Litigation Targeting Trans Fat Stayed: A Bump in the Road or Something More?

davidwallacehsfcomLGSMKellyGuest Commentary

by David L. Wallace and Michael R. Kelly, Herbert Smith Freehills LLP*

Since the 1950s, partially hydrogenated vegetable oils (PHOs) have been used to produce all sorts of packaged foods. These ingredients increase food shelf life and flavor stability. They also contain artificial trans fats, which have been linked to various health risks, including cardiovascular disease. Despite these risks, PHOs were until recently “generally recognized as safe” (GRAS) for use as a food ingredient. The tide began to swing two years ago, though, when the Food and Drug Administration (FDA) tentatively proposed to withdraw GRAS status for PHOs “based on current scientific information” about the health risks of trans-fat consumption. It finalized this determination in a June 2015 order, declaring “that there is no longer a consensus among qualified experts that partially hydrogenated oils … are generally recognized as safe for any use in human food.”

Lawyers Running With Regulations

This regulatory action makes PHOs a “food additive” subject to pre-market approval by the FDA. Without FDA approval, foods containing PHOs would be deemed “adulterated” under both federal and state laws. The agency left industry breathing room, however, giving it until June 2018 either to comply or to obtain approval for certain uses of PHOs. But, like time, regulation-chasing plaintiffs’ lawyers wait for no one, and pounced on the agency’s new stance in the name of “consumer protection.” Before the FDA had even finalized its decision on PHOs, they had already installed trans fats as the latest bogeyman on supermarket shelves and the food-litigation landscape—alongside such hated fighting words as “natural,” “healthy,” “freshly baked,” and “handcrafted.”       Continue reading

Sixth Circuit Affirms Class-Certification Order Despite Lack of Commonality

Cruz-Alvarez_FFeatured Expert Contributor – Civil Justice/Class Actions

Frank Cruz-Alvarez, Shook, Hardy & Bacon L.L.P. (co-authored with Talia Zucker, Shook, Hardy & Bacon L.L.P.)*

The U.S. Court of Appeals for the Sixth Circuit’s recent decision in Rikos v. The Procter & Gamble Company was a setback to Rule 23 jurisprudence, but as is often the case, there is a silver lining—Judge Deborah Cook’s dissenting opinion.  Judge Cook penned a thoughtful dissent that unravels the analytical shortcomings of the majority’s opinion, and demonstrates the conflict that exists between the majority opinion and the Supreme Court’s Rule 23 jurisprudence.

This lawsuit arose when three consumers (“Plaintiffs”), each residing in different states, purchased the product Align, a probiotic nutritional supplemental designed to promote digestive health, but believed it did not work as advertised. They subsequently brought this action against Procter & Gamble (“P&G”), the manufacturer of Align, claiming violations of various state unfair and deceptive practices because Align did not promote digestive health for anyone. Continue reading

Ninth Circuit Panel Eviscerates 2014 ‘En Banc’ Decision That Protects CAFA Removal Rights

9thCirCongress adopted the Class Action Fairness Act (CAFA) in 2005 in response to concerns that plaintiffs’ lawyers were gaming the system to prevent removal of class actions and “mass actions” (lawsuits with more than 100 named plaintiffs) from state court to federal court. CAFA provided state-court defendants the option of removing a case to federal court when the suit is both substantial and involves numerous plaintiffs, even when complete diversity of citizenship is lacking.

Immediately thereafter, the plaintiffs’ bar began to undermine CAFA by coming up with new ways to keep their mass lawsuits in state courts. Among other schemes, plaintiffs’ lawyers divided their clients (often numbering in the thousands) among multiple lawsuits in the same state court, thereby ensuring that CAFA’s 100-plaintiff threshold would not be surpassed in any one lawsuit. An excellent 2014 en banc decision from the U.S. Court of Appeals for the Ninth Circuit imposed strict limits on use of this removal-defeating tactic. The court held in Corber v. Xanodyne Pharmaceuticals, Inc. that if, after filing their separate lawsuits, the plaintiffs ask the state court to coordinate the cases for all purposes, the cases should be deemed unified and thus removable under CAFA’s mass-action provision. But a Ninth Circuit panel decision this month, Briggs v. Merck Sharp & Dohme, creates a roadmap that allows plaintiffs to coordinate their lawsuits yet avoid removal—thereby eviscerating Corber. The decision suggests that the panel (Judges Fletcher, Berzon, and Paez) feels free to thumb their collective nose at Ninth Circuit en banc decisions; it ought to be reversed. Continue reading

Court Cuts Class-Action Firm’s Fees to $0 after Unveiling Concealed Settlement Scheme

Guest Commentary

by Chelsie Kidd, a 2015 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.

A California Superior Court judge recently turned a class-action law firm’s worst nightmare into reality when she denied the firm over $5 million in attorneys’ fees. In Lofton v. Wells Fargo Home Mortgage, Judge Mary Wiss found that Initiative Legal Group (“ILG”) “attempted to arrogate to itself more than $5 million in class action attorneys’ fees without court approval.”

Source: WikiMedia Commons

Source: WikiMedia Commons

The events leading up to Judge Wiss’ denial of attorneys’ fees began in 2005 when ILG filed a wage-and-hour class action on behalf of home mortgage consultants against Wells Fargo in Mevorah v. Wells Fargo Home Mortgage. Plaintiffs asserted claims for unpaid overtime, meal- and rest-break violations, and waiting-time penalties. Ultimately, ILG failed to obtain class certification in Mevorah. Undeterred, ILG filed numerous additional class-action suits against Wells Fargo, but each action asserted claims that overlapped with those alleged in Mevorah. ILG was “on the verge of filing a new motion for class certification when Wells Fargo agreed to attend mediation.” In early 2011, only after ILG and Wells Fargo reached a claims-made, non-reversionary class settlement,the Lofton action was filed solely for the purpose of seeking court approval of the settlement. ILG encouraged and directed its clients to make claims from the Lofton settlement (even telling some of its clients to send form directly to ILG and not the claims administrator). Continue reading

Federal Judge, Referencing FDA Order on Trans Fat, Permits State-Law Class Action to Proceed

food-courtThe Food Court strikes again.

On July 15, U.S. District Court for the Northern District of California Judge William Alsup rejected Nissin Foods Company’s motion to dismiss a claim alleging that Nissin’s use of trans fat in its instant noodles was an unfair trade practice under California law. The decision comes just a month after the federal Food and Drug Administration (FDA) issued a Declaratory Order removing the generally recognized as safe (GRAS) designation from partially hydrogenated oils (PHOs), the main source of trans fat in Americans’ diets. Judge Alsup’s opinion is the first we know of to reference FDA’s order. Continue reading

The Supreme Court’s NOT Top 10: Cases the Justices Wrongly Rejected Last Term

supreme courtThe usual spate of articles by Supreme Court scribes pronouncing the Roberts Court staunchly pro-business were noticeably sparser as the latest term ended. When journalists are reduced to using the Obamacare and same-sex marriage cases as their main exhibits to prove the Supreme Court’s supposed pro-business tilt, you know it wasn’t a banner year for business.

Of course there were a few notable losses (King v. Burwell itself, Oneok, and Texas Dept. of Housing come to mind). But the fact that free enterprise did not fare well this term had comparatively little to do with the decisions the Supreme Court issued. Rather, business civil liberties suffered more overall from the various state supreme court and federal courts of appeals cases that the high court left on the cutting-room floor.

The tally that follows comprises more than just the cases of a disappointed cert seeker. WLF did not participate in more than half of the examples discussed below. However, the cert petitions mentioned here are all cases where free enterprise, individual and business civil liberties, or rule of law interests were at stake. From the free-market vantage point, it once again appears that the Court did not make enough room on its docket for cases implicating significant liberty interests. By choosing a lighter load, the Court allows legal uncertainty to linger, lower-court disobedience to fester, adventuresome new legal theories to propagate, and injustices implicating millions, if not billions, of dollars to prevail.       Continue reading

Ninth Circuit Decision Allowing Appeal of Right from Order Denying Class Certification Is Ripe for Supreme Court Review

9thCirRule 23(f) of the Federal Rules of Civil Procedure gives appeals courts unfettered discretion in deciding whether to permit an interlocutory appeal from a class certification decision. Most circuits have exercised that discretion sparingly. But a U.S. Court of Appeals for the Ninth Circuit decision issued last week affirmed that circuit’s unique rule: plaintiffs (but not defendants) are entitled to take an immediate appeal from an adverse class certification ruling, even when an appeals court panel has previously denied discretionary appeal under Rule 23(f). All plaintiffs need do is stipulate to dismissal of the complaint with prejudice, and then seek review of the order denying certification in connection with an appeal from the final judgment of dismissal. Never mind that a plaintiff who stipulates to dismissal of his lawsuit might reasonably be deemed to have abandoned his claims. Continue reading