OFF TOPIC: California's Budget Fiasco

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I haven't used this blog as a general political soapbox, but sometimes things go too far.  California citizens recalled Gray Davis shortly after he announced that the state budget shortfall was likely to exceed $35 billion, on a budget of about $100 billion.  Think about that for a minute.  "Oops, we overspent by a third!"

Now, with a budget that has exploded to around $140 billion, I'm hearing that I may face higher sales taxes, higher gas taxes, and higher income taxes because we are still $40 billion in the red.  Wait, weren't we $40 billion in the red in 2003, when we did the unprecedented and recalled a governor?

The only adjectives that come to mind for the leadership of this state (and are fit to print in a family publication) are "criminal," "pathetic," "inexcusable."  Leaders lead.  Under that standard, Sacramento hasn't had leadership for a long time.  Thank you for driving my child's future in this beautiful state off a cliff in your exuberant desire to shovel money you don't have and don't own into the hands of your various pet projects and respective backers.  This defines ultra vires activity.  It should be criminal, and every legislator that voted for any of these budgets should be personally liable for the shortfall.  How could you let this happen?  How could we let this happen?  I guess apathy gets what it deserves, which is nothing.

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Labor Code section 206.5 may be the focus of forthcoming opinion in Fourth Appellate District

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Greatsealcal100I’m told that the Fourth Appellate District, Division Three, has an interesting opinion on the way in the next couple of weeks. According to Wage Law via Twitter (@wagelaw), Chindarah et al. v. Pick Up Stix, Inc. et al. is going to have something interesting to say about Labor Code section 206.5. @wagelaw suggests that the decision is due this week, and the docket nominally supports that contention, noting that the decision is “due” on February 19, 2009. However, at least some of the Courts of Appeal around the state interpret the 90-day deadline on the issuance of opinions in submitted matters to mean that the case must be decided by the end of the month in which the decision is due (when the Court reports on whether it has resolved all pending matters under penalty of nonpayment of Justices’ salaries). I don’t know if this interpretation is universal across the state, but, if it applies here, the decision could issue any time before the end of the month. And don’t forget that, in rare circumstances, the Court can essentially vacate the submission and resubmit the matter if the press of other business makes issuance of an opinion by its orginal due date impossible.

Section 206.5 fascinates me.  Maybe "fascinates" is a bit strong.  In any event, there is little in the way of decisional law about this Labor Code section, which states:

“(a) An employer shall not require the execution of a release of a claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of those wages has been made. A release required or executed in violation of the provisions of this section shall be null and void as between the employer and the employee. Violation of this section by the employer is a misdemeanor.

(b) For purposes of this section, "execution of a release" includes requiring an employee, as a condition of being paid, to execute a statement of the hours he or she worked during a pay period which the employer knows to be false.

Subdivision (b) is new, so the opinion can’t address that provision. That leaves subdivision (a). In the world of wage and hour class actions, the only time I ever ran across this section was when an employer was picking off class members by making them sign a release to get an offered payment. I believed that the releases obtained were void, but I never had the opportunity to test that belief. I’m very curious to see if that is the issue that has been presented in Chindarah. Of course, there is no guarantee of publication, but, as a matter of first impression (while I wildly speculate about the issues on appeal), one has to believe that publication would be certain.

And to digress for a moment, Twitter is definitely building momentum as a source for breaking news (amongst the nonsense about what somebody has decided to eat for dinner). You can read my recent posts in the sidebar on this blog or see whose posts I am following on Twitter by going to http://twitter.com/hsleviant (@hsleviant, in Twitter-ese).  If you start by reading posts from legal news sources, you may find that you can build a customized legal news amalgamation that suits your interests very precisely.

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It's been a bad week to work at Big Law

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Above the Law has been diligently covering what it charming refers to as the Valentine's Day Massacre of 2009, a substantial collection of layoff announcements at major firms.  Show compassion for your displaced brethren.  I do know how they feel.

It does make me wonder, though, about what's going to happen in the area of complex litigation and class actions.  There seems to be a uniform sentiment that the weak economy will lead to more litigation, especially in the employment class action realm (and employment claims generally).  If businesses are paying less for lawyers, and have less money to allocate towards negotiated class settlements, will more of these cases speed through to trial?  [This is where regular readers can express their opinions in the comment section, striking up a lively dialog.  No, really.]  We're also going to see a knowledge gap at big firms, if we have a multi-year discontinuity in hiring.

UPDATE:  More news coverage at JDJournal.

UPDATE 2:  The Recorder, via Law.com reports that several other shoes have yet to drop.

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California Supreme Court lets two appellate court decisions stand

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Mentioned by UCL Practitioner and Wage Law (note their new domain of www.californiawagelaw.com), this week the California Supreme Court denied review in Harper v. 24 Hour Fitness, Inc. (2008) 167 Cal.App.4th 966 (reversing an order order decertifying UCL and FAL claims) and denied a request to depublish Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116 (holding that trial court must independently review adequacy of class aciton settlement value).

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Cristler v. Express Messenger says more about the standard of review on appeal than it does about class actions or employee misclassification

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Greatsealcal100When does a class action go to trial? That’s not an easy question to answer. The potential recovery is a factor, but not always. Personalities involved in the litigation are a factor, but not always. The jury pool is factor, but not always. However, when the class is seeking to declare unlawful a delivery company’s classification of delivery drivers as “independent contractors,” it looks like a sure bet that the class action will go to trial.

In Christler v. Express Messenger Systems, Inc. (February 11, 2009), the Court of Appeal (Fourth Appellate District, Division One) considered challenges to a number of rulings surrounding the trial of plaintiffs’ claim that defendant misclassified its delivery drivers as “independent contractors.” While this opinion does discuss the legal standard for determining employment, the Court of Appeal limited its review, based upon what appellant presented:

“ Cristler emphasizes throughout its briefing that other cases addressing the proper classification of package delivery drivers have resulted in findings that the drivers were employees, rather than independent contractors. (See Estrada, supra, 154 Cal.4th at pp. 11-12 [reciting litany of factors that provided substantial evidence to support trial court's finding that FedEx drivers were employees, including "FedEx's control over every exquisite detail of the drivers' performance, including the color of their socks and the style of their hair"]; JKH Enterprises, Inc. v. Department of Industrial Relations (2006) 142 Cal.App.4th 1046, 1065 [listing factors that provided substantial evidence for trial court's conclusion that drivers were employees and thus "reject[ing] JKH's contention" that the evidence "dictate[d] but one conclusion here — that the drivers are independent contractors"]; Air Couriers, supra, 150 Cal.App.4th at p. 938 [same].) The simple answer to these references is that these cases concerned different circumstances presented to a different finder of fact. Indeed, even if the facts of this case were identical to those in the cases Cristler cites (and they are not), we would not be authorized to overrule the determination of the jury to achieve conformity with other cases — particularly as Cristler does not even argue that the jury's verdict is unsupported by substantial evidence.

(Slip op., at p. 8, fn. 2.) If nothing else, this certainly suggests a trend when suing delivery companies who have, as their business model, decided to classify delivery drivers as “independent contractors.”

As part of the appeal, plaintiffs contended that the trial court erred by failing to continually review the class definition to ensure that class members were not inappropriately excluded: “In the instant case, regardless of whether the trial court erred in defining the class, Cristler fails to carry its burden of establishing reversible error as there is no showing of prejudice from the trial court's assertedly erroneous rulings.” (Slip op., at p. 11.) Continuing, the Court explained: “In light of the trial court's refusal to expand the class definition, the drivers who remained in the class — those without any employees of their own and who did not deliver even an occasional package for clients other than Express Messenger — were the most likely to be characterized as Express Messenger's employees rather than as independent contractors.” (Ibid.) Losing at trial with a narrow class didn’t do much for the plaintiffs’ arguments.

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UPDATED: Lu v. Hawaiian Gardens Casino, Inc. offers a reminder that the UCL can borrow statutes that do not themselves include a private right of action

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Greatsealcal100Better late than never, a brief comment about Lu v. Hawaiian Gardens Casino, Inc. (Jan. 22, 2009) is in order. In Lu, the Second Appellate District, Division Three, considered whether dealer tip pooling in casinos (1) gives rise to a private right of action under California Labor Code section 351 and/or 450, and (2) whether those or other Labor Code sections can serve as predicates for an Unfair Competition Law claim.

After reviewing the two Labor Code sections at issue, the Lu Court concluded with little difficulty that neither section (351 or 450) created a private right of action. However, the Lu Court then noted that such Labor Code sections could nevertheless serve as predicates for the “unlawful” conduct prong under the UCL:

“Nevertheless, Lu alleged a cause of action under the UCL for violation of Labor Code sections 351 and 450. “ ‘Virtually any law -- federal, state or local -- can serve as a predicate for an action under Business and Professions Code section 17200.’ [Citation.]” (Ticconi v. Blue Shield of California Life & Health Ins. Co. (2008) 160 Cal.App.4th 528, 539; cf. Louis v. McCormick & Schmick Restaurant Corp. (C.D.Cal. 2006) 460 F.Supp.2d 1153, 1156, fn. 5; Matoff v. Brinker Restaurant Corp., supra, 439 F.Supp.2d at pp. 1037-1038.) The UCL is a proper avenue for Lu to challenge violations of these Labor Code provisions. Therefore, we turn to the substantive question of whether the tip pool procedure here violates the Labor Code sections enumerated in the complaint such as would support UCL causes of action.

(Slip op., at p. 11.) The Court then analyzed various Labor Code sections asserted in the plaintiff’s complaint, concluding that section 351 could support a UCL “unlawful” prong claim sufficient to withstand summary judgment. (Slip op., at pp. 21-23.)

UPDATE:  Just when you get around to writing a post, wouldn't you know that the Court of Appeal changes the Opinion.  A Modified Opinion issued on February 11, 2009, which slightly alters the judgment.

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CLE: The Rutter Group offers upcoming 17200 seminar

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The Rutter Group will be offering a seminar in March on the newest developments in 17200 (and CLRA) practice.  Live programs will be held on March 3, 2009 in San Francisco and March 5, 2009 in Los Angeles.  Other locations will offer video replays later in March.  All programs are from 6:00 p.m. to 9:15 p.m.  New case discussions will include, among others, Meyer v. Sprint Spectrum L.P.  For more information, visit www.RutterGroup.com.

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Opportunity for Plaintiffs’ Lawyer to Start-up and Lead Los Angeles Office

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Sprenger ◊ Lang, a Martindale-Hubbell AV® rated national plaintiffs’ class action law firm, seeks a plaintiffs’ lawyer to start-up and lead a Los Angeles, CA office.

The Opportunity

If you are an entrepreneurial plaintiffs’ lawyer with an interest in raising your profile by working with or for Sprenger + Lang, we have an opportunity for you to start-up and lead our Los Angeles, CA office. With offices in Washington D.C., Minneapolis, and Chicago, Sprenger + Lang is a nationally recognized law firm representing plaintiffs in employment and consumer class action litigation.

If you follow class action litigation in California, you may be familiar with Sprenger + Lang’s pending age discrimination class actions on behalf of television writers against virtually every major player in the television industry. You may also be familiar with our class action on behalf of California consumers against DirecTV for early termination fees and other illegal business practices. Attorneys around the country know us for having the first sexual harassment class certified, Jenson v. Eveleth Taconite Co., which inspired the feature film “North Country” and was detailed in the book "Class Action: The Story of Lois Jenson and the Landmark Case That Changed Sexual Harassment Law."

Sprenger + Lang has a long history of prevailing in groundbreaking employment law class actions against major corporations. Sprenger + Lang is now bringing this tradition of cutting-edge work to its consumer practice and has brought consumer classes against DirecTV, Qwest, Homecomings Financial Network, and the U.S. Department of Education.

For more information on who we are, visit http://www.sprengerlang.com/meet-us/groundbreaking-work/.

The Requisites

An attorney able to start-up and lead our LA office with an understanding of the business of contingency fee law firms and a willingness to prosecute class actions. An attorney who recently (i.e., in the last 3-5 years) established or joined a successful plaintiff’s practice with a rising profile but with an interest in raising his or her profile higher by working with or for a national plaintiffs’ class action law firm.

Essential Criteria

An attorney who has practiced complex, plaintiffs’ litigation for at least five (5) years with the ability to make immediate contributions to class action cases. The attorney must be experienced in all facets of discovery and possess superior research, analytical, and writing skills while meeting internal deadlines.

Candidates with less than ten (10) years’ experience should also meet at least one employment and one academic criterion listed below:

Employment

  • At least two years with a national plaintiffs’ firm.

  • A one or two year clerkship (not an internship) with a federal district court or court of appeals judge, not a state court judge or a federal bankruptcy or magistrate judge.

Academic

  • Tier one law school and:

  • Law review/journal; and/or

  • Summa or magna cum laude or equivalent.

  • Tier two or three law school and:

  • Law review/journal; and

  • Summa or magna cum laude or equivalent.

The Ideal Candidate

In addition to the Essential Criteria, The Ideal Candidate would:

  • Practice in Los Angeles, CA.

  • Practice in one or more of the following areas:

  • Consumer Fraud/Protection.

  • Civil Rights Law.

  • Employment Law.

  • Employee Benefits – ERISA.

  • Investor Fraud/Protection.

  • Securities Fraud/Protection.

Compensation

Compensation depends on the candidate and the legal entity the firm creates in CA.

Contact Us

To learn more about this opportunity, please contact me.

Douglas Olson
Business & Operations Manager
Sprenger + Lang PLLC
Direct/ 612-486-1840
eMail/ dolson@sprengerlang.com
www.sprengerlang.com

Certification Mark Reference: "CV, BV and AV are registered certification marks of Reed Elsevier Properties Inc., used in accordance with the Martindale-Hubbell certification procedures, standards and policies."

Rating Explanation: Martindale-Hubbell is the facilitator of a peer review rating process. Ratings reflect the confidential opinions of members of the Bar and the Judiciary. Martindale-Hubbell Ratings fall into two categories - legal ability and general ethical standards.

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Gorman v. Wolpoff & Abramson examines creditor obligations under Fair Credit Reporting Act (FCRA)

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Ninth Circuit SealWhat must a creditor do when notified of a dispute by a Credit Reporting Agency (CRA)? Under the Fair Credit Reporting Act (FCRA), the creditor is obligated to conduct “an investigation with respect to the disputed information.” 15 U.S.C. § 1681s-2(b)(1)(A). But does that investigation have to be “reasonable?” In a case involving a complicated dispute about credit card charges, the Ninth Circuit, in Gorman v. Wolpoff & Abramson, said that such investigations must be reasonable, following the Fourth Circuit.

Dismissing the contention that the absence of the word “reasonable” authorizes unreasonable investigations, the Court said:

“ This court has not addressed MBNA’s contention about the FCRA’s investigation requirement. But, MBNA made — and lost — the same argument before the Fourth Circuit. Johnson v. MBNA Am. Bank, NA, 357 F.3d 426, 429-31 (4th Cir. 2004). Concluding that the statute includes a requirement that a furnisher’s investigation not be unreasonable, the Fourth Circuit first noted that the plain meaning of the term “investigation” is a “ ‘detailed inquiry or systematic examination,’ ” which necessarily “requires some degree of careful inquiry.” Id. at 430 (quoting Am. Heritage Dictionary 920 (4th ed. 2000)). Second, the Fourth Circuit reasoned that because the purpose of the provision is “to give consumers a means to dispute — and, ultimately, correct — inaccurate information on their credit reports,” id. at 430-31, a “superficial, unreasonable inquir[y]” would hardly satisfy Congress’ objective. Id. at 431. The Seventh Circuit, without discussing the issue, has also found an implicit reasonableness requirement. See Westra v. Credit Control of Pinellas, 409 F.3d 825, 827 (7th Cir. 2005) (“Whether a defendant’s investigation [pursuant to § 1681s-2(b)(1)(A)] is reasonable is a factual question normally reserved for trial.”); see also Johnson, 357 F.3d at 430 n.2 (“[D]istrict courts that have considered the issue have consistently recognized that the creditor’s investigation must be a reasonable one.” (citing cases)).

(Slip op., at pp. 277-278.) The Ninth Circuit found this reasoning more than sufficient. The Court went on to evaluate the reasonableness of a number of investigations by the creditor, finding them to be reasonable on the offered facts.

The Court then flirted with a pre-emption issue related to state law claims arising out of credit reporting: “The preemption question presents a difficult issue of first impression.” (Slip op., at p. 296.) But after building the suspense with a discussion of district courts in "disarray" on the issue, the Court concluded that an insufficiency of evidence would preclude a libel claim by the debtor, rendering a decision on the pre-emption claim unnecessary. The wind-up was good; the Court had me ready to learn how they were going to untangle the statutory interpretation issue that confounded district courts on the pre-emption question.

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Sanai v. Saltz: a tale of woe and courage (on the part of the Court of Appeal)

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This is post is much less about complex litigation than it is about my respect for Division Seven of the Second District Court of Appeal and the great job done by Professor Shaun Martin at his blog, California Appellate Report.  I can't do justice to the story any better than Professor Martin does, so read about Sanai v. Saltz at California Appellate Report and have some courage that we still have judges that do what the law requires, even when it probably hurts.

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