Monthly Archives: June 2014

Recent Filings – June Digest

View Susan Huber's Complete Bio at RBH.comNot every class action court filing in North and South Carolina becomes a full-length post on our blog. Here is a recap of June’s filings:

Smith v. Air Methods Corp., No. 9:14-cv-02587 (D.S.C. June 26, 2014) (alleging exorbitant and unconscionable charge for medical air transportation). Plaintiff’s purported class consists of “those who find themselves in need of medical attention” (para. 18) and “have been charged an unreasonable fee” for medical air transportation (para 34). This case was originally filed in Jasper County on May 15, 2014.

Oliver v. FirstPoint, Inc., No. 1:14-cv-00517 (M.D.N.C. June 24, 2014) (nationwide class alleging FirstPoint provided criminal history information in an employment-related report without proper notice in violation of the Fair Credit Reporting Act).

Alexander v. Pfizer Inc., No. 2:14-cv-02508 (D.S.C. June 20, 2014) (one of thirty-three similar complaints transferred to MDL in the United States District Court for the District of South Carolina). Plaintiffs allege that Pfizer’s cholesterol lowering medication, Lipitor, caused their diabetes.

Pinckney v. 7-Eleven Inc., No. 3:14-cv-02337 (June 13, 2014) (alleging violations of the Fair Labor Standards Act and South Carolina Payment of Wages Act for unpaid overtime and unpaid wages for “off the clock hours”). This case was originally filed in the Richland County Court of Common Pleas on May 8, 2014. The complaint is nearly identical to the complaints in Hammond v. The Methodist Oaks, No. 5:14-cv-02152 (June 4, 2014) and Void v. Orangeburg County Disabilities and Special Needs Board, No. 5:14-cv-02157 (June 4, 2014) (more information below), and plaintiffs in all three cases are represented by the same attorney. 7-Eleven has filed a motion to dismiss, arguing in part that plaintiffs failed to state a claim for a collective action under the FLSA because they neither defined a class nor identified a factual nexus between the plaintiffs and potential class members.

Reynolds v. Wyndham Vacation Resorts, Inc., No. 4:14-cv-02261 (June 10, 2014) (employee timeshare sales agents allege violation of the Fair Labor Standards Act for unpaid wages and overtime).

Allard v. Eadie’s Construction Co., No. 2:14-cv-02236 (June 9, 2014) (alleging violations of the Fair Labor Standards Act for unpaid overtime and unpaid wages associated with “off the clock” work and compensable travel time).

Hammond v. The Methodist Oaks, No. 5:14-cv-02152 (June 4, 2014) (alleging violations of the Fair Labor Standards Act and South Carolina Payment of Wages Act for unpaid overtime and unpaid wages for “off the clock hours”). The case was originally filed in the Orangeburg County Court of Common Pleas on May 2, 2014. The complaint is nearly identical to the complaint in Void v. Orangeburg County Disabilities and Special Needs Board, No. 5:14-cv-02157 (June 4, 2014) (more information below), and both sets of plaintiffs are represented by the same attorney.

Void v. Orangeburg County Disabilities and Special Needs Board, No. 5:14-cv-02157 (June 4, 2014) (alleging violations of the Fair Labor Standards Act and South Carolina Payment of Wages Act for unpaid overtime and unpaid wages for “off the clock hours”). The case was originally filed in the Orangeburg County Court of Common Pleas on May 2, 2014.

Lecroy v. CSX Transportation, Inc., No. 2:14-cv-02128 (June 2, 2014) (removal pursuant to the Class Action Fairness Act of case alleging negligence and strict liability for “obstruction of roadway” after April 28, 2014 train derailment and bridge collapse blocked Cypress Gardens Road in Berkeley County, South Carolina and caused a putative class in excess of 3,000 persons additional travel time and expense to use alternate roadways). The complaint was originally filed in the Berkeley County Court of Common Pleas on May 15, 2014.

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Supreme Court Upholds Fraud on the Market Presumption

View David Wright's Complete Bio at RBH.comEarly in May, we reported on the Supreme Court’s review of the Basic v. Levinson presumption of reliance in securities fraud cases. In an opinion today by Justice Roberts, the Court declined the invitation to overrule Basic’s presumption of reliance in an efficiently traded market. Three justices (Thomas, Scalia and Alito) were prepared to overrule Basic. The majority held that there was no “special justification” to overrule Basic, noting the absence of “the kind of fundamental shift in economic theory that could justify overruling a precedent on the ground that it misunderstood or has since been overtaken by economic realities.” The Court did, however, continue to emphasize that “plaintiffs wishing to proceed through a class action must actually prove—not simply plead—that their proposed class satisfies each requirement of Rule 23.” The Court emphasized that “the Basic presumption does not relieve plaintiffs of the burden of proving—before class certification—that this requirement is met.” But the Court also emphasized that defendants’ ability to rebut reliance did not mean that individual questions will necessarily overwhelm common ones and render class certification inappropriate under Rule 23(b)(3). As to abuses attendant to securities class actions, Justice Roberts said—in effect—“write your Congressional representative”—observing that Congress had enacted the Private Securities Litigation Reform Act (PSLRA) to combat some of those perceived abuses.

Critically, the Court held that defendants must be allowed to defeat the reliance presumption of Basic at the class certification stage. The “price impact” of an alleged misrepresentation is crucial to the operation of the Basic presumption, Justice Roberts observed, and “thus has everything to do with the issue of predominance at the class certification stage.” And if the Basic presumption is rebutted, “class certification [is] inappropriate.” Look for a plethora of event studies at the class certification stage.

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Fail-Safe Class Fails to Obtain Class Certification

View Amanda Pickens’ Complete Bio at RBH.comCourts have understandably been reluctant to certify a class consisting of “persons who are injured by the defendant” or “individuals to whom the defendant is liable,” i.e., a class definition that depends on the outcome of the case. Such a “fail-safe” class is unfair to defendants:  if defendants win the case, there is no class that is bound by the result because the class consists solely of victors.

A West Virginia judge recently denied a former Dollar General employee her bid for class certification, finding the proposed class was fail-safe and therefore improper. Stephanie N. Paulino filed a class action lawsuit against Dollar General in 2012, alleging the company violated the West Virginia Payment and Collection Act (“WPCA”) when it failed to pay her final wages within 72 hours of her termination. The putative class was defined as all former West Virginia Dollar General employees who were “involuntarily terminated” and who were “not paid their final wages within 72 hours of termination.”

According to Judge Groh, the putative class was an impermissible “fail-safe” class because membership depended on Dollar General’s ultimate liability to each employee under the WPCA. Members could either win their WPCA claims and join the class, or lose and be excluded from the class.

The Fourth Circuit hasn’t weighed in directly on the “fail-safe” class issue, but district courts, including in the District of South Carolina, have flatly prohibited such definitions. Melton v. Carolina Power & Light Co., 283 F.R.D. 280 (D.S.C. 2012)

The class also failed to meet Rule 23’s commonality, typicality, predominance, and superiority requirements. Judge Groh found that the Court would have to engage in an individualized analysis to determine whether a member could even qualify for the class. Specifically, the Court would have to determine, at minimum, three threshold questions: Did the former employee resign, or was he fired? When did Dollar General terminate the former employee (including both the time and the date)? When did Dollar General disburse the former employee’s final wages? The court held that these initial questions require a substantial, fact-intensive, individualized investigation.

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Decertification of Class Claims Alleging Breach of Warranty Fails in South Carolina

View David Wright's Complete Bio at RBH.comThe aphorism “If at first you don’t succeed . . .” has special significance in class litigation.  Rule 23(c)(1)(C) expressly provides that an order granting or denying class certification “may be altered or amended before final judgment,” and the Fourth Circuit has made it clear that the district court must decertify a class if “it becomes apparent, at any time during the pendency of the proceeding that class treatment of the action is inappropriate.” Stott v. Haworth, 916 F.2d 134, 139 (4th Cir. 1990).  But Judge Childs declined to decertify a class of plaintiffs who contended that their roofing shingles were defective in Brooks v. GAF Materials Corp., No. 8:11-cv-00983 (June 6, 2014). Significantly, citing district court rulings in the Second Circuit, Judge Childs remarked that “a court should be wary of revoking a certification order completely at a late stage in the litigation process.” Although this observation is difficult to square with the fact that the plaintiffs continue to bear the burden to show class certification is appropriate throughout the entire case, the Court doesn’t grapple with that issue, and declines to equate the claims in the case before it with the commonality ruling in Comcast.  Judge Childs also made short shrift of the argument that the failure to accept an offer of judgment impacted the adequacy of the named plaintiff to represent the class.

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