a California-centric collection of comments and resources about complex litigation and class action practice
Judge Victoria Gerrard Chaney, of the Superior Court of Los Angeles County, was confirmed as an Associate Justice of the Second Appellate District, Division One. The Judicial Council's press release can be found here.
[Editor’s Note: This post was prepared by new Contributing Author, Shawn Westrick. Mr. Westrick is an attorney at Initiative Legal Group, LLP, and it is the Editor’s hope that this column is the first of many such posts. Mr. Westrick has spent considerable time in his career litigating PAGA issues, and the Arias decision was of particular interest as source material for a first blog post submission.]
By Shawn Westrick:
In Arias v. Superior Court (Angelo Dairy) (June 29, 2009), the California Supreme Court issued its long-anticipated opinion addressing when conventional class action procedural requirements must be met in representative actions filed against employers.
Plaintiff Jose Arias sued his employer Angelo Dairy, alleging, among other things, violations of the unfair competition law and under the Labor Code Private Attorneys General Act of 2004 (“PAGA”) (Cal. Lab. Code § 2698, et seq.). The trial court granted defendant’s motion to strike the causes of action based on the unfair competition law. The trial court’s reasoning was that claims brought under the unfair competition law and PAGA had to plead class action requirements.
In essence, the appellate court affirmed a portion of the trial court’s Order, directing the trial court to “issue a new order striking the representative claims alleged in the seventh through tenth causes of action, but not the eleventh cause of action” (slip op., at 3), the eleventh cause of action being the claim arising under PAGA.
The Supreme Court began its analysis with a thorough discussion of Proposition 64. Proposition 64 amended the unfair competition law to ensure that a plaintiff suffering injury in fact must comply with Code of Civil Procedure § 382. However, Proposition 64 did not specifically use the phrase “class action” in any of its statutory language. Nevertheless, the Supreme Court ruled that a literal construction would frustrate the purpose of Proposition 64. A review of the Voter Information Guide, the official summary of Proposition 64, and the ballot measure summary suggested that the purpose of Proposition 64 was to require plaintiffs to meet the requirements for a class action.
Turning to PAGA, the Supreme Court then analyzed the question of whether PAGA claims must be certified as class actions to proceed on a representative basis. As an important distinction to be aware of, it has already been determined that actions under the Labor Code Private Attorneys General Act of 2004 may be brought as class actions. (Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1173.) At issue in Arias was whether such actions must be brought as a class action. Beginning its discussion, the Supreme Court noted that the statute was passed because of the lack of adequate financing for labor law enforcement. Employees would act as private attorneys general to collect civil penalties for violations of the Labor Code:
Before bringing a civil action for statutory penalties, an employee must comply with Labor Code section 2699.3. (Lab. Code, § 2699, subd. (a).) That statute requires the employee to give written notice of the alleged Labor Code violation to both the employer and the Labor and Workforce Development Agency, and the notice must describe facts and theories supporting the violation. (Id., § 2699.3, subd. (a).) If the agency notifies the employee and the employer that it does not intend to investigate (as occurred here), or if the agency fails to respond within 33 days, the employee may then bring a civil action against the employer. (Id., § 2699.3, subd. (a)(2)(A).) If the agency decides to investigate, it then has 120 days to do so. If the agency decides not to issue a citation, or does not issue a citation within 158 days after the postmark date of the employee‘s notice, the employee may commence a civil action. (Id., § 2699.3, subd. (a)(2)(B).)
Slip op., at 9.
The Supreme Court rejected the employer’s convoluted argument that permitting employees to proceed with representative actions that did not satisfy class action requirements would cause absurd results. Explaining the strange reasoning of the employer, the Supreme Court said:
Defendants read the Court of Appeal‘s decision as holding that class action requirements do not apply to actions under Labor Code section 2699, subdivision (a) only because class action requirements are "provisions of law" and subdivision (a) says that it applies regardless of, or notwithstanding, "any other provision of law." Defendants then argue that because Labor Code section 2699, subdivision (g) does not contain subdivision (a)'s "[n]otwithstanding any other provision of law" language, it follows that actions under that subdivision must comply with class action requirements. According to defendants, to conclude that subdivision (g) actions must satisfy class action requirements but subdivision (a) actions need not is "absurd" and therefore the Court of Appeal's statutory construction must be wrong. We disagree.
Slip op., at 11. According to the Supreme Court, Defendants' argument presupposed that class action requirements apply to all representative actions unless the Legislature affirmatively precludes their application by inserting the phrase "notwithstanding any other provision of law," or similar words, in the statute authorizing the representative action. The Court rejected that assumption.
The Supreme Court then turned to the employer’s argument that the legislative history required PAGA actions be brought as class actions. The Supreme Court noted that some committee reports expressed concerns that PAGA would allow employees to sue as a class action and some commentators were concerned that without a class action there could be no preclusive effects. The Supreme Court rejected committee report comments as insufficient to demonstrate any particular legislative intent regarding certification of PAGA claims.
The Court then turned to the due process issue of collateral estoppel. The employer argued that in the absence of class action requirements, employers would be subject to constant one-way intervention, violating their rights to due process. However an action under PAGA is binding not only on the named employee but also on the government agencies and any aggrieved employee not a party to the proceeding. An employee suing under PAGA does so as a “proxy or agent of the state’s labor law enforcement agencies.” Slip op., at p. 16. The employee can only bring a PAGA action after giving written notice pursuant to Section 2699.3. Id. An employee acts as a substitute for “the government itself” and a “judgment in an action binds all those ... who would be bound by a judgment in an action brought by the government.” Slip op., at p. 17.
Overall, the Court’s decision on the unfair competition law is straightforward. The long term effect of the Court’s foray into res judicata could have far reaching consequences for class actions in California. Taken as a whole, Arias should be a lesson to lawyers representing employers during settlements. Arias is clear that a PAGA action can only be commenced by adhering to the requirements under Section 2699.3. Slip op., at p. 16. In conjunction with the Supreme Court’s suggestion that the State of California has a vested interest in the civil penalties in PAGA, employers who settle class actions but do not settle PAGA actions with an employee who is authorized to file a PAGA action may find themselves liable for civil penalties owed to California (and, if authorized, other employees) for the same time period and the same class members who participated in a previous class action.
[Full Disclosure: Mr. Westrick is counsel in the matter of Deleon v. Verizon Wireless, in which the Supreme Court issued a “grant and hold” Order pending disposition of Arias. The Deleon matter directly raises the issue of whether settlement of wage & hour claims implicitly settles PAGA claims based upon the same underlying violations.]
When you see that "Doe" in the case name, you already know that an opinion is likely to tread where you'd rather it didn't. In Doe v. MySpace Incorporated (June 30, 2009), the Court of Appeal (Second Appellate District, Division Eight) has the thankless task of deciding whether Myspace Incorporated is liable for sexual assaults by men that the minors met through MySpace.com. The Court framed the issue in simple terms: "Can an internet Web server such as MySpace Incorporated, be held liable when a minor is sexually assaulted by an adult she met on its Web site?" Slip op., at 2. The Court determined that the answer hinged upon application of section 230 of the Communications Decency Act, which provides limited immunity for certain content publishers.
The Court described the test for immunity under section 230:
Immunity under section 230 requires proof of three elements: (1) MySpace is an interactive computer services provider, (2) MySpace is not an information content provider with respect to the disputed activity, and (3) appellants seek to hold MySpace liable for information originating with a third party user of its service. (Zeran v. America Online, Inc. (4th Cir. 1997) 129 F.3d 327, 330 (Zeran); Delfino v. Agilent Technologies, Inc. (2006) 145 Cal.App.4th 790, 804-805.)
Slip op., at 7. After examing federal authority that consistently found immunity existed in similar circumstances, the Court nevertheless discharged its obligation to examine the issue under California law:
While the Fifth Circuit‟s holding in Doe v. Myspace, Inc. is certainly persuasive, especially as it relates to an interpretation of a federal statute, its holding is not binding upon this court. Neither are the other federal precedents cited above. (Southern Cal. Ch. of Associated Builders etc. Com. v. California Apprenticeship Council (1992) 4 Cal.4th 422, 437; Wagner v. Apex Marine Ship Management Corp. (2000) 83 Cal.App.4th 1444, 1451.) However, where the decisions of the federal courts on a federal question are " ' "both numerous and consistent," we should hesitate to reject their authority [citation].' " (Barrett v. Rosenthal (2006) 40 Cal.4th 33, 58 (Barrett).) Nevertheless, we must look to our own state‟s treatment of section 230 immunity to confirm the above analysis.
Slip op., at 10-11. The Court's survey of California decisions didn't reveal any basis for departing from the federal cases construing section 230, and the Court concluded that MySpace was immunized by section 230. Go hug your child. Teach them what not to do online, even if you don't understand it all that well. And pay attention to what they are doing on the internet anyhow.
After several weeks of slim pickings, this week is turning out to have more than enough news. As a big for-instance, on June 29, 2009, Governor Schwarzenegger signed into law AB 5. The Governor had previously vetoed a prior version of the bill for reasons probably related to some budgetary brinkmanship. As before, the new rules track closely with the federal rules and would spell out how and when records from fax machines, computer databases, e-mails and cell phones should be exchanged in litigation. They also set up procedures for settling disputes over data that one party contends are trade secrets or privileged attorney work-product.
The Supreme Court's Opinion in Arias v. Superior Court (Dairy, RPI) (June 29, 2009) is now available. The Complex Litigator will have a more thorough commentary available soon. In addition, the Opinion in Amalgamated Transit Union, Local 1756, AFL-CIO et al. v. Superior Court (First Transit, Inc., et al., RPI) (June 29, 2009) is also available now.
I'm posting via iBlogger, a blogging application for the iPhone, so my editing tools are limited.
[Posted with iBlogger from my iPhone]
The Supreme Court pre-announces the release of opinions one business day before they are made available to the public. This morning, the Supreme Court announced forthcoming decisions in two cases that are of interest to wage & hour class/mass action practitioners. The first, Arias v. Superior Court (Dairy, RPI), concerns issues related to the Labor Code Private Attorneys General Act of 2004 ("PAGA"). The Court lists two questions that will be answered in the opinion: "(1) Must an employee who is suing an employer for labor law violations on behalf of himself and others under the Unfair Competition Law (Bus. & Prof. Code, § 17203) bring his representative claims as a class action? (2) Must an employee who is pursuing such claims under the Private Attorneys General Act (Lab. Code, § 2699) bring them as a class action?"
The Supreme Court will also render its opinion in Amalgamated Transit Union, Local 1756, AFL-CIO et al. v. Superior Court (First Transit, Inc., et al., RPI). Amalgamated addresses novel issues under PAGA and the UCL: "(1) Does a worker’s assignment to the worker’s union of a cause of action for meal and rest period violations carry with it the worker’s right to sue in a representative capacity under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.) or the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.)? (2) Does Business and Professions Code section 17203, as amended by Proposition 64, which provides that representative claims may be brought only if the injured claimant "complies with Section 382 of the Code of Civil Procedure," require that private representative claims meet the procedural requirements applicable to class action lawsuits?"
I am speaking at the Los Angles County Bar Association Solo & Small Firm Conference. Specifically, I am talking about social media as a marketing tool for attorneys. Go figure. Below is a fascinating widget that displays twitter tweets with the hashtag #solo09:
In Satterfield v. Simon & Schuster, Inc. (June 19, 2009), the Ninth Circuit issued a consumer-oriented opinion that exemplifies the challenges faced by courts that are asked to apply existing laws to developing areas of technology. By technology standards, Satterfield is not cutting-edge material. Plaintiff Satterfield alleged a violation of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, arising after Satterfield received an unsolicited text message. At the time of the TCPA's enactment, text messaging was not yet in use:
The precise language at issue here is what did Congress intend when it said “to make any call” under the TCPA. Utilizing the aforementioned canons of statutory construction, we look to the ordinary, contemporary, and common meaning of the verb “to call.” Webster’s defines “call” in this context as “to communicate with or try to get into communication with a person by a telephone.” Webster’s Third New International Dictionary 318 (2002). This definition suggests that by enacting the TCPA, Congress intended to regulate the use of an ATDS to communicate or try to get into communication with a person by a telephone. However, this law was enacted in 1991 when text messaging was not available.
Slip op., at 7342. With no court having addressed this question, the Ninth Circuit looked to the FCC's determination on the issue for guidance:
The TCPA makes it unlawful “to make any call” using an ATDS. 47 U.S.C. § 227(b)(1)(A). While the TCPA does not define “call,” the FCC has explicitly stated that the TCPA’s prohibition on ATDSs “encompasses both voice calls and text calls to wireless numbers including, for example, short message service (SMS) calls . . . .” In re Rules and Regulations, Report and Order, 18 FCC Rcd. 14014, 14115 Implementing the Telephone Consumer Protection Act of 1991 (July 3, 2003) (hereinafter “2003 Report and Order”). The FCC subsequently confirmed that the “prohibition on using automatic telephone dialing systems to make calls to wireless phone numbers applies to text messages (e.g., phone-to-phone SMS), as well as voice calls.” In the Matter of Rules and Regulations Implementing the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003; Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 19 FCC Rcd. 15927, 15934 (FCC August Implementing the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003; Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991 12, 2004). In the Notice of Proposed Rulemaking of the CANSPAM Act, the FCC also noted “that the TCPA and Commission rules that specifically prohibit using automatic telephone dialing systems to call wireless numbers already apply to any type of call, including both voice and text calls.” Id. at 15933. Therefore, the FCC has determined that a text message falls within the meaning of “to make any call” in 47 U.S.C. § 227(b)(1)(A).
Slip op. at 7338-39. Applying the two-step test for judicial review of administrative agency interpretations of federal law set forth in Chevron v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843-44 (1984), the Ninth Circuit concluded that the FCC's treatment of text messaging as "calls" under the TCPA was reasonable. The Ninth Circuit reversed the trial court's grant of summary judgment. It is unclear whether this proposed class action was certified prior to the summary judgment motion.
Unlike single party cases, class actions routinely have more than one plaintiff that purports to represent the same (or similar) class. In Hernandez v. Vitamin Shoppe (Spencer, Appellant) (June 17, 2009), the Court of Appeal (First Appellate District, Division Two) examined the ability of trial courts to set limits on the methods and extent of that advocacy:
After the trial court conditionally certified the class for settlement purposes, appellant Jeffrey Spencer, attorney for appellant Lisa Hernandez, a plaintiff in Perry, sent a letter to various class members urging them to opt out of the settlement, and to retain him as counsel against Vitamin Shoppe in another class action involving the same matters. The court subsequently issued orders and rulings regarding these communications, barring Spencer from certain future communications, and granting monetary sanctions against him, which appellants Hernandez and Spencer challenge on appeal. In the published portion of this opinion, we affirm these rulings and orders, except that we reverse the trial court‘s imposition of monetary sanctions against Spencer.
Slip op., at 1-2. Later, the Court described aspects of the letter to class members:
Spencer, identifying himself as counsel in Thompson, represented in his letters to various members of the conditionally certified class that if the Perry settlement were approved, "substantial compensation will be forfeited," that "you will not be able to recover compensation for all the rest and meal periods you were denied or for all of the overtime compensation or penalties you are owed," and that "[u]nder California law you are entitled to an extra hour of pay for each rest and meal period that you missed during your employment." He advised them to "protect" themselves from the Perry settlement by opting out of the class and joining the Thompson action, which he stated was "in progress," encouraged them to request exclusion from the settlement, and warned that those who did not exclude themselves would be "stuck" with the settlement‘s terms. He solicited them to retain him as counsel, or to contact him for advice or assistance with respect to excluding themselves from the class, and enclosed his retainer agreement.
Slip op., at 4-5. So, to recap, there are acceptable means of objecting to a proposed class action settlement, and there are unacceptable means. This opinion concerns one of those unacceptable means. But I will note that it is a tough position to be in as an attorney for the same putative class if you believe that you can obtain a better result for that class. In the end, class action settlements are approved not on the basis of whether they are the best possible settlement; instead, the proposed settlement need only be good enough.
When the California Supreme Court grants a Petition for Review, it's okay to leave and go get a cup of coffee. You have time. But that doesn't mean that nothing is happening behind the scenes. In Brinker Restaurant v. Superior Court (Hohnbaum) we have developments. On May 7, 2009, Real Party in Interest Hohnbaum requested an extension until August 4, 2009 to file the Reply Brief on the merits. On May 14, 2009 the Supreme Court granted an extension through June 22, 2009, with the additional proviso that no further extensions were contemplated. However, today the Supreme Court granted a two-week extension to that previously firm deadline. The Reply Brief on the merits is now due on July 6, 2009. After that, the amicus bloodbath will ensue (they are due on July 20, 2009).
The Complex Litigator reports on developments in related areas of class action and complex litigation. It is a resource for legal professionals to use as a tool for examining different viewpoints related to changing legal precedent. H. Scott Leviant is the editor-in-chief and primary author of The Complex Litigator.
