Will the Ninth Circuit affirm nationwide certification of state law claims?

In the matter of Mazza, et al v. American Honda Motor Company, the Ninth Circuit will hear oral argument on June 9, 2010, at 9:30 a.m., in Pasadena, California.  Defendant's Rule 23 Petition was granted after the District Court certified UCL and CLRA claims on a nationwide basis.  The District Court's extensive discussion of choice-of-law analysis may be the primary focus.  The outcome may prove to be significant for the many Toyota acceleration cases assigned to Judge Selna in the same Central District from which Mazza was issued.  I would like to attend and provide a detailed account of the argument, but my schedule may not permit it.  If I cannot attend, I will try to arrange for someone to report in my absence.

Coming soon: Posts on Dukes v. Wal-Mart and Stolt-Nielsen S.A. v. AnimalFeeds International Corp

The blockbusters are coming fast and furious.  Too fast, in fact, to have comprehensive, same-day posts up.  Longer posts on Dukes v. Wal-Mart and Stolt-Nielsen S.A. v. AnimalFeeds International Corp. (Supreme Court ruling on class arbitration issue) will be up in the next few days.

Wal-Mart ramps up spin control following decision in Dukes v. Wal-Mart Stores, Inc.

Following the decision in Dukes v. Wal-Mart Stores, Inc. (9th Cir. Apr. 26, 2010), Wal-Mart is already in full spin control mode.  In a statement released through PR Newswire, Wal-Mart expressed how happy it was that a class action involving hundreds of thousands of employees would proceed against it:

We are pleased that the court agreed with our position on several critical issues. The court significantly reduced the size of the originally certified class by as much as two-thirds. Finding that the trial court 'abused its discretion,' the appeals court also set aside the ruling on punitive damages.

Perhaps the rosy glow will fade when Wal-Mart realizes that several issues are simply returning to the trial court for further analysis.  For example, punitive damages may very well be certified on terms identical to the original order:  "With respect to the claims for punitive damages, we remand so that the district court may consider whether to certify the class under Rule 23(b)(2) or (b)(3)."  Slip op., at 6147.  Don't say anything to Wal-Mart about this just yet; even Wal-Mart deserves some happiness, no matter how brief.

Daily Journal article on right to discover witness identities in class actions

The April 21, 2010 edition of the Daily Journal includes my article, entitled "Witnesses Cannot Hide," in the Perspective column. It explains that the right to discover putative class member identity in class actions is really the right to discover witness identity in general. Discovery of witnesses is a foundational element of civil discovery rights. The arguments about privacy notices are intended to distract from this core right. The article is posted below with permission of Daily Journal Corp. (2010).

If you have difficulty viewing the flash object, the direct link is here.  I thank the editorial staff of the Daily Journal for providing the posting permission.

"No taxation without representation"

Government derives its just powers from the consent of the governed.  But when the majority of the governed demand other than what government forces upon them, what recourse?

The British Parliament regulated colonial trade and taxed America's imports and exports since roughly 1660.  Then, the English Bill of Rights 1689 recognized a number of natural rights of English subjects.  Among these rights were the rights of representation in Parliament and the protection against taxation by prerogative.  These fundamental rights laid part of the foundation for American revolt against control by Parliament, but the boiling point was not reached until the middle part of the 18th century, nearly 70 years later.

Tolerance of British control without representation in Parliament neared its end with the passage of the Stamp Act of 1765.  The Stamp Act required British America to utilize paper printed in London and marked with an embossed revenue stamp.  Colonists viewed the Stamp Act as a violation of their right to be taxed only with their consent.  Protests intimidated paper distributors into abandoning their commissions.  The tax was effectively nullified in this manner.

Public opposition to taxation with representation culminated, symbolically, in the Boston Tea Party, when protesters elected to destroy tea that the Royal Governor would not return to England.  Better the destruction of that tea than the literal and figurative consumption of that tax.  Parliament retaliated with the Coercive Acts.  Colonists, in turn, escalated their protests and formed the First Continental Congress.  Often overlooked is the fact that the taxes that precipitated revolt were modest; the first protests were about the principle of unrepresented governance.

In 1775, the American Revolutionary War began near Boston.

235 years later, the Colonists are the victims of a new brand of tyranny.  Believing that their duly elected representatives would espouse their will, they now watch helplessly as the the cornerstone of American democracy, the Constitution, is disregarded with a contempt worth of monarchs, not elected officials accountable to the people.

What recourse?  Apparently, none.  The plaintiffs' bar should be the first to raise hue and cry at the infringement of our constitutionally protected rights, by likely unconstitutional processes.  I hear nothing.  Taxation without representation indeed.

My thoughts and prayers go out to our democratic republic.

The cuts continue; L.A. Court loses hundreds of employees

One day after running my Perspective column, entitled "Legislature Using Purse Strings to Bind Judiciary," the Daily Journal has published a story today that chronicles the massive cuts to the Los Angeles County Superior Court system.  Rebecca U. Cho & Catherine Ho, Hundreds Of L.A. Court Workers to Be Laid Off Today (March 16, 2010) www.dailyjournal.com [subscription required]. 

329 employees are scheduled to receive pink slips today.  In addition, it is reported that 12 courtrooms will close, but the specifics have not been announced.    The Los Angeles Superior Court currently plan to lay off an additional 500 employees in September.  Los Angeles court officials are reportedly "facing a $79 million budget deficit in the current fiscal year, which is expected to grow to $120 million next year." Judge Charles McCoy is reported to have asked the Judicial Council for permission to use court construction funds for court operations.

In an article by the Los Angeles Times, Presiding Judge McCoy's missing to communicate the court funding crisis was described:

Los Angeles County Presiding Judge Charles "Tim" McCoy's message is loud and clear: His court system, the largest trial court in the nation, is facing deep fiscal trouble in the years ahead due to drastic cuts in state government funding.

Victoria Kim, L.A. County's top judge faces steep opposition to fund diversion proposal (February 16, 2010).  In that article, the uphill battle in front of Judge McCoy is spelled out.  According to Ann O'Malley. O'Malley, who chairs the state's Trial Court Presiding Judges Advisory Committee, 53 presiding judges of the state's 58 trial courts have told her they oppose Judge McCoy's proposed use of the construction fund to cover operating expenses.

If it is even necessary to consider layoffs of hundreds of employees or utilizing a court construction fund backed by bonds, not budget appropriations, to support basic operations, something is seriously awry in California's budgeting process.  Whether or not you agree with Judge McCoy's specific predictions and approach to the problem, there is no disputing that a problem of colossal magnitude now exists.  Pretty soon we won't need to debate tort reform or amendments to California's class action procedures; nobody will be able to have a civil case heard by a judge before the parties and counsel are all dead of old age.

Update on 2010-03-16 21:43 by The Complex Litigator

The Press Release from the Los Angeles Superior Court is now available at the Los Angeles Superior Court website.

Courtroom View Network is streaming a wrongful death trial trial involving a Ford Explorer rollover accident

Courtroom View Network, with over three years of experience Webcasting high-stakes civil litigation, is streaming the trial of Moreno v. Ford.  This trial is part of the statewide coordinated judicial proceeding involving Firestone tire tread separation and Ford Explorer rollover related litigation, currently centralized in Los Angeles.  Judge Anthony Mohr is presiding over the trial.  Access to video and streaming is available here.

Courtroom View Network has covered multiple legal proceedings across the country, including such cases as “Jose Adolfo Tellez et al v. Dole Food Company Inc et al” and “Norman Turner v. Chevron Corporation” in Los Angeles Superior Court. Courtroom View Network’s target audience are members of the legal and financial community who require instant, comprehensive coverage of litigation that affects their business. Its Web site is at www.courtroomview.com.

California's budget problems are threatening a constitutional crisis

A colleague of mine (Linh Hua) and I have been talking out an issue that has troubled me for some time now.  It occurred to me that there must be a constitutional limit of some sort to the underfunding of California's judiciary.  I didn't have any specific case in mind when the concept crossed my mind, and my discussions with other practitioners elicited general agreement without specific supporting authority.  Coincidentally, just as I began to look into this issue, a confirming answer of sorts dropped into my lap.

This evening (for publication on 2/24/2010), Joel Stashenko reports in the New York Law Journal that New York's highest court has held unconstitutional the failure to grant pay raises to judges for the last 11 years.  Joel Stashenko, Denial of N.Y. Judicial Pay Raise Is Ruled Unconstitutional (February 24, 2010) www.law.com.  The high court (the New York Court of Appeals) declared the de facto pay freeze a "crisis" that threatened the separation of powers.  Declining requests for an order mandating an immediate pay raise, the Court said, "By ensuring that any judicial salary increases will be premised on their merits, this holding aims to strike the appropriate balance between preserving the independence of the Judiciary and avoiding encroachment on the budget-making authority of the Legislature."

While the Court proceeded with caution, it also warned, "It [the Legislature] should keep in mind, however, that whether the Legislature has met its constitutional obligations in that regard is within the province of this Court," citing Marbury v. Madison, 1 Cranch 137 (1803). "We therefore expect appropriate and expeditious legislative consideration."

Writing for the 5-1 majority, Judge Pigott said, "Because the Separation of Powers doctrine is aimed at preventing one branch of government from dominating or interfering with the functioning of another co-equal branch, we conclude that the independence of the judiciary is improperly jeopardized by the current judicial pay crisis, and this constitutes a violation of the Separation of Power doctrine."

In California we don't just have a pay crisis, we have a funding crisis.  Our Courts are closed one Wednesday each month, and I've heard mention that an additional closure day is under consideration by some.  We've lost a complex litigation court in Los Angeles County, a court designed to better manage the burdens imposed by complex, multi-party litigation.  If the pay issue in New York is a constitutional "crisis," what California is experiencing is a constitutional debacle.  The judiciary is not just impaired here, it is hamstrung and handcuffed.  As participants operating within one of the presumably co-equal branches of government, we must be vigilant and speak out when it is clear that a failure by one branch imperils the unfettered operation of another.

I intend to continue speaking about this issue until the futility of it all depresses me into silence.

Second Interim Report on class actions in California sheds new light on certification

Earlier this month, the Administrative Office of the Courts released its Second Interim Report from the Study of California Class Action Litigation.  The Second Interim Report specifically analyzed class certifications in cases initially filed with a class action designation.  The findings were surprising.

First, over the period of 2000 to 2005, certification rates plummeted: "The rate of class certification (by any means) decreased by more than 50 percent over the study years."  Report, at 6.  This sharp decline mirrored findings in federal courts.

Second, a meager 13% of cases initially filed as a class action ever had a motion for class certification filed before final disposition, and only 46% of those motions were granted.  Report, at 8-9.  However, three times more cases were certified as part of a settlement.  Report, at 11.  The Report speculated that the rate of certification by settlement could be attributable to the State's complex litigation programs:  "In California, the frequency of classes certified as part of a settlement agreement may be another product of the Complex Civil Litigation Program."  Report, at 11.  Sadly, the apparent success of this program hasn't ensured that class actions filed in Los Angeles County receive the careful attention of the Complex Civil Litigation Program.  Due to limited resources, the Los Angeles County Complex Courts are rejecting most class actions to focus on construction defect cases, mass torts, and other multi-party suits.

The Second Interim Report also examined data to test the hypothesis that class certification pressures settlements from defendants.  The data did not support that hypothesis.  For example, the lack of interlocutory review of orders granting certification did not reveal a settlement pressure when compared to federal courts:

Given the absence of an interlocutory appeal option in California, one may conclude that settlement pressure would exert more effect and more cases would be compelled to settle after the granting of a motion for class certification as compared to federal court. However, the disposition composition for certified cases that reached a final outcome in California does not support this hypothesis. Table 16 shows that the rate of settlement after certification through a court-granted motion for certification is 69%. This is actually slightly lower than the rate of 72% in the federal court. California‘s lack of intermediate recourse in response to the granting of class certification does not result in a higher rate of settlement in that situation when compared to data from federal court.

Report, at 26.  Summing up the data analysis related to the theorized pressure to settle, the Report concluded:

In sum, California data show that very few cases could be included in a category in which the commonly discussed parameters that define settlement pressure from class certification may have been a factor in the decision to settle. Many cases circumvented the issue altogether by including class certification as an element of the settlement itself. In cases with a class certified through a court-granted motion for certification, neither the overall disposition composition nor the time-to-settlement analyses seem to suggest an automatic or immediate progression from certification through motion to settlement which would allow the determination that pressure results in inevitable settlement. The conclusion here is not that the idea of settlement pressure is fabricated, or even altogether negligible, but rather that the pervasive effect of settlement pressure in California does not appear to be supported by the data.

Report, at 28.  It is at least fair to say that the only comprehensive study of California class action data available does not provide support for the recent, repeated claims by CJAC, Governor Schwarzenegger, and others that class actions are out of control, forcing settlements or in need of reforms such as the right to immediately appeal any order certifying a class.  Such a reform would likely lower the number of contested settlements from meager to negligible.  Certainly, that is a desirable result for businesses that underpay employees, sell defective products, or falsely advertise goods and services.  It is not, however, necessary to save our bankrupt state.

Consumer Attorneys of California makes it to the bleeding edge: Twitter and Facebook

Consumer Attorneys of California (CAOC) is breaking into new media territory with presence on Facebook and Twitter.  You can find CAOC on Twitter by following @ConsumerAttysCA.  You can become a fan of CAOC on Facebook here.  Personally, I've almost given up on Facebook, purely because of its deplorable disregard for user privacy.  Facebook needs to keep its act clean for a while just to get back to zero with me.  The problem is, half the planet is using Facebook, so my protestations are unlikely to start a grass roots movement.