More on Morgan, et al. v. AT&T Wireless Services, Inc.

As promised shortly after Morgan, et al. v. AT&T Wireless Services, Inc. (September 23, 2009) was published, here is a longer post on the first substantial application of In re Tobacco II Cases, 46 Cal. 4th 298 (2009) by a California Court of Appeal.  Before commenting on the analysis in Morgan, a brief summary of the facts of the case are in order.  The plaintiffs alleged that they were ripped off when they purchased the premium Sony Ericsson T68i cell phone for use on the AT&T network but weren't told that AT&T was abandoning the 1900 MHz GSM spectrum in favor of the 850 MHz spectrum, rendering the phones useless.  Then AT&T sent the T68i owners an inferior replacement that they called an "upgrade."  After three successive rounds of pleadings, the trial court held that plaintiffs could not state any actionable claims.  In case you were wondering, I just summarized 20 pages of opinion for you.

 First, the Court examined the UCL cause of action by recapitulating the elements of a valid UCL cause of action:

[D]espite the changes to the standing requirements, the Proposition 64 amendments to the UCL "'left entirely unchanged the substantive rules governing business and competitive conduct. Nothing a business might lawfully do before Proposition 64 is unlawful now, and nothing earlier forbidden is now permitted.'" (In re Tobacco II Cases (2009) 46 Cal.4th 298, 314 (Tobacco II).) Thus, pre-Proposition 64 caselaw that describes the kinds of conduct outlawed under the UCL is applicable to post-Proposition 64 cases such as the present case. The only difference is that, after Proposition 64, plaintiffs (but not absent class members in a class action) must establish that they meet the Proposition 64 standing requirements. (Tobacco II, supra, 46 Cal.4th at p. 320.)

Slip op., at 20.  Then the Court cut through the extraneous allegations of the Third Amended Complaint to determine whether any prong of the UCL was sufficiently alleged:

The definitions of unlawful and fraudulent business practices are straightforward and well established. An unlawful business practice under the UCL is "'"'anything that can properly be called a business practice and that at the same time is forbidden by law.'"'" (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180 (Cel-Tech).) A fraudulent business practice is one in which "'"'members of the public are likely to be "deceived."'"'" (Tobacco II, supra, 46 Cal.4th at p. 312.)

Slip op., at 21-22.  The Court also noted the unsettled definition of "unfair" in cases not involving commercial competitors, but it did not need to resolve the dispute, concluding that the other two prongs were sufficient to resolve the appeal.  Returning to the fraudulent prong of the UCL, after underscoring that "fraudulent" under the UCL is distinct from common law fraud, the Court provided more detail about the type of conduct that is "fraudulent" under the UCL:

As noted above, a fraudulent business practice is one that is likely to deceive members of the public. (Tobacco II, supra, 46 Cal.4th at p. 312.) A UCL claim based on the fraudulent prong can be based on representations that deceive because they are untrue, but "'"also those which may be accurate on some level, but will nonetheless tend to mislead or deceive. . . . A perfectly true statement couched in such a manner that it is likely to mislead or deceive the consumer, such as by failure to disclose other relevant information, is actionable under"' the UCL." (McKell, supra, 142 Cal.App.4th at p. 1471.) For example, in Pastoria v. Nationwide Ins., supra, 112 Cal.App.4th 1490, the plaintiffs alleged: (1) they purchased insurance policies based upon the defendant insurance company's description of the premiums, lack of deductibles, and other policy benefits; (2) less than two months later the insurer notified them of significant changes to their policies, including material increases in premiums and substantial deductibles; and (3) the insurer knew of the impending changes to the policies at the time plaintiffs purchased them, but did not communicate that to the plaintiffs. (Id. at p. 1493.) We held that those allegations were sufficient to state a claim for relief under the fraudulent business practices prong of the UCL. (Id. at p. 1499.)

Slip op., at 23-24.  The Court then identified the allegation from Morgan that were comparable:

In the present case, plaintiffs alleged that (1) AT&T marketed and sold expensive T68i phones (which could be operated only on the AT&T GSM/GPRS network) in conjunction with multi-year service plans, and touted the improvements it was making to its GSM/GPRS network; (2) the improvements AT&T made to the network significantly degraded the portion of the network on which the T68i phones operated; and (3) AT&T knew at the time it sold the T68i phones that the improvements it was going make would soon render the T68i phones essentially useless.

Slip op., at 24.  Having concluded that a UCL fraudulent prong violation was alleged, the Court then determined that the plaintiffs had standing to bring the claim, citing Tobacco II:

In Tobacco II, supra, 46 Cal.4th 298, the Supreme Court held that this standing requirement applies only to the named plaintiffs in a class action (id. at pp. 320-321), and that it imposes an actual reliance requirement on named plaintiffs seeking relief under the fraudulent prong of the UCL (id. at p. 326). The court went on to explain what a plaintiff must plead and prove: “while a plaintiff must allege that the defendant's misrepresentations were an immediate cause of the injury-causing conduct, the plaintiff is not required to allege that those misrepresentations were the sole or even the decisive cause of the injury-producing conduct. Furthermore, where, as here, a plaintiff alleges exposure to a long-term advertising campaign, the plaintiff is not required to plead with an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements.” (Id. at p. 328.)

Slip op., at 27.  The Court found that the allegations of an extensive advertising campaign by AT&T, coupled with the plaintiffs' online research and similar representations made to them in AT&T stores sufficiently alleged the necessary reliance element.

The Court did not reach the same conclusion when it turned to the cause of action under the FAL (False Advertising Law), which was based on the claim that the T68i replacement phone was an "upgrade":

AT&T argues that plaintiffs do not have standing to bring this claim. AT&T is correct. Proposition 64 made identical changes to the standing requirements to bring an action under the FAL as it made to the requirements under the UCL. (Californians for Disability Rights v. Mervyn’s, LLC, supra, 39 Cal.4th at p. 229, fn. 2.) A person bringing an action under the FAL must establish that he or she “has suffered injury in fact and has lost money or property as a result of a violation of [the FAL].” (Bus. & Prof. Code, § 17535.) Even if it could be said that the return of a phone that plaintiffs alleged was “useless” constituted an injury in fact, plaintiffs alleged that each of them declined to return their T68i phone. Therefore, they cannot truthfully allege that they lost money or property as a result of AT&T's offer. Accordingly, the trial court did not err by sustaining the demurrer to the FAL cause of action.

Slip op., at 29.

Regarding the CLRA claim, the Court of Appeal clearly resolved a question with respect to CLRA notices for corrective action.  The question is whether the notice must be sent before the initial complaint is filed to permit an amendment seeking damages, or, alternatively, whether it can issue after the initial complaint is filed so long as at least 30 days pass before an amendment seeking damages is filed.  This question gained some traction when a federal district court ruled that the notice must be sent before the initial complaint is filed.  The Court of Appeal disagreed:

The federal district court cases upon which AT&T relies for its assertion that failure to comply with the notice requirement requires dismissal with prejudice fail to properly take into account the purpose of the notice requirement. That requirement exists in order to allow a defendant to avoid liability for damages if the defendant corrects the alleged wrongs within 30 days after notice, or indicates within that 30-day period that it will correct those wrongs within a reasonable time. (See, e.g., Meyer v. Sprint Spectrum L.P., supra, 45 Cal.4th at p. 642; Kagan v. Gibraltar Sav. & Loan Assn., supra, 35 Cal.3d at p. 590.) A dismissal with prejudice of a damages claim filed without the requisite notice is not required to satisfy this purpose. Instead, the claim must simply be dismissed until 30 days or more after the plaintiff complies with the notice requirements. If, before that 30-day period expires the defendant corrects the alleged wrongs or indicates it will correct the wrongs, the defendant cannot be held liable for damages.

Slip op., at 31.  I've been on the short end of this argument, and I'm glad that a California Court of Appeal put an end to what I viewed as an argument disconnected from the purpose of the statutory language.

Regarding the fraud cause of action, the Court of Appeal noted the general rule that fraud must be pled with particularity; however, it then described an important exception:

[T]he Supreme Court has noted, there are “certain exceptions which mitigate the rigor of the rule requiring specific pleading of fraud.” (Children’s Television, supra, 35 Cal.3d at p. 217.) For example, where a fraud claim is based upon numerous misrepresentations, such as an advertising campaign that is alleged to be misleading, plaintiffs need not allege the specific advertisements the individual plaintiffs relied upon; it is sufficient for the plaintiff to provide a representative selection of the advertisements or other statements to indicate the language upon which the implied misrepresentations are based. (Id. at p. 218.) But the court also noted that where a claim of fraud is based upon a long-term advertising campaign, which “may seek to persuade by cumulative impact, not by a particular representation on a particular date . . . [p]laintiffs should be able to base their cause of action upon an allegation that they acted in response to an advertising campaign even if they cannot recall the specific advertisements.” (Id. at p. 219.)

Slip op., at 33.

This opinion offers the first evidence that Tobacco II will prove to be yet another instance where the California Supreme Court has substantially redirected an anti-consumer trend in appellate and trial court rulings.

in brief: Morgan, et al. v. AT&T Wireless Services, Inc. analyzes the sufficiency of allegations under the UCL, CLRA, FAL and common law fraud in a consumer class action

While a more thorough analysis will follow, reader may be interested in taking a look at Morgan, et al. v. AT& T Wireless Services, Inc. (September 23, 2009).  In Morgan, the Court of Appeal (Second Appellate District, Division Four) is called upon to address the sufficiency of allegations in a consumer class action alleging causes of action under the Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200 et seq.), the False Advertising Law (FAL) (Bus. & Prof. Code, § 17500 et seq.), the Consumers Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.), and for fraud and declaratory relief.  You can wade through the decision yourself, or wait for the Executive Summary in the next day or so.

In Cartwright, et al., v. Viking Industries, Inc., District Court certifies consumer class action claims under UCL, CLRA, fraudulent concealment and unjust enrichment theories

On September 11, 2009, the United States District Court, Eastern District of California, issued a substantial class certification opinion in Cartwright, et al. v. Viking Industries, Inc. Cartwright is a consumer class action alleging that certain Viking windows are defective, allowing water and air intrusion into homes. The suit alleged claims for Strict Products Liability, Negligence, Breach of Express Warranty, Breach of Implied Warranty, Violation of the Consumer Legal Remedies Act (“CLRA”), Violation of California’s Unfair Competition Law (“UCL”), Fraudulent Concealment, and Restitution.

The District Court ultimately certified a class for the following claims: CLRA, UCL, fraudulent concealment and unjust enrichment. The District Court denied certification of strict liability and negligence claims. In a thorough opinion that emphasizes a number of pro-consumer certification decisions, the Court certified fraudulent concealment claims by allowing a presumption of reliance. The Court's analysis is as interesting for what it does not cite as for what it does cite. Tobacco II is not mentioned. But the Court does cite Mazza v. Am. Honda Motor Co., 254 F.R.D. 610 (C.D. Cal. 2008), which is currently on appeal to the Ninth Circuit following a 23(f) Petition for Permission to Appeal, and Chamberlan v. Ford Motor Corp., 223 F.R.D. 524, 526-27 (N.D. Cal. 2004).

The Opinion also cites to some principles of federal certification that may be surprising to practitioners that rarely venture outside of California's Superior Court. For instance, the Court notes that evidence inadmissible at trial, and, in particular, expert testimony, may be considered as part of a certification decision. "'On a motion for class certification, the court may consider evidence that may not be admissible at trial.'" Order, citing Mazza, 254 F.R.D. at 616 (citing, in turn, Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974)). "'[R]obust gatekeeping of expert evidence is not required; rather, the court should ask only if expert evidence is "useful in evaluating whether class certification requirements have been met."' Ellis v. Costco Wholesale Corp., 240 F.R.D. 627, 635 (N.D. Cal. 2007)."

Now let's see if the acrobat.com embed object will display here:

If you don't see the flash object above, you can directly download the Order. Thanks to Mark Moore for the tip.

California Supreme Court activity for the week of August 17, 2009

The California Supreme Court held its (usually) weekly conference today. Notable results include:

• A transfer Order issued in Pfizer, Inc. v. Superior Court (Galfano) following the decision in the lead case, In re Tobacco II Cases, 46 Cal. 4th 298 (2009).  See also, additional comments in this post at The UCL Practitioner.
• A transfer Order issued in McAdams v. Monier following the decision in the lead case, In re Tobacco II Cases, 46 Cal. 4th 298 (2009).
• A Petition for Review was denied in Olvera v. El Pollo Loco (arbitration agreement found unconscionable; no lucky for clucky).

Never say never: even CJAC's counsel agrees that sometimes unfair competition class actions are a viable tool for obtaining justice

The Civil Justice Association of California ("CJAC") is demonstrating that the "justice" isn't in their name for show.  Fred Hiestand, general counsel for CJAC, wants justice, and he's willing to file a class action against the City of Sacramento and allege unfair competition in violation of Business and Professions Code section 17200 to get that justice.  Dave Gilson, Tort Reformer Wants His Day in Court (August 14, 2009) www.motherjones.com.  According to Legal Pad, CJAC's President, John Sullivan, lamented Hiestand's suit, saying, "Fred has been fighting against frivolous lawsuits for decades, and like a doctor fighting malaria, he’s become infected himself — and with the worse strain of the disease — class actions."  Cheryl Miller, Tort Reform Leader Brings Class Action 'Cause His Car Got Towed (August 14, 2009) legalpad.typepad.com.

In all seriousness, it is outrageous that a city would tow a car for parking in a no parking zone.  Those no parking zones are for special people, like lawyers, that are important and have important things to do, like eat dinner.  Those signs really mean no parking for regular people.  Why do lawyers have to put up with abuse like this?  I'm so angry I could just spit nails.  Sorry I can't blog more, but I need to run out to the street and tell that parking enforcement officer that the red stripe on the curb means "Reserved for The Complex Litigator!"  He has malaria, people - back off.

In Amalgamated, the companion opinion to Arias, the Supreme Court analyzes whether PAGA and UCL claims can be assigned by individuals to their labor union

June 29, 2009 was a busy day for California Supreme Court news.  In Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court (First Transit, Inc.) (June 29, 2009), the California Supreme Court issued the second of companion opinions addressing aspects of California’s unfair competition law (“UCL”) and the Labor Code Private Attorneys General Act of 2004 (“PAGA”) (Cal. Lab. Code § 2698, et seq.). See previous post on Arias.  Because the decisional authority analyzing the recently-passed PAGA is sparse, Amalgamated is important to understanding the reach of PAGA and its role in securing civil penalties for California employees.

Amalgamated addressed two issues. First, the Supreme Court rhetorically asked whether “a plaintiff labor union that has not suffered actual injury under the unfair competition law, and that is not an ‘aggrieved employee’ under the Labor Code Private Attorney General Act of 2004, nevertheless bring a representative action under those laws (1) as the assignee of employees who have suffered an actual injury and who are aggrieved employees, or (2) as an association whose members have suffered actual injury and are aggrieved employees.” Slip op., at 2. Second, the Supreme Court asked whether “a representative action under the unfair competition law be brought as a class action.” Slip op., at 2.

As to the second issue, the Supreme Court noted that Arias sufficiently addressed that issue, holding that an action under the unfair competition law must be brought as a class action.

Before turning to the first issue, the procedural background of Amalgamated touches on a procedural practice recently the subject of appellate consideration.  If you have practiced in the Civil Central West courthouse in Los Angeles, you may be familiar with that Court’s former practice of allowing parties to obtain early determinations of “threshold” issues. See post on Magana Cathcart McCarthy v. CB Richard Ellis, Inc. (May 21, 2009) (holding that early determination of "threshold issues" is not a substitute for the summary adjudication procedural requirements). As in Magana, the parties in Amalgamated briefed threshold issues. The trial court found that plaintiff unions lacked standing under the unfair competition law because the union had not suffered any injury themselves. The trial court further found that the unions lacked standing under PAGA because they were not “aggrieved employees.” The unions appealed and a divided Court of Appeal denied the petition.

The Supreme Court, however, granted the Petition and affirmed the trial court’s ruling. The unions could not be assigned the right to sue under the unfair competition law as a result of amendments passed as part of Proposition 64. The Supreme Court reasoned that the new requirement of “injury in fact” would be undermined by allowing non-injured assignees to stand in the shoes of the injured parties.

With direct standing through assignment precluded, associational standing was next considered.  The Supreme Court found that the post-Proposition 64 UCL was at odds with the doctrine of associational standing: In proposing the amendment to the unfair competition law, section 1 of Proposition 64 sets forth its findings and declarations of purpose. Subdivision (e) of section 1 states: “It is the intent of California voters in enacting this act to prohibit private attorneys from filing lawsuits for unfair competition where they have no client who has been injured in fact under the standing requirements of the United States Constitution.” (Voter Information Guide, Gen. Elec. (Nov. 2, 2004) text of proposed law, p. 109, italics added.) That intent is reflected in the amended statutory language stating that an unfair competition law action can be brought only by a person who has suffered “injury in fact.” (Bus. & Prof. Code, § 17204, italics added.) This standing requirement is inconsistent with the federal doctrine of associational standing. That doctrine applies only when the plaintiff association has not itself suffered actual injury but is seeking to act on behalf of its members who have sustained such injury.

Slip op. at p. 10.  Hence, the unions could neither be assigned the right to sue or bring suit as an association whose members had suffered actual injury.

Regarding PAGA, the Supreme Court repeated comments from Arias, observing:

In bringing such an action, the aggrieved employee acts as the proxy or agent of state labor law enforcement agencies, representing the same legal right and interest as those agencies, in a proceeding that is designed to protect the public, not to benefit private parties. (Arias v. Superior Court, supra, ___ Cal.4th ___, ___ [pp. 16-17]; see People v. Pacific Land Research Co. (1977) 20 Cal.3d 10, 17.)

Slip op. at p. 8.  Keeping with the theme from Arias, it is interesting that the Supreme Court has again pointed out that, under PAGA, an aggrieved employee acts like a “proxy or agent” of the state labor law enforcement agencies.

Because PAGA created neither a property right nor any other substantive right, and because it did not create any legal obligations, PAGA claims cannot be assigned. That prohibition on assignment is not new; rather, it is consistent with previous Supreme Court holdings that preclude the assignment of a right to collect statutory penalties.  Further, because PAGA allows only an aggrieved employee to bring an action to recover civil penalties, unions are foreclosed from asserting PAGA claims on behalf of their members. In effect, there is no associational standing available for a claim uniquely assigned to the employee by the State.

[Editor’s Note: A Contributing Author byline has been added for Shawn Westrick, given that he did not flake after one post.]

Arias v. Superior Court (June 29, 2009) analyzes certification obligations under two of California's representative action statutes

[Editor’s Note: This post was prepared by new Contributing Author, Shawn Westrick. Mr. Westrick is an attorney at Initiative Legal Group, LLP, and it is the Editor’s hope that this column is the first of many such posts. Mr. Westrick has spent considerable time in his career litigating PAGA issues, and the Arias decision was of particular interest as source material for a first blog post submission.]

By Shawn Westrick:

In Arias v. Superior Court (Angelo Dairy) (June 29, 2009), the California Supreme Court issued its long-anticipated opinion addressing when conventional class action procedural requirements must be met in representative actions filed against employers.

Plaintiff Jose Arias sued his employer Angelo Dairy, alleging, among other things, violations of the unfair competition law and under the Labor Code Private Attorneys General Act of 2004 (“PAGA”) (Cal. Lab. Code § 2698, et seq.). The trial court granted defendant’s motion to strike the causes of action based on the unfair competition law. The trial court’s reasoning was that claims brought under the unfair competition law and PAGA had to plead class action requirements.

In essence, the appellate court affirmed a portion of the trial court’s Order, directing the trial court to “issue a new order striking the representative claims alleged in the seventh through tenth causes of action, but not the eleventh cause of action” (slip op., at 3), the eleventh cause of action being the claim arising under PAGA.

The Supreme Court began its analysis with a thorough discussion of Proposition 64. Proposition 64 amended the unfair competition law to ensure that a plaintiff suffering injury in fact must comply with Code of Civil Procedure § 382. However, Proposition 64 did not specifically use the phrase “class action” in any of its statutory language. Nevertheless, the Supreme Court ruled that a literal construction would frustrate the purpose of Proposition 64. A review of the Voter Information Guide, the official summary of Proposition 64, and the ballot measure summary suggested that the purpose of Proposition 64 was to require plaintiffs to meet the requirements for a class action.

Turning to PAGA, the Supreme Court then analyzed the question of whether PAGA claims must be certified as class actions to proceed on a representative basis. As an important distinction to be aware of, it has already been determined that actions under the Labor Code Private Attorneys General Act of 2004 may be brought as class actions. (Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1173.) At issue in Arias was whether such actions must be brought as a class action. Beginning its discussion, the Supreme Court noted that the statute was passed because of the lack of adequate financing for labor law enforcement. Employees would act as private attorneys general to collect civil penalties for violations of the Labor Code:

Before bringing a civil action for statutory penalties, an employee must comply with Labor Code section 2699.3. (Lab. Code, § 2699, subd. (a).) That statute requires the employee to give written notice of the alleged Labor Code violation to both the employer and the Labor and Workforce Development Agency, and the notice must describe facts and theories supporting the violation. (Id., § 2699.3, subd. (a).) If the agency notifies the employee and the employer that it does not intend to investigate (as occurred here), or if the agency fails to respond within 33 days, the employee may then bring a civil action against the employer. (Id., § 2699.3, subd. (a)(2)(A).) If the agency decides to investigate, it then has 120 days to do so. If the agency decides not to issue a citation, or does not issue a citation within 158 days after the postmark date of the employee‘s notice, the employee may commence a civil action. (Id., § 2699.3, subd. (a)(2)(B).)

Slip op., at 9.

The Supreme Court rejected the employer’s convoluted argument that permitting employees to proceed with representative actions that did not satisfy class action requirements would cause absurd results. Explaining the strange reasoning of the employer, the Supreme Court said:

Defendants read the Court of Appeal‘s decision as holding that class action requirements do not apply to actions under Labor Code section 2699, subdivision (a) only because class action requirements are "provisions of law" and subdivision (a) says that it applies regardless of, or notwithstanding, "any other provision of law." Defendants then argue that because Labor Code section 2699, subdivision (g) does not contain subdivision (a)'s "[n]otwithstanding any other provision of law" language, it follows that actions under that subdivision must comply with class action requirements. According to defendants, to conclude that subdivision (g) actions must satisfy class action requirements but subdivision (a) actions need not is "absurd" and therefore the Court of Appeal's statutory construction must be wrong. We disagree.

Slip op., at 11. According to the Supreme Court, Defendants' argument presupposed that class action requirements apply to all representative actions unless the Legislature affirmatively precludes their application by inserting the phrase "notwithstanding any other provision of law," or similar words, in the statute authorizing the representative action. The Court rejected that assumption.

The Supreme Court then turned to the employer’s argument that the legislative history required PAGA actions be brought as class actions. The Supreme Court noted that some committee reports expressed concerns that PAGA would allow employees to sue as a class action and some commentators were concerned that without a class action there could be no preclusive effects. The Supreme Court rejected committee report comments as insufficient to demonstrate any particular legislative intent regarding certification of PAGA claims.

The Court then turned to the due process issue of collateral estoppel. The employer argued that in the absence of class action requirements, employers would be subject to constant one-way intervention, violating their rights to due process. However an action under PAGA is binding not only on the named employee but also on the government agencies and any aggrieved employee not a party to the proceeding. An employee suing under PAGA does so as a “proxy or agent of the state’s labor law enforcement agencies.” Slip op., at p. 16. The employee can only bring a PAGA action after giving written notice pursuant to Section 2699.3. Id. An employee acts as a substitute for “the government itself” and a “judgment in an action binds all those ... who would be bound by a judgment in an action brought by the government.” Slip op., at p. 17.

Overall, the Court’s decision on the unfair competition law is straightforward. The long term effect of the Court’s foray into res judicata could have far reaching consequences for class actions in California. Taken as a whole, Arias should be a lesson to lawyers representing employers during settlements. Arias is clear that a PAGA action can only be commenced by adhering to the requirements under Section 2699.3. Slip op., at p. 16. In conjunction with the Supreme Court’s suggestion that the State of California has a vested interest in the civil penalties in PAGA, employers who settle class actions but do not settle PAGA actions with an employee who is authorized to file a PAGA action may find themselves liable for civil penalties owed to California (and, if authorized, other employees) for the same time period and the same class members who participated in a previous class action.

[Full Disclosure: Mr. Westrick is counsel in the matter of Deleon v. Verizon Wireless, in which the Supreme Court issued a “grant and hold” Order pending disposition of Arias. The Deleon matter directly raises the issue of whether settlement of wage & hour claims implicitly settles PAGA claims based upon the same underlying violations.]

Supreme Court will issue opinion in Arias v. Superior Court (Dairy, RPI) and other cases on Monday, June 29, 2009

The Supreme Court pre-announces the release of opinions one business day before they are made available to the public.  This morning, the Supreme Court announced forthcoming decisions in two cases that are of interest to wage & hour class/mass action practitioners.  The first, Arias v. Superior Court (Dairy, RPI), concerns issues related to the Labor Code Private Attorneys General Act of 2004 ("PAGA").  The Court lists two questions that will be answered in the opinion:  "(1) Must an employee who is suing an employer for labor law violations on behalf of himself and others under the Unfair Competition Law (Bus. & Prof. Code, § 17203) bring his representative claims as a class action? (2) Must an employee who is pursuing such claims under the Private Attorneys General Act (Lab. Code, § 2699) bring them as a class action?"

The Supreme Court will also render its opinion in Amalgamated Transit Union, Local 1756, AFL-CIO et al. v. Superior Court (First Transit, Inc., et al., RPI).  Amalgamated addresses novel issues under PAGA and the UCL:  "(1) Does a worker’s assignment to the worker’s union of a cause of action for meal and rest period violations carry with it the worker’s right to sue in a representative capacity under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.) or the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.)? (2) Does Business and Professions Code section 17203, as amended by Proposition 64, which provides that representative claims may be brought only if the injured claimant "complies with Section 382 of the Code of Civil Procedure," require that private representative claims meet the procedural requirements applicable to class action lawsuits?"

BREAKING NEWS: Petition for Review granted in Kwikset Corporation v. Superior Court (Benson)

You may recall Kwikset Corporation v. Superior Court (Benson) (Feb. 25, 2009). That's the opinion in which the Court of Appeal (Fourth Appellate District, Divsion Three) held that if you want to buy a "Made in U.S.A." product, and you spend money to get it, and that claim was false, in violation of California law, you still don't have standing to bring a UCL suit because you weren't damaged. On June 10, 2009, in a unanimous vote, the California Supreme Court granted the Petition for Review. When this lawsuit is finally resolved, the grandchildren of the current lawyers will be representing the decendents of the parties (Benson v. Kwikset was one of the Proposition 64 cases). See this post on The UCL Practitioner for a sharp commentary about the Court of Appeal's Opinion.

An unprecedented alliance of interests fails to elicit review or depublication of Troyk v. Farmers Group, Inc.

In a potentially singular confluence of interests, all parties in Troyk v. Farmers Group, Inc., distressed that the Court of Appeal reissued its opinion despite their notice of settlement, filed a Joint Petition for Review on April 20, 2009. The 72-page opinion from the Court of Appeal (Fourth Appellate District, Division One) addresses issues of standing under the UCL, alter-ego liability and insurance service charges as premiums. The petition was filed by Coughlin Stoia Geller Rudman & Robbins for class plaintiffs, Gibson, Dunn & Crutcher and Skadden, Arps, Slate, Meagher & Flom for defendants, and Fulbright & Jaworski for third-party movants. Consumer Attorneys of California, among others, filed a letter seeking depublication on the grounds that the appellate court's ruling "threatens to upend settled law."

Despite that unholy alliance, on June 10, 2009 the Supreme Court denied the Joint Petition for Review and the Requests for Depublication.  Justices Baxter, Chin, and Corrigan were of the opinion that the petition should have been granted.  I can't say that this result offers encouragement to parties that finally work to settle their disputes.  Such polarized interests rarely agree on anything.  When they do, its a signal that careful scrutiny is in order.  However, others have suggested that if all the parties are unhappy with the result, there may be some validity to it.  (Note: The Recorder article on Law.com appears to have been authored before the Supreme Court's decision to deny the Petition was publicly available.)