Monthly Archives: December 2014

Where State Law Is Silent, Cross-Jurisdictional Tolling Is Unavailable

View David Wright's Complete Bio at RBH.com View Sinéad O’Doherty’s Complete Bio at RBH.com Just before the holidays, Judge Norton considered the thorny issue of “cross-jurisdictional class action tolling” in a multidistrict litigation case involving allegedly defective windows. See Schwartz v. Pella Corp., No. 2:14-mn-00001, 2:14-cv-00556 (D.S.C. Dec. 18, 2014). As the name suggests, cross-jurisdictional class action tolling is an equitable doctrine that tolls the statute of limitations during the pendency of a class action in a different court. The principle of class action tolling was introduced forty years ago in American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974), when the Supreme Court held that the statute of limitations was tolled during the pendency of a putative federal class action. Generally, therefore, a putative class member can sit on the sidelines while a federal class action rocks along without the limitations period running. There is one (big) catch, however: American Pipe tolling only applies to subsequently filed federal question actions, not class actions based on state law. See Wade v. Danek Med., Inc., 182 F.3d 281, 286 (4th Cir. 1999). And, where state law is silent regarding cross-jurisdictional class action tolling, the Fourth Circuit has strongly suggested that federal courts should not infer its availability. Id. at 287-88. Unfortunately for Schwartz, her leaky-window implied breach of warranty claims were based on Minnesota law and her class action tolling contention hinged on a case filed in Illinois federal court. Thus, because Minnesota has never recognized cross-jurisdictional class action tolling, Judge Norton “decline[d] to establish such a rule in the first instance,” and dismissed Schwartz’s implied warranty claims as untimely.

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Notice of Removal: Short and Plain Statement, Not Proof of Jurisdictional Facts, Required

View Sinéad O’Doherty’s Complete Bio at RBH.comLast May, we introduced you to the Dart Cherokee Basin Operating Co., LLC v. Owens case and the interesting possibilities it presented for Supreme Court review. On Monday, a divided Supreme Court issued its decision in this matter, and it did not disappoint. To briefly recap, this case arose from the attempted removal of a putative class action to federal court under the Class Action Fairness Act (the “CAFA”). In their notice of removal, the defendants (collectively, “Dart Cherokee”) asserted that the amount in controversy was $8.2 million, satisfying CAFA’s $5 million threshold. The plaintiff, Brandon Owens, sought to remand the case on the grounds that the removal notice was legally defective because it did not contain admissible evidence proving that the amount in controversy had been met. In response to Owens’ remand motion, Dart Cherokee provided an affidavit supporting its damages calculation. Relying on Tenth Circuit precedent and the “presumption” against removal, the district court remanded the case to state court. Dart Cherokee sought leave to appeal the remand order to the Tenth Circuit. See 28 U.S.C. § 1453(c)(1) (providing that “a court of appeals may accept an appeal from an order of a district court granting or denying a motion to remand a class action”). After a divided Tenth Circuit denied Dart Cherokee’s request for appellate review, the Supreme Court granted certiorari to determine if a notice of removal must include jurisdictional evidence.

The Supreme Court quickly disposed of this question: “The answer, we hold, is supplied by the removal statute itself. A statement ‘short and plain’ need not contain evidentiary submissions.” Dart Cherokee Basin Operating Co. v. Owens, No. 13-719, slip op. at 2, 574 U.S. ___ (2014). In reaching this conclusion, the Supreme Court noted that the removal statute tracks the pleading requirements of Federal Rule of Civil Procedure 8(a) and emphasized that the “notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold,” Dart Cherokee, slip op. at 7. As for the district court’s reliance on the “purported ‘presumption’ against removal,” the Supreme Court concluded, “[i]t suffices to point out that no antiremoval presumption attends cases invoking CAFA.” Id. In so ruling, the Supreme Court has brought some clarity to the removal process under CAFA.

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If you are one of our readers who enjoys more esoteric issues, you’ll want to keep reading. The Dart Cherokee case provoked two dissenting opinions, but the dissenting justices appear to agree with the majority’s answer to the question of whether jurisdictional evidence is required with a notice of removal. See Dart Cherokee, slip op. at 1-2 (Scalia, J., dissenting) (“Eager to correct what we suspected was the District Court’s (and the Tenth Circuit’s) erroneous interpretation of § 1446(a), we granted certiorari to decide whether notices of removal must contain evidence supporting federal jurisdiction.”). Where the justices split, however, was on the propriety of reviewing the merits of an order remanding a class action to state court when the court of appeals denies leave to appeal under Section 1453(c)(1). In last year’s Standard Fire Insurance Co. v. Knowles decision, a unanimous Supreme Court considered the merits of a case in precisely that procedural posture: the Eighth Circuit had denied a defendant’s request for leave to appeal a remand order under Section 1453(c)(1). Unlike in Knowles, an amicus brief in this case argued that because Section 1453(c)(1) provides for discretionary appellate review, the only issue before the Supreme Court was whether the Tenth Circuit abused its discretion in denying Dart Cherokee’s leave-to-appeal application. The dissenting justices agreed with this argument and concluded that, because they could not determine the reasons why the Tenth Circuit denied Dart Cherokee’s request, the case should have been dismissed as improvidently granted. Failing that, most of the dissenting justices would have affirmed the Tenth Circuit’s ruling. Justice Thomas, however, would have dismissed the case for lack of jurisdiction under 28 U.S.C. § 1254. According to Justice Thomas, because the Tenth Circuit denied Dart Cherokee’s application for leave to appeal, “no ‘case’ ever arrived ‘in the court of appeals’” for the Supreme Court to review. Dart Cherokee, slip op. at 2 (Thomas, J., dissenting). By contrast, the majority concluded that jurisdiction was proper under Section 1254, explaining, “The case was ‘in’ the Court of Appeals because of Dart’s leave-to-appeal application, and we have jurisdiction to review what the Court of Appeals did with that application.” Id. at 8 (majority opinion). The majority further concluded that, “[f]rom all signals one can discern…, the Tenth Circuit’s denial of Dart ’s request for review of the remand order was infected by legal error.” Id. at 11. In the majority’s opinion, whether the Tenth Circuit erred in denying review and whether the district court erred in remanding the case “depends on the answer to the very same question: What must the removal notice contain?” Id. at 13.

Given this division among the justices, it will be interesting to see how the Supreme Court resolves the next case where a defendant seeks review of a remand order after the Court of Appeals denies leave to appeal under Section 1453(c)(1).

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Claims Relating to Hospital Charges Must Proceed Individually, Business Court Says

View David Wright's Complete Bio at RBH.com The North Carolina Business Court today rebuffed an attempt by “self-pay” patients receiving emergency treatment to challenge the hospital’s charges on a class-wide basis. In Hefner et al. v. Mission Hospital, Inc., et al., No. 12-CVS-3088 (N.C. Business Court Dec. 8, 2014), Judge Gale found that there “is a panoply of potential issues factoring into the ultimate questions of reasonableness [of patient charges] because every patient treated at Mission received different services and was billed for different amounts.” A key consideration in deciding whether to certify a class, particularly in North Carolina state courts, is whether the forecasted individual issues relate exclusively to “damages” or whether they also relate to the core issue of liability, something we have discussed in another post. In the language of North Carolina appellate precedent, this determination depends upon whether the case fits within the Scylla of Beroth or the Charybdis of Faulkenbury. The key to Judge Gale’s decision was his finding that “this case is much more comparable to Beroth than Faulkenbury,” i.e., the reasonableness of hospital charges was found to be a liability issue.

In Wal-Mart Stores, Inc. v. Dukes, Justice Scalia rejected plaintiffs’ attempt to found a common question on statistical proof based on an aggregate disparity. Judge Gale did much the same thing, expressly rejecting “the notion that it would be appropriate or fair … to reduce the question of the reasonableness of individualized charges to some form of averaging.” And Judge Gale delivered an important exegesis of the recent Beroth decision: “Beroth makes it clear that a Plaintiff seeking class certification must produce evidence that each putative class member was affected the same way and at least to approximately the same extent by a defendant’s actions. If liability as to the proposed class can only be established after an individualized investigation into the circumstances of each class member, the class does not satisfy the commonality prerequisite.”

(Robert Fuller and Heyward Bouknight of our firm represented Defendants in this case).

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Recent Filings – November Digest

View Susan Huber's 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 November’s filings:

Foster v. M5 Hospitality Group, LLC, No. 4:14-cv-04517 (D.S.C. Nov. 25, 2014) (alleging violations of the Fair Labor Standards Act and S.C. Payment of Wages Act for unpaid overtime and minimum wages based, in part, on alleged tip pool violations at the Good Time Charley’s restaurant in Myrtle Beach).

Di Biase v. SPX Corp., No. 3:14-cv-00656 (Nov. 25, 2014 W.D.N.C.) (alleging breach of settlement agreements and ERISA violations for announced changes to retiree health care benefits). David Wright, Cary Davis, and Amanda Pickens serve as counsel for SPX in this case.

Bentaous v. Asset Acceptance, LLC, No. 14-2266 (4th Cir. Nov. 19, 2014) (appeal from memorandum and order of the U.S. District Court for the District of Maryland granting motion to compel arbitration of putative class action for violations of the Fair Debt Collection Practices Act, Maryland Consumer Debt Collection Act, and Maryland Consumer Protection Act).

Evanston Ins. Co. v. Agape Senior Primary Care, Inc., No. 14-2268 (4th Cir. Nov. 19, 2014) (appeal from summary judgment order of the U.S. District Court for the District of South Carolina concluding that insurance coverage existed). For purposes of determining Evanston’s duty to defend and indemnify Agape, Evanston initially sought certification of a class of people who may have received medical treatment at any Agape facility from Ernest Addo, who was pretending to be a doctor. In April, the District Court denied class certification.

Baker v. Branch Banking & Trust Co., No. 1:14-cv-967 (M.D.N.C. Nov. 19, 2014) (alleging collective action for wage and overtime violations of the Fair Labor Standards Act related to BB&T’s Leadership Development Program).

Meiser et al. v. Takata Corp., et al. (W.D.N.C. Nov. 17, 2014) (action filed under CAFA on behalf of persons who purchased or leased various model Honda automobiles that have been subject to an airbag-related warning or recall).

Young v. Takata Corp., (E.D.N.C. Nov. 17, 2014) (CAFA action relating to alleged defects in airbags manufactured by Takata).

Horton v. Takata Corp., No. 2:14-cv-4433 (D.S.C. Nov. 14, 2014) (asserting nationwide and South Carolina class actions on behalf of all individuals in the United States or South Carolina, respectively, who leased or purchased a litany of vehicles containing allegedly defective Takata airbags).

Grignon v. Salix Pharm., Ltd., No. 5:14-cv-804 (E.D.N.C. Nov. 12, 2014) (asserting federal securities class action for securities violations, including fraudulent statements regarding wholesaler inventory levels).

Prontaut v. Reliable Reports of Texas, Inc., 1:14-CV-00945 (M.D.N.C. Nov. 11, 2014) (alleging violation of the Fair Labor Standards Act and other claims against insurance inspection and reporting company for failing to pay minimum wage as a result of paying inspectors on a per-inspection basis and other policies).

Graham v. Toyota Motor Corp., No. 2:14-cv-4357 (D.S.C. Nov. 10, 2014). On behalf of a putative class of South Carolinians who purchased certain Toyota Camry and Lexus models, plaintiffs brought a class action for breach of warranties. We have noted before that breach of warranty claims pose challenges for class certification, but by pleading a one-state class, the Graham plaintiffs have circumvented one of the most obvious obstacles to class certification.

Cox v. Syngenta Corp., No. 4:14-CV-04345 (D.S.C. Nov. 10, 2014) and Lanier et al. v. Syngenta AG, No. 7:14-CV-00262 (E.D.N.C. Nov. 11, 2014). Complaints filed against manufacturer of genetically modified corn, by corn farmers on behalf of all S.C. and N.C. corn farmers (respectively) who sold non-genetically modified corn, alleging Lanham Act and tort claims arising from manufacturer’s misrepresentations and other actions that led to contamination of U.S. corn supply with genetically modified corn and consequent refusal by China to accept U.S. corn imports.

Barron’s Outfitters Inc. v. Big Hairy Dog Information Systems, No. 3:14-CV-04335 (D.S.C. Nov. 7, 2014) (alleging Telephone Consumer Protection Act violations by company that sent unsolicited faxes advertising point of sale systems to South Carolina business and class of similarly situated persons).

Leonard et al. v. Rust-Oleum Corp., No. 7:14-CV-00259 (E.D.N.C. Nov. 6, 2014) (alleging breach of warranty and other claims against paint manufacturer for design and manufacturing defects in paint product).

Jackson v. National General Insurance Co., No. 1:14-CV-00927 (M.D.N.C. Nov. 5, 2014) (alleging Fair Labor Standards Act and other claims arising from call center company’s failure to pay employees for tasks employees were required to perform outside of normal working hours).

Blue v. Waters Investments, Inc., No. 5:14-CV-00770 (E.D.N.C. Nov. 4, 2014). Complaint filed against store on behalf of disabled plaintiff and similarly situated individuals for facilities that allegedly violate Americans with Disabilities Act.

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