Right to Rescission Classes in Truth in Lending Actions



From PLI’s Course Handbook

14th Annual Consumer Financial Services Litigation Institute

#18521

6

Recent developments in consumer class action practice

Stuart Rossman

National Consumer Law Center

December 31, 2008

RECENT DEVELOPMENTS IN CONSUMER CLASS ACTION PRACTICE

Stuart T. Rossman

National Consumer Law Center

Boston, MA

December 31, 2008

Stuart T. Rossman

Stuart Rossman is a staff attorney at the National Consumer Law Center (“NCLC”) and has served as its Director of Litigation since 1999. NCLC is a 38 year old national non-profit advocacy organization dedicated to the representation of low income and elderly consumers. It focuses its efforts on the areas of consumer credit, maintaining affordable home ownership and access to utilities. Stuart is the co-editor of the 6th Edition of the NCLC Consumer Class Actions manual and coordinates NCLC’s Consumer Class Action Symposium. He is a 1975 graduate of the University of Michigan, summa cum laud, and graduated from Harvard Law School, cum laud, in 1978. After 13 years of private trial practice in Boston, Stuart served as Chief of the Trial Division and Chief of the Business and Labor Protection Bureau at the Massachusetts Attorney General’s Office from 1991-1999. As founding chairman of the Boston Bar Association (BBA) Young Lawyers Section he coauthored and edited a handbook on the rights of the homeless in Massachusetts, which received the American Bar Association’s Young Lawyer’s Division Award of Achievement in 1989. Stuart is the former Chairman of the Volunteer Lawyers Project, Massachusetts’ largest pro bono legal referral service program. Since 1992 he has been a member of the adjunct faculty at the Northeastern University School of Law where he teaches courses in Civil Trial Advocacy. He also is a member of the adjunct faculty at the Suffolk University School of Law. In 2004, Stuart and his co-counsel were recognized as Finalists for Trial Lawyer of the Year by the Trial Lawyers for Public Justice for their contribution to the public interest through their work on the case of Coleman v. General Motors Acceptance Corporation. He also was awarded the 2005 Thurgood Marshall Award by the Rainbow/PUSH Coalition and its Wall Street Project. Stuart currently serves as the President of the Jewish Community Relations Council of Greater Boston.

I. Where Have All the Class Actions Gone?

In November, 2008, the Federal Judicial Center issued “Impact of the Class Action Fairness Act on the Federal Courts-Preliminary Findings from Phase Two’s Pre-CAFA Sample of Diversity Class Actions”, principally authored by Emery G. Lee II and Thomas E. Willging.[1] The report represents preliminary findings from Phase Two of the ongoing study of the Class Action Fairness Act of 2005 (“CAFA”).

Phase One of the study found that the number of class actions based on diversity of citizenship jurisdiction filed in or removed to the federal courts increased after CAFA’s effective date.[2] The most important findings of that study, issued in April, 2008, were:

• There has been a dramatic increase in the number of diversity class actions filed as original proceedings in the federal courts in the post-CAFA period;

• Diversity class action removals increased in the immediate post-CAFA period over their 2004 levels but have been trending downward since 2005; and

• The increase in diversity class actions is due largely to increases in the numbers of contracts, consumer protection/fraud and torts-property damage class actions being filed in or removed to federal court in the post-CAFA period.

Phase Two will measure CAFA’s impact on litigation activity and judicial rulings in class actions in the federal courts. As the first step in the Phase Two analysis, the Federal Judicial Center attempted to study the litigation activity, outcomes and case characteristics of class actions based on diversity of citizenship jurisdiction filed in or removed to the federal courts in the two years preceding CAFA’s effective date. These findings are intended to serve as a base line for further comparisons--i.e. the “‘before’ portion of a ‘before and after’ study of CAFA’s impact on the courts.”

The initial results are fascinating. The Executive Summary of the Report indicates as principal findings, inter alia, that in the pre-CAFA sample of diversity class actions:

• Plaintiffs filed motions to certify a class in fewer than one in four class actions;

• Motions activity was relatively infrequent--56% of the class actions had one or zero motions filed;

• All cases where a class was certified resulted in a class settlement;

• Parties proposed class settlements in 9% of the diversity class actions filed and all were ultimately approved by the Court;

• Plaintiffs filed motion to remand in 75% of the removed cases and judges granted remand motions almost 70% of the time, resulting in the remand of more than half of the removed cases; and

• Voluntary dismissal was the most frequent disposition of cases not remanded, occurring 38% of the time.

In sum, the Federal Judicial Center surprisingly concludes that “in diversity class actions there is less to class allegations than one would expect.” Most of the plaintiffs in cases that raised class allegations did not take the next step and move to certify a class. All class actions in the study that were certified, whether for litigation or settlement purposes, ended with class settlements. The majority of cases not remanded to state court ended in voluntary dismissal.

So where did all of the pre-CAFA diversity class actions go? The report speculates that the dismissals may represent a financial or equitable-relief settlement of individual claims of the named plaintiffs or a dismissal of claims without settlement. Dismissal without settlement could be from cases lacking merit or a solvent defendant, or with an eye toward litigating in another jurisdiction, according to the study.

The simple answer would appear to be that pre-CAFA diversity class action cases that were voluntarily dismissed at an early stage and/or class certification motions were not pursued in cases where settlements occurred first. Whether these settlements constituted a legitimate outcome for the putative class members or represented a sell out by class counsel is unclear because, prior to 2003, the public scrutiny of settlements in federal class action cases was less focused.

Perhaps a comparison with post-CAFA diversity cases, with its more detailed settlement notice procedures, will uncover a reversal of this trend. Alternatively, it is unclear at this point if the same outcomes hold true for either pre-CAFA or post-CAFA class actions based on federal question jurisdiction.

Nonetheless, if there is, in fact, a more recent drop in voluntary dismissals in post-CAFA diversity class actions, maybe it is attributable not to the impact of the statute alone, but in combination with the amendments to Federal Rules of Civil Procedure in 2003, which in revising Rule 23 required greater transparency in the settlement process and mandated a more active role by the Courts in the settlement approval process.

II. Right to Rescission Classes in Truth in Lending Actions?[3]

The three Circuits that have now considered the issue have all held that a trial court may not certify a class seeking rescission under the Truth in Lending Act (“TILA”), whether mere declaratory relief or an injunction is requested. Andrews v. Chevy Chase Bank, 545 F.3d 570(7th Cir. 2008) (one judge dissenting); McKenna v. First Horizon Home Loan Corp., 475 F.3d 418 (1st Cir., 2007); James v. Home Construction. Co., 621 F.2d 727, 731 (5th Cir. 1980). These courts have noted that the statutory scheme gives the creditor certain rights before a rescission claim can be brought before a court, and also that TILA’s statutory-damages remedy specifically references class actions (by providing a damages cap), while TILA’s rescission remedy does not. See also, Jefferson v. Sec. Pac. Fin. Servs., Inc., 161 F.R.D. 63 (N.D. Ill. 1995) (agreeing with rationale of James, and concluding that actions seeking rescission under TILA § 1635 should not be certified); and Nelson v. Unified Credit Plan, Inc., 77 F.R.D. 54, 58 (E.D. La. 1978) (having “found no evidence of congressional intent that class treatment is appropriate in actions seeking rescission in the Truth-in-Lending context,” casting doubt on the “propriety of ever pursuing rescission under” TILA).

The James Court, for example, found that the right of rescission was a purely personal remedy under TILA, exemplified as a unique transaction between each individual lender and borrower that differs each time the right is exercised. Therefore, the Court concluded, the remedy did not present the commonality, superiority and manageability features necessary to support a class certification under the federal rules. Furthermore, the Court noted

that without a cap on the rescission payments the creditor could be exposed to annihilating damages and insolvency if class rescissions were allowed. Finally, the Court found comfort in the fact that the availability of monetary recoveries and attorneys fees in individual rescission cases still would be available in individual enforcement actions under TILA.

Some contemporary cases subsequently held, however, that a rescission class could be certified, specifically when the relief sought was merely a declaration of the class members’ rights to individually pursue a rescission of their own transaction. See, e.g., Tower v. Moss, 625 F.2d 1161 (5th Cir. 1980) (class certified under TILA with option to rescind offered in settlement of common claim); Williams v. Empire Funding Corp., 183 F.R.D. 428 (E.D. Pa. 1998) (same), later opinion, 109 F. Supp. 2d 352 (E.D. Pa. 2000); In re Consol. Non-Filing Ins. Fee Litig., 195 F.R.D. 684, 692 (M.D. Ala. 2000) (same); Hickey v. Great W. Mortgage Corp., 158 F.R.D. 603 (N.D. Ill. 1994) (permitting certification of a 23(b)(3) class seeking, inter alia, “a declaration that the class has a continuing right to rescind its transactions,” having concluded that Nelson and its progeny were inapposite when the plaintiff had not rescinded his contract).

More recently, however, in McKenna v. First Horizon Home Loan Corp., 475 F.3d 418 (1st Cir., 2007), the First Circuit Court of Appeals followed James, supra, and held that, as a matter of law, class certification is not available for rescission claims, direct or declaratory, under TILA and parallel state law because Congress did not intend rescission suits to receive class action treatment. Among other things, the Court disdained “the notion that Congress would limit liability to $500,000 with respect to one remedy while allowing the sky to be the limit with respect to another for the same violation.” Id., 475 F.3d at 424. Soon thereafter, the Seventh Circuit followed suit, in part because “creating a circuit split generally requires quite solid justification…[and] the Andrews have not persuaded us that the First and Fifth Circuits have misinterpreted the operative provisions of TILA.” Andrews v. Chevy Chase Bank, 545 F.3d 570 (7th Cir. 2008).

Interestingly, the district court in Andrews Court had granted class certification for declaratory relief in part because while Congress had amended TILA to cap damages claims against creditors it did not, at the same time, limit or ban rescission

classes. Andrews v. Chevy Chase Bank, FSB, 474 F.Supp. 2d 1006 (E.D. WI, 2007). As a result, the lower Court concluded, it should not infer a Congressional intent to limit or ban rescission classes in the face of a vacuum. The dissenting judge on the Court of Appeals agreed with this view, but the majority followed its sister circuits in rejecting it and inferring instead a lack of intent to permit rescission class actions, period.

Despite Andrews, counsel for a putative class of borrowers in In Re Ameriquest Mortgage Co. Mortgage Lending Practices Litigation, No. 1715, a multidistrict litigation case (MDL”) pending before Judge Aspen in the United States District Court for the Northern District of Illinois, have argued that while the court cannot certify a class of borrowers who have not yet rescinded in order to determine whether the option of rescission is available to those individuals, it may certify a class of those who have already made rescission requests in order to enforce these. (Doc. 2457, filed 10/15/08) The district court has not yet ruled on this contention.

III. Are State Court Nationwide Class Action Settlements Enforceable?

A question that continues to confront class action practitioners is whether nationwide class action settlements approved by a state court are effective and enforceable in all other jurisdictions where putative class members reside. Two recent state court rulings on this challenging issue are instructive.

In Simeron v. Dryvit Systems, 196 N.J. 316, 953 A.2d 478 (August 11, 2008), the New Jersey Supreme Court was asked to decide whether homeowner could bring a consumer fraud action under New Jersey law against the manufacturer of synthetic stucco used to cover his home. The manufacturer filed a motion to dismiss based on a settlement in a nationwide class action previously filed in the State of Tennessee. The motion had been allowed by the trial court, but reversed and remanded by an intermediate appeals court.

The New Jersey Supreme Court held that before New Jersey courts will give full faith and credit to a class action judgment of a sister state, class members in that action must have been afforded the minimum procedural requirement for the Fourteenth Amendment’s Due Process Clause, i.e., notice plus an opportunity to be heard and participate; the notice must be the best practicable,

reasonably calculated to apprise class members of the pendency of the action and afford them an opportunity to present their objections, and the notice should also describe the class members’ rights in the action and provide them an opportunity to remove themselves from the class. Furthermore, even when a sister state court provides the necessary notification to class members required by due process, New Jersey courts still will not accord full faith and credit to a judgment that is infirm for other reasons (i.e. courts are not compelled to give preclusive effect to a sister state’s judgment procured by fraud or misrepresentation since it is likely that such a judgment would not be upheld by the sister state’s courts either).

In Simeron, the New Jersey Supreme Court found that the Tennessee case’s notice to class members satisfied due process because the New Jersey homeowner’s action involved the same defendant and subject matter. Specifically, the Court noted that the first-class mailing of the Tennessee settlement notice to the home addresses of over 85,000 nationwide putative class members contained pertinent information about settlement and how awards would be structured, and included a form allowing for class members to opt out of the settlement. The settlement also was published in national periodicals and trade publications. Ultimately, the Tennessee court entertained challenges to the proposed settlement at three different fairness hearings.

On a separate issue of interest, the New Jersey Supreme Court confirmed an award of all litigation expenses, including attorney fees, as a sanction against the defendant for its improper failure to timely disclose the existence of the Tennessee class action in the homeowner’s New Jersey consumer fraud action involving the same subject matter because the manufacturer sought to gain an unfair advantage through the delay while the deadline for opting out of the nationwide class action settlement was expiring. On the other hand, the Court held that the failure to disclose was not a sufficient basis, in and of itself, to deny full faith and credit to the settlement of the Tennessee suit where the plaintiff homeowner, once he found out about the settlement, took no steps to intervene and seek relief in the Tennessee court and, therefore, did not suffer irreparable prejudice.

Compare the outcome in Simeron to the decision of the Massachusetts Supreme Judicial Court in the recent case of Moelis v. Berkshire Life Insurance Company, 451 Mass. 483, 887 N.E.2d 214 (May 22, 2008). In Moelis, a putative class of insurance policy holders sought to certify both a national and state-wide class action against an insurer based on alleged deceptive practices with respect to “disappearing premium” insurance policies that did not perform as expected. The trial court denied the motions to certify the classes and the matter was reported, on an interlocutory basis, to the Supreme Judicial Court.

There, on the issue of the denial of nationwide class certification, the Court affirmed the trial court’s decision on the grounds that the Commonwealth’s courts could not exercise personal jurisdiction over nonresident plaintiffs as required to certify a national class. Specifically, the Supreme Judicial Court recognized that the plaintiffs’ contact with the insurer via the contract for the insurance policy did not constitute sufficient minimum contacts with Massachusetts to justify an exercise of personal jurisdiction.

The Supreme Judicial Court went on to note that a state court nonetheless may bind an absent plaintiff in a class action for money damages even if he or she lacks minimum contacts with the forum so long as basic due process protections are provided. Such protections would include notice, an opportunity to be heard and to participate in the litigation and the opportunity for the plaintiff to remove himself or herself from the class. Here, however, the statute under which the action had been brought did not provide an opportunity for nonresident class plaintiffs to opt out and, therefore, would offend traditional notions of fair play and substantial justice.

IV. Can Issues of Reliance Predominate?

In April, 2008, the Second Circuit Court of Appeals considered the question of when class certification is inappropriate because individualized issues of proof would defeat the predominance requirement of Rule 23(b)(3) in the case of McLaughlin v. American Tobacco Co., 522 F.3d 215. At issue in McLaughlin was certification of a RICO fraud-based putative class action brought by smokers alleging that they had been deceived

into purchasing “light” cigarettes through marketing campaigns and branding that implied that light cigarettes were healthier than “full-flavored” cigarettes. Reversing a lengthy decision by the trial court, the Second Circuit decertified the putative class because it found that the plaintiffs’ claims suffered from an “insurmountable deficit of collective legal or factual questions.”

Included among the issues the Second Circuit found could not be determined on a class wide basis was the requirement that the plaintiffs needed to demonstrate their reliance on the alleged misrepresentations concerning light cigarettes. The trial court had found that this requirement could be fulfilled on a class wide basis using generalized proof, because the defendants allegedly employed a uniform national marketing campaign for their products. The Second Circuit found, however, that proof of misrepresentation, even widespread and uniform misrepresentation-only satisfies half of the equation; the other half, reliance on the misrepresentation, could not be the subject of general proof.

Instead, individualized proof is needed to overcome the possibility that a member of the purported class “purchased Lights for some reason other than the belief that Lights were a healthier alternative-for example, if a Lights smoker was unaware of that representation, preferred the taste of Lights, or chose Lights as an expression of personal style.”

Of interest, the Second Circuit specifically rejected the plaintiffs’ argument, previously adopted by the trial court, that there should be a rebuttable presumption of reliance based on a “fraud on the market” theory. The Court found that the market for consumer goods was not efficient enough to support a presumption of reliance and, therefore, it could not assume that “regardless of whether individual smokers were aware of defendants’ misrepresentation, the market at large internalized the misrepresentation to such an extent that all plaintiffs can be said to have relied on it.”

VI. Rigorous Analysis of the Class Action Burden of Proof[4]

What is the burden of proof for class certification? The issue is significant for at least two reasons. One, before an appellate court can determine whether a trial court abused its discretion on the certification issue, one would ordinarily want to know what standard applies to that exercise of discretion. Two, district courts

and litigants have an obvious interest in knowing the exact standard before the class hearing so they can marshal their discovery, facts and arguments, particularly where there may be a close call on one or more of the Rule 23 requirements.

The absence of a definitive standard can be explained by (or blamed on) two Supreme Court decisions. In General Telephone Co. of the Southwest v. Falcon, 457 U.S. 147 (1982), the Court hinted at a standard: “[a] class action [] may only be certified if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied.” Id. at 161. In Falcon, the trial court certified the class based primarily on the complaint’s allegation that the defendant had an “across-the-board” policy and practice of discriminating against Mexican-Americans. See id. Given that context, the Court apparently thought that something more than the complaint’s allegation needed to be presented to support class certification. Beyond that, the Court did not elaborate on the “rigorous analysis” language.

Based on Falcon, some courts and most defense counsel have adopted the “rigorous analysis” test as if it were a burden of proof standard. But it is not clear what “rigorous analysis” means. Does it mean an evidentiary hearing is always required? Is “rigorous analysis” less demanding than a preponderance of the evidence? Is it more demanding? These real life questions arise repeatedly because the “rigorous analysis” standard describes the effort and care a district judge should bring to his or her decision-making in all matters. The standard does not describe, as it should, the quantum or the nature of the proof required.

The other Supreme Court opinion that has impeded the explication of a definitive standard is Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974). In Eisen, the Court said, “We find nothing either in the language or history of Rule 23 that gives a court any authority to conduct a preliminary inquiry into the merits of a suit in order to determine whether it may be maintained as a class action.” Id. at 177.

Against this background, the Second Circuit Court of Appeals has acknowledged that it “has been less than clear as to the applicable standard,” In re Initial Public Offering Securities Litig., 471 F.3d 24, 32 (2d Cir. 2006). In expressly rejecting a

“some showing” standard, the Court in its 2006 decision nonetheless left unclear whether the proper standard is (i) “rigorous analysis;” (ii) “preponderance of the evidence;” (iii) “substantial evidence;” or (iv) some combination of the three. In Dukes v. Wal-Mart Stores, Inc., by contrast, a 2-1 majority of the Ninth Circuit appeared to utilize a “substantial evidence” standard without directly addressing some vague criticisms by the dissent. See 509 F.3d 1168 (December 11, 2007).

Into this fray, two new decisions by federal appellate courts during 2008 recently have either contributed to a solution to this quandary or added to the confusion surrounding it by adopting an explicit “preponderance of the evidence” standard for the rigorous analysis of the class action burdens of proof.

In Teamsters Local 445 Freight Division Pension Fund v. Bombardier Inc., 546 F.3d 196 (October 14, 2008), the Second Circuit Court of Appeals revisited it’s In re Initial Public Offering Securities Litig. decision. The Court notes that “[a]lthough we did not use the words ‘preponderance of the evidence’ in In re IPO to describe the standard of proof applicable to Rule 23 issues, we in effect required the application of a cognate standard by directing district courts ‘to assess all of the relevant evidence admitted at the class certification stage,’ to ‘resolve[ ] factual disputes relevant to each Rule 23 requirement,’ and ‘[to] find[ ] that whatever underlying facts are relevant to a particular Rule 23 requirement have been established,’ notwithstanding an issue’s overlap with the merits.” The Court then goes on to rule that “[t]oday, we dispel any remaining confusion and hold that the preponderance of the evidence standard applies to evidence proffered to establish Rule 23’s requirements.”

The Third Circuit Court of Appeals in In re: Hydrogen Peroxide Antitrust Litigation, --- F.3d ----, 2008 WL 5411562, C.A.3 (Pa.), December 30, 2008 (NO. 07-1689), makes it clear that the decision to certify a class calls for findings by the trial court, not merely a “threshold showing by a party, that each requirement of Rule 23 is met.. Factual determinations supporting Rule 23 findings must be made by a preponderance of the evidence. Furthermore, the trial court is required to resolve all factual or legal disputes relevant to class certification, even if they overlap

with the merits--including disputes touching on elements of the cause of action. Finally, the court’s obligation to consider all relevant evidence and arguments extends to expert testimony, whether offered by a party seeking class certification or by a party opposing it.

VI. Can a Federal MDL Proceeding Enjoin a State Class Action Settlement?

What happens when one of the defendants in a federal Multi-District Litigation (“MDL”) proceeding settles a state class action case that purports to encompass the class of plaintiffs in the pending MDL action? Does the state class action settlement release the defendant from further liability in the federal MDL proceeding? Alternatively, does the federal interest take precedence and supersede the state court action and, if so, what authority does the federal court have to impose control over the proposed state class action settlement?

These are the interesting issues recently faced by a Federal District Court in the In re Jamster Marketing Litigation, 2008 WL 4482307 (S.D. Cal. September 29, 2008), when AT&T, a defendant in the MDL proceedings, reported a proposed settlement in a state class action pending in Georgia that purported to cover the putative class of plaintiffs suing AT&T in the federal case.

The Federal District Court began its analysis with a comparison of the applicable legal standards under the All Writs Act and the Anti-Injunction Act. The All Writs Act provides that: “The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.” 28 U.S.C. § 1651(a). This broad grant of authority is tempered by the Anti-Injunction Act which provides that “[a] court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act

of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgment.” 28 U.S.C. § 2283. Moreover, “[a]ny doubts as to the propriety of a federal injunction against state court proceedings should be resolved in favor of permitting the state courts to proceed in an orderly fashion to finally determine the controversy.” Atl. Coast Line R.R. Co. v. Brotherhood of Locomotive Eng'rs, 398 U.S. 281, 297 (1970). In exercising its authority under the All Writs Act, the Supreme Court

emphasized that such authority is necessary only if “some federal injunctive relief may be necessary to prevent a state court from so interfering with a federal court's consideration or disposition of a case as to seriously impair the federal court's flexibility and authority to decide that case.” Id. at 295.

The District Court noted that the All Writs Act has had particular application in the context of MDL proceedings. “[W]here complex [MDL] cases are sufficiently developed, mere exercise of parallel jurisdiction by the state court may present enough of a threat to the jurisdiction of the federal court to justify issuance of an injunction.” In re Diet Drugs Prods. Liab. Litig., 282 F.3d 220, 225 (3rd Cir.2002). Where the Anti-Injunction Act applies, “the injunction should be directed at a litigant ... instead of the state court proceedings itself.” California v. Randtron, 284 F.3d 969, 975 (9th Cir.2002).

However, a federal court’s authority to interfere with on-going state court proceedings is limited and not all encompassing. The scope of its injunctive authority should be limited to claims that share common facts or issues of the core cases comprising the MDL litigation. The primary purpose of MDL proceedings is to provide efficiencies in coordinated pretrial discovery and other pretrial matters--not to use the MDL proceedings as a means to expand the scope of the litigation.

In Jamster, the Plaintiffs argued that AT & T had to be enjoined from pursuing the settlement in the Georgia state action as a necessary aid to the federal court's jurisdiction and to prevent it from being wrongfully usurped. “[W]here jurisdiction over federal MDL class action litigation is threatened by a potential settlement of the same claims in a state court, the federal court can act pursuant to the All Writs Act even when the federal court has not already entered an order that requires preservation.” In re Lease Oil Antitrust Litigation No. II, 48 F.Supp.2d 699, 705 (S.D.Tex.1998). Any litigant may be enjoined from proceeding with a state court action where it is “necessary to prevent a state court from so interfering with a federal court's consideration or disposition of a case as to seriously impair the federal court's flexibility and authority to decide the case.” In re Diet Drugs Prod. Liab. Litig., 282 F.3d 220, 234 (3d Cir.2002); Keith v. Volpe, 118 F.3d 1386, 1390 (9th Cir.1997) (federal courts have authority to enjoin “state proceedings that interfere, derogate, or conflict with federal judgments, orders, or settlements”).

While the mere existence of a parallel state court action is insufficient to warrant injunctive relief, the District Court concluded here that the MDL action was sufficiently advanced and presented unique circumstances such that entry of a partial stay of the Georgia state action, as it related to the core MDL deceptive marketing claims was required to preserve the integrity, efficiency and fairness of the MDL related actions. Moreover, the Court found that the implementation of a stay would foster the proper administration of justice and permit the Plaintiffs to obtain complete relief on the core MDL claims to which they may be entitled. The Court held that, in furtherance of the principles of federalism and comity, entry of a limited and narrowly crafted stay in the Georgia state action as to the deceptive marketing claims did not so much interfere with the Georgia action but, rather, prevented that action from interfering with the federal proceeding consisting of MDL related actions that present complex issues involving a substantial class of individuals from many different states.

-----------------------

[1] See, $file/cafa1108.pdf

[2] See, $file/cafa0408.pdf

[3] This section was prepared with the assistance of Charles M. Delbaum, Staff Attorney at the National Consumer Law Center.

[4] Portions of this section have been taken from an article prepared by Michael D. Donovan, Donovan Searles, LLC, Philadelphia, PA , for the National Consumer Law Center’s 2007 Consumer Rights Litigation Conference.

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download