Founded in 1973, MBIA’s business model focused on relatively low-risk insurance against municipal bonds defaulting. However, by 2008, MBIA had become at least as prominent in insuring mortgage-backed securities, including those generated by two Bank of America acquisitions, Countrywide (which generated the risky home mortgages) and Merrill Lynch (which created and sold securities backed by the Countrywide mortgages). MBIA found itself faced with having to pay in excess of $3 billion in claims to Merrill Lynch, but without the funds to avoid default. The settlement restructures MBIA’s obligations to Bank of America, and the $1.6 billion in cash will allow MBIA to stay in business.

Announcement of the deal led to a sharp increase in Bank of America’s per-share price, suggesting that analysts had expected the settlement to be even more costly for the bank. For MBIA, the settlement’s timing was at least as important as the amount, as MBIA was believed to have only enough cash to sustain its operations for a matter of weeks at the time of the settlement. The price of MBIA stock increased by 45% on news of the settlement, strongly suggesting that the cash infusion from the settlement didn’t merely benefit MBIA, it saved the company.

In the underlying action, the plaintiffs sued on behalf of some 4,000 fellow security guards, alleging nonpayment of overtime as well as meal and rest break violations. The trial court denied certification across the board, and on appeal the certification as to the overtime claims was granted. However, pre-Brinker, the Court of Appeal affirmed the denial of certification for the meal and rest break claims. See Faulkinbury v. Boyd & Assocs., Inc., 185 Cal. App. 4th 1363 (2010).

The California Supreme Court later granted review and held pending further decision in its landmark Brinker decision (53 Cal. 4th 1004). Upon review in light of Brinker, the Court of Appeal has now ordered that the same meal and rest break claims be certified. Increasingly, despite having been assessed as something of a draw when it was issued, Brinker is looking like a net benefit to workers seeking to enforce California’s meal and rest break statutes, with Faulkinbury vividly illustrating what workers faced both before and after Brinker.

While the court’s pre-Brinker analysis was barely indistinguishable from a rough finding on the merits (“the trial court reasonably could conclude there was insufficient evidence of classwide denial of off-duty meal breaks” (185 Cal. App. 4th at 1383)), the post-Brinker analysis focused on the plaintiff’s theory of liability, consistent with Brinker and other similarly-reasoned authority. The court found persuasive evidence that the defendant’s meal break policy “was uniformly and consistently applied to all security guard employees.” As such, citing Brinker, the court held that “‘[c]laims alleging that a uniform policy consistently applied to a group of employees is in violation of the wage and hour laws are of the sort routinely, and properly, found suitable for class treatment.’” Slip op. at 13 (internal citation omitted).

This most recent Faulkinbury decision is notable in making direct reference to and relying on Justice Werdegar’s Brinker concurrence, noting that “if an employer’s records show no meal period for a given shift, a rebuttable presumption arises that the employee was not relieved of duty and no meal period was provided, shifting the burden to the employer to show the meal period was waived.” Slip op. at 10, citing Brinker, 53 Cal. 4th at 1052 (Werdegar, J, concurring). Thus, rather than giving rise to individual questions that destroy the predominance necessary for certification because such records speak to the “why” behind missed breaks, the Werdegar concurrence, and now Faulkinbury, sensibly regards such evidence as tending to validate a plaintiff’s theory of meal break liability.

The Faulkinbury panel included Acting Presiding Justice William F. Rylaarsdam, Associate Justice Richard D. Fybel, and Associate Justice Eileen Moore. Justice Fybel wrote the unanimous opinion.

The trial opened in January of 2013, with the plaintiff himself testifying candidly: “I find it particularly abhorrent that all the credit card companies got together under the covers to basically screw the American consumer.” It is alleged that the banks reveled in the favorable quid pro quo likely to result from directing massive filing fees at reliably pro-defendant arbitrators, with the National Arbitration Forum (NAF) receiving particular praise from one of the bank defendants, First USA.

The meetings, with agenda items such as “the end of class actions,” brought together otherwise staunch competitors, including Bank of America, American Express, Capital One, Chase Bank, Discover, HSBC, MBNA, and Providian. Within three years, every major bank had implemented a mandatory arbitration policy for their credit card customers, and on starkly similar terms. The plaintiff is seeking an eight-year ban on arbitration clauses in credit card user agreements.

The antitrust action has already yielded results, as four of the bank defendants — JPMorgan Chase, Bank of America, HSBC and Capital One — settled in 2010, each agreeing to ban arbitration clauses for three-and-a-half years – a measure due to expire this year. The remaining defendants — American Express, Discover and Citigroup — have steadfastly resisted settlement, and in their closing arguments insisted that there was nothing nefarious in the 28 meetings that are the cornerstone of the plaintiff’s case.

If the plaintiff’s antitrust claims prevail before U.S. District Judge William Pauley and the eight-year arbitration clause ban is imposed, the banks will be unable to partake of the fully legal greasing of the arbitration skids provided by decisions like AT&T Mobility v. Concepcion. It appears that the banks did not foresee that the U.S. Supreme Court would undertake a remarkably similar agenda, and without the burden of antitrust compliance.

The issues around certification of the meal break claim were familiar, with the plaintiff presenting evidence of a systematic, de facto policy of the defendant not providing second meal breaks after the tenth hour of a shift. Slip op. at 11-12. The Court of Appeal deemed inadequate the defendant’s proffering of three declarations from supervisors, attesting to having provided the workers under them sufficient opportunity to take second meal breaks, notwithstanding the company’s lack of any written second meal policy comparable to its written policy governing first meal breaks. Slip op. at 12-13.

As to the rest break claim, the Court of Appeal extensively considered the defendant’s proffered defense, which seemingly entailed extensive individual questions. Slip op. at 7-9. However, the Court of Appeal ruled that determining whether Safeway’s rest break policy and purported practice of including payment for rest breaks in mileage reimbursements complied with California law could be accomplished in a single, common adjudication. Slip op. at 9-10.

Safeway offered a familiar defense to certification of a wage statement class by focusing on the California Labor Code requirement (under Cal. Lab. Code § 226(e)) that there must be an “injury” coincident with a wage statement violation. However, consistent with the California Legislature’s recent clarification of the wage statement statute, the Court of Appeal reversed the trial court’s denial of certification as to the wage statement claim, noting that “‘a very modest showing will suffice.’” Slip op. at 15, citing Jaimez v. DAIOHS USA, Inc., 181 Cal. App. 4th 1286, 1306 (2010).

While this case is not currently designated as published, the Third Appellate District’s rigorously reasoned and detailed ruling as to some of the most frequently pleaded classwide claims would likely find considerable utility as a published case.

This case has now yielded a $240 million jury verdict, the largest in EEOC’s history according to the agency. The jury found that Henry’s Turkey had subjected the 32 plaintiffs to severe abuse and discrimination, and awarded the former employees, who earned a meager $65 per month working at Henry’s, $5.5 million each in compensatory damages and $2 million each in punitive damages.

The abuse was shocking in its cruelty. During the trial, the EEOC offered evidence that the employer (including owners and supervisors) directed verbal abuse at the workers, regularly referring to them as “retarded,” “dumb ass” and “stupid.” The company also failed to provide workers with the medical care that was needed in the course of the high-risk work and paid them well under the minimum wage. In the face of such serious allegations, Hill County Farms nonetheless opted to take the case to trial, refusing to settle through the ADA’s mandatory conciliation process.

The significance of this historic jury award is eloquently summed up by an EEOC press release: “The verdict sends an important message that the conduct that occurred here is intolerable in this nation, and hopefully will help to restore dignity and acknowledge the humanity of the workers who were mistreated for so many years.”

No word on why Fannie Mae and other lenders have opted for cheerful nicknames rather than simple, staid acronyms.

Although Cullen’s suit did not directly generate the settlement resulting in the consent decree, it was likely among the constellation of forces — a “catalyst” under pertinent doctrine — that compelled Netflix to agree to precisely the relief that Cullen sought in his earlier-filed case. As such, Cullen’s attorneys sought fees of $250,000 based on that theory, noting that Cullen effectively prevailed in his litigation aims (insofar as his claims were virtually identical to those in the NAD lawsuit) and that in the course of litigating the case, Cullen and his counsel contributed to negotiations and decisions that ultimately led to the settlement with the NAD. However, Netflix’s counsel, San Francisco-based Morrison & Forster, not only opposed the attempt by Cullen’s counsel to recover fees, but argued that Netflix should be awarded $165,000 to pay Morrison & Forster for efforts spent defending against Cullen’s suit.

On May 1st, U.S. District Court Judge Edward J. Davila issued a decision denying both fee motions. Cullen v. Netflix, No. 11-1199 (N.D. Cal. May 1, 2013) (order denying plaintiff’s and defendant’s motions for attorneys’ fees, available here). Judge Davila held that Cullen had not successfully argued for application of the catalyst theory, finding that he failed to establish the requisite causal connection between his suit and the NAD-negotiated consent decree. Order at 4-5. In rejecting the Netflix fee motion, Judge Davila found that Netflix fell well short of establishing the criteria for a prevailing party entitled to fees, and hinted that the Cullen fee decision was a close call, since Cullen filed his claims “not only to rectify an alleged harm on his own behalf, but also to serve a greater purpose in the form of establishing certain civil rights standards and thresholds on behalf of a class of disabled individuals.” Order at 7.

Ultimately, that greater purpose will be served by the consent decree that will eventually provide for full closed captioning of Netflix streaming videos. Whether Cullen’s fee motion might have been granted in the absence of Netflix having filed its own fee motion cannot be known.

This case and numerous related cases had a long, meandering decade-plus procedural history before arriving in the Sixth Circuit, which has appellate jurisdiction over federal trial-level courts in Kentucky, Michigan, Ohio, and Tennessee. The plaintiff first filed the action in the Southern District of California in 2002, seeking to represent a national class who bought membership programs purporting to provide discounts on purchases, but that in fact functioned to lure consumers with “bait” products. Slip op. at 2-4. The plaintiff alleged that when customers called the company to buy the bait product, they were deceived into believing that free materials would be sent to them in the mail. Id. Vertrue would then mail a membership card and place a recurring annual charge of $60-$170 on the customer’s credit card, which would only be removed if the customer navigated hard-to-follow procedures for cancellation. Id.

The California district court dismissed the action without having ruled on class certification. Slip op. at 3-4. In response, plaintiffs filed 13 state court actions across multiple jurisdictions, which were consolidated in the Northern District of Ohio. Slip op. at 4-5. The Ohio federal court held that the claims were tolled as a result of the Southern District of California proceeding and that the state court claims therefore were timely filed, which occasioned the appeal to the Sixth Circuit. Slip op. at 5. The Sixth Circuit affirmed the tolling, relying on Supreme Court authority allowing for unnamed plaintiffs to preserve their individual claims while class action lawsuits are pending. The court explained that refusing to recognize the claims of unnamed class members would lead to inefficiency because the class members would then be forced to file individual actions to preserve any state law claims whose statutes of limitations might otherwise expire while a federal class action is pending. See slip op. at 11-12.

The unanimous three-judge panel affirmed the district court’s holding that both the plaintiffs’ federal and state law claims were timely asserted, and that the plaintiffs’ claims were tolled under American Pipe & Constr. Co. v. Utah, 414 U.S. 538, (1974). Circuit Judge Julia Smith Gibbons reasoned that “Vertrue has failed to explain how the efficiencies sought by American Pipe tolling would be advanced if putative class members were forced to file individual state law actions to preserve any state law claims whose statutes of limitations might run during the course of class proceedings.” Slip op. at 11.

In sensibly preserving the rights of consumers whose claims have never been adjudicated or denied class certification, the decision marks a clear victory for consumers, and, in contrast to some recent decisions affecting class actions, one grounded in Supreme Court precedent.

The parties negotiated a settlement that reflected the various circumstances of the 15,000 class members and the different damages resulting therefrom. Specifically, class members denied employment as a result of the erroneous credit reports would receive $750; those denied a mortgage or housing rental would receive $500; and those denied an auto loan, $150. Slip op. at 11. Even those class members who suffered no adverse consequences at all would receive a nominal $26 payment. Slip op. at 11-12. The settlement further provided that the class representatives, like the settling defendants, would not object to the negotiated payment schedule. Slip op. at 18. It was the provision whereby the class representatives would not object to the payments that the Ninth Circuit took issue with, as the panel reasoned that the class representatives would have a financial disincentive to push their lawyers to attempt to negotiate greater payments to the settling class members. See slip op. at 18-19.

Seemingly lost on the panel was the fact that the class representatives had already championed their fellow class members’ interests in negotiations that resulted in payments tailored to the consequences resulting from the defective credit reports. See slip op. at 11-12. Indeed, even those class members who suffered no adverse consequences at all (more than 750,000 of them) would receive $26 “convenience payments.” Slip op. at 12. The panel’s reliance on Staton v. Boeing Co. to support the result is also puzzling. In that case, the 29 class representatives were set to receive a whopping $50,000 each, ten times more than the payments to the Radcliffe class reps.  See Staton v. Boeing Co., 327 F.3d 938, 975 (9th Cir. 2003).

In the underlying case, plaintiffs alleged that doctors prescribing the anti-seizure drug Neurontin were deceived by the defendant, pharmaceutical giant Pfizer, with respect to “off-label” uses for which Neurontin is not formally approved. The district court repeatedly rejected the plaintiffs’ use of widely-accepted statistical methods, including multiple regression, to prove causation. The First Circuit panel rejected the defendants’ argument that the plaintiffs’ use of aggregate evidence precluded class treatment. See slip op. at 20-22.

The plaintiffs’ expert had shown by regression analysis that essentially all Neurontin prescriptions for bipolar disorder were the result of Pfizer’s off-label marketing. In denying the plaintiffs’ second class certification motion, the district court adopted reasoning typically invoked by class action defendants, holding that the plaintiffs’ expert could not offer class-wide causation evidence because the regression analysis did not take account of doctors’ individual prescribing decisions, and only focused on Pfizer’s off-label marketing. See slip op. at 8.

While the second class certification motion was pending, Pfizer filed a summary judgment motion premised on the same causation argument, arguing that the doctor-by-doctor inquiry purportedly required to augment the regression analysis would be “unmanageable.” Slip op. at 13. The district court denied the second class certification motion and granted Pfizer’s summary judgment motion.

The First Circuit reversed both the district court’s entry of summary judgment and denial of class certification, with the centerpiece of the appellate ruling being the panel’s endorsement of the rigorous statistical methods that the district court had rejected. Recognizing that regression analysis is capable of distinguishing the relative causation effects among multiple independent variables, Judge Lynch’s decision noted that the plaintiffs had not relied exclusively on the regression analysis: “[I]n addition to the aggregate statistical evidence, . . . plaintiffs also presented circumstantial evidence that supported an inference of causation”, such as “documents showing that psychiatrists had almost never prescribed Neurontin for bipolar disorder until after Pfizer began its marketing campaign, at which point prescriptions jumped by 1700% in two years.” Slip op. at 20.

The first Circuit’s decision serves as essential guidance for plaintiffs’ counsel in complex litigation requiring sophisticated and rigorous scientific methods in order to confront facile arguments like those advanced by Pfizer, and adopted, repeatedly and emphatically, by the trial court.