Tag Archives: settlement

Rule 68 does not moot case

In Emily Diaz v. First Am. Home Buyers Protection Corp., No. 11-57239 (9th Cir. Oct. 4, 2013), the 9th Circuit Court of Appeals ruled that an offer of judgment (Rule 68) did not make a plaintiff’s case moot.  This is an important case because it provides guidance when considering when to file summary judgment when a Rule 68 offer has been made.

Rule 68 is when a party offers opposing party a judgment for full satisfaction that the opposing party could recover at trial.  In this case, First American offered $7,019.32 plus costs.  Diaz, the plaintiff, declined this offer.  Thereby the issue was whether offering the money made the lawsuit moot.

The 9th Circuit Court of Appeals held that the First American’s offer, even if it fully satisfied the plaintiff’s claim, did not make the case moot.  When reaching this conclusion the 9th Circuit cited Kagan’s dissent in Healthcare Corp. v. Symczyk, 133 S.Ct. 1523, 1528-29 (2013).

‘[A] case becomes moot only when it is impossible for a court to grant any effectual relief whatever to the prevailing party.’ By those measures, an unaccepted offer of judgment cannot moot a case.   When a plaintiff rejects such an offer – however good the terms – her interest in the lawsuit remains just what it was before. And so too does the court’s ability to grant her relief. An unaccepted settlement offer – like any unaccepted contract offer – is a legal nullity, with no operative effect.”

Id. at 1536 (citation omitted).

via Courthouse News Service.

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Fair Labor Standard Act and Individual Liability

In Torres et al. v. Gristedes Operating Corp. et al., Case No. 11-4035 (July 9, 2013), the Second Circuit Court of Appeals held that a mayoral candidate, a supermarket owner, and an executive can be individually liable for settlement payments arising of a Fair Labor Standard Act class action.

In this case, the parties settled the class action.  A class action is a discrimination case brought by a few plaintiffs on behalf of many employees.  All of the members who agreed to be part of the class (the individuals who were discriminated against) receive their part of the settlement.  In order for a fair disbursement, the Judge must adopt the settlement.

Under the settlement, the defendants agreed to pay $3.5 million to the class.  However, the defendants defaulted on the payments.  The judge’s order allowed the class to enforce the settlement.  Defendants, who sought to change the settlement, stated that they were not bound by the settlement because they were not “employers.”

The Second Circuit Court of Appeals disagreed.  The Court noted that the defendants exercised “operational control” that affected the class’ employment.  For example, based of their decisions, the employees’ wages were affected.  Because defendants were employers, defendants were bound by the settlement.  Based on this decision, defendants now have to pay the owed money.

via Labor Employment Law Blog: Second Circuit Imposes Individual Liability on New York Mayoral Candidate for Fair Labor Standards Act Settlement.

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Judge OKs $1.6B settlement in Toyota class action

You may remember this story that exploded all over the news.  Around the end of 2009 and start of 2010, the news reported that some Toyota cars had sudden-acceleration defects.

Toyota recently settled a federal class action.  U.S. District Court Judge James V. Seina approved of the federal class action settlement.  The settlement approved is for $1.6 billion, which includes attorney fees and costs calculated at $227 million.  The class members are said to receive anywhere between $125 to $10,000 each.

Toyota has denied liability for the alleged sudden-acceleration problem with the vehicles, as provided in the language of the settlement.  The ABA reports that a spokeswoman for Toyota stated,

This agreement allows us to resolve a legacy legal issue in a way that provides significant value to our customers and demonstrates that they can depend on Toyota to stand behind our vehicles,

It is important to note that Toyota is still facing trials in more than 80 state court lawsuits over the alleged sudden-acceleration defects.

via Judge OKs $1.6B pact in Toyota class action as trial begins in first wrongful death case – ABA Journal.

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EEOC’s First GINA Suit Settlement

The first settlement between the EEOC and an employer over GINA is important because it brings attention to this relatively new law.  EEOC charges alleging GINA violations have increased each year.  Consequently, it is important for employers to ensure their policies and procedures are compliant with GINA procedures.

The Genetic Information Nondiscrimination Act (GINA) went into effect in 2009.  Some of GINA’s regulations are as follows.

  • It is illegal for employers to discriminate against employees or applicants based on their genetic information.
  • Employers cannot request or obtain genetic information, which includes any information about an employee or an applicant’s family history.
  • GINA also applies to third parties.  So, employers cannot request or obtain family medical history, even through a third-party medical provider or examiner.
  • There are exceptions for voluntary health risk assessments.  However, if the employee is receiving an incentive for completion of the Health Risk Assessment, the employer must make clear that an employee need not answer any of the questions about family medical history in order to obtain the incentive.

On May 7, 2013, the U.S. Equal Employment Opportunity Commission (“EEOC”) reached a milestone of sorts as it filed – and then settled – its first complaint ever alleging genetic discrimination under the Genetic Information Nondiscrimination Act of 2008 (“GINA”).

The EEOC filed suit in Oklahoma federal court against Fabricut Inc., one of the world’s largest distributors of decorative fabrics, alleging that Fabricut violated GINA and the Americans With Disabilities Act (“ADA”) by unlawfully asking a job applicant for her family medical history in a pre-employment, post-job offer medical examination, and allegedly rescinding her job offer based on the belief that she had carpal tunnel syndrome.

The EEOC and Fabricut reached a settlement, which is the first settlement in a GINA case.  In the consent decree, Fabricut agreed to pay $50,000 but did not admit to violating GINA or the ADA.

via EEOC’s First GINA Suit Serves As Reminder of Pre-Employment Exam Pitfall | Proskauer Rose LLP – JDSupra.

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Generic and Branded Drugs

This is an interesting case that the Supreme Court will hear today.  Does a branded drug maker, faced with a potential competitor who makes generic drugs, act illegally if it pays money to the competitor in a deal that postpones the sale of the generic drug for a period of years?

The FTC says it is unlawful, while the generic and branded drug makers disagree.

So why does this matter?  Everyone knows that generic drugs are cheaper than branded drugs.  As the NY Times reported, “73 percent of consumer spending” is spent on branded drugs.  When a generic drug, which costs about 15% of the branded drug cost, enters the market, branded drug makers lose about 90% of their profits.

In FTC v. Actavis, Inc., the 11th Circuit Court of Appeals held companies holding the patent to the branded drug could make those payments to the generic drug maker.  In this case, the generic drug maker challenged the patent of the branded drug maker in court.  Both drug makers came to a settlement, whereby the generic would get some payment as long as the branded drug maker could continue to sell its branded drug exclusively for a time period.

In sum, the 11th Circuit reasoned, “absent sham litigation or fraud” when the anticompetitive effects of a patent fell within that scope, there is no antitrust claim. Further, since there was a settlement, the 11th Circuit stated that it would be hard to predict what the effect would have been.  And since the settlement was with one generic drug maker, this did not impact other generic drug makers from selling the generic version of the drug.

Now, the Supreme Court has to decide on this issue.

via Generic-Brand Name Drug Case Goes to Supreme Court – NYTimes.com.

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3-parent birth certificate is OKd by judge

A south Florida judge approved an unusual settlement regarding the issue of who are the legal parents of a little girl.  I bring this settlement to you because it shows the changing environment in our times.

What’s so unusual about the settlement?  The settlement allowed the birth certificate to list 3 parents: two women and one man (the sperm donor).

This settlement came after a lengthly court battle.  Maria Italiano, 43, and Cher Filippazzo, 38, were legally married in Connecticut. They and a hairdresser for one of the women, Massimiliano “Massimo” Gerina, had an oral agreement about their arrangement, but a legal dispute erupted as he pondered the responsibilities of fatherhood, reported the Miami Heralds Gay South Florida blog.

“We’re creating entirely new concepts of families. If you have two women seeking to be listed as Parent One and Parent Two, that does not exclude listing a man as father,” said attorney Karyn J. Begin, who represented Gerina.

The Daily Mail, Reuters and the Tampa Bay Times also have stories.  Miami-Dade Circuit Court Judge Antonio Marin posed in photos with the smiling parties after they reached the unusual agreement.

Although state law does not recognize the paternity of a sperm donor, Gerina argued that his role was broader. The two women will have custody of their daughter and he will have visitation.

via 3-parent birth certificate is OKd by judge – ABA Journal.

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Contingency fees in Personal Injury

The ABA Journal reported on an interesting case; where the attorney was unable to get all of its full contingency fees.  The reason?  Because the client replaced the attorney with himself prior to the $1 million settlement.

New York’s Appellate Division, First Department, ruled in an unsigned opinion that the settlement wasn’t yet final when lawyer Jeffrey Aronsky handled the case because the settlement offer hadn’t been formally communicated to the defendant, Rivlab Transportation. However, the court held that Aronsky will be allowed to place a lien on Gyabaah’s recovery and receive a pro rata fee based on his contributed work, Reuters reports.

Reuters notes that in a dissent, Justice Richard Andrias considered the settlement binding because a general release was signed and defense counsel confirmed in writing that the $1 million settlement offer was accepted.

via Lawyer Replaced by Client Can’t Collect Full Contingency on $1M Settlement, Court Rules – News – ABA Journal.

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TN County agrees to reform judicial system

The ABA Journal Blog reports on a ground-breaking agreement between TN Shelby County and the US Dep’t of Justice.  The agreement regards the juvenile judicial system, includes the following provisions:

  • Teens will be advised of their Miranda Rights;
  • Teens will get a probable cause hearing on detention within 48 hours; and
  • Teens will get help from specially trained public defenders.

This agreement arose from a federal investigation which found the following:

  • Black teens were twice as likely as white teens to be detained;
  • Black teens were transferred to adult criminal court for low-level offenses;
  • Black teens were subjected to unnecessary restraints;
  • Black teens were not advised of their Miranda rights; and
  • Black teens were held in detention on weekends and holidays because no probable cause hearings were held.

via A Tennessee County Agrees to Grant New Protections to Accused Juveniles in Template for Reform – News – ABA Journal.

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9th Circuit thwarts Kellogg cy pres settlement

Note to class action lawyers: When doling out settlement funds to charities as part of a cy pres award, specify the recipients and choose them carefully.

That was the message the 9th Circuit delivered Friday in a decision striking down a settlement plaintiffs’ lawyers reached with cereal maker Kellogg Co over the benefits of Frosted Mini-Wheats. The decision is the latest in a string of recent cases from the 1st, 5th and 9th circuits to question whether class funds that are not distributed to the plaintiffs are going to charities that serve the interests of class members.

The plaintiffs sued in 2009, taking Kellogg to task for its claim that the breakfast cereal was clinically shown to improve children’s attentiveness by 20 percent. The parties settled within three months, with Kellogg agreeing to provide $2.75 million for consumer refunds (up to $15 per customer), a $5.5 million charitable food donation and a promise to stop making similar claims for three years.

When two class members represented by the Law Offices of Darrell Palmer and the Bandas Law Firm objected to the settlement and then appealed its confirmation, the 9th Circuit grabbed the opportunity to elaborate on the standard for cy pres it set in November in a class action against AOL. A three-judge appellate panel tossed the settlement, concluding that for one thing, the cy pres donation was too vague because it said awards to charities that feed the indigent would be chosen later. Food banks were also the wrong recipients, the court concluded, given that the lawsuit involved claims of deceptive advertising, not food deprivation.

“The only relationship between this lawsuit and feeding the indigent is that they both involve food in some way,” Judge Stephen Trott wrote for a panel that also included Judge Sidney Thomas and Judge Kevin Duffy of the Southern District of New York, who was sitting by designation. Any charitable donation should have gone to consumer protection groups that combat false advertising, the appeals court concluded.

The court cited its rejection of the cy pres award in the AOL case, which called for $110,000 to go to charities unrelated to the concerns of its customers, who had sued over promotional messages included in their emails. The decision also comes after a 5th Circuit ruling in September, which held that $830,000 in leftover settlement funds from a case against Elf Atochem should go to class members, not charities.

Class counsel Timothy Blood of Blood Hurst & O’Reardon defended the connection between the Kellogg food donation and the lawsuit, which dealt with claims about the nutritional value of a food directed at children. “We felt it was important to provide food products to the indigent because most of the indigent are children,” he told On the Case, adding that the court’s decision would lead to settlements that were less beneficial to society at large. Kellogg counsel Kenneth Lee of Jenner & Block did not immediately respond to requests for comment. The company declined to comment on the litigation.

Darrell Palmer, a lawyer for the objectors, welcomed the decision as a sign that federal appeals courts are scrutinizing whether cy pres awards have a relationship to the underlying claims. Palmer noted that the 9th Circuit panel included a New York federal judge. “I’m hoping (the ruling) might resonate with the 2nd Circuit,” Palmer said. “Judges often think of the 9th Circuit as liberal.”

In addition to a problem with the intended recipients, the court also found the $2 million set aside for plaintiffs’ attorney fees was excessive. Based on hours worked, lawyers for the class were charging $2,100 per hour — more than even “the most highly sought-after attorneys,” the court found. Class counsel Blood disputed that number, claiming it didn’t take into account work performed over the course of two years.

via 9th Circuit thwarts Kellogg cy pres settlement.

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Wal-Mart Settles with DOL in FLSA Investigation to the tune of $4.8 Million

It’s my favorite foil for employment classes for a reason. According to the DOL, Wal-Mart has agreed to pay more than $ 4.8 million in back wages and damages to 4500 workers improperly classified as exempt from the FLSA’s overtime provisions. The superstore will also pay about $450,000 in civil fines. From the press release,

The violations affected current and former vision center managers and asset protection coordinators at Wal-Mart Discount Stores, Wal-Mart Supercenters, Neighborhood Markets and Sam’s Club warehouses. Wal-Mart failed to compensate these employees with overtime pay, considering them to be exempt from the FLSA’s overtime requirements. The Labor Department’s investigation found that the employees are nonexempt and consequently due overtime pay for any hours worked beyond 40 in a week.

“Misclassification of employees as exempt from FLSA coverage is a costly problem with adverse consequences for employees and corporations,” said Secretary of Labor Hilda L. Solis. “Let this be a signal to other companies that when violations are found, the Labor Department will take appropriate action to ensure that workers receive the wages they have earned.”

Under the terms of the settlement, Wal-Mart has agreed to pay all back wages the department determined are owed for the violations in addition to paying liquidated damages to the employees and a penalty to the department. The civil money penalties assessed stem from the repeat nature of the violations. Wal-Mart, which operates more than 3,900 establishments in the United States, corrected its classification practices for these workers in 2007, and negotiation over the back pay issues has been ongoing since that time. A third-party administrator will disburse the payments to the affected employees.

“Our department has been working with Wal-Mart for a long time to reach this agreement,” said Nancy J. Leppink, deputy administrator of the Wage and Hour Division. “I am very pleased that staff in our Southwest region persevered, ensured these employees will be paid the back wages they are owed and brought this case to conclusion. Thanks to this resolution, thousands of employees will see money put back into their pockets that should have been there all along. The damages and penalties assessed in this case should put other employers on notice that they cannot avoid their obligations to their employees by inappropriately classifying their workers as exempt.”

via Workplace Prof Blog: Wal-Mart Settles with DOL in FLSA Investigation to the tune of $4.8 Million.

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