Class action news of note: Tobacco II arguments leaves everyone guessing, and more

/

This past week, the California Supreme Court heard oral argument in the Tobacco II cases.  Extensive coverage of the oral argument is available from the UCL Practitioner in this post.  The obligatory reading of tea leaves has, in this instance, revealed little.  For examle, Mike McKee, writing for The Records, said, "Just a few weeks ago, the California Supreme Court ruled that lawsuits under the Consumer Legal Remedies Act can only be filed by individuals who suffer real damage from unlawful business practices. But during oral arguments on Tuesday it wasn't clear where the court stood on applying that same rule to every participant of class actions filed under the state's Unfair Competition Law."  (Mike McKee, Calif. Justices Air Standing for UCL Class Actions Against Tobacco Industry (March 4, 2009) www.law.com.)  Having watched the argument myself, I agree that it was hard to discern much from the Justices.  The cynic in me always assumes that the creep of Proposition 64 will keep on spreading its tendrils, but the argument itself gives me little actual evidence to support that guess.

Meanwhile, the significance of the Ninth Circuit's decision in Davis v. HSBC Bank Nevada, N.A., et al. (February 26, 2009) reached the legal media:  "In a blow to plaintiffs class action lawyers, the 9th U.S. Circuit Court of Appeals has made it tougher to hold that a national company is a 'citizen' of California merely based on the disproportionate size of the state's population."  (Pamela A. MacLean, 9th Circuit Deals a Blow to Plaintiffs Lawyers in 'Principal Place of Business' Test (March 9, 2009) www.law.com.)  Not that Tosco actually held that a state's population size governed corporate citizenship, but the remainder of the article is accurate.  This blog noted the decision in this short post.

Finally, while a bit late to the party, another ISP and the defunct Adzilla were sued for deep packet inspection for the purposes of obtaining the advertising holy grail: complete knowledge of each consumer's behaviors and preferences.  (Ryan Singel, Another ISP Ad Snooper Hit With Lawsuit (March 3, 2009) www.wired.com.)  I've already expressed my contempt for this behavior by ISPs.  Luckily, these projects appear dead in the United States.  But don't count on them staying down forever.

Read More

Are meal period premiums part of the "regular rate" in FLSA cases? One District Court says, "No."

/

In a LinexLegal.com news article entitled Must Employers Include Meal-Period Premium Payments in the "Regular Rate" Used to Compute the Overtime Owed to Their Employees?, it is reported that, on February 25, 2009, Judge Saundra B. Armstrong of the U.S. District Court for the Northern District of California held that meal-period premiums mandated by California Labor Code Section 226.7 need not be included in the "regular rate" for purposes of calculating an employee's overtime compensation under the federal Fair Labor Standards Act (FLSA), 29 U.S.C. para 201 et seq.   The ruling was issued in the context of a putative state-wide class-action in Rubin v. Wal-Mart Stores, Inc., No. CV 08-4214.

Read More

BREAKING NEWS: Supreme Court finds no pre-emption in Wyeth v. Levine

/

More commentary on thus opinion will follow (it will, in fact, be discussed everywhere), but it suffices to say that this was one of the foundational set pieces in the attack on consumer class actions.

Read More

in brief: Ninth Circuit clarifies the Tosco "substantial predominance" test for corporate operations in Davis v. HSBC Bank Nevada, N.A., et al.

/

Ninth Circuit SealIf you spend any time litigating class actions, CAFA almost guarantees that some of that time will be spent in federal court. Thus, the citizenship of the defendant(s) is a significant issue. In Davis v. HSBC Bank Nevada, N.A., et al. (February 26, 2009), the Ninth Circuit interpreted and limited the “substantial predominance” analysis for the “principal place of business” test, as it was described in Tosco Corp. v. Communities for a Better Env't, 236 F.3d 495 (9th Cir. 2001). In brief, the Court held that the “substantial predominance” of activities is tested against national activities, not the next largest state, but a per-capita analysis is not required.

Read More

BREAKING NEWS: First appellate construction of Labor Code section 206.5 concludes that it doesn't mean what it seems to say

/

Greatsealcal100As predicted in this post, the Fourth Appellate District, Division Three, has issued a published opinion in Chindarah et al. v. Pick Up Stix, Inc. et al (February 26, 2009).  The opinion construes Labor Code section 206.5, concluding that employer-obtained releases of wage claims in dispute were not void by operation of section 206.5.  There is some qualifying language in the opinion worth mentioning, but, that must wait for another day.

Read More

in brief: Consumers resist bank changes to terms in credit agreements; JP Morgan Chase named in class action

/

On January 28, 2009, consumers filed a class action lawsuit against banks JP Morgan Chase and Chase Manhattan Bank for unilateral changes to terms governing credit card agreements.  This class action appears to be one of the early reactions to a wave of bank-imposed changes to terms governing consumer credit accounts.  (Ron Lieber, Credit Card Companies Go to War Against Losses (January 30, 2009) www.nytimes.com; see also, Eileen Ambrose, Banks playing hardball on credit, leaving consumers feeling blindsided, angry (February 24, 2009) www.baltimoresun.com.)  The banking practices mentioned in these articles are happening at other institutions.  Just as commentators predict a wave of employment litigation, I expect that consumer lending issues will balloon this year.

Read More

in brief: UCL Practitioner has more on Sullivan, et al. v. Oracle Corporation

/

The UCL Pracitioner has a series of posts on Sullivan, et al. v. Oracle Corporation.  In particular, the most recent post sets forth the questions certified by the Ninth Circuit to the California Supreme Court.

Read More

Labor Code section 206.5 may be the focus of forthcoming opinion in Fourth Appellate District

/

Greatsealcal100I’m told that the Fourth Appellate District, Division Three, has an interesting opinion on the way in the next couple of weeks. According to Wage Law via Twitter (@wagelaw), Chindarah et al. v. Pick Up Stix, Inc. et al. is going to have something interesting to say about Labor Code section 206.5. @wagelaw suggests that the decision is due this week, and the docket nominally supports that contention, noting that the decision is “due” on February 19, 2009. However, at least some of the Courts of Appeal around the state interpret the 90-day deadline on the issuance of opinions in submitted matters to mean that the case must be decided by the end of the month in which the decision is due (when the Court reports on whether it has resolved all pending matters under penalty of nonpayment of Justices’ salaries). I don’t know if this interpretation is universal across the state, but, if it applies here, the decision could issue any time before the end of the month. And don’t forget that, in rare circumstances, the Court can essentially vacate the submission and resubmit the matter if the press of other business makes issuance of an opinion by its orginal due date impossible.

Section 206.5 fascinates me.  Maybe "fascinates" is a bit strong.  In any event, there is little in the way of decisional law about this Labor Code section, which states:

“(a) An employer shall not require the execution of a release of a claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of those wages has been made. A release required or executed in violation of the provisions of this section shall be null and void as between the employer and the employee. Violation of this section by the employer is a misdemeanor.

(b) For purposes of this section, "execution of a release" includes requiring an employee, as a condition of being paid, to execute a statement of the hours he or she worked during a pay period which the employer knows to be false.

Subdivision (b) is new, so the opinion can’t address that provision. That leaves subdivision (a). In the world of wage and hour class actions, the only time I ever ran across this section was when an employer was picking off class members by making them sign a release to get an offered payment. I believed that the releases obtained were void, but I never had the opportunity to test that belief. I’m very curious to see if that is the issue that has been presented in Chindarah. Of course, there is no guarantee of publication, but, as a matter of first impression (while I wildly speculate about the issues on appeal), one has to believe that publication would be certain.

And to digress for a moment, Twitter is definitely building momentum as a source for breaking news (amongst the nonsense about what somebody has decided to eat for dinner). You can read my recent posts in the sidebar on this blog or see whose posts I am following on Twitter by going to http://twitter.com/hsleviant (@hsleviant, in Twitter-ese).  If you start by reading posts from legal news sources, you may find that you can build a customized legal news amalgamation that suits your interests very precisely.

Read More

More coverage of Meyer v. Sprint Spectrum

/

Greatsealcal100In Meyer v. Sprint Spectrum L.P. (January 29, 2009), the California Supreme Court considered a matter, arising under the California Consumer Legal Remedies Act (CLRA; Civ. Code, § 1750 et seq.), in which plaintiffs sued the defendant cellular telephone company, alleging that its arbitration agreement and other remedial provisions were unconscionable. In Meyer, the plaintiffs did not allege that these provisions had been enforced against them or caused them damage. The primary issue considered by Meyer was whether, under these circumstances, a plaintiff may obtain injunctive relief to compel the removal of the allegedly unconscionable provisions under the CLRA. The ancillary issue was whether a plaintiff may obtain declaratory relief pursuant to Code of Civil Procedure section 1060 to declare these provisions unlawful and unenforceable. The Supreme Court concluded that neither form of relief was available to plaintiffs, affirming the decision below.

The Meyer decision has all the hallmarks of a case that will be misused and misunderstood for years to come.  Its holding regarding "damages" will be grist for the deceptive briefing mill. One significant point made in the decision, and likely to be ignored when inconvenient for some defendant's demurrer, is that “any damages” can be something other than “actual” or “pecuniary damages”:

“ As to the first argument, plaintiffs contend that the phrase “any damage” is not synonymous with “actual damages,” which generally refers to pecuniary damages. The language of section 1780(a) indicates that plaintiffs are correct. If “any damage” and “actual damages” were synonymous, then it seems likely only the latter phrase would have been used in the first part of subdivision (a). The juxtaposition of the two phrases so close together indicates that the phrases have different meanings. Moreover, the breadth of the phrase “any damage” indicates a category that includes, but is greater than, “actual damages,” i.e. those who are eligible for the remedy of “actual damages” are a subset of those who have suffered “any damage.” Sprint does not dispute this point. It concedes that “any damage” may encompass harms other than pecuniary damages, such as certain types of transaction costs and opportunity costs.

(Slip op., at p. 5, footnote omitted.) Construing Kagan v. Gibraltar Sav. & Loan Assn. (1984) 35 Cal.3d 582 to fit this rubric, the Meyer Court noted that in Kagan, the plaintiff wasn’t charged an improper fee, but did expend time and resources resisting the fee after the financial institution announced its intention to assess the fee. (Slip op., at pp. 8-9.)

The opinion has other interesting holdings. For example, the Meyer Court explicitly declares that the statute of limitation applicable to a CLRA claim is subject to a delayed discovery rule, based on an objective reasonable consumer standard. (Slip op., at p. 12, citing Chamberlain v. Ford Motor Co. (N.D.Cal. 2005) 369 F.Supp.2d 1138, 1148.) The decision also confirms that settling with a plaintiff individually does not undermine a plaintiff’s status as a legitimate class representative.

From the consumer standpoint, Meyer is mixed bag of holdings. But on the damage issue, the UCL Practitioner likely has the right of it when noting that this looks suspiciously like Proposition 64 creep.

Read More

California Supreme Court grants request to file over-length Opening Brief in Brinker Restaurant v. Superior Court

/

As indicated on the docket, the Supreme Court granted permission for Petitioner to file an over-length Opening Brief in Brinker Restaurant v. Superior Court.  Sources indicate that the Opening Brief was in the neighborhood of 135 pages, so "over-length" may not truly communicate the magnitude of the Brief.

By all rights, between that Opening Brief and the Opposition Brief, there should be nothing left for amicus filers to discuss.  In theory, Amicus Briefs should not repeat arguments advanced in the briefing by the parties.  In practice, this rule isn't just tested, it is abused.  The Proposition 64 briefing, in particular, took great liberties.  But the Supreme Court has appeared tolerant on this point, at least as indicated by its liberal granting of permission to file Amicus Briefs.  Of course, there is no way of knowing whether such Briefs receive any meaningful consideration if they are duplicative of the parties' Briefs.  I assume the "me too" briefs are primarily intended to exert some measure of pressure on the decision, but no one would ever admit as much.

Read More