Second Interim Report on class actions in California sheds new light on certification

Earlier this month, the Administrative Office of the Courts released its Second Interim Report from the Study of California Class Action Litigation.  The Second Interim Report specifically analyzed class certifications in cases initially filed with a class action designation.  The findings were surprising.

First, over the period of 2000 to 2005, certification rates plummeted: "The rate of class certification (by any means) decreased by more than 50 percent over the study years."  Report, at 6.  This sharp decline mirrored findings in federal courts.

Second, a meager 13% of cases initially filed as a class action ever had a motion for class certification filed before final disposition, and only 46% of those motions were granted.  Report, at 8-9.  However, three times more cases were certified as part of a settlement.  Report, at 11.  The Report speculated that the rate of certification by settlement could be attributable to the State's complex litigation programs:  "In California, the frequency of classes certified as part of a settlement agreement may be another product of the Complex Civil Litigation Program."  Report, at 11.  Sadly, the apparent success of this program hasn't ensured that class actions filed in Los Angeles County receive the careful attention of the Complex Civil Litigation Program.  Due to limited resources, the Los Angeles County Complex Courts are rejecting most class actions to focus on construction defect cases, mass torts, and other multi-party suits.

The Second Interim Report also examined data to test the hypothesis that class certification pressures settlements from defendants.  The data did not support that hypothesis.  For example, the lack of interlocutory review of orders granting certification did not reveal a settlement pressure when compared to federal courts:

Given the absence of an interlocutory appeal option in California, one may conclude that settlement pressure would exert more effect and more cases would be compelled to settle after the granting of a motion for class certification as compared to federal court. However, the disposition composition for certified cases that reached a final outcome in California does not support this hypothesis. Table 16 shows that the rate of settlement after certification through a court-granted motion for certification is 69%. This is actually slightly lower than the rate of 72% in the federal court. California‘s lack of intermediate recourse in response to the granting of class certification does not result in a higher rate of settlement in that situation when compared to data from federal court.

Report, at 26.  Summing up the data analysis related to the theorized pressure to settle, the Report concluded:

In sum, California data show that very few cases could be included in a category in which the commonly discussed parameters that define settlement pressure from class certification may have been a factor in the decision to settle. Many cases circumvented the issue altogether by including class certification as an element of the settlement itself. In cases with a class certified through a court-granted motion for certification, neither the overall disposition composition nor the time-to-settlement analyses seem to suggest an automatic or immediate progression from certification through motion to settlement which would allow the determination that pressure results in inevitable settlement. The conclusion here is not that the idea of settlement pressure is fabricated, or even altogether negligible, but rather that the pervasive effect of settlement pressure in California does not appear to be supported by the data.

Report, at 28.  It is at least fair to say that the only comprehensive study of California class action data available does not provide support for the recent, repeated claims by CJAC, Governor Schwarzenegger, and others that class actions are out of control, forcing settlements or in need of reforms such as the right to immediately appeal any order certifying a class.  Such a reform would likely lower the number of contested settlements from meager to negligible.  Certainly, that is a desirable result for businesses that underpay employees, sell defective products, or falsely advertise goods and services.  It is not, however, necessary to save our bankrupt state.

Consumer Attorneys of California makes it to the bleeding edge: Twitter and Facebook

Consumer Attorneys of California (CAOC) is breaking into new media territory with presence on Facebook and Twitter.  You can find CAOC on Twitter by following @ConsumerAttysCA.  You can become a fan of CAOC on Facebook here.  Personally, I've almost given up on Facebook, purely because of its deplorable disregard for user privacy.  Facebook needs to keep its act clean for a while just to get back to zero with me.  The problem is, half the planet is using Facebook, so my protestations are unlikely to start a grass roots movement.

California Supreme Court activity for the week of January 18, 2010

The California Supreme Court held its (usually) weekly conference on January 20, 2010.  The only interesting, if not significant bit of information, is the fact that some well-known cases are still kicking around:

• Review denied in Gattuso v. S.C. (Harte-Hanks Shoppers)
• Review denied in Harper v. S.C. (24 Hour Fitness) (Successful plaintiff-appellant in initial appeal challenged the striking of their 170.6 challenge on remand.  Court of Appeal affirmed.)

United States District Court Judge Florence Marie Cooper passes

As reported by the Los Angeles Times, United States District Court Judge Florence Marie Cooper died of lymphoma on January 15, 2010.  Judge Cooper was appointed to the federal bench by President Bill Clinton in 1999.

Google takes a first step at upsetting the cell phone purchase apple cart

Of interest to the gadget-loving attorneys out there, today Google announced on its blog a first step towards another attempt to change how consumers buy cell phones.  Google will offer the Nexus One "superphone" through a Google-hosted store.  The Nexus One was built by HTC and runs the Android operating system.  Google was heavily involved in the creation of the device and customized the operating system to showcase what the newest version of Android can do.  Google said that other phones on other carriers will follow.

Keep an eye on Google in this space.  As with its Google Scholar search capabilities that allow free searching for caselaw, this first step by Google into the mobile phone sales arena won't unseat the major players...yet.  In fact, the initial offering is a fairly conventional choice of a subsidized phone through T-Mobile or an unlocked Nexus One at a typical smartphone price.  The interesting part of this development is Google's ability to bring so many handset manufacturers together under the Android umbrella.  Handset makers just want to sell their hardware.  A desirable consumer experience and a solid operating system with the ability to run large numbers of third-party applications sells the hardware.  Apple proved that.  If Google gains enough traction in the cell phone space to change pricing models and, perhaps, move towards a different subsidy model, such as ad and metrics-based subsidies, could inject a new dynamic into this market.

For the mobile lawyer, this may mean a downward pressure on prices and an increase in the quality of smartphone choices as service providers compete in the one way they most easily can - offering better handsets with lower service prices.

California Proposition 8 elicits constitution-based, discovery rights opinion from Ninth Circuit

For those following the complicated twists and turns of litigation over California Ballot Proposition 8, which amended the California Constitution to provide that only marriage between a man and a woman is valid or recognized in California, the litigation about that measure continues.  Today, the Ninth Circuit, in Perry, et al. v. Arnold Schwarzenegger (9th Cir. January 4, 2009), issued a writ of mandamus directing the trial court to enter a protective order barring access to internal campaign communications of proponents of the Proposition.  I'm no constitutional law expert, but high-stakes litigation like this tends to create its own complexity, so I simply note the opinion for the constitutional law scholars, fans and practitioners.  I can say that it's not every day that you see discovery limited because it would intrude on the the First Amendment right of freedom to associate.  The one-page appendix to the opinion is also available.

California's mismanagement of its finances causes further damage to Court system

The California Supreme Court has announced on the California Courts website that its Los Angeles Clerk's Office will close at the start of the new year.  The Notice states:

Notice

EFFECTIVE JANUARY 1, 2010, the Los Angeles Clerk's Office of the Supreme Court of California will be closed. The Supreme Court will no longer accept filings at Court of Appeal locations. All petitions for review, writs, and legal briefs must be filed at:

Supreme Court of California
Office of the Clerk, First Floor
350 McAllister Street
San Francisco, CA 94102

The Supreme Court will continue its practice of conducting oral argument in Los Angeles, typically in the months of April, June, October, and December.

Update on 2009-12-23 01:20 by The Complex Litigator

The UCL Practitioner has additional helpful comments about alternative methods for filing briefs under the Rules of Court.

Courtroom View Network is providing live coverage of eBay v. Craigslist

The Delaware Court of Chancery, in Georgetown, Delaware, is playing host to a wild one.  Courtroom View Network is now providing live coverage of eBay v. Craigslist, otherwise known as eBay Domestic Holdings, Inc. v. Craig Newmark.  California online mainstays eBay and Craiglist are involved in a bi-coastal battle over director voting rights and the alleged theft of confidential information.  In a nutshell, eBay claims that Craiglist's directors unfairly diluted eBay's 28.4 percent minority shareholder stake in Craigslist and eliminated eBay's right to appoint a director.  In another lawsuit filed in San Francisco, Craigslist claimed that eBay used its shareholder position to obtain confidential competitive information to gain an unfair commercial advantage in developing eBay's own competing online classified ad business, kijiji.com.

Courtroom View Network is providing free access to a sample clip of cross-examination of Meg Whitman, the former CEO of eBay.  Other media outlets have more coverage of the opening day of trial.  See, e.g., Shannon P. Duffy, Craigslist, eBay Face Off in Closely Watched Trial (December 8, 2009) www.law.com.

True, it's not a class action, but this is complex litigation at its best.  Two cyber-goliaths trying to strangle each other on opposite sides of the country is too good to pass up.  I just don't know who to root for.

Breaking News: Plaintiff class wins second trial against alter ego defendants associated with Global Vision Products (Avacor hair regrowth formula)

In January 2008, class plaintiffs who purchased the hair regrowth formula Avacor prevailed at trial against Global Vision Products, Inc.  The plaintiff alleged that Avacor was not an all natural or herbal formulation, but contained the drug Minoxidil (Rogaine).  The initial verdict for the plaintiff class was approximately $37 million.  However, Global Vision Products filed for bankruptcy protection.

Today, after a second phase of trial, a jury returned a verdict against individual defendants Robert DeBenedictis and Henry Edelson on an alter ego theory.

I will provide some additional information about this verdict after reviewing materials from the trial.  Until then, Courtroom View Network, which recorded video of the entire trial, has provided access to a free clip from the trial.

Google gets in on the legal research game

To Westlaw and Lexis:

You have a big head start, but the world's largest search monster just left the land of nightmares and placed itself squarely in your rearview mirrors.  Google has surfaced search functionality that will return full-text opinions from state and federal courts.  Google Scholar, still in "beta," allows searches by case name, topic, or key words.  Advanced filters allow for creative search construction.  The November 17, 2009 announcement on Google's blog is here.

I did some test searches, and the results are good, but not quite as current as Westlaw or Lexis would provide.  Each case, when viewed, includes a "how cited" tab that, rather than explaining the correct citation syntax, provides a list of other cases citing to that case and an interesting list of case quotes showing how the case is cited in context.  Testing with Tobacco II, I was able to find that Cohen v. DirecTV cites Tobacco II, but Cohen isn't yet returned as a result when searching for it by name.  Either Google is waiting for finality before providing access to opinions, or its data source is slow to update.  As another plus, the cases include pagination information.

Setting all else aside, it's free and it's simple.  At this point, Westlaw and Lexis should stock up on clean underwear.