Tuesday, August 13, 2013
Here’s Adam Liptak’s latest story, When Lawyers Cut Their Clients Out of the Deal, which discusses a recent Ninth Circuit decision on cy pres settlements that is the subject of a pending Supreme Court cert. petition, Marek v. Lane (No. 13-136).
Monday, August 12, 2013
Hot on the heels of Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), comes a new Second Circuit decision heralding the slow strangulation of Fair Labor Standards Act cases: Sutherland v. Ernst & Young LLP, No. 12-304-cv (2d Cir. Aug. 9, 2013).
Plaintiff, a former employee of Ernst & Young, brought a class action on behalf of herself and other similarly situated to recover overtime wages under the FLSA and the New York Department of Labor's Minimum Wage Order. Plaintiff's employment contract, naturally, contained a mandatory arbitration clause that specifically applied to the FLSA and state wage laws, as well as a provision that "disputes pertaining to different employees will be heard in separate proceedings."
Plaintiff's individual alleged unpaid overtime wages were $1,867.02. The district court denied Ernst & Young's motion to dismiss, stay the proceedings, or compel arbitration on an individual bases. The district court reasoned that "[e]nforcement of the class waiver provision in this case would effectively ban all proceeings by [plaintiff] against E&Y."
The Second Circuit reversed. Citing American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013), the court held that the "effective vindication doctrine" (which might allow invalidation of a class-action waiver) was not satisfied even if the cost of proceeding individually in arbitration would exceed the potential recovery. Further, the court held that FLSA "does not include a 'contrary congressional command' that prevents a class-action waiver provision in an arbitration agreement from being enforced by its terms."
Thursday, August 8, 2013
The Judicial Panel on Multidistrict Litigation granted three Motions to Centralize and denied eight Motions to Centralize in its July 2013 Hearing Session.
MDL No. 2458 - IN RE: Effexor (Venlafaxine Hydrochloride) Products Liability Litigation (before Judge Rufe in the Eastern District of Pennsylvania)
MDL No. 2455 - IN RE: Stericycle, Inc., Steri-Safe Contract Litigation (before Judge Shadur in the Northern District of Illinois)
MDL No. 2454 - IN RE: Franck's Lab, Inc., Products Liability Litigation (before Judge Engelhardt in the Eastern District of Louisiana)
MDL No. 2469 - IN RE: Capatriti Brand Olive Oil Marketing and Sales Practices Litigation
MDL No. 2467 - IN RE: Bank of America, N.A., Mortgage Corporation Force-Placed Hazard Insurance Litigation
MDL No. 2466 - IN RE: Wells Fargo Bank, N.A., Mortgage Corporation Force-Placed Hazard Insurance Litigation
MDL No. 2465 - IN RE: JPMorgan Chase Bank, N.A., Mortgage Corporation Force-Placed Hazard Insurance Litigation
MDL No. 2464 - IN RE: HSBC Mortgage Corporation Force-Placed Hazard Insurance Litigation
MDL No. 2463 - IN RE: Fresh Dairy Products Antitrust Litigation (No. II)
MDL No. 2453 - IN RE: Adderall XR (Amphetamine/Dextroamphetamine) Marketing, Sales Practices and Antitrust Litigation
MDL No. 2456 - IN RE: Kashi Company Marketing and Sales Practices Litigation
Monday, July 22, 2013
The Northern District of Ohio, supervising multidistrict litigation alleging that Whirlpool's front-loading washing machines allow mold and mildew to grow in the machines, certified a class of Ohio purchasers for liability purposes. The Sixth Circuit affirmed. The Supreme Court granted Whirlpool's petition for certiorari, vacated, and remanded to the Sixth Circuit for reconsideration in light of Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013).
The Sixth Circuit just reaffirmed the class certification, despite Amgen and Comcast. Glazer v. Whirlpool Corp., No. 10-4188 (6th Cir. July 18, 2013).
Saturday, July 13, 2013
Nineteen plaintiff families filed a single complaint against Pfizer and other pharmaceutical companies in state court in West Virginia, alleging that Zoloft caused birth defects to children born of women ingesting it. Only one of the plaintiff families was nondiverse from the defendants. A West Virginia state rule required each family to be docketed separately and to pay a separate filing fee, but did not required them to fiile separate complaints.
The pharmaceutical companies removed eighteen of the nineteen families to federal court, alleging diversity jurisdiction. The district court remanded, holding that the action was really one civil action lacking complete diversity, and that the one nondiverse family was not fraudulently joined.
The Fourth Circuit held that the remand order was within the scope of 28 U.S.C. 1447(c) because it was based on the district court's lack of subject matter jurisdiction. Therefore, the remand order was not reviewable on appeal under 28 U.S.C. 1447(d).
Retired Justice Sandra Day O'Connor, sitting by designation, joined the opinion. E.D. v. Pfizer, No. 12-2188 (4th Cir. July 12, 2013).
Wednesday, July 3, 2013
The Legal Intelligencer reports that a Pennsylvania lower court has upheld the statutory $500,000 limit on damages awards against governmental entities, reducing a $14 million award to a plaintiff for loss of her leg, and setting the stage for a constitutional challenge to the damages cap in the Pennsylvania Supreme Court.
Monday, July 1, 2013
Here is the opinion in The Authors Guild, Inc. v. Google Inc. The opinion begins:
We consider in this appeal whether the United States District Court for the Southern District of New York (Denny Chin, Circuit Judge, sitting by designation) erred in certifying the plaintiff class—authors claiming that defendant-appellant Google Inc. committed copyright infringement by copying and displaying “snippets” of millions of books in the Library Project of its Google Books search tool. On the particular facts of this case, we conclude that class certification was premature in the absence of a determination by the District Court of the merits of Google’s “fair use” defense. Accordingly, we vacate the June 11, 2012 order certifying the class and remand the cause to the District Court, for consideration of the fair use issues, without prejudice to any future motion for class certification.
Friday, June 28, 2013
This week the Supreme Court issued its much-anticipated decisions in Windsor v. United States (on the federal Defense of Marriage Act) and Hollingsworth v. Perry (on California’s Prop. 8). Both cases presented significant questions with respect to Article III jurisdiction and standing, which were excellently summarized earlier this year by Marty Lederman’s seven-part series for SCOTUSblog.
In Windsor, a five-Justice majority opinion authored by Justice Kennedy (joined by Ginsburg, Breyer, Sotomayor, and Kagan) found that Article III jurisdiction was proper and that the Court should not invoke prudential grounds to refrain from exercising jurisdiction; the majority then concluded that DOMA was unconstitutional.
In Perry, a five-Justice majority opinion authored by Chief Justice Roberts concluded that the intervenors who supported Proposition 8 lacked Article III standing to challenge the district court’s order declaring Prop. 8 unconstitutional and enjoining California officials from enforcing it. Perry was a particularly interesting 5-4 split: The Chief was joined by Scalia, Ginsburg, Breyer, and Kagan. Justice Kennedy dissented, joined by Thomas, Alito, and Sotomayor.
From a jurisdictional standpoint, one crucial difference was that in Windsor, the federal government enforced DOMA (by denying Windsor the requested refund) and then proceeded to seek review of both the district court and appellate court rulings that DOMA was unconstitutional. As Kennedy puts it: “It would be a different case if the Executive had taken the further step of paying Windsor the refund to which she was entitled under the District Court’s ruling.” In Perry, on the other hand, the California government did not appeal the district court’s order and injunction. Perhaps the standing inquiry in Perry would have come out differently if the California government had adopted a litigation strategy similar to the one the U.S. government took in Windsor.
For anyone counting heads, here’s how each Justice came down on the Article III issues in both cases:
- Kennedy, Alito and Sotomayor supported exercising jurisdiction in both Windsor and Perry. (Alito is somewhat unique as to Windsor, because he argued that the U.S. government “clearly is not a proper petitioner” given its position that DOMA was unconstitutional; he argued instead that jurisdiction was proper because the House of Representatives’ Bipartisan Legal Advisory Group had standing as intervenors.)
- Roberts and Scalia opposed exercising jurisdiction in both Windsor and Perry.
- Ginsburg, Breyer and Kagan supported jurisdiction in Windsor and opposed jurisdiction in Perry.
- Thomas supported jurisdiction in Perry and opposed jurisdiction in Windsor.
Monday, June 24, 2013
With all of this week’s end-of-the-Term anticipation and excitement, some of today’s cert. grants may have slipped below the radar. But here are two cases that will be argued next Term that may be of interest:
Thursday, June 20, 2013
Today the Supreme Court issued its decision in American Express Co. v. Italian Colors Restaurant (No. 12-133), another important arbitration case. The Court divides 5-to-3, with Justice Scalia writing the majority opinion (joined by Roberts, Kennedy, Thomas and Alito), and Justice Thomas writing a brief concurring opinion. Justice Kagan writes a dissenting opinion (joined by Ginsburg and Breyer). Justice Sotomayor took no part.
Justice Scalia’s majority opinion begins: “We consider whether a contractual waiver of class arbitration is enforceable under the Federal Arbitration Act when the plaintiff’s cost of individually arbitrating a federal statutory claim exceeds the potential recovery.” The answer: yes. The FAA’s mandate that arbitration provisions are “valid, irrevocable, and enforceable” applies [p.3], and “[n]o contrary congressional command requires us to reject the waiver of class arbitration here.” [p.4]. The opinion continues: “Respondents argue that requiring them to litigate their claims individually—as they contracted to do—would contravene the policies of the antitrust laws. But the antitrust laws do not guarantee an affordable procedural path to the vindication of every claim.” [p.4]
Wednesday, June 19, 2013
Plaintiff, a Florida limited liability company, filed a diversity suit against Sheraton in the Southern District of New York. After three years and much discovery, the action was dismissed without prejudice for lack of subject matter jurisdiction when it was revealed that at least one of the members of plaintiff's limited liability company was a New York citizen, as was Sheraton. Plaintiff then tried to cure the jurisdictional defect by dropping the non-diverse member of its company and filing a new action alleging the same claims.
The district court also dismissed the second action for lack of subject matter jurisdiction, ruling that 28 U.S.C. §1359 prohibited such "engineering" of diversity jurisdiction. The court also granted Sheraton's motion for "just costs," including $200,000 in attorney's fees, under 28 U.S.C. §1919 ("Whenever any action or suit is dismissed in any district court . . . for want of jurisdiction, such court may order the payment of just costs.")
The Second Circuit reversed, holding that Section 1919's allowance of "just costs" did not include attorney's fees, and that the invocation of the common-law "bad faith" exception to the American Rule on attorney's fees was not appropriate in the case. Castillo Grand, LLC v. Sheraton Operating Corp., No. 11-2457 (2d Cir. June 18, 2013).
In Budinich v. Becton Dickinson & Co., 486 U.S. 196 (1988), this Court held that a district court’s decision on the merits that left unresolved a request for statutory attorney’s fees was a “final decision” under 28 U.S.C. § 1291. The question presented in this case, on which there is an acknowledged conflict among nine circuits, is whether a district court’s decision on the merits that leaves unresolved a request for contractual attorney’s fees is a “final decision” under 28 U.S.C. § 1291.
You can find a link to the First Circuit’s decision below and the cert-stage briefing at SCOTUSblog’s case file.
Monday, June 10, 2013
Today was arbitration day at the Supreme Court (well, that and raisins). In addition to granting certiorari in BG Group PLC v. Argentina, the Court issued a unanimous decision in Oxford Health Plans LLC v. Sutter (No. 12-135). Justice Kagan writes the Court’s opinion in Oxford, which begins:
Class arbitration is a matter of consent: An arbitrator may employ class procedures only if the parties have authorized them. See Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S. 662, 684 (2010). In this case, an arbitrator found that the parties’ contract provided for class arbitration. The question presented is whether in doing so he “exceeded [his] powers” under §10(a)(4) of the Federal Arbitration Act (FAA or Act), 9 U. S. C. §1 et seq. We conclude that the arbitrator’s decision survives the limited judicial review §10(a)(4) allows.
Here’s more from Justice Kagan’s opinion on the relationship between Oxford and Stolt-Nielsen [Op. at 6-7]:
Today the Supreme Court granted certiorari in BG Group PLC v. Republic of Argentina (No. 12-138), which presents the question: “In disputes involving a multi-staged dispute resolution process, does a court or instead the arbitrator determine whether a precondition to arbitration has been satisﬁed?”
You can find links to the D.C. Circuit’s decision below and the cert-stage briefing at SCOTUSblog’s case file.
Sunday, June 9, 2013
class actions (consolidated in an MDL in Minnesota) are notable for the whimsical names of their subclasses, the Soggy
Plaintiffs and the Cloggy Plaintiffs.
The Eighth Circuit upheld the settlement of several class actions
alleging damage caused by defective brass
plumbing fittings sold by defendants Radiant and Uponor. The Soggy Plaintiffs have already experienced
leaking (in some cases causing severe damage) and the Cloggy Plaintiffs have
not yet experienced leaks but have the same fittings.
"The proposed settlement agreement stipulated that after two leaks, soggy plaintiffs would be entitled to have their entire plumbing system replaced at Uponor and Radiant's expense. Cloggy plaintiffs who had demonstrated 'by way of a flow test that a differential in water flow . . . of more than 50% [exists] between the hot and cold lines' would also be entitled to replacement of their brass fittings, and if that proved insufficient, to a new plumbing system."
After notice of the proposed settlement had been sent, Ortega, a California resident, moved to intervene as of right. His motion was denied as untimely. He and 26 other class members then objected to the settlement, arguing that notice had been deficient, that the scope of the release of defendants was overbroad, and that the settlement did not account for a cause of action available under California law. All of these arguments were rejected and the district court's approval of the settlement was upheld. In re Uponor, Inc., F1807 Plumbing Fittings Products Liability Litigation, No. 12-2761 (8th Cir. June 7, 2013).
Saturday, June 8, 2013
In an absurdly lengthy opinion, which I must admit to only skimming, the Third Circuit has held that a ten-by-ten foot subleased office makes Delaware the principal place of business of a GlaxoSmithKline holding company, and thus upheld diversity jurisdiction over a personal injury action involving thalilomide. (Yes, thalilomide, the anti-nausea-in-pregnancy drug from the late 50's and early 60's that caused birth defects.) Plaintiffs claim to have discovered new evidence showing that defendants were aware of the drug's defects while marketing it. Johnson v. SmithKline Beecham Corp., No. 12-2561 (3d Cir. June 7, 2013.)
The plaintiffs are Pennsylvania citizens and they claimed that four defendants were also Pennsylvania citizens. So when defendants removed the action from Pennsylvania state court, plaintiffs moved to remand. That motion was denied and the issue certified for interlocutory appeal. Apparently the issue of these companies' citizenship for diversity purposes has come up in several other cases and the district court rulings have conflicted.
As a naive law student, I concluded that any corporate structure that I could not understand was up to no good, and I have found no reason to change my mind about this well into middle age. Three of the four defendants that plaintiffs claimed were Pennsylvania citizens are entities affiliated with GlaxoSmithKline plc, the British entity that is the "global head" of the GlaxoSmithKline group of companies. Defendant SmithKline Beecham Corp. was once a Pennsylvania corporation, but it converted in 2009 to a Delaware LLC. As far as I understood, the purpose of the conversion was to avoid "unnecessary tax liability." (Wish I could convert myself to a Delaware LLC!) SmithKline Beecham then dissolved. The court thus held that SmithKline Beecham was not a Pennsylvania citizen because it had converted itself into a new entity, defendant GSK LLC.
GSK LLC operates the US division of GlaxoSmithKline plc. Its headquarters is still in Philadelphia, "where it occupies 650,000 square feet of office space and employs 1,800 people" – the same as when it was still SmithKline Beecham. SmithKline Beecham's board of directors became GSK LLC's "board of managers." Does that mean GSK LLC's principal place of business is still Pennsylvania?
No. As an LLC, GSK LLC's citizenship for diversity purposes is derivative of its owner's (or "member's") citizenship. Its sole member is GSK Holdings, a Delaware corporation with its principal place of business in (according to the Third Circuit) Delaware. GSK Holdings subleases a ten-by-ten foot office in Delaware. It has one employee who works about 20 hours per year. Its three directors hold quarterly 15-30 minute meetings in Delaware (at least one of the directors is usually physically present at the meetings) to discuss GSK Holdings' investments.
As for the fourth defendant at issue, Avantor, it evidently moved its principal place of business to Pennsylvania five days after the removal, so the court held that it was still a New Jersey citizen at the time of removal.
Thursday, June 6, 2013
stunning development, the Oklahoma Supreme Court has invalidated a sweeping
tort reform bill passed in 2009. The
particular provision at issue in Douglas
v. Cox Retirement Properties, Inc., 2013 OK 37, a wrongful
death action against a nursing home, was the requirement of an expert's "affidavit
of merit" to be filed with or shortly after the filing of the complaint in
a professional negligence claim. When
the plaintiff failed to file the affidavit of merit, the trial court granted
defendant's motion to dismiss. The
Oklahoma Supreme Court reversed.
The expert affidavit of merit requirement was just one portion of Oklahoma H.B. 1603, the so-called Comprehensive Lawsuit Reform Act of 2009. The bill has 90 separate sections encompassing such disparate topics as transfer of cases, limitations on noneconomic damages, suing fast food providers, and a host of other provisions. The court held that H.B. 1603 violated Article 5, Section 57 of the Oklahoma Constitution ("Every act of the Legislature shall embrace but one subject, which shall be clearly expressed in its title"), commonly known as the single-subject rule. "The purposes of the single-subject rule are to ensure the legialtors or voters of Oklahoma are adequately notified of the potential effect of the legislation and to prevent logrolling."
A separate opinion, Wall v. Marouk, 2013 OK 36 (June 4, 2013), also invalidated the affidavit of merit requirement in a medical malpractice action. The court held that the requirement violated two other Oklahoma constitutional provisions, one prohibiting "special laws" (Okla. Const. art. 5, §46), and the other guaranteeing right of access to the courts (Okla. Const. art. 2, §6).
Sunday, June 2, 2013
Twelve Asbestos Plaintiffs' Claims Dismissed Under Rule 41(b) for Noncompliance with Administrative Order
The Third Circuit has upheld the dismissal of twelve plaintiffs' claims in the Asbestos MDL for failure to comply with an administrative order requiring them to include specific histories of their exposure to asbestos. The first paragraph of the opinion is:
This appeal comes to us from Multidistict Litigtion case number 875 ("MDL 875"), otherwise known as the "Asbestos MDL," involving asbestos cases from around the country, pending before Judge Robreno in the United States District Court for the Eastern District of Pennsylvania. The District Court, overseeing several thousand asbestos cases, dismissed the claims of twelve Plaintiffs pursuant to Rule 41(b) of the Federal Rules of Civil Procedure based on non-compliance with the District Court's Administrative Order No. 12 ("AO 12"). Specifically, Judge Robreno determinated that the Plaintiffs' submissions were fatally flawed in that they failed to include specific histories of Plaintiffs' exposure to asbestos. Plaintiffs contend on appeal, as they did in the District Court, that AO 12 did not impose this requirement, and urge, alternatively, that even if it did, under a proper balancing of the factors we outlined in Poulis v. State Farm Fire and Casulaty Company, 747 F.2d 863 (3d Cir. 1984), dismissal with prejudice was not warranted. For the reasons discussed below, we will affirm the District Court's dismissal of the twelve cases at issue.
In re: Asbestos Products Liability Litigation, No. 12-2061 (3d Cir. May 31, 2013).
Tuesday, May 28, 2013
Whether a state’s parens patriae action is removable as a “mass action” under the Class Action Fairness Act when the state is the sole plaintiff, the claims arise under state law, and the state attorney general possesses statutory and common-law authority to assert all claims in the complaint.
You can find a link to the Fifth Circuit’s decision below and the cert-stage briefing at SCOTUSblog’s case file.
It will be the second Supreme Court case to interpret CAFA in as many Terms, following the decision this March in Standard Fire Insurance Co. v. Knowles.
Thursday, May 16, 2013
Two years ago we covered the strange set of developments in Comer v. Murphy Oil USA, a class action lawsuit against a number of chemical and energy companies based on their alleged contribution to climate conditions that exacerbated the force and effect of Hurricane Katrina. The district court had dismissed the case on political question grounds, but a Fifth Circuit panel reversed — rejecting the political question argument and finding that the plaintiffs had standing. See 585 F.3d 855 (2009).
The en banc Fifth Circuit granted rehearing, although due to several recusals only nine of the sixteen Fifth Circuit judges were able to vote. Then one of those nine judges recused, thus depriving the en banc court of its quorum. However, the quorum-less en banc court chose not to revert to the Fifth Circuit panel’s decision, which would have reversed the district court’s dismissal and remanded the case for further proceedings. Rather, the quorum-less en banc court (per five of the remaining eight judges) dismissed the appeal in its entirety, thereby reinstating a district court ruling that had already been unanimously reversed by a three-judge Fifth Circuit panel. See 607 F.3d 1049 (2010).
In 2011, the plaintiffs filed a new lawsuit alleging many of the same claims. This week, a Fifth Circuit panel affirms the dismissal of that lawsuit, finding it barred by res judicata. In Comer II (No. 12-60291, May 14, 2013), the panel concludes that — despite the unusual chain of events at the Fifth Circuit two years ago — the first lawsuit satisfied all the elements of res judicata: “(1) the parties are identical or in privity; (2) the judgment in the prior action was rendered by a court of competent jurisdiction; (3) the prior action was concluded by a final judgment on the merits; and (4) the same claim or cause of action was involved in both actions.” [Slip Op. 7]
(Hat Tip: David Coale)