Monthly Archives: July 2014

Recent Filings – July Digest

View Susan Huber's Complete Bio at Not every class action court filing in North and South Carolina becomes a full-length post on our blog. Here is a recap of July’s filings:

Billioni v. Bryant, No. 0:14-cv-03060 (D.S.C. July 31, 2014) (alleging collective action for unpaid overtime in violation of the Fair Labor Standards Act and individual claims under the First and Fourteenth Amendments, the South Carolina whistleblower statute and for retaliation and wrongful termination from the York County Detention Center).

Home Loan Center v. Dijkstra, No. 14-386 (4th Cir. July 31, 2014) (appeal from U.S. District Court for the Northern District of West Virginia’s order on class damages, which awarded class members—West Virginia consumers who obtained mortgage loans through LendingTree—with more than $4,000 in statutory damages for Defendants’ unauthorized practice of law at real estate closings and excessive notary fees).

Sadler v. Pella Corp., No. 2:14-cv-03051 (D.S.C. July 30, 2014) (case transferred to MDL from U.S. District Court for the Northern District of Illinois).

Friday v. The Remi Group, LLC, No. 3:14-cv-00405 (W.D.N.C. July 24, 2014) (alleging violations of the Fair Labor Standards Act and N.C. Wage and Hour Act for failure to pay wages for all hours worked and overtime). The purported class is defined as “all customer service agents of defendants from May 2011 through present who were not paid for all hours worked in at least one workweek which exceeded forty (40) hours of work.” You can read more about such fail-safe classes in our previous post.

Sams v. Entrust Arizona, LLC, No. 14-1722 (4th Cir. July 18, 2014) (appeal from order and memorandum granting motion to dismiss for failure to state a claim). Sams brought suit in the U.S. District Court for the District of Maryland on behalf of herself and three purported classes of similarly situated persons, alleging that defendants, self-directed individual retirement account custodians and administrators, are liable for account losses associated with her investment in a Ponzi scheme. The alleged Ponzi scheme manager was not named as a defendant, and Sams failed to allege that defendants knew about the Ponzi scheme.

Brown v. GNC Corp., No. 14-1724 (4th Cir. July 18, 2014) (appeal from grant of motion to dismiss MDL consolidated complaint alleging violations of various state consumer protection, deceptive practices, and warranty statutes related to GNC and Rite Aid joint supplements containing glucosamine and chondroitin). The U.S. District Court for the District of Maryland (Judge Motz) held that the existence of a “battle of the experts” regarding the supplements’ effectiveness was insufficient, as a matter of law, to establish that the Defendants’ advertisements violated consumer protection laws.

Baker v. Aramark Corp., No. 1:14-cv-02857 (D.S.C. July 16, 2014) (removal from Aiken County of action 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 Complaint, which is nearly identical to the complaints in Pinckney v. 7-Eleven Inc., No. 3:14-cv-02337 (D.S.C. June 13, 2014), 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), was originally filed June 3, 2014.

Manheim v. SME Inc., USA, No. 2:14-cv-02856 (D.S.C. July 16, 2014) (nationwide class action alleging violation of the Telephone Consumer Protection Act for sending junk faxes). Plaintiff filed a motion and brief in support of class certification contemporaneously with the complaint, and, the next day, filed a motion to stay the motion for class certification and requested time to conduct class-related discovery.

Clark v. PokerTek, Inc., No. 3:14-cv-00380 (W.D.N.C. July 10, 2014) (federal securities class action to enjoin the proposed acquisition of PokerTek by Multimedia Games, Inc., alleging inadequate sales price and proxy deficiencies).

Two recent filings from the U.S. District Court for the Eastern District of North Carolina are related to federal securities class actions filed against PowerSecure International. As previously reported, these related cases allege fraud after the defendant company’s share price dropped.

These cases join Ash v. PowerSecure Int’l, Inc., No. 4:14-cv-000092 (E.D.N.C. May 22, 2014).

Experian Information Solutions, Inc. v. Dreher, No. 14-325 (4th Cir. July 7, 2014) (petition for interlocutory appeal from the United States District Court for the Eastern District of Virginia’s order granting class certification of nationwide 88,000-member class of individuals who requested a credit report from Experian that included an account with Advanta Bank or Advanta Credit Cards after Advanta entered FDIC receivership in August 2010). Plaintiff, a victim of identity theft, alleges in his Complaint multiple violations of the Fair Credit Reporting Act related to the credit reporting agency’s failure to provide notice, accurate information, and prompt investigation of the fraudulent accounts opened through Advanta. For more information, see this post.

Kingery v. Quicken Loans, Inc., No. 14-1661 (4th Cir. July 7, 2014) (appeal from United States District Court for the Southern District of West Virginia’s class decertification and grant of summary judgment in favor of Quicken Loans). Plaintiff alleged that Quicken Loans used her credit score but failed to provide her with timely notice in violation of the Fair Credit Reporting Act. At summary judgment, the trial court determined that Plaintiff was not a member of the certified nationwide class consisting of all individuals with credit scores obtained and used by Quicken Loans because there was no admissible evidence that Plaintiff’s score was used by Quicken Loans. Because Plaintiff was not a member of the class, the class was decertified and her individual claims failed as a matter of law.

Alshehabi v. Hymans Seafood Co., No. 2:14-cv-02724 (D.S.C. July 3, 2014) (alleging minimum wage and overtime violations under the Fair Labor Standards Act based, in part, on unlawful tip-sharing arrangement at restaurant).

Corbett et al. v. General Motors, LLC, No. 7:14-cv-00139 (E.D.N.C. July 1, 2014) (class action filed on behalf of North Carolinians alleging “deadly design defect in vehicle switches in millions of GM vehicles”).

No Second Bite of the Appellate Apple

View David Wright's Complete Bio at RBH.comRule 23(f) provides an important exception to the “final judgment rule,” and allows interlocutory appeal of class certification decisions. When the district court makes only one “class certification” decision, the application of Rule 23(f) is fairly straightforward. But what happens when the district court – after making an initial class certification ruling – rules on a motion to decertify the class? Is the denial of that motion also appealable? Most courts have said “no,” and you can understand why: motions to decertify and Rule 23(f) applications could go on endlessly. In a recent order, Judge Gregory wrote that “the time for appeal [under Rule 23(f)] will not reset when a court rules on certification motions filed subsequent to the original motion so long as the later rulings do not alter the original ruling.” So, in the Fourth Circuit, unless the new ruling changes or adjusts in some respect the original ruling on class certification, a litigant does not get to reset the 14-day interlocutory appeals clock under Rule 23(f).

Experian Petitions Fourth Circuit to Review Certification of 88,000-Member Class

View Stuart Pratt’s Complete Bio at RBH.comExperian recently petitioned the Fourth Circuit to immediately review a district court’s order certifying an 88,000-member, nationwide class of consumers who requested Experian credit reports that listed accounts with the now-defunct Advanta Bank. In this case, Dreher v. Experian Information Solutions, Inc., No. 14-325 (4th Cir. July 3, 2014), Experian requested an interlocutory appeal under Rule 23(f), contending that, among other things, the district court’s order that certified a class with members that had suffered no injury and found Rule 23’s predominance requirement to be satisfied was “manifestly erroneous.”

In January 2012, the plaintiff filed a class-action complaint in the Eastern District of Virginia, alleging Experian had committed multiple violations of the Fair Credit Reporting Act (“FCRA”) by failing to provide notice and accurate information about accounts with the defunct Advanta Bank listed on his and other consumers’ credit reports. Specifically, the plaintiff claimed that Experian erroneously reported that Advanta had supplied the credit-report information, when, in fact, Cardworks, a newly appointed servicer of the Advanta accounts, had given Experian this information. For these violations, the plaintiff sought statutory damages and attorneys’ fees and costs.

Upon the plaintiff’s motion, the district court, in June 2014, issued an order and opinion finding that the plaintiff had satisfied the class-action requirements of Rule 23 and certifying a class of individuals who had received a credit report from Experian after August 1, 2010, that identified Advanta as the sole source of information for an account entry. The district court rejected Experian’s arguments that issues of individual statutory damages would predominate over common issues of liability, concluding that the damages calculation for each class member would simply be based on the number of discrete statutory violations, and not, as Experian contended, based on each member’s individualized actual harm. The district court did not address Experian’s argument that most of the potential class members lacked Article III standing because they had not suffered an injury-in-fact.

Experian’s petition to the Fourth Circuit for interlocutory review focused on these two issues: Article III standing and predominance. Experian first argued that interlocutory review was appropriate because the district court—despite recognizing that “it is unlikely that anyone suffered actual injury”— ignored Experian’s Article III standing argument. The Fourth Circuit, Experian said, recently held that “deprivation of [a] statutory right” was not “sufficient to constitute injury-in-fact for Article III standing.” David v. Alphin, 704 F.3d 327, 338 (4th Cir. 2013). Thus, Experian contended that the district court’s admission about the lack of actual injury meant the class members did not have Article III standing and the class should not have been certified.

Second, Experian claimed that the certification order erroneously found that common issues predominated over individual members’ issues. Experian said the district court justified this conclusion by improperly adopting a “Trial by Formula” approach—using a mathematical calculation based on the FCRA’s statutory-damages limits to determine the class’s total damages. Again, Experian argued that the district court’s decision conflicted with a previous Fourth Circuit decision, this time Soutter v. Equifax Information Services, LLC, 498 F. App’x 267 (4th Cir. 2010). Instead of using a math formula to determine a class’s statutory damages under FCRA, Experian asserted that Soutter requires a court to typically do an “individualized inquiry” to determine damages. Further, Experian said the district court’s “Trial by Formula” approach was improper under Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), because the Dukes Court had rejected using such formulas to adjudicate class actions.

The plaintiff’s response to Experian’s petition is due in August. Then, it will be up to the Fourth Circuit to decide whether to allow an interlocutory appeal. We’ll continue to monitor and report on this case as it progresses in the courts.

Can an offer of judgment to the named plaintiff moot a class action lawsuit? District of South Carolina says “No”

View David Wright's Complete Bio at RBH.comIt is often expedient for a defendant to make an offer of judgment in order to avoid the expense of lengthy proceedings, particularly when the plaintiff’s damages claim is small. But what happens when the offer of judgment is made to a class representative? Does that mean that the individual no longer has standing? And does it make any difference if the offer is made before or after the class certification motion is filed? Judge Currie grappled with these issues last week in a Fair Debt Collection Practices Act case, Chatham v. GC Services, LP, No. 3:14-cv-00526 (D.S.C. July 16, 2014), lamenting that “neither party [had] cite[d] to any Fourth Circuit or United States Supreme Court authority on this precise issue,” namely: “Do the presence of class allegations in the Complaint and the pendency of a motion for class certification . . . preclude the offer of judgment from rendering the Plaintiff’s class action moot?”

Although most circuits have rebuffed this defense tactic, there appears to be a bit of light in the Supreme Court’s decision in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013). But that was a Fair Labor Standards Act case, and rules for collective actions are different. In the end, Judge Currie aligned herself with the majority rule, finding that “an offer of judgment will not moot a named plaintiff’s claim if the offer is made while a motion to certify the class is pending.”

It remains to be seen whether or not the filing of the class certification motion is dispositive in this line of cases. If it is, you can expect to see in consumer class actions simultaneous filings of class certification motions with the complaint.

New Article Proposes Alternatives to Class Action Litigation

View David Wright's Complete Bio at RBH.comProfessor Linda Mullenix, the Morris and Rita Atlas Chair in Advocacy at the University of Texas School of Law, has written an intriguing retrospective about the American “love affair” with class actions and the “evolving dysfunction” of that procedure. She argues that although “class actions are not dead,” “they are just badly done and in compelling need for rethinking of the class action rule.” In place of what we have now – a landscape dominated by Rule 23(b)(3) class actions – she advocates for a “reformed, simplified class action rule” focusing on injunctive remedies, alongside more robust public regulatory enforcement. An intriguing read, and thanks to the authors of the What’s Fair?: A Blog of the Law of Unfair and Deceptive Trade Practices for bringing this to our attention!