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Third Circuit Affirms the Dismissal of a Putative Class Action against TD Bank for Failure to Meet Pleading Requirements

Third Circuit Affirms the Dismissal of a Putative Class Action against TD Bank for Failure to Meet Pleading Requirements

Last month, the Third Circuit upheld the dismissal of a putative class action against TD Bank, finding that plaintiffs’ conclusory allegations lacked sufficient evidence and failed to satisfy Rule 9(b)’s heightened pleading standard for claims that sound in fraud. In MZL Capital Holdings, Inc. et al. v. TD Bank, N.A. et al., two account holders with TD Bank filed a proposed class action accusing the Bank of obscuring its exchange rates and improperly charging an embedded fee for converting foreign currency, thereby defrauding its customers in violation of the New Jersey Consumer Fraud Act. Shortly thereafter, plaintiffs amended their complaint to add claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of numerous other state consumer-protection laws. TD Bank moved to dismiss plaintiffs’ claims for failure to state a claim, and the District Court granted TD Bank’s motion, dismissing all of plaintiffs’ claims. On appeal, the Third Circuit affirmed the district court’s decision, concluding that plaintiffs’ claims were inadequately pled. At the outset, the Court re-affirmed the basic principle that claims brought under the Consumer Fraud Act sound in fraud and therefore must comply with Rule 9(b)’s particularity requirement. The Third...

Delaware Supreme Court Gives Preclusive Effect to Federal Court  Dismissal of Derivative Suit for Failure to Show Demand Futility

Delaware Supreme Court Gives Preclusive Effect to Federal Court Dismissal of Derivative Suit for Failure to Show Demand Futility

In its highly anticipated opinion in California State Teachers’ Retirement System v. Alvarez, the Delaware Supreme Court unanimously affirmed the dismissal of a group of Delaware shareholders’ derivative actions, holding that a previous dismissal by a federal court for failure to plead demand futility precluded other shareholders from pursuing additional derivative actions so long as the other shareholders were adequately represented in the earlier suit. Following the New York Times 2012 exposure of Wal-Mart executives’ alleged mishandling of bribery allegations, Wal-Mart shareholders brought derivative suits in the Western District of Arkansas and the Delaware Court of Chancery. In May 2015, the Arkansas court dismissed the case before it, because the shareholders had failed to adequately plead demand futility. Prompted by the Arkansas dismissal, the Delaware Court of Chancery initially dismissed the Delaware action, but, after some ping-ponging back and forth between the Court of Chancery and the Delaware Supreme Court, the Court of Chancery issued a supplemental opinion, recommending that the Supreme Court adopt a rule proposed in EZCORP Inc. Consulting Agreement Deriv. Litig., which held that constitutional Due Process permits a derivative suit to have a preclusive effect on a subsequent derivative suit only if the plaintiff in the first...

Class Certification Denied in Tropicana Orange Juice Labeling MDL

Class Certification Denied in Tropicana Orange Juice Labeling MDL

In the Tropicana Orange Juice multidistrict litigation (MDL), plaintiffs’ bid for class certification has been rejected due to the need for individualized proofs and inability to ascertain class members. On January 22, 2018, U.S. District Judge William J. Martini (DNJ) denied class certification in the multidistrict litigation, In re Tropicana Orange Juice Marketing and Sales Practices Litigation. The lawsuit claimed that “Tropicana Pure Premium” (TPP) orange juice was mislabeled and misbranded as “100% pure and natural” because the juice contains undisclosed natural flavoring in violation of FDA standards of identity for pasteurized orange juice. Plaintiffs also attacked the marketing of TPP as “pure, natural and fresh from the grove” as demonstrably false given the added flavoring. The MDL judge, however, concluded that plaintiffs’ common law and N.J. Consumer Fraud Act (“CFA”) claims were “plainly unsuitable for class certification” because each claim “requires individualized proof.” Plaintiffs argued that their unjust enrichment claim was uniform because it focused on the TPP label and consumers uniformly paid for pasteurized orange juice that they did not receive. But the court held that defendant would be unjustly enriched only if a consumer did not receive the benefit of the bargain for which she paid, thus...