Seventh Circuit Vacates Magnuson-Moss Decision, Opens Door to State Court Filing

July 29th, 2021

     In an opinion issued today, the Seventh Circuit held that both it and the district court lacked subject-matter jurisdiction in a putative class action that was filed against Best Buy's Geek Squad Protection Plan (GSPP). 

      The case began when a couple purchased an expensive television set from Best Buy that utilized the now-abandoned plasma technology. Best Buy urged them to purchase the GSPP as an extended warranty and offered a discount on the television set if they did. The couple purchased the GSPP. When the television set failed, Best Buy was unable to repair it, offering instead a refund of the depreciated value of the television or a much cheaper replacement, informing the couple that the GSPP is a service plan, not a warranty as their advertising states.

      The district court dismissed the action, holding that under federal regulations, a warranty cannot require extra payment, and the purchase of the GSPP prevented it from being considered a warranty under the Magnuson-Moss Warranty Act. On appeal, CCL argued for the couple that the regulation had no basis in the statute and allowed Best Buy to misrepresent its service contract as a warranty, precisely the evil that the Magnuson-Moss Act was designed to prevent.

      The Seventh Circuit's decision in Ware v. Best Buy did not address the substance of the arguments, but found that subject-matter jurisdiction was lacking, even though neither party nor the lower court raised the issue. Under Magnuson-Moss, jurisdiction lies in federal court only if a purported class action actually names 100 individual plaintiffs. That was lacking in the complaint. Recognizing the possibility of dismissal on jurisdictional grounds, CCL filed a supplemental brief for the plaintiffs, suggesting both other ways that jurisdiction could be asserted, as well as a request that the adverse district court decision be vacated so the Wares could refile in state courts. The Seventh Circuit took the latter approach.

CCL Files Brief on Best Buy Warranty Issue

September 30th, 2020

     The Center for Constitutional Litigation, working with Paul A. Rothstein, P.A., told the U.S. Court of Appeals for the Seventh Circuit that Best Buy's Geek Squad Protection Plan is a warranty under the federal Magnuson-Moss Warranty Act and that it should reverse dismissal of this action by the district court in an opening brief filed today.

      Tawanna and Anthony Ware purchased a $3,000 Samsung plasma television from Best Buy after its sales people and store manager advised them that the warranty that comes with the television is generally worthless because the electronic will work fine for the warranty period. They advised purchasing the protection plan to extend the warranty, protect themselves from failures of materials and workmanship for a five-year period. They made the sale more attractive by giving the couple a $300 discount if the extended warranty was purchased. 

      When the television failed after Samsung stopped manufacturing plasma televisions and could not be fixed, Best Buy reneged on the promised to replace or refund the full purchase price, claiming that the plan was actually a service plan, not a warranty. The Wares brought suit in a putative class action under Magnuson-Moss, but the case was dismissed because the Court credited an Federal Trade Commission regulation that distinguished warranties from service contracts if extra consideration was paid. The fact that Best Buy called and promoted the plan as a warranty and treated the television and plan as a single transaction in a bundle did not move the district court. Meanwhile, Magnuson-Moss itself defines a warranty as part of the same transaction if it was part of the basis for the bargain. The conflict between the statutory language and the regulation is at the heart of this consumer action. Today's filing is the start of the briefing process.

Congressional Staff Receive Preview of Supreme Court Cy Pres Case

June 8th, 2018

      Congressional staff heard differing views about the Supreme Court's likely approach to cy pres next term in Frank v. Gaos. CCL President Robert S. Peck suggested that the Supreme Court is likely to take a very narrow view of the issue, based on the facts in the case. Peck presented, along with Adam Schulman, a lawyer with the group headed by Petition Ted Frank, who brought the challenge. The event was sponsored by the Congressional Civil Justice Academy, a part of the Law and Economics Center at the Antonin Scalia Law School at George Mason University.

      In Frank, the Ninth Circuit upheld a class action settlement that grew out of the information that Google acquired, used and distributed when Internet surfers use that search engine. Though the damage suffered by uninformed surfers was difficult to monetize and the case itself was three times challenged with motions to dismiss, a mediator suggested the settlement that both sides accepted. As part of the settlement, Google agreed to provide a permanent disclosure of what information it collects and how it uses it. In addition, Google agreed to pay compensatory damages of $8.5 million. After attorney fees, costs, and incentive compensation for the named class representatives, the court was left with $5.3 million to be distributed to 129 million class members, an average of 4.1 cents apiece. The court determined that distribution was infeasible given that a process for proof of claim and the process of sending checks would cost substantially more than the four cents each claimant was owed. Instead, the court entertained proposals for non-profit organizations that work in the area of Internet privacy as alternate recipients. 

     The organizations suggested provided the court with proposals about how the money would be spent to advance Internet privacy. After a seven-month process of examination, the court approved each of the organizations as highly qualified, even though it lamented that the groups were the "usual suspects" on this subject. Objector Frank proposed an alternative approach that would compensate only some members of the class at a $5 or $10 rate given the low claiming rate that might be accepted. While the Ninth Circuit held that that approach would have been acceptable, it found nothing wrong with the use of cy pres to send the money to the organizations, utilizing the deferential abuse of discretion standard of reviewing the trial court. 

      The Supreme Court will consider whether the approach approved by the Ninth Circuit comported with Rule 23's requirement that class action settlements be fair, reasonable and adequate.

Plaintiffs File Briefs in Support of Class Certification, in Opposition to Challenge to their Experts in Chicago Stop and Frisk Case

May 30th, 2018

      As part of a team of plaintiffs' lawyers, CCL participated in the writing and filing of briefs representing a proposed class of minority residents who were stopped-and-frisked by Chicago police without probable cause. The City of Chicago challenged class certification of the class, as well as the expert evidence in support of certification. Two briefs responded to Chicago's objections. 

District Court Permits Stop & Frisk Case to Proceed

November 10th, 2015

In a civil rights case alleging the rampant use of illegal stop & frisk tactics by Chicago Police, the federal district court for the Northern District of Illinois denied the City’s and the Superintendent of Police’s motions to dismiss the claims brought by more than 50 African-American and Hispanic plaintiffs on behalf of themselves and a class of plaintiffs. The complaint alleges that Chicago Police officers stopped and frisked the plaintiffs and members of the class based on their race or national origin and did so without reasonable suspicion that they were engaged in criminal activity. Working with co-counsel Antonio M. Romanucci, Martin D. Gould & Angela Kurtz with the Chicago firm Romanucci & Blandin, LLC, and Rod Gregory of the Gregory Law Firm in Jacksonville, Florida, CCL’s Robert S. Peck and Valerie M. Nannery prepared many of the successful arguments in the plaintiffs’ opposition to the motions to dismiss.

The district court adopted many of CCL’s arguments and held that the plaintiffs have standing to seek equitable relief and that they have stated claims against the City and the Superintendent in his individual capacity for violations of the plaintiffs’ constitutional rights. The court rejected the City’s argument that the plaintiffs could not seek declaratory and injunctive relief because their past encounters with Chicago Police officers could not establish that they faced a real and immediate threat of future unconstitutional stops and frisks by officers. The court held that held that the plaintiffs’ claims for injunctive relief were plausible based on their allegations of an unconstitutional practice and repeated unconstitutional stops and frisks by Chicago Police of people who were engaged in innocent, lawful conduct. The court also held that the complaint alleged enough factual details to state claims for violations of the plaintiffs’ Fourth and Fourteenth Amendment rights against the City, and against the Superintendent in his individual capacity. Finally, the court rejected the City’s assertion that many of the plaintiffs’ claims were mooted by the City’s separate agreement with the ACLU to change Chicago Police practices. The court wrote that the City’s promise to comply with its agreement with the ACLU, without more, could not moot the plaintiffs’ requests for prospective relief, and that the agreement did not moot the plaintiffs’ claims for damages.

The court’s order, which came more than a month before its scheduled hearing on the motions, requires the defendants to answer the complaint, and allows the plaintiffs’ claims to move forward.

CCL Argues Class Action Standing Challenge Is Not Properly Presented

September 29th, 2015

On September 29, CCL filed an amicus brief for the American Association for Justice, once again asking the U.S. Supreme Court to dismiss the petition in a case involving the Article III standing requirements in federal class actions. Tyson Foods, Inc. v. Bouaphakeo, No. 14-1146.

Plaintiffs in this case are hourly workers at a Tyson pork processing facility in Iowa. Employees were paid from the time the first piece of work arrived at their workstation until the last piece was finished. They were also paid four additional minutes to compensate for time donning and doffing required protective or sanitary equipment or clothing. Plaintiffs brought a class action alleging that donning/doffing activities constituted compensable work under the Fair Labor Standards Act for which they were not fully compensated. Plaintiffs’ expert testified, based on observations of a sample of workers, that workers in two areas of the plant spent an average of 21 minutes and 18 minutes performing these activities. Another expert calculated the amount of overtime pay owed to the class if Tyson had properly credited the workers with donning/doffing time. The expert noted that 212 members of the class would not have been eligible for additional overtime, even if properly credited with donning/doffing time. The jury returned an aggregate verdict in favor of the class. The Eighth Circuit Court of Appeals affirmed.

The Supreme Court granted certiorari to review two questions, including whether a class action may be certified “when the class contains hundreds of members who were not injured.”

In an amicus brief prepared by CCL Senior Counsel Jeffrey R. White, AAJ submitted that this question is not properly presented in this case. The complaint alleged that all members of the class were undercompensated due to the pay system used by Tyson. The fact that the class subsequently limited the relief sought does not retroactively deprive the 212 ineligible workers of Article III standing. Moreover, the record reflects that plaintiffs’ expert removed those 212 workers from her calculations of the class damages; they did not contribute to the amount claimed by the class. Finally, Tyson lacks standing to challenge the allocation of an aggregate award among class members that will not affect the amount of Tyson’s liability. If the Court reaches the merits, AAJ argued, it should affirm the general rule followed by federal courts that allegations of concrete injury by the named plaintiff in a class action is sufficient to establish standing under Article III.

CCL Joins Oakland Legal Team in Filing FHA Lawsuit against Wells Fargo

September 22nd, 2015

The City of Oakland, California filed a federal lawsuit against Wells Fargo Bank to recover damages caused by the bank’s predatory and discriminatory lending practices within the city.

The lawsuit charges Wells Fargo with targeting minority borrowers with predatory mortgage loan terms in violation of the federal Fair Housing Act and California’s Fair Employment and Housing Act.

In a press release issued upon the filing of the action, Oakland City Attorney said, “Wells Fargo’s discriminatory conduct devastated individuals and communities, increasing poverty and wiping out or drastically reducing wealth for minority communities while bankers prospered.”

The lawsuit asks the Court to order Wells Fargo to cease its discriminatory practices and compensate the City of Oakland for financial harm that the foreclosure crisis caused the city. In addition to losing millions in tax revenues, which necessitated police layoffs and other cuts in city services, the bank’s predatory practices saddled the city and its taxpayers with massive costs in addressing blight, vandalism and crime associated with foreclosed properties.

Thousands of homes went into foreclosure and remain in poor condition costing cities significant sums of money due to the loss of property taxes and increased out-of-pocket expenditures to remedy the resulting blight throughout minority communities.

City Attorney Parker filed the lawsuit in federal court with outside counsel that includes CCL President Robert S. Peck, Dean Erwin Chemerinsky of the University of California at Irvine School of Law, Yosef Peretz of Peretz & Associates, and Joel Liberson of Trial & Appellate Resources.

The U.S. Department of Justice and the cities of Los Angeles, Miami and Miami Gardens previously filed similar lawsuits against various banks. CCL is part of the legal team in the other municipal lawsuits.

CCL Files Amended Complaint in Fair Housing Litigation Brought by City of Miami Gardens, Florida

September 21st, 2015

In an amended complaint filed in federal court in Florida, the City of Miami Gardens renewed its allegations that Wells Fargo Bank violated the federal Fair Housing Act (FHA) by steering minority applicants to more expensive loans than they otherwise qualified for, resulting in a blight of foreclosures and costs to the city.  CCL is part of the city’s legal team in litigating the matter.

The case, originally filed more than a year ago, was stayed by U.S. District Court Judge Federico Moreno, while similar cases brought by the City of Miami was heard by the U.S. Court of Appeals for the Eleventh Circuit. Earlier this month, that court revived Miami’s lawsuits against Wells Fargo, as well as Bank of America and Citigroup, which had been dismissed by another district court judge, largely on grounds that the city lacked standing to prosecute FHA claims. CCL President Robert S. Peck argued the three successful appeals on behalf of Miami.

Miami Gardens’ new complaint also incorporates guidance received in June from the U.S. Supreme Court on the requirements for claims based on disparate impact under the FHA.

CCL Wins Important CAFA Victory in Ninth Circuit

August 6th, 2015

On August 6, 2015, the U.S. Court of Appeals for the Ninth Circuit held that, to qualify as a “mass action” under the Class Action Fairness Act, making an action filed in state court eligible for removal to federal court, a plaintiff must affirmatively propose a joint trial with other similar cases. In Briggs v. Merck Sharp & Dohme, the appellate court unanimously reversed a trial-level decision that had found federal jurisdiction under CAFA over five separate suits originally filed in California state courts. The Ninth Circuit decision adopted in toto the positions advocated by CCL Chief Litigation Counsel Louis Bograd in support of plaintiffs. The Court first agreed with plaintiffs on a threshold jurisdictional question, holding that a petition for leave to appeal filed within 10 days of the denial of a motion for reconsideration is timely. Turning to the merits, the Court of Appeals ruled that a “proposal” for joint trial under CAFA must be made to a court with the authority to effect the relief requested and, therefore, statements made in federal court cannot constitute such a “proposal.” The panel also ruled that a plaintiff who files a coordination petition that specifically says it is not for a joint trial does not trigger CAFA. Finally, the court ruled that a proposal for bellwether trials in a state mass tort proceeding is not a proposal for joint trials. The Briggs ruling provides clear guidance for plaintiffs who wish to keep their mass tort cases in state court. CCL’s co-counsel in this appeal included Ryan Thompson of Watts Guerra LLP, Hunter Shkolnik of Napoli Bern Ripa Shkolnik LLP, and John Restaino of Restaino Siled LLD.

CCL Files Reply Brief in Indiana State Fair Appeal

October 9th, 2014

In a reply brief filed October 3, CCL told the Indiana Court of Appeals that the State’s brief misunderstands the issue raised in CCL’s challenge to the aggregate cap in the state’s Tort Claims Act.  The State’s brief defended the right of the State to limit its damages on both a per-individual and per-occurrence basis, even if that results in different limits for similarly injured persons.  CCL’s opening brief argued that the differential treatment of claimants constituted a violation of the state constitution’s Equal Privileges and Immunities Clause.

The case arises from the stage collapse at the 2009 Indiana State Fair after a tornado suddenly appeared as crowds were gathered for an evening concert.  Seven people were killed, and another 58 were injured in the incident. The Tort Claims Act limits the State’s liability to $700,000 per person and $5 million per incident. Because of the large number  of people injured, the State attempted to settle claims by distributing the $5 million aggregate cap on a pro rata basis, after allocating $350,000 to every wrongful death claim.  Plaintiff Jordyn Polet, who was offered about $1,600 on a claim estimated to be worth $100,000, was the only claimant who refused the settlement offer. Her offer was then redistributed among the settling claimants, who later received another $6 million appropriated by the legislature after it determined the original $5 million was insufficient. When Polet sought to sue under the Tort Claims Act, the State asserted an affirmative defense, claiming that she lost her cause of action when she refused the settlement offer and that the overall $5 million cap means that the State has expended its entire responsibility, foreclosing further claims.

In reply, CCL argues that Polet has an accrued, valid cause of action because the Tort Claims Act unequivocally waived the State’s immunity and that a rejected settlement offer cannot divest her of that claim. Citing the state constitution’s Open Courts provision, the brief indicates that her interest in making a claim vested at the time of the injury and could not be alienated from her by the State’s attempts to settle the case. In response to the State’s claim that its interest in protecting the public fisc overrode all other considerations, CCL’s brief pointed out that this would give the State plenary authority  to set up its tort claims act caps any way it wants, including on a first come, first served basis. Thus, the CCL brief points out, if the day before the present tragedy at the State Fair, only five people were injured when the same stage collapsed and were thus eligible for up to $700,000 in compensation each, the State was free to settle with six of them for $200,000 apiece, and a lone claimant who refused that settlement would still have a cause of action to prove liability and damages above the $200,000 offer because the aggregate cap would not kick in. However, if the stage collapses again the following day after a failure to remedy the previous day’s problem, rendering the negligence more egregious, and 65 more people are injured this time, it is the State’s position that they are free to offer each an even pro rata settlement of less than $77,000 each, redistribute the leftover $77,000 to those willing to settle, and leave the single claimant who refused the settlement without any recourse, solely because the aggregate cap now applies and changes everything. CCL contends that such an approach is inconsistent with the Equal Privileges right.

CCL’s Robert S. Peck is counsel for Polet, along with Anthony Patterson of Indianapolis.  A date for oral argument has not yet been set.