18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 501 The District Court granted Defendant’s motion to dismiss. On appeal, the First Circuit affirmed the District Court’s ruling. Plaintiff paid Defendant for a Spring 2020 study abroad program at the University of Amsterdam in the Netherlands. Plaintiff signed Defendant’s Program Participant Contract and Forum Methodology for Dispute Resolution Agreement ("Participant Contract"), which included the Terms and Conditions ("Terms and Conditions") to the program. Id . at *2. In March of 2020, after the World Health Organization announced that COVID-19 was a global pandemic, Defendant notified the program participants of its plans to suspend the abroad portion of their study abroad programs, and instead migrate to online and distance-learning classes. Defendant instituted a no-refund policy for most students on April 1, 2020. Plaintiff alleged that she and others similarly-situated had a right to a refund for services not provided by Defendant because Paragraph 14 of the Participant Contract stated that "[i]n the unlikely event that a program is cancelled (due to low enrollment or any other reason), CIEE will refund all payments received but will have no further liability to participant." Id at *3. Defendant argued that other clauses in the Participant Contract and Terms and Conditions exempted them from issuing refunds to participants. The First Circuit agreed with the District Court’s finding that in reading the Terms and Conditions in their entirety, a refund was not guaranteed under the circumstances. The First Circuit noted that the Terms and Conditions also contained a section addressing program cancellation during the term, and it provided that if “an emergency requires that a program be canceled following the program start date and prior to the end of an academic term, CIEE will make reasonable efforts to make alternative arrangements in order to allow students to complete their academic work, but cannot guarantee that full or partial credit will be obtained.” Id . at *6. The First Circuit found that the District Court correctly applied basic rules of contract interpretation to find the Participant Contract unambiguous, by reading whole context and structure rather than reading Paragraph 14 in isolation. The First Circuit ruled that in transitioning its programs to an online platform so that participants could complete their academic work, Defendant complied with the Program Cancellation section and with Paragraph 14. The First Circuit thus concluded that the District Court did not err when it held that Paragraph 14 was limited by other provisions of the Participant Contract in light of the unambiguous language in the Terms and Conditions’ Program Cancellation section. Id . at *11. For these reasons, the First Circuit affirmed the District Court’s ruling granting Defendant’s motion to dismiss. (xiv) Class Actions Involving Claims Of Negligence Bobbitt, et al. v. Milberg LLP, 2021 U.S. Dist. LEXIS 95462 (D. Ariz. May 19, 2021). Plaintiff brought a class action related to the underlying litigation in Drnek v. Variable Annuity Life Insurance, Case No. CV-010242 (D. Ariz. May 25, 2001). In Drnek, investors brought a putative class action alleging that Variable had illegally sold them tax-sheltered annuity contracts to be included in individual retirement plans that already qualified for favorable income tax treatment, and that this violated § 10b-5 of the Securities Exchange Act of 1934 (“SEA”). Plaintiff’s class action complaint in this case alleged claims of negligence as well as breach of fiduciary duty on the part of the attorneys representing Plaintiffs in Drnek. Specifically, Plaintiff alleged that as a result of Defendant’s negligence for failing to timely disclose an expert witnesses, the class in Drnek was decertified, and Defendant failed to notify the putative class of the decertification order. The Court initially denied Plaintiffs’ motion for class certification, but on Plaintiffs’ motion for reconsideration, the Court granted Plaintiff’s motion for class certification pursuant to Rule 23(b)(3). At the outset, the Court determined that it would utilize the case- within-a-case method in order to analyze whether litigating a legal malpractice case was feasible in the context of class action litigation. First, the Court found, and the parties did not dispute, that numerosity was met. As to commonality, the Court found that this requirement was also met because the factual basis for all the putative class claims was the same. For the legal malpractice allegations, Defendants’ actions were applicable to the putative class in that Defendant missed the expert witness deadline, so the class was decertified, and also failed to notify the putative class as such. In the underlying litigation there was also the common legal question of whether VALIC’s failure to disclose tax redundancy in its prospectuses and brochures constituted a violation of § 10b-5. As such, the Court concluded that this requirement was met. As to typicality, the Court ruled that Plaintiff’s claim was typical of the class in that he asserted that VALIC did not disclose tax redundancy and Defendants breached their duty to the class when they missed expert deadlines and failed to notify the putative class of the decertification order. As a result, the Court opined that Plaintiff’s claim was reasonably coextensive with that of the class. Likewise, the Court held that adequacy was also satisfied. As to Rule 23(b)(3)’s requirements of predominance and superiority, the Court determined that these requirements were also established. The common issues in the Drnek litigation included VALIC’s duty and failure to disclose tax redundancy in its prospectus and the materiality of such failures. In this litigation, shared events in the alleged