Tag Archive for 'class action'

Class Action Lawsuit Survives Against Chrysler for Defective Clutch

Chrysler_logoIn a class action lawsuit against Chrysler, a federal judge ruled in favor of the plaintiffs on Monday, June 15, 2015, when he denied a request by Chrysler Group LLC to dismiss the class action alleging Chrysler of selling Dodge Darts from 2013 and 2014 with defective clutches. He found that the plaintiffs provided a sufficient description of the defect in their complaint. He also found that the allegation that the defect caused the vehicles to be unmerchantable, was sufficient.

Although the judge reduced the size of the class action, he rejected Chrysler’s argument that certain plaintiffs were in violation of Federal Rule of Civil Procedure 8(a) by failing to state a defect in adequate detail in order to permit Chrysler to defend itself. According to the lawsuit, the automaker was aware that the vehicles with manual transmissions had a defective hydraulic clutch system. It is also alleged that although Chrysler knew that the clutch system malfunctioned, and was marked by several problems and safety issues, it concealed the defect from customers and instead, resumed marketing the vehicles as “robust and reliable.”

However, the judge did not side with the plaintiffs completely, for he dismissed the claims of express warranty and a violation of the Magnuson-Moss Act to the degree to which the basis of those claims is a design defect. He ruled in this way because Dart’s express warranties do not include design defects.

The Magnuson-Moss Act states that a warrantor must reveal, completely and clearly, in language that is easy to comprehend, the warranty terms and conditions to the degree to which they are required by the Federal Trade Commission. According to the terms of the Act, any ambiguous statements contained in a warranty are construed against the one who drafted the warranty.
Moreover, under the California Consumers Legal Remedies Act, the judge dismissed the lawsuit’s punitive damages claims concerning Chrysler’s representation of the cars’ safety. The court found that a press release containing a vice president’s depiction of pre-market testing did not demonstrate that an officer or other person in a position of authority approved of Chrysler’s alleged wrongful behavior.

Nevertheless, the judge seemed to be mostly in favor of the plaintiffs, and hopefully, Chrysler and other automakers will be deterred from hiding their vehicles’ defects from consumers in the interest of increasing their profits. Surely, the cost of defending a lawsuit and the resulting award or settlement amount must exceed the price of taking preventive measures to ensure the safety of consumer products.

Will Eating Sushi Give You Tapeworms?

I love sushi. Between the neat compact shapes, the bright colors, and odd yet creative names restaurants give their sushi, it’s easily one of my favorite foods. Unfortunately, sushi, like most foods, can be dangerous if prepared incorrectly.

SushiThere’s a story circulating on the Internet about a man in China named Tain Liao who eats a lot of sushi. One day, he experiences some stomach pains and goes to the doctor. The doctor takes a few x-rays and discovers the man’s body is full of tapeworms.

For anyone not familiar with tapeworms, their larva and eggs are often found in undercooked food, including fish. Tapeworms are parasites that can live in their hosts for almost a quarter of a century, feeding as the human it inhabits eats. The worm can cause abdominal discomfort, diarrhea, and/or loss of appetite. Usually tapeworms aren’t life threatening, but if the parasite starts moving around the body, it can obstruct intestines. If the worm finds its way into the brain, fatal seizures may occur.

Fortunately for sushi lovers like myself, there is reason to doubt whether this story is true. First, the x-rays took pictures of muscle tissue when tapeworms typically live in intestines (that’s where all the food is of course). Second, most doctors would start with a feces test because tapeworms leave evidence behind, which the intestines will flush out along with regular waste.

But before you breathe a sigh of relief, there’s another story in the United States that might be true. In Southern California, Farmer’s Rice Cooperative is being sued for selling tainted rice. Sushi restaurant owners claim, through a class-action suit, that they thought they were buying U.S. No. 1 Extra Fancy rice. The restaurants assert that the rice they received had extra things in it, but it wasn’t fancy. The rice allegedly contains rodent feces, black mold, and other things that shouldn’t be eaten. Farmer’s Rice is denying all accusations that they defrauded restaurants into buying tainted rice for sushi production.

Should I Still Eat Sushi?

Regardless of the horror stories, I still plan on eating sushi. Bad things could happen if I eat the wrong undercooked fish, but bad things could happen if I eat the wrong hamburger. The question is not whether I should still eat, but whether there are enough rules to ensure that the food I buy is what I paid for.

Chefs must follow rules and guidelines created by the Food and Drug Administration (FDA) and state laws that they work in. Indeed, California passed a law this year required sushi chefs to work with plastic gloves when handling undercooked food, barring certain exceptions.

Restaurants and chefs aren’t fond of the new rule because they prefer to work with their hands. Chefs might protest that using gloves wouldn’t stop customers from eating a tapeworm or mold in rice. However, the gloves lessen the danger that the chef might contaminate the food with their hands. This would bolster any case against food manufactures like Farmer’s Rice Cooperative because an alternative cause of food contamination, the chefs, would not be a factor. More importantly, this would help courts determine who is actually liable for bad food.

So sushi lovers rejoice. Even if you find tapeworms and rat feces in your food, you might be able to get compensation without shutting down your favorite Japanese restaurant.


Judge “Dislikes” Facebook Class Action Settlement

Picture This: You’re chatting with some friends on Facebook when one of your friends posts a link to a book about dogs she just wrote. You click “Like” to support your friend’s interest and write a comment underneath the link. The next time you log on to Facebook though, you notice a new advertisement on the side of the social networking site. A small advertisement about dog food is there with your name and picture beside the product’s logo. Your previous comment is also there, except this time it’s being used to support a company you’ve never even heard of.

This story actually isn’t that far off base. Five Facebook users brought a class-action suit, a lawsuit involving many plaintiffs with a shared grievance against the defendant, against the social networking giant on behalf of 100 million other potential class members. The suit contends that Facebook is violating a California law which prohibits the use of a person’s name, photo or other personal information for the purpose of commerce advertising without the person’s consent.

This kind of lawsuit against Facebook isn’t unusual; Facebook is quickly becoming notorious for all sorts of privacy violations. Facebook’s procedure for handling these kinds of lawsuits is typically to make a settlement, change their privacy agreements and software a little, and then go on like nothing happened. This time, however, the judge blocked the settlement. The settlement was for a total of $20 million; $10 million for various charities, including privacy advocacy groups, and the other half for legal fees.

The disturbing part of this story isn’t the mass violation of privacy; sadly, this is a common occurrence on the internet now. No, the scary part is the question about the legal fees and the role of the plaintiff’s attorneys in the case. First, economists consulted by the plaintiffs estimate the case to be worth $103 million. While one side in a settlement can’t expect to get their exact amount, $20 million is very far from the estimate provided.

Second, the fact that none of the money goes to recovery for any of the plaintiffs is disheartening for a justice system which claims to be for the people. “Cy pres” payments were originally used to make trusts and wills which were impossible (because the money supposed to be given is less than the actual amount the deceased had) legal by adjusting the amount of inheritance given in the will. California courts, however, have used the doctrine to help promote the interests of parties bringing class action lawsuits. This case questions the true intent of the doctrine as the real plaintiffs in this case aren’t even directly benefiting from it.

To add insult to injury, half of the proposed settlement went to the attorneys to cover the costs of the lawsuit. Even if it is assumed that the attorneys were working on a contingency fee, a fee arrangement where the attorneys get a percentage of the money awarded by a judgment, a third of a settlement is the accepted standard. Half of a settlement is excessive, especially when the plaintiffs aren’t going to get a penny.

The most outrageous part though is that Facebook would have gotten off the hook. While $20 million is no small amount, given the company’s history on privacy, the settlement should have included some means to restrain Facebook from committing a practice which violates the public interest. Judge Seeborg was right to block the agreement, but the perplexing part was that the judge had to act at all. Where were the plaintiff’s attorneys when this one-sided agreement was being made? It makes little sense to hire an attorney if the lawyer won’t zealously advocate for the client(s). The privacy of 100 million users, and possibly everyone’s, demands more.

Wage and Hour Lawsuits are on the Rise

It looks like plaintiffs’ lawyers have their work cut out for them in a new breed of lawsuit that’s quickly grabbing hold of the nation.  “Wage and Hour” litigation is getting bigger, especially in federal court.  Wage and Hour claims typically involve situations where an employer fails to pay an employee minimum wage or overtime pay according to the standards set out in the Fair Labor Standards Act (FLSA).

Wage and hour claims are different from your usual employment lawsuits involving harassment or discrimination- those tend to involve only one employee in a somewhat isolated incident.  In comparison, these newer wage and hour claims we’re seeing can involve an entire class of employees- sometimes hundreds or even thousands working for the same company.  These class action suits can create huge chunks of losses for the employer, with many of them ending in settlements of anywhere from $10 to $90 million dollars.

Federal Judicial Caseload Statistics reports that well over 6,000 wage and hour lawsuits were filed in each of the years 2011 and 2010.  Overall, the federal courts have seen a 325% increase in these types of claims since 2001.  For anyone familiar with legal trends, this represents just an absolutely massive increase in labor cases.  These figures actually should raise some concern, especially for major employers who might be negatively affected by this new trend.  Why the sudden spike in wage and hour claims?

For starters, legal analysts suspect two distinct factors that may be linked to the increase in wage and hour claims, both of which have to do with exemption laws (if an employee is classified as “exempt” they may not be entitled to overtime pay).  First, it’s possible that many employers have been intentionally misclassifying employees as exempt in efforts to cut company costs.  Though this is illegal, with today’s economy, some outfits have been desperate enough to engage in this type of conduct.

The second, more complicated factor is that employers might be lacking a thorough understanding of wage and hour laws.  Exemption laws are difficult to navigate already; combine this with the many changes in the workforce that we’ve seen in the past decade, and it starts to become clear why so many employees may have been misclassified.  For example, wage-hour laws are not at all clear on many new developments like:

  • Alternative Work Weeks:  A good chunk of the working sector doesn’t follow a rigid, 9-5, M-F schedule anymore.  More and more people are working odd weeks, like M-Thu, and Sat., or weeks involving 10 hour days.  Nurses and other care providers are especially known for working non-standard shifts.  Exemption laws also don’t specifically define what a “working day” is and so it’s getting more difficult to monitor employee hours.
  • Odd Management Structures:  Exemptions apply especially to persons working in executive, administrative, or professional positions.  In practice, more and more businesses are actually being run by persons with titles like assistant managers rather than actual managers.  This makes it difficult to classify managers, since exemption eligibility is based on duties performed and not generic job descriptions.
  • Interns:  Full-time unpaid internships are particularly prone to employment abuse, as we’ve blogged about in the past.  Many have debated about whether interns should be paid minimum wage, and some employers may be engaging in FLSA violations with regards to their interns.
  • Work-related Technological Advancements:  Technology always seems to throw a wrench in the legal system.  Here we’re talking specifically about mobile devices that allow a person to put in work while away from the office.  It makes it much more difficult to determine exemption status if a worker is constantly performing work tasks while away from the office.

At first I thought this was just another case of the frivolous lawsuit craze that is (sadly) characteristic of our so-called “litigious society”.  But upon closer examination, to me it looks like something more serious is going on here.  I mean, there are literally thousands of these cases being filed, all of them having to do with FLSA and exemptions.

Yes, these people need to be compensated for lost pay, but I don’t think this is a case of bandwagon litigation.  Something seriously needs to be done on the employers’ parts, such as getting a better grasp of wage and hour laws.  Part the danger here is that one employer’s mistake or intentional disregard of the law can affect entire classes of workers.  And also the law itself needs to be updated in this area.  The Fair Labor Standards Act is well over 70 years old, which makes it a dinosaur by legislative standards.  No one has done anything in a long while in terms of incorporating information-age changes into FLSA.

If you actually think about it, business owners and managers need to start protecting themselves against wage and hour claims, because they can be deadly to a company, especially class action lawsuits.  We’re talking major, major losses for corporations, not to mention the time and frustration involved for laborers.  If these trends continue (which it looks like they will), more and more lawyers might be billing for overtime pay as well.

Top Legal Stories of 2011

2011 has been an interesting year. The economy remained sluggish. The 2012 presidential campaign got into full swing. We had a war in Libya (remember that?). Of course, this is a law blog, so I won’t dwell on those subjects except to the extent that they have a significant legal angle.

But there’s still plenty to write about – 2011 has been an incredibly eventful year in the legal world. Important constitutional questions about the power of the president were brought to the forefront of public discussion. The Supreme Court agreed to hear what may well be its most momentous case in decades. A longstanding policy regarding sexual orientation and military service was changed. And there were plenty more, far too many to discuss in a single blog post.

So, without further ado, here are what I view to be the most important legal news stories of 2011, in no particular order, and chosen by my subjective opinion of which stories were the most interesting, along with a bit of arbitrary whim. So, it’s the definitive list, obviously.

  1. The legality of the military invention in Libya: 2011 may be remembered as a year of profound change in the Middle East, with one of the most notable cases being in Libya, where the U.S. and its allies, backed by a UN resolution, launched air strikes, helping rebels overthrow Moammar Ghadaffi. However, there has been some controversy over America’s role in the operation. Under the War Powers Resolution, passed after the Vietnam War, the President must obtain the approval of Congress for any overseas military engagement lasting longer than 60 days. President Obama did not seek such approval (to be fair, every president since the law was passed has ignored it, arguing that it’s unconstitutional). Given the divided political culture in Washington, some politicians and commentators have argued that the U.S. intervention in Libya was illegal. This controversy brought the War Powers Resolution back into the public limelight, and sparked a heated (though brief) public debate about this important constitutional issue.
  1. “Don’t ask, don’t tell” is repealed: The policy that barred gay and lesbian soldiers from serving openly in the U.S. military was repealed in December of 2010, and the repeal went into full effect in September of 2011. As of the writing of this blog post, there have been no reports of any significant problems resulting from the repeal. There are predictions that, in the long run, allowing gays and lesbians to serve openly will have broader positive implications for expanding the legal rights of gays and lesbians.
  1. Massive employee lawsuit against Wal-Mart thrown out: The largest class-action lawsuit in U.S. history (and it’s now likely to hold on to that record forever, for reasons that will soon be obvious) was thrown out by the U.S. Supreme Court on the grounds that the proposed class – comprising 1.6 million current and former female Wal-Mart employees – was too large. The court never ruled on the merits of the plaintiffs’ claims that Wal-Mart engaged in a pattern of gender discrimination, leaving the plaintiffs open to bring a new lawsuit with a smaller class of plaintiffs, which marks a trend of the Roberts court limiting consumer class-action lawsuits.
  1. New York legalizes same-sex marriage: The state of New York became the largest state in the country to legalize same-sex marriage. It also marked the first time a Republican-majority state legislature passed such a law. Once again, it brought into focus the fact that the federal government does not recognize these unions, denying lawfully-married same-sex couples the many federal benefits that come with marriage.
  1. States take immigration enforcement into their own hands: Several U.S. states set themselves up for a legal showdown with the federal government over who has (and doesn’t have) the power to enforce federal immigration laws. Immigration is generally considered the exclusive domain of the federal government. However, with immigration becoming a hot-button political issue, many states began passing laws giving state authorities unprecedented authority to enforce immigration laws. The federal government, concerned about diplomatic relations with foreign countries and maintaining a consistent nationwide immigration policy, is challenging some of these laws in court. You can bet that 2012 is going to see much more of this.
  1. Supreme Court to hear healthcare reform cases: Legal challenges to President Obama’s signature legislative accomplishment – the Patient Protection and Affordable Care Act – began almost immediately after the law was passed. Federal courts considering the constitutionality of the “individual mandate” (the provision of the law that requires almost all Americans to obtain health insurance or pay a financial penalty) have come out on both sides. The Supreme Court, as everybody predicted, is going to hear the case, and hopefully resolve the issue once and for all. However it rules, you can bet that the court’s decision (expected in the summer or fall of next year) is going to be one of the top legal news stories of 2012.
  1. Free speech applies to the worst of the worst: Westboro Baptist Church, the group best known for its virulent anti-gay stances, and its claims that every bad thing that happens in the world is a result of God punishing humanity for allowing gay people to exist, and picketing the funerals of U.S. soldiers killed overseas, which, naturally, the friends and families of these soldiers found incredibly upsetting. One family sued the church for intentional infliction of emotional distress. The Supreme Court ruled that the church’s actions were protected by the First Amendment. Most legal commentators reluctantly agreed that the court’s ruling was correct, even if almost everyone found it personally distasteful.

2011 was definitely an eventful year in legal news. And considering that most of the stories discussed above are far from over, I wouldn’t be too surprised if a lot of them make the 2012 list, as well.