Tobacco II Opinion generates widespread media coverage and commentary

Monday's Tobacco II Cases Opinion has generated extensive media coverage and commentary.  Here's a sample of the reactions:

• Courthouse News Service said, in a brief commentary, "Plaintiffs in a class-action lawsuit against the tobacco industry are not required to show that every member has relied on the tobacco industry's claims about cigarettes, the California Supreme Court ruled."
• In a press release issued through PRWeb's emediawire.com, commentary included: "This new ruling will clarify a number of legal issues, and will reject the idea that in a class action, each and every class member will have to show "reliance" on a fraudulent act to win a class action. This will mean that the hundreds of thousands of California residents who have been harmed by tobacco companies may seek relief in court."
• LegalNewsline primarily focused its coverage on the Tobacco II Cases, "The California Supreme Court, in a 4-3 vote Monday, has reinstated a class action lawsuit against tobacco companies accused of misleading advertising."
• Jon Hood, at consumeraffairs.com, discussed the significant implications for consumer class actions, "Justice Carlos Moreno, writing for the majority, said that the law was only intended to stop 'shakedown' lawsuits against businesses, and was passed in response to the practice of small business paying lawyers off to make threatened suits go away. Moreno said that the Court of Appeals' view 'would effectively eliminate the class action lawsuit as a vehicle for vindication of (consumer) rights.' Moreno also pointed out that Prop 64's sponsors explicitly provided in ballot arguments that they did not intend to weaken consumer protection laws."
• Metnews.com also focused on the facts of the case itself, but delved further into the rationale of the majority opinion, "Proposition 64, Moreno elaborated, amended the UCL by requiring a showing that the plaintiff has suffered injury 'as a result of' an unfair, unlawful, or fraudulent act or practice. The initiative does not, he said, make 'any reference to altering class action procedures to impose upon all absent class members the standing requirement imposed upon the class representative.'"
• The UCL Practitioner collected blog and news commentary in posts here and here.  I find it particularly amusing that Will Stern, an architect of Proposition 64, seems surprised that the ballot measure promise that the amendment was not intended to weaken consumer protections should come back as a basis for the Supreme Court's Tobacco II Cases Opinion.

Despite all this coverage, one comment that I find particulary significant has received little in the way of analysis:

Moreover, Proposition 64 left intact provisions of the UCL that support the conclusion that the initiative was not intended to have any effect on absent class members. Specifically, Proposition 64 did not amend the remedies provision of section 17203. This is significant because under section 17203, the primary form of relief available under the UCL to protect consumers from unfair business practices is an injunction, along with ancillary relief in the form of such restitution “as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition.” (§ 17203.)

(Slip op., at p. 21)  Over the last several years, I have contended in many class certification motions that UCL classes could be certified under the less stringent Fed. R. Civ. P. 23(b)(2) class (recognized by California Courts) because the essence of a UCL claim is injunctive relief, including any Order of restitution.  I contend that this is particularly valid where a minimum amount of restitution can be identified.  Under the policy that unjust enrichment cannot be tolerated under the UCL, an equitable order directing disgorgement in that circumstance is primarily injunctive in nature.  Circumstances have conspired to deprive me of a trial court ruling on the issue.  Perhaps I shall have a further opportunity to pursue this theory in the near future.

COMPLEX TECH: Install Windows 7 RC1 on a netbook

Considering the price of a netbook ($300 - $450), the price of Windows 7 RC1 (free to download and try until June), and how easy it is to put Windows 7 RC1 on a netbook, there is no reason not to try out this new operating system on a secondary system.  I put Windows 7 RC1 on an Acer netbook over the weekend, and the process was amazingly smooth.  You will need an external DVD burner to make this really easy to do (around $100), since netbooks don't come with optical drives.  Also, it will be easier to do this with a netbook that includes a hard drive, rather than a solid state drive.  The solid state drives in many netbooks are just too small.  Finally, follow these instructions on ZDNet.

The operating system looks beautiful and seems to be faster than XP was on that same netbook.  The screen looks better under Windows 7 than it did on XP.  IE 8 seems to open and load faster.  It handles wireless settings much better than XP.  Pending further study, I will buy a copy of the OS for that netbook when it comes out later this year.

BREAKING NEWS: Tobacco II Cases Opinion is available and does not impose classwide reliance showing under the UCL

In re Tobacco II Cases is available for viewing now.  The summary of the case is best that I can provide for now:

On review, we address two questions: First, who in a UCL class action must comply with Proposition 64’s standing requirements, the class representatives or all unnamed class members, in order for the class action to proceed? We conclude that standing requirements are applicable only to the class representatives, and not all absent class members. Second, what is the causation requirement for purposes of establishing standing under the UCL, and in particular what is the meaning of the phrase "as a result of" in section 17204? We conclude that a class representative proceeding on a claim of misrepresentation as the basis of his or her UCL action must demonstrate actual reliance on the allegedly deceptive or misleading statements, in accordance with well-settled principles regarding the element of reliance in ordinary fraud actions. Those same principles, however, do not require the class representative to plead or prove an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements when the unfair practice is a fraudulent advertising campaign. Accordingly, we reverse the order of decertification to the extent it was based upon the conclusion that all class members were required to demonstrate Proposition 64 standing, and remand for further proceedings regarding whether the class representatives in this case have, or can demonstrate, standing.

(Slip op., at pp. 2-3.)  There should be some very interesting adjustments to positions in consumer class actions alleging UCL claims for deceptive or misleading statements.

Domain mapping change may cause temporary access issues on this site

I am about to flip the switch and direct the domain of www.thecomplexlitigator.com to this SquareSpace blog.  Changes to DNS settings can take 24-48 hours to finish propagating throughout the internet's DNS servers.  I you are using a major ISP, it is likely that the change will take effect for you in hours rather than days.

Please excuse the temporary disruption.

Update on 2009-05-16 18:20 by The Complex Litigator

UPDATE:  I have to extend my compliments to GoDaddy and SquareSpace for making this entire process so easy.

BREAKING NEWS: The California Supreme Court will issue the IN RE TOBACCO II CASES Opinion on Monday, May 18, 2009

According to the Notice posted on the California Courts website, the California Supreme Court will issue the IN RE TOBACCO II CASES Opinion on Monday, May 18, 2009.  The issues presented are described as follows:

This case includes the following issues: (1) In order to bring a class action under Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.), as amended by Proposition 64 (Gen. Elec. (Nov. 2, 2004)), must every member of the proposed class have suffered “injury in fact,” or is it sufficient that the class representative comply with that requirement? (2) In a class action based on a manufacturer’s alleged misrepresentation of a product, must every member of the class have actually relied on the manufacturer’s representations?

Class action suit accuses lawfirm of overbilling for online legal research

A class action lawsuit filed earlier this month in Los Angeles Superior Court alleges that Chadbourne & Parke, a New York-based law firm, charged clients hourly rates for online legal research services that billed the firm at a flat rate.  (Erik Sherman, Law Firms Allegedly Overcharging for Online Legal Research (May 14 2009) industry.bnet.com; Tresa Baldas, Lawsuit Claims Chadbourne Overcharged For Computerized Legal Research (May 8, 2009) www.law.com.)  Patricia Meyer, counsel for the plaintiff, says that other suits are in the works.  (Id.)  I suspect that this billing practice is pandemic in the legal industry.  Keep your eyes on this story; we could be in for a wild ride.

The FeedBurner feed from The Complex Litigator is now supplied by the SquareSpace blog

The FeedBurner RSS feed for The Complex Litigator is now supplied by the RSS feed for this blog at SquareSpace.  If you are subscribed to the RSS feed from The Complex Litigator through FeedBurner, you should continue to receive a feed.  If your feed has been disrupted (meaning, if I tinkered with something that I should have left untouched and broke something), the RSS subscription link in the right column will directly supply the feed to your preferred reader.

Please excuse our dust...

but Step One to ready this blog for its move to SquareSpace is complete.  The Complex Litigator now has a new registrar.  You may notice some disruptions getting to this site today as new nameservers take over for those on Hostway (which did absolutely nothing to make moving to a new registrar painless and comfortable).  I am still hoping to complete the move over this weekend.  If you subscribe to this blog in a reader, you may wish to visit thecomplexlitigator.squarespace.com and use the new RSS subscription tool to update the source of the feed.

In Hatfield v. Halifax PLC, et al., the Ninth Circuit explains that American Pipe tolling and California's equitable tolling doctrine are not identical

The Ninth Circuit issued a very interesting opinion last week about serial class action tolling in California state courts (for purposes of this post, let's just assume that "interesting" and "serial class action tolling" are phrases you would arguably use in a single sentence that did not also involve irony or sarcasm).  In Hatfield v. Halifax PLC, et al. (May 8, 2009), the Ninth Circuit reviewed a district court decision in which the district court found that Plaintiff "Hatfield’s claims, brought eight-and-a-half years after her causes of action arose, were barred by California’s statutes of limitations, which are four years or less for each of Hatfield’s claims."  (Slip op., at p. 5403.)  On appeal, Hatfield argued, in part, that the "limitations period was tolled by the filing of a previous class action in New Jersey state court, making this action timely.  (Id.)

First, the Ninth Circuit concluded that Hatfield, as an individual, was entitled to tolling from the filing of the New Jersey class action.  (Slip op., at pp. 5412-15.)  The Ninth Circuit then turned to the more difficult question of whether Hatfield could claim such tolling on behalf of class members that Hatfield sought to represent:

While there is no California precedent directly on point, based on closely analogous precedent, we see no reason why California’s equitable tolling doctrine would not also apply to the claims of its unnamed putative class members who, like Hatfield, are California residents.  First, the California Supreme Court has indicated a general agreement with tolling in the class action context, going so far as to cite with approval the Supreme Court’s decision in American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974). See Jolly v. Eli Lilly & Co., 751 P.2d 923, 934-35 (Cal. 1988). In American Pipe, the Supreme Court held that “the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action.” 414 U.S. at 554.  In Jolly, 751 P.2d 934-35, the California Supreme Court noted with approval the two major policies that underlie the American Pipe tolling rule, the first of which is most relevant here.  That policy protects the class action device because, without it, potential class members would be induced to file protective actions to preserve their claims, thus depriving class actions of their ability to secure “efficiency and economy of litigation.”  Id. at 935 (quoting American Pipe, 414 U.S. at 553).  In Jolly, despite the endorsement of American Pipe, the court rejected its application under the facts of that case.  Id. at 935-36.

(Slip op., at pp. 5415-16, footnotes omitted.)  Defendant Halifax then argued that a recent Ninth Circuit opinion, Clemens v. DaimlerChrysler Corp., 534 F.3d 1017 (9th Cir. 2008), precluded "cross-jurisdictional tolling."  The Ninth Circuit agreed that, while Clemens would preclude American Pipe tolling, it would not bar California's equitable tolling doctrine:

Although the Clemens decision would foreclose application of American Pipe here, it does not dictate a similar rejection of California’s equitable tolling doctrine, especially as it applies to California’s own residents. Although the two types of tolling—equitable and American Pipe —overlap to some extent, see Becker, 277 Cal. Rptr. at 496, and even though California courts have treated them at times as interchangeable, they are not congruent. The Halifax Appellees themselves concede that “the equitable tolling applied to individual actions is distinct from American Pipe tolling.” They cite Newport v. Dell, Inc., No. CV-08-0096, 2008 WL 4347311, at *4 n.8 (D. Az. Aug. 21, 2008), a case decided shortly after Clemens, which stated that “[t]he class-action tolling discussed in American Pipe and Crown is a species of legal tolling, not equitable tolling.” Thus, by the Halifax Appellees’ own admission, Clemens, which only rejected the application of American Pipe tolling in a cross-jurisdictional action, does not affect the application of California’s equitable tolling doctrine, which covers situations beyond those covered by American Pipe. See McDonald v. Antelope Valley Cmty. Coll. Dist., 194 P.3d 1026, 1032 (Cal. 2008) (“[California’s equitable HATFIELD v. HALIFAX PLC tolling] may apply where one action stands to lessen the harm that is the subject of a potential second action; where administrative remedies must be exhausted before a second action can proceed; or where a first action, embarked upon in good faith, is found to be defective for some reason.”).

(Slip op., at pp. 5417-18.)  The Court concluded that California would protect its own citizens with its equitable tolling doctrine ("California has a strong interest in providing a remedy for wrongs committed against its citizens"), but would not extend that same equitable tolling protection to individuals outside of California. 

As a final observation, the Ninth Circuit also offered a useful comment on the extent of tolling that is available under American Pipe:

Although American Pipe is clearly applicable to individual actions, some federal decisions have refused to allow the doctrine to toll the limitations period for subsequently filed class actions. See Robbin v. Fluor Corp., 835 F.2d 213, 214 (9th Cir. 1987) (“We agree with the Second Circuit that to extend tolling to class actions ‘tests the outer limits of the American Pipe doctrine and . . . falls beyond its carefully crafted parameters into the range of abusive options.’ ” (quoting Korwek v. Hunt, 827 F.2d 874, 879 (2d Cir. 1987) (alteration in original))).  In Catholic Social Services, Inc. v. INS, 232 F.3d 1139, 1149 (9th Cir. 2000) (en banc), however, the Ninth Circuit extended American Pipe to toll the claims of an entire class where “[p]laintiffs . . . are not attempting to relitigate an earlier denial of class certification, or to correct a procedural deficiency in an earlier would-be class.”  Whether the subject class action was actually trying to relitigate the certification issue was disputed by one of the dissents.  Id. at 1157-58 (Graber, J., dissenting in part).  However, the current action is clearly not an instance in which Hatfield is trying to reargue a denial of class certification because of a failure to meet Rule 23 of the Federal Rules of Civil Procedure or its state counterpart.  Rather, the previous class action was dismissed for lack of in personam jurisdiction.  Thus, if Hatfield had brought the original class action in California, American Pipe would permit tolling for the entire class action.

(Slip op., at p. 5419, fn. 8.)

The Complex Litigator may experience brief "outages" as the domain registrar is changed ahead of hosting move

The prior registrar for www.thecomplexlitigator.com provided no user access to custom DNS settings.  In advance of the move to SquareSpace for blog hosting, I am moving to a new registrar (although my old registrar seems determined to make that process as slow and painful as possible).  When the registrar changes, I'll need to change domain name servers.  That will cause a brief "outage" as the new information propogate through the top level domain name servers on the internet.  Since my current registrar is being "jerky" (a legal term used to describe certain registrars), I may not be able to control the exact time of the transfer, but Monday or Tuesday looks most likely.

Once that switch is complete, I'll redirect traffic to SquareSpace on the weekend of May 16th.  That switch will cause another brief outage (anywhere from hours to a day or two, depending upon how quickly your particular DNS server refreshes its data).