Feed on
Posts
Comments

Beware of Class Action Scam, But Get Cash Now!

December 4, 2008 by Paul Karlsgodt

Local Phoenix ABC affiliate KNXV-TV has a report today about a consumer scam in which people are told that they are eligible for money in a class action.  The scam involves individuals being contacted by telephone to tell them that they are part of a class action lawsuit and are entitled to recover hundreds or thousands of dollars, but that they first need to send in money to help pay for court costs.

The KNXV story refers to an alert on the website www.consumeraffairs.org, which can be found here.  Somewhat ironically, one of the Google ads in the left-hand column of that alert (at least when I viewed it) points readers to a website where they can “Get Cash Now” for their structured settlements in lawsuits.

Posted in Class Action News | Tagged , , , | No Comments »

No CABWR This Week, But Here’s a Tidbit

December 3, 2008 by Paul Karlsgodt

Given that it took me until Saturday to get last week’s Class Action Blogosphere Weekly Review out, I plan to wait until next week to do the next one.  In the meantime, here’s an interesting tidbit that Werner Kranenberg of With Vigour & Zeal  tipped me off to earlier in the week.  David I. Michaels, law clerk at the Delaware Court of Chancery and a UCLA law student will be publishing an article in the Rutgers Law Journal entitled An Empirical Study of Securities Litigation after WorldCom.  The abstract, which is available at SSRN, begins:

In this article I present the first empirical study analyzing whether and to what extent In re WorldCom, Inc. Securities Litigation impacted class action litigation brought under Section 11 of the Securities Act of 1933, one of the securities laws’ principal liability provisions. . . .

For those interested in trends in securities class actions, this article looks like an interesting read.

Posted in Class Action News, Class Action Trends, Other class action blogs | Tagged , , , | No Comments »

Colorado Supreme Court Hears Argument in “Fraud on the Market” Consumer Class Action

December 3, 2008 by Paul Karlsgodt

The Colorado Supreme Court held oral argument today in the case of Farmers Insurance Exchange v. Benzing, No. 07SC483.  Audio of the argument is now available at the Colorado Supreme Court’s website.  Among the issues in the case is whether the “fraud on the market” theory, and other presumptions of reliance recognized in securities cases, applied to permit the plaintiff in a consumer fraud case to attempt to prove causation of harm on a class-wide basis without having to prove that each class member suffered injury directly as a result of the alleged fraud. 

The appeal is from a trial court judge’s order decertifying an earlier class certification order authored by another judge.  The second judge had concluded that individualized issues of causation and reliance precluded certification of claims for fraud by omission, finding that whether a policyholder would have made the decision not to buy certain insurance coverage but for the alleged nondisclosures required a case-by-case determination.  The Court of Appeals had relied on the possibility that the plaintiffs might be able to prove liability on a “fraud on the market” theory in holding that the trial court had abused its discretion in decertifying the class.  Under the “fraud on the market” theory, a defendant can be held liable for securities fraud even if each individual shareholder did not rely on the misrepresentation or omission of fact if it can be proven that the fraud had the effect of depressing the overall value of the stock in an efficient market.

The issues for which the Petition for Certiorari was granted are summarized in this ClassActionBlawg entry.

Many of the questions focused on whether there were facts in the record to support the conclusion that proof of causation could be made by class-wide evidence without relying on the “fraud on the market” theory.  Other key questions focused on whether the trial court’s exercise of discretion to decertify the class could be upheld under an abuse of discretion standard even if other courts might have reached the opposite conclusion.  Two concepts not addressed in detail were the impact of the regulated nature of insurance premiums and the fact that premium rates are driven primarily by the actuarial risk assumed by insurers, not by pure market competition.  Both of these facts raise doubts about any assumption that more “fully informed” consumers might have been able to drive down the cost of premiums.

The “fraud on the market” and “price inflation” theories of loss causation appeared to be a growing trend in consumer class actions until earlier this year when the Second Circuit Court of Appeals in the light cigarettes marketing case, McLaughlin v. Philip Morris USA, Inc. et al., No. 06-4666-cv (April 3, 2008).  In McLaughlin, the court held that these types of theories could not be used to justify certification of a consumer class because they were too attenuated and speculative.

Coincidentally, Securities Docket reports today that a method suggested by Michigan law professor Adam Pritchard for companies to avoid or reduce exposure for certain ”fraud on the market” securities claims by amending a company’s bylaws has now been proposed by a shareholder of Alaska Air, Inc. to its Chairman and CEO.  That entry also has a link to the proposal itself.

Posted in Class Action News, Class Action Trends, Colorado Class Action News | Tagged , , , , , , , , , , | No Comments »

ClassActionBlawg Is Now Tweeting

December 2, 2008 by Paul Karlsgodt

I didn’t realize that I was getting left behind in the Twitter revolution until recently, but no longer.  ClassActionBlawg is now feeding to Twitter.  (For those of you who have no idea what I’m talking about, you will soon).  I have added a link to my Twitter page, @classaction, as well as the Twitter RSS feed.  For those readers who like the content at ClassActionBlawg but hate the verbosity of its author, the Twitter feed is for you.

Posted in General Site Information | Tagged , , , | No Comments »

Consumers Don’t Benefit from UK Collective Actions. So How Exactly Does that Make them Different from US Class Actions?

December 1, 2008 by Paul Karlsgodt

UK legal publication The Lawyer has an interesting article out today for anyone tracking trends in class and collective action reform across the pond.  According to the article, Which?, a consumer organization granted the right to pursue collective redress on behalf of consumers harmed by conduct declared to have violated antitrust laws, isn’t convinced that it would pursue another one after facing several practical barriers in pursuing a case against a sports merchandiser for allegedly selling overpriced replica soccer jerseys.  Among the challenges cited by a lawyer for the group was the fact that few consumers found it worth their while to pursue a claim in light of the relatively modest amounts they stood to gain (£20 per person), the fact that consumers had to provide proof of purchase, and the fact that years had passed by the time the opportunity to make a claim became available. 

The report notes that even after a highly publicized media campaign highlighting the case, only about 500 consumers decided to participate.  The total amount of the settlement payout was around £18,000, plus reasonable litigation costs, as compared to a multi-million dollar penalty imposed against the company for its anti-competitive actions in the first place.   An earlier article by The Lawyervalued those costs at many hundreds of thousands of pounds, dwarfing the amount of the payout.  That article quotes a lawyer for which as saying that the use of an opt-in versus an opt-out system contributed to the discrepancy.

The issue of the cost of litigation versus the actual benefit to victims, however, is one that arises whether the system is opt-in or opt-out.  Even in the U.S., which technically has an opt-out system, actual monetary redress to alleged victims happens as a result of some sort of claim-in process, either as part of a settlement or a distribution of a judgment.  Unclaimed funds are either distributed pro-rata to those class members who do file a claim, returned to the defendant, paid to the government, or distributed to charity as part of a cy pres remedy.  In any event, the system does not in any way guaranty redress to those who don’t have the means to prove their entitlement to relief or who don’t find it worthwhile to pursue a remedy.

Posted in Class Action News, Class Action Trends, Commentary, International Class Action Law | Tagged , , , , , , , , , | No Comments »

Class Action Blogosphere Weekly Review

November 29, 2008 by Paul Karlsgodt

CABWR Challenge of the Week Recap

I’m very disappointed to have to report that last week’s “Lay Down the Gauntlet” Challenge of the Week did not generate a single vote or comment.  This means that I must arbitrarily assign a label for class actions filed against institutional investors for failing to make a claim in another class action settlement.  I have delegated the selection to my dog, Monty, whose vote was to be recorded based on whether he wagged his tail in response to my uttering each of the three candidates.  For anyone who questions the fairness of this process, you should have thought about that when you decided not to vote.  Plus, you should know that Monty got third place one year in the NCAA basketball tournament office pool.  In truth, Monty wasn’t enthralled by any of the choices.  But he did raise an eyebrow and sniff in response to one, while simply maintaining a blank stare in response to the other two.  So, class actions seeking liability for failing to participate in other class action shall forever be called…

“Malkovich”

Congrats to Professor Peter J. Henning of White Collar Crime Prof Blog on his victory.  I’m sure he’ll be thrilled by his victory if he ever discovers that he even entered (in an entry from 2005).

Without further ado (and a few days later than usual), here are some blog entries from the week that was that might be of interest to class action practitioners…

Class Action Decisions

Feminist Law Professors discusses a California state court’s decision to grant class certification in a sexual orientation discrimination case filed against an online dating site for refusing to match gay and lesbian patrons:

http://feministlawprofs.law.sc.edu/?p=4364

Class Action Defense Blog reviews a Third Circuit Court of Appeals opinion reversing, on predominance and superiority grounds, a class certification order in a case filed by automobile dealers against a manufacturer:

http://classactiondefense.jmbm.com/2008/11/class_action_defense_casesdanv_1.html

Classified provides a synopsis of a decision by a Florida federal court addressing proof necessary to establish jurisdiction under the $5 million amount in controversy requirement in a case removed under the Class Action Fairness Act (CAFA) when the plaintiffs’ class definition was imprecise:

http://www.carltonfields.com/classactionblog/blog.aspx?entry=243

Drug and Device Law comments on a Tennessee Supreme Court decision from earlier this year holding that claims under the state’s consumer protection law could not be brought as class actions:

http://druganddevicelaw.blogspot.com/2008/11/tennessee-rejects-consumer-fraud-class.html

Class Action Trends

Point of Law comments on a well-known personal injury firm switching its emphasis from asbestos cases to ERISA class actions involving fees charged in connection with 401K plans:

http://www.pointoflaw.com/archives/2008/11/asbestos-today.php

The WSJ Law Blog discusses a request for attorneys fees in a class action settlement for work done by temporary lawyers:

http://blogs.wsj.com/law/2008/11/24/in-xerox-class-action-fees-for-temp-lawyers-take-center-stage/

Class Action News

North Carolina Business Litigation Report offers the latest developments relating to a class action brought to enjoin a high profile bank merger:

http://www.ncbusinesslitigationreport.com/2008/11/articles/class-actions/north-carolinas-attorney-general-and-state-treasurer-duke-it-out/

Securities Docket discusses the resolution of a battle between several large institutional investors for appointment as “lead plaintiff” in a securities class action against a mortgage lender:

http://www.securitiesdocket.com/2008/11/26/political-shoving-match-in-north-carolina-rebuts-lead-plaintiff-presumption-in-freddie-mac-case/

The Tampa Bay Tribune reports on a putative class action filed in Florida on behalf of voters challenging Florida’s decision to move up its primaries despite objections from both major parties:

http://www2.tbo.com/content/2008/nov/26/class-action-status-sought-suit-over-florida-prima/news-politics/

The UCL Practitioner summarizes the issues accepted for review by the California Supreme Court in a case implicating whether payment of alleged overcharges can constitute injury sufficient to support an action under the Unfair Competition Law (UCL) when those overcharges are passed on to third parties:

http://www.uclpractitioner.com/2008/11/statement-of-issues-on-review-in-clayworth-v-pfizer-inc.html

AMLAC & Fraud links to a CNN article reporting on the indictment of six people charged in connection with an alleged conspiracy to make fraudulent claims in class action settlements (see ClassActionBlawg entry about the story here):

http://amlac1.blogspot.com/2008/11/federal-government-charges-6-in-40.html

Class Action Commentary

Sergie Lemberg of LemonJustice.com offers a guest commentary on The Complex Litigator addressing the loser pays rule common in jurisdictions outside the Europe and opining that the rule hurts consumers:

http://www.thecomplexlitigator.com/2008/11/guest-blogger-sergei-lemberg-from-lemonjusticecom-on-the-loser-pays-system-and-why-it-hurts-consumer.html

The Race to the Bottom comments on trends in “foreign cubed” securities fraud class actions.  (See recent ClassActionBlawg commentary on the subject here):

http://www.theracetothebottom.org/home/no-bright-line-test-for-foreign-cubed-securities-fraud-actio.html

Class Action Reports

Tom Willging of the Federal Judicial Center (FJC) comments on Consumer Law & Protection Blog regarding the FJC’s recent report on trends in class action filings following the Class Action Fairness Act (CAFA):

http://pubcit.typepad.com/clpblog/2008/11/new-federal-judicial-center-study-on-the-class-action-fairness-action-one-of-the-authors-speaks.html

International Class Action Law

Shareholders Foundation discusses proposed European collective action procedures and how they might compare to the U.S. class action model:

http://shareholdersfoundation.com/?p=4647

Jurist reports on the Sixth Circuit’s decision affirming an order granting in part and denying in part a motion for summary judgment in a class action against the Vatican arising out of alleged clergy abuse by the Catholic Church:

http://jurist.law.pitt.edu/paperchase/2008/11/sixth-circuit-allows-class-action.php

With Vigour and Zeal offers notes on a variety of issues touching on international and transnational class and collective action litigation:

http://kranenburgesq.com/blog/2008/11/wrapping-it-up-26-november-2008/

Posted in Class Action Decisions, Class Action News, Class Action Trends, International Class Action Law, Other class action blogs, Reports and Surveys | Tagged , , , , , , , , , , | No Comments »

Lloyd’s/RAND Report Covers Key Trends in International Class Action Litigation

November 25, 2008 by Paul Karlsgodt

Lloyd’s, in cooperation with RAND Europe and the RAND Institute of Civil Justice (ICJ), has issued an intriguing report on trends in transnational class action litigation and related topics entitled Litigation and Business: Transatlantic Trends.  The report covers three hot topics that will be of interest to anyone following developments in transnational and global class, group, and other representative action litigation:

  • Third party litigation funding
  • Transnational class actions
  • International forum shopping

The report offers insights into developments in these areas and tips for businesses in dealing with the prospect of international litigation.  The report does not provide an exhaustive analysis of these topics, but it serves as a good primer into the types of issues with which business should be familiar relating to international class actions and similar litigation.

Posted in Class Action Trends, International Class Action Law | Tagged , , , | No Comments »

Balancing Ease of Participation and Fraud Prevention in Class Action Settlements

November 24, 2008 by Paul Karlsgodt

Class action settlements are often criticized because claim verification requirements can seem onerous and seemingly intended to create a disincentive for class members to participate.  However, here is a story that may illustrate the legitimate rationale for including strict claims verification requirements.

According to a report published today on Alibaba.com, six individuals have been charged in federal indictments for an alleged scheme to file false claims in class action settlements totaling more than $40 million.  The defendants are charged with for a variety of crimes ranging from wire fraud to money laundering and tax evasion.  According to the report, the defendants are accused of creating fake corporations and falsifying documents in order to claim money from three class action settlements administered between 2001 and 2007.

It is unclear from the news report what verification requirements were used in connection with the three settlements and whether any additional requirements could have prevented the alleged fraud.  However, the story provides at least anecdotal support for the argument that a class action settlement must balance procedures intended to make it as easy as possible for class members to participate with with reasonable procedures intended to combat fraud by undeserving participants.

Posted in Class Action News, Commentary | Tagged , , , , , | 1 Comment »

Comment on dit “public nuisance” en Québécois?

November 22, 2008 by Paul Karlsgodt

“Public nuisance” environmental class actions have not fared well in the U.S. recently, but apparently not so in Canada.  Close on the heels of the Rhode Island Supreme Court’s decision in Rhode Island v. Lead Industries Association, the Supreme Court of Canada has affirmed a Quebec Superior Court’s finding of liability based on the theory that a company’s emissions constituted “excessive annoyance” to surrounding residents even though the company had complied with all applicable environmental laws and regulations and was otherwise without fault. 

I have not seen the opinion, but according to news reports, the court limited the availability of class action remedy to landowners, excluding tenants and family members.  This suggests that court was persuaded that claims for damage to property value could be treated on a class-wide basis, but not personal injury claims.  Whatever the limitation on the availability of damages, however, there can be little doubt that this decision will have a big impact on the course of environmental litigation in Canada, if not in the U.S. too.

Posted in Class Action News, Class Action Trends, International Class Action Law | Tagged , , , , , , , | No Comments »

New Federalist Society Class Action Watch Available

November 20, 2008 by Paul Karlsgodt

The October 2008 issue of the Federalist Society’s Class Action Watch is now available for free download at the organization’s website (see link to the March 2008 issue here).  This installment includes articles on punitive damage limits, medical monitoring, the selection of lead counsel in securities class actions, product-based public nuisance cases, the impact of conflicts of state law on class certification, and more…

Thanks to Ted Frank at Overlawyered for the tip.

Posted in Class Action News, Class Action Trends, Other class action blogs | Tagged , , , , , , | 1 Comment »

Older Posts »