Class Action Lawsuit Defense

Class Action Lawsuit Defense

Class Action Defense News, Developments and Commentary

Unprofessional Marketing: Illinois Appellate Court Denies Professional Liability Coverage for TCPA Violation

Posted in Consumer Class Action, Insurance, TCPA

On November 26, 2014, an Illinois appellate court held that a professional liability insurer had no duty to defend or indemnify its insured for a class action brought under the Telephone Consumer Protection Act (TCPA) because the insured’s robocalls did not constitute conduct of the insured’s business “in rendering services for others,” as required by the policy.  Margulis v. BCS Ins. Co., 2014 IL App (1st) 140286 (Nov. 26, 2014).

In 2008, a class led by Scott Margulis filed a class action suit in Missouri against Bradford, an insurance broker, for making unsolicited and prerecorded telephone calls to residential lines in violation of the TCPA.  Bradford tendered the claim to its professional liability insurer, BCS Insurance Company, but BCS denied coverage.  In a July 2011 settlement, Margulis and Bradford agreed to a judgment of $4,999,999, to be satisfied solely from the proceeds of Bradford’s insurance policies and claims against Bradford’s insurers.  Continue Reading

The FTC’s Thoughts on Why “Unlimited Data” Shouldn’t Need Scare Quotes

Posted in Advertising Class Action

“Unlimited data” shouldn’t need scare quotes: what recent FTC action may mean for wireless providers, broadband companies, and class action plaintiffs

On October 28, 2014, the United States Federal Trade Commission (FTC) sued AT&T’s mobile division in the Northern District of California (F.T.C. v. AT&T Mobility LLC, Case No._ [N.D. Cal., Oct. 28, 2014] “AT&T Mobility”). The FTC alleged that AT&T had signed millions of customers to “unlimited” mobile data plans from 2007 through June 2010, but that in July 2011 AT&T began reducing the data speeds, or “data throttling,” for its unlimited customers. This throttling resulted in drastically reduced service for 3.5 million AT&T customers across a total of over 25 million discrete actions. Based on these allegations, the FTC further alleged that AT&T had engaged in “unfair or deceptive acts or practices in or affecting commerce” and sought an injunction and disgorgement.

As the latest in a series of related regulatory actions, AT&T Mobility echoed an earlier FTC complaint against T-Mobile for bill “cramming” (charging customers for services not sought or understood). The AT&T Mobility allegations mirrored mid-2014 concerns raised by the United States Federal Communications Commission (FCC) regarding a similar plan with a different wireless carrier to throttle heavy data users. The FCC also recognized the AT&T Mobility filing with its own statement that (a) the FCC was coordinating with the FTC “on investigations into carriers slowing down unlimited data” and that (b) customers should “contact the FCC if they are being throttled by AT&T or other cellular providers.” Continue Reading

Class Action Disgorgement Case Dismissed Against PG&E as Remedy Sought Would Interfere with Filed Rates

Posted in Class Action Trends

Companies in regulated markets, such as insurance and energy, are increasing litigating issues surrounding the “filed rate doctrine,” or in other words, whether they can be sued in a class action where the remedy sought necessarily challenges the rates that are required or approved by the relevant regulators.  Pacific Gas & Electric is a great example of a well-reasoned dismissal where the court understood the real risks that regulated industries face from inconsistent and duplicate liability from both regulators and the courts.

A California appellate court in the First District recently upheld a trial court’s demurrer of a class action complaint filed by class representative Filomena Guerrero against the Pacific Gas & Electric Company (“PG&E”).  The complaint alleged that PG&E deceptively represented to both California’s Public Utilities Commission (“PUC”) and the public regarding how much revenue it required to provide safe natural gas service.  The complaint sought restitution and disgorgement of profits for PG&E’s alleged “wrongful diversion of more than $100 million in rates it collected over a thirteen year period that should have been expended on natural gas pipeline safety projects.”  Guerrero v. Pac. Gas & Elec. Co., 2014 WL 5073493, at *1 (Cal. Ct. App. Oct. 10, 2014). Continue Reading

BakerHostetler Antitrust Lawyer Examines Recent Development in Antitrust Class Action Litigation

Posted in Antitrust

GCR 2014The Antitrust Review of the Americas 2015 features a chapter by BakerHostetler antitrust partner Edmund W. Searby entitled, “United States: Private Antitrust Litigation – Class Actions.”  He wrote:

“As many appreciate, two Supreme Court decisions in the last seven years have assisted the defense of antitrust class actions.  The first and most significant is the enhancement of pleading standards. Second, the Supreme Court addressed the standards for class certification in terms that at the very least require greater rigour in class certification. While neither Supreme Court decision is new, we review in this article recent cases to see how these decisions have affected the prosecution of antitrust class actions.”

The chapter includes sections on motions to dismiss antitrust class actions under Twombly, trends involving the application of greater rigor by courts in assessing antitrust class certifications, and patterns in antitrust class action filings by judicial circuit.  Read the chapter.

The 18th annual edition of The Antitrust Review of the Americas covers hot topics in the U.S., Canada and Brazil including: Cartels, Energy, Foreign Investment, Joint Ventures, IP & Antitrust, Mergers, Private Enforcement, Private Equity, Technology and Vertical Restraint. Government officials discuss current enforcement and priorities for the year ahead in the U.S., Canada, Barbados, Brazil, Colombia, Mexico and Nicaragua.

Extracts from The Antitrust Review of the Americas 2015 – www.GlobalCompetitionReview.com

Editor’s Note: This blog post is a joint submission with BakerHostetler’s Antitrust Advocate blog.

Court Takes Cue from Comcast v. Behrend, Certifies Class as to Liability but not Damages

Posted in Class Certification, Securities

Fort Worth Employees’ Retirement Fund v. J.P. Morgan Chase & Co.

In what appears to be an increasingly common practice since the Supreme Court decided Comcast Corp. v. Behrend, 133 S.Ct. 1426 (2013), the Southern District of New York recently certified a class as to liability, but rejected certification as to damages.  Fort Worth Employees’ Retirement Fund v. J.P. Morgan Chase & Co., — F.R.D. —-, 2014 WL 4840752, 09-3701 (JPO) (S.D.N.Y. Sep. 30, 2014).  Taking a cue from Comcast, the Court held that the predominance requirement for class certification—that “questions of law or fact common to class members predominate over any questions affecting only individual members,” see Fed. R. Civ. P. 23(b)(3)—requires plaintiffs to specify a damages methodology that can be utilized for the entire class.  The plaintiffs, investors in certain mortgage-backed securities issued by JP Morgan Chase & Co. and related entities (collectively “JPM”), failed to adequately specify the methodology they planned to use to value the securities at issue.  The Court therefore rejected certification as to damages and placed responsibility on each class member to prove damages on a member-by-member basis.  The Court, however, found that the plaintiffs proved predominance as to liability and certified the class for that limited purpose. Continue Reading

Federal Magistrate Recommends Dismissing TCPA Class Claims Against Coke

Posted in Rule 12 Motions to Dismiss, TCPA

Responding to an invitation to text can satisfy TCPA’s Express Consent Requirement

In a Telephone Consumer Protection Act (TCPA) putative class action against Coca-Cola and its marketing agent, a Northern District of Alabama magistrate judge recommended dismissal on September 3, 2014, of most of the plaintiff’s claims on grounds that the plaintiff gave Coca-Cola prior express consent to send text messages to his mobile phone.

The plaintiff alleged that he and the putative class members responded to a Coca-Cola scoreboard message at a college football game asking fans to “vote” for their favorite team using their mobile phones.  The plaintiff alleged that, after voting, he received a series of unsolicited text messages on his mobile phone.  Based on this, the plaintiff alleged that Coca-Cola unlawfully used an automated telephone dialing system (“ATDS”) to text his mobile phone and that Coca-Cola unlawfully texted his mobile number in violation of the national do-not-call registry on which the number was allegedly listed.

Coca-Cola filed a motion to dismiss both the ATDS claim and the do-not-call registry claim. On the ATDS claim, Coca-Cola unsuccessfully argued that a text message is not a call under the TCPA (an argument that courts have almost universally rejected), and that Coca-Cola did not use an ATDS in dialing the plaintiff’s mobile number (a closer question under current law because the parameters of what qualifies as an ATDS are constantly evolving with technology).  Coca-Cola was successful, however, in arguing that it had a complete affirmative defense to the plaintiff’s claims because the plaintiff gave “prior express consent” by texting his “vote” to Coca-Cola.  In agreeing with Coca-Cola on the express consent argument, the Court adopted a fairly expansive—but well-supported by precedent—definition of consent as “knowingly releasing” a mobile number to a potential caller.  In so finding, the Court noted that the plaintiff could not “plausibly claim that he was simply voting for his favorite team with no expectation of receiving ‘telemarketing’ messages in return.” Continue Reading

In “Zombie” Class Action, Seventh Circuit Requires Plaintiffs to Present Evidence to Prove Home-State Exception to CAFA Jurisdiction

Posted in Class Action Fairness Act, Class Certification

On Tuesday, the Seventh Circuit decided Myrick v. Wellpoint, Inc., Nos. 12-3882, 13-2230, 2014 WL 4073065 (Aug. 19, 2014), which held that plaintiffs were required to produce evidence—and not merely assumptions—about the citizenship of class members to establish the “home-state exception” to CAFA jurisdiction under 28 U.S.C. § 1332(d)(4). The case arose when a health insurer offering policies in Illinois was bought out in 2001 and, in 2002, withdrew from the Illinois market and canceled all of its Illinois policies.

Plaintiffs filed suit in Illinois state court, alleging that the cancellation violated Illinois law, and sought to certify a class of all former policyholders. Defendants removed the case to federal court pursuant to CAFA, as the proposed class had the requisite size, amount in controversy, and minimal diversity. Continue Reading

Nominations Open for ABA Journal’s Top 100 Legal Blogs – Class Action Lawsuit Defense

Posted in Uncategorized

The American Bar Association Journal announced that it is compiling its annual list of the 100 best legal blogs and invites readers to submit a nomination:

Use the form below to tell us about a blog—not your own—that you read regularly and think other lawyers should know about. If there is more than one blog you want to support, feel free to send us additional amici through the form. We may include some of the best comments in our Blawg 100 coverage. But keep your remarks pithy—you have a 500-character limit.

We invite our readers to recommend the Class Action Lawsuit Defense blog and other favorite legal blogs for selection by the ABA. Submissions are accepted through August 8, 2014.

Sixth Circuit Affirms Certification and Summary Judgment for TCPA Class, Despite State Law Class Action Prohibition

Posted in Class Actions Privacy, Class Certification, Consumer Class Action, State Class Action Law, TCPA

On July 9, 2014, the Sixth Circuit affirmed a district court ruling that a consumer TCPA class action could proceed against Lake City Industrial Products, rejecting Lake City’s argument that Michigan law prohibited TCPA class actions.  American Copper & Brass, Inc. v. Lake City Industrial Products, Inc., Case No. 13-2605, (6th Cir. 2014).  In addition, Lake City’s potential bankruptcy and inability to pay a judgment was irrelevant at this stage of the case, so summary judgment also was affirmed.

In February 2006, Lake City, a pipe-thread sealing tape distributor, retained a fax-blasting company to transmit approximately 10,000 Lake City advertisements.  American Copper, a Michigan equipment wholesaler, received Lake City’s fax later that month.  American Copper had no preexisting business relationship with Lake City and had not consented to the receipt of faxes from Lake City.  American Copper filed a class action law suit in federal district court in Michigan in 2009, alleging that Lake City violated the Telephone Consumer Protection Act (TCPA).  The district court granted class certification and summary judgment in favor of American Copper, and Lake City appealed.

On appeal, Lake City argued that the district court erred by refusing to apply Michigan Court Rule 3.501(A)(5), which states that an “action for a penalty or minimum amount of recovery without regard to actual damages imposed or authorized by statute may not be maintained as a class action unless the statute specifically authorizes its recovery in a class action.”  The Sixth Circuit acknowledged that because the TCPA provides for a minimum recovery of $500 per violation, regardless of actual damages, and does not specifically authorize class actions, TCPA suits cannot be maintained as class actions in Michigan state court.

Noting the “general rule” that the Federal Rules of Civil Procedure apply to all civil cases brought in federal courts, the court affirmed the district court’s rejection of Lake City’s argument.  There are “rare exceptions,” however, where Congress may bypass the federal rules and require federal courts to apply state procedure.  Seizing on the following language, Lake City argued that the TCPA evinces Congress’s intent that state procedural rules apply to all TCPA cases:

A person or entity may, if otherwise permitted by the laws or rules of court of a State, bring in an appropriate court of that State –

(A) an action based on a violation of this subsection or the regulations prescribed under this subsection to enjoin such violation,

(B) an action to recover for actual monetary loss from such a violation, or to receive $500 in damages for each such violation, whichever is greater, or

(C) both such actions.

47 U.S.C. 227(b)(3) (italics added).

The Sixth Circuit held that “[t]he better view of this state-oriented language relied on by Lake City . . . is that Congress simply intended to ‘enable states to decide whether and how to spend their resources on TCPA enforcement.’” Id. at 8, citing Giovanniello v. ALM Media, LLC, 726 F.3d 106, 114 (2d Cir. 2013).  While admitting that its holding could lead to forum shopping, the Court noted a recent United States Supreme Court case — Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co,. 559 U.S. 393, 416 (2010) — which held that a “Federal Rule governing procedure is valid whether or not it alters the outcome of the case in a way that induces forum shopping.”

The Court also held that the district court correctly disregarded Lake City’s assertion that summary judgment would lead to its bankruptcy.  “Lake City’s ability (or inability) to pay a judgment was irrelevant at the summary judgment stage of the case.”  Opinion at 4.

As this case demonstrates, the stakes in TCPA cases could not be higher for the unwary.  Businesses are urged to seek appropriate counsel before undertaking activities that might implicate the statute.