18th Annual Workplace Class Action Report - 2022 Edition

660 Annual Workplace Class Action Litigation Report: 2022 Edition of express warranty claim on behalf of a nationwide class (Count III), and several state law claims on behalf of state-specific subclasses. Id . at *3. GM moved to dismiss Plaintiffs’ express warranty claims and to strike Plaintiffs’ nationwide class allegations underlying their MMWA and warranty claims. Id . The Court denied the motion. First, Defendant argued that since Plaintiffs only alleged a design defect, the express warranty claims were not viable "because the alleged air conditioning design defect is not covered by the warranty." Id . at *4. The Court found that GM’s argument was with the warranty’s plain language, which stated that it "covers repairs to correct any vehicle defect, not slight noise, vibrations, or other normal characteristics of the vehicle related to materials or workmanship." Id . at *5. The Court determined that the warranty’s plain language demonstrated that the phrase "related to materials or workmanship" modified "normal characteristics of the vehicle" and not "any vehicle defect" and thus covered "any vehicle defect" except for slight noise, vibrations, or manufacturing defects related to "normal characteristics of the vehicle." Id . at *6. The Court thereby declined to dismiss the express warranty claims. As to GM’s motion to strike Plaintiffs’ nationwide class allegations under the MMWA. Defendants argued that since there were only 18 named Plaintiffs, they could not met the MMWA requirement of 100 of more Plaintiffs and therefore the Court lacked subject-matter jurisdiction over the claims. However, Plaintiffs contended that the Class Action Fairness Act (“CAFA”) provided a viable, independent basis for subject-matter jurisdiction over the MMWA class claim. Id. at *10. The Court agreed with Plaintiffs. It found that the Sixth Circuit previously had held that if Plaintiffs satisfied the CAFA’s jurisdictional requirements, it "had subject matter jurisdiction over Plaintiffs’ proposed MMWA class claim notwithstanding the MMWA’s jurisdictional threshold.” Id . at *11. Finally, GM argued that class claims of the state law violations should be struck because the variation in state laws would defeat the commonality, predominance, and superiority requirements of Rule 23. The Court reasoned that GM had not provided a detailed and careful showing of the precise differences between the various state laws that could apply to Plaintiffs’ claims. The Court opined that the parties must conduct a careful and thorough state-by-state analysis showing the Court how the relevant state laws differed under the circumstances. For that reason, the Court concluded that it would be more appropriate to review GM’s arguments at the class certification stage. Accordingly, the Court denied GM’s motion to dismiss and to strike class allegations. Klein, et al. v. Ellison, 2021 U.S. Dist. LEXIS 97880 (N.D. Cal. May 24, 2021). Plaintiffs brought a shareholder derivative action against Defendants, a group of directors and officers of Oracle Corporation and Oracle America, Inc. Plaintiffs alleged that because Oracle failed to meaningfully diversify its Board of Directors, and had alleged discriminatory hiring and promotional practices, and representations that Defendants made in Proxy Statements breached Defendants’ fiduciary duties and violated § 14(a) of the Securities Exchange Act. The Court noted that because of the extraordinary nature of a shareholder derivative suit, Federal Rule of Civil Procedure 23.1 establishes stringent conditions for bringing such a suit. Rule 23.1. The “demand futility rule” requires that a shareholder derivative complaint allege with particularity any effort by a Plaintiff to obtain the desired action from the directors or comparable authority and the reasons for not obtaining the action or not making the effort. Defendants moved to dismiss Plaintiffs complaint on the basis that: (i) Plaintiffs had not adequately pleaded demand futility, (ii) the complaint failed to state claims upon which relief could be granted, and (iii) Oracle’s by-laws’ forum-selection provision required that derivative actions be adjudicated in Delaware. The Court granted the motion to dismiss. It concluded that Plaintiffs had not sufficiently pleaded demand futility and, in light of Oracle’s by-laws, it determined that the state law claims must be asserted in the Delaware Chancery Court. At the outset the Court noted that analyzing demand futility requires two steps. First, a Court must analyze whether Plaintiff has alleged particularized facts showing that any director is interested. Second, if that showing has been made as to at least one director, the Court considers whether Plaintiff has pled particularized facts showing that enough of the remaining directors are so beholden to an interested director that the directors cannot independently act on a shareholder demand. If Plaintiff has not pled particularized facts showing that any director is interested, then demand futility has not been met and the Court need not evaluate whether any director is independent of an interested director. Based on Plaintiffs’ allegations, the Court concluded that Plaintiffs failed to allege particularized facts sufficient to show that any director Defendant was “interested.” As a result, the Court held that Plaintiffs had not sufficiently alleged demand futility as to their § 14(a) claim, and it dismissed that claim. In addition, Defendants asserted that Oracle’s by-laws contained a forum-selection clause requiring the adjudication of derivative actions in the Delaware Chancery Court. The clause provided that “the Chancery Court shall be the sole and exclusive forum for any actual or purported derivative action brought on behalf of Oracle.” Id. at *10. The Court agreed with Defendants that the clause was