In re Baycol Cases I and II provides more guidance on operation of "death knell" doctrine in class action appeals

In California, the right to appeal is generally governed by the “one final judgment” rule, under which most interlocutory orders are not appealable.  (See Code Civ. Proc., § 904.1.)1  But Daar v. Yellow Cab Co.,  67 Cal.2d 695 (1967) concluded that an exception was necessary because orders dismissing all class action claims might in some instances escape review.  The Supreme Court created what is now referred to as the “death knell” doctrine, allowing a party to appeal such class action claim dismissal orders immediately, even though they are not final.  In re Baycol Cases I and II (February 28, 2011) marks the the Supreme Court's return to that docrine.

In 2007, after consolidation with other actions in a Judicial Council Coordinated Proceeding, Plaintiff filed a first amended complaint, adding to the UCL and unjust enrichment claims a claim under the Consumers Legal Remedies Act (Civ. Code, § 1750 et seq.). Bayer demurred to both the class allegations and each substantive claim. On April 27, 2007, the trial court sustained the demurrer in its entirety without leave to amend. It thereafter denied Shaw's motion for reconsideration on both class and individual claims and entered a judgment of dismissal. Bayer served a notice of entry of judgment on October 29, 2007, and Shaw filed his notice of appeal on December 20, 2007. The Court of Appeal reversed dismissal of Shaw's individual UCL claim, concluding he should have been granted leave to amend. However, it declined to consider on the merits the appeal of the class claims dismissal and instead dismissed that portion of the appeal. Relying on cases that have held death knell orders terminating class claims are immediately appealable, the Court of Appeal reasoned that, upon entry of the April 27, 2007, order sustaining Bayer's demurrer, the class claims dismissal, unlike the individual claims dismissal, was appealable. Consequently, the December 20, 2007, notice of appeal was, as to the class claims, untimely. (See Cal. Rules of Court, rules 8.104, 8.108(e).)

The Supreme Court reversed, concluding that the preservation of individual claims is an essential prerequisite to application of the death knell doctrine. The doctrine renders appealable only those orders that effectively terminate class claims but permit individual claims to continue. When an order terminates both class and individual claims, there is no need to apply any special exception to the usual one final judgment rule to ensure appellate review of class claims. Instead, routine application of that rule suffices to ensure review while also avoiding a multiplicity of appeals.

Seymore v. Metson Marine, Inc. offers guidance on 7th day overtime, on call work

Plaintiffs worked consecutive 14-day “hitches” on Metson's ships, providing emergency clean up of oil spills and other hazardous chemical spills off the California coast.  This arrangement gave rise to questions about how Metson calculated pay for the seventh consecutive workday in a week and compensation for employees when on call.  In Seymore v. Metson Marine, Inc. (February 28, 2011), the Court of Appeal (First Appellate District, Division Three) reversed an order granting summary judgment in favor of Metson.

On the seventh day of overtime issue, Metson set the start time of the workweek so that employees only worked one "workweek" of seven consecutive days in the 14-day hitch.  On an issue of first impression, the Court rejected that manipulation:

Metson's attempt to evade the requirements of sections 500 and 510 is no different from the method struck down in the Wal-Mart case. Under the plain language of section 510, plaintiffs are entitled to premium pay “on the seventh day of work in any one workweek” and according to section 500, a workweek is defined to mean “any seven consecutive days, starting with the same calendar day each week.” The clear intent of this statute is to provide premium pay for employees who are required to work a seventh consecutive day in a “fixed and regularly” occurring workweek. Metson's attempt to circumvent this requirement cannot be condoned. (Huntington Memorial Hospital v. Superior Court (2005) 131 Cal.App.4th 893, 910 [“The bottom line is this: An employer may not engage in a subterfuge or artifice designed to evade the overtime laws”].)

Slip op., at 5.  The Court found a DLSE memorandum on the issue to be in potential conflict with the statutory language and disregarded it.

Turning to whether Metson's control was sufficient to establish an obligation to pay for on-call time, the Court reviewed the evidence de novo, finding one fact in particular to be the key determinant, the obligation to sleep on Metson's premises:

Metson cites a number of cases in which courts have concluded that on-call employees able to engage in such personal activities and subject to even shorter response time requirements were not entitled to compensation. (See Gomez, supra, 173 Cal.App.4th 508 [30-minute telephone response time]; Dinges v. Sacred Heart St. Mary’s Hosps. (7th Cir. 1999) 164 F.3d 1056 [7-minute response time]; Bright v. Houston Northwest Medical Center Survivor, Inc. (5th Cir. 1991) 934 F.2d 671 [20-minute response time].) However, there is one critical difference between each of those cases and the present situation —in none of those cases was the employee required to sleep at the employer's premises. In Bright, the court observed that the situation there was “wholly different” from cases in which employees were required to serve their on-call time at the employer's premises because “Bright did not have to remain on or about his employer's place of business, or some location designated by his employer, but was free to be at his home or at any place or places he chose, without advising his employer, subject only to the restrictions that he be reachable by beeper, not be intoxicated, and be able to arrive at the hospital in 'approximately' twenty minutes.” (934 F.2d at p. 676.)

Slip op., at 10.  (As an aside, I find it amusing that two cases I handled, one on the prevailing side and one on the losing side, factored into the Court's discussion of this on-call issue.  Glad I didn't completely screw it up for the plaintiffs here.)  In any event, after an extended discussion of how California parallels but does not exactly follow FLSA precedent surrounding this issue, the Court then spent a moment discussing the fact that, in California, an employer may agree with an employee to designate eight sleeping hours as uncompensated time when an employee works a 24-hour shift.  The Court concluded by suggesting that Metson's arguments about the need for revised exceptions to current wage orders (or a new wage order) were worthy of consideration but did not provide a basis for the Court to disregard existing law.

Two California Supreme Court cases relevant to this blog will be online shortly

Later this morning the California Supreme Court will post opinions in Bruns (Dana) v. E-Commerce Exchange, Inc., et al. and In re Baycol Cases I and II. Bruns raises the following issues: Does a stay of discovery constitute a stay of the action within the meaning of Code of Civil Procedure section 583.340, subdivision (c), such that the period during which discovery was stayed should be excluded in determining the time within which the action had to be brought to trial? Baycol raises the following issue: Did the “death knell doctrine” require plaintiff to immediately appeal the sustaining of a demurer as to class claims when the ruling resolved both individual and class claims, or did the one final judgment rule apply and require a single appeal from the subsequent entry of final judgment on all claims?

The links above should work shortly after 10:00 a.m. today.Save & Close

Update on 2011-02-28 18:05 by The Complex Litigator

The opinions are now available at the links above.

United Parcel Service Wage And Hour Cases holds that a defendant cannot recover fees after prevailing on Labor Code section 226.7 claims

In Kirby v. Immoos Fire Protection, Inc. (July 27, 2010), the Court of Appeal (Third Appellate District) held that a prevailing defendant could recover fees when it prevailed against a plaintiff asserting claims arising under Labor Code section 226.7 (meal and rest periods).  The Supreme Court then granted review.  The answering brief is currently due in that matter on March 21, 2011.   Today, the inscrutable Second Appellate District (Division Eight) held, in United Parcel Service Wage And Hour Cases (February 24, 2011), that fees were not available to a prevailing defendant in such actions.  In its analysis, the Court said:

Nothing in the legislative history suggests the Legislature meant the reciprocal fee recovery provisions of Labor Code section 218.5 to apply in an action for violation of the section 226.7 mandate that employers provide meal and rest breaks for certain nonexempt employees. The statutory remedy of section 226.7, providing compensation for missed breaks, was first enacted in 2000 in response to poor employer compliance with the meal and rest break requirements. (Murphy, supra, 40 Cal.4th at pp. 1105-1106; Stats. 2000, ch. 876, § 7, p. 6509.) Before 2000, the only remedy available to an aggrieved employee was injunctive relief to prevent future abuse. (Murphy, at p. 1105.)

The 2000 amendment providing a pay remedy bears sufficient hallmarks of a penalty designed to shape employer behavior, and is sufficiently distinct from the customary types of bargained-for wages recognized under the law, that we cannot conclude the Legislature intended a claim under Labor Code section 226.7 to be interpreted as a claim for “nonpayment of wages” within the meaning of section 218.5. The section 226.7 pay remedy for missed meal and rest breaks was enacted 14 years after the Legislature enacted the reciprocal fee recovery provisions of section 218.5. It is therefore not reasonable to assume that when the Legislature enacted section 218.5 in 1986 to provide for recovery of prevailing party fees in claims for nonpayment of wages and benefits, it intended that provision to permit a prevailing employer-defendant to recover fees from an employee raising a claim for denial of breaks -- a claim which at that time only supported injunctive relief.

Construing the entire statutory scheme with a view toward protecting employees, as we must, we find that a claim for remedial compensation under Labor Code section 226.7 does not trigger the reciprocal fee recovery provisions of section 218.5. Since none of the claims on which UPS prevailed permit the recovery of attorney fees, the award of statutory fees to UPS was in error.

Slip op., at 14.

Considering the current state of Kirby, it seems like this decision will be citable law for about 90 days, give or take a week here or there.  If a Petition for Review wasn't granted, we'd certainly have a good idea about how a part of Kirby will be decided.

In Safaie v. Jacuzzi Whirlpool Bath, Inc., Court holds that decertification order, affirmed on appeal, bars subsequent motion to certify

Stephen v. Enterprise Rent-a-Car, 235 Cal. App. 3d 806 (1991) held that a party has no right to bring a second motion to certify a class after the court has denied the first motion and the time for appeal has passed.  Stephen arose when a plaintiff failed to timely appeal an order denying certification.  But Stephen did not consider all of the unusual permutations that could occur.  In Safaie v. Jacuzzi Whirlpool Bath, Inc. (February 22, 2011), the Court of Appeal (Fourth Appellate District, Division One) examined whether, after an unsuccessful appeal of an order decertifying a class, the plaintiff could move for recertification on the basis of new law (Tobacco II).  The Court concluded that, because the plaintiff did not petition for review while Tobacco II was pending, the order affirming decertication was final and no further attempts at certification were permissible absent equitable considerations necessary to prevent unfairness.

The Court offered interesting comments about the course that it expects class actions to follow:

We agree with Stephen's holding and find its rationale persuasive. To ensure fairness to the class action plaintiff, trial courts are required to liberally grant continuances and ensure a plaintiff has the opportunity to make a complete record before the court rules on class certification. (See Stephen, supra, 235 Cal.App.3d at pp. 814- 815.) Once the record is complete, if the trial court issues a final order denying a class certification motion in its entirety, the plaintiff has the right to seek immediate appellate review and to obtain a written ruling from a Court of Appeal on the disputed issues, and then, if dissatisfied, to petition for review in the California Supreme Court. Thus, unlike the situation with most interlocutory orders, the plaintiff is provided the right to an immediate appeal even though the case is still pending. However, this special status has a necessary ramification: once the appellate period has passed or once the appellate court has affirmed the order and a remittitur has issued, the order is final and plaintiff is bound by the final decertification decision.

Slip op., at 12.  The Court later discussed the possibility of equitable exceptions to the rule in Stephen:

In reaching this conclusion, we recognize trial courts have broad discretion to determine the propriety of class actions, including to be procedurally innovative in certifying an appropriate class and in formulating procedures to ensure fairness and avoid manifest injustice in class action litigation. (See Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 339.) Moreover, a court has the discretion to move sua sponte to certify a class. (See City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 453-454.) However, to the extent there may be equitable exceptions to the rule precluding successive class certification motions after a final order denying certification, the circumstances here do not come within this exception.

Slip op., at 17.

From all of this I take away two possible lessons.  First, you must file a petition for review with the California Supreme Court if there is any chance that a change in law could help your certification arguments.  Second, the farther away you get from the wellspring of all consumer and employee protection, the more likely it is that your class action will receive the firing squad, not a certification order.  This theory would explain why Los Angeles is dicey, Orange County is perilous, and San Diego is the kiss of death.  But it's just a theory.

UPS v. Superior Court holds that Labor Code section 226.7 allows for 2 premium payments per workday

Today the Second Appellate District, Division Eight, giveth and taketh away.  In the first of two opinions issued by that Court today, the Court considered, in UPS v. Superior Court (February 16, 2011), whether Labor Code section 226.7 "authorizes one premium payment per work day regardless of the number or type of break periods that were not provided, or two premium payments per work day – one for failure to provide a meal period and another for failure to provide a rest period."  Slip op., at 2.  The Court concluded that section 226.7 allows up to two premium payments per work day.  In reaching that holding, the Court discussed with approval the statutory analysis and review of legislative history undertaken by the one federal court to exmaine the issue.  See, Marlo v. United Parcel Service, Inc. (C.D. Cal. May 5, 2009, CV 03-04336 DDP).

I must apologize for the reduced post frequency to start out this year.  Between a long overdue vacation, a bit of a lull in appellate decisions of note, and an impending move, I've been a bit short on blogging time.  My life is currently compressing into stacks of moving boxes and won't rehydrate until late March.  Thank you for your patience and for reading.

Update on 2011-06-02 22:57 by The Complex Litigator

The same result was reached after rehearing, in an opinion published on June 2, 2011.

Breaking News: Kwikset Corporation v. Superior Court clears up many issues regarding standing under the UCL

I haven't read the entire opinion yet, which has a 32 page majority opinion and a 12 page dissent, but the the summary of the Supreme Court's holding in Kwikset Corporation v. Superior Court (Jan. 27, 2011) says a lot about what this opinion has to say about the UCL and standing.  James Benson sued Kwikset under the unfair competition and false advertising laws, alleging that he purchased a lockset because of its false country of manufacture label.  The Court said:

Accordingly, plaintiffs who can truthfully allege they were deceived by a product‟s label into spending money to purchase the product, and would not have purchased it otherwise, have “lost money or property” within the meaning of Proposition 64 and have standing to sue. Because plaintiffs here have so alleged, we reverse.

Slip op., at 2.  Stay tuned.

Update on 2011-01-27 23:43 by The Complex Litigator

A link to the opnion has been added to this post.

Ninth Circuit holds that district courts are limited to the complaint in deciding certain local controversy criteria for CAFA remand

On November 30, 2010, the Ninth Circuit agreed to hear a discretionary appeal in Coleman v. Estes Express Lines, Inc.  See prior post.  The Ninth Circuit accepted the appeal and provided some guidance in the Ninth Circuit as to whether such appeals should be taken.  Today, the Ninth Circuit issued its Opinion on the underlying issue.  Coleman v. Estes Express Lines, Inc. (9th Cir. Jan. 25, 2011).  Asked to decide whether a federal district court is limited to the complaint in deciding whether two of the criteria for the local controversy exception are satisfied, the Court held that the district court is so limited.

Coleman moved for remand under the local controversy exception. Estes opposed, arguing that two of the criteria for the local controversy exception were not satisfied. "First, Estes argued that Estes West had insufficient funds to satisfy a judgment, and that 'significant relief' therefore had not been 'sought' from it. See 28 U.S.C. § 1332(d)(4)(A)(i)(II)(aa). Second, Estes argued that Estes Express had almost complete control over the operations of Estes West, and that Estes West’s 'alleged conduct' therefore did not 'form a significant basis for the claims asserted by the proposed plaintiff class.' Id. § 1332(d)(4)(A)(i)(II)(bb)."  Slip op., at 5.  Estes then supplied a declaration to support its contentions.  The District Court refused to consider the declaration, finding that the complaint satisfied the criteria for remand.

Looking at the plain language of the statute, the Court found support for the concept that the pleadings govern the analysis:

The first criterion is whether “significant relief is sought” from a defendant who is a citizen of the state in which the suit is filed. 28 U.S.C. § 1332(d)(4)(A)(i)(II)(aa) (emphasis added). The word “sought” focuses attention on the plaintiff’s claim for relief — that is, on what is “sought” in the complaint — rather than on what may or may not be proved by evidence. The second criterion is whether the defendant’s “alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class.” Id. § 1332(d)(4)(A)(i)(II)(bb) (emphasis added). Like the word “sought,” the word “alleged” makes clear that the second criterion is based on what is alleged in the complaint rather than on what may or may not be proved by evidence.

Slip op., at 8.

The Court then reviewed the legislative history and concluded that it supported the construction applied by the Court.  The Court commentd in passing that the declaration supplied by Estes was probably insufficient even if the District Court could have considered it.

The Court ended with a note about variations in pleading standards between state and federal courts:

We are aware of the difficulties that can be created by different pleading requirements in state and federal courts. A plaintiff filing a putative class action in state court need satisfy only the pleading standards of that court. It is therefore possible that if a putative class action is removed from state to federal court under CAFA the complaint, as originally drafted, will not answer the questions that need to be answered before the federal court can determine whether the suit comes within the local controversy exception to CAFA jurisdiction. In that circumstance, the district court may, in its discretion, require or permit the plaintiff to file an amended complaint that addresses any relevant CAFA criteria.

Slip op., at 21-22. The Court then affirmed the remand.

District Court denies certification in consumer case involving appliance repair insurance

United States Magistrate Judge Jan M. Adler (Southern District of California) denied a motion for class certification in a suit alleging improper practices and representations about a home warranty insurance product.  Campion v. Old Republic Home Protection Co., Inc., 2011 WL 42759 (S.D.Cal. Jan. 06, 2011).  The Court found that individual issues would predominate because each denial of warranty coverage would reuqire an inquiry into the basis for the denial.  The Court also relied heavily on the construction of Tobacco II that was advanced in Cohen v. DirectTV, 178 Cal. App. 4th 966 (2009) when it refused to presume reliance on the part of absent class members.

Order from In re Wal-Mart Stores, Inc. Wage and Hour Litigation highlights need to support incentive award requests with detailed facts when the requested award is substantial

Untited States District Court Judge Saundra B. Armstrong (Northern District of California) granted in part and denied in part the unopposed motion of plaintiffs for an award of incentive payments and attorney's fees.  In re Wal-Mart Stores, Inc. Wage and Hour Litigation, 2011 WL 31266 (N.D.Cal. Jan. 05, 2011).  Counsel requested 33.3% of the maximum settlement amount of $86 million.  The Court agreed that a departure from the 25% benchmark in the Ninth Circuit was appropriate but not to that degree.  The Court awarded a fee equal to 27% of the maximum settlement amount.

On the requested enhancement awards, the Court said:

Upon review of the record in this case, the Court finds that Plaintiffs are entitled to a reasonable incentive payment. However, the Court finds the requested award of $25,000 per named Plaintiff to be excessive, in view of the nature of their assistance in this case.  First, the Court notes that the named Plaintiffs have not indicated in their declarations the total number of hours they spent on this litigation. Rather, they generally explain that they were deposed, responded to written discovery, and assisted and met with counsel. Second, in arguing that $25,000 is an appropriate award, Plaintiffs cite to cases that are clearly distinguishable. For instance, in Brotherton v. Cleveland, 141 F.Supp.2d 907 (S.D.Ohio 2001), the court awarded $50,000 to a single named plaintiff, finding that “she has spent approximately 800 hours working on this litigation.” Id. at 914. By contrast, here, there is no evidence that the named Plaintiffs' involvement reached anywhere near this level.

Slip op., at 4.  The Court awarded $5,000 to each plaintiff.