Perfunctory certification order reversed and sent back to the trial court in Myers v. Raley's

The standard of review governing certification orders is effectively unique to class actions. As the Supreme Court explained in Ayala v. Antelope Valley Newspapers, Inc. 59 Cal.4th 522 (2014): “We review the trial court’s actual reasons for granting or denying certification; if they are erroneous, we must reverse, whether or not other reasons not relied upon might have supported the ruling.” Id., at 530. In other words, only the stated reasons are reviewed under the abuse of discretion standard. And if a stated reason includes a legally erroneous provision, that, by definition, constitutes and abuse of discretion. The record is not searched for an alternative basis to affirm.

In Myers v. Rayey’s (March 12, 2019), the Court of appeal (Third Appellate District) [Yolo!] concluded that one paragraph of substance was insufficient to permit review, since, without a statement of reasoning and analysis, there is no way to meaningfully review what is simply an ultimate conclusion:

To turn to the record to concoct some basis for the trial court’s denial of certification is to abolish the relevant standard of review, ignore the trial court’s reasoning, and apply ordinary appellate review contrary to the legion of cases that prohibit appellate revisionism. This we cannot do.

Slip op., at 15. As part of its discussion of the insufficiency of a “perfunctory” order, the Court explicitly disagreed with Dailey v. Sears, Roebuck & Co., 214 Cal. App. 4th 974 (2013), which had affirmed an exceedingly terse certification denial order.

This hits close to home, as I was unsuccessful on an appeal of a certification order with about as much (or little) in the way of analysis. If I had been in front of this panel…. And if it weren’t for those meddling kids!

I also get the feeling when reading the statement of facts that the Court had a strong opinion about how things should turn out after round two but couldn’t actually say how things should turn out.

No tolling for the wicked, at least when it comes to Fed. R. Civ. P. 23(f) petitions

In a move that surely caused money to change hands between law nerds gambling on federal rules interpretations through off-shore gambling sites, the United States Supreme Court held, in Nutraceutical Corp. v. Lambert (February 26, 2019), that Fed. R. Civ. P. 23(f) — the portion of Rule 23 that permits parties to request permission for interlocutory review of class certification decisions within 14 days of the issuance of the decision — is a mandatory, but nonjurisdictional, claim-processing rule, and therefore not subject to tolling or other exceptions for reasons of equity or fairness. The decision was unanimous.

In Gilberg v. Cal. Check Cashing, Ninth Circuit extends Syed, holding that FCRA precludes all surplussage in background check disclosures

In Gilberg v. California Check Cashing Stores, LLC (9th Cir. Jan. 29, 2019), the Ninth Circuit confirmed that Syed v. M-I, LLC, 853 F.3d 492 (9th Cir. 2017) applied to any surplussge in employment background check disclosures required by the Fair Credit Reporting Act.

I did that. Weird flex, but okay.

Slip opinion available to download here.

Central District of California Local Rule 23-3 finally addressed in published Ninth Circuit opinion

For years I've heard grumbling about Civil Local Rule 23-3 of the United States District Court for the Central District of California.  I may have been been responsible for some of that grumbling myself.  If you haven't run into this rule, Local Rule 23-3 requires the filing of a class certification motion within 90 days of the commencement of the action.  While many judges would accept stipulations to waive the rule, some did not.  In ABS Entertainment Inc. v. CBS Corp. (9th Cir. Aug. 20, 2018), the Ninth Circuit finally addressed this Local Rule in a published opinion (I believe there was commentary in an unpublished opinion a number of years ago):

Central District of California Local Rule 23-3 sets a strict 90-day time frame from the filing of a complaint to the motion for class action certification. This bright line rule is in direct contrast to the flexibility of the Federal Rule, which calls for a determination on class certification “[a]t an early practicable time after a person sues or is sued as a class representative.” Fed. R. Civ. P. 23(c)(1)(A). That flexible approach makes sense. The class action determination can only be decided after the district court undertakes a “rigorous analysis” of the prerequisites for certification. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350–51 (2011) (quoting Gen. Tele. Co. of SW v. Falcon, 457 U.S. 147, 161 (1982)). To undertake that analysis may require discovery. Kamm v. Cal. City Dev. Co., 509 F.2d 205, 210 (9th Cir.1975) (“The propriety of a class action cannot be determined in some cases without discovery;” “To deny discovery in [such cases] would be an abuse of discretion.”).

The district court’s actions here demonstrate the impracticability of the 90-day limit, particularly in combination with the district court’s summary and unexplained denial of the parties’ joint stipulation to extend the 90-day deadline based on the need for pre-certification discovery. See Barbara J. Rothstein & Thomas E. Willging, Federal Judicial Center, Managing Class Action Litigation: A Pocket Guide for Judges 9 (3d ed. 2010) (“Considering [Fed. R. Civ. P. 23(c)(1)], you should feel free to ignore local rules calling for specific time limits; such local rules appear to be inconsistent with the federal rules and, as such, obsolete.”); Federal Judicial Center, Manual for Complex Litigation, Fourth § 21.133 (“Some local rules specify a short period within which the plaintiff must file a motion to certify a class action. Such rules, however, may be inconsistent with Rule 23(c)(1)(A)’s emphasis on the parties’ obligation to present the court with sufficient information to support an informed decision on certification. Parties need sufficient time to develop an adequate record.”).

Although the district court’s application and interpretation of its Local Rules is entitled to “a large measure of discretion,” Lance, Inc. v. Dewco Servs., Inc., 422 F.2d 778, 784 (9th Cir. 1970), Local Rules cannot be incompatible with Federal Rules. Fed. R. Civ. P. 83(a)(1). We conclude that the bright-line of Local Rule 23-3 is incompatible with Federal Rule of Civil Procedure 23.

Slip op., at 49-50.  I only wonder whether the inclusion of this discussion at the end of a massive copyright opinion will give it more attention -- perhaps enough to lead to a repeal of Local Rule 23-3 entirely -- or less because it will get lost at the end of this unusually long opinion.

Petition for Rehearing Denied in Troester v. Starbucks; Minimal change to Opinion

The California Supreme Court denied the Petition for Rehearing in Troester v. Starbucks, making a tiny change to the Opinion.  Here is the change, which was made to the last paragraph:

Old version:

We hold that the relevant California statutes and wage order have not incorporated the de minimis doctrine found in the FLSA. We further conclude that although California has a de minimis rule that is a background principle of state law, the rule is not applicable here. The relevant statutes and wage order do not allow employers **834 to require employees to routinely work for minutes off-the-clock without compensation. We leave open whether there are wage claims involving employee activities that are so irregular or brief in duration that it would not be reasonable to require employers to compensate employees for the time spent on them.

New version:

We hold that the relevant California statutes and wage order have not incorporated the de minimis doctrine found in the FLSA.  We further conclude that although California has a de minimis rule that is a background principle of state law, the rule is not applicable to the regularly reoccurring activities that are principally at issue here.  The relevant statutes and wage order do not allow employers to require employees to routinely work for minutes off the clock without compensation.  We leave open whether there are wage claims involving employee activities that are so irregular or brief in duration that employers may not be reasonably required to compensate employees for the time spent on them.

So that makes this Opinion final final.  Can't wait until its final final final.  Or even final final final final.

Episode 19 of the Class Re-Action Podcast is Now Available

Join us on Episode 19 for a lively discussion of potential implications from the recent Troester v. Starbucks decision from the California Supreme Court.  Listen as I attempt to control the crowd cheering for me.

BREAKING NEWS: Troester v. Starbucks opinion will be released tomorrow

Hot off the notification presses, the California Supreme Court will release its opinion in Troester v. Starbucks tomorrow, at about 10:00 a.m.

Wagers on whether California will adopt the Lindow rule for de minimis time?  Comments?

Morris v. Ernst & Young, LLP, 834 F.3d 975 is officially vacated by Ninth Circuit

Following the Epic decision by the Supreme Court, today the Ninth Circuit formally vacated Morris v. Ernst & Young, LLP in a per curiam Opinion.  And I bet you were wondering if they would Resist!  They did not.

It's a day ending in "y," so rounding is cool says AHMC Healthcare, Inc. v. Superior Court

Set aside, for a brief moment, the legal arguments about rounding in the context of California law (I know...it's a legal blog, but I can digress because I say so).  Here's what I don't get in the class context: how does it pass the smell test to say to some employees, who lost some wages from rounding, that it's cool because their money basically went to some other employees.  Using the rationale of rounding jurisprudence, I think I could make wage system that randomly takes money from half a workforce and gives it to the other half.  It's neutral as applied by definition.  It's random so it's "fair" on its face.  What's wrong with that?  And if it's not okay, why is rounding okay.

Anyhow, in AHMC Healthcare, Inc. v. Superior Court (June 25, 2018), the Court of Appeal (Second Appellate District, Division Four) held that rounding was proper in a system the Court characterized as "neutral on its face and as applied."  Slip op., at 2.  On undisputed facts, it was shown that slightly more employees lost time than gained time, but the gainers did slightly better in aggregate.  Slip op., at 4-5.

After discussing federal decisions that approved of rounding in the aggregate, the Court said this:

Because California’s wage laws are patterned on federal statutes, in determining employee wage claims, California courts may look to federal authorities for guidance in interpreting state labor provisions. 

Slip op. at 11.  I don't think that's right, at least not as stated.  California extensively diverges from federal wage and hour law in many areas.  The California Supreme Court has issued a number of decisions rejecting application of federal law in a variety of contexts, noting in several cases that Wage Orders must basically state express incorporation of a federal standard before it will be read into a Wage Order.  Notably, and I think relevant to rounding, California's definition of what constitutes compensable time differs from the federal standard.  What no Court has yet attempted to explain is why rounding is not analyzed in the way other wage and hour obligations are analyzed when comparing California law to federal law.  Given the undeniably employee-centric nature of California wage and hour law, I find this at least peculiar.

This issue will receive more attention before it is settled I predict.

Jeffrey P. Fuchsman and Zareh A. Jaltorossian of Ballard Rosenberg Golper & Savitt represented the successful petitioner. 

Episode 18 of the Class Re-Action Podcast is now live!

Episode 18 is here, discussing how Epic (and its utter termination with extreme prejudice of the NLRA theory that class waivers impair concerted employee activity) will drive PAGA litigation.  And then we turn to Huff, which makes that prospect of more PAGA litigation significantly more daunting for employers.

Maybe this podcast thing will catch on one day...