a California-centric collection of comments and resources about complex litigation and class action practice
We're well on our way to self extinction by using unnatural selection to make ourselves as dumb as possible. Two teens sending dirty pictures to each other should be a parental matter, not a criminal case with both willing participants getting charged with adult felonies.
Source: Arstechnica
I just discovered over the weekend that links to the Class Re-Action podcasts were broken. I fixed the change in the back-end support that caused the problem, and everything appears to be working correctly again. Sorry for the inconvenience.
Once again I find myself apologizing for the hiatus in blogging. I've been in depositions all over the place, dealing with massive document productions, and writing to the point of stupor. I've decided to add an additional topic that I've flirted with on this blog in the past. Specifically, I am going to mention (in short posts) some technology products that have made my life easier in different ways or are of notable quality (I'm not going to try to do comprehensive product reviews - plenty of people do that online). Some products will be nothing more than a $10 accessory, and some will be like this one, a full computer.
The product: The Surface Pro 3 from Microsoft.
The good: The digital pen is extremely accurate. When you couple the Surface Pro 3 with OneNote (which I am realizing is an awesome tool) and the digital pen, you get exceedingly good handwriting recognition and a great note-taking device for hearings. Convert your written notes to text with the accurate OCR in OneNote. The device is a full PC that is very portable, attractive, and very well built.
Where to find it: Microsoft Store or other retailers
Disclaimer: I was not compensated for any positive comments about this product, and I was not asked to review this product.
Agencies love their power. They grow like a cancer, absorbing more and more of it from the body politic. But every now and then a court reminds an agency that its power is limited by the terms of its statutory authority. For instance, in Gerard v. Orange Coast Memorial Medical Center (Feb. 10, 2015), the Court of Appeal (Fourth Appellate District, Division Three) did just that with regard to a provision of an IWC Wage Order.
Health care workers sued their hospital employer in a putative class and private attorney general enforcement action for alleged Labor Code violations and related claims. Plaintiffs alleged, among other things, that the hospital illegally let health care employees waive their second meal periods on shifts longer than 12 hours. Under the Labor Code, employers are required to provide two meal periods for shifts longer than 12 hours. But an order of the Industrial Welfare Commission (IWC) authorizes employees in the health care industry to waive one of those two required meal periods on shifts longer than 8 hours. The trial court, finding the IWC Wage Order valid, and granted summary judgment and denied class certification on that basis.
The Court examined Labor Code section 512 and Wage Order 5 to determine whether the Wage Order exemption was authorized. The Court first observed that section 512 says: “An employer may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived.” (Italics added.) And section 516 says: “Except as provided in Section 512, the [IWC] may adopt or amend working condition orders with respect to break periods, meal periods, and days of rest for any workers in California consistent with the health and welfare of those workers.” (Italics added.)
Next, the Court noted that the authority of an administrative agency is limited by enabling legislation, holding that the IWC is constrained where the Labor Code expressly sets forth requirements:
“The IWC has long been understood to have the power to adopt requirements beyond those codified in statute. [Citations.] Section 516 creates an exception; it bars the use of this power to diminish section 512’s protections. . . . While the Legislature in section 516 generally preserved the IWC’s authority to regulate break periods, it intended to prohibit the IWC from amending its wage orders in ways that ‘conflict[ ] with [the] 30-minute meal period requirements’ in section 512. [Citations.]” (Brinker, supra, 53 Cal.4th at pp. 1042-1043.)
Slip op., at 8. In its discussion, the Court cited frequently to Bearden v. U.S. Borax, Inc., 138 Cal. App. 4th 429 (2006), which held that another provision of a Wage Order issued by the IWC was invalid as an act inconsistent with statutory provisions.
The Court then directed the trial court to determine the retroactive application of portions of the Court’s holding, since the issue of invalidity was not evaluated by the trial court, holding that “with the exception of plaintiffs’ premium wage claims based on section 226.7, the retroactive application of our decision must be litigated on remand.” The Court concluded that “there is no compelling reason of fairness or public policy that warrants an exception to the general rule of retroactivity for our decision partially invalidating section 11(D).” Slip op., at 17.
The Court then turned to the grant of summary judgment in the matter. The discussion detoured into evidentiary disputes. The defendant objected to the introduction of time cards attached to counsel’s declaration, saying that they were merely purported to be authentic. The Court disagreed:
Evidence Code section 1414 provides: “A writing may be authenticated by evidence that: [¶] (a) The party against whom it is offered has at any time admitted its authenticity; or [¶] (b) The writing has been acted upon as authentic by the party against whom it is offered.” The Coats declaration satisfies both subdivisions.
Further, while Claudio v. Regents of University of California (2005) 134 Cal.App.4th 224, 244 did say the declaration of the plaintiff’s attorney was not proper authentication for the disputed letter, the critical problem was that, “Plaintiff’s [own] declaration did not mention the letter.” The same is not true in this case.
Here, Gerard’s own declaration (an exhibit to the Coats declaration) states: “Attached as Exhibit B are true and correct copies of a portion of my time records from August of 2004 through March of 2008, which were produced by Defendant in this litigation. Also attached as Exhibit B are true and correct copies [of] a portion of my wage records from August of 2004 through March of 2008, which were produced by Defendant in this litigation.” A comparison of the bates numbers in Exhibit B reveals they are the same as the relevant documents in Exhibits 7 and 8.
Slip op., at 18. The Court concluded its analysis of the summary judgment motion by finding that triable issues of fact were shown by the plaintiffs.
Finally, the Court held that the trial court abused its discretion when it denied class certification, relying on incorrect criteria:
McElroy and Carl argue the court improperly denied class certification for several reasons. Among other things they cite as an abuse of discretion the court’s community interest analysis based on its erroneous “legal assumption that ‘liability is not established by an illegal policy.’” Plaintiffs contend that assumption is contrary to the holding of Brinker, supra, 53 Cal.4th at page 1033, and Faulkinbury v. Boyd & Associates, Inc. (2013) 216 Cal.App.4th 220, 232. We conclude this argument has merit.
Slip op., at 20. The Court remanded the matter for further consideration of the other aspects of certification that were not fully considered by the trial court.
I regret that the press of work kept me away from this site for quite some time, other than the podcasts that I've continued to work on. It looks like I'm going to be able to come up for air, so I am going to get back to posting on a more regular basis.
In Trilogy at Glen Ivy Maintenance Association, et al. v. Shea Homes, Inc., et al. (pub. ord. Mar. 19, 2015), the Court of Appeal (Fourth Appellate District, Division One) affirmed a trial court finding that an anti-SLAPP Motion lacked merit for failure to satisfy even the first prong of the two-part anti-SLAPP analysis. As summarized by the Court, under the first step, "the defendant bringing an anti-SLAPP motion must make a prima facie showing that the plaintiff's suit is subject to section 425.16 by showing the plaintiff's claims arise from conduct by the defendant taken in furtherance of the defendant's constitutional rights of petition, or free speech in connection with a public issue, as defined by the statute." Slip op., at 7-8.
The Court explained that, when evaluating whether a claim arises from protected speech, a trial court must look to the gravamen of the claim:
[W]e disregard the labeling of the claim (Ramona Unified School Dist. v. Tsiknas (2005) 135 Cal.App.4th 510, 522) and instead "examine the principal thrust or gravamen of a plaintiff's cause of action to determine whether the anti-SLAPP statute applies" and whether the trial court correctly ruled on the anti-SLAPP motion. (Id. at pp. 519-522.) We assess the principal thrust by identifying "the allegedly wrongful and injury-producing conduct . . . that provides the foundation for the claim." (Martinez v. Metabolife Internat., Inc. (2003) 113 Cal.App.4th 181, 189.) If the core injury-causing conduct on which the plaintiff's claim is premised does not rest on protected speech, collateral or incidental allusions to protected activity will not trigger application of the anti-SLAPP statute. (Ibid.)
Slip op., at 9. Following from this distinction, the Court concluded that the unusual choice of wording in the complaint was irrelevant to the analysis of the actual gravamen of the claim. Specifically, the plaintiff used the word "repudiation" to describe a species of fiduciary breach, leading the defendant to claim that the complaint was about speech. The Court was not persuaded, correctly identifying the fiduciary breach "gravamen" of the complaint.
We are up to Episode 15 of the Class Re-Action Podcast, available here. In case you missed the explanation previously, shows will now run between 30 and 45 minutes, due to changes in MCLE requirements. I'm working on blanket provider status so that each show will qualify as MCLE. However, nobody wants reading material as homework, so we are going to stay under an hour an avoid that added complication.
In an article from December 2014, Sidney Powell offers a colorful description of a proceeding in which a federal judge excoriated a federal prosecutor for lying in his courtroom. Sidney Powell, Judge Kevin Thomas Duffy Blasts Federal Prosecutor For Lying in Court (December 16, 2014) observer.com. Sidney Powell worked in the Department of Justice for 10 years and was lead counsel in more than 500 federal appeals. She is the author of Licensed to Lie: Exposing Corruption in the Department of Justice. Sadly, these sorts of abused of power appear to be increasing in frequency (or the technology age has rendered them easier to detect and widely disseminate).
The legal profession, as it is currently structured, is rotting at its core. High rates of substance abuse and addiction among lawyers are the symptoms of deeper problems, precipitated by long hours, tight deadlines, and devastating consequences for failure. The statistics on substance abuse by lawyers are grim. However, before tackling the statistics, some definitions are in order:
Drug dependence, also known as addiction, is a chronic disease. It is progressive, and occurs when the body becomes physically dependant upon a drug. Drug addiction in any form – from cocaine to methamphetamine to prescription pain relievers and stimulants -changes the brain. Individuals who are dependent upon drugs may not be able to control how much they use and continue to use drugs despite serious consequences.
Drug abuse occurs when a person is not physically dependent upon a drug, but does exhibit problems with a particular drug. Someone who abuses drugs may use too frequently and experience problems due to drug use.
http://www.americanbar.org/groups/lawyer_assistance/resources/drug_abuse_dependence.html
Substance abuse problems within the legal profession likely arise with such high frequency due to an underlying high rate of depression. According to CNN, "Suicide is a hazard so real that it is the third leading cause of death in the profession. By comparison, suicide is only the 10th leading cause of death in the general population." http://www.cnn.com/2014/01/20/opinion/krill-lawyers-suicide/. Multiple studies, including one conducted at Johns Hopkins, found that lawyers have the highest rate of depression of any profession. Where there is smoke, there is fire, and where there is severe depression, there is substance abuse.
Consider for a moment how the statistics track. Lawyers suffer depression at roughly three times the rate of the general population and experience substance abuse problems about twice as frequently as the general population. In a study published in the International Journal of Law and Psychiatry it was found that the rate of alcohol abuse for attorneys was 18% compared to 10% in the general population. Benjamin, G.A. H., Darling, E.J., and Sales, B. (1990), The prevalence of depression, alcohol abuse, and cocaine abuse among United States lawyers, International Journal of Law and Psychiatry, 13, 233-246. In a 1990 study conducted by the North Carolina Bar Association, 17% of the 2,600 attorneys surveyed admitted to drinking 3-5 alcoholic beverages per day. In the state of Washington, a study once again found that 18% of the 801 lawyers surveyed were problem drinkers.
And lawyers with substance abuse are also more likely to have an additional psychological disorder beyond substance dependence. In a sample of individuals attending a recovery center specializing in impaired professionals, 60% of attorneys had a co-occurring psychological disorder compared to 46% of healthcare professionals and 28% of nonprofessionals. Of attorneys with a co-occurring disorder, 32% had Major Depression, 14.6% had Bipolar Disorder, and 13.4% had an anxiety disorder. Sweeney, T.J., Myers, D.P., Molea, J. (2004), Treatment for attorneys with substance related and co-occurring psychiatric disorders: demographic and outcomes, 23, 55-64.
Not every depressed person becomes a substance abuser, but depressed individuals are more susceptible to the lure of temporary mood altering substances including alcohol and drugs, and the consequences to lawyers and their clients are substantial. Studies in Canada and in the United States estimate that roughly 60% of discipline prosecutions involve alcoholism or other substance abuse problems. Similarly, something over 60% of all malpractice claims involve substance abuse. Yet another study has suggested that 90% of serious disciplinary matters involve substance abuse. Substance abuse in the legal profession is an incredibly costly problem.
The current structure of the the legal profession is like gasoline on a fire for these serious issues:
Addiction is a tremendously difficult problem to tackle, even with the right support system in place. While there are no easy fixes, the California State Bar offers help through the Lawyer Assistance Program. Confidential support is available. If you are struggling with substance abuse issues in another jurisdiction, many states offer similar assistance through their bar programs.
Funny timing on this one. In Episode 14 of the Class Re-Action podcast, our discussion turned at one point to fee awards in class actions. We briefly mentioned Laffitte v. Robert Half International, Inc. (November 21, 2014), but didn't dive under the hood. But now that I've had a chance to read it, I see that a postscript to the podcast is in order. In Laffitte, the Court of Appeal (Second Appellate District, Division Seven) considered an appeal by an objector to a class action settlement. One issue the Court touched on was the propriety of using a percentage of the fund to award fees (with a lodestar crosscheck), rather than the currently trendy approach of using lodestar with a percentage crosscheck. Here's a rundown of the Court's opinion.
The plaintiff settled a class action lawsuit against a group of defendants related to Robert Half International Inc. for $19 million. The trial court granted the parties’ ex parte application for an order amending the settlement agreement, class notice, and claim form. Among other things, the amended settlement agreement said that Robert Half would pay a gross settlement amount of $19,000,000. Subject to court approval, the settlement agreement listed the following payments would be made from the gross settlement amount: class counsel attorneys’ fees of not more than $6,333,333.33 (one third of the gross settlement amount) and costs not to exceed counsel’s actual costs, class representative payments not to exceed $80,000, settlement administrator fees not to exceed $79,000, civil penalties owed to the California Labor and Workforce Development Agency, and applicable payroll taxes on the employees’ recovery.
In support of their motion for attorneys’ fees, class counsel submitted declarations from the attorneys in each of the three law firms serving as class counsel. The attorneys did not submit detailed time records. The declarations stated that class counsel worked a total of 4,263.5 hours on the case (and anticipated working 200 hours on the appeal) and, using the hourly rate for each attorney, calculated that the total lodestar amount was $2,968,620 ($3,118,620 including the appeal). Class counsel requested a lodestar multiplier of between 2.03 to 2.13 for a total requested attorneys’ fee award of $6,333,333.33.
David Brennan, a member of the class, objected to the settlement and the amount awarded in attorney’s fees. The trial court overruled his objections and approved the settlement, which included an award of attorneys’ fees to class counsel of one-third of the settlement, or approximately $6.3 million. Brennan appealed from the order approving the settlement and entering final judgment, challenging both the class action settlement notice regarding the award of attorneys’ fees and the amount of attorneys’ fees awarded. Laffitte asked that the Court affirm the trial court’s order. The Robert Half defendants had no strong position on the appropriate amount of fees, but asked that the Court affirm the order “in order to bring this lawsuit to closure.”
The Court began its discussion of the challenge to attorney’s fees by observing that the Notice stated the maximum amount of fees that would be sought by class counsel:
The class notice describing the preliminarily-approved settlement included the proposed attorneys’ fees award for class counsel, a schedule for final approval, and the procedure for making objections. The notice stated: “Class Counsel, consisting of Law Offices of Kevin T. Barnes, Law Office of Joseph Antonelli, and Appell | Hilaire | Benardo LLP, will seek approval from the Court for the payment in an amount not more than $6,333,333.33 for their attorneys’ fees in connection with their work in the Actions, and an amount not more than $200,000 in reimbursement of their actual litigation expenses that were advanced in connection with the Actions. Class Counsel’s attorneys’ fees and litigation expenses as approved by the Court will be paid out of the Gross Settlement Amount.”
Slip op., at 10. The Court then considered and rejected the argument that the motion for an award of fees should be available to the class members before the deadline to object expires, as Fed. R. Civ. P. 23 requires, as interpreted by the Ninth Circuit decision, In re Mercury Interactive Corp. Securities Litigation, 618 F.3d 988 (9th Cir. 2010): “Rule 23 does not control in California. ‘As a general rule, California courts are not bound by the federal rules of procedure but may look to them and to the federal cases interpreting them for guidance or where California precedent is lacking. [Citations.] California courts have never adopted Rule 23 as “a procedural strait jacket. To the contrary, trial courts [are] urged to exercise pragmatism and flexibility in dealing with class actions.” [Citations.]’ ” Slip op., at 11-12. Instead, the Court said that California had adequate rules for notice:
California precedent and authority governing court approval of class action settlements and attorneys’ fees applications, however, are not lacking. Rule 3.769 of the California Rules of Court states the procedure for including an attorneys’ fees provision in a class action settlement agreement and for giving notice of the final approval hearing on the proposed settlement. Under rule 3.769(b) of the California Rules of Court, “[a]ny agreement, express or implied, that has been entered into with respect to the payment of attorney’s fees or the submission of an application for the approval of attorney’s fees must be set forth in full in any application for approval of the dismissal or settlement of an action that has been certified as a class action.”
Slip op., at 12. The Court concluded that the notice given complied with Rule 3.769:
The notice given to the class members complied with California Rules of Court rule 3.769 by apprising them of the agreement concerning attorneys’ fees. The notice told the class members that class counsel could receive up to $6.3 million in attorneys’ fees. The notice also advised the class members of the procedures for objecting to the proposed settlement and appearing at the settlement hearing, where they could present their objections to any aspect of the settlement, including the amount of attorneys’ fees to be awarded to class counsel.
Slip op., at 13. Positive number one from this opinion: no need to copy the approach of In re Mercury Interactive.
Next, the Court looked at the reasonableness of the fee award, noting discussion first the lodestar method of calculation:
In Lealao v. Beneficial California, Inc., supra, 82 Cal.App.4th 19 the court stated that “[t]he primacy of the lodestar method in California was established in 1977 in Serrano [v. Priest (1977)] 20 Cal.3d 25. . . . [O]ur Supreme Court declared: ‘“The starting point of every fee award . . . must be a calculation of the attorney’s services in terms of the time he has expended on the case.”’” (Id. at p. 26.) The court added that “[i]n so-called fee shifting cases, in which the responsibility to pay attorney fees is statutorily or otherwise transferred from the prevailing plaintiff or class to the defendant, the primary method for establishing the amount of ‘reasonable’ attorney fees is the lodestar method. The lodestar (or touchstone) is produced by multiplying the number of hours reasonably expended by counsel by a reasonable hourly rate. Once the court has fixed the lodestar, it may increase or decrease that amount by applying a positive or negative ‘multiplier’ to take into account a variety of other factors, including the quality of the representation, the novelty and complexity of the issues, the results obtained, and the contingent risk presented. [Citation.]”
Slip op., at 16-17. The Court then noted that percentage of the fund remains a viable method of awarding fees in common fund cases:
Subsequent judicial opinions have made it clear that a percentage fee award in a common fund case “may still be done.” For example, in Chavez v. Netflix, Inc. (2008) 162 Cal.App.4th 43 the court stated that “the Lealao court did not purport to mandate the use of one particular formula in class action cases. The method the trial court used here and that [was] discussed in Lealao are merely different ways of using the same data—the amount of the proposed award and the monetized value of the class benefits—to accomplish the same purpose: to cross-check the fee award against an estimate of what the market would pay for comparable litigation services rendered pursuant to a fee agreement. [Citation.]” (Id. at p. 65.) Therefore, “fees based on a percentage of the benefits are in fact appropriate in large class actions when the benefit per class member is relatively low . . . .” (Id. at p. 63.)
Slip op., at 18. In this matter, the Court held proper the trial court’s use of a percentage of the fund method with a lodestar crosscheck:
The trial court did not use the percentage of fund method exclusively to determine whether the amount of attorneys’ fees requested was reasonable and appropriate. The trial court also performed a lodestar calculation to cross-check the reasonableness of the percentage of fund award. This was entirely proper. “[A]lthough attorney fees awarded under the common fund doctrine are based on a ‘percentage-of-the-benefit’ analysis, while those under a fee-shifting statute are determined using the lodestar method, ‘[t]he ultimate goal . . . is the award of a “reasonable” fee to compensate counsel for their efforts, irrespective of the method of calculation.’ [Citations.]” (Apple Computer, Inc. v. Superior Court (2005) 126 Cal.App.4th 1253, 1270.) It therefore is appropriate for the trial court to cross-check an award of attorneys’ fees calculated by one method against an award calculated by the other method in order to confirm whether the award is reasonable.
Slip op., at 19-20. Positive number two from this opinion: focusing on the percentage of the fund is still appropriate (courts claiming otherwise are misrepresenting the authority out there, though it probably doesn't matter, since what this really points out is that any rational method for evaluating the fee against the benefit conferred). The Court added to the beneficial discussion by holding that detailed time records are not required:
Brennan argues that, in connection with the court’s lodestar calculations, class counsel did not submit detailed attorney time records. Such detailed time records, however, are not required. “It is well established that ‘California courts do not require detailed time records, and trial courts have discretion to award fees based on declarations of counsel describing the work they have done and the court’s own view of the number of hours reasonably spent.
Slip op., at 20. That's right - more confirmation that there is no requirement to maintain detailed time records. Positive number three. The Court then soundly rejected the objector’s challenge to the application of a multiplier to compare the percentage of the fund award to the lodestar. Finally, the Court concluded that the “clear sailing” provision in the settlement agreement was not improper in general:
“While it is true that the propriety of ‘clear sailing’ attorney fee agreements has been debated in scholarly circles [citations], commentators have also noted that class action ‘settlement agreement[s] typically include[] a “clear sailing” clause . . . .’ [Citation.] In fact, commentators have agreed that such an agreement is proper. ‘[A]n agreement by the defendant to pay such sum of reasonable fees as may be awarded by the court, and agreeing also not to object to a fee award up to a certain sum, is probably still a proper and ethical practice. This practice serves to facilitate settlements and avoids a conflict, and yet it gives the defendant a predictable measure of exposure of total monetary liability for the judgment and fees in a case. To the extent it facilitates completion of settlements, this practice should not be discouraged.’ [Citation.]” (Consumer Privacy Cases, supra, 175 Cal.App.4th at p. 553, fn. omitted; see Cellphone Termination Fee Cases (2009) 180 Cal.App.4th 1110, 1120 [“[c]lass action settlements frequently contain a ‘clear sailing’ agreement, whereby the defendant agrees not to object to an attorney fee award up to a certain amount”].)
Slip op. at 24-25. The Court then concluded that there was no reason to find the “clear sailing” provision suspect in this matter. The trial court was affirmed and costs were awarded to the plaintiff and defendants, indicating the Court’s view of the lack of merit in the appeal.
Episode 14 of the Class Re-Action podcast is finally up. We recorded the episode a week ago, but a cold did me in right after the show, and I couldn't get a passable intro recorded until today. This episode is our version of the year in review. The guests are Hon. Carl J. West (Ret.) of JAMS and Lynn Frank of Frank & Feder, and we discuss the impact of decisions issued in 2014 on mediation in the class action and complex litigation settings.
The Complex Litigator reports on developments in related areas of class action and complex litigation. It is a resource for legal professionals to use as a tool for examining different viewpoints related to changing legal precedent. H. Scott Leviant is the editor-in-chief and primary author of The Complex Litigator.
