In addition to generating caselaw bearing on whether large class action damages constitute “annihilating” penalties that render individual actions superior to class treatment, the Fair and Accurate Credit Transactions Act (FACTA) also defines the common term willfulness, a measure of conduct with considerable application beyond FACTA consumer class actions, or wage-and-hour class actions.

In California, for instance, the waiting-time penalties that are often the largest portion of damages where relatively small per-violation amounts are alleged (such as with the miscalculation of overtime pay rates) are triggered only if the underlying conduct is deemed willful. While not a wage-and-hour decision per se, Long v. Tommy Hilfiger, Inc., No. 09-1701 (W.D. Pa. Feb. 11, 2011) (available here) adds weight to the argument that analysis of willful conduct ought to be under a objective standard, as opposed to a subjective standard that will often provide incentives for employers and retailers to be deliberately uninformed as part of making out a defense to willfulness. See Cal. Lab. Code § 203(a) (“If an employer willfully fails to pay . . . any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty frwillfom the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days.”) (emphasis added). Under an objective standard, any discovery of or analysis concerning a defendant’s subjective beliefs is obviated, in favor of an inquiry as to the objective reasonableness of the defendant’s conduct.

In Long, the district court took up whether the defendant had violated the FACTA requirement that credit card receipts not show a credit card’s expiration date by including the month, but not year, or expiration on credit card receipts. Under the premise that “expiration date” within FACTA’s meaning and intent requires both a month and year, the court held that the defendant did not violate FACTA. It was the court’s alternative reasoning from which the broader holding concerning willfulness arose. The court concluded the defendant’s understanding of the statute was objectively reasonable in the absence of any judicial guidance, so even if printing only the month of expiration had been a violation of the expiration date prohibition, it would not have been a willful violation. As such, FACTA statutory penalties, which require willful conduct, would not be triggered. The Long court relied on the willfulness analysis in Shlahtichman v. 1-800 Contacts, 615 F.3d 794 (7th Cir. 2010), and its holding applying an objective standard to willfulness analysis.

Accordingly, despite being a ruling helpful to companies, the objective standard for assessing willful conduct could, in the long run, yield considerably greater pro-plaintiff benefits, with any class seeking California’s Section 203 waiting-time penalties being one obvious beneficiary.

Securities Class Action Services (SCAS) has issued its annual ranking of the top firms that exclusively represent plaintiffs in securities class actions. The full SCAS rankings are available here. The top position, by some distance, is occupied by relative upstart Bernstein Litowitz Berger & Grossmann, with nearly $1 billion in settlements during 2010.

Bernstein Litowitz has been accumulating accolades in recent years. The 54-lawyer firm is reputed to be selective in it hiring. Moreover, Bernstein Litowitz devotes an entire page on its website to complimentary remarks from judges. One of the twelve quotations on the Bernstein Litowitz webpage, from an unspecified judge sitting in the Southern District of Texas, reads “A tremendous job . . . [N]ot only in the monetary result, but the substantial and very innovative programmatic relief obtained in this case . . . these lawyers did an outstanding job trying to make sure that’s the kind of thing that the case left behind.”

The second-place firm in the SCAS rankings, Robbins Geller Rudman & Dowd, has 190 lawyers to Bernstein Litowitz’s 54. And although Bernstein Litowitz settled only 16 cases in 2010 (to Robbins Geller’s 31), the average Bernstein Litowitz settlement of $62.4 million was nearly three times that of Robbins Geller, and more than any other firm with more than two settlements during 2010. The Milberg firm, which was once the perennial first-place securities firm, was ranked thirteenth in 2010, with $137 million in settlements.

Bernstein Litowitz’s most prominent and potentially lucrative, though also risky, representation is of the institutional investors that opted out of last year’s record $624-million settlement on behalf of Countrywide Financial Corp. shareholders. If Bernstein Litowitz can negotiate a comparable settlement on behalf of the Countrywide opt-outs and maintain its extraordinary relations with the judges who approve class action settlements, it is likely to not only retain its top SCAS position, but widen its lead.

Following an extraordinary procedural journey, the case that began as Price v. Phillip Morris and yielded a $10 billion verdict against the tobacco giant in 2003 has been revived.  The plaintiff class had alleged that Phillip Morris’s advertising, for what it called “light” and “low tar or nicotine” cigarettes, was deceptive, as these cigarettes were not in fact safer than regular cigarettes, and that the company knew it.

After the plaintiffs’ initial victory in Price, Phillip Morris appealed.  The case then bypassed the Appellate Court of Illinois and went straight to the Illinois Supreme Court, where the lower court’s verdict was reversed based on Philip Morris’s claim that the Federal Trade Commission (FTC) had authorized cigarette companies to use “light, low or reduced” in descriptions of cigarettes.  See Price v. Philip Morris, Inc., 2005 Ill. LEXIS 2071 (Ill. 2005) (available here).  Thereafter, the U.S. Supreme Court declined to hear an appeal of the Illinois Supreme Court’s decision, and the trial court dismissed the case in 2006.

Two years later, the U.S. Supreme Court reviewed a case that took up similar preemption issues — Altria Group, Inc. v. Good, 555 U.S. 70 (2008) — and held that the Federal Cigarette Labeling and Advertising Act (FCLAA), 15 U.S.C. §§1331-41 (2011), did not preempt a claim under a Maine statute (similar to the Illinois statute) for deceptive advertising of “light” cigarettes (opinion available here).  The Price plaintiffs immediately filed an appeal with the Fifth District Appellate Court on the grounds that the Court’s ruling in Good demonstrated that the Illinois Supreme Court incorrectly decided Price.  The Fifth District agreed (dismissing Phillip Morris’s argument that plaintiffs’ appeal was untimely), and has reinstated the case and remanded it back to the trial court for further proceedings.

Through a lengthy and convoluted legal process that began in early 2003, Price v. Phillip Morris has come full circle and once again sits in the Madison County Circuit Court, awaiting whatever “further proceedings” may be required to finally resolve this case.  Phillip Morris is expected to appeal the Fifth District’s decision to the Illinois Supreme Court.

As we wait for the United States Supreme Court’s upcoming decision in AT&T v. Concepcion, which is expected to define the ability of arbitration clauses to foreclose class actions, the influential Second Circuit Court of Appeals has recently issued a decision holding a class action waiver embedded in an arbitration agreement unenforceable, which might indicate how the Supreme Court will rule on key aspects of AT&T v. Concepcion. See In re American Express Merchants’ Litigation, 634 F.3d 187 (2d Cir. 2011); the decision is available here.

Though the decision is in no sense binding on the Supreme Court, it is notable that the Second Circuit panel (which has a reputation for intellectual rigor) previously included Justice Sonya Sotomayor; thus, this decision could be an indication of the direction that the Supreme Court might take in Concepcion. Moreover, although there is relatively little suspense as to which way Justice Sotomayor will vote in Concepcion, Court observers have noted that her prior experience with arbitration and class action waiver issues carries weight with her colleagues, even those on the Court’s conservative bloc.

The In re American Express decision arises from a Supreme Court remand, and thus cannot be taken solely as an expression of the Second Circuit’s inclinations as to arbitration agreements and class action waivers. With this most recent decision, the Second Circuit has now twice invalidated the at-issue class action waiver, this time presumably infusing that invalidation with reasoning and doctrine acceptable to the Supreme Court. Specifically, the Supreme Court remanded In re American Express with directions that the Second Circuit take account of its decision in Stolt-Nielsen, S. A. v. AnimalFeeds Int’l Corp., 130 S.Ct. 1758 (2010), which held that parties cannot be compelled to participate in class arbitration without having expressly agreed to do so. The Supreme Court instructed the Second Circuit to reassess its invalidation of the at-issue clause barring class arbitration, and in particular to decide whether there was merit to American Express’s argument that a class action waiver within a mandatory arbitration clause is per se enforceable.

In a strong statement that evokes the Ninth Circuit’s invalidation of a similar class waiver provision in Concepcion, the two-judge Second Circuit panel (now minus Justice Sotomayor) excerpted from the plaintiffs’ brief: “We agree with plaintiffs that ‘[t]o infer from Stolt-Nielsen’s narrow ruling on contractual construction that the Supreme Court meant to imply that an arbitration is valid and enforceable where, as a demonstrated factual matter, it prevents the effective vindication of federal rights would be to presume that the Stolt-Nielsen court meant to overrule or drastically limit its prior precedent.’” In re American Express at *33.

Apart from this ruling’s substantive importance and potentially presaging the reasoning, outcome, or both in AT&T v. Concepcion, In re American Express is also a reminder that persuasive and well-constructed passages from appellate briefs can end up, verbatim, as statements of binding law.