Monthly Archives: March 2015

Recent Filings – March 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 March’s filings:

Duckworth v. Lumber Liquidators, Inc., No. 5:15-cv-42 (W.D.N.C. Mar. 31, 2015) (asserting statewide class action for purported defects in Lumber Liquidators’ Chinese wood flooring). This is the first North Carolina case involving Lumber Liquidators’ allegedly defective flooring, which is already the subject of the Green, White, Sahn, and Watson cases in South Carolina.

Parker v. A Backyard Creation, LLC, No. 4:15-cv-1389 (D.S.C. Mar. 26, 2015) (asserting collective action for unpaid overtime compensation under the Fair Labor Standards Act arising from allegedly improper reclassification of “pool tech” workers in March 2014).

Barrett v. Local Lighthouse, Inc., No. 3:15-cv-132 (W.D.N.C. Mar. 19, 2015) — Seeking injunctive relief and statutory damages on behalf of two proposed nationwide classes, Plaintiff has sued Local Lighthouse, Inc. (“Lighthouse”) for violations of the Telephone Consumer Protection Act (“TCPA”). The complaint asserts that Lighthouse has violated the TCPA through both repeated telemarketing calls to telephone numbers on the Do Not Call Registry (the “Do Not Call Class”) and unsolicited prerecorded telemarketing calls to individuals without their consent (the “Robocall Class”). To prevent a preemptive “buy off,” Plaintiff filed a motion for class certification the same day as his complaint.

Watson v. Lumber Liquidators, Inc., No. 3:15-cv-1259 (D.S.C. Mar. 18, 2015) (alleging nationwide class action for purported defects in Lumber Liquidators’ laminate Chinese wood flooring). Unlike Sahn, White, and Green, this case includes one named plaintiff who resides outside South Carolina and asserts a subclass of individuals whose flooring actually contains the alleged defects. As with Sahn and White, Watson has been assigned to the federal judge handling Green.

Sahn v. Lumber Liquidators, Inc., No. 2:15-cv-1176 (D.S.C. Mar. 12, 2015) (alleging nationwide class action for purported defects in Lumber Liquidators’ Chinese wood flooring). Seeking similar relief and raising similar claims as in Green v. Lumber Liquidators, Inc., this case has been assigned to the federal judge handling Green.

White v. Lumber Liquidators, Inc., No. 2:15-cv-1175 (D.S.C. Mar. 12, 2015) (alleging breach of warranty claims for purported defects in Lumber Liquidators’ laminate Chinese wood flooring). With a class limited to South Carolina residents, this case has been assigned to the federal judge handling Green v. Lumber Liquidators, Inc., No. 4:15-cv-1111.

Mazur v. Stericycle, Inc., No. 1:15-cv-224 (M.D.N.C. March 12, 2015) (contract and UDTP complaint by class of individuals who entered into “standard contracts” with defendant to dispose of medical waste; filed under CAFA and in the apparent aftermath of a qui tam proceeding).

Green v. Lumber Liquidators, Inc., No. 4:15-cv-1111 (D.S.C. Mar. 9, 2015) — This purported nationwide class action brings a bevy of claims, including for negligence, breach of warranty, violation of South Carolina Code § 15-73-10, and fraud, against Lumber Liquidators, Inc. and its affiliates for alleged defects in its “Chinese wood flooring material (‘Chinese Flooring’).” The complaint defines a nationwide injunctive and damages class as well as an alternate damages class limited to individuals in South Carolina who have purchased and installed such Chinese Flooring.

Scofield v. Anthem, Inc., No. 4:15-cv-00040 (E.D.N.C. Mar. 5, 2015) (state-wide class action alleging negligence, breach of fiduciary duty, breach of contract, negligent misrepresentation, unjust enrichment, and unfair and deceptive trade practices related to “massive” data breach of personally identifiable information).

Crank v. Elauwit, LLC, No. 3:15-cv-01057 (D.S.C. Mar. 4, 2015) (collective action alleging violations of the Fair Labor Standards Act for unpaid overtime brought on behalf of field technicians who provided fiber optic networking services).

Irvine v. Destination Wild Dunes Mgmt., Inc., No. 2:15-cv-00980 (D.S.C. Mar. 1, 2015) (collective action alleging violations of the Fair Labor Standards Act for unpaid wages and overtime based, in part, on tip credit violations at the Sea Island Grill restaurant and related restaurants at the Wild Dunes resort).

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Settlement Approvals: Like Selling a Boat?

View David Wright's Complete Bio at RBH.comThere is a well-known quip about the two best days for boat owners: the day when the owner buys it and the day when he sells it. We’ve previously referred to case law emphasizing the need for more active supervision of settlements, particularly with respect to commonality issues, but the fact remains that judges are often happy to have a class action in their court go away. Indeed, when plaintiffs and defendants unite in their application, and the objectors are few and subdued, settlements most often go through. We highlight Judge Norton’s decision preliminarily approving a settlement in Case v. Plantation Title Co., No. 9:12-CV-2518 (D.S.C. March 5, 2015), not because it is groundbreaking, but because it falls into the mainstream of such approvals. The case was vigorously litigated (there are over 286 docket entries), and it had been filed in 2012. So it doesn’t surprise us that Judge Norton discerned a “strong judicial policy in favor of settlements, particularly in the class action context,” nor that he cited a 25-year-old decision in accord with that sentiment. If you need a quote to support settlement, consider this one from the opinion: “[S]ettlement classes have proved to be quite useful in resolving major class action disputes. While their use may still be controversial, most courts have recognized their utility and authorized the parties to seek to compromise their differences, including class action issues, through this means.” And best of luck in selling your boat.

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Class Certified in Magistrate’s Pay Case

View David Wright's Complete Bio at RBH.comOn March 3, 2015, Judge Michael O’Foghludha, a Rule 2.1 judge appointed to hear the controversy, granted a motion to certify a class of state magistrates serving between 2009 and 2014. Adams v. State, No. 14-CVS-15027 (Wake Cnty. N.C. Super. Ct. Mar. 3, 2015). The principal common issues appear to be whether a statutory “step increase” in pay became a part of the individual employment contracts of the magistrates and whether the State could suspend these step increases without incurring liability. The certification order affects approximately 650 magistrates.

In its decision, the trial court does not wrestle with what can often lead to denial of class certification in oral contract disputes. If “oral statements” provide the foundation for contractual relief (rather than, say, a statutory change), inquiry into those individual circumstances can often dwarf the issues otherwise common to the class. (In this regard, see our previous post regarding CEVA Logistics.)

Of note is Judge O’Foghludha’s citation in his ruling to English v. Holden Beach Realty Corp., 41 N.C. App. 1, 254 S.E.2d 223 (1979). Although the “community of interest” standard in English was later disapproved by the North Carolina Supreme Court, see Crow v. Citicorp Acceptance Co., 319 N.C. 274, 279-80, 354 S.E.2d 459, 464 (1987), the case remains good law for a general proposition favorable to plaintiffs: “Our Rule 23 should receive a liberal construction, and it should not be loaded down with arbitrary and technical restrictions.”

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Trends in Shareholder Class Actions Challenging Corporate Mergers

View Adam Doerr's Complete Bio at RBH.com In two recent studies of shareholder class actions over corporate mergers, the authors reached conclusions consistent with our experience with such cases in North Carolina: that nearly every acquisition of a public company results in shareholder litigation. The Cornerstone Research report found that 93% of public company acquisitions were challenged. Takeover Litigation in 2014, a separate study by Matthew Cain of the SEC and Steven Solomon of UC Berkeley, found that 94.9 of deals were challenged. (The two studies used slightly different cutoffs for their samples.)

Both reports found that the number of cases filed in multiple jurisdictions is on the decline, and they speculate that this may result from an increase in companies with forum selection clauses in their bylaws. Both reports also found that the average number of suits challenging each transaction had declined slightly, from over 5 to 4.3 (Cain & Solomon) or 4.5 (Cornerstone).

The vast majority of these shareholder class actions, over eighty percent, settled for additional disclosures of information to shareholders. Most of the remaining cases were resolved for changes to deal protection provisions or reductions in termination fees. Few cases involved monetary payments to shareholders.

The reports do not provide information on specific states apart from Delaware. Although our experience in North Carolina is generally consistent with these findings, North Carolina law differs from Delaware law in important respects, and our sample size is not large enough to confirm national trends.

(Robinson Bradshaw has represented companies, boards of directors, and private equity purchasers in numerous shareholder class actions challenging corporate mergers, including the defense of suits against the Duke Energy/Progress Energy merger, the Wells Fargo/Wachovia merger, and multiple going private transactions between public companies and private equity firms.)

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Recent Filings – February 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 February’s filings:

McCants v. The Nat’l Collegiate Athletic Ass’n, No. 1:15-cv-00176 (M.D.N.C. Feb. 27, 2015) (removal of class action brought on behalf of University of North Carolina at Chapel Hill student athletes who enrolled in putative “sham paper classes” from 1989 to 2011, alleging negligence and breaches of fiduciary duty, implied contract, and implied covenant of good faith and fair dealing against the NCAA and UNC). The 100-page complaint was originally filed in Durham County Superior Court on January 22, 2015.

Pick v. Lenovo (United States) Inc., No. 5:15-cv-00068 (E.D.N.C. Feb. 24, 2015) (nationwide class action alleging violation of the federal wiretap act and other claims for computers sold with Superfish adware installed on them).

Campbell v. Am. Int’l Grp., Inc., No. 15-1177 (4th Cir. Feb. 20, 2015) (appeal of the U.S. District Court for the Eastern District of Virginia’s dismissal for failure to state a claim of a stockholder suit alleging violation of the Securities and Exchange Commission’s plain language rules for AIG’s 2008 prospectus description of certain equity units).

Bond v. Marriott Int’l, Inc., No. 15-1160 (4th Cir. Feb. 19, 2015) (appeal from order granting summary judgment in favor of Marriott; second amended complaint alleges violations of ERISA’s vesting provisions on behalf of a class of former Marriott employees and beneficiaries of Marriott’s stock and cash incentive retirement plan). The trial court deferred and ultimately did not need to rule on class certification. On February 24, 2015, Marriott filed a cross appeal (No. 15-1199) that has been consolidated with the Bond appeal.

Coalition for Equity and Excellence in S.C. High Educ. v. South Carolina, No. 3:15-cv-00667 (D.S.C. Feb. 13, 2015) (alleging violations of the Equal Protection Clause and Title VI of the Civil Rights Act of 1964 for failing to desegregate the state’s higher education system and implementing duplicative programming that negatively impacts students at South Carolina State University, the state’s only public historically black institution).

Lynch v. Dining Concepts Group, LLC d/b/a Wicked Tuna, No. 2:15-cv-00580 (D.S.C. Feb. 9, 2015) (restaurant workers alleging violations of the Fair Labor Standards Act for unpaid minimum wages and overtime based, in part, on alleged tip pool violations).

Ingram-Fleming v. Lowe’s Home Centers, LLC, d/b/a Lowe’s, No. 5:15-cv-00018 (W.D.N.C. Feb. 5, 2015) (transfer of nationwide class action originally filed on October 9, 2014 in the U.S. District Court for the Middle District of Florida brought on behalf of Lowe’s employees and applicants alleging violation of the federal Fair Credit Reporting Act in connection with employment background checks).

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