On behalf of four Texas law firms, Blank Rome on March 24, 2020, successfully obtained a dismissal of a putative legal malpractice class action in Gore, et al. v. Bruce Nagel, et al., filed in the United States District Court for the District of New Jersey, alleging that the law firms violated New Jersey Court Rule 1:21-7 by charging excessive contingency fees. Plaintiffs did not allege that the Texas law firms provided incorrect advice. In underlying personal injury litigation, the Texas law firms represented Debbie Gore, a Texas resident, and Doris Lance-Smith, an Alabama resident, against Ethicon, the manufacturer of pelvic mesh products for injuries sustained after surgical implantation of these products. On May 21, 2013, and June 2, 2012, respectively, Texas resident Gore and Alabama resident Lance-Smith, entered into retainer agreements with Texas counsel to pursue their mesh claims against Ethicon. Both Plaintiffs agreed to pay a 40 percent contingency fee, and allowed their counsel to associate with other law firms without increasing the required fee. Gore’s Retainer Agreement stated that Texas law governs and that any claims “arising under [the Gore Retainer] must be filed only in a court of competent jurisdiction in Harris County, Houston, Texas.” Lance-Smith’s Retainer Agreement did not have a choice of law provision. The Plaintiffs had sustained injuries in their home states after being implanted with the allegedly defective mesh products. Continue reading “Blank Rome Obtains Dismissal of Putative Class Action for Legal Malpractice against Texas Law Firms”
In another blow to plaintiffs suing under New Jersey’s Truth-in-Consumer Contract, Warranty, and Notice Act (“TCCWNA”), the United States District Court for the District of New Jersey in Martinez-Santiago v. Public Storage, 2019 WL 1418118 (D.N.J. March 29, 2019), decertified a class of 160,000 members alleging that lease agreements with the Defendant Public Storage violated TCCWNA. Following the New Jersey Supreme Court’s decision last year finding that a consumer who is a party to a contract that fails to comply with New Jersey law, but who does not suffer any adverse consequences from the noncompliance, has failed to state a TCCWNA claim, United States District Judge Jerome Simandle decertified the class. The decision was based on an analysis of the Rule 23 requirements, where the Court held that the requirements of “typicality,” “predominance,” and “numerosity” under Rule 23 could not be met.
With respect to the typicality requirement, the Court found that the named plaintiff was one of “relatively few” customers who actually suffered an adverse consequence due to the form lease contract entered into with Public Storage. Since the vast majority of class members did not suffer an adverse consequence, the claims of the named plaintiff were not typical of the class members, and therefore the typicality requirement was not met.
The Court also found that the “predominance” requirement could not be met because questions of fact common to class members no longer predominated over questions affecting only individual claims. Finally, because discovery revealed that only 29 class members might be able to assert a viable claim under TCCWNA, the “numerosity” requirement of Rule 23 likewise could not be met.
The decision of the Court in Martinez-Santiago left only the named plaintiff with potentially viable claims, thereby continuing to chip away at the prospect of successful class action suits against corporate entities, and large attorneys’ fee awards to class action counsel, in suits where the class cannot meet the requirements of Federal Rule of Civil Procedure 23.
In a case alleging violations of federal securities laws by Cigna Corporation and certain of its officers, the Second Circuit Court of Appeals affirmed the dismissal of the complaint on the basis that the statements made by the defendants were simple, generic assertions about its regulatory policies and procedures upon which no reasonable investor would reasonably rely, and were therefore not materially misleading. Singh v. Cigna Corp., No. 17-3484-cv, (2d Cir. Mar. 5, 2019). Following Cigna’s acquisition of HealthSpring, a regional Medicare insurer, Cigna issued several public statements, including 10-K filings, concerning its commitment to regulatory compliance given the significant regulatory responsibilities involved in Medicare coverage. In its 2013 Form 10-K filed on February 27, 2014, Cigna said it had “established policies and procedures to comply with applicable requirements,” and that it “expect[ed] to continue to allocate significant resources” to compliance efforts. Id. at *5. In December 2014, Cigna published a pamphlet titled “Code of Ethics and Principles of Conduct,” which affirmed the importance of compliance and integrity:
[I]t’s important for every employee. . .to handle, maintain, and report on [Cigna’s financial] information in compliance with all laws and regulations. . .
[W]e have a responsibility to act with integrity in all we do, including any and all dealings with government officials.
Id. at **4-5. In its 2014 Form 10-K, Cigna stated that it would “continue to allocate significant resources” to compliance. Id. at *6. The 10-K included a discussion of the difficulty of compliance in the regulatory environment given the “uncertainty surrounding legislation and implementation of national healthcare reform.” Id.
A 2015 audit of Cigna’s Medicare operations by the Centers for Medicare and Medicaid Services (“CMS”) revealed numerous regulatory violations. Cigna filed a Form 8-K disclosing the CMS audit conclusions and accompanying sanctions. Within several days, Cigna’s stock price fell substantially. Continue reading “Generic Representations of Regulatory Compliance Not Actionable under Federal Securities Laws”
Blank Rome Partners Omid Safa and Michael A. Iannucci have been named 2018 Rising Stars by Law360 in recognition of their legal accomplishments in the categories of Insurance and Class Action, respectively. Below are excerpts of their profiles, as published by Law360. Continue reading “Meet Blank Rome’s 2018 Law360 Rising Stars”
Consumer class action litigation—often accusing the defendant company of deceiving its customers—strikes at the heart of a company’s reputation, goodwill, and brand—all of which are often built over the course of many years or decades. As such, these cases pose not only the threat of immense litigation and liability costs, but also irreparable, and potentially fatal, future damage to the company’s brand. By way of recent example, for the past several years, a putative class of plaintiffs from several states took aim at Tropicana’s Pure Premium (“TPP”) orange juice, claiming that the company deceived and misrepresented the public concerning its popular orange juice. Continue reading “Class Gets the Squeeze: Class Certification Denied in In Re: Tropicana Orange Juice Marketing and Sales Practices Litigation, Civil No. 2:11-07382, MDL 2353 (D.N.J. Jan. 22, 2018)”
A nationwide class of 17.9 million members was certified by a judge in the District of New Jersey last week in Mendez v. Avis Budget Group, Inc. and Highway Toll Administration LLC. The Court also granted Florida and New Jersey sub-classes. The suit alleges that Avis secretly charged drivers who rented cars for an electronic toll-payment service (“e-Toll”). Specifically, Plaintiff Jose Mendez alleged that his rental agreement with Avis did not specify he would be automatically enrolled as an e-Toll subscriber and charged an alleged convenience fee of $2.50 per day and up to $10 a week for the service, irrespective of whether he paid for the highway tolls he incurred. Continue reading “EZ-Pass Paid and Certified: Nationwide Class Certification Granted under New Jersey’s Consumer Fraud Act”
Michael A. Iannucci and Richard Wolf
While questions remain about the Consumer Financial Protection Bureau’s (“CFPB”) future power, the agency, which was created by the Dodd-Frank Act in the wake of the 2008 economic crash, issued a powerful Final Rule that will ban companies from using class action waivers in arbitration clauses. The Final Rule will go into effect 60 days after its publication in the Federal Register, and arbitration agreements entered into 180 days after publication must comply with the new rule. Retail clients, banks and financial institutions, debt collectors, and credit card companies may be most impacted by the new rule, as they often utilize these arbitration clauses in consumer agreements as a less expensive—and private—alternative to litigation. The CFPB, which has faced intense scrutiny from the Trump Administration as well as challenges in federal courts, reasoned that class action litigation waivers effectively foreclose consumers from pursuing small-dollar disputes on an individual basis because doing so is not cost effective.
A Discussion of the Third Circuit’s Recent Decision in Chassen
In Chassen v. Fid. Nat’l Fin., Inc., 2016 U.S. App. LEXIS 16489 (3d Cir. N.J. Sept. 8, 2016), Plaintiffs represented a putative class of New Jersey real estate purchasers and refinancers who were allegedly overcharged fees in connection with the recording of their deeds and mortgage instruments. Plaintiffs alleged that Defendants charged them more than it cost to record these documents with the county clerk and pocketed the difference. Plaintiffs also alleged that the class claims totaled over $50 million.
In 2009, Plaintiffs filed a complaint in the U.S. District Court for the District of New Jersey alleging both breach of contract and violation of New Jersey law. Defendants moved to dismiss some of these claims and raised various affirmative defenses. Defendants did not seek to compel arbitration based upon arbitration clauses contained in contracts with Plaintiffs. The parties litigated the case for two and a half years, focusing primarily on class certification, during which the parties conducted broad discovery and filed several motions on the merits. Continue reading “Arbitration of Claims to Avoid Costly Putative Class Action Lawsuits”
The All-Important Factors for Class “Numerosity”
On September 13, 2016, the United States Court of Appeals for the Third Circuit set forth for the first time a “non-exhaustive list” of factors for a District Court judge to consider when determining whether joinder would be impracticable for purposes of the class action “numerosity” requirement. In re Modafinil Antitrust Litigation, No. 15-3475 (3d Cir. Sept. 13, 2016). These factors include (1) judicial economy, (2) the claimants’ ability and motivation to litigate as joined plaintiffs, (3) the financial resources of class members, (4) the geographic dispersion of class members, (5) the ability to identify future claimants, and (6) whether the claims are for injunctive relief or for damages. Id. at *31-32.
In order to gain class certification, a putative class must satisfy a number of requirements, including that “the class is so numerous that joinder of all members is impracticable.” F.R.C.P. 23(a)(1). The Rule does not define “numerous,” and it is left to the Court to decide on a case-by-case basis whether a particular putative class meets this requirement. Despite the need for individualized factual analysis, a class of 20 or fewer is generally too small and a class of over 40 is usually sufficiently numerous. In re Modafinil at *24-25. While the Court noted that “the number of class members is the starting point of our numerosity analysis,” id. at *25, the Court focused on whether joinder is impracticable. Continue reading “Judicial Economy and Joined Plaintiffs”