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

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Greatsealcal100Once 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.

Tarkington v. California Unemployment Insurance Appeals Board (Albertson’s, Inc.) strictly limits instances where class actions can be decided on the pleadings

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Greatsealcal100On April 13, 2009, the Court of Appeal (Second Appellate District, Division One) ordered the publication of its March 12, 2009 opinion in Tarkington v. California Unemployment Insurance Appeals Board (Albertson’s, Inc.). The appeal followed a somewhat complex effort to obtain unemployment insurance benefits by locked-out employees of Albertsons, Inc. If you are curious about such things as writ petitions following adverse administrative ruling and the disdainful lack of honor by defendants that demand procedural compliance only to throw that compliance in the plaintiffs’ face when they satisfy those demands, then I urge you to read the opinion since I won’t be discussing those niceties here.

The very basic procedural summary of the case is as follows:

“ This is an appeal from the denial of a writ petition, styled as a class action, filed by employees of Albertson’s Inc. (Albertson’s) seeking to reverse an administrative decision denying them unemployment insurance benefits during an 18-week lockout by Albertson’s. On demurrer, the trial court ruled that the employees failed to allege sufficient facts supporting equitable tolling. The trial court also struck the class allegations as overly broad. The employees elected not to amend their petition in order to pursue the present appeal. We reverse and remand for further proceedings.

(Slip op., at p. 2.) The aspect of the opinion of interest in the context of class action litigation is the near-adamant holding that class actions should be decided at the pleading stage only in mass tort and similar actions not well-suited to class treatment. That section is quoted here in full:

““California’s judicial policy [is to allow] potential class action plaintiffs to have their action measured on its merits to determine whether trying their suits as a class action would bestow the requisite benefits upon the litigants and the judicial process to justify class action litigation.” (Beckstead v. Superior Court (1971) 21 Cal.App.3d 780, 783.) “In order to effect this judicial policy, the California Supreme Court has mandated that a candidate complaint for class action consideration, if at all possible, be allowed to survive the pleading stages of litigation.” (Id. citing La Sala v. American Sav. & Loan Assn. (1971) 5 Cal.3d 864, 868-869 [reversing trial court’s sustaining of demurrer against class action suit]; Vasquez v. Superior Court (1971) 4 Cal.3d 800, 816 [same]; Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 716-717 [same]; Jones v. H. F. Ahmanson & Co. (1969) 1 Cal.3d 93, 121 [affirming trial court’s overruling of demurrer attacking class allegations].)

“The wisdom of allowing survival is elementary. Class action litigation is proper whenever it may be determined that it is more beneficial to the litigants and to the judicial process to try a suit in one action rather than in several actions . . . . It is clear that the more intimate the judge becomes with the character of the action, the more intelligently he may make the determination. If the judicial machinery encourages the decision to be made at the pleading stages and the judge decides against class litigation, he divests the court of the power to later alter that decision . . . Therefore, because the sustaining of demurrers without leave to amend represents the earliest possible determination of the propriety of class action litigation, it should be looked upon with disfavor.” (Beckstead, supra, 21 Cal.App.3d at p. 783.) Despite the policy disfavoring the determination of class suitability issues at the pleading stage, several cases, including those cited by Albertson’s, have done exactly that. (See, e.g, Silva v. Block (1996) 49 Cal.App.4th 345, 348 [trial court properly determined class issues on demurrer, since it was apparent from the face of the pleading that issues requiring separate adjudication—both of liability and damages—predominated over common questions]; Clausing v. San Francisco Unified School Dist. (1990) 221 Cal.App.3d 1224, 1234 [in this mass-tort action, “it would be a waste of time and judicial resources to require a full evidentiary hearing [on class suitability] when the matter can properly be disposed of by demurrer”; Brown v. Regents of University of California (1984) 151 Cal.App.3d 982, 990-991 [determination of class status by demurrer proper in mass-tort action].)

In Prince v. CLS Transportation, Inc. (2004) 118 Cal.App.4th 1320, after an exhaustive review of the relevant case law, this division determined that the apparent conflict was in fact not a conflict at all: “[I]t is only in mass tort actions (or other actions equally unsuited to class action treatment) that class suitability can and should be determined at the pleading stage. In other cases, particularly those involving wage and hour claims, class suitability should not be determined by demurrer.” (Id. at p. 1325.) We reasoned that in mass tort actions individual questions of liability and damages frequently predominate over common questions and resolving class suitability at the pleading stage is therefore proper. (Id. at pp. 1327-1328.) In contrast, we explained, “wage and hour disputes (and others in the same class) routinely proceed as class actions” because they usually involve “’a single set of facts applicable to all members’,” and “’one question of law common to all class members.’” (Ibid.) As long as a plaintiff “alleges institutional practices . . . that affected all of the members of the potential class in the same manner, and it appears from the complaint that all liability issues can be determined on a class-wide basis,” we held that “no more is required” at the pleading stage. (Id. at p. 1329.)

In our view, the petition in this case is more like a wage and hour case than a mass-tort action. It involves a single set of facts (i.e., those allegations pertaining to Albertson’s selective lockout and illegal hiring of locked out employees), one question of law common to all class members (i.e., whether employees who could not work because of Albertson’s lockout fall under the ambit of section 1262), and one institutional practice (i.e., the denial of benefits to locked out employees by the EDD and CUIAB Board). While there may be individual questions of the amount of benefits, if any, to which each claimant is entitled, we do not see these questions as predominant over the common factual allegations and legal questions cited above. (Accord Vasquez v. Superior Court (1971) 4 Cal.3d 800, 809 [“the fact that each member of the class must prove his separate claim to a portion of any recovery by the class is only one factor to be considered in determining whether a class action is proper”]; Reyes v. Board of Supervisors (1987) 196 Cal.App.3d 1263, 1272, 1279 [rejecting county’s argument that denial of governmental benefits was not suitable for class treatment because “each recipient’s right to recover depends on the facts peculiar to his/her case” and noting that “it is especially appropriate to proceed with a class action to provide effective relief when, as here, a large number of [class members] have been allegedly, improperly denied governmental benefits on the basis of an invalid administrative practice”].)

In line with our decision in Prince, we conclude that it was premature for the trial court to make determinations pertaining to class suitability on demurrer. We reverse the court’s order granting Albertson’s motion to strike and the court’s accompanying legal ruling that the class definition was “too broad.” The putative class definition alleged in the petition, which we cite here, is sufficient to move forward past the pleading stage:

“Petitioners . . . bring this petition for writ of administrative mandamus on behalf of the entire class of individuals who were employed by Albertson’s at any time during the period October 11, 2003 through February 26, 2004, and who filed timely claims with the EDD for unemployment insurance benefits for all or some of this period, and were denied such benefits on the basis of the trade dispute exception, California Unemployment Insurance Code § 1262 . . . .”

(Slip op., at pp. 17-20.) This holding is likely to see immediate use in every class action challenged by way of demurrer or motion to strike, and it may deter these procedural wastes of time.  At least I hope so.  Nothing ruins a perfectly good day like receiving the obligatory demurrer to class allegations.

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In Hunt v. Imperial Merchant Services, the Ninth Circuit goes the extra mile to address class notice cost-shifting

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Ninth Circuit Seal“We have never addressed when it is appropriate to place notice costs on a class action defendant,” said the Ninth Circuit on March 31, 2009, in Hunt v. Imperial Merchant Services. When an appellate court says that, you are almost guaranteed to get an answer to that question (unless the appellate court takes that opportunity to mention that it isn’t going to answer that question because it doesn’t have to reach the question to resolve the appeal). In this instance, you are in luck. Hunt provides something of an answer to that question.

The “holding” is summarized in the final paragraph of the opinion:

“District courts may order a class action defendant to pay the cost of class notification after they determine that the defendant is liable on the merits. They may in an appropriate case shift these notice costs even when the liability decision is under appeal. Here, considering the totality of circumstances, we conclude that the district court did not abuse its discretion by placing the cost of class notification on IMS.

(Opinion, at p. 3895.) From this paragraph, we already know that trouble is afoot. We know that merits were decided, in some fashion, against the defendant, and that decision is on appeal. One could also infer, rightly in this case, that the opinion doesn’t resolve the liability appeal. So we have a notice cost shifting order resolved on an appeal before the underlying liability decision is resolved. The truth, as is often the case in litigation, is even worse than that:

“This appeal reaches us in unusual procedural circumstances [author’s note: “uh oh”] that have resulted in two active appeals assigned to different panels of our circuit. Brandy Hunt and Brian Castillo (collectively “Hunt”) filed a class action complaint against IMS, alleging that it violated the FDCPA by attempting to collect both an interest charge and a statutory service charge on dishonored checks. The district court concluded that whether IMS violated the FDCPA turned on whether California law permits a debt collector to demand both a statutory service charge and interest in addition to the debt amount. Hunt v. Check Recovery Sys., Inc., 478 F. Supp. 2d 1157, 1161 (N.D. Cal. 2007). The district court granted Hunt partial summary judgment on liability in March 2007, concluding that IMS’ collection efforts violated California law and thus the FDCPA. In a separate order filed the same day, the district court certified two subclasses under Federal Rules of Civil Procedure (“Rule”) 23(b)(2) and 23(b)(3), with Hunt and Castillo as named plaintiffs.

(Opinion, at p. 3885.) But wait, there’s more:

“The class action was not the first time Brandy Hunt had pursued her FDCPA claim against IMS. Hunt had declared bankruptcy before filing her class action complaint, and the bankruptcy court determined that IMS could not collect both an interest charge and a statutory service charge from Hunt under California law. IMS appealed the bankruptcy court’s decision to the district court, and the appeal was assigned to the same district judge responsible for the consolidated class action cases. The district court affirmed the bankruptcy court’s decision, incorporating its March 2007 partial summary judgment order in this class action case as the basis for affirming. IMS appealed the district court’s judgment affirming the bankruptcy court, and the appeal was assigned to a different panel of our circuit as case number 07-15976 (the “merits appeal”). On May 12, 2008, the other panel certified to the California Supreme Court the question whether a debt collector recovering on a dishonored check may impose both a service charge and prejudgment interest under California law. Imperial Merchant Servs., Inc. v. Hunt, 528 F.3d 1129, 1130 (9th Cir. 2008).

The California Supreme Court granted certification in July 2008, but has not yet issued its decision, and so the merits appeal is still active. The class action case has been stayed since June 2008, pending resolution of both this appeal and the merits appeal.

(Opinion, at p. 3886-7.) Amazing. You can decide for yourself whether you think that this is amazing “good” or amazing “bad”. If you are curious about the cost-shifting analysis, it is but a smidgeon of the opinion. Before the Court ever reaches that issue, it has to decide whether it can hear the appeal, what standard of review applies, whether the appeal is moot, whether it is “anticipatorily moot,” and whether the Court will hear the matter regardless. The Court decides to hear the issue because it is an “issue that often arises in district courts but typically evades appellate review.”

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California Supreme Court denies Petitions for Review in Ghazaryan and Marin

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In its April 1, 2009 Conference Report, the California Supreme Court noted that Petitions for Review were denied in Ghazaryan v. Diva Limousine, LTD. (2009) 169 Cal.App.4th 1524 and Marin v. Costco Wholesale Corporation (2008) 169 Cal.App. 4th 804 (among other denials).  You can read about Ghazaryan on this blog here, and Marin here.

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Nationwide class action against American Express goes to trial; Amex prevails

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In the grand scheme of civil litigation, there aren't that many class actions as a percentage of lawsuits filed (probably around one half of one percent of unlimited civil filings in California, for example; see post).  Rarer still are the nationwide class actions.  And rarest of all, the nationwide class action that goes to trial.  Believed by some to be extinct, a recent sighting in the wild confirms that it still exists, at least in theory.

On March 26, after 11 weeks of testimony from the class, Judge George Hernandez of the California Superior Court in Fremont, California, in a nonjury trial, ruled that plaintiffs failed to prove their case.  (Pamela A. MacLean, Amex Wins Rare National Class Action Trial Over Allegations of Overcharging (March 31, 2009) www.law.com and www.nlj.com.)  The suit alleged that Amex charged a fee for airline travel purchased on its charge card and would sweep in inappropriate insurance charges for flights consumers later canceled, seat upgrades and baggage fees.

Not surprisingly, plaintiffs' counsel indicated that an appeal is on the way.

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"Tip Pooling" class actions are the latest craze

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Greatsealcal100Today, in Etheridge v. Reins International California, Inc., the California Court of Appeal (Second Appellate District, Division Three) issued an opinion in a class action lawsuit about the practice of "tip pooling" common in restaurants and casinos.  That, by itself, might not even be interesting enough to write about here.  But it is news when it marks the third such opinion on the topic this year.  Lu v. Hawaiian Gardens Casino, Inc. (2009) 170 Cal.App.4th 466 began the trend, followed by Grodensky v. Artichoke Joe’s Casino (March 11, 2009) ___ Cal.App.4th ___.  Grodensky was exciting in that it created a split of authority as to whether Labor Code section 351 provides for a private right of action or serves merely as a predicate violation of law under the UCL.

This effectively sums up the dearth of good class action-related news in California this week.

UPDATE (3/30/09):  A reader has been kind enough to let me know that I missed the fourth such case this year, Budrow v. Dave & Buster's of California, Inc. (March 2, 2009) (Second Appellate District, Division Eight).  That same reader advised me that Petitions for Review have been or will be filed in several of these cases.

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In Naranjo v. Spectrum Security Services, Inc., another pre-emption argument falls flat

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Greatsealcal100With collateral attacks on the class action device – such as several efforts to amend California’s class action law (Code Civ. Proc., § 382) – proving unsuccessful, the name of the game in recent years has been pre-emption arguments. In general, it’s fair to say that those arguments have had limited success. <cough> Wyeth. <cough> In Naranjo v. Spectrum Security Services, Inc. (March 24, 2009), the Court of Appeal (Second Appellate District, Division Four) considered whether the McNamara-O’Hara Service Contract Act of 1965 (SCA) (41 U.S.C. § 351 et seq.) pre-empts all state law remedies for wage & hour violations.

The Court described the SCA:

“ The SCA requires government contractors to pay service employees “minimum wages and benefits determined by the Secretary of Labor.” (U.S. ex rel. Sutton v. Double Day Office Services (9th Cir. 1997) 121 F.3d 531, 533.) “Its purpose is to protect employees of government contractors. Before the [SCA], the federal government had been ‘subsidizing’ substandard levels of compensation by awarding contracts to those who were able to bid low by paying less. [Citation.]” (Saavedra v. Donovan (9th Cir. 1983) 700 F.2d 496, 497.)

(Slip op., at p. 4.) After considering the pre-emption argument successfully raised by defendant at summary judgment, the Court concluded that the SCA did not pre-empt the Labor Code Claims at issue:

“ We therefore conclude that Naranjo’s action to recover additional wages under Labor Code section 226.7 neither conflicts with the SCA nor hinders the achievement of its goals. The wage determination attached to Spectrum’s contract sets forth the minimum basic wage rates for a large number of employment categories, including Naranjo’s category of detention officer; in addition, it contains provisions setting minimum rates for night pay, Sunday pay, and a “[h]azardous [p]ay [d]ifferential,” but none regarding additional pay for the denial of meal and rest breaks. Naranjo’s suit thus seeks state-required wages that exceed the minimum wages determined by the Secretary. In view of the language of the form clause in Spectrum’s contract and the authorities discussed above, Naranjo’s action under Labor Code section 226.7 does not conflict with the SCA and promotes, rather than impedes, its goals.

We reach the same conclusions regarding Naranjo’s claims under Labor Code sections 203 and 226. Labor Code section 203, subdivision (a), imposes a penalty upon employers who willfully fail to pay discharged employees their full compensation in a timely manner. Naranjo’s complaint seeks this penalty for the additional wages allegedly not paid under Labor Code section 226.7. As explained above, Naranjo may properly seek the wages in a state court without impeding the operation of the SCA. In view of Butler, we conclude that Naranjo’s litigation of his request for a penalty under Labor Code section 203 also would not hinder or conflict with the SCA.

Finally, Labor Code section 226 obliges employers to provide their employees with records of their earnings and deductions, and imposes penalties upon employers who knowingly and intentionally fail to supply the records. In contrast, under the SCA and its regulations, employers must maintain records and disclose them to the Secretary, but are not required to disclose the records to employees. (29 C.F.R. § 4.6(g)(1).) The employer’s sole duty regarding employees is to post a form notice in a prominent place regarding the wages and benefits required under the SCA. (29 C.F.R. §§ 4.183, 4.184.) The form clause in Spectrum’s contract specifying its SCA obligations imposes no duty upon Spectrum to provide wage and benefit records to its employees. (48 C.F.R. § 52.222-41(i).) As the evident goal of the employer’s recordkeeping duties under the SCA is to ensure compliance with the SCA, we conclude that Labor Code section 226 complements the SCA and facilitates its goals by enhancing scrutiny of the employers’ conduct.

(Slip op., at pp. 13-14.) The plaintiff did not address the trial court’s ruling of pre-emption as to claims for violation of the UCL, conversion, and injunctive relief. Having not raised those rulings as erroneous, the Court did not address them. And so another pre-emption argument fizzles.

The life cycles of these trends are interesting.  Consider, for example, the anti-class action arbitration provisions that were struck down in waves, or the run of decisions about class member identity discovery after Pioneer.  Makes you wonder how these issues manage to percolate up to the appellate level in such temporal proximity.  Probably coincidence, but maybe a vast defense conspiracy...

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“There you go again,” CJAC

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In a March 12, 2009 blog post entitled Class Actions Slamming Our Courts, But Seldom Going to Trial, CJAC, once again, calls for an immediate right to appeal an order granting certification. Just like it did back in 2008, when it was supporting AB 1905, CJAC is back to denouncing the current class action device in California as something akin to a congealing mass that is paralyzing the gears of justice. This time CJAC’s campaign is in support of Assembly Bill 298, authored by Assembly Member Van Tran. However, CJAC is seemingly more concerned with creating an illusion of chaos than with offering a fair presentation of the data surrounding class actions. Starting with the title of its post, a quick search of Findings of the Study of California Class Action Litigation, 2000-2006 (“Study”) cited in CJAC’s post reveals no mention of Court’s getting “slammed” by class actions.

Continuing, CJAC says, “A just-released California Judicial Council report says that class action lawsuits are booming in California, but that only a small percentage (0.7%) ever go to trial.” Again, no mention in the Study that class action suits are booming, and the truth differs markedly from the hyberbole. According to the Study cited in CJAC’s blog post, “Study courts reported a total of 3,711 class action cases filed between 2000 and 2005.” (Study, at p. 3.) What will our system of justice do under the weight of so many class actions? It likely won’t notice them, as suggested by these additional statistics from the Judicial Council’s 2007 Court Statistics Report Introduction: “Civil filings totaled 1,418,490, and civil dispositions totaled 1,268,153 in FY 2005–2006.” Nearly one and one-half million civil filings in a one year period in California. Contrast that number with the paltry count of 3,711 class action cases in 6-year period, and the impressiveness of the class action filing numbers diminishes. Moreover, California’s class actions are routinely being handled in trial courts established under California’s Complex Civil Litigation Pilot Program. Those courts are uniquely positioned to handle complex cases, like class actions, efficiently and effectively.

CJAC’s post said, “The study found a 63% increase in class action filings between 2000 and 2005 in the 12 courts reviewed. The increase was in contrast to the overall civil filings, which decreased during that same time period.” But CJAC doesn’t mention the theories in the Study as to why that increase might have occurred. From the Study:

“It is important to note that class action cases represent less than one-half of one percent of all unlimited civil filings in the study courts during the study period. Very few class action cases are filed as compared to the entire unlimited civil category and, as previously discussed, discreet events can create an immediate filing effect in the class action segment. For example, a natural disaster may cause a significant increase in insurance-related class action activity without affecting overall unlimited civil filings. Similarly, a change in the law, as in the CAFA example cited above, may also have an effect on this litigation type that is not seen elsewhere. Both of these examples could create observed divergences from unlimited civil filings that are unique to the class action arena. Thus, filing trends in the overall unlimited civil category are not reliable predictors of class action behavior.

(Study, at p. 4.) In other words, class actions, a tiny portion of all civil filings, may display reactions to significant events not discernable when examining the hundreds of thousands of unlimited civil filings each year or the millions of total filings each year.

But because the Study doesn’t actually do much to advance CJAC’s objectives, CJAC moves on to assertions having no connection to the Study: “Many cases settle immediately after class certification because defendants fear the large cost of going to trial and find it cheaper to settle whether the underlying claim has merit or not.” Really? Based on what? It can’t be the Study figures, which offer some surprising statistics, in a handy chart:

Certification status of disposed cases

Certification Status

n

Percent

No Certification

1,005

77.7%

Certified by motion OR as part of a settlement

277

21.4%

Certified by BOTH motion and as part of a settlement

12

0.9%

All Cases

1,294

100.0%

(Study, at p. C11, where n represents the number of cases in a category.) 77.7% of all class actions reaching a disposition during the Study period were not certified. Only 21.4% of all class actions were certified either as part of a settlement or as part of a contested certification motion. However, of the 1,294 class actions tracked in the sample group, 413 cases in this sample were resolved through settlement. (Study, at p. C1.) Comparing the 277 figure for certification for any reason (disputed or for settlement) to the 413 figure for any type of settlement, it is evident that at least 136 of the class actions in the sample settled on non-class terms, and possibly more than that. So much for image of defendants falling over themselves to settle class actions because of the fear of the massive costs associated with litigating a class action.  CJAC says, "If California law granted the defendant the same right to appeal the class certification decision, only valid class action cases could proceed."  Evidently, CJAC concludes that, even with 77.7% of the Study cases failing to achieve certification, even more of an impediment is needed.  CJAC also neglects to mention that some defendants may choose to settle class actions because they know that they violated the law and simply want a settlement discount on their liability.

But going further, what is different about a defendant settling a class action because it is cheaper than going to trial when compared to every defendant that settles an individual suit because it might be cheaper to settle, irrespective of merit? I once heard a mediator opine that, due to the costs of litigation, he estimated that no case with less than $75,000 in dispute should go to trial. CJAC’s position devolves into argumentum ad terrorem, with nothing of substance behind it.

Known as a “death knell” ruling, an order denying certification to an entire class is appealable because it is the legal equivalent of a dismissal of the action as to all members of the class other than the named plaintiff. (See, e.g., Linder v. Thrifty Oil Co., 23 C4th 429 (2000).) Absent class members must decide whether to file a tidal wave of individual suits, or abandon their rights. Allowing an appeal of the denial of certification is comparable to the right of appeal following the termination of a claim. A defendant, on the other hand, retains the right to challenge a claim on the merits after certification is granted. If the defendant prevails, that victory is enforceable against the entire class. If the defendant loses on the merits after certification, the defendant can then challenge both the certification order and the order on the merits on appeal. And if the defendant can’t beat certification and doesn’t prevail on the merits and can’t convince a court of appeal that any error of significance was responsible for the result below, then the system operated correctly.

The alternative is what CJAC wants: the immediate cessation of litigation in the trial court upon the issuance of an order granting or denying certification. And the class that may have been victimized by a defendant gets to sit by and wait several more years for recompense. Keep in mind that, even after certification is granted, a trial court can “decertify” a class if later-discovered information proves that course appropriate. In the CJAC universe, a defendant could appeal the granting of certification. Then, if that year and a half long detour to the Court of Appeal proved unsuccessful, the defendant could file a motion to decertify the class after remand. If that motion were denied, it, too, would likely generate an immediate right of appeal. Because there is no numerical limit on the number of times a defendant can seek decertification (other than the limit imposed by the need for “new” evidence to support the motion), the number of appeals of right could be staggering. In other words, the consequences of proposals like that contained in AB 298 would essentially place class actions in the deep freeze of appellate activity until the cost of litigation broke the plaintiff.

Has CJAC made the case for essentially destroying the rights of plaintiffs in cases that constitute less than one-half of one percent of all unlimited civil filings? Not even close. And if CJAC continues with its highly selective citation to statistics, it will also confirm for itself an absence of credibility in legal discourse.

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in brief: Dukes v. Wal-Mart Stores already set for en banc hearing

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Ninth Circuit SealOn February 13, 2009, the Ninth Circuit granted a request for en banc review of Dukes v. Wal-Mart Stores (9th Cir. 2007) 509 F.3d 1168. On March 11, 2009, the Court issued a Corrected Notice of hearing, listing March 24, 2009, at 2:00 p.m., as the date and time for that en banc hearing in the San Francisco Courthouse of the Ninth Circuit. I don't know what a "normal" lag time is from granting en banc review to setting the hearing, but in appellate court years, that seems like nanoseconds to me. The UCL Practitioner has some detailed coverage of Dukes in this post collection.

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In Franco v. Athens Disposal Company, Inc., another "no class action" arbitartion clause bites the dust, and with a kicker

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Greatsealcal100Today, in a putative class action asserting various Labor Code violations, the Court of Appeal (Second Appellate District, Division One) invalidated as unconscionable an arbitration agreement containing a “no class action or private attorney general action (PAGA) clause” in Franco v. Athens Disposal Company, Inc. (March 10, 2009).

The Court held:

“We conclude that the class arbitration waiver is unconscionable with respect to the alleged violations of the meal and rest period laws given “the modest size of the potential individual recovery, the potential for retaliation against members of the class, [and] the fact that absent members of the class may be ill informed about their rights.” (Gentry v. Superior Court (2007) 42 Cal.4th 443, 463 (Gentry).) In addition, because the arbitration agreement prevents plaintiff from acting as a private attorney general, it conflicts with the Labor Code Private Attorneys General Act of 2004 (PAGA) (§§ 2698–2699.5) — an act that furthers Gentry’s goal of comprehensively enforcing state labor laws through statutory sanctions (see Gentry, supra, 42 Cal.4th at pp. 462–463).

(Slip op., at p. 2.) But you have to admire the employer for the sheer chutzpah of it. A “no private attorney general” clause?  Bold, and daring.

The opinion is longer than you might expect.  Several preliminary issues required discussion before the Court moved to the meat of the issues.  And the Court provided an extensive discussion of both Gentry and the nature of PAGA actions.  If this happens to be your bailiwick, the opinion is a must read.  If you never confront arbitration agreements or wage & hour matters, move along - there is nothing to see here.

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