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CAFA Update

I am speaking at the 11th Annual National Institute on Class Actions, held at the Fairmont Hotel in Chicago on October 19, 2007.  I will be providing a doctrinal overview of all of the significant doctrinal developments concerning the Class Action Fairness Act of 2005.  Here is an outline of my talk.

Class Action Attorney's Fees Expert - August Column

I write a monthly column entitled "Expert's Corner" in Class Action Attorney Fee Digest.  My August Column describes an interesting situation:  a nationwide consumer class action settlement entered by a state court in Illinois that a state court in North Carolina has refused to respect under the Full, Faith, and Credit Clause in part because the class members received almost no compensation while the attorneys received a significant fee.  See Moody v. Sears, Roebuck and Co., 2007 WL 2582193 (N.C.Super. May 7, 2007).  The case raises a host of interesting issues which I describe and critique.

Class Action Attorney's Fees Expert - July Column

I write a monthly column entitled "Expert's Corner" in Class Actions Attorney Fee Digest.  My July column provides a round-up of the 2007-2008 Supreme Court Term, analyzing cases concerning class action law generally, and class action attorney's fees in particular.

Class Action Attorney Fees Expert - June Column

I write a monthly column entitled "Expert's Corner" in Class Actions Attorney Fee Digest.  My June column looks at two cases in which class certification was denied and yet fees were sought.  In one case, class counsel recovered fees while in the other they did not.  The column discusses the differences between the two cases and explains their outcomes. 

Class Action Attorney's Fees Expert - May Column

I write a monthly column entitled "Expert's Corner" in Class Actions Attorney Fee Digest.  My May column analyzes the issue of aggregate fee awards that must be divided up among many class counsel -- I consider who does the dividing, according to what standard, and whether the outcome should be kept confidential.  The column discusses a fee dispute presently preceding in the federal district court in New Orleans, where the court -- at lead counsel's request -- has sealed the amounts each class counsel is receiving from the aggregate fee award and where objectors seek to unseal those records.  See In re High Sulfur Content Gasoline Products Liability Litigation, Civil Action No. MDL 1632 (E.D. La.).

Morgan Stanley Settles Sex Discrimination Class Action

The New York Times reported today that Morgan Stanley has agreed "to pay at least $46 million to settle a class-action suit filed by eight current and former female brokers who contended that they were discriminated against in how they were trained, promoted and paid."   The parties have filed for preliminary approval of the settlement agreement in the US District Court for the District of Columbia.  The plaintiffs are represented by Mehri & Skalet, Sprenger + Lang, PLLC, and a New Mexico employment firm Moody & Warner, PA; Morgan, Lewis & Bockius, LLP represents Morgan Stanley.

California Supreme Court Rules Certification Should Precede Merits

In Fireside Bank v. Superior Court of Santa Clara County, the California Supreme Court held that class certification decisions should precede merits rulings so as to guard against the problem of "one-way intervention."  The Court nonetheless affirmed the trial court's decision to certify the class.  Jan T. Chilton of Severson & Werson argued for the bank; Carol McLean Brewer of Kemnitzer, Anderson, Barron & Ogilvie for the plaintiffs.

Class Action Attorney's Fees Expert - April Column

I write a monthly column entitled "Expert's Corner" in Class Actions Attorney Fee Digest.  My April column discusses incentive payments to plaintiffs, looking at why such payments are paid, to whom, in what circumstances, and how much they should be.  The column's jumping off point is a $1.25 million incentive payment to plaintiffs in a recent nationwide anti-trust case.  Spartanburg Regional Health Services Dist., Inc. v. Hillenbrand Indus., Inc., No. 03-2141 (D. S.C. 2006). 

Class Action Law Teleconference

I am participating in a class action continuing legal education teleconference on Tuesday, March 20, 2007.  Here's an overview  of the topics that I will be covering and an annotated outline of the CAFA issues that I will discuss.

Class Action Attorney's Fees Expert - March Column

I write a monthly column entitled "Expert's Corner" in Class Actions Attorney Fee Digest.  My March column analyzes the issue of whether, in a common fund case, the fee should be set as a percentage of the monies made available or of those actually claimed by the plaintiffs (or distributed via cy pres).   The column discusses, and agrees with the result reached by the Second Circuit in, Masters v. Wilhelmina Model Agency, Inc., 473 F.3d 423 (2d Cir. 2007).

Class Action Attorney's Fees Expert - February Column

I am writing a monthly column entitled "Experts Corner" in a terrific new publication, Class Actions Attorney Fee Digest.  My first column , co-authored with my friend Alan Hirsch, appeared in February.  It discusses In re Stock Exchanges Options Trading Antitrust Litigation, 2006 U.S. Dist. LEXIS 87825 (S.D.N.Y. Dec. 4, 2006), a case in which the district judge chose to use a lodestar rather than percentage fee based on the fact that the plaintiffs' were only partially successful.  Alan and I are critical of this choice, arguing that the percentage method would have been more efficient and would have been well-tailored to capture the partial success since it would have been only a percentage of the fund that the plaintiffs actually recovered.

New Article Analyzes CAFA Commencement Issue

Lonny Hoffman (Univ. of Houston, visiting at Texas) has posted a new article analyzing the first year of caselaw concerning CAFA's commencement issue.  Though the issue of when a class action "commenced" for purposes of whether or not CAFA applies is an issue that will fade with time. Professor Hoffman argues that there are important lessons for statutory commencement issues generally that can be drawn from the CAFA caselaw.

Another Circuit Fixes CAFA

With Morgan v. Gay, 2006 WL 2938309 (Oct. 16, 2006), the Third Circuit joins the Ninth, Tenth , and Eleventh Circuit in interpeting CAFA's remand appeal timing provision to mean precisely the opposite of what it says.  CAFA permits appeal from an order granting or denying a motion to remand a removed case back to state court so long as the appeal is filed "not less than 7 days after entry of the [district court's] order." 28 U.S.C. §1453(c).  As written, a litigant cannot appeal until day 7, but can then appeal years later.  Of course, Congress meant to require appeal petitions to be filed expeditiously, so the provision should have read "not more than 7 days after entry of the order."  It is fun to watch these courts reach this conclusion because to do so they have turn to the legislative history even though the statutory text itself is completely unambiguous (stupid, but not ambiguous), hence violating what some (though not all) see as a sacred principle of statutory construction.

Law Professor Experts in Class Action Lawsuits

I am on a panel at the ALI/ABA Tenth Annual National Institute on Class Actions in San Diego, CA on Friday, October 6.  I have been given the task of describing the growing trend of law professors appearing as expert witnesses in class action cases.  Though I have been retained as an expert on a number of occasions, I have never seen anything written describing the practice, nor analyzing its legal, ethical, and strategic components.  Click here for my thoughts.

District Court Holds Parallel State Action No Bar to Its Proceedings; Refuses to Dismiss or Stay

Plaintiffs filed class actions, consolidated in the Eastern District of Pennsylvania, against manufacturers of hydrogen peroxide, alleging price fixing under five different states' laws.  The Court divided them into two actions, one for direct purchasers, the other for indirect purchasers who allege that they have overpaid for a particular product as a result of a defendant's anticompetitive actions.  Before the instant case was filed, parallel state claims were filed in California state court by plaintiffs also named in the federal action. 
     Defendants filed a motion to dismiss or stay the California claims in the instant case out of deference to the ongoing state action.  United States District Court Judge for the Eastern District of Pennsylvania Stewart Dalzell analyzed the parallel claims under the six Colorado River factors.  Finding that "none of these factors compels abstention, let alone favors it, dismissing or staying this case would amount to an abuse of discretion."  In his analysis, Judge Dalzell stressed that plaintiffs had advised the state court that they would ask it to suspend its jurisdiction if the district court retained its jurisdiction.  Furthermore, "CAFA itself weighs against" dismissal, since "Congress has put its thumb heavily on the federal side of the scales in class actions like these."  The fact that California law would ultimately govern the substantive inquiry thus had "little, if any, bearing."  In re: Hydrogen Peroxide Antitrust Litigation, 2006 U.S. Dist. LEXIS 18790 (E.D. Penn. Apr. 11, 2006).- A.S.

DC District Court Certifies Class Action For Settlement Purposes

Plaintiffs initiated this RICO action against directors and employees of Riggs Bank alleging money laundering, wire fraud, and mail fraud.  Parties reached a settlement in June 2005 which plaintiff accepted on behalf of a putative class.  After receiving preliminary certification and notifying class members, the plaintiff requested final approval of the settlement and class certification.  The court certified the class, finding that the requirements of 23(a) and (b) were met and noting that "settlement-only" certifications were becoming a prominent feature of federal class action practice.  The court also approved the settlement, finding it met the standard embodied in rule 23(e), and granted attorney's fees of 22%.  Freeport v. Allbritton, 2006 U.S. Dist. LEXIS 9710 (D. D.C. Mar.13, 2006).  - L.C.

D.C. Circuit Denies 23(f) Interlocutory Appeal

Plaintiffs filed this Title VII case against Naval Sea Systems Command, alleging sex and race discrimination.  They later moved to certify the matter as a class action, but the EEOC dismissed the complaint as lacking jurisdiction.  The employer then processed the complaints individually, and dismissed each one.  Plantiffs failed to sue within the required 90 days of the EEOC's dismissal, but did file with 90 days of the employer's individual dismissals.  Shortly thereafter, they moved to certify the class under Rule 23.  The district court dismissed the action because the plaintiffs had failed to file within the Title VII 90 day deadline.  Plaintiffs then filed this 23(f) motion for an interlocutory appeal on the certification issue, arguing that the district court's denial of certification was clearly erroneous.  The D.C. Circuit dismissed the petition, finding that plaintiff's arguments related entirely to Title VII timing requirements, and were thus beyond the scope of a 23(f) appeal, which is limited to arguments dealing with Rule 23 certification requirements.  The court emphasized the narrowness of its holding, pointing out that plaintiffs' individual claims could go forward, and that they could appeal the Title VII issues after final judgment.  In re James, 2006 U.S. App. LEXIS 8405 (D.C. Cir. Apr. 7, 2006). - L.C.

5th Circuit Grants Removal Under CAFA For Suit Filed Prior To Requisite "Commencment" Date

In Braud v. Trans Serv. Co. the United States Court of Appeals for the fifth circuit held that removal to federal court under CAFA was appropriate for a suit originally filed before the requisite commencment date (2/18/05), when the effect of adding a defendant after that date made "it a substantially new suit so as to restart the removal window." 2006 U.S.App. Lexis 8496.  Plaintiffs originally filed their class action suit in Louisiana state court on 8/30/04.  After amending their complaint on 4/8/05 to add another defendant, that defendant filed for removal to federal court under CAFA, which gives the federal courts jurisdiction of qualifying class actions "commenced" after 2/18/05.  This court overruled the district court's holding that removal was inappropriate, reasoning that the addition of the second defendant did not relate back to the original complaint, but effectively made it a substantially new suit.  This court further held that the later dismissal of the second defendant from the complaint did not "oust" the federal court of subject matter jurisdiciton. - J.J.

Illinois District Court Denies Class Certification in ERISA Suit for Failure to Satisfy Typicality Requirement

United States District Judge for the Northern District of Illinois Amy J. St. Eve refused to certifiy plaintiffs' proposed class, in a suit arising from defendant insurer's refusal to pay for a certain cancer treatment.  The court found that plaintiffs' claims were not typical of the proposed sub-class of persons governed by ERISA, as Rule 23(a)(3) requires, because the insurer's coverage of the cancer treatment depended upon the date of treatment, the plan governing the claim, and whether treatment was provided as in-patient or out-patient care.  The court further ruled that the plaintiffs were improper representatives of a proposed non-ERISA sub-class, comprised of persons with claims governed by state contract law, because the plaintiffs were not members of this sub-class.  Finally the court rejected plaintiffs' effort to certify a defendant class, finding that the defendants were not "adequate" representatives due to antagonistic interests between them and the proposed defendant class.  Moffat v. Unicare Midwest Plan Group 31451, 2006 U.S. Dist. LEXIS 16348 (N.D. Ill. Apr. 5, 2006).  - A.L.