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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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Recent Filings – July 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 July’s filings:

Prince, et al. v. Perfect Delivery, Inc., et al.; No. 8:17-cv-01950 (D.S.C. July 24, 2017) (purported collective and class action brought by delivery drivers against defendants, which operate Papa John’s franchises in North and South Carolina, alleging defendants used flawed methods to determine reimbursement rates for the drivers who used their own vehicles for delivery, thereby causing their wages to fall below federal minimum wage standards under FLSA.)

Prescott, et al. v. Morgreen Solar Solutions, LLC, et al.; No. 5:17-cv-00365 (E.D.N.C. July 21, 2017) (purported collective and class action brought by employees who allege they were misclassified by defendants as independent contractors and were thereby not properly compensated under federal and state wage and hour laws for time worked including failure to pay minimum wage and overtime compensation.)

Prescott, et al. v. Morgreen Solar Solutions, LLC, et al.; No. 5:17-cv-00365 (E.D.N.C. July 21, 2017) (purported collective and class action brought by employees who allege they were misclassified by defendants as independent contractors and defendants thereby failed to pay minimum wage and overtime compensation for time worked under federal and state wage and hour laws.)

Parshall, et al. v. ASB Bancorp, Inc., et al.; No. 1:17-cv-00194 (W.D.N.C. July 19, 2017) (purported class action brought by shareholders of ASB Bancorp, Inc. against it and its board of directors alleging a false and misleading registration statement was filed regarding a proposed merger with First Bancorp and seeking to enjoin defendants from closing the transaction, or, if consummated, rescinding it or setting it aside.)

Jones, et al. v. Chicago Bridge & Iron Company; No. 3:17-cv-00424 (W.D.N.C. July 18, 2017) (purported collective and class action brought under federal and state wage and hour laws by employees who were assigned to work under the “9/80” pay plan but were allegedly denied overtime compensation and other lawful pay due under that plan.)

Bushansky, et al. Capital Bank Financial Corp., et al.; No. 3:17-cv-00422 (W.D.N.C. July 17, 2017) (one of three putative class action lawsuits brought by shareholders of Capital Bank Financial Corp. under federal securities laws against the Bank and its board of directors alleging defendants failed to disclose material information related to its proposed merger with First Horizon National Corporation and seeking to enjoin the upcoming shareholder vote. The other two cases are: Parshall v. Capital Bank Financial Corp., et al.; No. 3:17-cv-00428 (W.D.N.C. July 19, 2017) and McNamara v. Capital Bank Financial Corp., et al.; No. 3:17-cv-00439 (W.D.N.C. July 25, 2017).)

Rubin, et al. v. ABS Bancorp, Inc.; No. 1:17-cv-00185 (W.D.N.C. July 14, 2017) (putative class action brought by shareholders of ASB Bancorp, Inc. under federal securities laws alleging defendants failed to provide a full disclosure of material information relating to a proposed merger with First Bancorp. and are attempting to enjoin an upcoming shareholder vote.)

Matthews, et al. v. Hyatt Corporation; No. 3:17-cv-00413 (W.D.N.C. July 14, 2017) (purported collective and class action brought by hourly at-home call center employees under federal and state wage and hour laws alleging defendant failed to pay pre-shift, mid-shift and post-shift time the employees spent conducting required tasks for their jobs.)

 

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Recent Filings – June 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 June’s filings:

Lopez, et al. v. Ham Farm, LLC et al., No. 2:14-cv-00030 (E.D.N.C. June 30, 2017) (purported collective and class action brought under FLSA and state wage and hour laws by migrant agricultural workers against sweet potato farm to recover allegedly unpaid minimum wages and overtime compensation).

Sneed, et al. v. Reynolds American Inc., et al., No. 1:17-cv-00584 (M.D.N.C. June 26, 2017) (putative class action asserting securities violations against defendant Reynolds American Inc. for filing an alleged false proxy statement with the SEC regarding a proposed merger with British American Tobacco p.l.c.)

Sommerville, et al. v. Bojangles’ Restaurants, Inc., et al., No. 1:17-cv-00565 (M.D.N.C. June 21, 2017) (purported class action and collective action brought by former and current employees to recover allegedly unpaid minimum wages and overtime compensation under the FLSA.)

Farrow Road Dental Group, P.A., et al. v. AT&T, Corp, et al., No. 3:17-cv-01615 (D.S.C. June 20, 2017) (putative class action removed from South Carolina state court to federal court alleging defendants violated the Telephone Communications Act of 1996 by failing to properly “port” the telephone numbers of the plaintiff which is a dental office, thereby causing existing and potential patients to receive an automated message that the numbers were disconnected and causing financial harm to plaintiff.)

Drew, et al. v. Reynolds American Inc., et al., No. 1:17-cv-00547 (M.D.N.C. June 16, 2017) (putative class action brought on behalf of shareholders of defendant Reynolds American Inc., and its officers and directors, asserting securities violations for filing an alleged materially incomplete and misleading proxy statement with the SEC in advance of a July 2017 special meeting regarding a proposed merger with British American Tobacco p.l.c.)

Parshall, et al. v. HCSB Financial Corporation, et al., No. 4:17-cv-1589 (D.S.C. June 16, 2017) (putative class action brought by shareholders of Defendant HCSB Financial Corporation, which is a bank holding company, for alleged violation of the Securities and Exchange Act through filing of a false and misleading registration statement in May of 2017 regarding merger with United Community Banks, Inc.)

Koerner, et al. v. Ocean Club Vacations, LLC, No. 4:17-cv-01566 (D.S.C. June 15, 2017) (putative class action alleging defendant Ocean Club Vacations, LLC violated the South Carolina Vacation Time Sharing Plans Act by selling timeshare interests in an estate located on Horry County, South Carolina that do not conform to the Act thereby harming plaintiffs financially.)

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Recent Filings – May 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 May’s filings:

Kasprzyk, et al. v. Hilton Grand Vacations Company, LLC, et al., No. 4:17-cv-01393 (D.S.C. May 26, 2017) (purported collective and class action brought under FLSA alleging defendants deducted wages, straight time and overtime pay from commissions earned.)

Berg, et al. v. Span-America Medical Systems, Inc., et al., No. 6:17-cv-01399 (D.S.C. May 26, 2017) (putative class action alleging defendants, who entered into an agreement and plan of merger in early May 2017, filed a solicitation statement that contained false and misleading information and omitted material information thereby violating federal securities laws.)

Giles, et al. v. BNC Bancorp, et al., No. 1:17-cv-00482 (M.D.N.C. May 25, 2017) (putative class action on behalf of shareholders of defendant BNC Bancorp, a publicly traded bank holding company, and its officers and directors, asserting securities violations for failing to disclose material information through incomplete and misleading proxy statements in advance of a proposed merger with Pinnacle Financial Partners, Inc.)

Pill, et al. v. Span-America Medical Systems, Inc., No. 6:17-cv-01375 (D.S.C. May 25, 2017) (putative class action alleging defendants Span-America Medical Systems and Savaris (SC), Inc., who manufacture various products for the medical market, entered into a flawed sales process in early May 2017 which favored Salvaria at the expense of Span’s shareholders, thereby alleging violation of federal and state securities laws.)

Porter, et al. v. Span-America Medical Systems, Inc., No. 6:17-cv-01357 (D.S.C. May 25, 2017) (putative class action alleging defendants entered into an agreement/plan of merger in early May 2017 which is materially deficient regarding financial projections and potential conflicts of interest regarding various managers and directors in violation of federal and state securities laws.)

Gagliastre, et al. v. Capt. George’s Seafood Restaurants, LP, et al., No. 4:17-cv-01308 (D.S.C. May 19, 2017) (putative class action and collective action alleging defendants, who own seafood buffet restaurants, misappropriated tips, required servers to work off the clock and otherwise failed to pay overtime compensation to employees under FLSA and state wage and hour laws.)

Salvo, et al. v. NightCap Inc. Food & Spirits, et al., No. 2:17-cv-01266 (D.S.C. May 17, 2017) (putative class action and collective action brought by servers, bartenders and other “tipped workers” alleging defendants failed to pay compensation due under FLSA and state wage and hour laws seeking to recover minimum wages, unlawful deductions and other wages due to employees.)

Christian, et al. v. TOWERCOMM, LLC, No. 5:17-cv-00223 (E.D.N.C. May 9, 2017) (putative class action and collective action brought by employees of defendant who were tower technicians performing maintenance, repair and installation and allege they were not paid overtime compensation that was due under FLSA and state wage and hour laws.)

Walton v. Maury Cobb & Associates, LLC, et al., No. 5:17-cv-00209 (E.D.N.C. May 2, 2017) (putative class action brought under federal consumer protection laws on behalf of consumers residing in North Carolina alleging defendants sent collection letters with original creditor information which was false and/or misleading.)

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