The Pioneer ripples continue to expand in Lee, et al. v. Dynamex, Inc., et al.

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Greatsealcal100Back on August 14th, I commented on yet another decision giving a further boost to the Supreme Court's decision in Pioneer Electronics (USA), Inc. v. Superior Court (Olmstead), 40 Cal.4th 360 (2007), in which the California Supreme Court confirmed the right of plaintiffs to discover the identity and contact information of putative class members.  Discussing Alch v. Superior Court (August 14, 2008) in this post, I commented that it furthered the trend of Belaire-West Landscape, Inc. v. Superior Court, 149 Cal.App.4th 554 (2007) and Puerto v. Superior Court, 158 Cal.App.4th 1242 (2008).  It turns out that appellate courts aren't done reminding parties about the fundamental right to engage in discovery in class actions.

On August September 17, 2008, the Second Appellate District (Division Seven) added to the discussion regarding the substantial right to basic discovery of information about putative class members.  In Lee, et al. v. Dynamex, Inc., et al., the Court of Appeal tied all of the threads emanating from Pioneer together and concluded that the failure to permit discovery about class member identity was grounds for reversing the trial court's order denying class certification:

“After first denying Lee’s motion to compel Dynamex to identify and provide contact information for potential putative class members, the trial court denied Lee’s motion for class certification. Because the trial court’s discovery ruling directly conflicts with the Supreme Court’s subsequent decision in Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360 (Pioneer), as well as our decisions in Belaire-West Landscape, Inc. v. Superior Court (2007) 149 Cal.App.4th 554 and Puerto v. Superior Court (2008) 158 Cal.App.4th 1242 (Puerto), and that ruling improperly interfered with Lee’s ability to establish the necessary elements for class certification, we reverse both orders and remand for further proceedings regarding class certification.

(Slip op., at p. 2.)  In light of Dynamex, defendants must carefully weigh whether to offer any opposition to plaintiffs seeking discovery of the identity and contact information for class members.  A successful opposition to such discovery may lead to a second chance at certification if the trial court denies certification.  In order to control costs and avoid such a result, we may see defendants electing to stipulate to an order to produce such discovery (as the expedient means of satisfying the defendant's obligation to maintain some degree of control over class member contact information).  As an aside, Dynamex had the misfortune of drawing the last panel they would have wanted to review this appeal.  I'd guess that Appellate Justices don't take kindly to trial court decisions that essentially ignore that panel's prior, controlling decisions on the issues confronting the trial court.

The opinion also includes an educational discussion about the "ascertainability" requisite for certification.  In short, the Court of Appeal again reminds us that all class members need not be identified or identifiable at the certification stage.

I'm still trying to catch up after two weeks of depositions out of state.  This has been a busy week for class-related decisions (and the week's not over yet); I'm working through the decisions and other news as fast as I can get to them.

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Media coverage of Martinez, et al. v. Regents of t...

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Martinez, et al. v. Regents of the University of California, et al. (September 15, 2008, Third Appellate District) is starting to generate a fair bit of press/media coverage:

This is just a sample of the dialog and reporting that are developing right now; more commentary will surely follow.

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Reversing trial court, Martinez, et al. v. Regents of the University of California, et al. holds that California's authorization of in-state tuition for "illegal immigrants" violates federal law

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Greatsealcal100The law waits for no one, not even The Complex Litigator (who has just finished a long deposition excursion, interspersed with efforts to encrust his face with powdered sugar as he jams beignets in his pie-hole). In that regard (the law, not the beignets), the Court of Appeal, in Martinez, et al. v. Regents of the University of California, et al. (September 15, 2008, Third Appellate District), essentially held that California Education Code § 68130.5 violates is preempted by United States Code (U.S.C.) section 1623 by allowing certain "illegal immigrants" to pay lower (roughly $17,000 lower) resident tuition rates.

The case was filed as a class action by "United States citizens who pay nonresident tuition for enrollment at California’s public universities/colleges . . . ." (Slip op., at pp. 2-3.)  But this case is interesting because it runs squarely into a socio-political minefield that is probably even more contentious a topic than the recent same-sex marriage decision from the California Supreme Court.  You know a case is going to be worth a read when a footnote is probably enough to incite public protests:

“Defendants prefer the term “undocumented immigrants.” However, defendants do not cite any authoritative definition of the term and do not support their assertion that the terms “undocumented mmigrant” and “illegal alien” are interchangeable. We consider the term “illegal alien” less ambiguous. Thus, under federal law, an “alien” is “any person not a citizen or national of the United States.” (8 U.S.C. § 1101(a)(3).) A “national of the United States” means a U.S. citizen or a noncitizen who owes permanent allegiance to the United States. (8 U.S.C. § 1101(a)(22).) Under federal law, “immigrant” means every alien except those classified by federal law as nonimmigrant aliens. (8 U.S.C. § 1101(a)(15).) “Nonimmigrant aliens” are, in general, temporary visitors to the United States, such as diplomats and students who have no intention of abandoning their residence in a foreign country. (8 U.S.C. § 1101(a)(15)(F), (G); Elkins v. Moreno (1978) 435 U.S. 647, 664-665 [55 L.Ed.2d 614, 627-628] [under pre-1996 law, held the question whether nonimmigrant aliens could become domiciliaries of Maryland for purposes of in-state college tuition was a matter of state law].) The federal statutes at issue in this appeal refer to “alien[s] who [are] not lawfully present in the United States.” (8 U.S.C. §§ 1621(d), 1623.) In place of the cumbersome phrase “alien[s] who [are] not lawfully present,” we shall use the term “illegal aliens.”

(Slip op., at p. 3.)  Having settled on "illegal alien" as the operative nomenclature, the Court moved on to the actual questions at issue.  First, the Court of Appeal addressed a number of procedural issue after the defendants argued that plaintiffs had waived or forfeited certain arguments by not raising them in the trial court:

“We reject defendants’ position that plaintiffs cannot raise
new theories on appeal that they did not allege in their
complaint or present in the trial court. When a demurrer is
sustained without leave to amend, the plaintiff may advance on
appeal new legal theories as to why the complaint’s allegations
state, or can be amended to state, a cause of action.

(Slip op., at p. 17.)  However, the Court of Appeal concluded that plaintiffs failed to adequate raise an issue in their Opening Brief regarding whether a private right of action exists for violation of title 8 U.S.C. section 1623.  (Slip op., at pp. 17-23.)  The Court of Appeal then spends almost nine pages addressing arguments about the trial court's failure to grant judicial notice to various materials.  In some other post I will comment on what I believe to be the pandemic misuse of requests for judicial notice, but with respect to this opinion, one has the sense that this Court is painfully aware of the potential for much higher levels of scrutiny of this opinion.  They seem to be dotting i's and crossing t's that would normally be relegated to footnote commentary, if that.

Finally turning to the merits, the Court of Appeal quickly dismissed an argument by plaintiffs that they could "amend the complaint to allege a viable claim that section 68130.5 constitutes discrimination in violation of section 68062."  (Slip op., at p. 33.)  The Court noted that any conflict between section 68062 and 68130.5 would not be resolved in plaintiffs' favor, given that section 68130.5 was enacted after 68062, triggering application of the doctrine of implied repeal.

The Court then turned to the question of federal preemption.  First, the Court identified De Canas v. Bica (1976) 424 U.S. 351 [47 L.Ed.2d 43] as authority identifying three tests to be used in determining whether a state statute related to immigration is preempted.  (Slip op., at p. 35.)  "First, the court must determine whether the state statute is a 'regulation of immigration' (i.e., a determination of who should or should not be admitted into the country and the conditions under which a legal entrant may remain)."  (Slip op., at p. 35.)  "Second, even if the state statute does not regulate immigration, it is preempted if Congress manifested a clear purpose to effect a complete ouster of state power, including state power to promulgate laws not in conflict with federal laws, with respect to the subject matter which the statute attempts to regulate."  (Slip op., at pp. 35-36.)  "Third, a state law is preempted if it 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'"  (Slip op., at p. 36.)  Applying this test, the Court concluded that plaintiffs stated a cause of action for federal preemption.

In its analysis, the Court determined that in-state tuition is, in fact, a benefit to the recipients of that lower tuition rate:

“Defendants argue the term “benefit” in title 8 U.S.C.
section 1623 is limited, because the federal statute refers to
“amount,” which means monetary payments, and in-state tuition
does not involve the payment of any money to students. However,
defendants cite no authority supporting their illogical
assumption that “amount” must mean monetary payment to the
beneficiary.

(Slip op., at p. 38.)  The Court then spends nearly 20 pages of its opinion considering whether section 68130.5 constitutes a de facto residency surrogate.  (Slip op., at pp. 42-61.)  The Court ultimately concludes that section 68130.5 was intended to benefit illegal aliens on the basis of residency in California.

The Court then determined that section 68130.5 was preempted by federal law.  In part, the Court determined that section 68130.5 interferes with an important federal policy: "It is a compelling government interest to remove the incentive for illegal immigration provided by the availability of public benefits."  (Slip op., at p. 65, citing title 8 U.S.C. section 1601.)  Using much of the same analysis, the Court held that "plaintiffs have stated a cause of action that section 68130.5 is preempted by title 8 U.S.C. section 1621," which generally precludes certain public education benefits to illegal aliens.

Several other claims were found insufficient by the Court of Appeal, but because several claims were found to have legal sufficiency, the Court reversed and remanded to the trial court.

I will be curious to see whether this case is reviewed by the California Supreme Court or the United States Supreme Court.

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Civil Rights Lawsuits

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On July 18, 2008, this blog reported on two class actions filed against Google for the alleged sale of "low quality" ads on parked domains and error pages.  The first such suit was filed by attorneys from the San Francisco-based law firm of Schubert Jonckheer Kolbe & Kralowec, including Kimberly Kralowec, author of the established and widely-read blog, The UCL Practitioner.  The second suit was filed six days later by the firm of Kabateck Brown Kellner.

It now looks like Google's woes have spread outside of California.  It has just been reported that JIT Packaging sued Google in a federal district court in Chicago.  (Google Hit with Another Suit For Fraud From PPC Program: Is this Final Straw For Domain Parking? (August 14, 2008) www.thedomains.com.)  The Domains wonders whether this will ultimately result in the demise of the domain registration industry.  If anyone has the power to force a change in the domain registration market, Google is on that short list.

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The Complex Litigator will have a limited number of new posts in the next two weeks

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I am out of California taking depositions for the next two weeks. I will have limited time available to post during this fun-filled excursion.  There will still be new posts during the next two weeks, but not the one-a-day target I customarily attempt to meet.

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CAOC Board of Governors elections begin today

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In between flying back and forth across the country for depositions, I took some time out to exercise my right to vote.  It wasn't as exciting as, say, secretly casting a vote for hottest VP candidate in history.  No, nothing that interesting.  I was voting online in CAOC's Board of Governors election.  But this relatively mundane event took on greater personal significance for me this year, as I happen to be one of the candidates in the Los Angeles district (lucky me - I am in one of a handful of contested districts).  If you are a CAOC member and haven't voted yet, remember: "a vote for me is a vote for change."  This is quite literally true, since I've never served on CAOC's Board of Governors before.

Together, we can make a difference.

Help me shake things up.

I'll fight for you!

Continuing Legal Education for everyone!

I'm just testing out some powerful campaign slogans.

I approve this message (because I wrote it).

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e-DISCOVERY: Adverse inference sanctions imposed due to Oracle's mishandling of electronic evidence

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In a long-running class action against Larry Ellison, founder of Oracle, and other executives, U.S. District Judge Susan Illston, of the Northern District of California, found that executives either destroyed or knowingly failed to preserve evidence in a suit asserting that Ellison and other Oracle executives misled investors about the company's financial strength.  (Brandon Bailey, Judge says Oralce mishandled evidence (September 3, 2008) www.mercurynews.com.)  Judge Illston indicated that she will infer that the evidence was incriminating. Those inferences will apply when she rules later on the substance of the case, and she will instruct a jury to make the same inference if the case goes to trial.

Judge Illston refused to go beyond the evidentiary inference, despite request by the plaintiffs for additional sanctions and summary judgment based on spoliation of evidence. However, the Court did not rule out further consequences and asked for added briefing.  (Pamela A. Maclean, Judge Orders Oracle Sanctioned Over Ellison E-Mails (September 4, 2008) www.law.com.)

It is a little surprising to me that major corporations, counseled by major law firms (in this case, Latham & Watkins), continue to believe that the substantial developments in e-discovery rules and subsequent decisional authority won't bite them if they don't comply.  Then again, the same thing happened when the world ran on paper, so I suppose there will always be another party to litigation that gambles on not getting caught spoliating or withholding key evidence.

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Petition for Review filed in Brinker

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Although it shouldn't come as a surprise, a Petition for Review in Brinker Restaurant Corporation, et al. v. Hohnbaum, et al (July 22, 2008) was filed with the Supreme Court on August 29, 2008.  The Supreme Court docket is available for viewing here.

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LIVEBLOGGING CAALA: Notes on class actions and procedure in complex cases

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Jerome Ringler, of Ringler Kearney Alvarez LLP, is speaking this year on the topics of class actions and complex cases.

Concerning class actions, Mr. Ringler notes the following basic concepts:

  • Choose a good class representative that doesn't bring along a lot of baggage [bankruptcies, criminal convictions, etc.].  I note that this is much easier said than done.  Individuals willing to step forward and litigate a cause on behalf of a group often have, at minimum, interesting personality quirks that supply the fortitude to endure a class action.
  • Decide where to file.  Again, easier said than done.  CAFA often dictates that a case may end up in federal court, whether you want to be there or not.
  • Compared to individual party litigation, discovery may be limited to certification issues.  Mr. Ringler notes, and I have also found, that there is often entanglement between merits issues and, in particular, commonality and typicality analysis.
  • Mr. Ringler notes that Pioneer and Belaire-West supply the procedure for obtaining class member contact information.  He notes that the process requires filing a motion and agreeing on a third-party administrator that will send out notices permitting the putative class members to opt-out of disclosure of their contact data.  I think that this summary of the current state of the law is, at minimum, incomplete, and, arguably, inaccurate.  Puerto and the recent Writers' Guild decision Alch (discussed here), both suggest in different ways that the class representative may have a right to obtain contact information and other class member data, irrespective of whether any  putative class member objects.
  • Watch out for client representation issues.  What if you represent a putative class member at a deposition?  Do you continue to represent that person until certification?  You probably do, but be careful with this hot potato.  Don't hand over communications - you may be waiving a privilege that you ought to make the Court determine.

This seminar lecture appears targeted at attorneys with limited experience in the area of class actions.  If you are interested in learning about class action procedure, you will probably do better reading portions of treatises, major decisional authority, and then co-counseling class actions with more experienced class action litigators.  I'm going to wrap this post up as my battery is dying.

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LIVEBLOGGING CAALA: Ethics issues of significance in complex litigation

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A fair portion of the CLE material at CAALA is of primary significance in single party personal injury cases.  However, as with yesterday's e-discovery talk by Judge Lee Edmon, some issues are relevant in complex litigation practices.  This morning I am sitting in the Legal Ethics session.

Robert Tessier just addressed a number of basic ethical conduct issues applicable to all attorneys.  One such issue is the obligation of counsel discharged by the client to turn over the case file to the client and/or successor counsel.  Importantly, there are two kickers to this obligation: the obligation to turn over the original file (CA Eth. Op. 1994-134 1994 WL 200778) and the obligation to turn over electronic data, including case e-mails, pleadings, discovery documents, and deposition transcripts and exhibits (CA Eth. Op. 2007-1 74 2007 WL 2461 9 14).

On the first prong of this obligation, the attorney's duty to the client precludes causing any prejudice to the client by holding onto a file after discharge:

“When a matter is pending before a tribunal, the attorney may retain possession and control of the file only to the extent necessary to represent the client competently and fulfill any outstanding obligations to the court arising out of that representation. The attorney may not, however, hold the file in order to obtain payment or other consideration from the client in exchange for the delivery of the file to the client.

(Tessier, Ethics for the Small Office (August 29, 2008).)  For the complex litigation and/or class action practice, this means that it is essential that you keep the file organized (this should be happening in any event) and strewn across a file room and various attorneys' and assistants' desks.

On the second prong of this obligation, the attorney's duty to turn over the file includes a duty to turn over electronic information:

“An attorney is ethically obligated, upon termination of employment, promptly to release to a client, at the client's request: (1) an electronic version of e-mail correspondence, because such items come within a category subject to release; (2) an electronic version of the pleadings, because such items too come within a category subject to release; (3) an electronic version of discovery requests and responses, because such items are subject to release as reasonably necessary to the client's representation; (4) an electronic deposition and exhibit database, because such an item itself contains items that come within categories subject to release; and (5) an electronic version oftransactional documents, because such items are subject to release as reasonably necessary to the client's representation. The attorney's ethical obligation to release any electronic items, however, does not require the attorney to create such items if they do not exist or to change the application (e.g., from Word (.doc) to Wordperfect (.wpd)) if they do exist.

(Tessier, Ethics for the Small Office (August 29, 2008).)  Electronic discovery is the new frontier of discovery practice in complex litigation.  This follows naturally from the fact that we are squarely in the digital era.  It also means that much of what we generate in litigation exists, in part or in whole, as digital information.  Collecting that digital information an providing it to the client is no small task, particularly where e-mail is concerned.  Most documents are saved in some reasonably organized manner on file servers.  E-mail, on the other hand, often resides in individual attorneys' inboxes.  To satisfy ethical obligations, complex litigation practices should implement some method of capturing e-mail of significance (especially e-mail to outside/opposing counsel).  Adobe Acrobat allows users to save e-mails as pdfs.  In addition, e-mails can simply be dragged and dropped into file folders.  Other software provides similar solutions.  The important issue is that you think about a process for saving case e-mails outside of your e-mail software.

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