Posts Tagged ‘class actions’

Court dismisses suit claiming McDonald’s should have discounted hold-the-cheese orders

“The court slapped down a South Florida couple’s putative class action lawsuit, which sought $5 million in damages and claimed McDonald’s was wrong to force diners to pay for cheese on Quarter Pounder and Double Quarter Pounder burgers, whether or not they wanted it.” [Raychel Lean, Daily Business Review/Law.com, earlier here and here]

Class action roundup

  • “For instance, linalool, which is cited as a cockroach insecticide by the law firm, is found in plants like mints and scented herbs. While it’s also used in insecticides, it’s not poisonous for humans…” [Aimee Picchi, CBS News on suit claiming that LaCroix flavored water wrongly claims “all natural” status]
  • “Appeals Court Strikes $8.7M in Legal Fees Based on Coupons in Class Action Settlement” [Ted Frank objection in ProFlowers and RedEnvelope class action; Amanda Bronstad, The Recorder] “Judge: Lawyers must justify fee requests for investor suits withdrawn vs Akorn over proxy disclosures” [Ted Frank objection in investor class action against Akorn Inc.; Jonathan Bilyk, Cook County Record]
  • Study: class action lawsuits hit innovative companies the hardest [Alex Verkhivker, Chicago Booth on study by Elisabeth Kempf of Chicago Booth and Oliver Spalt of Tilburg University]
  • “It’s Possible Woman Suing Over Sugar In ONE Protein Bars Never Actually Ate One” [Mary Ann Magnell, Legal NewsLine] And it is surprising how many reports continue to indulge the notion that typical consumer class actions spring from consumer grievance as opposed to lawyers’ entrepreneurial spotting of chances [ABA Journal on slack-fill suits]
  • “DOJ Tells Court: Class Lawyers Already Got $60M in Fees. Now They Want More? [Marcia Coyle, National Law Journal on Native American farmer case] “noting that it was difficult for him to believe the few boilerplate documents entered into the record took hundreds of hours to create. ” [D.M. Herra, Cook County Record; Western Union text messages]
  • “State Street settlement fiasco has Arkansas lawmakers questioning state’s role in class actions” [John O’Brien, Legal NewsLine, earlier here, etc.]

Liability roundup

Opponent claims multi-line class action shop compensated plaintiffs

A Southern California class action firm “is accused of bribing cash-strapped 20-somethings to serve as lead plaintiffs and submit false testimony.” The firm, Newport Trial Group, is active in many categories of litigation readers of this site may find familiar, including suits over alleged food and cosmetic mislabeling, slack fill, and failure to advise customers that their phone calls were being recorded, and its founder has also been listed as counsel in multiple suits against large corporations over web accessibility and claims of patent infringement by non-practicing entities. [Jenna Greene, American Lawyer Litigation Daily courtesy Texans for Lawsuit Reform]

Ironically, the complicated and protracted litigation that led to the new setback arose not from the numerous suits the law firm or its founder filed against household-name national companies, but from one against a purveyor of nutritional items and supplements such as colloidal silver. Excerpt:

The district court judge, James Selna, explained his reasoning in a June 12 decision that does not bode well for the firm.

Natural Immunogenics, he wrote, “has put forth sufficient evidence to support its contention that defendants operated a fraudulent scheme to manufacture litigation.”

“Specifically, NIC has established that in camera review may reveal evidence that defendants have a pattern of manufacturing litigation, which involves the [Newport Trial Group] defendants identifying companies vulnerable to false advertising or wiretap litigation, recruiting individuals to serve as lead plaintiffs, instructing the individuals on exactly what steps to take to give them the appearance of having suffered actionable injuries, and concealing and misrepresenting the contrived nature of the lawsuits from the courts.”

A “web of concealment and highly questionable ethical practices”

A “web of concealment and highly questionable ethical practices by experienced attorneys who should have known better”: a court has unsealed a scathing report on the conduct in the State Street case of a leading class action firm, Labaton Sucharow, and Garrett Bradley of the Thornton Law Firm in Boston. The court took particular notice of Labaton’s connections through a Houston middleman (to whom it had agreed to pay an undisclosed $4.1 million fee) to the Arkansas Teacher Retirement System, which served as institutional plaintiff [Daniel Fisher/Forbes, Amanda Bronstad/NLJ] Earlier here and here.

Supreme Court: class actions can’t be brought back time after time

Class action tolling means suspending time limits on future lawsuits while a class action suit is pending. This is distinct from class action trolling which is when the Ninth Circuit adopts a deliriously liberal rule and dares the Supreme Court to reverse it.

Both phenomena were involved in today’s unanimous Supreme Court opinion in China Agritech v. Resh. In the 1974 case of American Pipe & Construction v. Utah the Court had adopted a rule permitting individual claimants to file otherwise-tardy actions after a court had declined to certify a class action. The American Pipe rule is itself decidedly indulgent toward the class action device, but it took the Ninth Circuit to take a crucial extra step off the Santa Monica pier by holding that the late-arriving claimants should themselves be able to ask for certification as a class action. After all, the first try at certification might have been based on a flawed legal strategy or incomplete factual record. Why not give our friends in the bar a second bite?

Or a third bite, or an nth: in fact the case that reached the high court was the third class action in a row attempted on the same underlying facts, a securities dispute. To almost everyone but the Ninth Circuit, the resulting danger was clear enough: without any real need to accept “no” for an answer, class action lawyers could just come back again and again with new tame plaintiffs until they find a judge willing to grant certification, the step that tends to guarantee a payday in the class action business.

Today’s unanimity is significant. On procedural and jurisdictional issues, at least, today’s liberal wing on the Court has sometimes been willing to unite with the Rehnquist-Scalia-Roberts wing to recognize and rein in the dangers of lawyer-driven overlitigation, the tactical use of lawsuits as a weapon, and so forth. Justice Ruth Bader Ginsburg, who wrote today’s opinion, has more than once joined and sometimes led such coalitions. By contrast, Justice Sonia Sotomayor has often been found alone and out on a limb in favor of a more litigation-friendly position, which happened again today: she joined in a concurrence agreeing that the Ninth Circuit had gone too far but seeking to limit the Court’s holding to securities suits governed by the Private Securities Litigation Reform Act of 1995 (PSLRA).

The Senate might want to quiz future liberal nominees – yes, there will be such – on whether they more favor the Ginsburg or the Sotomayor approach to these issues.

[cross-posted from Cato at Liberty]

Liability roundup

“They like a Quarter Pounder without cheese. So they’re suing McDonald’s for $5 million”

Some McDonald’s stores used to charge separate prices for Quarter Pounders depending on whether they did or did not include cheese, but then moved to a policy of charging the same price either way. Lawyers have now filed an intended class action claiming that two South Florida clients “have suffered injury” because under the new pricing scheme they “were required to pay for cheese… that they did not want and did not receive.”” [Howard Cohen, Miami Herald]

Supreme Court upholds workplace arbitration, and it’s Epic

My latest at Cato on this week’s decision upholding agreements to individually arbitrate wage and hour claims, in Epic Systems Corp. v. Lewis:

Yesterday’s 5-4 Supreme Court decision upholding agreements to individually arbitrate wage-and-hour claims was neither surprising nor novel as a legal matter. Nor – notwithstanding the variously breathless, furious, and apocalyptic reactions it has drawn from stage Left – is it objectionable as a matter of policy, or “anti-worker.” It is pro-liberty, pro-contract, and pro-respect for private ordering….

NPR, which really should know better, misreported on Twitter that “The Supreme Court in a 5-4 vote has delivered a major blow to workers, ruling for the first time that workers may not band together to challenge violations of federal labor laws,” of which the first eight words count as accurate reporting, the next half-dozen as erroneous opinion, and the remainder as merely false in fact….

…an oft-heard argument is that a contract presented as a take-it-or-leave-it matter, as is typical of employer handbook policies, credit card terms and the like, doesn’t count as a “real” contract and is entitled to no respect as a matter or law or, presumably, from libertarians. … Properly evaluating that claim is a task for another occasion, but my colleague Andrew Grossman is surely right when he points out that every hour of the day workers choose to accept overall employment packages including some terms they welcome (health insurance coverage, paid vacations) along with others they may not (some weekend hours required, don’t take staplers home) and that the lack of dickering over individual terms does not mean that they are not voluntary or have somehow been imposed by force.

Whole thing here. As I wrote after Italian Colors, millions of people “sign away their class action rights not because they are all hoodwinked or coerced, but because at some level they have rational grounds to recognize that” those rights are mostly of value to the class action industry.

Speaking of Italian Colors, the outcome in Epic Systems would surely have been no different had Scalia lived, since he led the way on the Court toward respecting contractual arbitration clauses and upholding the broad scope of the Federal Arbitration Act. More from Archis Parasharami and Dan Jones at SCOTUSBlog: “The best available empirical evidence shows that employees who arbitrate their claims are more likely to prevail than those who go to court, and to obtain awards that are the same as or larger than court awards in a shorter amount of time.” More: James Copland.