Recent Filings – October Digest

View Amanda Pickens Nitto’s Complete Bio at robinsonbradshaw.comNot every class action court filing in North and South Carolina becomes a full-length post on our blog. Here is a recap of October’s filings:

Laverty, et al. v. Niagara Bottling, LLC; No. 5:17-cv-00196 (W.D.N.C. October 31, 2017) (collective action brought under FLSA against Niagara Bottling LLC, a national water and/or beverage bottling company, by “preventative maintenance technicians” who allege they were not paid overtime compensation for required tasks performed, and also under FMLA by the lead plaintiff for alleged violation of his rights regarding the death of a family member.)

Jackson, et al. v. Ettain Group, Inc.; No. 3:17-cv-00622 (W.D.N.C. October 25, 2017) (action brought under federal and state wage and hour laws by plaintiffs who are “temporary workers” of defendant, which provides temporary contract employee across the country, alleging they were not compensated for work in excess of 40 hours per week and, additionally, were not paid wages due to them on regular paydays.)

Morton, et al. v. The Chemours Company FC, LLC, et al.; No. 7:17-cv-00197 (E.D.N.C. October 20, 2017) (previously reported as included below, this is a putative class action brought by landowners in the Wilmington, North Carolina area alleging defendants are responsible for trespass, nuisance and negligence by releasing toxic chemicals from their Fayetteville, North Carolina site to the property and water supply of those living in the Wilmington area causing damage and contamination to property, previous case is: Nix, et al. v. The Chemours Company FC, LLC, et al.; No. 7:17-cv-00189 (E.D.N.C. October 3, 2017).)

Anderson, et al. v. Equifax Inc., et al.; No. 2:17-cv-02825 (D.S.C. October 18, 2017) (one of several previously reported class actions brought under the Fair Credit Reporting Act by alleged victims of Equifax’s now well publicized data breach claiming they were harmed by unauthorized parties gaining access to personal and/or private information and Equifax’s delayed communication after learning of the breach.)

Clayton, et al. v. CenturyLink, Inc., et al.; No. 1:17-cv-00921 (M.D.N.C. October 13, 2017) (action brought under NC Unfair and Deceptive Trade Practices Act by consumers against defendants, which are global communications and IT services companies, alleging they were charged false and unauthorized charges for services including telephone, internet and/or television accounts, resulting in charges for services they did not order and overcharges for services they did receive.)

Rando, et al. v. CB&I, LLC; No. 0:17-cv-02790 (D.S.C. October 13, 2017) (purported class action brought under federal and state wage and hour laws by alleged non-exempt employees claiming they did not receive overtime compensation and were required to work more time than was included in their compensable time.)

Rhodes, et al. v. Shipman Family Home Care, Inc.; No. 1:17-cv-00950 (M.D.N.C. October 13, 2017) (purported collective and class action brought under federal and state wage and hour laws by employees of defendant who were “home health aides” and also performed related activities for defendant in Kingston, North Carolina who allege they were not paid correct overtime premium rate compensation.)

Brown, et al. v. South Carolina Public Service Authority, et al.; No. 3:17-cv-02764 (D.S.C. October 12, 2017) (previously reported similar action brought by holders of securities in SCANA; this putative class action is brought by customers of SCANA, who have no option but to use SCANA for electrical service, and allegedly have been charged for the costs of the building of various nuclear plants, which have been abandoned with no services rendered.)

Erekson, et al. v. Advanced Call Center Technologies, LLC; No. 3:17-cv-02766 (D.S.C. October 12, 2017) (putative collective and class action brought under FDCPA alleging defendants issued threatening collection letters with misleading and confusing information regarding the identities of creditors and debtors.)

Sharpenter, et al. v. Premara Financial, Inc., et al.; No. 3:17-cv-00607 (W.D.N.C. October 12, 2017) (class action brought under federal securities laws alleging defendants issued a false and misleading registration statement with the SEC regarding a proposed merger with Select Bank & Trust Company, which allegedly denies shareholders information needed to make sound future decisions.)

Sellers, et al. v. Keller Unlimited LLC, et al.; No. 2:17-cv-02758 (D.S.C. October 11, 2017) (putative collective and class action brought under federal and state wage and hour laws alleging defendants, which are restaurants and sports bars, violated FLSA by requiring bartenders to perform non-tipped unrelated duties and not paying federal minimum wage for time spent working in the restaurants.)

Anderson, et al. v. Laboratory Corporation of America Holdings; No. 1:17-cv-00911-TDS (M.D.N.C. October 10, 2017) (putative collective and class action brought under UDTPA and the equivalent under various state laws by plaintiffs alleging they were charged fees for services by LabCorp that were in excess of the negotiated or mandated fair market value rates established between LabCorp and the private or public health insurers.)

Laurence, et al. v. Harris Teeter, LLC; No. 3:17-cv-00602 (W.D.N.C. October 6, 2017) (putative collective and class action brought under federal and state wage and hour laws by “hourly-paid Keyholders and Assistant Grocery Managers” of defendant who allege they received inadequate compensation for the required hours they worked “off the clock” and were not paid overtime wages for work performed.)

Evans, et al. v. SCANA Corporation, et al.; No. 3:17-cv-02683 (D.S.C. October 5, 2017) (putative class action brought under federal securities laws by purchasers of publicly traded securities of SCANA during a period from February 2016 to September 2017 alleging defendant filed/released false and misleading analyst reports and advisories regarding the building of two nuclear plants thereby inflating the price of the securities and harming plaintiffs in their purchase of same.)

Nix, et al. v. The Chemours Company FC, LLC, et al.; No. 7:17-cv-00189 (E.D.N.C. October 3, 2017) (putative class action brought by landowners in the Wilmington, North Carolina, area alleging defendants are responsible for trespass, nuisance, and negligence by releasing toxic chemicals from their Fayetteville, North Carolina, site to the property and water supply of those living in the Wilmington area causing damage and contamination to property.)

Grubbs, et al. v. Advance Stores Company, Inc., et al.; No. 4:17-cv-02647 (D.S.C. October 2, 2017) (putative collective and class action brought under federal and state wage and hour laws by plaintiffs who were part-time delivery drivers of defendant for a period from the fall of 2016 through spring of 2017 and who allege defendant failed to pay overtime compensation for hours worked.)

Mason v. Equifax Inc.; No. 4:17-cv-02644 (D.S.C. October 2, 2017) (one of several putative class actions previously reported brought under the Fair Credit Reporting Act by alleged victims of Equifax’s now well-publicized data breach claiming they were harmed by unauthorized parties gaining access to personal and/or private information and Equifax’s delayed communication after learning of the breach.)

Wright, et al. v. Waste Pro USA, Inc., et al,; No. 2:17-cv-02654 (D.S.C. October 2, 2017) (putative collective and class action brought under federal and state wage and hour laws by employees of defendants alleging miscalculation of hourly rates by defendants, receiving only “half-time” for all hours worked over forty (40) hours in any given work week, in addition to being required to perform pre-shift and post-shift work without pay.)

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Recent Filings – September Digest

View Amanda Pickens Nitto’s Complete Bio at robinsonbradshaw.comNot every class action court filing in North and South Carolina becomes a full-length post on our blog. Here is a recap of September’s filings:

Carlin, et al. v. Hudson Seafood Corp., d/b/a Hudson’s Seafood House on the Docks, et al., No. 9:17-cv-02638 (D.S.C. September 29, 2017) (putative collective and class action brought under federal and state wage and hour employment laws by alleged nonexempt employees of defendants in Beaufort County who were allegedly paid less than minimum wage and also had a portion of their earned tips placed in a “tip pool”.)

Delmater, et al. v. SCANA Corporation, et al., No. 3:17-cv-02563 (D.S.C. September 22, 2017) (putative class action brought by residents of South Carolina who are within the service area of defendant SCANA, a company that supplies electricity to residential, commercial and government customers, alleging that the defendant has violated the Racketeer Influenced and Corrupt Organizations Act as well as other federal and state laws, and has overcharged fees to customers relating to their construction of two nuclear reactors at a facility in Fairfield County.)

Humble, et al. v. Harrah’s NC Casino Company, LLC, et al., No. 1:17-cv-00262 (W.D.N.C. September 18, 2017) (one of two purported collective and class actions brought under federal and state wage and hour laws by “gaming floor employees” alleging defendants violated these laws by failing to pay regular wage and overtime compensation by requiring them to perform work during their meal breaks. The other previously reported case is Clark, et al. v. Harrah’s NC Casino Company, LLC, et al., No. 1:17-cv-00240 (W.D.N.C. August 31, 2017).)

Tate, et al. v. Equifax, Inc., No. 3:17-cv-00555 (W. D.N.C. September 18, 2017) (one of two putative class actions brought under the Fair Credit Reporting Act by alleged victims of Equifax’s now well publicized data breach claiming they were harmed by unauthorized parties gaining access to personal and/or private information and Equifax’s delayed communication after learning of the breach. The other related case is Weaver, et al. v. Equifax, Inc., No. 1:17-cv-00268 (W.D.N.C. September 27, 2017).)

Berg, et al. v. MaxPoint Interactive, et al., No. 5:17-cv-00469 (E.D.N.C. September 14, 2017) (putative class action brought by shareholders against MaxPoint Interactive, Inc. and its directors under federal securities laws alleging defendants filed a solicitation statement that was false and misleading regarding a proposed transaction in which MaxPoint will be acquired by Valassis Communications, Inc. and its affiliates.)

McNeil, et al. v. Low Country Laundry & Dry Cleaning LLC, et al., No. 2:17-cv-02429 (D.S.C. September 10, 2017) (putative class action and purported collective action brought under FLSA and state wage and hour laws alleging defendants, who own and operate 3 full service dry cleaner and laundry service locations in Charleston, failed to pay plaintiffs for hours worked in excess of forty (40) hours per week, failed to compensate for time and a half of hourly wages, engaged in “time shaving,” and violated employment agreements in various other ways.)

Stanford, et al. v. Aldous & Associates, PLLC, et al.; No. 5:17-cv-00444 (E.D.N.C. September 1, 2017)(purported class action brought under FDCPA by North Carolina residents who allege the defendant collection agency violated the Act by sending threatening delinquent balance letters in an attempt to collect debts owed to “Gold’s Gym” in Fayetteville and threatening collection fees if no payment came within a certain time period.)

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Recent Filings – August Digest

View Amanda Pickens’ Complete Bio at robinsonbradshaw.comNot every class action court filing in North and South Carolina becomes a full-length post on our blog. Here is a recap of August’s filings:

Clark, et al. v. Harrah’s NC Casino Company, LLC, et al.; No. 1:17-cv-00240 (W.D.N.C. August 31, 2017) (purported collective and class action brought under federal and state wage and hour laws by “gaming floor employees” alleging defendants violated these laws by failing to pay regular wage and overtime compensation by requiring them to perform work during their meal breaks.)

Dibble, et al. v. Williams & Fudge, Inc., et al.; No. 0:17-cv-02351 (D.S.C. August 31, 2017 ) (purported class action brought under the FDCPA by consumers in the state of Wyoming who allege the defendant collection agency company sent collection letters attempting to charge a fee for debit/credit card payments made to a community college.)

Payne, et al. v. Amazon.com, Inc.; No. 2:17-cv-02313 (D.S.C. August 29, 2017) (purported class action brought under federal and state unfair trade practice, consumer protection, and products liability laws alleging the “Eclipse Glasses” sold by Amazon were defective and dangerous and the recall issued by Amazon was “too little” as well as “too late”.)

Butler, et al. v. Fluor Corporation, et al.; No. 0:17-cv-02201 (D.S.C. August 18, 2017) (one of two putative class lawsuits brought under the federal Worker Adjustment and Retraining Notification Act by former employees of defendants alleging they were terminated on July 31, 2017 without cause and without 60 days’ advance written notice as required by the Act. The other previously reported case is: Pennington, et al. v. Fluor Corporation, et al.; No. 0:17-cv-02094 (D.S.C. August 8, 2017).)

Roskopf, et al. v. Park Sterling Corporation, et al.; No. 3:17-cv-00483 (W.D.N.C. August 14, 2017) (purported class action brought by shareholders of Park Sterling Bank against the bank and its directors alleging a false and misleading registration statement was filed with the SEC regarding its proposed merger with South State Bank.)

Moseman, et al. v. U.S. Bank N.A.; No. 3:17-cv-00481 (W.D.N.C. August 14, 2017 ) (purported collective and class action brought under federal and state wage and hour laws by plaintiffs, who were preliminary investigators researching accounts highlighted for suspicious activity, alleging defendants failed to pay overtime compensation for work in excess of 40 hours a week.)

Fokes, et al. v. AARGON Collection Agency, et al.; No. 2:17-cv-2121 (D.S.C. August 10, 2017) (purported class action brought under the Fair Debt Collections Practices Act by South Carolina residents alleging defendants used false and misleading representations in collection letters in order to collect a higher debt than was actually owed.)

Pennington, et al. v. Fluor Corporation, et al.; No. 0:17-cv-02094 (D.S.C. August 8, 2017) (purported class action brought under the federal Worker Adjustment and Retraining Notification Act by former employees of defendants alleging they were terminated on July 31, 2017 without cause and without 60 days’ advance written notice as required by the Act.)

Bright, et al. v. Taishan Gypsum Co., Ltd., et al.; No. 2:17-cv-00035 (E.D.N.C. August 1, 2017) (one of two purported class actions brought under various state consumer products acts by real property owners who allege the various defendants designed, manufactured, or generally sold and marketed defective Chinese manufactured drywall that contained compounds which caused damage to the plaintiffs and their property. The second case is: DeOliveira, et al. v. Taishan Gypsum Co., Ltd.; No. 4:17-cv-02019 (D.S.C. August 1, 2017).)

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The Case of the $5 Footlong*

View Adam Doerr's Complete Bio at robinsonbradshaw.comFor what appears to have been a frivolous lawsuit, In re: Subway Footlong Sandwich Marketing and Sales Practices Litigation generated an interesting opinion from the Seventh Circuit full of class-action issues. The case originated when an Australian teenager posted a photo of an 11-inch Subway sandwich, with a tape measure, on his Facebook page. Coming in the midst of Subway’s $5 FootlongsTM campaign, the picture went viral, and class-action cases were soon pending.

After early discovery showed that most “footlongs” were, in fact, 12 inches long, plaintiffs’ counsel ran into a series of problems with their damages class under Rule 23(b)(3), including:

    • commonality (“The overwhelming majority of Subway’s sandwiches lived up to their advertised length, so individual hearings would be needed to identify which purchasers actually received undersized sandwiches. But sandwich measuring by Subway customers had been a fleeting social-media meme; most people consumed their sandwiches without first measuring them”);
    • materiality under state consumer protection laws (“Individualized hearings would be necessary to identify which customers, if any, deemed the minor variation in bread length material to the decision to purchase”); and
    • damages (“[A]ll of Subway’s raw dough sticks weigh exactly the same, so the rare sandwich roll that fails to bake to a full 12 inches actually contains no less bread…. As for other sandwich ingredients, class members could be as profligate or as temperate as they pleased: Subway’s ‘sandwich artists’ add toppings at the customer’s request.”)

The plaintiffs shifted strategy, moving from a damages class to a Rule 23(b)(2) class for injunctive relief. Following mediation, the case settled for a series of “procedures designed to achieve better bread-length uniformity,” including bread oven inspections and use of a “tool” (perhaps a ruler?) to measure compliance. To deal with deficient rolls that slipped past the watchful eyes of the inspectors, a poster would be prominently displayed at each restaurant: “Due to natural variations in the bread baking process, the size and shape of bread may vary.”

The settlement provided for $520,000 in fees for plaintiffs’ attorneys, enough for nearly 20 miles of sandwiches, and incentive payments of $500 each for the class representatives. But one class member—Theodore Frank—objected. He argued that the settlement was worthless to the class of Subway customers, who still faced a non-neglible (and relatively meaningless) risk of a short sandwich despite the large payment to class counsel. The attorneys for the class responded that if Subway continued to sell sandwiches less than 12 inches long, failure to comply with the settlement could be punished by contempt. The Seventh Circuit was not persuaded: “Contempt as a remedy to enforce a worthless settlement is itself worthless. Zero plus zero equals zero.”

That the Seventh Circuit even heard an appeal from a settlement approved by the district court also reveals an interesting dynamic in class-action settlements. Class members generally have the right to object to a proposed class-action settlement, and they can attempt to appeal a settlement approved over their objections. Class member objections often involve the fees to be paid to the plaintiffs’ attorneys, especially when the settlement appears to benefit attorneys more than the members of the class. Mr. Frank, the objector in the Subway case, is an attorney who has objected to dozens of class-action settlements as the director of the Center for Class Action Fairness, a nonprofit that describes itself as challenging unfair class-action procedures.1 Interestingly, although Mr. Frank is generally a nonprofit objector, in 2015 he was involved in a situation he described as “lurid” and “Grishamesque” when his $250,000 consulting agreement with a professional serial objector (an attorney who objects to class-action settlements in hopes of being paid to drop the objection by the lead attorneys) became public, as reported by Alison Frankel at Reuters.

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1 The Center for Class Action Fairness is part of the Competitive Enterprise Institute, a conservative organization that advocates for issues including tort reform. Critics of these tort reform efforts contend that by selectively focusing on unrepresentative cases, like litigation over the length of a Subway sandwich, tort reformers are attempting to paint a distorted picture of the legal system that ignores the important role that class actions play in protecting consumers and enforcing civil rights.

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Fourth Circuit Provides Guidance Concerning Proof of the Amount in Controversy under CAFA

View David Wright's Complete Bio at robinsonbradshaw.comWe don’t often get appellate guidance after a federal trial judge remands a case to state court following removal because 28 U.S.C. Sect. 1447(d) generally makes such a ruling unreviewable. But the Class Action Fairness Act (“CAFA”), 28 U.S.C. Sect. 1332(d), permits a court of appeals to accept an appeal of a remand from a class action. The Fourth Circuit exercised this right in Scott v. Cricket Communications, LLC, No. 16-2300 (4th Cir. July 28, 2017), in order to provide some guidance about the quantum and quality of proof required to prove the amount in controversy under CAFA.

Let’s face it. When a plaintiff files a putative class action in state court, he does so because he believes that jurisdiction will be more favorable than a federal forum. In order to defeat removal under CAFA, therefore, the plaintiff must figure out a way to stay under the $5,000,000 CAFA controversy limit. Only an ill-advised plaintiff would file a class action in state court in which he alleges specifically that the class is entitled to receive over $5,000,000. Indeed, as Judge Duncan points out in Cricket Communications, a “removing defendant is somewhat constrained by the plaintiff,” because “[a]fter all, as ‘masters of their complaint’ plaintiffs are free to purposely omit information that would allow a defendant to allege the amount in controversy with pinpoint precision.”

Michael Scott, the sole named plaintiff in the Cricket Communications case, filed his suit in state court after purchasing two Samsung Galaxy phones from Cricket for “hundreds of dollars each.” He alleged he—and others like him—got a raw deal because Cricket had begun to shut down its Code Division Multiple Access (CDMA) technology, thereby rendering his phones “useless and worthless.” He defined the class to include Maryland citizens who—for a nine-month period—purchased a CDMA mobile telephone from Cricket that was locked for use only on Cricket’s (defunct) CDMA network.

When it removed the case, Cricket provided a declaration from an individual who attested that during the relevant period, Cricket customers in Maryland purchased at least 50,000 phones. A supplemental affidavit from Cricket, filed after the motion to remand, clarified that over 47,000 of these phones, associated with billing addresses in Maryland, were “locked into” Cricket’s CDMA network. Accepting the complaint’s reference to each phone being worth “hundreds of dollars” meant, according to Cricket, that the amount in controversy was north of $9,000,000.

The district court, however, remanded the case. The district court observed that the class consisted only of Maryland citizens. Cricket’s removal affidavit was overinclusive, it felt, because some portion of the 47,000 phones sold to customers in Maryland were likely sold to non-citizens. Accordingly, the court found the evidence by Cricket was not “sufficiently tailored to Scott’s narrowly defined class.”

On appeal, the Fourth Circuit agreed that Cricket bore the burden of demonstrating that removal jurisdiction was proper: “When a plaintiff’s complaint leaves the amount of damages unspecified, the defendant must provide evidence to show . . . what the stakes of litigation . . . are given the plaintiff’s actual demands.” And since the class was limited to Maryland citizens, it was Cricket’s job to provide proof that at least 100 Maryland citizens purchased more than $5,000,000 of locked phones from Cricket. The panel agreed that citizenship, as the district court had observed, was different from residence.

Also like the district court, the Fourth Circuit agreed that the initial statement by Cricket that it sold at least 50,000 CDMA mobile phones in Maryland “suffices to allege jurisdiction under CAFA.” But once Scott challenged these allegations through a motion to remand, Cricket was required to prove the jurisdictional amount by a preponderance of the evidence. The appellate court, however, disagreed with the way in which the district court assessed whether the removing defendant had satisfied its burden.

Of necessity, Judge Duncan observed, a defendant must to some extent rely on “reasonable estimates, inferences and deductions.” The “key inquiry,” according to the court, is “not what the plaintiff will recover” but “an estimate of the amount that will be put at issue in the course of the litigation.” The panel found that “[a] removing defendant can use overinclusive evidence to establish the amount in controversy so long as the evidence shows it is more likely than not that ‘a fact finder might legally conclude that’ damages will exceed the jurisdictional amount.”

Because the district court applied, in the Fourth Circuit’s judgment, the wrong legal standard in reviewing this evidence, the court of appeals remanded, emphasizing that Cricket must provide enough facts “to allow a court to determine—not speculate—that it is more likely than not” that the $5,000,000 amount in controversy has been satisfied. Although Cricket, the court said, need not make a “definitive determination of domicile,” it needed to provide more evidence to allow a determination about domicile of the class members.

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