The value of precedent depends on perspective: Bell v. Superior Court (H.F. Cox, Inc.)

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Greatsealcal100 In a post from earlier today, The UCL Practitioner reported that "[o]n Wednesday, the Supreme Court denied review and depublication in Bell v. Superior Court (H.F. Cox, Inc.), no. S160423."  (Kralowec, "Supreme Court denies review and depublication in class certification case: Bell v. Superior Court (H.F. Cox, Inc.)," The UCL Practioner, www.theuclpractitioner.com.)   In an earlier post on that same blog, The UCL Practitioner, noting that the Bell decision contained "some interesting language on the 'superiority' element of class certification," quoted from the opinion:

The opinion contains some interesting language on the "superiority" element of class certification: The party seeking class certification has the burden to establish that class action will be a superior means of resolving the dispute. (Aguiar v. Cintas Corp. No. 2, supra, 144 Cal.App.4th at pp. 132-133.) Our Supreme Court recently addressed the issue of the superiority of a class action in a wage and hour case. In Gentry v. Superior Court (2007) 42 Cal.4th 443, the Supreme Court concluded that both factors on which the trial court relied in this case – the size of some claims suggesting individual enforcement and the possibility of administrative proceedings before the Labor Commissioner – were insufficient to deny class certification. The court noted that there are many other factors in favor of class resolution in such cases, including that current employees might not bring individual claims out of a fear of retaliation, that current employees might not know of their rights (especially where, as here, the employer has affirmatively told them they are not eligible for overtime), and the necessity of class actions to give teeth to wage and hour laws even when some employees may have claims large enough for individual enforcement. (Id. at p. 459-462.) The court specifically held that an administrative action before the Labor Commissioner was an inadequate substitute for a class action. (Id. at p. 465.) As such, the trial court’s conclusion that a class action is not superior cannot stand.

(Kralowec, "New class certification decision: Bell v. Superior Court (H.F. Cox, Inc.)," The UCL Practioner, www.theuclpractitioner.com, quoting Bell.) My reaction to Bell at the time was that it seemed substantially more useful to plaintiffs than defendants.  As an aside, this is almost always true when a Court of Appeal reversed any part of a denial of certification.  Reversing a certification denial order, in any part, is a big deal.  Certification decisions are reviewed for abuse of discretion, and trial courts get the benefit of the doubt on appeal.

Today, I argued (successfully) against a defendant that sought to decertify a class.  Relying heavily on Bell, the defendant attacked a garden-variety class definition used in overtime/off the clock cases as lacking ascertainability.  Bell included some language that made defendant's argument more than trivial to overcome.

The defendant's use of Bell, an apparently plaintiff-friendly case, was sobering.  I was reminded of the danger inherrent in evaluating new precedent through the bias of one's primary practice area, in my case, predominantly plaintiff-side class actions.  While it is usually the case that a defendant, seeking decertification, would shy away from any certification opinion where any portion of a denial of certification was reversed, there are no guarantees that you won't have to deal with "surprise" citations.  In Bell, as in most cases, there are bits and pieces that are as useful to defendants as to plaintiffs, depending upon what issues are in play.

My unsolicited advice to erstwhile class action practitioners is to set aside some time to read each and every new class action decision, front to back, at least once while it is still hot off the presses.  Your early read of new authority may be enough to help you avoid surprises down the line.

UPDATE:  Aside from also reporting on the depublication of Bell earlier today, Wage Law notes that while Bell "had seemed to favor the plaintiff (who was the petitioner seeking Supreme Court review) the Court of Appeal's endorsement of the denial of certification in the off-the-clock and meal period causes of action had been embraced by the employers' bar, who will lament the depublication of the case."  ("Supreme Court Depublishes Bell v Superior Court (HF Cox, Inc.)," Wage Law, www.wagelaw.typepad.com.)

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My identity is worth $2.00?

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I was just informed by the Consumer Law & Policy blog that my identity is worth a scant $2.00.  The apparent basis for this valuation is the fact that so much data is available for the taking online, that there is essentially no barrier to entry in the market to sell this stuff.  That is sufficiently troubling to be the end of the story, but it got me thinking.  If I bring a consumer identity theft class action against some big company that suffered one of those headline-generating breaches, will I see as an expert for the defendant one of the black market identity theft privateers, opining that the data is nearly worthless (but he'll bid $1.75 for each person in the data set)?  It just seems like the natural progression: "Sure, your private data was stolen, it's just worthless.  Here's your settlement for 99 cents."

[From Techdirt, via Consumer Law & Policy Blog]

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Complex litigation requires clear, cogent writing

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In my experience, class action and other complex cases depend more heavily upon written submissions to the court.  I spend more time writing joint status conference statements, supplemental briefs after hearings, oppositions to demurrers to eighth amended complaints, and so on, and so forth.  I don't necessarily mind the emphasis on writing - I like writing.  But I am ever more keenly aware that as the briefing and other written submissions rise in importance, the quality of the written message must also rise.  There isn't enough time in the day to make every brief the ideal brief.  We simply endeavor to make each brief better than what is required to accomplish the goal of the brief.

In my own efforts to improve my writing, I am always interested in sound advice and constructive criticism.  I recently found the blog of Wayne Schiess, a legal writing instructor at the University of Texas.  Surprisingly named Wayne Schiess's legal-writing blog, Mr. Schiess provides interesting advice about writing, advice with which I find myself often in agreement.  The blog doesn't link to each post on its primary page, so Mr. Schiess's blog is more suited to occasional browsing.

[Thanks to The California Blog of Appeal for suggesting the site.]

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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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