In a move that surely caused money to change hands between law nerds gambling on federal rules interpretations through off-shore gambling sites, the United States Supreme Court held, in Nutraceutical Corp. v. Lambert (February 26, 2019), that Fed. R. Civ. P. 23(f) — the portion of Rule 23 that permits parties to request permission for interlocutory review of class certification decisions within 14 days of the issuance of the decision — is a mandatory, but nonjurisdictional, claim-processing rule, and therefore not subject to tolling or other exceptions for reasons of equity or fairness. The decision was unanimous.
For years I've heard grumbling about Civil Local Rule 23-3 of the United States District Court for the Central District of California. I may have been been responsible for some of that grumbling myself. If you haven't run into this rule, Local Rule 23-3 requires the filing of a class certification motion within 90 days of the commencement of the action. While many judges would accept stipulations to waive the rule, some did not. In ABS Entertainment Inc. v. CBS Corp. (9th Cir. Aug. 20, 2018), the Ninth Circuit finally addressed this Local Rule in a published opinion (I believe there was commentary in an unpublished opinion a number of years ago):
Central District of California Local Rule 23-3 sets a strict 90-day time frame from the filing of a complaint to the motion for class action certification. This bright line rule is in direct contrast to the flexibility of the Federal Rule, which calls for a determination on class certification “[a]t an early practicable time after a person sues or is sued as a class representative.” Fed. R. Civ. P. 23(c)(1)(A). That flexible approach makes sense. The class action determination can only be decided after the district court undertakes a “rigorous analysis” of the prerequisites for certification. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350–51 (2011) (quoting Gen. Tele. Co. of SW v. Falcon, 457 U.S. 147, 161 (1982)). To undertake that analysis may require discovery. Kamm v. Cal. City Dev. Co., 509 F.2d 205, 210 (9th Cir.1975) (“The propriety of a class action cannot be determined in some cases without discovery;” “To deny discovery in [such cases] would be an abuse of discretion.”).
The district court’s actions here demonstrate the impracticability of the 90-day limit, particularly in combination with the district court’s summary and unexplained denial of the parties’ joint stipulation to extend the 90-day deadline based on the need for pre-certification discovery. See Barbara J. Rothstein & Thomas E. Willging, Federal Judicial Center, Managing Class Action Litigation: A Pocket Guide for Judges 9 (3d ed. 2010) (“Considering [Fed. R. Civ. P. 23(c)(1)], you should feel free to ignore local rules calling for specific time limits; such local rules appear to be inconsistent with the federal rules and, as such, obsolete.”); Federal Judicial Center, Manual for Complex Litigation, Fourth § 21.133 (“Some local rules specify a short period within which the plaintiff must file a motion to certify a class action. Such rules, however, may be inconsistent with Rule 23(c)(1)(A)’s emphasis on the parties’ obligation to present the court with sufficient information to support an informed decision on certification. Parties need sufficient time to develop an adequate record.”).
Although the district court’s application and interpretation of its Local Rules is entitled to “a large measure of discretion,” Lance, Inc. v. Dewco Servs., Inc., 422 F.2d 778, 784 (9th Cir. 1970), Local Rules cannot be incompatible with Federal Rules. Fed. R. Civ. P. 83(a)(1). We conclude that the bright-line of Local Rule 23-3 is incompatible with Federal Rule of Civil Procedure 23.
Slip op., at 49-50. I only wonder whether the inclusion of this discussion at the end of a massive copyright opinion will give it more attention -- perhaps enough to lead to a repeal of Local Rule 23-3 entirely -- or less because it will get lost at the end of this unusually long opinion.
Following the Epic decision by the Supreme Court, today the Ninth Circuit formally vacated Morris v. Ernst & Young, LLP in a per curiam Opinion. And I bet you were wondering if they would Resist! They did not.
American Pipe, we had some good time. Sniff. But now you're dead to me. Pack your stuff and get out. The Unites States Supreme Court, in China Agritech, Inc. v. Resh, et al. (June 11, 2018), answered a question that, as far as I have observed, wasn't being asked with any stridency for years. That question was whether American Pipe equitable tolling applied to a subsequent class action (as opposed to individual action) when the plaintiff bringing the second action (a putative class member from the first) would have a time-barred claim absent the equitable tolling.
Top-filers, start your engines!
On May 9, 2018, a panel of the Ninth Circuit certified questions to the California Supreme Court in two different cases involving airlines. In Ward v. United Airlines, Inc., the Court asked for review of the following two questions:
(1) Wage Order 9 exempts from its wage statement requirements an employee who has entered into a collective bargaining agreement (CBA) in accordance with the Railway Labor Act (RLA). See 8 C.C.R. § 11090(1)(E). Does the RLA exemption in Wage Order 9 bar a wage statement claim brought under California Labor Code § 226 by an employee who is covered by a CBA?
(2) Does California Labor Code § 226 apply to wage statements provided by an out-of-state employer to an employee who resides in California, receives pay in California, and pays California income tax on her wages, but who does not work principally in California or any other state?
Order, at 2-3.
In Oman v. Delta Air Lines, Inc., the Court asked for review of the following three questions:
(1) Do California Labor Code §§ 204 and 226 apply to wage payments and wage statements provided by an out-of-state employer to an employee who, in the relevant pay period, works in California only episodically and for less than a day at a time?
(2) Does California minimum wage law apply to all work performed in California for an out-of-state employer by an employee who works in California only episodically and for less than a day at a time? See Cal. Labor Code §§ 1182.12, 1194; 8 C.C.R. § 11090(4).
(3) Does the Armenta/Gonzalez bar on averaging wages apply to a pay formula that generally awards credit for all hours on duty, but which, in certain situations resulting in higher pay, does not award credit for all hours on duty? See Gonzalez v. Downtown LA Motors, LP, 155 Cal. Rptr. 3d 18, 20 (Ct. App. 2013); Armenta v. Osmose, Inc., 37 Cal. Rptr. 3d 460, 468 (Ct. App. 2005)?
Order, at 2.
Of the two sets of questions, Delta certainly presents questions that are likely of broader applicability.
It's easy to say that California courts look to Rule 23 decisions for guidance when there is a gap in California's jurisprudence on class-related issues. But how that works out in practice is a different matter. In Fierro v. Landry's Restaurant Inc. (May 14, 2018), the Court of Appeal (Fourth Appellate District, Division One) waded into uncharted procedural terrain when they sorted out how American Pipe tolling interacts with California's different procedural approach to certification as a "death knell" versus interlocutory issue. The core of the American Pipe application issue is captured by the Court's discussion of how federal and state procedure differ:
In the federal system, because there can be no appellate review of an order denying class certification until after entry of a final judgment in the class action, there can be years of delay—including potentially a trial on the merits of the individual claims—before the parties have the benefit of appellate review of the denial of class certification. Under such a procedure, the policy of protecting the efficiency and economy of litigation is not furthered by the continuation of tolling—first, pending resolution of the remaining claims in the trial court and, then, pending review and disposition in the appellate court.
In contrast, in our state system, the death knell doctrine allows the parties the benefit of immediate appellate review of an order denying class certification. This procedure advances the efficiency and economy of class action litigation. Stated differently, neither efficiency nor economy will result if, upon the denial of class certification, an unnamed class member is required either to seek intervention in the individual action that remains in the trial court or to file a new action while an immediate appeal of the order denying class certification is pending. Thus, in both the state and federal systems, once the trial court denies certification, the putative class member is on notice that he or she must take action to protect his or her rights; however, in the state system, there is a right to immediate review of that decision, and to deny American Pipe tolling under such circumstances is to encourage a multiplicity of actions—i.e., to encourage inefficiency and expense—before the order denying class certification is final
Slip op., at 20. The Court's effort to get under the hood and examine how policy interacts with procedural differences is commendable.
Separately, this case presents an unusual procedural history in its own right, as the Court had to engage in some very proactive digging to try to get as complete a record as it could and still fell short of getting all of what it wanted.
Appellants were successfully represented by Matthew Righetti and John J. Glugoski of Righetti Glugoski.
I won't diminish the expectant quality of your Friday by providing a blow-by-blow of the decision, but Lambert v. Nutraceutical Corp. (9th Cir. Sept. 15, 2017) takes a thorough look at the timing requirements of Fed. R. Civ. P. 23(f) petitions, concluding that the 14-day filing deadline of Rule 23(f) is not jurisdictional and can be extended or tolled for a variety of reasons. The opinion also reversed the District Court's decertification order in the consumer class action, concluding that it erred in its treatment of the plaintiff's damage model.
Appellant was successfully represented by Gregory Weston (argued) and David Elliott, The Weston Firm, San Diego, California; and, Ronald A. Marron, The Law Offices of Ronald A. Marron APLC, San Diego, California.
Mohamed v. Uber Technologies, Inc. (9th Cir. Dec. 21, 2016) isn't the first decision to hold, in the face of a motion to compel arbitration in a wage and hour suit, that (1) PAGA claims should be severed from the rest of the claims and proceed in Court, and (2) the arbitrability of all other claims was for an arbitrator to determine. The Court said:
In Iskanian v. CLS Transp. L.A., LLC, 327 P.3d 129 (Cal. 2014), the California Supreme Court held that where “an employment agreement compels the waiver of representative claims under the PAGA, it is contrary to public policy and unenforceable as a matter of state law.” Id. at 149. We have held that the Federal Arbitration Act does not preempt this rule. Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425, 427 (9th Cir. 2015).
Slip op., at 21.
For those of you who recognized that the Ninth Circuit got it 100% right when it found in Morris v. Ernst & Young, LLP (9th Cir. Aug. 22, 2016) that an arbitration agreement that precludes collective actions violates rights protected by the NLRA, you may wish to know where things stand with that case on further appeal. Right now, Morris is before the U.S. Supreme Court on a Petition for Writ of Certiorari. Here is the Docket report:
- Sep 8 2016: Petition for a writ of certiorari filed. (Response due October 11, 2016)
- Sep 21 2016: Consent to the filing of amicus curiae briefs, in support of either party or of neither party, received from counsel for petitioners.
- Sep 29 2016: Consent to the filing of amicus curiae briefs, in support of either party or of neither party, received from counsel for respondents
- Oct 3 2016: Brief amici curiae of National Association of Manufacturers, et al. filed. VIDED.
- Oct 3 2016: Brief amicus curiae of Chamber of Commerce of the United States filed.
- Oct 6 2016: Order extending time to file response to petition to and including November 14, 2016.
- Oct 7 2016: Brief amicus curiae of International Association of Defense Counsel filed.
- Oct 10 2016: Brief amicus curiae of Atlantic Legal Foundation filed.
- Oct 11 2016: Brief amicus curiae of The Employers Group filed.
- Oct 11 2016: Brief amicus curiae of The Retail Litigation Center, Inc. filed.
- Oct 11 2016: Brief amicus curiae of The Business Roundtable filed.
- Oct 11 2016: Brief amicus curiae of New England Legal Foundation filed.
- Nov 15 2016: Order further extending time to file response to petition to and including November 21, 2016.
- Nov 21 2016: Brief of respondents Stephen Morris, et al. in opposition filed.
Just look at those busy amicus filers. I bet all those employers are telling the Supreme Court that the world would end in fire and death if they couldn't block class actions for wage and hour violations with arbitration agreements that employees have to sign to work.
In Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012), the Ninth Circuit Rule 23 predominance was defeated where many (or even most) class members “were never exposed to the allegedly misleading advertisements” (666 F.3d at 597) because the defendant subjected only a small segment of an expansive class of car buyers to misleading material as part of a “very limited” advertising campaign (id. at 595). This decision raised questions about how federal courts in the Ninth Circuit would actually evaluate UCL claims when faced with reconciling In re Tobacco II and Mazza. In Ruiz Torres v. Mercer Canyons Inc. (9th Cir. Aug. 31, 2016), a wage & hour suit in which the District Court certified a class, the Ninth Circuit analyzed Mazza in a manner demonstrating that it may be constrained in its application moving forward.Read More