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Entries for category:
Other Jurisdictions
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Nov 19, 2012
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Choice of Law Decision Leads to Dismissal of State False Advertising Claims in Class Action Against General Mills
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“Wow, I can help lower my cholesterol 10 percent in one month?” This and other statements on Cheerios boxes led the FDA to issue a warning letter to General Mills. Without commenting on the accuracy of the health claims in the Cheerios marketing, the FDA noted that if the cereal is intended for use in lowering cholesterol, then it’s a drug within the agency’s regulatory supervision. Cheerios boxes were relabeled, but that didn’t stop the class action plaintiffs. Six complaints were filed by plaintiffs in California, New Jersey and New York. Apparently, all were filed in state court seeking state law remedies. The U.S. Judicial Panel on Multidistrict Litigation Committee consolidated the actions into one multidistrict litigation. For more, read the full story.
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Posted by
G. Krabacher in
Federal Class Action Law
Other Jurisdictions
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Permalink
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Oct 09, 2012
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The End of Incentive Agreements for Plaintiffs?
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Recently, the Ninth Circuit Court of Appeals issued a decision that calls to task the unethical behavior of class counsel. As a result, class counsel was denied some of its fees and a serious blow to the legitimacy of incentive agreements was dealt.
In the consolidated case of Rodriguez vs. Disner, case no. 10-55309 (9th Cir.), the court held that due to the inherent conflict of interest created by the incentive agreement in place between the McGuireWoods law firm as class counsel and select class members, it would award neither incentive compensation to the select class members nor incentive fees to McGuireWoods.
The case arose out of an antitrust class action law suit brought by the plaintiffs against West Publishing (owner of BAR/BRI) and Kaplan. The plaintiffs alleged that these two defendants conspired to prevent competition and wrongfully monopolize the full-service bar review course market, all in violation of applicable federal law. Shortly before trial, the allegations were resolved and the case was settled. West Publishing and Kaplan agreed to pay $49 million into a settlement fund, with 25 percent of that amount set aside for attorneys’ fees.
The twist here is that the original class counsel, Van Etten Suzumoto & Becket LLP (which later merged with McGuireWoods LLP), had entered into incentive agreements with five of the plaintiffs. Pursuant to these agreements, the law firm would apply for additional compensation for these plaintiffs, together with the concomitant attorneys’ fees. Per the terms of the agreement, the law firm would seek incentive awards upwards of $75,000 per plaintiff.
For more, read the full article.
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Posted by
C. Ernst in
Other Jurisdictions
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Permalink
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Sep 17, 2012
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MERS class action dismissed in New Jersey federal court
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The United States District Court for the District of New Jersey has declined a remand request and dismissed a putative class action filed by homeowners against HSBC Mortgage Services Inc. and Mortgage Electronic Registration Systems, Inc. In Napoli v. HSBC Mortgage Servs., Inc., Case No. 12-CV-222 (D. N.J. 2012), the plaintiffs alleged that HSBC and MERS fraudulently overcharged them and similarly situated foreclosed-upon borrowers by overstating the payoff amounts due on their home loans, and asserted claims for breach of contract and violations of the New Jersey Consumer Fraud Act, the Truth-In-Consumer Contract, the Warranty and Notice Act, and the Uniform Commercial Code. The case was originally filed in New Jersey Superior Court and was removed by the defendants pursuant to the Class Action Fairness Act (CAFA). The plaintiffs had been foreclosed upon and were facing the sale of their properties following judgment when they refinanced their properties immediately prior to sale. Plaintiffs alleged in their complaint that the loan payoff amounts that were ultimately refinanced had been overstated by the defendants by more than $6,000. They sought to recover their damages, trebled under the state statutes forming the basis for their claims. For more, read the full story.
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Posted by
D. Gibson in
Banking Industry
Class Action Fairness Act
Other Jurisdictions
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Permalink
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Sep 10, 2012
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Court says no way to cy pres: "Gift" stricken from class action settlement
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Courts are questioning whether the trust doctrine of cy pres may be used in class action litigation to permit the distribution of unclaimed settlement funds to charities. While proponents argue that cy pres distributions punish corporate wrongdoing, deter future misconduct and deny “windfalls” to settling defendants, there is mounting concern that the process can erode public confidence in the bar and the judiciary. Of equal concern, leading scholars — and courts — believe that the process is simply unconstitutional.
A recent decision from the U.S. District Court in New Mexico is a case in point. In In re Thornburg Mortgage, Inc. Securities Litigation, 2012 U.S. Dist. LEXIS 107934 (July 24, 2012), the court struck a cy pres provision in an agreed class action settlement that would have made a local charity the primary beneficiary of a class settlement, while excluding some class members from participating in the settlement at all.
In re Thornburg Mortgage, Inc. Securities Litigation is the latest in a series of thoughtful cases addressing the flaws with cy pres awards, and striking them on its own motion. Settling defendants should not hesitate to challenge cy pres distributions and insist that residual settlement funds be returned at the close of the claims period. For more, read the full story.
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Posted by
D. Campbell in
Cy Pres
Other Jurisdictions
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Permalink
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Dec 01, 2011
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Concepcion, collective-arbitration waivers, and the business of insurance: Arkansas Supreme Court says the McCarron-Ferguson Act reverse preempts the FAA
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Following the Supreme Court's decision in AT&T Mobility, Inc. v. Concepcion, 113 S. Ct. 1740 (2011), it seemed clear that states possessed little power to limit the enforcement of arbitration provisions and class action waivers in consumer contracts. "Arbitration is a matter of contract, and the [Federal Arbitration Act ("FAA")] requires courts to honor parties' expectations." However, the Supreme Court of Arkansas, in its recent decision in Southern Pioneer Life Ins. Co. v. Thomas, 2011 Ark. 490 (Ark., 2011) identified what could be a significant exception to Concepcion: the business of insurance.
In Southern Pioneer, the Thomas's executed a credit application and a retail installment contract as part of the purchase of a new car. The credit application contained a provision calling for arbitration of "[a]ny claim or dispute, whether in contract, tort or otherwise…, which arise [sic] out of or relate to this Application, an installment sale contract or lease agreement, or any resulting transaction or relationship…." The related retail installment contract provided an option for the purchase of credit-life insurance coverage with Southern Pioneer, the entire premium for which was financed with the purchase price of the vehicle and wrapped into the life of the loan. The Thomas's opted for the insurance, but subsequently paid off the loan six years ahead of the maturity date. They then filed a putative class action, alleging breach of the insurance contract against Southern Pioneer and seeking the refund of unearned premiums from the date of payoff through the original maturity date. Southern Pioneer sought to compel arbitration pursuant to the arbitration clause in the credit application.
The trial court denied Southern Pioneer's motion, and the Arkansas Supreme Court affirmed, because the Arkansas Uniform Arbitration Act (the "AUAA") in effect at the time, and which recognized the validity, enforceability and irrevocability of contractual arbitration provisions generally, expressly did not apply to "any insured or beneficiary under any insurance policy…." Ark. Code. Ann. 16-108-201(b) (Repl. 2006). While recognizing that the FAA "would ordinarily preempt conflicting state law," the Court held that the McCarran-Ferguson Act (the "MFA"), [15 U.S.C. 1011, et seq.], "operates to bar application of the FAA and leave the regulation of the insurance industry to the states…." The MFA provides that "[n]o Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance…unless such Act specifically relates to the business of insurance…." 15 U.S.C. 1012(b).
The Arkansas Supreme Court's decision suggests that, while states may be barred by the FAA from either enacting or judicially enforcing laws or doctrines like the Discover Bank rule, as set forth in Concepcion (California's rule classifying most collective-arbitration waivers in consumer contracts as unconscionable, and therefore unenforceable), states are nonetheless free under the McCarron-Ferguson Act to place limitations or outright prohibitions on collective-arbitration waivers or arbitration agreements generally, if the limitation or prohibition is a law enacted by the state for the purpose of regulating the business of insurance.
However, the Ohio Revised Code does not specifically exempt the business of insurance from the enforceability of contractual arbitration provisions like the AUAA did in Southern Pioneer. As a result, Concepcion, and by extension the FAA, appear likely to continue to govern the enforceability of arbitration agreements and collective-arbitration waiver provisions in Ohio jurisdictions for the foreseeable future, including those found in contracts of insurance.
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Posted by
D. Gibson in
Arbitration
Federal Class Action Law
Insurance Industry
Other Jurisdictions
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