Case Notes

More Case Notes

• » In re Bailey v. Janssen Pharmaceutica Inc.
  In a case of first impression the Eleventh Circuit opined on whether, in multi-defendant litigation, the limitations period for removal expires upon thirty days from service on the first-served or the last-served defendant under 28 U.S.C. § 1446(b).

   

• » Hunt v. U.S. Tobacco
  Third Circuit Rules That Private Plaintiffs Must Plead Individual “Justifiable Reliance” To Sustain Class Claims Under Pennsylvania’s Consumer Protection Law.
  A recent decision by the Court of Appeals for the Third Circuit has made class actions under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) even more difficult. In Hunt v. U.S. Tobacco, --- F.3d ----, 2008 WL 2967249, (3d. Cir. Aug. 05, 2008), the court considered whether a private consumer must prove that he individually relied on the defendants’ alleged deceptive conduct or statements to sustain a claim under the UTPCPL.

   

• » In re Conagra Peanut Butter Products Liability Litigation
  On July 22, 2008, in a case involving nationwide claims that purchasers of jars of peanut butter contaminated with Salmonella bacteria suffered financial and personal injury losses, the MDL judge rejected proposed national classes for both consumer and personal injury claims.

   

• » Moelis v Berkshire Life Ins. Co.
  On May 22, 2008, the Massachusetts Supreme Judicial Court held that due process concerns precluded certification of a nationwide class of purchasers of “disappearing premium” insurance policies. The court also denied without prejudice plaintiffs’ alternative request to certify a statewide class because of individual statute of limitations issues.

  See also: Court Decision

   

• » Teamsters Local 445 Freight Division Pension Fund v. Dynex Capital Inc. | 
  Second Circuit Finds Corporate Scienter Possible Absent Showing of Individual Scienter
  In Teamsters Local 445 Freight Division Pension Fund v. Dynex Capital Inc., 06-2902-cv, the 2nd Circuit Court of Appeals reversed the trial court's denial of a motion to dismiss based on failure to adequately plead scienter but held that a finding of scienter by individual defendants is not required to support a showing of corporate scienter. Judge Walker, writing for the court, stated: "Congress has imposed strict requirements on securities fraud pleading, but we do not believe they have imposed the rule urged by defendants, that in no case can corporate scienter be pleaded in the absence of successfully pleading scienter as to an expressly named officer." The 2nd Circuit's dismissal is with leave for plaintiffs to replead.

   

• » Krueger v. Wyeth, Inc.
  In Krueger v. Wyeth, Inc., 2008 U.S. Dist. LEXIS 12236 (D. Cal. 2008), Judge Janis Sammartino of California’s Southern District denied without prejudice plaintiff April Krueger’s motion for 23(b)(3) class certification for “[a]ll California consumers who purchased Wyeth's Hormone Replacement Therapy products, Premarin, Prempro, and/or Premphase, between January 1995 and January 2003.”

  See also: Court Decision  | 

   

• » Summary of New Federal Preemption Ruling
  On February 20, 2008, the United States Supreme Court found: (1) the FDA’s rigorous Class III premarket approval process met the burden of establishing federal requirements concerning specific medical devices and (2) the Medical Device Amendments of 1976 (“MDA”) preempted petitioner’s New York common law claims for strict liability, breach of implied warranty, and negligence. The plaintiff sought reversal of the lower court’s finding that the MDA Amendments preempted their state law claims against the manufacturer of a type of catheter.

  See also: Court Decision  | 

   

• » Grosset v. Wenaas, et al.
  On February 14, 2008, the California Supreme Court decided an important issue of shareholder derivative standing in Grosset v. Wenaas, et al., S139285, and dismissed the appeal because the shareholder plaintiff could not satisfy the “continuous ownership” requirement after his stock was acquired in a merger transaction.

  See also: Court Opinion  | 

   

• » In re Omnicom Group, Inc.
  On January 29, 2008, Judge Pauley of the United States District Court, Southern District of New York, granted the summary judgment motion of defendants Omnicare Group, Inc. and certain members of management in a class action captioned In re Omnicom Group, Inc.

   

• » Tellabs, Inc. v. Makor Issues & Rights, Ltd.
  On remand from the U.S. Supreme Court to reconsider the sufficiency of the complaint in light of the uniform standard announced by the Supreme Court in Tellabs, Inc. v. Makor Issues & Rights, Ltd., 127 S. Ct. 2499 (2007), the Seventh Circuit held that the plaintiff investors’ allegations of securities fraud create the strong inference of scienter required by the Private Securities Litigation Reform Act of 1995 (the PSLRA).

   

• » Summary of New Class-Certification Ruling
  On December 6, 2007, the United States District Court for the District of Kansas denied the plaintiffs’ motion to certify an 18-jurisdiction class of customers allegedly overcharged by a title company for the cost of recording their real-estate documents.

   

• » In re Micron Tech. Secs. Litigation
  On December 19, 2007, Chief District Judge B. Lynn Winmill issued a thoughtful and detailed Memorandum Decision and Order granting plaintiffs’ motion for class certification in a securities class action against Micron.

   

• » Illiadis v. Wal-Mart Stores, Inc.
  On May 31, 2007, the New Jersey Supreme Court joined several other courts in reversing lower court decisions refusing to certify claims of thousands of hourly workers for missed rest and meal breaks and off-the-clock work against Wal-Mart Stores, Inc.

   

• » International Union of Operating Engineers Local No. 68 Welfare Fund v. Merck & Co.
  New Jersey Supreme Court rejects national consumer fraud class action involving Vioxx

   

• » Higginbotham v. Baxter International, Inc. | 
  In Higginbotham, the Seventh Circuit affirmed dismissal of the securities fraud class action, which involved alleged financial improprieties and a three-year restatement of financials. Specifically, the court held that allegations in the complaint that were attributed to five confidential witnesses must be "discounted" in assessing scienter in the wake of Tellabs. The court pointed out that, under Tellabs, a complaint will survive a motion to dismiss only if a reasonable person would deem the inference of scienter cogent and at least as compelling as any opposing inference one could draw from the facts alleged and, in applying this standard, the court must take into account plausible opposing inferences. The Court went on to note that it would be hard to see how information from anonymous sources could be deemed "compelling" under the dictate of Tellabs. Indeed, "[t]o determine whether a strong inference of scienter has been established, the judiciary must evaluate what the complaint reveals and disregard what it conceals." The court held that the plaintiffs failed to proffer concrete evidence of knowledge on the part of Baxter's leadership in the United States, and that the arguments in support of scienter were inadequate.

   

• » Tellabs, Inc. et al., v. Makor Issues & Rights Ltd. et al. | 
  On Thursday, June 21, 2007 the Supreme Court issued a significant opinion in Tellabs, Inc. et al., v. Makor Issues & Rights Ltd. et al., 551 U.S. ___ (2007), regarding the pleading standard for scienter under the Private Securities Litigation Reform Act of 1995 (“PSLRA”). Specifically, the Court considered what constitutes the requisite “strong inference” of scienter under the PSLRA and a majority of the Court held that “[t]o qualify as ‘strong’ within the intendment of Section 21D(b)(2), we hold, an inference must be more than merely plausible or reasonable—it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent ” In so holding, the Court expressly reversed the determination of the Seventh Circuit that courts need not consider competing inferences in determining whether a securities fraud complaint gives rise to a “strong” inference of scienter and instead stated that “the court must take into account plausible opposing inferences.”

   

• » Bodner v. Oreck Direct, LLC | 
  Federal Judge slams lawyer-cooked class action.

   

• » Oscar Private Equity Investments v. Allegiance Telecom, Inc. | 
  On May 16, 2007, a divided panel of the Court of Appeals for the Fifth Circuit issued a significant decision reversing class certification in a federal securities class action based on plaintiff’s inability to establish loss causation at the class certification stage in Oscar Private Equity Investments, et al. v. Allegiance Telecom, Inc., ___ F.3d ____, No. 05-10791, 2007 WL 1430225, (C.A. 5 May 19, 2007). The Fifth Circuit held that absent a showing of loss causation, made by the preponderance of the admissible evidence, plaintiffs were not entitled to rely on the fraud-on-the-market presumption established by the Supreme Court in Basic v. Levinson, 485 U.S. 224, 244 (1998). Accordingly, the Court concluded that plaintiffs had failed to make the necessary showing under Rule 23 that common issues would prodominate over individualized issues of reliance.
  
  The decision raises key issues regarding:

• The terms under which courts outside of the Fifth Circuit will permit plaintiffs to rely on the fraud-on-the-market presumption
• Whether courts will increase scrutiny on class certification in securities class actions
• The how courts will address the overlap between Rule 23 and merits determinations at the class certification stage.

• » Katie Lowrey, et al. vs. Alabama Power Company, et al. | 
  Eleventh Circuit holds that in a CAFA mass action, any one defendant authorized under CAFA to remove the claims against that defendant to federal court may remove the action as a whole, regardless of whether other defendants in the action would be authorized to remove their claims. Eleventh Circuit also limits use of discovery to support amount in controversy for removal purposes.

   

• » Enron Appellate Ruling
  Fifth Circuit holds that secondary actors cannot be primarily liable under securities laws for conduct alone.

   

• » Ryan v. Gifford and In Re Tyson Foods
  Delaware Court of Chancery issues two watershed opinions in shareholder derivative actions.

   

• » Tellabs, Inc. v. Makor Issues & Rights, Ltd. | 
  SEC and USDOJ file Amicus Curiae and urge a heightened legal standard for shareholders in actions against corporations and their directors and officers.

   

• » In Re: Vioxx, Civil Action No. 2:05-md-01657 (Nov. 22, 2006 E.D. La.)
  Eastern District of Louisiana declines to certify nationwide class action in pharmaceutical personal injury case, and joins long line of federal decisions with similar holdings.

  [See also: Order & Reasons (PDF)]

   

• » Sinclair v. Merck & Co.
  New Jersey Appellate Division issues important decision that holds out the possibility of a medical monitoring remedy in class action pharmaceutical product liability cases involving claimed latent injuries.

   

• » Main Drug, Inc. v. Aetna U.S. Healthcare, Inc. | 
  Eleventh Circuit holds that in seeking discretionary review of a district court's remand decision in a CAFA case, Rule 5 of the Federal Rules of Appellate Procedure must be followed.

   

• » Dukes v. Wal-Mart, Inc. | 
  On February 6, 2007 the United States Court of Appeals for the Ninth Circuit affirmed the district court’s “historic” certification of a class of 1.5 million female current and former Wal-Mart employees. The Ninth Circuit ruled that monetary damages do not predominate over the womens’ class claims for injunctive relief brought pursuant to Rule 23 (b)(2) to enjoin Wal-Mart’s alleged discrimination in pay and promotion practices. The Court ruled that back pay and punitive damages are equitable in nature, and sufficient procedural safeguards exist to allow the case to proceed as the largest employment class action in American History.

   

• » Ellis v. Costco Wholesale Corp. | 
  On January 11, 2007, Judge Marilyn Hall Patel of the Northern District of California certified a nationwide gender discrimination class action challenging promotion practices for senior retail warehouse management positions at Costco. The class was certified under Rule 23(b)(2) and includes compensatory and punitive damages. The court ordered notice and opt out for class members.

   

• » Schwab, et al v. Philip Morris et al
  Tobacco Litigation Still Has A Pulse: Judge Weinstein Certifies Class Action on "Light" Cigarettes.

   

• » Pfizer, Inc. v. Superior Court | 
  The California Court of Appeal holds that where a class action is brought under California's unfair competition law or the false advertising law (Business and Professions Code, Section 17200 and 17500) all of the members of the class must meet the new Prop. 64 standing requirements, not just the Class Representative.

   

• » Evans v. Walter Industries, Inc. et al. (11th Cir. 2006) | 
  In the subject action, the Eleventh Circuit Court of Appeals examined the local controversy exception to CAFA. The Court of Appeals held that: (1) once defendants met CAFA's basic jurisdictional requirements for removal, that at least one plaintiff and one defendant are from different states and the amount in controversy exceeds $5,000,000, the burden of proving the local controversy exception to CAFA shifts to the plaintiffs; (2) the plaintiffs failed to satisfy the local controversy exception because less than two-thirds of the proposed class members were Alabama citizens; and (3) plaintiffs failed to satisfy the local controversy exception requirement that at least one defendant is a defendant from whom significant relief is sought by the class, whose alleged conduct forms a significant basis for the class claims asserted and who is a citizen of the state in which the action was originally filed.

   

• » Heffner v. Blue Cross & Blue Shield of Alabama, Inc. | 
  Eleventh Circuit reverses 23(b)(2) ERISA certification.

  [See also: Court Opinion (PDF)]

   

• » Rodney v. Northwest Airlines, Inc. | 
  The Sixth Circuit concludes that plaintiff failed to satisfy Rule 23(b)'s "predominance" test and, therefore, upheld a district court order denying plaintiff's motion to certify class in antitrust action.

   

• » In Re Relafen Antitrust Litigation | 
  The United States District Court for the District of Massachusetts grants motion for final class certification and approves $75 million dollar settlement between class plaintiffs and drug manufacturer defendants. Further, the Court sets forth its reflections on the state of class action litigation and the American jury system today.

   

• » Brill v. Countrywide Home Loans, Inc. | 
  The Seventh Circuit holds, inter alia, that:
  a) a party seeking to remove an action to federal court under CAFA bears the burden of establishing jurisdiction; and
  b) the amount in controversy dictates whether the jurisdictional amount requirement has been satisfied—the amount the plaintiff actually will recover is not relevant to the jurisdictional amount analysis.

   

• » New Jersey Court Certifies Nationwide Class Action in Vioxx Litigation | 
  

  [See also:Memorandum of Decision on Motion (New Jersey Supreme Court) (PDF)]



• » Bush v. Cheaptickets | 
  On October 6th, the Ninth Circuit (J. Bybee) ruled that CAFA does not apply retroactively to cases pending in state court.

   

• » Illinois Supreme Court Reverses $1 Billion Judgment | 
  Illinois Supreme Court reverses $1 billion judgment against State Farm in a nationwide class action limiting the reach of nationwide class actions in Illinois courts.
  

  [See also: Court Decision ]



• » In re The Walt Disney Co. | 
  A Ringing Endorsement of the Business Judgment Rule: Decision After Trial of Derivative Action Attacking Ovitz Compensation as a Breach of Fiduciary Duty and Constituting Bad Faith.
  

  [Read also: Disney Affirmed by Stephen C. Norman ]



• » Exxon Mobil Corp. v. Allapattah Services, Inc., et al. | 
  Supreme Court Slip Opinion: The U.S. Supreme Court holds in this decision that class actions may be filed in or removed to federal court as long as at least one named class representative's claim satisfies the $75,000 amount-in-controversy requirement of 28 U.S.C. Section 1332(b), even if other class members' claims fall below this amount.
  

  [See also: Analysis by Scott Nelson | (PDF)]



• » Simon II v. Philip Morris USA Inc. | 
  Second Circuit Decision: Reversing certification of nationwide class of cigarette smokers.

   

• » California Supreme Court's decision in Discover Bank case | 
  The California Supreme Court has held that class action waivers in consumer adhesion contracts (including but not limited to class action waivers in arbitration clauses) are unconscionable and unenforceable in circumstances where "disputes between the contracting parties predictably involve small amounts of damages, and when it is alleged that the party with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money ...."