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

Applying High Court Jurisdiction Rulings, Federal Judge Shuts Out Suit Against Foreign Soccer Federation

headerGuest Commentary

By Ashley Snell, a 2015 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.

After finding some success in its concussion-related class actions against professional and amateur football associations, noted plaintiffs’ firm Hagens Berman has taken aim at the world’s most popular sport—soccer. The firm has sued a number of soccer organizations, including the much-maligned Federation Internationale de Football Association (FIFA), for failing to provide proper concussion management for players. The Zurich, Switzerland-based federation, obviously averse to playing defense on (or rather, in) the plaintiffs’ home court (U.S. District Court for the Northern District of California), moved to dismiss. The result in Mehr v. Federation Internationale de Football Association exhibits the far-reaching impact of the U.S. Supreme Court’s game-changing general-jurisdiction decisions.

In its 2014 Daimler AG v. Bauman decision, the Court offered defendants highly specific guidance on defeating general jurisdiction. Several past WLF Legal Pulse commentaries have addressed Bauman (here and here). In a nutshell, Argentinian plaintiffs sued a German company, over events that took place in Argentina, in a California federal court. The Court’s opinion limited general jurisdiction over corporations to its principal place of business, its state of incorporation, and “an exceptional case” that renders the defendant at home in that state. Continue reading

Eleventh Circuit Weighs in on Need for Consumer Class Actions’ Plaintiffs to be Ascertainable

11th CircuitWhether a class of plaintiffs must be “ascertainable”—i.e. capable of being feasibly identified through an objective process—continues to be one of the most contested legal issues in class-action litigation. We’ve written about ascertainability mostly in the context of food labeling lawsuits (our collection is here) but it has arisen in claims involving other consumer products. The U.S. Court of Appeals for the Eleventh Circuit is the latest jurisdiction to weigh in on the issue with a decision that directly addresses one of the common objections to ascertainability—that it dooms small-dollar class-action suits.

The plaintiff in Karhu v. Vital Pharmaceuticals accused the defendant of falsely advertising its dietary supplement, “Meltdown Fat Incinerator,” because it did not in fact incinerate his fat. The federal district court dismissed Karhu’s claims because he failed to demonstrate the class members were ascertainable. The Eleventh Circuit affirmed the district court. Judge Richard Goldberg of the U.S. Court of International Trade, sitting by designation, authored the majority opinion and Judge Beverly Martin wrote a cautionary concurrence. Continue reading

Majority Rule: Standing Continues to be Plaintiffs’ Achilles Heel in Data-Breach Class Actions

securityGuest Commentary

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

Some years ago, when data breaches first became a problem for the business community, plaintiffs’ lawyers thought class actions on behalf of consumers whose information had been stolen would be the next big moneymaker. To their disappointment, a majority of federal courts across the United States has ruled in favor of data breaches’ most direct and obvious victim—hacked businesses—because plaintiffs have failed to establish standing to sue. In order to establish constitutional standing, plaintiffs must show that the alleged injury is concrete, particularized, actual or imminent, fairly traceable to the action challenged, and redressable. Absent standing, courts lack subject matter jurisdiction over the suit under Federal Rule of Civil Procedure Rule 12(b)(1).

Recently, federal district courts from Nevada (In re Zappos.com, Inc., Customer Data Security Breach Litigation) and Minnesota (Carlsen v. Gamestop, Inc.) joined most federal courts in dismissing data-breach class-action lawsuits for lack of standing. Continue reading

“Handmade” Liquor: Federal Courts Offer Divergent Views in Two Similar Lawsuits

liquorGuest Commentary

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

In recent decisions from opposite sides of the nation—Florida and California—two federal district judges issued contradictory decisions on the same question—whether a liquor manufacturer’s use of “handmade” on its product label is false or misleading to the average consumer. Defendants in mislabeling cases rarely claim total victory at the preliminary level because courts tend to defer the question of whether a label is false or misleading to a later stage in the litigation. The Florida judge’s willingness to dismiss a “handmade” claim shows that courts can beat this trend. If, on the other hand, judges follow the path of least resistance, as seen in the California case, mislabeling claims of questionable merit will continue to proliferate, undermining predictability in the law and raising prices for consumer product purchasers. Continue reading