Posts belonging to Category Caselaw Developments

A Northern District judge has conditionally certified claims brought under the Fair Labor Standards Act (FLSA) against an industrial supply company by two salaried retail store general managers.  See Deane v. Fastenal, No. 3:11-cv-00042 (N.D. Cal. Nov. 14, 2011) (order granting conditional certification) (available here).  The named plaintiffs seek to represent a nationwide class of approximately 2,000 former and current general managers who were allegedly misclassified as exempt employees.  Id.  Judge Susan Illston found that the named plaintiffs’ declarations and their documentary evidence established that they were similarly situated to the proposed class members, and found that the company’s contrary declarations did not sufficiently negate this showing.  Id.  Pursuant to the FLSA’s unique procedures, the court ordered Fastenal to provide the general managers’ contact information to a class action administrator, which will send the putative class members an opt-in notice.  Id.

A California district court judge granted certification in a class action against Countrywide Financial.  The plaintiffs allege that the home mortgage giant, now owned by Bank of America, engaged in deceptive practices while selling billions of dollars in mortgage-backed securities.  See Maine State Retirement System v. Countrywide Financial Corp., No. 2:10-cv-00302 (C.D. Cal. Nov. 16, 2011) (order granting class certification) (available here).  The class consists of all persons and entities that bought Countrywide’s mortgage-backed securities before January 14, 2010, and includes participants in several public employee pension plans.  Id.

The certified class can now pursue claims that Countrywide and its investment banks made misleading statements and omissions in connection with the issuance of highly risky mortgage-backed securities, which were secured by mortgages virtually certain to result in defaults.  See Second Amended Complaint, Maine State Retirement System v. Countrywide, No. 2:10-cv-00302 (C.D. Cal., filed Dec. 6, 2010), ¶¶ 4-10.  The inevitable mortgage defaults revealed that the properties underlying the mortgages were worth materially less than the loans issued to the borrowers, and that the borrowers were unable to cover the outstanding mortgage balances.   Id. at ¶¶ 10-17. 

The class certification order came after Countrywide stipulated to a proposed class in conformity with the judge’s previous rulings in the case, thereby cutting short protracted legal argument over class certification.  See Maine State Retirement System v. Countrywide Financial Corp., No. 2:10-cv-00302 (C.D. Cal. Nov. 16, 2011) (order granting class certification).

The U.S. Supreme Court’s Dukes v. Wal-Mart decision reversed certification of a class of approximately 1.5 million current and former Wal-Mart employees, partly on grounds that litigating the claims of a class so large would be unwieldy.  See Dukes v. Wal-Mart, 131 S. Ct. 2541, 2555-56 (2011) (“Even if [statistical proof] established (as it does not) a pay or promotion pattern that differs from the nationwide figures or the regional figures in all of Wal-Mart’s 3,400 stores, that would still not demonstrate that commonality of issue exists.”).  Now, despite that ruling, the California-based plaintiffs have filed a fourth amended complaint, which alleges sex discrimination against Wal-Mart, but only on behalf of a putative class of California employees.  See Plaintiffs’ Fourth Amended Complaint, Dukes v. Wal-Mart, No. 3:01-cv-02252 (N.D. Cal. October 27, 2011) (available here).  The named plaintiffs seek to represent approximately 90,000 prospective class members.  Id. at ¶¶ 15-17.

Still captioned Dukes v. Wal-Mart, the newly filed action could become a model for additional, regional lawsuits against Wal-Mart.  The plaintiffs’ attorneys in the California action have indicated their intention to file similar class actions in other states.  This suggests a potential new trend in class actions, marked by narrower class definitions more conducive to identifiable and answerable common questions.  This could also pave the way for more targeted “mass actions” that disaggregate class actions into simultaneously pending individual actions.

A federal judge has granted class certification in a lawsuit alleging that consumers relied on false representations by defendant Smoking Everywhere regarding the purported safety of its electronic cigarettes.  See Mathias v. Smoking Everywhere, Inc., No. 09-cv-03434 (E.D. Cal. Oct. 25, 2011) (order granting class certification motion) (available here).  This sets the stage for a potentially sizeable recovery for Californians who bought the $49.95 “starter kit” in reliance on claims that electronic cigarettes are non-toxic and a safe alternative to smoking conventional cigarettes.

The operative complaint alleges that Smoking Everywhere falsely advertised its electronic cigarettes as non-hazardous, and failed to warn consumers that the product contains carcinogens and other toxins.  Id. at 3-4.  The certified class comprises all California residents who bought the Smoking Everywhere product from December 2005 to October 2011, and seeks damages and injunctive relief pursuant to California’s Consumer Legal Remedies Act and Unfair Business Practices Act.  Id. at 1 and Class Action Complaint for Injunctive Relief and Restitution, Mathias v. Smoking Everywhere, Inc., No. 09-cv-03434 (E.D. Cal. filed Dec. 10, 2009).

The nascent but growing electronic cigarette industry—estimated to generate $100 million in annual gross revenues—has also been a target of state and federal government officials.  In August of 2010, Smoking Everywhere settled a lawsuit brought by the Oregon Attorney General, which resulted in Smoking Everywhere altogether discontinuing retail sales in Oregon.  The U.S. Food and Drug Administration has also been involved in litigation around the FDA’s attempts to regulate Smoking Everywhere and other electronic cigarette manufacturers.