California Supreme Court activity for the week of December 21, 2009

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The California Supreme Court held its (usually) weekly conference on December 23, 2009.  The only notable event I noticed was:

  • A Petition for Review was granted in O'Neil v. Crane Company.  O'Neil is a toxic tort decision that concerns manufacturer liability when a non-dangerous component is incorporated into a package or system that is dangerous.  In this case, the manufacturer supplies valves and pumps that were covered with an asbestos lagging/insulation.  The Court of Appeal concluded that the component part defense did not apply when the parts were designed to be incorporated into a system that was not altered by the customer and had but one intended use.  The decision conflicts with a recent opinion in Taylor v. Elliott Turbomachinery Co., 171 Cal. App. 4th 564 (2009).

California's mismanagement of its finances causes further damage to Court system

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The California Supreme Court has announced on the California Courts website that its Los Angeles Clerk's Office will close at the start of the new year.  The Notice states:

Notice

EFFECTIVE JANUARY 1, 2010, the Los Angeles Clerk's Office of the Supreme Court of California will be closed. The Supreme Court will no longer accept filings at Court of Appeal locations. All petitions for review, writs, and legal briefs must be filed at:

Supreme Court of California
Office of the Clerk, First Floor
350 McAllister Street
San Francisco, CA 94102

The Supreme Court will continue its practice of conducting oral argument in Los Angeles, typically in the months of April, June, October, and December.

Breaking News: Denial of class certification affirmed in Vioxx Class Cases

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With the holidays upon us, the topical and interesting news stories have been few and far between.  But the drought cannot last forever.  Today, the Court of Appeal (Second Appellate District, Division Three) issued an Opinion in which it affirmed the trial court's denial of class certification in the matter of In re Vioxx Class Cases (December 15, 2009).  I will need to read this Opinion with some deliberation before writing an extended post about it.  However, a few things jumped out immediately and are worth noting now.  Tobacco II is mentioned early in the Opinion, and I assumed that the Opinion would join the few recent Opinions that appear to conflict with Tobacco II.  That does not appear to be the case here:  "Nonetheless, it is clear from Supreme Court authority that recovery in a UCL action is available in the absence of individual proof of deception, reliance, and injury. (Tobacco II, supra, 46 Cal.4th at p. 320.)"  (Slip op., at 25 n. 19.)  Instead, the Court of Appeal affirmed the trial court's denial of class certification on the basis of damage-related issues: "The trial court’s findings with respect to the measure of damages are sufficient to support its denial of class certification with respect to the UCL and FAL causes of action."  (Slip op., at 25, emphasis added.)  This damages discussion, and some remarks about typicality, will require more reading and a longer post.

From Bridgeport's 6th Annual Wage & Hour Litigation Conference: Future attacks on Gentry v. Superior Court

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I'm attending Bridgeport's 6th Annual Wage & Hour Litigation Conference. Today, one topic of discussion is the subject of class arbitrations after Gentry. According to Steven Katz, partner at Reed Smith LLP, Gentry is one of the California Supreme Court's most erroneously-reasoned decisions in quite some time. That's not the interesting part (it's the funny part). The interesting commentary comes from how the defense bar hopes to limit Gentry.

Mr. Katz starts from the premise that Gentry. does not state a bright-line rule precluding class action waivers in all wage & hour class actions. The defense bar hopes to elicit further review of Gentry by challenging trial and appellate orders that impose a bright-line rule when invalidating arbitration agreements with such waivers. The protective measure that plaintiffs should take is to draft proposed orders that identify the four-factor test from Gentry as having been satisfied.

The second major challenge to Gentry that is being tested at the appellate level is a species of "field" preemption. The defense contention is that Gentry allows for a type of contract impairment that isn't directed at arbitration agreements directly, but nevertheless affects only those types of agreements. This argument disregards the fact that the principles in Gentry are subject-neutral. It is merely the nature of the effect of these agreements that renders them invalid. The factors in Gentry don't seek out just arbitration agreements with class action waivers. Despite that weakness in the defense-side argument, plaintiffs should handle these arguments with great care. This species of "field" premption is very complex, and the attorneys bringing these arguments often have an advantage in the form of repeated experience with them. Don't take a novel preemption argument lightly.

Banks can require U.S. citizens to provide social security numbers on credit card applications, despite accepting alternative forms of identification from foreign nationals

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In Howe v. Bank of America N.A., plaintiffs, on behalf of a putative class of “individuals of U.S. national origin and/or ancestry, as well as naturalized individuals,” sued Bank of America and other companies. They alleged that Bank of America and other defendants had discriminated against the class in violation of the Unruh Civil Rights Act (Civ. Code, § 51 et seq.) by requiring that United States citizens provide a Social Security number to open a particular type of credit card account, while allowing foreign nationals to open such accounts with only alternative forms of identification.  Slip op. at 2.  The trial court sustained the defendants' demurrer.  The Court of Appeal (Fourth Appellate District, Division Three), affirmed, finding that Bank of America's actions were facially reasonable in that they complied with federal minimum identification regulations.

Dragon Dictation is now available in the iPhone app store

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Dragon Dictation, which is a simplified version of the PC software, Dragon NaturallySpeaking, is now available in the iTunes App store.  And, for some limited amount of time, it is FREE.

What You See:

This application is simple, but very nice.  At launch, all you see is a button, with text that reads, "Tap here and dictate."  Go on, tap!  The application immediately begins recording what you say.  When you are finished, press another button, and the speech-to-text conversion occurs.  Once you have text, you can either edit the text or export it to e-mail on your phone, text messaging, or the clipboard.  If you don't like the virtual keyboard, this program offers a way to write a significant amount of text in a hurry.

It Works:

In my testing, it was shockingly accurate.  Admitedly, I tested the application is a quiet room, with no significant background noise.  Dragon Dictation recognized punctuation and "new line" commands.  I'm still amazed at the quality of the recognition from a phone.  A phone.

Courtroom View Network is providing live coverage of eBay v. Craigslist

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The Delaware Court of Chancery, in Georgetown, Delaware, is playing host to a wild one.  Courtroom View Network is now providing live coverage of eBay v. Craigslist, otherwise known as eBay Domestic Holdings, Inc. v. Craig Newmark.  California online mainstays eBay and Craiglist are involved in a bi-coastal battle over director voting rights and the alleged theft of confidential information.  In a nutshell, eBay claims that Craiglist's directors unfairly diluted eBay's 28.4 percent minority shareholder stake in Craigslist and eliminated eBay's right to appoint a director.  In another lawsuit filed in San Francisco, Craigslist claimed that eBay used its shareholder position to obtain confidential competitive information to gain an unfair commercial advantage in developing eBay's own competing online classified ad business, kijiji.com.

Courtroom View Network is providing free access to a sample clip of cross-examination of Meg Whitman, the former CEO of eBay.  Other media outlets have more coverage of the opening day of trial.  See, e.g., Shannon P. Duffy, Craigslist, eBay Face Off in Closely Watched Trial (December 8, 2009) www.law.com.

True, it's not a class action, but this is complex litigation at its best.  Two cyber-goliaths trying to strangle each other on opposite sides of the country is too good to pass up.  I just don't know who to root for.

Bates v. Rubio's Restaurants, Inc. reminds defendants to be sure the class list is complete before the money starts flowing

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While most of this opinion has nothing to do with class actions and everything to do with whether a judge can sua sponte reconsider a prior order and then recuse himself in the same minute order, Bates v. Rubio's Restaurant's Inc. (November 30, 2009) includes an important lesson for the administration of class action.  The Court of Appeal (Fourth Appellate District, Division Three) affirmed an interesting order of the trial court that had a significant effect on the constituency of a class in a settlement.  The concise summary of key events sets the stage for the discussion that follows in the opinion:

The parties in this wage and hour class action litigation entered into a $7.5 million settlement agreement, providing for three payments of $2.5 million to approved class members. After the initial $2.5 million payment was distributed among 529 approved class members, defendant and appellant Rubio‟s Restaurants, Inc. (Rubio‟s) realized it had not provided the names of all potential class members to the settlement administrator. One hundred forty potential class members had not received notification of the settlement.

After postjudgment briefing and status conferences, the court ruled that the 140 late-identified class members should receive notice and be folded into the settlement agreement. Later, the judge reconsidered his ruling sua sponte and vacated it. In the same minute order, the judge, citing Code of Civil Procedure section 170.1, subdivision (a)(6)(A)(i), then recused himself from any further proceedings in the matter, in the interests of justice.

Slip op., at 2.  Rubio's argued that the recusal negated the validity of the portion of the order vacating the prior ruling.  The Court of Appeal said that was nonsense, concluding that the trial court could properly rescing its earlier ruling and later, in the same minute order, recuse itself.

The only reason for all the fuss was the fact that 140 class members can file another class action and state with great certainty that they didn't receive notice of the prior settlement.  There's your class action angle.

in brief: Majority of California Supreme Court sets 1-1 punitive damage to compensatory ratio on facts in Roby v. McKesson Corporation

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In Roby v. McKesson Corporation, the second opinion issued today by the California Supreme Court, the Court held, among other things, that on the facts and circumstances presented, a 1-1 punitive damage to compensatory damage ratio was the constitutional ceiling.  Justice Werdegar authored a dissenting opinion (to which Justice Moreno concurred) on the Court's punitive damage holding, concluding that the facts and circumstances of the case supported a 2-1 punitive damage to compensatory damage ratio.  The case concerns allegations of wrongful discharge, discrimination and harassment.