ABA Journal wants feedback from lawyers about job market and economy

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The ABA Journal is surveying lawyers about the job market and the current state of the economy.  Your participation will help improve the quality of information reflected in surey results, which will be published in the January ABA Journal.

Visit the survey here:  ABA Journal survey. (NOTE: survey conducted through www.surveymonkey.com)

For my part, I'm always curious to learn more about the state of the job market, especially when it appears to be tightening, so I consider this to be a valuable endeavor by the ABA Journal.  It never hurts to know your options.  In fact, given some of the major firm failures, it's short-sighted not to carefully consider every legitimate option that comes your way.

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A Flurry of iPhone Class Actions

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This blog reported in September that Apple and AT&T were facing a flurry of proposed class action lawsuits regarding the performance of the iPhone 3G on AT&T's higher speed network.  On November 12, 2008, another class action suit joined the ranks of those complaining about the iPhone 3G's ability to function correctly on AT&T's 3G network, but this lawsuit also complained that the casings on the iPhone 3G are defective and prone to cracking.  (Slash Lane, Apple sued over hairline cracks in iPhone 3G casings (November 14, 2008) www.appleinsider.com.)

Once again, who knows what will come of the casing complaint.  Apple was reportedly replacing any phone that showed evidence of hairline fractures.  My iPhone 3G is still looking sharp, but I don't (1) drop it, (2) drop it, (3) drop it, (4) put it in my pocket and sit on it, (5) drop it, (6) put it in my backpack and crush it with books, (7) drop it, or (8) catch it with my foot when I drop it and try to keep it from hitting the ground, resulting in it flying through the air and slamming into a brick wall and then falling to the ground.  But that's just how I am with gadgets - overly cautious.

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NebuAd and ISPs named in class action suit over "Deep Packet Inspection"

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Combine class actions and cutting-edge technology (two topics of interest to me in different ways) and you have what I consider to be the ideal subject matter for blog pontification.  On November 10, 2008, 15 consumers filed a putative class action lawsuit against NebuAd, Inc. and certain Internet Service Providers (ISPs) over the use of NebuAd's "Deep Packet Inspection" (DPI) technology.  (Sam Diaz, NebuAd, ISPs, named in class action lawsuit (November 11, 2008) blogs.zdnet.com.)  A copy of the suit is hosted here.

Perhaps you don't know much about computers on a technical leval and are wondering why this should interest you.  Perhaps you know that you can connect to the Internet but don't know much about what happens after electrons fly out of your home over a DSL line or a Cable line or (please, no) a dial-up internet connection.  If you take nothing else away from this post, know that Deep Packet Inspection is evil.  Be horrified by it.  If you hear of such a program coming to an ISP near to you, protest like your life depends on it.

In basic terms, computers find each other on the internet with numerical IP addresses.  You type in the name of a website.  Behind the scenes, your computer asks a Domain Name Server to translate "thecomplexlitigator.com", for example, into a numerical IP address.  Your computer then requests something from that address such as a website homepage.  The request is passed from router to router, out of your ISP's network and into other networks until it finds the server with the numerical address your computer requested.  That server then delivers the packets of data that comprise the reponse to your request.  Each packet has your delivery address in it.  Each packet makes its way to your computer on its own.  Your computer receives the response packets and reassembles the response, be it a webpage or a file download or something else, by putting the various packets back together in the correct order (they are sequentially numbered).

Your ISP knows that you have requested something from a particular site, but it doesn't know the details of what is passing back and forth between your computer and some server somewhere else on the Internet.  DPI, however, is a method by which NebuAd (or other companies) can peek inside packets and examine the contents of your communications in detail.  This gives far more information about your online activities than merely knowing the IP addresses that your computer visits.  "Having an IP address might tell the system what sites you visit on a regular basis, but for sites like Amazon.com, this is less than helpful. DPI gear can see exactly what pages on the site are being accessed, though, and it can scan those pages for keywords to use in building its profile."  (Nate Anderson, Charter "enhances" Internet service with targeted ads (May 13, 2008) arstechnica.com.)

Phorm, another company providing DPI services, has been given the green light to proceed in the United Kingdom.  While the technology is beyond the scope of this blog, Phorm's DPI technology is even worse than NebuAd because it essentially impersonates you on the Internet in a manner that is undetectable to you and the site you are visiting.  Where provided access by ISPs, Phorm will read the URLs visited, the search terms used by every user, and the content of every page visited. The resulting profiles are then sold to advertisers who are salivating at the thought of this highly specific targeting.  ISPs will share in the revenue with Phorm.

Imagine someone following you around a mall, noting every product that caught your eye, even for a moment, and then selling that information to every store in every mall you visit.  Then imagine walking into a different mall and realizing that every store already knew this information about you and actively solicited you to purchase competitors' products that are similar to what you viewed.  Don't let it happen to you!

[UPDATE:  Thanks to the reader who occasionally catches my typos.  I often have limited free time for posting, and proofreading is the first thing that gets sacrificed.]

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In Kullar v. Foot Locker Retail, Inc., Court of Appeal sides with objector to class action settlement

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Greatsealcal100Objectors to class action settlements have limited prospects for success.  I haven't seen any data, but the success rate of objectors looks to be exceedingly low.  So it is of some note when a published opinion accepts an objector's contention that a class action settlement is "fair, reasonable and adequate."  In Kullar v. Foot Locker Retail, Inc. (Echeverria as Objector and Appellant) (November 7, 2008), the Court of Appeal (First Appellate District, Division Three) did just that.

Echeverria contended that the trial court erred in finding a settlement "fair, reasonable and adequate without any evidence of the amount to which class members would be entitled if they prevailed in the litigation...." (Slip op., at p. 1.) The Court of Appeal agreed that the trial court was obligated to consider the potential range of possible recoveries before concluding that a settlement meets that standard:

“More fundamentally, neither Dunk, 7-Eleven, nor any other case suggests that the court may determine the adequacy of a class action settlement without independently satisfying itself that the consideration being received for the release of the class members’ claims is reasonable in light of the strengths and weaknesses of the claims and the risks of the particular litigation. The court undoubtedly should give considerable weight to the competency and integrity of counsel and the involvement of a neutral mediator in assuring itself that a settlement agreement represents an arm’s length transaction entered without self-dealing or other potential misconduct. While an agreement reached under these circumstances presumably will be fair to all concerned, particularly when few of the affected class members express objections, in the final analysis it is the court that bears the responsibility to ensure that the recovery represents a reasonable compromise, given the magnitude and apparent merit of the claims being released, discounted by the risks and expenses of attempting to establish and collect on those claims by pursuing the litigation. “The court has a fiduciary responsibility as guardians of the rights of the absentee class members when deciding whether to approve a settlement agreement.” (4 Newberg on Class Actions, supra, § 11.41 at p. 118; 7-Eleven, supra, 85 Cal.App.4th at p. 1151.) “The courts are supposed to be the guardians of the class.” (Dickerson, Class Actions: The Law of 50 States (2008 ed.) § 9.02[2], p. 9-6.)

(Slip op., at pp. 13-14.)  The Court of Appeal acknowledged the factual circumstances that guided the trial court but ultimately dismissed those circumstances (a possible mediation privilege) as a basis for presuming the fairness of a settlement without testing it against the range of potential recoveries: 

“Here, the trial court acknowledged that “in logic” it would have been preferable for it to have been presented with data permitting it to review class counsel’s evaluation of the sufficiency of the settlement, but felt that this was precluded because the supporting information was exchanged in the course of mediation. We disagree with this conclusion for two reasons. First, the fact that the settlement was reached during mediation to which Evidence Code section 1119 applies does not eliminate the court’s obligation to evaluate the terms of the settlement and to ensure that they are fair, adequate and reasonable. If some relevant information is subject to a privilege that the court must respect, other data must be provided that will enable the court to make an independent assessment of the adequacy of the settlement terms. Secondly, the fact that communications were made during the mediation and writings prepared for use in the mediation that are inadmissible and not subject to compulsory production does not mean that the underlying data, not otherwise privileged, is also immune from production. (Evid. Code, § 1120 [“Evidence otherwise admissible or subject to discovery outside of a mediation . . . shall not be or become inadmissible or protected from disclosure solely by reason of its introduction or use in a mediation . . .]; Rojas v. Superior Court (2004) 33 Cal.4th 407, 417; Wimsatt v. Superior Court (2007) 152 Cal.App.4th 137, 157-158.) Foot Locker’s payroll records, for example, if relevant to the quantification of the claims being settled, are subject to discovery and may be introduced in opposition to the settlement even if they were disclosed to class counsel during the mediation, and even if class counsel was shown only a summary or analysis of those records that is not itself subject to production because prepared for use in the mediation.

(Slip op., at pp. 16-17.)

Easy moral:  Give the trial court something to hang its hat on when seeking approval of a settlement.  Sample calculations for claimants would be a good start, coupled with a discussion of how risk impacts a claim calculated at any particular recovery level.

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Petition for Review filed in Johnson v. Glaxosmithkline, Inc.

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Greatsealcal100This blog briefly reported on a new opinion in Johnson v. Glaxosmithkline, Inc. (September 19, 2008).  You can read that post here.  A Petition for Rehearing was filed on October 7, 2008.  It was denied the day it was filed.  On October 14, 2008, the Court of Appeal modified its opinion, without changing the judgment.  In a later post, I guessed (not a stretch) that a Petition for Review was coming.  Last week the expected Petition was filed with the Supreme Court.

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Attending CAOC Committee Meetings and first Board Meeting

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I'm in San Francisco today to attend CAOC's Class Action Committee section meeting and my first CAOC Board of Governor's meeting after becoming a Board member-elect.  It's eye-opening to talk with other class action practitioners from around California and hear about their concerns and experiences.

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Brinker redux in Brinkley v. Public Storage, Inc.

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Greatsealcal100On October 22, 2008, the Supreme Court has GRANTED the Petition for Review in Brinker Restaurant Corporation, et al. v. Superior Court (Hohnbaum).  See this blog's coverage here and here for more information. The calm didn't last long though, as another Division of the Court of Appeal has re-asserted portions of the Brinker holding that were rendered uncitable with the grant of review.

In Brinkley v. Public Storage, Inc. (October 28, 2008), the Court of Appeal (Second Appellate District, Division Three), relying on the same federal court decision used by the Court of Appeal in Brinker, determined that employers need only "provide" meal breaks, not "ensure" that they are taken:

“In fact, the obligation to affirmatively ensure that workers are relieved of all duty is consistent with the rule requiring employers to provide a meal break. (White v. Starbucks Corp. (N.D.Cal. 2007) 497 F.Supp.2d 1080, 1089 (White) [interpreting Cicairos].) In White, the court rejected the plaintiff’s argument under sections 226.7 and 512 that employers “must affirmatively enforce the meal break requirements.” (White, at p. 1088.) The court noted that it would be impossible for employers with large work forces to enforce such meal breaks. (Ibid.) It further stated that “employees would be able to manipulate the process and manufacture claims by skipping breaks or taking breaks of fewer than 30 minutes, entitling them to compensation of one hour of pay for each violation. This cannot have been the intent of the California Legislature, and the court declines to find a rule that would create such perverse and incoherent incentives.” (Id. at p. 1089.) We agree with this analysis.

(Slip op., at pp. 10-11.)  The California Courts website has been difficult to access today, so have patience if you are looking for the full opinion there.

I authored a column, published in the Daily Journal, where I discussed the weakness in the Brinker/White economic analysis of employer and employee incentives.  (A Bad Meal Deal: 'Brinker' Gets the Incentive Question Wrong, Daily Journal (Los Angeles), August 6, 2008.)  The same criticisms apply with equal force.  Here is a brief excerpt of that column:

“The fundamental flaw in Brinker's analysis is that it is premised on false assumptions. The idea that it is "impossible" to control breaks is inconsistent with the observable fact that employers of all sizes control employees in a variety of ways every day. In fact, since S. G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal.3d 341 (1989), "[t]he principal test of an employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired." As one example of such control, employers habitually set hours of work for their employees. Under the analysis supplied by White and adopted by Brinker, a large employer should find it impossible to control when its employees arrive and depart each day. And yet somehow, they do. The primary manner in which they do so is through a combination of positive and negative incentives. An employee who is punctual and performs well will receive favorable reviews, earn raises or qualify for promotions. A habitually tardy employee may ultimately face termination. For most employees, these combined incentives control their behavior. An employer's failure to modify a recalcitrant employee's behavior is the fault of the employer, not evidence of the impossibility of employee control.

As a result of accepting the White conclusions, Brinker misses many obvious incentives that could overwhelm the financial incentive on an employee to work during a meal break. The potential loss of employment is a larger financial incentive on an employee than an additional hour of pay. Rational employees, working for an employer that enforces its meal break policy, will respond to the larger financial incentive of job retention. Similarly, an employer faces an economic incentive to affirmatively relieve all employees of work duties for 30 minutes during shifts of sufficient length. The employer must then determine whether enforcement of policy is the preferred course to paying meal break premiums. In addition, the employer faces the additional, strong incentive to avoid meal break litigation by employees seeking to recover meal break premium payments. These incentives on employers and employees seem sufficient to overwhelm the singular incentive mentioned in Brown and accepted by Brinker.

(A Bad Meal Deal: 'Brinker' Gets the Incentive Question Wrong, Daily Journal (Los Angeles), August 6, 2008.)  If Courts are considering a discussion of economics as a supporting basis for an opinion's analysis, such Courts would be well advised to either offer a complete discussion of the economic forces at work or avoid the topic entirely.  An incomplete economic analysis in Brinker, and now Brinkley, results in conclusions that don't stand up to scrutiny.

It's very disappointing to see the law premised upon a suspect rationale that individuals without an economics background might not notice.  It creates the appearance, whether accurate or not, of outcome-driven decisions.  The integrity of our legal systems requires our citizens to believe that the law is dispassionately interpreted without a pre-determined outcome in mind.  I don't perceive that to be the case here.

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Court of Appeal reverses order decertifying a class in Harper v. 24 Hour Fitness, Inc.

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Greatsealcal100This is proving to be a busy day in the world of class actions.  And once again, Division Seven in the Second Appellate District is in the mix.  Division Seven seems to be one of those lucky divisions that attracts interesting class action issue appeals (I don't know if they consider themselves "lucky" to be the beneficiaries of these questions).  Just the last year was a busy one for them.  Division Seven recently took some of the sting out of Alvarez v. May Dept. Stores Co., 143 Cal.App.4th 1223 (2006) with their decision in Johnson v. Glaxosmithkline, Inc., 166 Cal.App.4th 1497 (September 19, 2008), as modified (October 14, 2008).  In Lee v. Dynamex (2008) 166 Cal.App.4th 1325 (discussed here), Division Seven reversed an Order denying class certification after the trial court refused to allow discovery of class member identity and contact information.  And in Puerto v. Superior Court (2008) 158 Cal.App.4th 1242, Division Seven added to the body of post-Pioneer decisions confirming the right to discovery putative class member (witness) identity.  And that's just the published decisions.

Division Seven also decided Belaire-West Landscape, Inc. v. Superior Court (2007) 149 Cal.App.4th 554, the first post-Pioneer decision confirming the right to discovery putative class member identity.  Other notable, fairly recent opinions include: Aron v. U-Haul Co. of California (2006) 143 Cal.App.4th 796; Aguiar v. Cintas Corp. No. 2 (2006) 144 Cal.App.4th 121; Singh v. Superior Court (2006) 140 Cal.App.4th 387; Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal.App.4th 365; Consumer Cause, Inc. v. Mrs. Gooch's Natural Food Markets, Inc. (2005) 127 Cal.App.4th 387; and, Newell v. State Farm General Ins. Co. (2004) 118 Cal. App. 4th 1094.  There are many substantial class action issues implicated in that list, including fee awards, insurance claims arising out of the Northridge earthquake, PAGA interpretation, and wage & hour law issues.  And the list includes decisions both favorable and unfavorable to positions advocated by the respective class action proponents.  But, uniformly, this Division endeavors to correctly state and apply highly nuanced issues arising in class actions.

Division Seven's latest opinion in the class action arena, Harper v. 24 Hour Fitness, Inc. (October 22, 2008), in a 2-1 opinion, reverses a trial court order decertifying a class action.  The bulk of the opinion examines the trial court's reliance on the pre-Proposition 64 formulation of the UCL.  I will leave discussion of that aspect of the opinion to the UCL Practitioner.  However, the opinion also offers some confirming language as to how the "ascertainability" requisite is measured.  The Court explains that "ascertainability" exists when the class members can tell if they are included, irrespective of whether anyone else knows the constituency of the class:

“With respect to the difficulty in confirming the identity of all class members prior to a determination on the merits, Division One of this court recently affirmed certification of a class consisting of FedEx drivers over FedEx’s objection “the members of this class shifted ‘in and out, sometimes on a day-to-day basis.’” (Estrada v. FedEx Ground Package System, Inc. (2007) 154 Cal.App.4th 1, 14.) The court explained, “The class is ascertainable if it identifies a group of unnamed plaintiffs by describing a set of common characteristics sufficient to allow a member of that group to identify himself as having a right to recover based on the description. [Citation.] [¶] . . . If FedEx’s claim is that every member of the class had to be identified from the outset, FedEx is simply wrong.” (Ibid.; accord, Lee v. Dynamex, Inc., supra, 166 Cal.App.4th at p. 1335; see also Sav-On Drug Stores, supra, 34 Cal.4th at p. 333 [“‘a class action is not inappropriate simply because each member of the class may at some point be required to make an individual showing as to his or her eligibility for recovery’”]; Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193, 1207 [class of employees ascertainable in spite of absence of specific rest period records; “speculation that goes to the merits of ultimate recovery [is] an inappropriate focus for the ascertainability inquiry”]; Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715, 744 [fact that class may ultimately turn out to be overinclusive not determinative; most class actions contemplate eventual individual proof of damages, including possibility some class members will have none].)

(Slip op., at pp. 11-12.)  This is an important distinction.  Too many trial courts succumb to arguments that the class identity can't be explicitly stated at the time of certification.

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Brinker Petition for Review

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For those visitors curious about all things Brinker, or the Petition process generally, here is that successful Petition for Review:

NOTE: If Flash is not enabled in your browser, you won't see the embedded acrobat.com application that displays the opinion. For those site visitors, you can directly access the Petition for Review here.

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Blog mentions following Brinker coverage

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The Brinker developments are receiving attention outside of California, and this blog has been a fortunate beneficiary of that news coverage:

  • The Wall Street Journal directed readers to this blog for more information about developments in Brinker.
  • In the weekly review of class action blog posts, ClassActionBlawg noted that this blog and Wage Law broke the news on Brinker.  By the way, I have long listed ClassActionBlawg as a site worth visiting and suggested that readers freqently persue that site for interesting news from the world of class actions.  For the casual reader that might not have browsed the blog links here, and for new readers, I direct your attention to the Class Action Blogosphere Weekly Review on ClassActionBlawg.com.  Because the site draws from around the country, it is almost a sure bet that you will find something of interest in the weekly roundups.  And my compliments to ClassActionBlawg for the makeover; the site looks good. 
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