Reversing trial court, Martinez, et al. v. Regents of the University of California, et al. holds that California's authorization of in-state tuition for "illegal immigrants" violates federal law

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Greatsealcal100The law waits for no one, not even The Complex Litigator (who has just finished a long deposition excursion, interspersed with efforts to encrust his face with powdered sugar as he jams beignets in his pie-hole). In that regard (the law, not the beignets), the Court of Appeal, in Martinez, et al. v. Regents of the University of California, et al. (September 15, 2008, Third Appellate District), essentially held that California Education Code § 68130.5 violates is preempted by United States Code (U.S.C.) section 1623 by allowing certain "illegal immigrants" to pay lower (roughly $17,000 lower) resident tuition rates.

The case was filed as a class action by "United States citizens who pay nonresident tuition for enrollment at California’s public universities/colleges . . . ." (Slip op., at pp. 2-3.)  But this case is interesting because it runs squarely into a socio-political minefield that is probably even more contentious a topic than the recent same-sex marriage decision from the California Supreme Court.  You know a case is going to be worth a read when a footnote is probably enough to incite public protests:

“Defendants prefer the term “undocumented immigrants.” However, defendants do not cite any authoritative definition of the term and do not support their assertion that the terms “undocumented mmigrant” and “illegal alien” are interchangeable. We consider the term “illegal alien” less ambiguous. Thus, under federal law, an “alien” is “any person not a citizen or national of the United States.” (8 U.S.C. § 1101(a)(3).) A “national of the United States” means a U.S. citizen or a noncitizen who owes permanent allegiance to the United States. (8 U.S.C. § 1101(a)(22).) Under federal law, “immigrant” means every alien except those classified by federal law as nonimmigrant aliens. (8 U.S.C. § 1101(a)(15).) “Nonimmigrant aliens” are, in general, temporary visitors to the United States, such as diplomats and students who have no intention of abandoning their residence in a foreign country. (8 U.S.C. § 1101(a)(15)(F), (G); Elkins v. Moreno (1978) 435 U.S. 647, 664-665 [55 L.Ed.2d 614, 627-628] [under pre-1996 law, held the question whether nonimmigrant aliens could become domiciliaries of Maryland for purposes of in-state college tuition was a matter of state law].) The federal statutes at issue in this appeal refer to “alien[s] who [are] not lawfully present in the United States.” (8 U.S.C. §§ 1621(d), 1623.) In place of the cumbersome phrase “alien[s] who [are] not lawfully present,” we shall use the term “illegal aliens.”

(Slip op., at p. 3.)  Having settled on "illegal alien" as the operative nomenclature, the Court moved on to the actual questions at issue.  First, the Court of Appeal addressed a number of procedural issue after the defendants argued that plaintiffs had waived or forfeited certain arguments by not raising them in the trial court:

“We reject defendants’ position that plaintiffs cannot raise
new theories on appeal that they did not allege in their
complaint or present in the trial court. When a demurrer is
sustained without leave to amend, the plaintiff may advance on
appeal new legal theories as to why the complaint’s allegations
state, or can be amended to state, a cause of action.

(Slip op., at p. 17.)  However, the Court of Appeal concluded that plaintiffs failed to adequate raise an issue in their Opening Brief regarding whether a private right of action exists for violation of title 8 U.S.C. section 1623.  (Slip op., at pp. 17-23.)  The Court of Appeal then spends almost nine pages addressing arguments about the trial court's failure to grant judicial notice to various materials.  In some other post I will comment on what I believe to be the pandemic misuse of requests for judicial notice, but with respect to this opinion, one has the sense that this Court is painfully aware of the potential for much higher levels of scrutiny of this opinion.  They seem to be dotting i's and crossing t's that would normally be relegated to footnote commentary, if that.

Finally turning to the merits, the Court of Appeal quickly dismissed an argument by plaintiffs that they could "amend the complaint to allege a viable claim that section 68130.5 constitutes discrimination in violation of section 68062."  (Slip op., at p. 33.)  The Court noted that any conflict between section 68062 and 68130.5 would not be resolved in plaintiffs' favor, given that section 68130.5 was enacted after 68062, triggering application of the doctrine of implied repeal.

The Court then turned to the question of federal preemption.  First, the Court identified De Canas v. Bica (1976) 424 U.S. 351 [47 L.Ed.2d 43] as authority identifying three tests to be used in determining whether a state statute related to immigration is preempted.  (Slip op., at p. 35.)  "First, the court must determine whether the state statute is a 'regulation of immigration' (i.e., a determination of who should or should not be admitted into the country and the conditions under which a legal entrant may remain)."  (Slip op., at p. 35.)  "Second, even if the state statute does not regulate immigration, it is preempted if Congress manifested a clear purpose to effect a complete ouster of state power, including state power to promulgate laws not in conflict with federal laws, with respect to the subject matter which the statute attempts to regulate."  (Slip op., at pp. 35-36.)  "Third, a state law is preempted if it 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'"  (Slip op., at p. 36.)  Applying this test, the Court concluded that plaintiffs stated a cause of action for federal preemption.

In its analysis, the Court determined that in-state tuition is, in fact, a benefit to the recipients of that lower tuition rate:

“Defendants argue the term “benefit” in title 8 U.S.C.
section 1623 is limited, because the federal statute refers to
“amount,” which means monetary payments, and in-state tuition
does not involve the payment of any money to students. However,
defendants cite no authority supporting their illogical
assumption that “amount” must mean monetary payment to the
beneficiary.

(Slip op., at p. 38.)  The Court then spends nearly 20 pages of its opinion considering whether section 68130.5 constitutes a de facto residency surrogate.  (Slip op., at pp. 42-61.)  The Court ultimately concludes that section 68130.5 was intended to benefit illegal aliens on the basis of residency in California.

The Court then determined that section 68130.5 was preempted by federal law.  In part, the Court determined that section 68130.5 interferes with an important federal policy: "It is a compelling government interest to remove the incentive for illegal immigration provided by the availability of public benefits."  (Slip op., at p. 65, citing title 8 U.S.C. section 1601.)  Using much of the same analysis, the Court held that "plaintiffs have stated a cause of action that section 68130.5 is preempted by title 8 U.S.C. section 1621," which generally precludes certain public education benefits to illegal aliens.

Several other claims were found insufficient by the Court of Appeal, but because several claims were found to have legal sufficiency, the Court reversed and remanded to the trial court.

I will be curious to see whether this case is reviewed by the California Supreme Court or the United States Supreme Court.

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Civil Rights Lawsuits

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On July 18, 2008, this blog reported on two class actions filed against Google for the alleged sale of "low quality" ads on parked domains and error pages.  The first such suit was filed by attorneys from the San Francisco-based law firm of Schubert Jonckheer Kolbe & Kralowec, including Kimberly Kralowec, author of the established and widely-read blog, The UCL Practitioner.  The second suit was filed six days later by the firm of Kabateck Brown Kellner.

It now looks like Google's woes have spread outside of California.  It has just been reported that JIT Packaging sued Google in a federal district court in Chicago.  (Google Hit with Another Suit For Fraud From PPC Program: Is this Final Straw For Domain Parking? (August 14, 2008) www.thedomains.com.)  The Domains wonders whether this will ultimately result in the demise of the domain registration industry.  If anyone has the power to force a change in the domain registration market, Google is on that short list.

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e-DISCOVERY: Adverse inference sanctions imposed due to Oracle's mishandling of electronic evidence

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In a long-running class action against Larry Ellison, founder of Oracle, and other executives, U.S. District Judge Susan Illston, of the Northern District of California, found that executives either destroyed or knowingly failed to preserve evidence in a suit asserting that Ellison and other Oracle executives misled investors about the company's financial strength.  (Brandon Bailey, Judge says Oralce mishandled evidence (September 3, 2008) www.mercurynews.com.)  Judge Illston indicated that she will infer that the evidence was incriminating. Those inferences will apply when she rules later on the substance of the case, and she will instruct a jury to make the same inference if the case goes to trial.

Judge Illston refused to go beyond the evidentiary inference, despite request by the plaintiffs for additional sanctions and summary judgment based on spoliation of evidence. However, the Court did not rule out further consequences and asked for added briefing.  (Pamela A. Maclean, Judge Orders Oracle Sanctioned Over Ellison E-Mails (September 4, 2008) www.law.com.)

It is a little surprising to me that major corporations, counseled by major law firms (in this case, Latham & Watkins), continue to believe that the substantial developments in e-discovery rules and subsequent decisional authority won't bite them if they don't comply.  Then again, the same thing happened when the world ran on paper, so I suppose there will always be another party to litigation that gambles on not getting caught spoliating or withholding key evidence.

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Petition for Review filed in Brinker

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Although it shouldn't come as a surprise, a Petition for Review in Brinker Restaurant Corporation, et al. v. Hohnbaum, et al (July 22, 2008) was filed with the Supreme Court on August 29, 2008.  The Supreme Court docket is available for viewing here.

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LIVEBLOGGING CAALA: Notes on class actions and procedure in complex cases

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Jerome Ringler, of Ringler Kearney Alvarez LLP, is speaking this year on the topics of class actions and complex cases.

Concerning class actions, Mr. Ringler notes the following basic concepts:

  • Choose a good class representative that doesn't bring along a lot of baggage [bankruptcies, criminal convictions, etc.].  I note that this is much easier said than done.  Individuals willing to step forward and litigate a cause on behalf of a group often have, at minimum, interesting personality quirks that supply the fortitude to endure a class action.
  • Decide where to file.  Again, easier said than done.  CAFA often dictates that a case may end up in federal court, whether you want to be there or not.
  • Compared to individual party litigation, discovery may be limited to certification issues.  Mr. Ringler notes, and I have also found, that there is often entanglement between merits issues and, in particular, commonality and typicality analysis.
  • Mr. Ringler notes that Pioneer and Belaire-West supply the procedure for obtaining class member contact information.  He notes that the process requires filing a motion and agreeing on a third-party administrator that will send out notices permitting the putative class members to opt-out of disclosure of their contact data.  I think that this summary of the current state of the law is, at minimum, incomplete, and, arguably, inaccurate.  Puerto and the recent Writers' Guild decision Alch (discussed here), both suggest in different ways that the class representative may have a right to obtain contact information and other class member data, irrespective of whether any  putative class member objects.
  • Watch out for client representation issues.  What if you represent a putative class member at a deposition?  Do you continue to represent that person until certification?  You probably do, but be careful with this hot potato.  Don't hand over communications - you may be waiving a privilege that you ought to make the Court determine.

This seminar lecture appears targeted at attorneys with limited experience in the area of class actions.  If you are interested in learning about class action procedure, you will probably do better reading portions of treatises, major decisional authority, and then co-counseling class actions with more experienced class action litigators.  I'm going to wrap this post up as my battery is dying.

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Certification decision Medrazo v. Honda of North Hollywood discusses commonality, ascertainability requisites and the prohibition on merits-based denials

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Greatsealcal100With all the class certification decisions over the years, one might think that there isn't much left to say on the topic that hasn't been said before.  While there is a kernel of truth to that sentiment, many of the governing principles of class action law aren't put into practice by trial courts in a consistent manner.  Reviewing courts occasionally take such opportunities to emphasize what should be well-settled principles.  In Medrazo v. Honda of North Hollywood, the Court of Appeal (Second Appellate District, Division Four) used just such an opportunity to reinforce the appropriate analyses that apply to the "commonality" and "ascertainability" requisites of class certification.  In addition, the Court of Appeal emphasized the prohibtion on merits-based denials by trial courts.

In Medrazo, the Plaintiff alleged that Honda of North Hollywood violated Vehicle Code sections 11712.5 and 24014 by failing to attach a suggested retail price and costs label to motorcycles.  The trial court denied a motion for class certification and an appeal followed.  Starting with the standard for evaluating motions for certification, the Court said:

““As the focus in a certification dispute is on what type of questions -- common or individual -- are likely to arise in the action, rather than on the merits of the case [citations], in determining whether there is substantial evidence to support a trial court’s certification order, we consider whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment.” (Sav-On Drug, supra, 34 Cal.4th at p. 327.)

(Slip op., at pp. 7-8.)  After articulating the standard, the Court held that the trial court erred when it considered the merits of an affirmative defense as a basis for denying certification.

Next, Medrazo addressed the trial court's determination that common issues of fact or law did not predominate.  Explaining predominance, Medrazo reminded courts and litigants that predominance is not requirement that demands an absence of individualized issues:

““Predominance is a comparative concept, and ‘the necessity for class members to individually establish eligibility and damages does not mean individual fact questions predominate.’ [Citations.] Individual issues do not render class certification inappropriate so long as such issues may effectively be managed. [Citations.] [] Nor is it a bar to certification that individual class members may ultimately need to itemize their damages.” (Sav-On Drug, supra, 34 Cal.4th at p. 334.)

It is true that in this case, each Honda purchaser will be required to establish that there was no hanger tag attached to the motorcycle he or she purchased and/or that the dealer-added costs were not disclosed on the hanger tag [footnote omitted], and all purchasers will be required to establish the suggested retail price of their motorcycles and the amount of dealer-added costs included in their purchases (if it is determined that the class is entitled to a monetary recovery measured by those items). But those individual issues must be compared to the issues that are subject to classwide (or sub-classwide) treatment. Those issues include: (1) whether HNH violated section 11712.5 and section 24014 by selling motorcycles without hanger tags; (2) whether a purchaser who buys a motorcycle sold in violation of section 11712.5 and section 24014 is entitled to restitution, disgorgement, and/or damages, and if so, what is the proper measure of restitution, disgorgement, and/or damages; (3) whether the alleged injury to the purchaser is mitigated by the disclosure of dealer-added costs in a sales agreement; and (4) whether HNH is excused from the requirements of section 11712.5 and section 24014 if the manufacturer does not supply a hanger tag that complies with section 24014.

There is nothing in the record to suggest that the individual issues cannot be effectively managed. Indeed, the record suggests that the resolution of the individual issues will involve mostly undisputed evidence -- presumably, the class members will attest that there were no hanger tags on the motorcycles they purchased, and HNH has admitted it did not attach hanger tags on any Suzuki or Yamaha motorcycles, did not attach them to some of the Honda motorcycles, and has no evidence to show there were hanger tags on any specific motorcycles. That HNH may be hampered in its ability to challenge the class members’ evidence due to its failure to keep records of its casual approach to affixing hanger tags is not a valid reason to deny class certification on the ground that individual issues predominate. In short, the substance and scope of the individual issues pale in comparison to the substance and scope of the common issues.

(Slip op., at pp. 12-13.)  Significantly for plaintiffs, this analysis provides a very concrete roadmap for presenting certification motion for claims based on statutory violations.

Finally, Medrazo explains yet again the fact that ascertainability does not require the Plaintiff to identify the class members at the time certification is determined:

““A class is ascertainable if it identifies a group of unnamed plaintiffs by describing a set of common characteristics sufficient to allow a member of that group to identify himself or herself as having a right to recover based on the description.” (Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 828.) While often it is said that “[c]lass members are ‘ascertainable’ where they may be readily identified without unreasonable expense or time by reference to official records” (Rose v. City of Hayward (1981) 126 Cal.App.3d 926, 932; accord, Aguiar v. Cintas Corp. No. 2, supra, 144 Cal.App.4th at p. 135), that statement must be considered in light of the purpose of the ascertainability requirement.

“Ascertainability is required in order to give notice to putative class members as to whom the judgment in the action will be res judicata.” (Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, 914; accord, Aguiar v. Cintas Corp. No. 2, supra, 144 Cal.App.4th at p. 135.) The representative plaintiff need not identify the individual members of the class at the class certification stage in order for the class members to be bound by the judgment. (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 706.) As long as the potential class members may be identified without unreasonable expense or time and given notice of the litigation, and the proposed class definition offers an objective means of identifying those persons who will be bound by the results of the litigation, the ascertainability requirement is met.

(Slip op., at pp. 13-14.)  This, too, is an important point.  It has been my observation that the ascertainability requirement is often twisted beyond recognition, until a trial court concludes that no class definition is workable.  As Bartold notes, what is important at the outset is that the definition be sufficiently specific that a class member viewing the definition knows whether he or she falls within the class definition.  Nobody else needs to know the answer to that question at the point of certification.  Thanks to Medrazo, the context added to the Rose decision may help resolve disingenuos challenges to ascertainability.

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BREAKING NEWS: California Labor Federation confronts Labor Commissioner over bias/haste in issuing Brinker memo

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On July 30, 2008, this blog reported that the DLSE had already updated its enforcement materials in response to Brinker Restaurant Corporation, et al. v. Hohnbaum, et al (July 22, 2008).  The information now coming to light is significantly more troubling than a simple revision of DLSE enforcement materials.  In a July 25, 2008 Memorandum entitled Binding Court Ruling on Meal and Rest Period Requirements, Angela Bradstreet, the Labor Commissioner, described Brinker as a “binding court ruling,” without noting that Brinker is one of two decisions that interpret regulations governing meal breaks (the other being Cicairos v Summit Logistics, Inc. (2005) 133 Cal App.4th 949, which still stands as valid authority).

The California Labor Federation was none too pleased with the July 25, 2008 Memorandum.  In strongly-worded correspondence of July 30, 2008, the California Labor Federation took Ms. Bradstreet to task for what it persuasively described as a biased, pro-employer approach from the very regulatory body charged with enforcing employee-protective laws and regulations.  And by fortunate happenstance, I've stumbled across a copy of that correspondence (with attachments):

The correspondence can also be downloaded in pdf format here.  The letter is definitely worth reading.

Because of the significance of this issue, I intend to set this post so that, for at least the next week, it appears as the first post on The Complex Litigator (assuming nothing else demands top billing in that time).  So be sure to check below to see new posts.

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Review by Supreme Court denied in Bufil v. Dollar Financial Group, Inc.

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Yesterday, the California Supreme Court denied review in Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193.  Other commentators noted this denial as significant because Bufil contains language that appears to conflict with Brinker Restaurant Corp., et al. v. Hohnbaum, et al. (2008) ___ Cal.App.4th ___.  (See, e.g., Wage Law.)  While I find the Brinker connection of great interest, I find this denial most significant because it let stand a rather significant reduction in the impact of Alvarez v. May Dept. Stores Co. (2006) 143 Cal.App.4th 1223.  My initial post on Bufil discusses the Alvarez connection in painful detail.

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DLSE will immediately enforce Brinker decision, despite risk

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Greatsealcal100Multiple sources are now reporting that the DLSE has already updated its materials to require hearing officers to follow Brinker Restaurant Corporation, et al. v. Hohnbaum, et al (July 22, 2008).  Reporting sources include California Labor & Employment Law Blog, What's New In Employment Law, and Wage Law.  Adding to the general coverage, Storm's California Employment Law blog has a brief but insightful obsevation about the fact that the DLSE's rush to implement pro-employer policies may ultimately harm them. 

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The little-used defendant class is recognized in Farwell v. Sunset Mesa Property Owners Association, Inc.

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Greatsealcal100 The Court of Appeal (Second District, Division Eight) penned a brief gem of a comment that will be of interest to class action practitioners (and nobody else on the planet).  In Farwell v. Sunset Mesa Property Owners Association, Inc. (June 18, 2008) ___ Cal.App.4th ___, the Court, probably unnecessarily, went to the trouble of summarizing the long history of defendant class actions (actions in which a class of defendants comprise the class, as opposed to plaintiff class actions, where a class of plaintiffs comprise the class):

“We note here that the adequacy of the representation of a defendant class is not a novel problem and has engaged the attention of the courts and text writers. (See cases and materials collected in 2 Conte & Newberg, Newberg on Class Actions (4th ed. 2002) § 4:60, pp. 375-384.) It is by no means an insurmountable task to identify persons who can serve as representatives of a defendant class, although the dynamics of such a class are different from that of a plaintiff class. (Id., § 4.46, pp. 336-339.)  Indeed, defendant classes have a long history, dating back to 1853.  (Id., § 4.46, p. 338, citing Smith v. Swormstedt (1853) 57 U.S. 288.) California has also long recognized defendant classes. (E.g., Wheelock v. First Presb. Church (1897) 119 Cal. 477, 481-482; Rosicrucian Fellow. v. Rosicrucian Etc. Ch. (1952) 39 Cal.2d 121, 139-140.)

(Slip op., at p. 6.)  As it turns out, the Court of Appeal decided that the Order in question was not appealable.  Thus, the wind-up about defendant class actions is purely of academic interest.

The only problem with this opinion is its title.  Whenever I see that a home owners' association is involved in litigation, I immediately write off the opinion as resulting from a mundane but intractable dispute between a nutball resident (likely with too many cats) and group of self-anointed potentates that enjoy too much their tiny universe of almost boundless power.  And so I learn my lesson.  Occasionally, even home owners' association litigation results in something interesting.  And if it wasn't for the more tolerant eyes of the UCL Practitioner, I would have remained blissfully ignorant of this opinion.

[Via UCL Practitioner]

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