Monthly Archives: January 2015

Business Court Approves Non-Opt-Out Class Settlement in Merger Case

View David Wright's Complete Bio at RBH.comThe North Carolina Business Court has seemed to settle upon a methodology in approving “disclosure only” settlements in merger cases. Following Judge Gale’s decision in In re Harris Teeter Merger Litigation, Judge Bledsoe certified a non-opt-out settlement class last week in In re PokerTek Merger Litigation, No. 14-CVS-105679 (Jan. 22, 2015), observing that such classes have become the norm both in Business Court and in Delaware. The key to such certification, as Judge Bledsoe observed, was that the case involve predominantly “equitable claims,” rather than claims for “money judgments.” As Justice Scalia recognized in analyzing Federal Rule 23, this is an important distinction: Rule 23(b)(2) “does not authorize class certification when each class members would be entitled to an individualized award of monetary damages.” Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2557 (2011) (observing that “[o]ne possible reading of [Rule 23(b)(2) is that it applies only to requests for . . . injunctive or declaratory relief” on behalf of the class as a whole). Although the federal courts, since Wal-Mart, have been more active in rejecting proposed settlements on commonality grounds, see, e.g., Rodriguez v. National City Bank, 726 F.3d 372 (3d Cir. 2013), a case in which plaintiffs seek to enjoin a merger on behalf of a class of shareholders does not typically present these difficulties. The procedure in PokerTek followed what is fast becoming a template: (i) filing of a complaint seeking injunctive relief; (ii) settlement discussions that yield an MOU; (iii) an agreement to provide additional disclosures to shareholders; (iv) an agreement not to oppose fees up to a certain amount; and (v) withdrawal of the request for injunctive relief, including a release in favor of the defendants by the settlement class.

A New Twist on “Issue Certification” from the District of South Carolina

View David Wright's Complete Bio at RBH.comAs we discussed last year, a bona fide circuit split exists with respect to “issue certification.” We observed that the Fourth Circuit’s guidance on this issue is foggy: As Judge Dever has noted, “although the Fourth Circuit appears to address this issue in Gunnells v. Healthplan Services, Inc., 348 F.3d 417 (4th Cir. 2003), its analysis is unclear.”

In his recent order denying class certification in Parker v. Asbestos Processing, LLC, No. 0:11-cv-01800 (D.S.C. Jan. 8, 2015), Judge Joseph F. Anderson joined the fray, providing an interesting twist on the subject and the practical observations of a judge who has been on the bench nearly 30 years. In Parker, a class comprised of about 15,000 South Carolina asbestos plaintiffs sought certification of legal malpractice and breach-of-fiduciary-duty claims against a number of Mississippi lawyers. Central to the contentions made by plaintiffs was the allegation that their lawyers had failed properly to advise them that proceeding with tort claims would prejudice their right to assert South Carolina workers’ compensation claims.

Judge Anderson skipped fairly quickly over Rule 23(a)’s commonality requirement, although he observed that “the Fourth Circuit appears to place more weight on the degree of commonality required under Rule 23(a)(2) stage than do other courts.” Indeed, the court’s rather rote discussion of commonality – including its citation of a 1997 Second Circuit case – was reminiscent of the way in which many courts previously approached commonality, at least before the Supreme  Court decided Wal-Mart Stores, Inc. v. Dukes.

Before getting to issue certification and ultimately to its holding concerning manageability, the court touched on a good number of class certification issues. These included: potential conflicts among the class members (since some of the class were currently represented by some of the defendants); choice of law issues (which the court resolved by finding that the injuries all occurred in South Carolina so there was not the uniformity problem we have previously discussed in this space; and the court’s read of Comcast, which Judge Anderson found “merely [to] indicate[] that the ‘methodology’ for measuring and quantifying damages be the same for all class members.”

As to issue certification, Judge Anderson observed that the question was not so much whether “issue certification” is viable (indeed Rule 23(c)(4) seems to assume as much) but how the predominance inquiry factored into the analysis. Judge Anderson read the Fourth Circuit’s decision in Gunnells differently from Judge Dever and sided with the Second, Seventh and Ninth Circuits, holding that a trial court “may use Rule 23(c)(4) to certify a class as to an issue regardless of whether the claim satisfies the predominance test in Rule 23(b)(3).”

But Judge Anderson ultimately declined to certify the class, ruling that the proceedings were unmanageable and because of that, a class action was not a superior method for adjudicating the case. Put simply, the court was not enamored with deciding – in one case – over 15,000 claims of workers’ compensation disability issues, even if there were some common questions floating about. This led Judge Anderson to observe that “the present case illustrates, perhaps, why issue certification authorized by Rule 23(c)(4) is little used. As the common issues are narrowed down to make them sufficiently ‘common,’ the desirability of issue certification is diminished” and “the superiority component of Rule 23(b)(3) frequently comes into play to defeat issue certification.” Judge Anderson aligned himself with other courts, cited in the opinion, concluding that “where the prevalence of individual issues is such that limited class certification would do little to increase the efficiency of the litigation,” class certification is not warranted.

Recent Filings – December 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 December’s filings:

Mateo-Evangelio v. Triple J Produce, Inc., No. 4:14-cv-00240 (E.D.N.C. Dec. 31, 2014) (agricultural and produce packing employees alleging violation of the Fair Labor Standards Act, North Carolina Wage and Hour Act, and Migrant and Seasonal Agricultural Worker Protection Act for unpaid wages and overtime).

Velazquez v. Burch Equipment, L.L.C., No. 4:14-cv-00241 (E.D.N.C. Dec. 31, 2014) (agricultural employees alleging violation of the Fair Labor Standards Act, North Carolina Wage and Hour Act, and Migrant and Seasonal Agricultural Worker Protection Act for unpaid wages and overtime based, in part, on inadequate piece rate payments).

McClease v. The Neiman Marcus Group, LLC, No. 2:14-cv-00072 (E.D.N.C. Dec. 30, 2014) (alleging, on behalf of a nationwide class of Neiman Marcus customers, negligence, breach of contract, unjust enrichment, unfair and deceptive business practices under all 50 states and D.C.’s laws, and violation of various states’ data breach acts related to a 2013 data security breach of customers’ payment card data and personally identifying information).

Hickey v. The Home Depot, Inc., No. 4:14-cv-00235 (E.D.N.C. Dec. 23, 2014) (alleging, on behalf of a class of North Carolina Home Depot customers, state law breach of contract, negligence, and unfair and deceptive trade practices claims related to an April 2014 data security breach of customers’ personal financial and identifying information). On December 31, 2014, the case number changed to 7:14-cv-00301.

Fitzhenry v. One on One Mktg., LLC, No. 2:14-cv-04782 (D.S.C. Dec. 18, 2014) (alleging violations of the Telephone Consumer Protection Act, based on autodialed telemarketing calls soliciting students for Virginia College). We have reported on several other similar cases filed by Mr. Fitzhenry in this court: Fitzhenry v. Lily Mgmt. and Mktg. Co., No. 2:14-cv-03866 (D.S.C. Oct. 3, 2014), Fitzhenry v. Indep. Order of Foresters, No. 2:14-03690 (D.S.C. Sept. 18, 2014), Fitzhenry v. Lowe’s Cos., No. 2:14-cv-02081 (D.S.C. May 29, 2014), and Fitzhenry v. Fifth Third Bank, No. 2:14-cv-02076 (D.S.C. May 28, 2014).

Gill v. W. Union Bus. Solutions (USA) LLC, No. 1:14-cv-01066 (M.D.N.C. Dec. 18, 2014) (removal from Cabarrus County Superior Court of a putative statewide class action alleging violations of North Carolina’s debt collection law, N.C. Gen. Stat. § 75-50, et seq., for fees charged in association with the Western Union SpeedPay service). The complaint was originally filed on November 13, 2014.

Kinard v. Migdalas IP Holding, LLC, No. 8:14-cv-04740 (D.S.C. Dec. 16, 2014) (alleging violations of the Fair Labor Standards Act at Migs restaurants in Newberry, Laurens, Greenwood, Saluda, Abbeyville, Ninety-Six, and Greenville, South Carolina, based on the restaurants’ practice to pay employees for their overtime hours “off the books” and at the straight-time rate).

Experian Information Solutions, Inc. v. Dreher, No. 14-491 (4th Cir. Dec. 15, 2014) (petition for interlocutory appeal of issues related to district court’s order granting partial summary judgment in favor of plaintiff on the issue of whether Experian’s violation of the Fair Credit Reporting Act was willful). Specifically, Experian asks the Fourth Circuit to consider whether a class with statutory (but not actual) damages under the FCRA has Article III standing and to articulate the proper test to determine whether violations of the FCRA are willful. Although the District Court for the Eastern District of Virginia’s order would generally not be appealable, the district court certified its order for interlocutory review under 28 U.S.C. § 1292(b).

We previously reported on Experian’s prior petition for interlocutory appeal of the district court’s order certifying a large nationwide class of consumers who requested a credit report from Experian that included an account with Advanta Bank or Advanta Credit Cards after Advanta entered FDIC receivership. Experian’s prior petition was denied by the Fourth Circuit on September 2, 2014.

Ritchie v. Windsor Window Co., No. 9:14-cv-04734 (D.S.C. Dec. 15, 2014) (purported South Carolina class alleging products liability and related claims in connection with defective and leaky windows designed, manufactured, and sold by defendants).

Reed v. Builders FirstSource Inc., No. 2-14-cv-04660 (D.S.C. Dec. 9, 2014) (collective action alleging unpaid overtime to sales coordinators in violation of the Fair Labor Standards Act, based, in part, on uncompensated working time during meal breaks and “off the clock” customer deliveries).