Claims And Issues

FLORIDA FORCE-PLACED PREMIUM PRACTICES: FEDERAL JUSTICE SYSTEM STEPS ASIDE.

It is often pointed out that whenever class action rights are taken away to require that all claims be arbitrated, then small claims will not be made because they are, well, too small to litigate.

Add to that this fact as well:  Claims may be too small for federal courts when the claims stand alone even if they are not too small when they are combined in a class action.

Adele Levine took out a mortgage for a home in Pembroke Pines, Florida.  Ms. Levine died.  Her estate disputed the payment of insurance premiums that were placed by force on her mortgage loan by the lender's mortgage servicer.  Ms. Levine's estate allegedly incurred legal fees of $2,565 in these disputes with the servicer and the lender over the lender force-placed insurance premiums.

Adele Levine opted out of a class action settlement with the mortgage servicer.  Her estate then filed its own lawsuit instead, for alleged violations of the Florida Consumer Collection Practices Act (FCCPA), for alleged violations also of the Florida Unfair and Deceptive Trade Practices Act (FDUTPA), and for what a federal judge called "tortious interference."

Unfortunately for the estate, the only "actual damages" it could allege was the $2,565 in attorney's fees caused by disputes over the LFPI.  This was not enough for federal court, the federal judge ruled, even after adding the potential recovery of an additional $1,000 under FCCPA.

Case dismissed.

The moral of the story is that there is more to the story that when class action rights are taken away to require that claims be arbitrated, then small claims will not be made because they are too small to litigate.  For federal courts, "small" claims can be less than $75,000 which for most people and particularly for those who cannot afford to litigate in federal court, is not a "small" amount by any stretch.  But in this federal case, anything less than $75,000 was, well, too small to litigate.

Dennis Wall is at work on a book about concealed evidence and secret settlements, including cases involving lender force-placed insurance, that take our money, foreclose on our homes, and change our lives. 

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

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Video Displays "Lender Force-placed Insurance Practices".

"CAN'T ANYBODY HERE PLAY THIS GAME?" UNFORCED ERRORS, BAD PITCHES.

With all respect, GEICO stepped in it in this one!  GEICO sued lawyers from a Washington class action in which they represented plaintiffs.  GEICO did not stop there.  GEICO also sued their Expert Witness in the Washington case, and the witness's company.

The dispute arose over the use of documents in litigation.  GEICO apparently thought that the documents were or should be protected secrets.  But GEICO did not raise its grievances in the Washington case.

GEICO instead filed suit in Federal Court far away from the State of Washington, in Philadelphia, Pennsylvania.  This was apparently as far away as GEICO could go.  GEICO alleged claims for allegedly misappropriating trade secrets and unjust enrichment.  The Federal Judge, named Stengel, was not having any of it, to put it mildly.

The Judge in Philadelphia wrote:

    GEICO weaves some clever arguments in an attempt to justify its acts of obstruction. However, practicality, legal analysis, and common sense all make clear GEICO is attempting to stalemate the Washington class actions by suing the plaintiffs’ lawyers thousands of miles away from where those class actions are currently being litigated. The red herrings in this case are GEICO’s alleged “claims” for trade secret misappropriation and unjust enrichment. Even if these “claims” were anything more than red herrings—which they are not—they fail as a matter of law.

GEICO's lawsuit is dismissed.  The Court will not allow this.  GEICO v. Nealey, No. 17-807, 2017 WL 2572519, at *1 (E.D. Pa. June 13, 2017) ("I will not tolerate the attempted manipulation of our judicial process in this case. The case is dismissed.").

Apparently thinking themselves to be a reincarnation of the New York Yankees from back in the day, invincible and "tough," they could not even convince a namesake of the Old Perfesser (Stengel) that they were doing anything good here.

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

 

RED FLAGS FOR CLASS ACTION SETTLEMENTS*

*FROM Howard M. Erichson, "Aggregation as Disempowerment," forthcoming, 92 Notre Dame L. Rev., as of Sunday, April 24, 2016.

A.  Terms that Make an Exaggerated Appearance of Value.

        1.    Spurious Injunctive Relief.

        2.    Coupons.

        3.    Cy Pres.

        4.    Claims Procedures (particularly when direct payment, in any case preferred, is

               feasible).

        5.    Reversion. 

B.  Terms that Expand Class Counsel's Franchise and Defendant's Protection.

        6.    Excessively Broad Release.

        7.    Expanded Class Definition.

C.    Terms that Discourage Objections.

        8.    Class Representative Bonus.

        9.    Fee Fund.

            a.  I.e., Segregated Revertible Fee Funds.

        10.    Clear Sailing Agreements.

©2016 by Dennis J. Wall.  All rights reserved.  No claim to original works of Prof. Howard M. Erichson or Notre Dame Law Review.

Permission is hereby freely given to readers of Insurance Claims and Issues Blog to download, print, and above all, use this checklist of Red Flags for Class Action Settlements.  This permission extends to all of this Blog's readers, especially but not only judges and their law clerks, lawyers, scholars, and investigative reporters.

APPELLANT'S ULTIMATE ISSUE ON CLASS ACTION SETTLEMENTS.

Some judges seem to have a hard time recognizing that some lawyers regularly benefit from settlements in lawsuits they file as class actions. 

This is the ultimate issue in a class action settlement now on appeal in a lender force-placed insurance case:  Some lawyers regularly benefit from settling class actions.  That is a trigger not so much for judgment as for scrutiny; it is a signal to look closely.  The Eleventh Circuit Court of Appeals is being asked to recognize this as a fact, because it is in the record of the case on appeal filed on behalf of Ms. Margo Perryman v. Ocwen Loan Servicing, appeal docketed, No. 15-14630 (11th Cir. October 14, 2015).

See her Opening Brief filed in the Eleventh Circuit:  Download Perryman Appeal from Lee v Ocwen. Perryman Initial Brief.Filed 12.23.15 (11th Cir No 15-14630).

Please Read The Disclaimer.  ©2016 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015).  All rights reserved.

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ST. PATRICK'S DAY, 2014: THE DAY THAT BARRED ALL CLAIMS, supposedly.

Lee: NO SURRENDER AT MIAMI COURTHOUSE. Part Two.

Lee FINAL APPROVAL OF CLASS ACTION SETTLEMENT IS ON APPEAL.

APPELLANT'S STATED ISSUES IN Lee CLASS ACTION SETTLEMENT APPEAL.

Continuing the articles posted yesterday on Insurance Claims and Bad Faith Law blog, here is the Appellant's, Ms. Margo Perryman's, fourth and ultimate issue in her Opening Brief in her appeal from a Magistrate Judge's final approval of the class action settlement of the lender force-placed insurance practices claims alleged (and which could have been alleged?) in Lee:

4. Did the district court abuse its discretion in finding the class action settlement fair, reasonable, and adequate, where it was collusively structured to maximize attorneys' fees and minimize the payout to the class?

This issue and the three other issues raised on behalf of Ms. Perryman in her Opening Brief are stated on page 2, here:  Download Perryman Appeal from Lee v Ocwen. Perryman Initial Brief.Filed 12.23.15 (11th Cir No 15-14630).

Please Read The Disclaimer.  ©2016 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015).  All rights reserved.

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Posner and Seventh Circuit Set Standards, Reject Class Action Settlement.

Lee FINAL APPROVAL OF CLASS ACTION SETTLEMENT IN SOUTH FLORIDA.

Lee FINAL APPROVAL OF CLASS ACTION SETTLEMENT IS ON APPEAL.

And So, Shall a Magistrate Lead Them to Fairness?

"INSURANCE CLAIMS AND ISSUES," THE BOOK: COMING IN 2016!

 

 Storm Clouds lined up over the Gulf of Mexico.  Photograph and text copyright 2015-2016 by Dennis J. Wall.

I am hard at work on an anthology of the best blogs from "Insurance Claims and Issues."  The anthology I submit to my publisher will keep all hyperlinks intact, including links to the Insurance Claims and Bad Faith Law blog.  When articles posted on Insurance Claims and Bad Faith Law blog are important to the anthology of "Insurance Claims and Issues," I am including them in the anthology too.

As each previously posted article is updated, the posted articles will remain just as available here as they always have been.  New articles will benefit from me being better informed and better equipped to discuss future insurance claims and issues.

I have contracted with Thomson Reuters (West Publishing Company to those fortunate to have the experience) to publish "Insurance Claims and Issues," the Book, in the late Spring or early Summer of 2016.  Best wishes to everyone for a joyous and Happy New Year!

Please Read The Disclaimer.  ©2016 by Dennis J. Wall, author of "Insurance Claims and Issues" (forthcoming Thomson Reuters 2016).  All rights reserved.

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Convincing Anyone Yet? Coverage, Contraception, and the Court.

CYBERINSURANCE:  MANY DATA-LESS RISKS TO UNDERWRITE & PREMIUMS TO CHARGE.

THE ALI RESTATEMENT PROJECT OF THE LAW OF LIABILITY INSURANCE.

Majority Holds No Negligence Cause of Action by Insured Against I.A.

AHA! FOUND YOU! THE FARCICAL CLASS ACTION SETTLEMENTS …

Storm Clouds Falling Into Line.  Photo Copyright Dennis J. Wall.  All rights reserved.

 

CONTINUE.  THIS TIME:  THE SECRECY OF MAKING AND SELLING CREDIT DEFAULT SWAPS.

I spent hours this week looking for the electronic Court file to update an article I posted on September 14, 2015, titled "BANKS CDS INSURANCE POLICIES IN SETTLEMENT -- WHAT'S THE DEAL?"

My September article was based on reporting in The New York Times that a huge class action involving credit default swaps was about to settle.  Alone among the major news organizations, The Times does not publish the name, number, or Court information when they report about a lawsuit.  I do not know why.  Maybe they have a policy against it for some reason.

So, in the course of updating my September, 2015 article I had to find out all that information first.  I found the name, number, and Court of the case pretty quickly:  In re Credit Default Swaps Antitrust Litigation, Case No. 1:13-md-02476 or 13 MD 2476 (DLC) [take your pick] (Southern District of New York).  Yet, after hours of investigation and research I still could not find an electronic Court file.  Making a long story short so to speak, I found it but it was not easy.  The obstacles I faced in finding this case were a portent of things to come.

The Court in that case has not yet entered a final Order approving the class action settlement of litigation over the alleged secrecy of the defendant investment banks and others in making and selling credit default swaps.  However, the Court in that case has entered a Preliminary Order.

The District Judge used the proposed order submitted by the lawyers (Docket No. 464-1 in that case) and crossed off the word "proposed" in the title:

PROPOSED  ORDER PRELIMINARILY APPROVING SETTLEMENTS AND PROVIDING FOR NOTICE TO THE SETTLEMENT CLASS, now listed by the Clerk as Docket No. 465 in Case No. 13 MD 2476 (DLC) (S.D.N.Y., October 29, 2015).   Download Order.Preliminary Settlement Approval.102915.Dkt No. 465. In re Credit Default Swaps Antitrust Lit. (SDNY Case No 13 MD 2476).

To her credit, the District Judge entered several lines of handwritten edits and additions to the lawyers' proposed order.  However, the District Court's certification of a "Settlement Class" was not among her edits.  Using the lawyers' proposed language, the Court certified a Settlement Class in that case pursuant to Rule 23 of the Federal Rules of Civil Procedure "solely for purposes of effectuating the Settlements".  (Preliminary Order, Docket No. 465, ¶ 3, p. 3.)

The proposed Order of Court went on to enter an injunction against anyone who wants to pursue "Released Claims" against the released entities including the defendants of course.  The injunction barred "any Settlement Class Member" from filing or maintaining "any action alleging any of the Released Claims against any of the Released Parties."   (Preliminary Order, Docket No. 465, ¶ 22, pp. 9-10.)   Download Order.Preliminary Settlement Approval.102915.Dkt No. 465. In re Credit Default Swaps Antitrust Lit. (SDNY Case No 13 MD 2476).

Do you notice any problems with this concept?

Well, for one, determining who is a "Settlement Class Member" is something of a farce.  Trying to advise anyone who is a "Settlement Class Member," and thus subject to this injunction, requires a determination of who is a settlement class member of course.  In one sense, a Settlement Class Member theoretically includes anyone who falls within the lawyers' stipulated settlement class whether or not the Court has jurisdiction over them or their claims.  That view includes anyone who might fall within the Settlement Class definition even before they have been given notice and an opportunity to be heard.

That may be good for the Released Parties, but it is not a valid interpretation for a Court.  Due process, the right to be heard, in person jurisdiction concepts and objections like that absolutely bar a Court from making such an interpretation.

No, in law as in reality the question of who is a "Settlement Class Member" depends on who files the appropriate paperwork by the appropriate deadlines decreed by this Order requiring that notice must be given and that an opportunity to be heard must be provided.  Depending on whether a person demands exclusion from the settlement class or files an objection to being included in the settlement class in this case, the deadline decreed for filing the appropriate paperwork is February 29, 2016.  But since February 29, 2016 has not come no-one knows who "any Settlement Class Member" is yet.

Another problem concerns the identity of what the "Released Claims" against any of the "Released Parties" are, exactly.  The Court apparently does not know.

The purported ruling written in the "Proposed Preliminary Order" that no-one can "commence or prosecute" the "Released Claims" does not say what the "Released Claims" are.

Perhaps there is a definition of "Released Claims" in the Settlement Agreements on file in this Court file.  There are some 700+ pages of settlement agreements on file in this Court file.

To know what are "Released Claims" which cannot be prosecuted or maintained until this Court gives its final approval to this settlement, we must wade through those settlement papers.  Just as soon as I finish wading, I will let you know what if anything I can find.  In the meantime, the Court in this case has set a so-called "Fairness" hearing in this Preliminary Order for Income Tax Day next year, or April 15, 2016.  Maybe by then we will know something more than the little we know now.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with 2015 Supplements).  See in addition the article about this case which was posted on Insurance Claims and Bad Faith Law Blog on December 10, 2015.  All rights reserved.

Lee: NO SURRENDER AT MIAMI COURTHOUSE. Part Two.

Lee FAIRNESS HEARING:  NO SURRENDER IN MIAMI.  Part Two.

This article continues the article posted on Insurance Claims and Bad Faith Law on Tuesday, June 16, 2015.

               The second extraordinary ruling by Judge Goodman in Lee was his ruling to take the motion to finally approve the class action settlement “under consideration.”  This may be the first time this ruling was reached in an LFPI class action settlement, and there have been many opportunities before now.

               The Judge’s Post Fairness Hearing Order deserves to be republished for general consideration beyond the confines of the parties and their lawyers in the Lee case in Florida:  Download Lee v Ocwen Loan Servicing. Post Fairness Hearing Order. Dkt No 159 (S.D. Fla. Case No. 0.14.cv.60649.JG).  It is published here for general consideration:

The Undersigned held a Fairness Hearing on June 11, 2015 concerning the motion [ECF No. 144] for final approval of the parties’ settlement in this class action matter involving forced‐placed insurance (also known as lender‐placed insurance). The motion at issue has been taken under consideration. At the conclusion of the hearing, the Undersigned entered the following procedural orders:

1)               While the Court will not require such a deposition, Plaintiffs may, by June 25, 2015, take the deposition of Jason Jastrzemski ‐‐ or another appropriate 30(b)(6) representative of Defendant Ocwen Loan Servicing, LLC (“Ocwen”) ‐‐ concerning the contention that a claims‐made process is necessary in this case because Ocwen cannot timely and efficiently obtain the necessary information on a systematic basis. If this deposition is undertaken, then counsel for all parties of record (not objectors to the settlement agreement) may attend and also ask questions. However, objecting parties (and/or their attorneys) may attend the deposition. Plaintiffs should include counsel for objectors in any communications scheduling such a deposition. Furthermore, if the deposition is taken, then Plaintiffs shall, within ten days of the deposition’s completion, file a copy of the deposition transcript with the Court. 

2)              Each party (or group of parties)¹ shall, by July 13, 2015, submit a proposed order on the motion [ECF No. 144] for final approval of class action settlement. The proposed order shall address all the relevant points discussed at the Fairness Hearing. Plaintiffs shall also file with their proposed order an up‐to‐date (as of the date of filing) affidavit from the settlement administrator, Rust Consulting, providing information as to the number of present claimants and opt‐outs.² In addition to submitting the proposed order through the CM/ECF electronic filing system, the parties (and objectors invited to submit a proposed order) shall submit a courtesy copy of the proposed order in Microsoft Word format to the Undersigned’s efile inbox ([email protected]).                                                  

¹                           For instance, Defendants may jointly submit a single proposed order, or they may each individually submit a proposed order. 

                    Furthermore, objectors Shane and Cecilia Valdez, through their counsel Stephen Fearon, Jr., who appeared at the Fairness Hearing, may also submit a proposed order. 

²                           This requirement was not mentioned at the Fairness Hearing, but upon consideration, the Undersigned deems this information to be of significant value in making a final decision on this motion. The Rust affidavit shall also disclose, on a week‐by‐week basis, how many class members submitted claims. It shall also list the number of phone calls received by Rust and lead class counsel since the Fairness Hearing. Finally, the affidavit shall explain the total number of insurance policies at issue in the claims received to date. 

DONE and ORDERED, in Chambers, in Miami, Florida, June 11, 2015. 

                       

The third extraordinary ruling of Judge Goodman in Lee is available at this time only to those with access to PACER, the Publicly Accessible Court Electronic Records system.  Starting on Thursday, June 18, 2015 it will also be available at Insurance Claims and Bad Faith Law blog, because on that date the third extraordinary ruling on the Lee class action settlement will be published there.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, author of “Lender Force-Placed Insurance Practices” (American Bar Association 2015).  All Rights Reserved.  No Claim to Original U.S. Government Works.

 

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And So, Shall a Magistrate Lead Them to Fairness?

AND SO, SHALL A MAGISTRATE LEAD THEM TO FAIRNESS?

           As was previously posted here, there is a Final Fairness Hearing scheduled for tomorrow morning, June 11, 2015 at 10:00 A.M., on the preliminarily approved class action settlement in Lee v. Ocwen Loan Servicing, LLC, No. 0:14-cv-60649-JG (S.D. Fla.).  See CLAIM PRECLUSION OPPORTUNITY TO BE HEARD ON JUNE 11, 2015, posted here on March 17, 2015.

          Certain reasons that the settlement may be unfair are presented in the previously posted article, including that “[t]he claims of the Lee plaintiffs are not typical, and neither the plaintiffs nor their settlement class attorneys can possibly represent the claims of the other members of the class under the laws of the 40+ States which they cannot invoke.”  Id.

          In addition, the stipulated settlement agreement in Lee, here: Download Lee v Ocwen Loan Servicing. Joint Stipulation and Settlement Agreement. Dkt 111-1 filed 12.18.14 (SD Fla Case No 0.14.cv.60649)., has the recurring potential unfairness defects in such cases that:

1.  People who are far from the Florida litigation will be barred from raising issues and claims that are included in the stipulated settlement in Florida, see the stipulation’s stated definition of “Settlement Class,” in Section (actually, Paragraph) 3.1, p. 16; and ¶¶s 10.1 and 10.1.1, pp. 39-40.

2. The same people whose issues or claims or both may be precluded against the same defendants will be purportedly enjoined from raising those issues and claims in any other litigation, with the injunction if any to be entered by the Court in Florida if the stipulation receives final approval.  ¶ 10.7, p. 43.

 

At least some of the defendants in the Florida case already have requested a Court in another jurisdiction in another case, to stay the other case because at the time the defendants had reached a settlement agreement in principle in the Florida case.  The other case is Valdez v. Saxon Mortgage Services, Inc., No. 2:14-cv-03595-CAS-MAN (C.D. Cal.)  Although the Judge in the Central District of California case denied the motion to stay, the Court made clear that the fairness of the settlement in Florida was an issue strictly reserved to the Court in Florida, and that the Judge was not adjudicating fairness issues in denying the motion to stay based on the stipulated settlement in Florida:

The fairness of the Lee settlement is not a proper subject for this Court’s consideration, and if plaintiffs’ counsel believes that the interests of the putative California class are harmed by that settlement, this issue should be presented to the Lee court by way of a timely objection.

Footnote 1 of Download Valdez v Saxon Mortgage Services, Inc. Order Denying Certain Defendants Motion to Stay Proceedings Against Them. Dkt No. 132. Filed 01.06.15 (CD Cal No. 2.14.cv.03595.CAS.MAN).  Parenthetically, the Court in California denied the motion to stay because the California litigation likely would remain pending regardless of whether the Lee Court ultimately gives its final approval to the settlement “—and because the only hardship proffered by moving defendants is the inconvenience of litigating two potentially duplicative actions”.  Page 5 of  Download Valdez v Saxon Mortgage Services, Inc. Order Denying Certain Defendants Motion to Stay Proceedings Against Them. Dkt No. 132. Filed 01.06.15 (CD Cal No. 2.14.cv.03595.CAS.MAN).

          Recently, the Magistrate Judge who is presiding over Lee by consent of the parties entered an Order directing the parties to address some 9 numbered paragraphs of concerns and issues related to any order of final approval at the Fairness Hearing scheduled for tomorrow, June 11, 2015 at 10:00 A.M.:  Download Lee v Ocwen Loan Servicing. Order on Objections to Requested Final Approval of Class Action Settlement. Dkt No 149. 051315 (SD Fla No 0.14.cv.60649).  These concerns will undoubtedly be raised by the Magistrate tomorrow.  It is hoped that these and all other fairness concerns will be addressed then also.

          Readers of this article may share their concerns and any objections they have to the ultimate fairness or unfairness of the Lee stipulated settlement by contacting the lawyers, who are in the position of raising such concerns with the Magistrate Judge at the Fairness Hearing.  At least some of the lawyers may appreciate your extension of help.  Here is the Clerk’s list of Attorneys in the Lee case if you wish to contact any of the attorneys:  Download Lee v Ocwen Servicing.Clerks List of Attorneys.(SD Fla No 0.14.cv.60649).061015.  EMail addresses are provided therein through the courtesy of the Clerk of the United States District Court for the Southern District of Florida.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, www.lenderforceplacedinsurance.com, author of “Lender Force-Placed Insurance Practices” (American Bar Association 2015).  All Rights Reserved.  No Claim to Original U.S. Government Works.

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Class Action Settlements Become Legalized Weapons of Mass Destruction.

AIG SHAREHOLDER CLASS ACTION SETTLEMENT OF FEDERAL SUIT, ATTORNEY’S FEES.

               AIG has reportedly settled a shareholder class action lawsuit filed in Federal Court.  Even though the Federal Government closed its alleged investigations into the subject, without filing any criminal or civil regulatory enforcement action, the AIG shareholders’ lawsuit involved allegations that AIG “had led investors to buy stock and debt they otherwise would not have bought, resulting in billions of dollars in losses.”  The alleged failures of AIG were alleged failures “to disclose the risks [AIG] took on through its portfolio of credit default swaps and a securities lending program.”  Reuters copyrighted report, “A.I.G. to Pay Nearly $1Billion to Settle Class-Action Suit Brought by Shareholders,” p. 16, Col. 1 (New York Times Nat’l ed., Sunday, March 22, 2015).

               AIG’s monetary payment of indemnity in the settlement is a reported $970.5 Million.  Id.

               AIG will pay the plaintiffs’ attorneys $120.46 Million.  See id.

               Whether these numbers are “hard” or “soft,” including whether the settlement payments for indemnity in particular represent actual amounts to be paid to the plaintiffs in this settlement, are questions worth exploring further.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall.  All Rights Reserved.

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ST. PATRICK'S DAY, 2014: THE DAY THAT BARRED ALL CLAIMS, supposedly.

MANDATORY ARBITRATION PROVISIONS IN INSURANCE CONTRACTS? CLASS ACTION WAIVERS?

    Mandatory arbitration provisions in contracts generally are a huge issue. USAA reportedly “uses mandatory arbitration clauses in many of its financial services contracts with service members.” Jessica Silver-Greenberg and Michael Corkery, “Failed by Law and Courts, Troops Come Home to Repossessions” p. A1, col. 1 (New York Times Nat’l ed., St. Patrick’s Day, 2015). If USAA and perhaps other insurance companies are using mandatory arbitration clauses in financial services contracts, their inclusion in the type of financial services contracts known as insurance contracts seems likely.

   If mandatory arbitration provisions in insurance contracts become an accepted part of transacting the business of insurance, it must be remembered that class action waivers are ordinarily a part of mandatory arbitration provisions in contracts in general.

Please Read The Disclaimer. ©2015 by Dennis J. Wall. All rights reserved.

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ST. PATRICK’S DAY, 2014: THE DAY THAT BARRED ALL CLAIMS, supposedly.

               St. Patrick’s Day, 2014 was the day a Federal Judge signed an order submitted by the parties to preliminarily approve their class action settlement of the plaintiffs’ claims arising from the defendants’ lender force-placed insurance practices.   Fladell v. Wells Fargo Bank, N.A., Case No. 13-cv-60721, Dkt. No. 168 (S.D. Fla. Order filed March 17, 2014).  Even before the Federal Judge signed the Order submitted by the parties in the Miami case, Federal Courts in other jurisdictions stayed or dismissed other pending lawsuits arising from the defendant bank’s alleged lender force-placed insurance practices.  See “They Were Against It Before They Were For It:  Fladell” in Three Parts, on Insurance Claims and Issues Blog, December 29, 2014; Insurance Claims and Bad Faith Law Blog, December 30, 2014; and on Insurance Claims and Issues Blog, December 31, 2014.

               The class certified for settlement purposes in Fladell included many more people than the Florida, Arkansas, and Oklahoma plaintiffs before the Court in South Florida.  It swept across the entire United States to include anyone who had a claim against the bank and its co-defendants anywhere, in basic and simple terms.   Fladell v. Wells Fargo Bank, N.A., Case No. 13-cv-60721, Dkt. No. 168, ¶ 4 (S.D. Fla. Order filed March 17, 2014).   The claims alleged by the actual plaintiffs in the Fladell case included alleged claims for unjust enrichment, breach of fiduciary duty, and breach of the implied covenant of good faith and fair dealing.

               The Order preliminarily approving the Fladell settlement has been replaced with an order submitted by the parties for final approval, and by a judgment.  However, even now, Fladell is not final.  It is on appeal as of this writing.

                Far from being dispositive in precluding other claims in other jurisdictions, Fladell may not be dispositive even in its own District.  It has been held in the Southern District of Florida – as it has been held elsewhere – that the requirement of “predominance” of common issues in a purported nationwide class action is simply not satisfied in the face of a predominant need for an individualized inquiry “based upon the class member’s location.”  Florida’s law on unjust enrichment in particular is different from many other States.  Florida is not alone.  Courts in many jurisdictions “have found variation in unjust enrichment laws to preclude a finding of predominance for multistate classes asserting unjust enrichment claims.”  Karhu v. Vital Pharmaceuticals, Inc., No. 13-60768-CIV, 2014 WL 815253, *8-*9  (S.D. Fla. March 3, 2014)(holding that putative class action plaintiff did not meet burden of establishing that common issues predominate “with regard to the unjust enrichment claims of the Proposed Classes”; same holding with regard to Unfair Trade Practices claim), dismissed without prejudice by Order filed on March 27, 2014, notice of appeal filed on April 15, 2014 regarding denial of class certification and dismissal.  (As of this writing, the appeal in Karhu is still pending.)

               It is unclear why the Fladell plaintiffs’ unjust enrichment claims should be given any greater weight simply because the parties in Fladell stipulated that everyone else’s claims of any kind anywhere in the nation would be included in their settlement once a Court approved it.  Certainly no reason appears why the Fladell plaintiffs’ claims for unjust enrichment should preclude the unjust enrichment claims of anyone else, nor why any of the claims alleged by the Fladell plaintiffs should preclude the claims of other people which Courts have held not to constitute a certifiable class action, such as deceptive and unfair trade practices laws, breach of the implied covenant of good faith and fair dealing, or alleged breach of fiduciary duties.  Each and every one of these claims necessitates individualized determinations of facts which do not allow even common questions to predominate and so preclude not the claims, but preclude a certifiable class.

               Although the Fladell class action settlement has been arguably reduced to a judgment, in the first place that judgment is not final; as noted earlier, it is on appeal.

               Second, even if the Fladell class action settlement eventually involves a final judgment, class settlement certification can be collaterally attacked including on the ground of inadequate representation on common issues.  See Hecht v. United Collection Bureau, Inc., 691 F.3d 218, 221-24 (2d Cir. 2012), and cases cited in it.  See generally the outstanding article by Georgene Vairo, “Is the Class Action Really Dead?  Is That Good or Bad for Class Members?” 64 Emory L.J. 477 (2014).

               The issue seems to boil down to whether a Court lacks subject-matter jurisdiction.  That the issue involved is at bottom a potential lack of jurisdiction is shown, for example, by the history of the Karhu case cited above.  In that Southern District of Florida case, once the District Judge denied certification of the alleged nationwide class, the Judge was impelled to dismiss the entire case without prejudice because the Court lacked jurisdiction as a result of denying the nationwide class certification.

              Attorneys in Fladell were thus justifiably concerned with the issue of jurisdiction because they provided a proposed order which the District Judge signed in Fladell that recited it would preclude all other claims filed anywhere in the United States because it barred all claims that were or supposedly could have been filed in Fladell.  See Fladell v. Wells Fargo Bank, N.A., Case No. 13-cv-60721, Dkt. No. 168, ¶¶ 13 & 15 (S.D. Fla. Order filed March 17, 2014).   The fact that these provisions were written into the preliminary class settlement certification order proposed in Fladell, which were carried forward when the class settlement was finally approved, reflect an understandable concern that the Fladell class action settlement may not apply anywhere outside of South Florida and, depending on the forthcoming resolution by the Eleventh Circuit Court of Appeals, may not apply anywhere including in South Florida.

The author’s forthcoming book on “Lender Force-Placed Insurance Practices” is scheduled for publication this Spring by the American Bar Association.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall.  All rights reserved.  No Claim to Original U.S. Government Works.

Happy St. Patrick’s Day Eve, 2015!

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PENNSYLVANIA SUPREME COURT APPROVES CLASS ACTION PROOF AND RESULTS.

    On December 15, 2014 the Pennsylvania Supreme Court delivered an opinion which affirmed a class action result.  Of at least equal importance, the Supreme Court approved the class action procedures before and at trial which led to that result.  The majority opinion is here:  Download Braun v. Wal Mart Stores (Pa. Dec. 15, 2014) Majority Opinion. 

     The Braun class action went to trial on claims of liability for Walmart's alleged failure to comply with Pennsylvania wage and hour laws and with Walmart's own company policies governing employee compensation including wages and hours.  The jury returned a verdict for $187,648,598.00 for Walmart's acts which the jury found did not comply with either Pennsylvania law or Walmart's own company rules.

    The defendant argued on appeal that the result in this case was prohibited by U.S. Supreme Court decisions.  The Pennsylvania Supreme Court disagreed.  It is of major significance to the outcomes in the trial court and in the appellate courts alike that the jury verdict in this case is "based on Walmart's own business records."  [Emphasis added.]

    A good explanation of the Braun result and the class action issues involved in it, is by Victoria Ni, Esquire, Managing Attorney, at Public Justice on December 16, 2014.

    The effect of this Pennsylvania Supreme Court decision on insurance class action cases is predictably going to be huge. 

Please Read The Disclaimer.  Copyright 2014 by Dennis J. Wall.  All rights reserved. 

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Posner and Seventh Circuit Set Standards, Reject Class Action Settlement.

POSNER AND SEVENTH CIRCUIT SET STANDARDS, REJECT CLASS ACTION SETTLEMENT.

This continues articles posted on Insurance Claims and Bad Faith Law Blog on Tuesday, December 2, 2014 and on Thursday, December 4, 2014.

               In Pearson v. NBTY, Inc., ___ F.3d ___, 2014 WL 6466128 (7th Cir. November 19, 2014), Judge Richard Posner wrote for a unanimous Seventh Circuit panel.  The Court set standards for evaluating Federal class action settlements that are likely to be applied in the great majority of other Federal Circuits, in Federal District Courts, and in most State Courts with class action rules which are in any way similar to the Federal Class Action Rule, Fed. R. Civ. P. 23.

               The Pearson appeal involved a collection of cases brought under State Consumer Protection Laws.  The suits were collectively settled and the settlement was rejected by the Seventh Circuit.  Judge Posner’s opinion in the Pearson case is nothing less than a tour de force.

               The Seventh Circuit listed at least a dozen factors which the Court considered in rejecting the class action settlement in this matter:

1. Only 0.25% of class members received compensation under the proposed settlement;
2. The District Court’s valuation of the settlement was based on potential value to the class rather than actual value as required;
3. The District Court’s calculation of “value” to class members,  moreover, improperly included such things as administrative costs and attorney’s fees;
4. The total actual compensation to class members would have been “$865,254 to the 30,245 class members who submitted claims”;
5. The District Court revised the attorney’s fees request downward and still the District Court’s award of fees represented 69% of what the class members would receive, at an average rate of $538/hour for each attorney at every level of practice and for each paralegal;
6. The proposed settlement was reached in a case involving no fund and no litigated judgment;
7. No reasonable expectation existed that more class members would submit claims than actually did submit claims before the deadline;
8. The process of submitting claims on the class action settlement appeared to be structured in such a way as to discourage, not encourage, potential class members to submit claims;
9. There was no legitimate benefit to be found to the class for the settlement agreement’s injunction against misleading claims;
10. The settlement agreement contained a “reversion” or a “kicker clause,” identified by the Court, under which any unclaimed funds that were originally contributed to the settlement amount would revert back to the defendant;
11. The settlement agreement included an award of $1,130,000.00 to a laudable orthopedic foundation, an award which, however laudable the recipient organization is, would have been an award which neither benefitted the class nor was truly a cy pres award; and last but not least,
12. In sum the benefits of this proposed settlement agreement did not actually accrue to the class:

And for conferring these meager benefits class counsel should receive almost $2 million?

The factors considered by the Court appear throughout the Court’s opinion.  The quote immediately above ends the Court’s discussion and can be found at Pearson v. NBTY, Inc., ___ F.3d ___, 2014 WL 6466128 *9 (7th Cir. November 19, 2014).

               Class action settlements are submitted to Judges and approved on a regular basis in many kinds of litigation, including lender force-placed insurance cases and products liability cases.  The Pearson decision represents the loudest rocket if not the first to be launched in a burst of judicial activity requiring more than mechanical approval of class action settlements.

The author is at work on a book on “Lender Force-Placed Insurance” which the American Bar Association is scheduling for publication in the Spring of 2015.

Please Read The Disclaimer.  ©2014 by Dennis J. Wall.  All rights reserved.  No claim to Original U.S. Government Works.

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