Monthly Archives

October 2018

USC Agrees To Pay $215M To Settle Class Action Sexual Misconduct Lawsuit

By | Attorney Fee Request, Class Action Lawsuits

The University of Southern California (USC) announced on October 19, 2018 that it has agreed to pay $215 million to victims of sexual misconduct allegedly committed by its former employee, Dr. George Tyndall, a gynecologist, at USC’s student health center during his nearly thirty years at the health center.

In announcing the proposed settlement that needs to be approved by the federal judge overseeing the class-action lawsuit, the Interim President of USC issued a statement on October 19, 2018 in which she stated, in part:

Dear USC community,

As of October 19, 2018, the university has reached agreement in principle on a $215 million class action settlement that will compensate students who received women’s health services from Dr. George Tyndall at USC’s student health center.

Our Board of Trustees supports this settlement, which was reached in collaboration with plaintiffs’ counsel, and which will provide relief to those who have been impacted by this difficult experience. By doing so, we hope that we can help our community move collectively toward reconciliation. I regret that any student ever felt uncomfortable, unsafe, or mistreated in any way as a result of the actions of a university employee.

The settlement provides all class members (former patients who received women’s health services from Tyndall) compensation of $2,500. Patients who are willing to provide further details about their experience could be eligible for additional compensation up to $250,000. Following the expected court approval, all class members will be sent a notice of their options under the settlement in the coming months. In the meantime, I encourage impacted patients to check back regularly on this site (change.usc.edu/settlement) to remain updated on new information.

A fair and respectful resolution for as many former patients as possible has been a priority for the university and for me personally since I began serving in the role of Interim President. Many sweeping changes have been made and we continue to work every day to prevent all forms of misconduct on our campuses, to provide outstanding care to all students, and to ensure we have policies and procedures that prioritize respect for our students and our entire university community.

Source

USC reportedly will pay the settlement through insurance and reserve funds, and not using tuition or donor funds. In addition, USC will pay up to $25 million in attorneys fees.

The federal sexual misconduct class action lawsuit alleges that the former gynecologist’s sexual misconduct included unnecessary pelvic examinations of students, digitally penetrating female patients, making sexually and racially inappropriate comments to students, and asking patients to remove their clothing in front of him, which allegations the former doctor denies. The former gynecologist left USC in June 2017.

Source

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Antitrust Lawsuits Filed Against Sinclair Broadcast And Tribune Media Regarding TV Advertising Consolidated Into MDL

By | Antitrust Litigation, Business Litigation, Multidistrict Litigation (MDL)

Maryland-based Sinclair Broadcast Group and Tribune Media Company are the defendants in more than a dozen antitrust lawsuits filed in various jurisdictions, contending that they committed antitrust violations involving TV advertising prices. The TV advertising antitrust cases filed throughout the United States were recently transferred and consolidated into Multidistrict Litigation (“MDL”) in Illinois, pursuant to an order of the U.S. Judicial Panel on Multidistrict Litigation earlier this month.

The antitrust lawsuits allege that the defendants stifled competition and raised, fixed, or stabilized television advertising prices throughout the United States, which resulted in advertising prices that were higher than they would have been in a competitive market. Sinclair Broadcast Group owns TV stations that reach 38% of U.S. households, and Tribune Media Company owns TV stations that reach 43% of U.S. households, according to the antitrust lawsuits.

The MDL case is captioned In Re: Local TV Advertising Antitrust Litigation, No. 2867.

One of the antitrust lawyers involved in the antitrust case filed in Maryland in August 2018 (Law Offices of Peter Miller, P.A. v. Sinclair Broadcast Group, Inc. et al, No. 1:18-cv-02316-TDC) alleges that the TV advertising market is susceptible to collusion because there is a limited number of TV station owners selling advertising, the barriers to entry into TV advertising are high, the TV advertising products are similar, the TV stations selling advertising have a common motive to maintain and increase their profits, and the TV stations had ample opportunities to conspire through industry associations and interactions.

Source

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$65M Proposed Settlement In Class Action Lawsuit Against Walmart Involving Cashiers

By | Business Litigation, Class Action Lawsuits

It has been reported that Walmart Inc. has agreed to settle a class action lawsuit filed nine years ago by nearly 100,000 cashiers who alleged that Walmart failed to provide them with adequate seating. The Walmart class action lawsuit was filed pursuant to California’s Private Attorneys General Act that allows California workers to bring claims for violations of California’s labor laws on behalf of the State and provides that the workers are entitled to 25% of the recovery.

The class-action plaintiffs argued that Walmart cashiers are entiteld to seating “when the nature of the work reasonably permits,” pursuant to a California regulation that was originally enacted in 1911 and was intended to benefit women employed in the retail sector. The regulation has been expanded and changed over time to apply to other workers.

The proposed settlement, which was filed on October 10, 2018 in Brown v. Walmart Inc., No. 5:09-cv-03339, which is pending in the U.S. District Court for the Northern District of California, must be approved by the federal judge assigned to the class-action lawsuit before it can become final.

Wamart had defended its failure to provide its cashiers with stools, claiming that stools would create a safety hazzard and result in less productivity, and that it would not be reasonable because its cashiers would have difficulty viewing the bottom of customers’ shopping carts from a seated position, the cashiers would have difficulty bagging customers’ merchandise from a seated position, and because cashiers sometimes are required to perform duties away from their cash registers.

If the proposed class-action settlement is approved as submitted to the federal court in California, cashiers who worked for Walmart since 2008 will share approximately $10.7 million and will receive about $4 per pay period (cashiers who worked the entire time period covered by the class action will receive about $1,000 or more if fewer class members participate in the settlement).

Pursuant to California’s Private Attorneys General Act, the California Labor and Workforce Development Agency would receive 75% of the remaining settlement fund.

Source

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Product Liability Cases Represent 90% Of All Multidictrict Litigation (MDL) Cases

By | Business Litigation, Multidistrict Litigation (MDL)

Lawyers for Civil Justice (LCJ), a national coalition of defense trial lawyer organizations, law firms, and corporations, issued a report on October 4, 2018 entitled “Rules 4 MDLs Calculating the Case” that found, based on its research of data from the Judicial Panel on Multidistrict Litigation (JPML), that product liability cases accounted for approximately 90% of all multidistrict litigation (MDL) cases that were pending at the end of fiscal year 2017. The LCJ further reported that products liability cases within MDLs represented 42% of the entire civil caseload as of the end of fiscal year 2017.

The LCJ found that MDL cases have more than tripled since the end of fiscal year 1992, increasing by 86,949 cases as of the end of fiscal year 2017. Over this same period, products liability cases in MDLs also have more than tripled, increasing by 76,398 cases. The growth in MDL products liability cases alone accounts for almost 88% of the growth in MDL cases since fiscal year 1992. The number of MDLs with  more than 1,000 pending cases also has surged since the early 1990s: as of September 2018, the number of MDLs with more than 1,000 cases has reached an all-time high of 24.

Source

What Is Multidistrict Litigation?

28 U.S.C. § 1407. Multidistrict litigation

(a) When civil actions involving one or more common questions of fact are pending in different districts, such actions may be transferred to any district for coordinated or consolidated pretrial proceedings. Such transfers shall be made by the judicial panel on multidistrict litigation authorized by this section upon its determination that transfers for such proceedings will be for the convenience of parties and witnesses and will promote the just and efficient conduct of such actions. Each action so transferred shall be remanded by the panel at or before the conclusion of such pretrial proceedings to the district from which it was transferred unless it shall have been previously terminated: Provided, however, That the panel may separate any claim, cross-claim, counter-claim, or third-party claim and remand any of such claims before the remainder of the action is remanded.

Source

If your business is presently or may soon be involved in multidistrict litigation (MDL) in the United States, email us at info@businesslitigationcontingencylawyers.com or telephone us toll-free in the United States at 800-756-2143 to find MDL lawyers who may handle your MDL litigation matter on a contingency basis.

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Federal Appellate Court Overturns $3M Verdict Against Paxil Manufacturer For Suicide Death

By | Business Litigation

The United States Court of Appeals for the Seventh Circuit (“Federal Appellate Court”) overturned a $3 million Illinois state verdict against GlaxoSmithKline LLC (“GSK”), which marketed paroxetine under the Paxil brand name in the United States using the FDA‐approved label through 2014.

From 1992 to 2014, when GSK sold the right to distribute brand‐name Paxil, GSK was responsible for the “accuracy and adequacy” of the drug’s label. To change the label, GSK needed either FDA permission or newly acquired information that supported a strengthened warning under the CBE regulation (The CBE regulation (“changes being effected”) is an exception to the general rule that changes require advance FDA permission. It allows manufacturers to change a label to “reflect newly acquired information” if the changes “add or strengthen a … warning” for which there is “evidence of a causal association … .” 21 C.F.R. § 314.70(c)(6)(iii)(A)).

Paroxetine is a selective serotonin reuptake inhibitor, one of a class of antidepressants commonly called SSRIs. For decades, the FDA has scrutinized data on the relationship between SSRIs and suicidal behavior.

The plaintiff alleged that in 2010, a doctor prescribed Paxil, the brand‐name version of paroxetine, to treat the plaintiff’s husband’s depression and anxiety. But his prescription was filled with generic paroxetine manufactured by another company. Six days later, the plaintiff’s husband committed suicide. Blood tests showed that paroxetine was in his system. He was 57 years old.

The plaintiff sued GSK, alleging that GSK negligently failed to include warnings that paroxetine was associated with suicide in patients older than 24. Since federal law makes it virtually impossible to sue generic drug manufacturers on a state‐law theory for failure to warn, the plaintiff sued the brand‐name manufacturer, who has more control over drug labels, for injuries caused by taking the generic drugs.

The jury awarded the plaintiff $3 million for the death of her husband, and GSK appealed.

Federal Appellate Court Opinion

Brand‐name and generic drug manufacturers have different federal drug labeling duties. A brand‐name manufacturer seeking new drug approval is responsible for the accuracy and adequacy of its label. 21 U.S.C. § 355(b)(1), (d). A manufacturer seeking generic drug approval, on the other hand, is responsible for ensuring that its warning label is the same as the brand name’s. 21 U.S.C. §§ 355(j)(2)(A)(v) & (j)(4)(G); 21 C.F.R. §§ 314.94(a)(8) & 314.127(a)(7). Thus, from 1992 to 2014, when GSK sold the right to distribute brand‐name Paxil, GSK was responsible for the “accuracy and adequacy” of the drug’s label. To change the label, GSK needed either FDA permission or newly acquired information that supported a strengthened warning under the CBE regulation.

The Federal Appellate Court held in its opinion filed on Augst 22, 2018: “GSK asked the FDA for permission to modify the paroxetine label as plaintiff argues was needed. The FDA said no, repeatedly. Federal law thus preempted plaintiff’s Illinois‐law claim that GSK should have warned of a risk of adult suicidality on the paroxetine label in 2010. GSK added a similar warning in 2006, and the FDA ordered that GSK remove that label and replace it with a class‐wide SSRI warning in 2007. As a matter of law, this is what <em>Levine</em> called “clear evidence” that the FDA would have rejected the warning that plaintiff seeks under Illinois law. After 2007, GSK lacked newly acquired information that would have allowed it to add an adult‐suicidality warning under the CBE regulation.”

Source

Dolin v. GlaxoSmithKline LLC, No. 17‐3030.

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Alabama Supreme Court Refuses To Compel Arbitration In Nursing Home Death Case

By | Business Arbitration

The Supreme Court of Alabama (“Alabama Supreme Court”) held in its opinion filed on October 5, 2018 that the daughter of a resident of the defendant nursing home did not have the authority to bind her father to the arbitration agreement contained in the nursing home admission documents, for the claim that the nursing home’s negligence led to the untimely death of the resident.

The Alabama nursing home negligence wrongful death lawsuit alleged that on or around December 9, 2015, the staff at the defendant rehab center (nursing home) found the resident unresponsive and transported him to the hospital. On December 20, 2015, the resident passed away as a result of septic shock and an associated urinary-tract infection.

Nursing Home Arbitration Agreement

On October 23, 2015, which was three days before the resident was admitted to the defendant nursing home, the resident’s daughter signed a number of documents to prepare for her father’s transfer from the hospital to the defendant nursing home, including an “Agreement to Alternative Dispute Resolution” (“the agreement”). The daughter signed the agreement in the space provided for the “signature of family member responsible for PATIENT.” The spaces for the signature of “PATIENT (unless PATIENT lacks sufficient mental capacity)”; “Conservator/Guardian, Durable Power of Attorney for Health Care or other Legal Representative(s) (if any)”; and “Health Care Decision Maker (if one has been named or appointed)” were left blank.

After the Alabama nursing home wrong death lawsuit was filed, the defendant filed a motion to compel arbitration and to dismiss or to stay the proceedings pending arbitration, arguing that the daughter, by filing her complaint, had failed to comply with the terms of the agreement. The trial court subsequently granted the motion to compel arbitration, and the plaintiff appealed.

Alabama Supreme Court Opinion

The Alabama Supreme Court stated that there is no dispute that a clause calling for arbitration exists and that the agreement, which contains the clause, evidences a transaction affecting interstate commerce. It is also undisputed that the resident did not sign the agreement and that the daughter signed on her father’s behalf as a family member. The daughter asserts that the arbitration provision is not enforceable because she did not have the legal or apparent authority to execute the agreement on behalf of her father. Specifically, the daughter argues that her father was mentally incompetent at the time she signed the agreement.

The Alabama Supreme Court stated that a party seeking to avoid a contract based on the defense of incapacity must prove either permanent incapacity or contractual incapacity at the very time of contracting.

The Alabama Supreme Court stated that the father’s diagnosis of dementia, by itself, does not establish permanent incapacity. The Alabama Supreme Court stated that it cannot conclude, based on the medical records submitted, that the daughter has overcome her burden of proving that her father’s condition rose to the level of permanent incapacity as that term is used under the law to void a contract. However, “t]he more important question is whether [the daughter] has overcome her burden of demonstrating contractual incapacity.”

The Alabama Supreme Court stated that “[i]t is clear that [the daughter] has presented evidence establishing that, at the time of execution of the agreement, [her father] “‘had no reasonable perception or understanding of the nature and terms of the contract.'” The Alabama Supreme Court held: “under the particular circumstances in [this] case, it is clear that, at the time [the daughter] signed the paperwork for [the defendant] in preparation for his transfer from [the hospital] to the Rehab Center, [the father] did not have “‘”‘sufficient capacity to understand in a reasonable manner the nature and effect of the act which he [or his daughter] was doing.'”‘

The Alabama Supreme Court held: “In this case, [the daughter] signed the agreement solely as a family member. Because this Court concludes that [the father] lacked the capacity to contract at the time the agreement was signed, [the daughter] did not have apparent authority to execute the agreement on his behalf,” noting that the submitted records are replete with references to the father suffering from confusion and frequently lacking orientation to date, time, and place before and during his hospitalization; the father suffered from dementia, was heavily medicated, and was recovering from surgery at the time his daughter signed the paperwork and at the time he was admitted to the Rehab Center. Furthermore, the daughter never represented to the defendant that she was her father’s legal representative.

Source

Stephan v. Millennium Nursing and Rehab Center, Inc., 1170524, October Term, 2018-2019.

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Federal Appellate Court Denies Attorney Fee Petition In Its Entirety For Being “Outrageously Excessive”

By | Attorney Fee Request

In its opinion filed on September 12, 2018, the United States Court of Appeals for the Third Circuit (“Federal Appellate Court”) held that the District Court had not abused its discretion in refusing to award any attorney fee to the prevailing plaintiff in an insurance bad faith case.

The Underlying Facts

Dissatisfied with defendant NYCM’s handling of his insurance claim related to a serious car accident, the plaintiff filed suit against the company in the Court of Common Pleas of Monroe County, asserting a contractual underinsured motorist (“UIM”) claim and a claim under the Bad Faith Statute, 42 Pa. Cons. Stat. § 8371. After NYCM removed the case to federal court, the parties settled the UIM claim for $25,000. The bad faith claim, meanwhile, proceeded to a week-long trial, at the  conclusion of which a jury found that NYCM had acted in bad faith in its handling of the insurance claim and awarded the plaintiff $100,000 in punitive damages.

As the prevailing party under the Bad Faith Statute, the plaintiff then submitted a petition for attorney’s fees, in which he requested an award of $946,526.43 in fees and costs. The District Court denied this request in its entirety, reviewing every time entry submitted, performing a traditional lodestar analysis, and concluding that eighty-seven percent of the hours billed had to be disallowed as vague, duplicative, unnecessary, or inadequately supported by documentary evidence. In light of that substantial reduction, the District Court deemed the plaintiff’s request “outrageously excessive” and exercised its discretion to award no fee whatsoever. The plaintiff, through new counsel, appealed.

The Pennsylvania Bad Faith Statute

The Pennsylvania Bad Faith Statute provides that in an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions: (1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3%. (2) Award punitive damages against the insurer. (3) Assess court costs and attorney fees against the insurer. 42 Pa. Cons. Stat. § 8371.

Because the statute uses the word “may,” the decision to award attorney’s fees and costs upon a finding of bad faith is wholly within the discretion of the trial court.

The Federal Appellate Court stated that although it was unusual for the district court to decide to award no attorney fee at all, in light of the excessive nature of the request after reducing the  requested fee by eighty-seven percent, “we cannot say that this decision was an abuse of discretion. Review of the record and the District Court’s comprehensive opinion makes clear that denial of a fee award was entirely appropriate under the circumstances of this case. Counsel’s success at trial notwithstanding, the fee petition was severely deficient in numerous ways,” including counsel did not maintain contemporaneous time records for most of the litigation but instead recreated all of the records provided as part of the fee petition, using an electronic case management system that did not keep track of the amount of time expended on particular tasks; the responsibility of reconstructing the time records was left to a single attorney, who retrospectively estimated not only the length of time she herself had spent on each individual task, but also the amount of time others had spent on particular tasks, including colleagues who could not be consulted because they had left the firm by the time the fee petition was filed; many of the time entries submitted were so vague that there is no way to discern whether the hours billed were reasonable;  some entries were, on their face, unnecessary or excessive (“Without more information, these tasks appear “purely clerical” in nature and should not be billed at a lawyer’s rate—nor for many hours at a time”); and, there are the “staggering” 562 hours that counsel billed for “Trial prep” or “Trial preparation” with no further description of the nature of the work performed (“We agree with the District Court that this is an “outrageous” number under the circumstances”).

The Federal Appellate Court noted that the district court stated  that if counsel did nothing else for eight hours a day, every day, 562 hours would mean that counsel spent approximately 70 days doing nothing but preparing for trial in this matter, yet the trial consisted of only four days of substantive testimony, and involved a total of only five witnesses for both sides (the sole issue was whether defendant NYCM had acted in bad faith in its handling of the plaintiff’s UIM claim).  The Federal Appellate Court stated: “we simply cannot fathom how they could have reasonably spent such an astronomical amount of time preparing for trial in this case, and we highly doubt they would have billed their own client for all of the hours claimed.”

The Federal Appellate Court continued: “All the more troubling is the fact that counsel’s (supposedly) hard work did not appear to pay off at trial. As the District Court explained, counsel had “to be repeatedly admonished for not being prepared because he was obviously unfamiliar with the Federal Rules of Evidence, the Federal Rules of Civil Procedure and the rulings of th[e] court.” App. 630 (emphasis omitted). Given counsel’s subpar performance and the vagueness and excessiveness of the time entries, the District Court did not abuse its discretion in disallowing all 562 hours.”

The Federal Appellate Court stated that the plaintiff’s counsel also neglected their burden of showing that their requested hourly rates were reasonable in light of the prevailing rates in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation (the five billing attorneys did not even submit their own affidavits identifying their usual billing rates or describing their levels of experience, and only one of the five attorneys testified at the hearing on the fee petition about her background and experience). The District Court would have liked to disallow any hours billed by those four lawyers, and the Federal Appellate Court stated that  it would have been within the court’s discretion to do so. But the District Court was not able to because the fee petition did not indicate which attorney performed each particular task. The District Court therefore disallowed all hours billed prior to the one testifying lawyer’s arrival at the firm, those billed for multiple attorney “roundtables,” and all trial hours billed by more than one lawyer.

The Federal Appellate Court held: “Here, the District Court provided a thorough explanation of how counsel failed to fulfill their duty to the court. This failure, coupled with the other deficiencies in the petition and counsel’s substandard performance, justified the District Court’s decision to deny the fee request in its entirety. That decision was not an abuse of discretion.”

Source

Clemens v. New York Central Mutual Fire Insurance Company, No. 17-3150.

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Federal Appellate Court Sets Aside Class Action Attorney Fees Award

By | Class Action Lawsuits, Contingency Fee Agreement

The July 3, 2017 published opinion of the United States Court of Appeals for the Tenth Circuit (“Federal Appellate Court”) in Chieftain Royalty Company v. Enervest Energy Institutional Fund XIII-A, L.P., No. 16-6022, held that the district court erred by awarding attorney fees to class counsel to be paid out of the common fund shared by class members instead of computing attorney fees under the lodestar method, as required by Oklahoma law in this diversity case.

Background

The underlying class action alleged underpayment of royalties by the defendants on gas from wells in Oklahoma. The parties reached a settlement for a cash payment of $52 million, to be distributed pro rata to the class members after payment of expenses and fees. Class counsel moved for attorney fees in the amount of 40% of the settlement fund, plus interest. After a hearing on the settlement and fee requests, the district court awarded class counsel 33 1/3% of the fund ($17,333.333.33) as attorney fees. Two objectors contested the award of the class action attorney fees.

Calculation Of Attorney Fees In Class Action Cases

Percentage Of The Fund Method

There are two primary methods for determining attorney-fee awards in common-fund class-action cases. The first is the percentage-of-the-fund method, which awards class counsel a share of the benefit achieved for the class, which considers 12 factors to determine the appropriate percentage: the time and labor required, the novelty and difficulty of the question presented by the case, the skill requisite to perform the legal service properly, the preclusion of other employment by the attorneys due to acceptance of the case, the customary fee, whether the fee is fixed or contingent, any time limitations imposed by the client or the circumstances, the amount involved and the results obtained, the experience, reputation and ability of the attorneys, the “undesirability” of the case, the nature and length of the professional relationship with the client, and awards in similar cases.

Lodestar Method

The second method is the lodestar approach. The court first determines the lodestar by multiplying the number of hours reasonably spent on the litigation by a reasonable hourly rate. This produces a presumptively reasonable fee but it may in rare circumstances be adjusted to account for the presence of special circumstances.

The Federal Appellate Court has approved both methods in common-fund cases, although expressing a preference for the percentage-of-the-fund approach by applying a ‘hybrid’ approach, combining the percentage fee method with the specific factors traditionally used to calculate the lodestar.

The Federal Appellate Court agreed with the two objectors that Oklahoma law governs the award of attorney fees in this case and requires using the lodestar approach rather than a percentage-of-the-fund analysis because federal courts must recognize state-created substantive rights, which include the rules of decision by which the court will adjudicate substantive rights.

Substantive Attorney Fees Vs. Procedural Attorney Fees 

There are two different types of attorney fees, depending on the basis for the fee award: substantive fees and procedural fees. Substantive fees are those that are tied to the outcome of the litigation and procedural fees are those that are generally based on a litigant’s bad faith
conduct in litigation.

Substantive fees are part and parcel of the cause of action over which the federal courts have diversity jurisdiction. In contrast, an attorney-fee award against bad faith conduct in the litigation has nothing to do with the nature of the cause of action and does not derive in any way from state substantive law.

Whether to award counsel a fee out of a common fund is not based on whether counsel behaves properly during the litigation; rather, the award is tied to the outcome of the litigation. In a diversity case, the matter of attorney’s fees is a substantive legal issue and is therefore controlled by state law. When state law governs whether to award attorney fees, state law also governs how to calculate the amount.

The Federal Appellate Court held: “Here, the attorney-fee award was based on the outcome of the litigation not the district court’s power to discipline the litigants. State law therefore governs the propriety of granting a fee award. And we must also apply the State’s rules on how the amount of the fee is to be calculated because they are “rules of decision by which [the] court will adjudicate [the] right[] [to the fee]” … After  all, if there is no sufficient federal interest to override a state’s decision not to allow common-fund attorney fees, it is hard to see how there could be a sufficient interest to override state law on how to compute the fee …  it is state substantive law that cabins the meaning of reasonable … a federal court in a diversity action must follow state law declaring that, absent extraordinary circumstances, a reasonable attorney fee is the fee computed under the lodestar method. We therefore see no reason to depart from what appears to be the consensus view that state law governs how to calculate a substantive attorney fee.”

In the case it was deciding, the Federal Appellate Court held: “The district court did not use the lodestar method to calculate class counsel’s fee in this case. Class counsel failed to provide the information necessary to apply that method. As already noted, in 1979 the Oklahoma Supreme Court stated that attorneys seeking fees must present “detailed time records” and “evidence as to the reasonable value for the
services performed” … Class counsel did not come close to performing this task … Therefore, we must set aside the attorney-fee award. The district court will have to decide in the first instance whether any award can be made in light of the absence of contemporaneous time records. It is unfortunate that class counsel did not do the necessary homework on Oklahoma law.”

Source

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Federal Appellate Court Reverses Dismissal Of Plaintiffs’ Fair Debt Collection Practices Act Violation Claim

By | Business Litigation, Class Action Lawsuits

In its precedential opinion filed on September 24, 2018, the United States Court of Appeals for the Third Circuit (“Federal Appellate Court”) held that the appellants (plaintiffs below) “have pled sufficient factual allegations that state a plausible claim upon which a court may grant relief under the FDCPA.”

Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §1692 et. seq.

Congress enacted the FDCPA in 1977, after noting the “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.”  § 1692e of the FDCPA states that “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt,” and goes on to describe the following as violations of the FDCPA: The threat to take any action that cannot legally be taken or that is not intended to be taken . . . The use of any false representation or deceptive means to collect or  attempt to collect any debt or to obtain information concerning a consumer.

Whether a collection letter is “false, deceptive, or misleading” under § 1692e is determined from the perspective of the “least sophisticated debtor.”

In the case it was deciding, the defendant debt collector sent letters to the plaintiffs attempting to collect outstanding debts, none of which exceeded $600. All of the defendant’s debt collection letters sent to the plaintiffs contained the following language: “We are not obligated to renew this offer. We will report forgiveness of debt as required by IRS regulations. Reporting is not required every time a debt is canceled or settled, and might not be required in your case.”

Because the U.S. Department of the Treasury only requires an entity or organization to report a discharge of indebtedness of $600 or more to the IRS, and because each of the debts linked to the plaintiffs was less than $600, the plaintiffs claimed that the inclusion of the aforementioned language was “false, deceptive and misleading” in violation of the FDCPA.

The Federal Appellate Court held: “By including the reporting language on collection letters addressing debts of less than $600, we believe that the least sophisticated debtor might be persuaded into thinking that the discharge of any portion of their debt, regardless of amount discharged, may be reportable …  it is not merely the inclusion of a lie but also incomplete or inapplicable language in a collection letter that may form the basis for a potential FDCPA violation … While we recognize that [the defendant debt collector], like many debt collection companies, uses form letters when contacting its debtors, we must reinforce that convenience does not excuse a potential violation of the FDCPA. We therefore are obligated to reverse the order of the District Court granting [the defendant’s] motion to dismiss, as a reasonable juror may find a violation of the FDCPA in this instance.”

Source

Schultz v. Midland Credit Management, Inc.,  Case No. 17-2244.

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