS to deposit her refund into an account established by the Bank. Davis v. Pacific Capital Bank, N. A., ___ F.3d ___ (9th Cir. December 24, 2008) [Slip Opn., at 16773-74]. According to the allegations underlying the class action, the Bank agreed to loan plaintiff $1115 for a fee of $85, and required that 48 days after the loan, plaintiff pay the Bank $1200 (representing a yearly interest rate of 57.969%). Id., at 16774. The loan documents expressly provided that plaintiff was not entitled to recover any part of the $85 finance charge, even if plaintiff repaid the loan early, but did not require plaintiff to additional finance charges if the loan was repaid late. Id. The IRS deposited plaintiff’s refund 10 days before the 48-day deadline for repayment, and plaintiff filed her class action alleging that it was unlawful for the Bank to retain the $17.74 pro-rated portion of her finance charge; the theory underlying the class action was that federal law prohibited the Bank from retaining “unearned interest.” Id. Defense attorneys moved to dismiss the class action on the ground that the $85 finance charge was not interest, and that the class action’s UCL claim was preempted by the National Bank Act. Id., at 16773-74 and n.1. The district court granted the defense motion and dismissed the class action, id., at 16774. The Ninth Circuit affirmed.

The issue presented to the Ninth Circuit was as follows: “Must a creditor who imposes a flat finance charge that does not vary with the term of a Refund Anticipation Loan refund a portion of the charge as ‘unearned interest’ under 15 U.S.C. §1615 when the loan is repaid earlier than anticipated in the loan agreement?” Davis, at 16773. Section 1615 provides, “If a consumer prepays in full the financed amount under any consumer credit transaction, the creditor shall promptly refund any unearned portion of the interest charge to the consumer.” 15 U.S.C. § 1615(a)(1). The difficulty with the class action case was that “Congress did not define the word ‘interest’ as used in § 1615, [so] it is not immediately obvious whether it encompasses the finance charge at issue.” Id., at 16774. Based on the Circuit Court’s analysis of the proper statutory interpretation to be given § 1615, and particularly the legislative history, see id., at 16775-77, the Court held that § 1615 did not require the Bank to refund any portion of the $85 finance charge, id., at 16777. And because the class action’s UCL claims were premised on the allegedly “unfair” and “unlawful” refusal of the Bank to refund a portion of the finance charge, the district court properly dismissed the class action complaint. Id., at 16777. Accordingly, the Ninth Circuit affirmed the judgment.

Posted In: Class Action Court Decisions

As a resource to California class action defense attorneys, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in the California state and federal courts located in Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that include 10% or more of the class action filings during the preceding week. This report covers the period from December 19 - 31, 2008, during which time only 38 new class action lawsuits were filed. Labor law class actions often top the list of the new class action filings by a wide margin, but the number of new employment-related class actions, as a percentage of the total number of new class action lawsuits filed, had dropped off somewhat in late November and early December. This report, however, covers more than a week because of the holidays, and labor law class action lawsuit filings surged to familiar territory. During this report period, 22 new labor law class action lawsuits were filed, representing 58% of the total number of new class actions filed. The only other category to meet the 10% threshold involved class actions alleging violations of California's Consumer Legal Remedies Act (CLRA) with 4 new filings (11%).

Posted In: Class Actions In The News

Judicial Panel Grants Plaintiff Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Supported by All Responding Parties including Other Class Action Plaintiffs and Countrywide Defendants, but Transfers Class Actions to Western District of Kentucky

Six class actions –three in California, two in Florida, and one in Missouri – were filed against Bank of America and various Countrywide entities, together with other defendants, alleging violations of the federal Fair Credit Reporting Act (FCRA). In re Countrywide Financial Corp. Customer Data Security Breach Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. December 2, 2008) [Slip Opn., at 1 and n.2.]. Specifically, the class action complaints alleged that Countrywide failed “to limit access to and/or adequately safeguard private customer information” in violation of the FCRA, id., at 2. Plaintiff in one of the Florida class actions filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Western District of Missouri or the District of Kansas. Id., at 1. All responding parties, which included more than 20 of the 26 plaintiffs in related “tag-along” class action lawsuits, supported centralization, and while some of the class action plaintiffs requested transfer to California, Florida, Missouri, North Carolina or Ohio, the vast majority – including more than 20 plaintiffs tag-along class actions and the Countrywide defendants – supported transfer to the District of Kansas. Id. The Judicial Panel granted the motion to centralize the class action lawsuits, but rejected each of the district requested by the parties. Id., at 2. The Judicial Panel concluded, “Given that this litigation involves 32 known actions pending throughout the United States, any number of districts would be an appropriate transferee forum.” Id. And without discussion or explanation, the Panel selected the Western District of Kentucky as the transferee court, id.

Posted In: FCRA Class Actions, Multidistrict Litigation, Class Action Court Decisions

The author of the Class Action Defense Blog wishes all of you a very happy New Year. A new class action article will be published tomorrow.

Posted In: Class Actions In The News

The author of the Class Action Defense Blog is taking the day off for the New Year holiday. A new class action article will be published on Friday, January 2.

Posted In: Class Actions In The News

Class Action Plaintiff Alleging Violations of Fair Labor Standards Act (FLSA) Entitled to Summary Judgment because Employers Improperly took “Tip Credits” Against Employee Wages and Failed to Pay Overtime Required by FLSA Texas Federal Court Holds

Plaintiff filed a class action against his former employers – TDS Entertainment (which owns Dixie's Country Bar), Chicago Bar and Vankar Enterprises (which owns Babcock Bar) – alleging violations of the federal Fair Labor Standards Act (FLSA); the class action complaint asserted that defendants failed to pay employees minimum wage because they unlawfully credited tips against their employees’ salaries. Bernal v. Vankar Enterprises, Inc., 579 F.Supp.2d 804, 805 (W.D.Tex. 2008). Specifically, the class action alleged that plaintiff worked at defendants' bars for less than the federal minimum wage, that plaintiff received tips from customers, and that defendants required that plaintiff contribute a portion of his tips to a “tip pool” to be shared with “managers and/or other employees who do not customarily and regularly receive tips.” Id., at 805-06. The class action alleged that defendants were not permitted to take “tip credits” against plaintiff’s minimum, and so violated the FLSA by paying him less than minimum wage. Id., at 806. The class action complaint prayed to recover as wages the difference between the federal minimum wage and the actual wage paid by defendants., id. The district court granted plaintiff’s motion for class action certification, id. Plaintiff’s counsel then moved for summary judgment as to “(1) whether the bars failed to pay the applicable minimum wage under circumstances in which the bars were not permitted to claim a tip credit; and (2) whether the bars failed to pay overtime as required by the FLSA.” Id. The federal court granted the motion.

The district court explained that “[t] he primary issue before the Court is whether a genuine issue of material fact exists regarding Defendants' entitlement to use the amount of tips its employees received in satisfaction of a portion of Defendants' minimum wage obligations.” Bernal, at 806. After summarizing the well-known standards governing summary judgment motions, see id., at 806-07, the court discussed the FLSA’s authorization, under “limited circumstances,” to pay a “tipped employee” less than the federal minimum wage, id., at 807. A “tipped employee” – defined as an employee who customarily receives more than $30 per month in tips, see 29 U.S.C. § 203(t), may be paid less than minimum wage (but no less than $2.13 per hour) “if the amount of the tips the employee actually receives, added to the hourly wage the employer pays, is at least equal to the minimum wage in effect,” a practice known as “taking a ‘tip credit.’” Bernal, at 807. The district court explained, however, that “An employer may not…take a tip credit ‘with respect to any tipped employee unless such employee has been informed by the employer of the [tip credit] provisions’” and that “no tip credit may be taken ‘with respect to any tipped employee unless ... all tips received by such employee have been retained by the employee,’ except in cases in which tips are pooled ‘among employees who customarily and regularly receive tips.’” Id. (citations omitted).

Continue reading "FLSA Class Action Defense Cases–Bernal v. Vankar: Texas Federal Court Grants Class Action Plaintiffs Summary Judgment In Labor Law Class Action Concluding Employers Failed To Pay Minimum Wages And Overtime Required By FLSA" »

Posted In: Employment Law Class Actions, Class Action Court Decisions

Class Action Complaint’s Anti-Cybersquatting Protection Act Claims do not Warrant Class Action Treatment because Rule 23(b)(3)’s Predominance Requirement for Class Action Certification not Met due to Individualized Issues Surrounding Trademarks or Personal Names Illinois Federal Court Holds

Plaintiffs filed a class action against Google and others alleging “a wide-ranging scheme whereby they receive ‘billions of dollars in ill-gotten advertising and marketing revenue’ by knowingly and intentionally registering, licensing and monetizing purportedly deceptive domain names at the expense of the plaintiff-mark owners.” Vulcan Golf, LLC v. Google Inc., ___ F.Supp.2d ___ (N.D.Ill. December 18, 2008) [Slip Opn., at 1]. In part, the class action alleged that Google’s conduct violated the Anti-Cybersquatting Protection Act (ACPA), id. Plaintiffs filed a motion for class action certification, id.; defense attorneys countered that class action treatment was not warranted because plaintiffs’ claims are not typical and because they are not adequate class representatives, see id., at 4, and because the predominance and superiority tests of Rule 23(b)(3) had not been met, see id., at 7. The district court rejected the first defense challenges, finding the requirements for class action certification under Rule 23(a) were satisfied. However, the district court concluded that Rule 23(b)(3)’s requirements for class action treatment had not been met. Accordingly, the court refused to certify the litigation as a class action.

With respect to the requirements for class action certification set forth in Rule 23(a), the district court easily found that numerosity and commonality had been satisfied. Vulcan Golf, at 4-5. Defense attorneys argued that plaintiffs’ claims were atypical and that they were not adequate class representatives “because intra-class conflicts exist.” Id., at 5. For reasons we do not detail here, the district court rejected the defense arguments and found that each of Rule 23(a)’s requirements for class action treatment had been met. See id., at 5-7. In sum, the federal court explained at page 7, “The representatives’ claims arise from the same course of conduct as the other class members and the class representatives have the same interests and have suffered the same injury as the putative class members.” It turned, therefore, to whether the class action requirements of Rule 23(b)(3) had been met.

Continue reading "Google Class Action Defense Cases–Vulcan Golf v. Google: Illinois Federal Court Denies Class Action Treatment For Class Action Complaint Against Google Alleging Violations Of Anti-Cybersquatting Protection Act" »

Posted In: Certification of Class Actions, Class Action Court Decisions

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Unopposed by Class Action Plaintiffs, and Transfers Actions to Southern District of New York

Six class actions – three in California, and one each in Kansas, Missouri and New York – were filed against Time Warner and Time Warner Cable, and others, alleging violations of the Sherman Antitrust Act. In re Set-Top Cable Television Box Antitrust Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. December 8, 2008) [Slip Opn., at 1]. Defense attorneys filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Southern District of New York; plaintiffs in two of the California class actions and plaintiffs in the Kansas, Missouri and New York class action all supported the motion, but argued that the class actions should be centralized in the District of Kansas. Id. The Judicial Panel granted the motion to centralize the class action lawsuits because “All actions allege that Time Warner improperly tied and bundled the lease of cable boxes to the ability to obtain premium cable services in violation of Section 1 of the Sherman Antitrust Act.” Id. The Panel also agreed with defense attorneys that the Southern District of New York would best serve as the appropriate transferee court, because “Time Warner is headquartered there, and relevant documents and witnesses will likely be located in that district.” Id. Accordingly, the Judicial Panel ordered all of the class actions transferred to the Southern District of New York, id., at 2.

Posted In: Multidistrict Litigation, Class Action Court Decisions

The author of the Class Action Defense Blog wishes all of you a very happy holiday season. A new class action article will be published tomorrow.

Posted In: Class Actions In The News

The author of the Class Action Defense Blog is taking the day off for the Christmas holiday. A new class action article will be published on Friday, December 26.

Posted In: Class Actions In The News

District Court Independently Analyzes Class Action Certification Requirements of ERISA Class Action Complaint, despite Lack of Defense Objection to Class Action Treatment, and Concludes Class Action Certification Warranted Texas Federal Court Holds

Plaintiffs, retirees of BellSouth Corporation, a subsidiary of AT & T, filed a class action against AT&T and BellSouth alleging violations of the he Employee Retirement Income Security Act of 1974 (ERISA); specifically, the class action complaint alleged “that (1) a benefit known as telephone concession, which was provided to certain employees of BellSouth after retirement, constitutes a defined benefit pension plan under ERISA (hereinafter, ‘plan claims’); and (2) that Defendants violated ERISA in administering and maintaining the telephone concession plan (hereinafter, ‘benefit claims’).” Boos v. AT&T, Inc., 252 F.R.D. 319, 321 (W.D. Tex. 2008). Plaintiffs’ lawyers filed a motion with the district court to certify the litigation as a class action. Id. Defense attorneys did not oppose plaintiffs’ motion for class action treatment; nonetheless, the district court conducted a thorough analysis of the propriety of class action certification under Rule 23 because Rule 23(c)(1)(A) requires that the district court “determine by order whether to certify the action as a class action.” Id. The federal court further observed at page 321 that “[t]he Fifth Circuit has also held that in order to certify a class, a district court must specifically find that the proposed class satisfies the requirements of Rule 23.” (citing Vizena v. Union Pac. R.R. Co., 360 F.3d 496, 503 (5th Cir. 2004)). Based on its detailed analysis, see id., at 321-26, the district court concluded that the requirements for class action certification had been satisfied and therefore granted plaintiffs’ motion. Id., at 326-27.

NOTE: We discuss this case only to make the point that Rule 23 requires a district court to independently determine whether class action treatment is warranted, whether the defendant objects or whether the parties stipulate to class action certification as part of a settlement agreement.

Posted In: Certification of Class Actions, Employment Law Class Actions, Class Action Court Decisions

Class Action Claims Alleging DuPont knew but Failed to Disclose Health Risks Associated with use of Non-Stick Cookware Coatings (including Teflon) not Entitled to Class Action Treatment because Class Definition Failed and Membership in Proposed Class could not be Objectively Established Iowa Federal Court Holds

Thirteen class action lawsuits were filed against E.I. DuPont De Nemours concerning its production and marketing of Teflon non-stick cookware coatings; specifically, the class action complaints alleged that “DuPont made false, misleading and deceptive representations regarding the safety of its product.” In re Teflon Products Liab. Litig., ___ F.Supp.2d ___ (S.D. Iowa December 5, 2008) [Slip Opn., at 1]. In essence, the class action plaintiffs asserted that the non-stick coatings “can decompose at temperatures within the realm of ‘normal use,’ potentially releasing a synthetic chemical” that is harmful to humans and could even cause birth defects. Id., at 2. Ultimately, the Environmental Protection Agency brought claims against DuPont under the Federal Toxic Substances Control Act, which DuPont settled in 2005 by paying “‘the largest civil administrative penalty [the] EPA has ever obtained under any federal environmental statute.’” Id., at 2-3. The Judicial Panel on Multidistrict Litigation centralized the class actions in the Southern District of Iowa pursuant to 28 U.S.C. § 1407, see id., at 1 n.2. According to the allegations underlying the class action, DuPont knew of these dangers prior to 1960, but failed to disclose them to consumers, id., at 3. Plaintiffs’ attorneys moved the district court to certify the litigation as a class action. Id. Defense attorneys argued against class action treatment, id., at 1. The district court determined that class action treatment was warranted and therefore granted plaintiffs’ class action certification motion.

After outlining the rules governing class action certification under Rule 23, see In re Teflon, at 5-7, the district court observed that there are two additional “implicit” requirements: “1) that the class definition is drafted to ensure that membership is ‘capable of ascertainment under some objective standard;’ and 2) that all class representatives are in fact members of the proposed class,” id., at 7 (citations omitted). The federal court began its analysis, then, with the definition of the class, which it noted “is at the heart of any decision” on class action treatment, id., at 8. Because several putative class representatives testified in deposition that they were uncertain whether the products they purchased in fact had been manufactured by DuPont, or that they mistakenly believed that all non-stick cookware coatings were manufactured by DuPont, the district court concluded that the class definition failed. See id., at 8-14. Additionally, the court could not conclude “that each proposed representative is in fact a member of the proposed class, or…sub-class” because “the vast majority of plaintiffs must rely on memory to establish crucial facts [which] will prevent the parties and the Court from ever being able to establish membership with objective certainty.” Id., at 14. Accordingly, it held that it “cannot in good conscience grant certification.” Id.

Continue reading "DuPont Class Action Defense Cases–In re Teflon: Iowa Federal Court Denies Class Action Treatment To False Advertising Class Action Against DuPont Alleging Failure To Disclose Health Risks Associated With Non-Stick Cookware Coatings" »

Posted In: Certification of Class Actions, Multidistrict Litigation, Class Action Court Decisions