Monthly Archives: April 2014

Recent Filings – April 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 April’s filings:

Graham v. Papa John’s USA, Inc., No. 14-cvs-7700 (Meck. County Apr. 25, 2014) (tort claims arising from alleged infections caused by restaurant worker with Hepatitis A).

Reed v. Big Water Resort, No. 2:14-cv-01583 (D.S.C. Apr. 22, 2014) (alleged “scheme to solicit millions of dollars from over a thousand people in exchange for the sale of nearly worthless memberships in the Big Water Resort,” located in Clarendon County).

Knight v. Pella Corp., No. 2:14-cv-01540 (D.S.C. Apr. 19, 2014) – South Carolina plaintiffs have sued Pella Corporation, a distributor of custom, residential windows and doors. Knight alleges that Pella designed, manufactured, marketed, advertised, and sold its defective windows to him and to other consumers throughout South Carolina. Knight alleges that at the time of the sale, Pella’s aluminum wood clad windows and doors contained a defect that permitted water to enter through unsealed areas, causing the wood cladding to leak, rot, and degrade. The defect led to homeowners having to spend money to fix damaged wooden window frames and other property inside their residences. Knight is seeking class certification, compensatory and punitive damages, costs, interest and attorneys’ fees.

Krakauer v. Dish Network, L.L.C., No. 1:14-cv-333 (M.D.N.C. Apr. 18, 2014) — On behalf of a proposed nationwide class, Plaintiff has sued Dish Network, L.L.C. (“Dish”) for violations of the Telephone Consumer Protection Act (“TCPA”) by Satellite Systems Network (“SSN”). The complaint asserts that SSN is an authorized Dish dealer that has violated the TCPA through repeated telemarketing calls to telephone numbers on the Do Not Call Registry. Seeking certification under Rule 23(b)(3), the complaint identifies seven alleged common questions of law and fact. The lawsuit requests injunctive relief as well as statutory damages of $500 to $1,500 per call.

Webster v. MetLife Home Loans, LLC, No. 3:14-cv-01361 (D.S.C. Apr. 14, 2014) – Plaintiffs have sued MetLife, alleging that the personal mortgage loan servicing company failed to renew their flood insurance policy with funds from their escrow account. During the lapse in coverage, the Biggert-Waters Flood Insurance Reform Act of 2012 was signed into law, and Plaintiffs’ new flood insurance premium payments are now unsubsidized and more expensive. Plaintiffs allege that MetLife’s internal policies caused many homeowners to have a lapse in flood insurance coverage when the 2012 legislation was enacted.

You can view a current list of recent filings here.

If at First You Don’t Succeed…

View Adam Doerr's Complete Bio at RBH.comUnlike many pretrial rulings, “[a] district court’s order denying or granting class status is inherently tentative.” Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 n. 11 (1978). Rule 23 expressly provides that “[a]n order that grants or denies class certification may be altered or amended before final judgment.” Fed. R. Civ. P. 23(c)(1)(C). Indeed, as the Fourth Circuit observed, in a case our firm handled, “an order certifying a class must be reversed 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) (emphasis added).

In Foster v. CEVA Freight, LLC, No. 3:10-cv-00095 (W.D.N.C.), Judge Whitney granted certification to a class of persons seeking injunctive relief for alleged Truth In Leasing Act violations. But the case evolved, and – as it approached trial – had changed into one alleging damages for breach of contract totaling $100 million. After initially declining to revisit class certification, Judge Whitney granted CEVA’s motion to decertify the damages claims, concluding that the prevalence of individually negotiated contracts destroyed commonality. Citing Wal-Mart, the Court held that there was “no longer proof of any ‘glue holding the alleged reasons for [Defendant’s 1.5 million payment] decisions together,’ much less a ‘common contention’ ‘of such a nature that it is capable of classwide resolution.”

In general, the Fourth Circuit hasn’t been fond of “glomming together” contract actions. See Broussard v. Meineke Disc. Muffler Shops, Inc., 155 F.3d 331, 340 (4th Cir. 1998) (“[P]laintiffs cannot amalgamate multiple contract actions into one”).

John Wester, David Wright, Stephen Cox and Adam Doerr of our firm were retained to serve as counsel for CEVA following the initial certification of the class.

NC Supreme Court Issues Class Action Opinion

View David Wright's Complete Bio at RBH.comThe so-called “Northern Beltway” around Winston-Salem – in part from litigation efforts and in part from lack of funding – has never really gotten off the ground. But property owners whose land and homes are affected by the future project complained that the State’s actions in putting them on the map for the roadway constitute a “taking” under inverse condemnation principles. And they brought a multi-count class action challenging the DOT’s actions. The trial court denied class certification, and a unanimous Court of Appeals affirmed in Beroth Oil Company v. NC DOT, 725 S.E. 2d 651 (N.C. Ct. App. 2012). After accepting review, the Supreme Court – in an April 11 decision – affirmed the class certification decision, but chastised the trial court for going a bit too far in commenting on the merits of the claims. Beroth Oil Company v. NC DOT, No. 390PA11-2 (April 11, 2014).

How far a trial court can go in examining the merits of the claims in analyzing class certification issues is a perennial conundrum. Since 1974, the Supreme Court has made it clear that a determination is not a “merits” determination, Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974), but that determination does depend on a “rigorous analysis,” often “requires a court to probe behind the pleadings,” General Telephone Co. of the Southwest v. Falcon, 457 U.S. 147, 160 (1982), and “involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff’s cause of action.” Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 (1978).

Winston-Salem SmallSo that means that the concept of a “taking” – and whether one occurred that affected Northern Beltway property owners – is a question that is integral to and must be considered in deciding whether class certification is appropriate in the case. What the majority didn’t like was that the trial court seemed to make a declarative, merits-based ruling related to the taking issue.

But the more lasting import of the 7-2 decision is that the Supreme Court reaffirmed the inappropriateness of class certification when the analysis of a “taking” depends upon consideration of individual issues affecting a myriad of different property owners. In so ruling, the Court clarified the meaning of the abuse of discretion standard of review in the Rule 23 context – reaffirming that legal errors are reviewable “de novo” and detailing that a ”competent evidence” standard, not ”clear error,” should be applied in reviewing factual determinations, citing Blitz v. Aegean, Inc., 197 N.C. App. 296 (2009). That discussion forecasts greater appellate scrutiny of otherwise discretionary decisions regarding class certification.

Notably, the court cited with approval the Fourth Circuit’s decision in Gariety v. Grant Thornton, LLP, 368 F.3d 356 (2004), which could provide an important precedent on commonality issues going forward.

A bone of contention between the dissent and the majority was whether the debate was really about another perennial issue – whether commonality or predominance is affected by individual damages issues. The majority “generally agreed” that differences in the amount of damages won’t preclude class certification, but – unlike the dissent – found that the liability issues were inextricably tied to the damages determination. State trial judges may be puzzled a bit by the Supreme Court’s declaration that the Superior Court erred in adopting “any test” to determine damages at “this stage of the proceedings.” And, since class certification decisions are conditional, it is unclear whether – at some later point in the proceedings – the class certification ruling might be revised after such a test is determined.

An infrequently analyzed issue under Rule 23 is the so-called “superiority” requirement, and that prong gets a boost from the Court’s decision. Citing Crow v. Citicorp Acceptance Co., 319 NC 274 (1987), the court reemphasizes that the “usefulness of the class action device must be balanced . . . against inefficiency or other drawbacks” and specifically notes the pendency of a consolidated Rule 2.1 case involving 52 landowners pending before Superior Court Judge John O. Craig III. The Court seemed troubled that plaintiffs’ counsel was simultaneously pursuing a series of individual, “exceptional” cases and still promoting the class action device as the most efficient way to resolve the claims.

Court Denies Certification of Settlement Class Where Settlement Only Benefited Named Plaintiff

View Rich Worf’s Complete Bio at RBH.comThe Second Circuit has observed that “[t]he [trial] judge [in a class action] should not regard himself as an umpire in typical adversary litigation. He sits also as a guardian for class members who have not received a notice or who lack the intellectual or financial resources to press objections.” Weinberger v. Kendrick, 698 F.2d 61, 69 n.10 (2d Cir. 1982). And this role is transparently on display when it comes to approving settlements, which is the court’s responsibility under Rule 23(e). Recent decisions in other circuits emphasize, particularly after Wal-Mart, that a court must still engage in a rigorous Rule 23 review even in the context of a settlement. See Rodriguez v. National City Bank, No. 11-8079 (3d Cir. Aug. 12, 2013) (declining to approve settlement class because it failed to meet newly articulated standards of commonality).

In Supler v. FKAACS, Inc., No. 5-11-CV-229 (E.D.N.C. Nov. 6, 2012), Judge Flanagan refused to approve a consent settlement in a Fair Debt Collection Practices case involving a company that allegedly left pre-recorded messages for a debtor without identifying it was a debt collector. She found four different barriers to class certification and settlement approval: (1) it was not administratively feasible to determine who was in the class because the defendant used multiple autodialing machines, only one of which allegedly transmitted illegal messages, and there were no records to show whom it called; (2) the injunctive remedy agreed to wasn’t meaningful or beneficial to the class because defendant wasn’t in the business anymore of collecting past-due accounts; (3) the damages remedy agreed to was not meaningful as it consisted of a $2,500 payment to the named plaintiff and a $17,500 cy pres payment to Legal Aid of North Carolina; and (4) the scope of the class was improperly confined to dates relevant chiefly to the named plaintiff’s interests.