Recent Filings – April Digest

View Amanda Pickens’ Complete Bio at RBH.com Not every class action court filing in North and South Carolina becomes a full-length post on our blog. Here is a recap of April’s filings:

EEOC v. Mission Hospital, Inc., No. 1:16-cv-00118 (W.D.N.C. April 28, 2016) (putative class action alleging violations of Title VII for allegedly refusing to honor employees’ requests for religious exemptions from the hospital’s flu vaccine policy).

Velez v. Healthcare Revenue Recovery Group, LLC, No. 1:16-cv-377 (M.D.N.C. April 25, 2016) (putative class action brought on behalf of consumers residing in North Carolina alleging violations of the Fair Debt Collection Practices Act).

ARcare v. Zylera Pharmaceuticals, LLC, No. 1:16-cv-378 (M.D.N.C. April 25, 2016) (putative class action based on the Telephone Consumer Protection Act and state consumer protection laws against pharmaceutical company for sending unsolicited fax advertisements).

Stayler v. Rohoho, Inc., No. 2:16-cv-1235 (D.S.C. April 21, 2016) (collective action brought under FLSA alleging that Papa John’s failed to properly reimburse pizza delivery drivers for their car expenses).

Jenkins v. The Moses H. Cone Memorial Health Servs. Corp., et. al., No. 5:16-cv-188 (E.D.N.C. April 21, 2016) (putative class action brought on behalf of hospital patients alleging defendant hospital breached its fiduciary duties and other state laws by seeking improper payments from patients and sending debt collection notices).

Jantz v. Berry, No. 1:16-cv-307 (M.D.N.C. April 11, 2016) (action filed to enjoin merger of grocery chains, alleging – inter alia – deficiencies in proxy materials)

Regan, et. al. v. City of Hanahan, No. 2:16-cv-01077 (D.S.C. April 7, 2016) (collective and class action brought under FLSA and state wage and hour law by EMS workers for city’s failure to pay overtime).

Balint v. The Fresh Market, Inc., No. 16-CVS-4144 (N.C. Bus. Ct. April 5, 2016) (action by public shareholders challenging merger consideration in proposed acquisition; Defendants have moved to dismiss on venue grounds, contending that the Company’s by-laws provide for exclusive jurisdiction in Delaware).

Peiffer v. Charleston County School District, No. 2:16-cv-01042 (D.S.C. April 4, 2016) (notice of removal of collective and class action brought under FLSA and South Carolina Payment of Wage Act alleging that defendant school system failed to pay teachers for attending new employee orientation).

Manigault v. Utopia Home Care, Inc., et. al., No. 2:16-cv-01036 (D.S.C. April 4, 2016) (collective and class action brought under FLSA and South Carolina Payment of Wages Act alleging that defendant home care agency failed to pay overtime and improperly classified certified nurses as exempt employees).

Perez v. Merrill Lynch & Co., No. 3:16-cv-00157 (W.D.N.C. April 1, 2016) (putative class action founded on CAFA and Title VII alleging breach of contract and violation of Title VII arising out of policy changes allegedly made by Merrill Lynch affecting international financial advisors).

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Multiple Studies Show Increase in Securities Class Actions

View Adam Doerr's Complete Bio at robinsonbradshaw.comRecent studies by PricewaterhouseCoopers, NERA Economic Consulting, Cornerstone, and Kevin LaCroix of D&O Diary have all found that federal securities class actions are on the rise. According to PwC, the data shows a trend towards more cases filed against smaller companies, especially for claims regarding accounting irregularities. Smaller companies also face a significant risk of claims regarding inadequate internal controls over financial reporting, likely due to their smaller size and more limited resources.

NERA found that standard federal securities class actions – complaints alleging violations of Rule 10b-5, Section 11, or Section 12 – increased for the third straight year. Both PwC and NERA determined that the number and proportion of federal cases challenging mergers and acquisitions also increased in 2015. It is unclear whether this is a result of Delaware’s increased scrutiny of merger litigation settlements, but we will monitor this trend, which also affects merger litigation in state courts, including the North Carolina Business Court.

Cornerstone analyzed the timing and progress of cases and found that the time to resolution appears to be increasing. Fewer cases were dismissed within the first year after they were filed, and the percentage of cases settled within three years also decreased. Despite this, only a small proportion of cases – just 26% — made it to a motion for class certification. The other 74% of cases were dismissed or resolved prior to class certification. When courts actually decided class certification motions, they granted them 75% of the time.

The studies were not consistent in identifying the number of cases filed in the Fourth Circuit, but all agreed that filings here are well behind those filed in the Second and Ninth Circuits, which saw more than 60% of securities class action filings. Although the Fourth Circuit did not see as much volume as these courts, one of the 10 largest settlements of 2015, a $146.3 million settlement of misrepresentation claims against an energy company, took place in the Western District of North Carolina.

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Recent Filings – March Digest

View Amanda Pickens’ Complete Bio at RBH.com Not every class action court filing in North and South Carolina becomes a full-length post on our blog. Here is a recap of March’s filings:

King v. Managed Recovery Systems, No. 7:16-cv-00954 (D.S.C. March 24, 2016) (action brought on behalf of consumers residing in South Carolina alleging violation of Fair Debt Collection Practices Act).

Storey v. King Street Grille, LLC, No. 2:16-cv-942 (D.S.C. March 24, 2016) (collective and class action brought under the FLSA and state wage and hour law alleging improper “tip credits”).

Filar-Collins et. al. v. Buffets, LLC, et. al. No. 6:16-cv-00888 (D.S.C. March 18, 2016) (notice of removal of putative class action on behalf of former employees alleging that defendants failed to make severance payments after being laid off).

Scrogham v. Reid, et. al., No. 5:16-cv-00045 (W.D.N.C. March 14, 2016) (putative class action on behalf of shareholders of CommunityOne Bancorp against Community Bank’s officers and directors alleging violations of the Exchange Act and other claims arising out of a proposed merger of its bank operations with Capital Bank Financial Corp.).

Carroll, et. al. v. Dewitt, et. al., No. 2:16-cv-00792 (D.S.C. March 11, 2016) (class action on behalf of detention center officers alleging that the officers were required to work off the clock without pay in violation of the South Carolina Payment of Wages Act).

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Recent Filings – January and February Digest

View Amanda Pickens’ Complete Bio at RBH.com Not every class action court filing in North and South Carolina becomes a full-length post on our blog. Here is a recap of January’s and February’s filings:

Folk v. S.C. Healthcare Investment, LLC, No. 1:16-cv-00643 (D.S.C. February 29, 2016) (notice of removal of class action on behalf of former hospital employees alleging that defendant failed to provide proper notice that it was closing the hospital and laying off its employees).

Pendleton v. Reid, et. al., No. 5:16-cv-00037 (W.D.N.C. February 29, 2016) (putative class action on behalf of shareholders of CommunityOne Bancorp against Community Bank’s officers and directors alleging violations of the Exchange Act and other claims arising out of a proposed merger of its bank operations with Capital Bank Financial Corp.).

Spires v. Schools, et. al., No. 2:16-cv-00616 (D.S.C. February 26, 2016) (putative class action alleging defendants breached their fiduciary duties by mismanaging Piggly Wiggly’s retirement plan and violated ERISA).

Ferebee v. Excel Staffing Services, Inc., No. 2:16-cv-00008 (E.D.N.C. February 12, 2016) (asserting Fair Labor Standards Act collective action and class action under the North Carolina Wage and Hour Act and Federal Credit Reporting Act alleging that defendant misclassified nurses as independent contractors, failed to pay overtime, and conducted improper background checks).

Jones v. Portfolio Recovery Associates, LLC, et. al., No. 4:16-cv-00411 (D.S.C. February 10, 2016) (consumer class action alleging that defendant collection agency violated the Fair Debt Collections Practices Act by failing to notify consumers that a payment on a time-barred debt would reset the applicable statutes of limitations).

Xue, et. al. v. J&B Spartanburg, LLC, et. al., No. 7:16-cv-00340 (D.S.C. February 4, 2016) (asserting collective action and class action under the South Carolina Payment of Wages Act brought by chefs alleging that defendant Chinese restaurant owner failed to pay chefs minimum wage and overtime).

Butler et. al. v. Fama Entertainment, LLC, et. al., No. 2:16-cv-00293 (D.S.C. January 29, 2016) (cooks and restaurant workers asserting Fair Labor Standards Act collective action and class action under South Carolina state law alleging that defendant bar owner failed to pay employees overtime).

DiSalvo v. IntelliCorp Records, Inc., No. 7:16-cv-00013 (E.D.N.C. January 26, 2016) (class action brought on behalf of all U.S. consumers to whom IntelliCorp provided a consumer report for employment purposes alleging violations of the Fair Credit Reporting Act).

Edwards v. AG of Durham, Inc., et. al., No. 1:16-cv-00057 (M.D.N.C. January 25, 2016) (collective and class action brought under FLSA and the North Carolina Wage and Hour Act by Mellow Mushroom employees alleging improper “tip credit”).

McCurley v. Flowers Foods, Inc., et. al., No. 5:16-cv-00194 (D.S.C. January 20, 2016) (collective and class action under FLSA and state law alleging that defendant bakery operator improperly classified bakers as independent contractors and failed to pay overtime).

Kassing-Bradley v. Aargon Agency, Inc., No. 9:16-cv-00165 (D.S.C. January 19, 2016) (putative class action alleging violations of Fair Credit Reporting Act for sending improper debt collection voicemail messages).

Rangel, et. al. v. Compliance Staffing Agency, LLC, et. al., No. 4:16-cv-00008 (E.D.N.C. January 19, 2016) (collective action brought under FLSA alleging that staffing companies improperly classified factory workers as independent contractors and failed to pay overtime).

Southern v. WakeMed, No. 5:16-cv-00017 (E.D.N.C. January 13, 2016) (putative class action brought on behalf of hospital patients alleging defendant hospital breached its fiduciary duties and other state laws by seeking improper payments from patients and sending debt collection notices).

Carbone v. China Fun, L.L.C., et. al., No. 2:16-cv-00108 (D.S.C. January 12, 2016) (asserting FLSA collective action and class action under the South Carolina Payment of Wages Act brought by restaurant workers alleging that defendant Chinese restaurant applied an improper “tip credit”).

Gaston, et. al. v. LexisNexis Risk Solutions, Inc., et. al., No. 5:16-cv-00009 (W.D.N.C. January 12, 2016) (consumer class action on behalf of Mecklenburg County residents alleging defendants improperly obtained, released, and sold plaintiffs’ private driving records without express consent from the plaintiffs).

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Fourth Circuit Holds that Court, Not Arbitrators, Decides Whether Arbitration Agreement Provides for Class Arbitration

View David Wright's Complete Bio at robinsonbradshaw.comCharacterizing an unpublished 2007 decision to the contrary as a “thin reed” displaced by later Supreme Court guidance, the Fourth Circuit held that the question of whether an arbitration agreement permits class proceedings is a “gateway” issue for the court, and not a procedural question left to the arbitrator to decide. Del Webb Communities, Inc. v. Carlson, No. 15-1385 (4th Cir. March 28, 2016). The case was filed after a builder – facing numerous construction defect claims and an arbitrator’s decision whether to certify those claims as a class proceeding – filed a petition to compel “bilateral arbitration” under the Federal Arbitration Act. The district court found that the decision whether to conduct class arbitration was a threshold question for the arbitrator. A unanimous Fourth Circuit panel disagreed.

After dealing with some jurisdictional issues – including CAFA jurisdiction and the Rooker-Feldman doctrine – the Court found that, although the Supreme Court had not decided the question, the high court’s adumbrations provided strong guidance on the subject. Writing for the panel, Judge Diaz concluded that a decision concerning “class arbitration” was tantamount to a question concerning arbitrability, which placed the issue squarely within the province of the judiciary under prevailing authority. In Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 559 U.S. 662 (2010), the Supreme Court had held that a party cannot be forced to arbitrate on a class-wide basis absent “a contractual basis for concluding that the party agreed to do so.” But the Court didn’t decide in that case who (the Court or the arbitrator) determined whether this “contractual basis” existed. The Fourth Circuit, agreeing with other Circuits on the question, observed that there was a world of difference between assuming the risk of an error in a bilateral arbitration agreement and accepting such a risk in a class arbitration proceeding. The Court viewed this question as tantamount to a decision on the scope of arbitration, which is a question reserved for the court unless the parties have clearly and unmistakably provided to the contrary.

Never mentioned by the Court in its decision is a line of cases holding that when the parties adopt the AAA rules in their contract, they have “clearly and unmistakably” committed the issue of arbitrability to the arbitrator. In Del Webb, the parties had selected the AAA Construction Arbitration Rules, and Rule R-9 of those rules expressly provides that “The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement.” In a recent North Carolina Business Court decision, Judge Bledsoe – citing numerous federal district and circuit court opinions on the subject – held that the adoption of the AAA rules in the parties’ contract “clearly and unmistakably” committed the issue of the arbitrability of a claim to the arbitrator. But Judge Bledsoe’s case did not involve class arbitration, and it is clear that the Fourth Circuit was not about to give final say to an arbitrator concerning certification of a putative class unless every party to the contract had clearly signed off on that proposition.

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