in brief: Johnson v. Arvin-Edison Water Storage Dist. holds that governmental entities are exempt from wage & hour laws absent express statutory language to contrary

In Johnson v. Arvin-Edison Water Storage Dist. (June 3, 2009) the Court of Appeal (Fifth Appellate District) held that governmental entities are not subject to a wide array of wage & hour laws absent express legislation to the contrary.  The water district defendant was determined to be a municipal entity, thus entitled to that broad grant of immunity.

Court of Appeal limits complex litigation court's ability to resolve "threshold issues" as case management tool

"A 'complex case' is an action that requires exceptional judicial management to avoid placing unnecessary burdens on the court or the litigants and to expedite the case, keep costs reasonable, and promote effective decision making by the court, the parties, and counsel." (Cal. Rules of Court, rule 3.400(a).) California's complex litigation pilot project Courts are charged with managing, on average, some of the more complicated civil litigation matters in California. To handle that burden, complex litigation Courts have to balance obligations imposed by rule and statute with the application of creativity in the areas where discretion and flexibility are options. In my experience, particularly in the complex litigation departments in Los Angeles, one way in which complex cases have been managed has been through the early evaluation of pivotal "threshold" legal issues that tend to give direction to such cases.

That case management technique just hit something of a snag.  The Court of Appeal (Second Appellate District, Division Five), in Magana Cathcart McCarthy v. CB Richard Ellis, Inc. (May 21, 2009) held, at least on the facts before it, that early determination of "threshold issues" is not a substitute for the summary adjudication procedural requirements:

Without filing a motion for summary judgment or mandatory separate statements of undisputed facts, and for the purpose of creating appellate review of pretrial rulings, the parties to an action in a complex litigation case stipulated that the court would have granted summary judgment based upon its ruling on certain "threshold issues" in favor of the defendant. The stipulation also included a dismissal, without prejudice, of class action allegations.

We disapprove of the unauthorized procedure utilized to create appellate review without compliance with the mandatory requirements of a summary judgment, and reverse. The requirements of a motion for summary judgment and the supporting separate statements of undisputed facts are expressly mandated by statute and court rules. In the absence of such documents, the stipulated judgment cannot stand. The convenience of the parties in a complex litigation case, and their desire to be spared the expense of a summary judgment motion, do not warrant deviation from the procedural requirements of summary judgment applicable to litigants who do not have the benefit of appearing in the complex litigation court. In addition, the stipulated judgment in this case violates an express agreement between the parties and the trial court that rulings on the threshold issues would not be a substitute for a motion for summary judgment that complies with the Code of Civil Procedure. We also conclude there is nothing about this action that warrants an exception to the foregoing rules promulgated by the Legislature and Judicial Council in a case which, in its current posture, involves a potential penalty of $500 and treble damages.

(Slip op., at p. 2.)  The majority opinion (yes, there is a dissent) spends a great deal of time reviewing the obligatory nature of the separate statement and other requirements associated with summary judgment motions or anything purporting to finally resolve matters outside the four corners of the pleadings.  In reading the opinion, I come away with the sense that there is something like contempt for the complex litigation courts, including a suggestion that the issues coming from those courts are no more difficult than those coming up for review out of standard general jurisdiction courts.  I happen to strongly disagree with that apparent sentiment; the complex courts, by virtue of their experience and creativity, make complex cases move more smoothly through the system.

The dissenting opinion is extensive.  It includes its own statement of facts and procedural background.  Part of that extensive workup appears intended to demonstrate that the record was suitable for appellate review.  In the dissent, Justice Mosk first explained why the Trial Court's procedure was permitted:

The parties stipulated to a judgment based on a pronouncement of the law by the trial court that followed legal briefing and argument by the parties. The procedure used, which did not include a demurrer, summary judgment motion, or other dispositive statutory motion, was justified as being a case management tool under the complex litigation program of the Los Angeles County Superior Court (Super. Ct. L.A. County, Local Rules, rules 7.3(h), 7.6; see Cal. Rules of Court, rule 3.400 et seq.; 3.750 et seq.; Gov. Code, § 68612; Code of Civ. Proc., § 575.1).

Although trial courts in complex cases have broad discretion to manage those cases in a manner that promotes efficiency and the conservation of judicial resources (see, e.g., Cal. Rules of Court, rules 3.400 et seq., 3.750 et seq.), that discretion is limited by countervailing interests of litigants and the public. "Reviewing courts have not hesitated to strike down local court rules or policies on the ground they are inconsistent with statute, . . . [¶] A common theme in the appellate decisions invalidating local rules . . . is that a local court has advanced the goals of efficiency and conservation of judicial resources by adopting procedures that deviated from those established by statute, thereby impairing the countervailing interests of litigants as well as the interest of the public in being afforded access to justice, resolution of a controversy on the merits, and a fair proceeding." (Elkins v. Superior Court (2007) 41 Cal.4th 1337, 1352-1353.) Deviation from formal procedures may, in many instances, present on appeal a case without an adequate record. Therefore, statutory procedures, such as those governing summary judgment, are designed, inter alia, to provide the appellate court with a factual and analytical framework upon which there can be de novo review.

It is important to recognize that the trial court did not, in effect, depart from established summary judgment procedures because the parties entered into a stipulation in connection with those procedures; "[s]tipulations may be entered into concerning any step of an action." (Bardendregt v. Downing, supra, 175 Cal.App.2d at p. 735.) Moreover, the court did not dispense with any procedure over the objection and to the prejudice of one of the parties. Here, both parties agreed to the procedure employed by the trial court to determine the legal issues, stipulated to the entry of judgment as if it were based on an order granting summary judgment, and agreed that the ensuing judgment was appealable.

(Slip op., Dissent, at pp. 5-6.)  It's an interesting debate.  I come down on the side of permitting the complex courts to manage cases with the flexibility that has proven itself in real cases over and over again.  Despite that, I understand the majority's call for predictability of procedure in any instance where a case is summarily adjudicated.

Petition for Review denied in Cristler v. Express Messenger Systems, Inc.

The California Supreme Court has denied the Petition for Review in Cristler v. Express Messenger Systems, Inc. (2009) 171 Cal. App. 4th 72.  My prior post on the case can be found here.  The denial is unfortunate, as the case is likely to be misconstrued as a decision about the independent contractor/employee distinction, rather than the jury instruction and standard of review opinion that it is.

In Clark v. Superior Court, the Court of Appeal tackles a major, but novel question about the interplay between the UCL and statutory penalty provision protecting seniors

The California Court of Appeal, Second Appellate District, Division Seven, has been in the thick of many a difficult class action or class-related question.  Why should today be any different?  After all, I spent an hour and half driving about 8 miles to work, so everything seems to be functioning as intended in our fine City and State.  But I digress.  Today, the Division Seven, in Clark v. Superior Court (May 21, 2009) was asked to reconcile statutes with similar purposes (consumer protection) but very different means of implementing those purposes.  The question presented to the Court makes the challenge clear:

Civil Code section 3345 (section 3345) authorizes the award of an enhanced remedy—up to three times greater than the amount of a fine, civil penalty "or any other remedy the purpose or effect of which is to punish or deter" that would otherwise be awarded—in actions by or on behalf of senior citizens or disabled persons seeking to "redress unfair or deceptive acts or practices or unfair methods of competition." Is this enhanced remedy available in a private action by senior citizens seeking restitution under California’s unfair competition law (Bus. & Prof. Code, § 17200 et seq.)?

(Slip op., at p. 2.)  Can the protected classification of senior citizens receive triple UCL restitution?  That's quite a question.  What might be more suprising at first blush is that the Court of Appeal said, "Yes."

Procedurally, after a class was certified, defendant National Western filed a motion for judgment on the pleadings, asserting section 3345’s enhanced, "treble damages" remedy was inapplicable to a private action under the unfair competition law.  The trial court granted the motion.  Plaintiffs filed a petition for a writ, and the Court of Appeal granted the petition, issuing the writ.  By necessity, the Court of Appeal reviewed the two laws:

Since 1977 the unfair competition law has prohibited unlawful, unfair or fraudulent business practices or unfair, deceptive, untrue or misleading advertising (Bus. & Prof. Code, § 17200) and subjected violators in actions prosecuted by public prosecutors to civil penalties not exceeding $2,500 for each violation (Bus. & Prof. Code, § 17206), as well as to injunctions and restitution orders (Bus. & Prof. Code, § 17203). Private plaintiffs may also prosecute actions under the unfair competition law, but their remedies are limited to orders for injunctions and restitution. (Bus. & Prof. Code, § 17203.) Damages and penalties, whether compensatory or punitive, are prohibited. (Korea Supply, supra, 29 Cal.4th at p. 1148 [only monetary relief available to private plaintiffs under unfair competition law is restitution; compensatory and punitive damages are not authorized]; Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 950 ["[i]n a suit under [unfair competition law], a public prosecutor may collect civil penalties, but a private plaintiff’s remedies are ‘generally limited to injunctive relief and restitution’"]; Cel-Tech, supra, 20 Cal.4th at p. 179 [under unfair competition law "[p]laintiffs may not receive damages, much less treble damages, or attorney fees"].)

(Slip op., at pp. 5-6.)  Many years later, the legislature determined that senior citizens were regular targets of unfair competition schemes and required additional protection.  A variety of potential statutes and amendments to existing laws were considered, including revisions to the UCL and the CLRA.  (Slip op., at pp. 6-10.)  Sweeping legislation was finally passed.

As finally enacted the legislation effected three major changes to California’s consumer protection laws relating to senior citizens and disabled persons. First, it amended the unfair competition law by adding Business and Professions Code section 17206.1,8 which authorizes the Attorney General and prosecutors in civil enforcement proceedings to recover an added civil penalty up to $2,500 (in addition to the $2,500 civil penalty available under Business and Professions Code section 17206) when the unfair practice is perpetrated against a senior citizen or disabled person. (See Bus. & Prof. Code, § 17206.1; Stats. 1988, ch. 823, § 1, pp. 2665-2666.)

Second, it amended the CLRA to authorize private litigants to recover, in addition to other remedies available under the act, including compensatory and punitive damages, an additional monetary award—up to $5,000—when the unfair practice prohibited by the act is perpetrated against a senior citizen or disabled person. (Civ. Code, § 1780, subd. (b)(1)(A)-(C); Stats. 1988, ch. 823, § 3, pp. 2667-2668.)

Third, it added section 3345 to the Civil Code, authorizing an enhanced remedy in actions brought by or on behalf of senior citizens seeking redress for "unfair or deceptive acts or practices or unfair methods of competition." (§ 3345, subd. (a).) Section 3345, subdivision (a), limits the new provision to actions "brought by, or on behalf of, or for the benefit of senior citizens or disabled persons, as those terms are defined in subdivisions (f) and (g) of [Civil Code] Section 1761[10] to redress unfair or deceptive acts or practices or unfair methods of competition." Section 3345, subdivision (b), provides the enhanced remedy: "Whenever a trier of fact is authorized by a statute to impose either a fine, or a civil penalty or other penalty, or any other remedy the purpose or effect of which is to punish or deter, and the amount of the fine, penalty, or other remedy is subject to the trier of fact’s discretion, the trier of fact shall consider all of the following factors, in addition to other appropriate factors, in determining the amount of fine, civil penalty or other penalty, or other remedy to impose. Whenever the trier of fact makes an affirmative finding in regard to one or more of the following factors, it may impose a fine, civil penalty or other penalty, or other remedy in an amount up to three times greater than authorized by the statute, or, where the statute does not authorize a specific amount, up to three times greater than the amount the trier of fact would impose in the absence of that affirmative finding."

(Slip op., at pp. 12-13.)  The Court then turned to the question:

Under the plain language of section 3345 two prerequisites must be satisfied before its enhanced remedy may apply: (1) The action must be brought by or on behalf of senior citizens or disabled persons seeking redress for "unfair or deceptive acts or practices or unfair methods of competition"—plainly satisfied here; and (2) the action must be one in which the trier of fact is authorized by a statute to impose a fine, civil penalty or any other penalty the purpose or effect of which is to punish or deter.

(Slip op., at p. 14.)  The Court then concluded that the enhanced restitution remedy was available:

Unlike Korea Supply and Cel-Tech, in this case the plaintiffs do not seek to justify monetary relief other than restitution under the unfair competition law: The enhanced remedy is sought under section 3345, a separate statute, which specifically authorizes such an enhanced remedy in unfair competition actions brought by senior citizens. We simply must presume the Legislature meant what it said when it provided section 3345 applied in unfair competition actions involving a fine, civil penalty or "any other remedy" the purpose of which is to punish or deter. (See People v. Toney (2004) 32 Cal.4th 228, 232 ["[i]f the statutory language is unambiguous, ‘we presume the Legislature meant what it said, and the plain meaning of the statute governs’"]; accord, Genlyte Group, LLC v. Workers’ Comp. Appeals Bd. (2008) 158 Cal.App.4th 705, 714; see also Hood v. Hartford Life & Accident Insurance Co. (E.D. Cal. 2008) 567 F.Supp.2d 1221, 1227 ["[t]he text of the statute clearly indicates that section 3345 applies to the UCA [unfair competition law] and the CLRA, as both Acts prohibit ‘unfair practices’"].)

(Slip op., at p. 16-17.)  I can't imagine that this ruling won't at least generate a Petition for Review.

Update on 2009-05-22 04:52 by The Complex Litigator

UPDATE:  The Court of Appeal issued a modification to the opinion, adding a footnote with no change in the judgment.

BREAKING NEWS: Tobacco II Cases Opinion is available and does not impose classwide reliance showing under the UCL

In re Tobacco II Cases is available for viewing now.  The summary of the case is best that I can provide for now:

On review, we address two questions: First, who in a UCL class action must comply with Proposition 64’s standing requirements, the class representatives or all unnamed class members, in order for the class action to proceed? We conclude that standing requirements are applicable only to the class representatives, and not all absent class members. Second, what is the causation requirement for purposes of establishing standing under the UCL, and in particular what is the meaning of the phrase "as a result of" in section 17204? We conclude that a class representative proceeding on a claim of misrepresentation as the basis of his or her UCL action must demonstrate actual reliance on the allegedly deceptive or misleading statements, in accordance with well-settled principles regarding the element of reliance in ordinary fraud actions. Those same principles, however, do not require the class representative to plead or prove an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements when the unfair practice is a fraudulent advertising campaign. Accordingly, we reverse the order of decertification to the extent it was based upon the conclusion that all class members were required to demonstrate Proposition 64 standing, and remand for further proceedings regarding whether the class representatives in this case have, or can demonstrate, standing.

(Slip op., at pp. 2-3.)  There should be some very interesting adjustments to positions in consumer class actions alleging UCL claims for deceptive or misleading statements.

BREAKING NEWS: The California Supreme Court will issue the IN RE TOBACCO II CASES Opinion on Monday, May 18, 2009

According to the Notice posted on the California Courts website, the California Supreme Court will issue the IN RE TOBACCO II CASES Opinion on Monday, May 18, 2009.  The issues presented are described as follows:

This case includes the following issues: (1) In order to bring a class action under Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.), as amended by Proposition 64 (Gen. Elec. (Nov. 2, 2004)), must every member of the proposed class have suffered “injury in fact,” or is it sufficient that the class representative comply with that requirement? (2) In a class action based on a manufacturer’s alleged misrepresentation of a product, must every member of the class have actually relied on the manufacturer’s representations?

In Hatfield v. Halifax PLC, et al., the Ninth Circuit explains that American Pipe tolling and California's equitable tolling doctrine are not identical

The Ninth Circuit issued a very interesting opinion last week about serial class action tolling in California state courts (for purposes of this post, let's just assume that "interesting" and "serial class action tolling" are phrases you would arguably use in a single sentence that did not also involve irony or sarcasm).  In Hatfield v. Halifax PLC, et al. (May 8, 2009), the Ninth Circuit reviewed a district court decision in which the district court found that Plaintiff "Hatfield’s claims, brought eight-and-a-half years after her causes of action arose, were barred by California’s statutes of limitations, which are four years or less for each of Hatfield’s claims."  (Slip op., at p. 5403.)  On appeal, Hatfield argued, in part, that the "limitations period was tolled by the filing of a previous class action in New Jersey state court, making this action timely.  (Id.)

First, the Ninth Circuit concluded that Hatfield, as an individual, was entitled to tolling from the filing of the New Jersey class action.  (Slip op., at pp. 5412-15.)  The Ninth Circuit then turned to the more difficult question of whether Hatfield could claim such tolling on behalf of class members that Hatfield sought to represent:

While there is no California precedent directly on point, based on closely analogous precedent, we see no reason why California’s equitable tolling doctrine would not also apply to the claims of its unnamed putative class members who, like Hatfield, are California residents.  First, the California Supreme Court has indicated a general agreement with tolling in the class action context, going so far as to cite with approval the Supreme Court’s decision in American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974). See Jolly v. Eli Lilly & Co., 751 P.2d 923, 934-35 (Cal. 1988). In American Pipe, the Supreme Court held that “the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action.” 414 U.S. at 554.  In Jolly, 751 P.2d 934-35, the California Supreme Court noted with approval the two major policies that underlie the American Pipe tolling rule, the first of which is most relevant here.  That policy protects the class action device because, without it, potential class members would be induced to file protective actions to preserve their claims, thus depriving class actions of their ability to secure “efficiency and economy of litigation.”  Id. at 935 (quoting American Pipe, 414 U.S. at 553).  In Jolly, despite the endorsement of American Pipe, the court rejected its application under the facts of that case.  Id. at 935-36.

(Slip op., at pp. 5415-16, footnotes omitted.)  Defendant Halifax then argued that a recent Ninth Circuit opinion, Clemens v. DaimlerChrysler Corp., 534 F.3d 1017 (9th Cir. 2008), precluded "cross-jurisdictional tolling."  The Ninth Circuit agreed that, while Clemens would preclude American Pipe tolling, it would not bar California's equitable tolling doctrine:

Although the Clemens decision would foreclose application of American Pipe here, it does not dictate a similar rejection of California’s equitable tolling doctrine, especially as it applies to California’s own residents. Although the two types of tolling—equitable and American Pipe —overlap to some extent, see Becker, 277 Cal. Rptr. at 496, and even though California courts have treated them at times as interchangeable, they are not congruent. The Halifax Appellees themselves concede that “the equitable tolling applied to individual actions is distinct from American Pipe tolling.” They cite Newport v. Dell, Inc., No. CV-08-0096, 2008 WL 4347311, at *4 n.8 (D. Az. Aug. 21, 2008), a case decided shortly after Clemens, which stated that “[t]he class-action tolling discussed in American Pipe and Crown is a species of legal tolling, not equitable tolling.” Thus, by the Halifax Appellees’ own admission, Clemens, which only rejected the application of American Pipe tolling in a cross-jurisdictional action, does not affect the application of California’s equitable tolling doctrine, which covers situations beyond those covered by American Pipe. See McDonald v. Antelope Valley Cmty. Coll. Dist., 194 P.3d 1026, 1032 (Cal. 2008) (“[California’s equitable HATFIELD v. HALIFAX PLC tolling] may apply where one action stands to lessen the harm that is the subject of a potential second action; where administrative remedies must be exhausted before a second action can proceed; or where a first action, embarked upon in good faith, is found to be defective for some reason.”).

(Slip op., at pp. 5417-18.)  The Court concluded that California would protect its own citizens with its equitable tolling doctrine ("California has a strong interest in providing a remedy for wrongs committed against its citizens"), but would not extend that same equitable tolling protection to individuals outside of California. 

As a final observation, the Ninth Circuit also offered a useful comment on the extent of tolling that is available under American Pipe:

Although American Pipe is clearly applicable to individual actions, some federal decisions have refused to allow the doctrine to toll the limitations period for subsequently filed class actions. See Robbin v. Fluor Corp., 835 F.2d 213, 214 (9th Cir. 1987) (“We agree with the Second Circuit that to extend tolling to class actions ‘tests the outer limits of the American Pipe doctrine and . . . falls beyond its carefully crafted parameters into the range of abusive options.’ ” (quoting Korwek v. Hunt, 827 F.2d 874, 879 (2d Cir. 1987) (alteration in original))).  In Catholic Social Services, Inc. v. INS, 232 F.3d 1139, 1149 (9th Cir. 2000) (en banc), however, the Ninth Circuit extended American Pipe to toll the claims of an entire class where “[p]laintiffs . . . are not attempting to relitigate an earlier denial of class certification, or to correct a procedural deficiency in an earlier would-be class.”  Whether the subject class action was actually trying to relitigate the certification issue was disputed by one of the dissents.  Id. at 1157-58 (Graber, J., dissenting in part).  However, the current action is clearly not an instance in which Hatfield is trying to reargue a denial of class certification because of a failure to meet Rule 23 of the Federal Rules of Civil Procedure or its state counterpart.  Rather, the previous class action was dismissed for lack of in personam jurisdiction.  Thus, if Hatfield had brought the original class action in California, American Pipe would permit tolling for the entire class action.

(Slip op., at p. 5419, fn. 8.)

California Supreme Court depublishes Liceaga v. Debt Recovery Solutions LLC, 169 Cal.App.4th 901 (December 29, 2008)

In Liceaga v. Debt Recovery Solutions LLC (December 29, 2008) the Court of Apppeal (First Appellate District, Division One) held that the federal Fair Credit Reporting Act completely preemted private rights of action under California's Consumer Credit Reporting Agencies Act.  Today, the Supreme Court directed The Reporter of Decisions not to publish the opinion in the official report.  This depublication is something of a boon consumers.  Until a Court in California holds otherwise, private actions under California’s Consumer Credit Reporting Agencies Act, Civil Code section 1785.1 et seq. (CCRAA), are not preempted by the corresponding federal Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) (FCRA)).  For some reason, the Court's weekly conference summary isn't available online, but the docket confirms the depublication Order of April 29, 2009.  My original post on Liceaga is here.

in brief: Gomez v. Lincare, Inc. provides a satisfying "I told you so"

In Gomez v. Lincare (April 28, 2009), the Court of Appeal (Fourth Appellate District, Division Three) reversed portions of various Trial Court Orders that caused the dismissal of a putative class action by employees that provided respiratory services and medical equipment setup to patients in their homes. The opinion, from the habitually conservative Fourth Appellate District, was originally unpublished. I find the decision particularly satisfying because I worked on that case for several years while employed by Plaintiffs' counsel. I may post more on this decision later.

in brief: another employment class arbitration waiver is rejected as unconscionable in Olvera v. El Pollo Loco, Inc.

Once again, an employer tried to avoid the potential for class-wide liability to employees by creating an arbitration agreement that included a class action waiver provision. Once again, that effort met with failure. In Olvera v. El Pollo Loco, Inc. (April 27, 2009), the Court of Appeal (Second Appellate District, Division Three) affirmed the Trial Court (Judge Peter Lichtman) Order denying a motion to compel arbitration.