Class Action Defense Blog provides good "unofficial" filing data

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If statistics and trends interest you, then click, don't walk, over to the Class Action Defense Blog.  As a regular feature, Class Action Defense Blog summarizes (with self-described "unofficial" data) the number and type of class action filings in the major metropolitan centers of California.  Their April 19, 2008 post is good example of the type of summary you will find on the site.  In reviewing the numbers for at least 2008, it should come as little surprise to most class action practitioners that wage & hour class actions habitually hold sway with the largest percentage of filings by claim type.

Class Action Defense Blog is unashamedly and openly a firm-sponsored blog of Jeffer, Mangels, Butler & Marmaro, LLP, so it understandably tends towards a staid tone in its posts (I, on the other hand, having no restraining guidance behind me, am a loose cannon that could go off at any time).  That blog is, nevertheless, dense with information about results and transactions in class actions around the country.

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California suits against foreign defendants: don't do this

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"When a California plaintiff brings an action against a foreign defendant in California court, the trial court does not possess the authority to dismiss the action on the basis of forum non conveniens. Instead, if the court determines California to be an inconvenient forum, the California court must stay the California action, in order to retain the ability to protect the California resident pending the resolution of the action in the foreign court."  (Van Keulen v. Cathay Pacific Airways, Ltd. (April 22, 2008) ___ Cal.Rptr.3d ___, 2008 WL 1799754.)  It appears settled, then, that  a case is stayed, rather than dismissed, after a foreign defendant prevails on a forum non conveniens motion.

But what happens if you don't bother to file suit in a foreign court?  The California court has discretion to dismiss the stayed action for failure to prosecute:

In this case, however, after the California court stayed the action on the basis of forum non conveniens, the California plaintiffs failed to file suit in the proper forum for over four years. The California court then granted the defendants’ motion to dismiss the California action for failure to diligently prosecute. The California plaintiffs appeal. We hold that a trial court does have the discretionary authority to dismiss for failure to diligently prosecute an action stayed on forum non conveniens grounds. We also conclude that, in this case, the trial court did not abuse its discretion by so doing.

(Slip. op., at p. 2.)  If you don't want your stayed action dismissed, be sure you file suit somewhere else, at least within 4 years of the California filing.

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Wage Law confirms that CashCall is good law

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I was aware of  CashCall, Inc. v. Superior Court (2008) 159 Cal.App.4th 273 shortly after it came out.  What I didn't know was that (1) a Petition for Review was filed in that case, and (2) that Petition was just denied by the California Supreme Court.  That information, and other commentary is available at Wage Law, in the post entitled "Courts Uphold Discovery to Replace Class Representative Who Never Had Standing."

CashCall has to be about as far out on that line of cases as California courts will be able to go.  In Cashcall, the Trial Court applied Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360 and Best Buy Stores, L.P. v. Superior Court (2006) 137 Cal.App.4th 772 regarding the right to discovery putative class member identity, and a number of cases regarding California's liberal policy of permitting the substitution of a party with standing for one without standing, to conclude that a proposed class representative that never had standing could conduct discovery to find one that did have standing.  The next exit on that train is the stop where a box of rock sues doe defendants for undisclosed reasons and then gets discovery from a number of major corporations so that plaintiffs with claims and standing can substitute into the case, disclose their causes of action and identify the doe defendants.

I think it's fair to say that CashCall, Pioneer Electronics, Best Buy, Puerto, Belaire-West and the like have armed putative class members with a metaphorical bazooka.  Big business and the defense bar must be bent out of shape by this development.  Well, we know big business is unhappy, but the defense bar may be secretly delighting in all the extra work they will have to do (with associated billables) in class actions that retain their legs after class member identity discovery instead of dying on the vine.  I jest.  Really.  Some of my best friends are defense attorneys.  But here's a suggestion for big business: abide by the law and don't cheat shareholders or employees or consumers.  Now that I've removed the need for litigation, I will set about developing free, clean energy for all mankind in the form of nuclear fusion reactors.

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Thank you for making the first month a good start

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The Complex Litigator has received over 1,500 visits in less than a month since its inception.  Thank you for visiting.  As this blog moves forward, I hope to keep you informed and entertained with a variety of features that are in the development pipeline.  Please stay tuned and thanks again for stopping by.

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Coupon Settlement redux: Chavez v. Netflix

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In an unintended moment of synchronicity, the First Appellate District, Division One, was opining on class action coupon settlements yesterday, the same day that I published some thoughts in a post entitled “Coupon-only settlements are hard to sell." After reading yesterday’s opinion in Chavez v. Netlflix (April 21, 2008) ___ Cal.Rptr.3d ___, 2008 WL 1777550 (“Netflix”), I feel that some further discussion of coupon settlements is in order.

Yesterday, I cautioned against the use of coupon settlements, based upon the negative perception of such settlement arrangements. It appears that I didn’t do a good enough job of parsing the audiences for such messages. Netflix strongly suggests that California courts look with much more favor upon coupon settlements than do members of the public and the media covering high-profile coupon settlements. After explaining in some detail that the Trial Court had analyzed the settlement under the four factors set forth in Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794 (slip op. at pp. 8-10), the Netflix Court made some interesting observations:

Ellis makes no claim that any of the factors supporting a presumption of fairness is not present in this case. Instead, Ellis bases her entire argument on the premise that this is a coupon settlement and that such settlements are, in general, inherently suspect and improper. In fact, these premises are neither entirely accurate nor particularly useful for evaluating the fairness of the specific settlement terms before us.

(Slip op. at p. 10.)

The claim that coupon settlements are inherently suspect or improper is also not persuasive. Ellis relies on a law review article and a handful of cases not decided under California law. [Footnote omitted.] She also asserts that the federal Class Action Fairness Act of 2005 (CAFA) (28 U.S.C. § 1712), although inapplicable to this proceeding, is “highly suspicious” of coupon settlements because it requires the court to hold a special hearing to determine their value. But while the valuation of coupon settlements may pose special challenges, neither CAFA nor any of the authorities Ellis cites hold that coupon settlements are per se improper. Notably, Ellis does not discuss or distinguish California cases in which coupon settlements have been found to be fair and reasonable. (See, e.g., In re Microsoft I–V Cases, supra, 135 Cal.App.4th at pp. 711–713; Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 247; Dunk, supra, 48 Cal.App.4th at pp. 1804–1805.)

(Slip op. at p. 11.)

Other than suggesting that a cash settlement would have had more value to class members and more deterrent value, Ellis fails to explain why the settlement terms are not fair and reasonable in relation to the range of possible results further litigation might have produced, including no class certification and/or zero or minimal recovery of damages by class members. The issue before the trial court was not whether the settlement agreement was the best one that class members could have possibly obtained, but whether it is “fair, adequate, and reasonable.” (Dunk, supra, 48 Cal.App.4th at p. 1801.)

(Slip op. at p. 12.)

I found the discussion about coupon settlements in Netflix very illuminating. Perhaps appellate justices are more sensitive (than the public and the media) to the challenges facing litigators and trial courts because almost all of the appellate justices followed that route to the appellate bench. In any case, if the panel in Netflix had been interested in getting up on the soapbox to pillory coupon settlements, they were given a slow pitch to hit. Instead of swinging, they brushed off most of the criticism. That isn’t intended to suggest that the Netflix decision described coupon settlements as “fantastic.” The Court simply noted that coupon settlements can readily qualify as “fair, adequate and reasonable.” (Ibid.)

There is more to say about Netflix, but a discussion about attorney fee awards in class actions deserves a post of its own (or two, or three…). It is enough right now to note that, at least in California’s state courts, coupon settlements are not categorically defined as an undesirable class settlement option.

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Coupon-only settlements are a hard sell

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"Class action attorney" is now routinely used as a pejorative.  Although a certain amount of the taint attached to class action attorneys certainly stems from marketing efforts by "big business" (another term now used as a pejorative), which has the most to lose from a robust class action device, the plaintiffs' bar is also to blame.  The chief culprit?  The despised coupon settlement:

Class-action cases haven't always served consumers' interests, admits Bailey. In notorious "coupon" settlements, millions of victims get near-worthless service credits or discounts, while lawyers who file the cases get millions in fees.

(Sullivan, The  End of Class-Action Lawsuits?, (April 1, 2008) redtape.msnbc.com.)

In my humble opinion, the "class action attorneys" of the world aren't doing themselves any favors with coupon-only settlements that are grist for the media mill.  Case in point, as reported by The UCL Practitioner last week a trial court granted final approval to a settlement in the Ford Explorer Cases, JCCP nos. 4266 & 4270.  The terms of that settlement, which involves coupons to Ford Explorer owners and substantial fees to attorneys, were not covered favorably in the media.  According to consumeraffairs.com, consumers "in California, Connecticut, Illinois and Texas will be able to apply for $500 coupons to buy or lease new Explorers or $300 coupons to buy or lease other Ford, Mercury or Lincoln" products.  (Enoch, Ford Class Action Settlement Leaves Consumers In The Dust (April 16, 2008), www.consumeraffairs.com.)  In that article, Enoch wrote:

But while trial lawyers who represented consumers in this case are likely to make about $25 million, most consumers will be lucky to get anything at all.

Many will never learn of the settlement results while those who do may well be unable to meet the strict requirements needed to qualify for the coupons, Ditlow said.

(Ibid.)  And a Texas newspaper, reporting on the objection filed by a local resident, said:

The compensation? Those who own an Explorer with a model year from 1991 to 2001 can submit a claim and receive a $500 voucher to buy another Explorer or receive a $300 voucher to purchase another Ford or Lincoln Mercury vehicle.

“Tell me why you’re going to spend $30,000 on a car to get the benefit of a $500 coupon,” Weinstein said Thursday.

While consumers are getting a coupon, attorneys in the case arranged their fees to be paid — in cash — to the tune of about $20 million.

Weinstein thinks that’s too much when the actual buyers of the vehicles are getting a coupon with no cash value.

(Larson, When is $500 worth nothing?  Local attorney thinks he knows (April 18, 2008), www.athensreview.com.)

Certainly, we don't (and won't) learn the full story behind why a particular settlement is accepted and recommended by counsel.  In any particular case, counsel for the class may conclude that there is little likelihood of success on the merits, despite the fact that certification appears likely or was achieved.  Despite not knowing the particular twists of the Ford case, it is a high profile matter that invites reporting like the examples above.

Personally, while I understand that there are occasions where coupon-only settlements are the only viable method for settlement and resolution, I prefer, at minimum, what I call "consumer choice settlements."  Under such settlements, a class member receives a choice of money in amount X or a coupon of value Y.  The parties can negotiate the values of X and Y to encourage one choice over the other, but the class member that wishes a clean divorce from the defendant can opt for the money, even if the coupon is of higher value.  "Class action attorneys" should consider the larger consequences of their settlement structures before legislative bodies take it upon themselves to do so for the attorneys.

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WHO'S WHO (AND WHERE) OF COMPLEX LITIGATION: Robert Ebe

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In a bid to strengthen its complex and commercial litigation capabilities, Nixon Peabody's San Francisco has lured parter Robert Ebe to the firm from Bingham McCutchen.  According to Nixon Peabody San Francisco managing partner Paul Schrier, Nixon Peabody's “California offices continue to handle more and more complex litigation."  (Lind, Nixon Peabody nabs partner from Bingham (April 16, 2008), www.legalweek.com.)

As this is the first post classified under this category, an explanatory word is in order.  One aspect of complex and class action litigation that The Complex Litigator will endeavor to cover is the personalities that pursue this type of litigation as a practice area.  We hope that, over time, we can provide more comprehensive profiles of complex/class action litigators making news in California.  If you have news of interest in this area, don't hesitate to send a note this way.

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Complex matter litigators have an ally in Judge Reiser

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Ventura County Superior Court Judge Glen M. Reiser may be the best friend that you haven't met yet.  In its (corrected and reprinted) Judicial Spotlight column, the Daily Journal provides some insight into why complex matter litigators should be lining up to support Judge Reiser's efforts.  (Iafolla, Passion for Change, Daily Journal (April 16, 2008) p. 3 (by subscription only).)

Judge Reiser is "involved in the development of the software" that is the California Case Management System ("CCMS").  CCMS, version 3, is operative in several counties, including San Diego and Ventura.  Sacramento is also part of the test project.  CCMS, version 4, should be under development at this time, based upon at least one news report about CCMS, version 4, from December 2007.  The California Case Management System, when operative, will allow online document access and e-filing in California's Court system of roughly 450 courthouses.  (Carreon, Online Civil Filings Will Replace Court Paper, Sacramento Bee (October 12, 2007).)

The present goal is to connect every Superior Court in California by 2012.  When completed, it is believed that CCMS will constitute the world's largest single online court system.  For the complex matter litigator this is the holy grail.  It is easier than ever to create high quality, text searchable pdfs.  The ability to file electronically, obtain electronic copies of filings, and search the entire court system for information about cases should provide a definite boost in efficiency.

That is, of course, if the Court system stays out of its own way.  Consider the recent change in the United States District Court for the Central District of California.  E-filing is now mandatory in all civil matters.  Great news, right?  Not if you've tried to navigate through its painful set of menu choices to find the "right" category for your document.  Oh, and those courtesy copies you used to have delivered to the Judge's drop box (per Orders of each Judge)?  You still have to do that, but now you have to attach your proof of e-filing to the back of the paper copy.  And you thought e-filing would save on all those messenger fees.  The CCMS project should learn from these types of implementation failures and make navigating the judicial system easier for everyone in California.  Support the efforts of Judges like Judge Reiser, but if you run into him, ask him to make sure that CCMS is an efficiency booster, not an extra step.

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That would be "Plaintiffs: 2, Defendants: 0"

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Earlier today I ran across a post at The Witness Box, a blog by the law firm Jackson Lewis.  Their post, entitled "Wage and hour developments: 1 for the plaintiff - 1 for the defense," presented two wage & hour developments, one apparently "pro-plaintiff" and one apparently "pro-defense."  The "pro-plaintiff" development concerns Massachusetts law; it is thus of little interest to me, particularly for this presumably California-centric blog.  The "pro-defense" development is another matter.

Wage & hour practitioners will recall Murphy v. Kenneth Cole Prods. (2007) 40 Cal.4th 1094, in which the California Supreme Court determined that the one hour of pay owed to an employee that misses a meal break is a wage and not a penalty (with a 1-year Statute of Limitation).  When coupled with Unfair Competition Law claims, this ruling effectively provided a 4-year Statute of Limitation to claims for missed meal breaks.

Not excited yet, Non-Wage & Hour Practitioner?  Then let me try to expand the relevance a little.  Murphy resulted in a predictable upswing in meal break claim class actions.  Earlier this year, Senator Margett introduced SB 1192, which would have re-classified the "pay" owed to an employee for a missed meal break as a penalty, thereby truncating the claim period to one year.  Which brings me to my observation about the post on the Witness Box.  According to The Witness Box article, SB 1192 represents the legislature's effort to ease penalties for missed meal breaks.

Not so fast.  According to the California Sentate, the first hearing on SB 1192 was "canceled at the request of author."   Couple that with reporting by Storm's California Employment Law blog that "SB 1192 appears dead," and things aren't looking good for SB 1192.  Or for that premature call of "1 for the plaintiff - 1 for the defense."  The moral of the story is that it is good to know about proposed legislation, but don't place any weight on a bill that hasn't even managed to have its scheduled hearing in committee.

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Recapitulation of greetings from the Blogospere

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I remain grateful for the several posts recognizing this new effort in the Blawgosphere.  (Side Note:  I'm still on the fence regarding the use of terms like "Blogosphere" or the even more particularized "Blawgosphere.")  Irrespective of my stylistic misgivings, I want to thank several established blogs (aren't they all established when you are three weeks old) for taking the time to note a new contributor to the online discussion:

  • The UCL Practitioner:  Already thanked, but given the size of her following, a nod from Kimberly carries weight
  • Wage Law:  I handle quite a bit of wage & hour class action litigation, and I was reading this blog by Walsh & Walsh for some time
  • The California Blog of Appeal:  I learned of this blog through the UCL Practitioner just this past week, and I'm quite entertained
  • ClassActionBlawg.com:  Authored by Paul Karlsgodt, a partner in the Denver office of Baker & Hostetler LLP, this relatively new blog covers class actions from a broader, national perspective

Thank you for the kind words.

UPDATE:  Other words of support have filtered in from the blogosphere:

  • California Punitive Damages:  A blog maintained by attorneys at Horvitz & Levy, I have been a fan of this firm for years.  Short personal anecdote:  I've had aspirations to attain an appellate specialist certification for many years.  I cold-called Ellis Horvitz one day to ask him if he had any suggestions about how to move in the direction of appellate law as a career.  Mr. Horvitz didn't just give me a few minutes on the phone.  Instead, he returned my call, invited me to lunch, and shared his insights over excellent Italian food that is sadly no longer available (so long, Il Balcone).  Any firm with leadership like that is built upon bedrock.  Back at you, California Punitive Damages.
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