The government can sneak on your property and track your car with GPS, no warrant required; illegal options exist to jam trackers

In United States v. Pineda-Moreno, 591 F.3d 1212 (9th Cir. 2010), a panel of the Ninth Circuit concluded that no Fourth Amendment issues were implicated when police snuck onto Pineda-Moreno’s property at night and attached a GPS tracking device to the underside of his car. The device continuously recorded the car’s location, allowing police to monitor all of Pineda-Moreno’s movements without the need for visual surveillance and without a warrant. The panel held that none of that implicated the Fourth Amendment, even though the government conceded that the car was in the curtilage of Pineda-Moreno’s home at the time the police attached the tracking device.

A petition for rehearing en banc was filed.  The petition did not receive the majority vote necessary for rehearing and was denied.  Chief Judge Kozinski had some choice words for the Court:

Having previously decimated the protections the Fourth Amendment accords to the home itself, United States v. Lemus, 596 F.3d 512 (9th Cir. 2010) (Kozinski, C.J., dissenting from the denial of rehearing en banc); United States v. Black, 482 F.3d 1044 (9th Cir. 2007) (Kozinski, J., dissenting from the denial of rehearing en banc), our court now proceeds to dismantle the zone of privacy we enjoy in the home’s curtilage and in public. The needs of law enforcement, to which my colleagues seem inclined to refuse nothing, are quickly making personal privacy a distant memory. 1984 may have come a bit later than predicted, but it’s here at last.

Slip op., at 11504.  On fire, the Chief Judge continued:

The panel authorizes police to do not only what invited strangers could, but also uninvited children—in this case crawl under the car to retrieve a ball and tinker with the undercarriage. But there’s no limit to what neighborhood kids will do, given half a chance: They’ll jump the fence, crawl under the porch, pick fruit from the trees, set fire to the cat and micturate on the azaleas. To say that the police may do on your property what urchins might do spells the end of Fourth Amendment protections for most people’s curtilage.

Slip op., at 11508.  In a particularly introspective moment, the Chief Judge argues that the bench is lacking in persons familiar with the life experiences of the poor:

There’s been much talk about diversity on the bench, but there’s one kind of diversity that doesn’t exist: No truly poor people are appointed as federal judges, or as state judges for that matter. Judges, regardless of race, ethnicity or sex, are selected from the class of people who don’t live in trailers or urban ghettos. The everyday problems of people who live in poverty are not close to our hearts and minds because that’s not how we and our friends live. Yet poor people are entitled to privacy, even if they can’t afford all the gadgets of the wealthy for ensuring it. Whatever else one may say about Pineda-Moreno, it’s perfectly clear that he did not expect—and certainly did not consent—to have strangers prowl his property in the middle of the night and attach electronic tracking devices to the underside of his car. No one does.

Slip op., at 11508-9.  Ouch.

Speaking of ways to protect your privacy from a government run amok, Gizmodo points out that certain cheap (but illegal) GPS jammers are available in an article prompted by this decision.  Please don't engage in any unlawful conduct to protect your constitutional rights.  That would be wrong.

Worldmark v. Wyndham Resort: an e-mail address is an "address"

In Worldmark, the Club v. Wyndham Resort Development Corporation (August 23, 2010), the Court of Appeal (Third Appellate District) reviewed a case arising under the Corporations Code after a member sought access to membership records of nonprofit mutual benefit corporation Worldmark. Worldmark is a California nonprofit mutual benefit corporation owned by its more than 260,000 members. It owns vacation time share resorts throughout North America. Wyndham is an Oregon corporation that manages the operations of Worldmark's resorts pursuant to a management agreement.

Who cares, you say?  You do!  Consider the facts. A Worldmark member invoked section 8330 to demand that Worldmark "make available" to its members a petition proposing amendments to the corporation's by-laws. When Worldmark refused, the member demanded a right to inspect and copy Worldmark's membership records, including the email addresses of its members, for the purpose of distributing the petition. Email is one of the methods that Worldmark uses to communicate with its members. When Worldmark denied the demand, it proposed the use of a third party mail house to send the petition as a “reasonable alternative” that achieved the purpose in the demand.  The member petitioned and the Court denied the petition.

Who cares, you say again?  You do!  Why?  Because the trial court reversed, holding:

We shall conclude that the term "members'. . . addresses," in section 8330, subdivision (a) (1), which a corporation is required to disclose, is sufficiently broad to encompass email addresses in light of the section's purpose and in light of allied sections that allow a corporation to communicate with its members for the purpose of the corporation's business.

Slip op., at 3-4.  Now you care.  A court just said that an e-mail address is an "address."  I know.  This holding is limited to an interpretation of a provision in the Corporations Code.  But this is where it starts - the recognition that e-mail is now as much a means of communication as a phone number or a physical address.

If you still don't care, I can't help you.

In Gutierrez v. California Commerce Club, Inc., Court of Appeal reverses order sustaining a demurrer to class allegations in a wage & hour suit

Those corporate employers are nothing if not a tenacious lot.  They keep challenging class action allegations at the pleading stage despite a substantial weight of authority finding that approach to be improper in most class actions.  In Gutierrez v. Commerce Club, Inc. (August 23, 2010), the Court of Appeal (Second Appellate District, Division One) reviewed a trial court order sustaining a demurrer to class allegations without leave to amend in a suit alleging, among other things, that the plaintiffs and other similarly situated members of the putative class were injured by the Club's unlawful policy and practice of denying meal and rest breaks to certain hourly, non-union employees.

After stating the procedural history in fair detail, the Court restated some of the purposes for class action litigation:

The wisdom of permitting the action to survive a demurrer is elementary.  "'Class action litigation is proper whenever it may be determined that it is more beneficial to the litigants and to the judicial process to try a suit in one action rather than in several actions. . . . It is clear that the more intimate the judge becomes with the character of the action, the more intelligently he may make the determination. If the judicial machinery encourages the decision to be made at the pleading stages and the judge decides against class litigation, he divests the court of the power to later alter that decision . . . . Therefore, because the sustaining of demurrers without leave to amend represents the earliest possible determination of the propriety of class action litigation, it should be looked upon with disfavor.' [Citation.]" (Tarkington, supra, 172 Cal.App.4th at p. 1511; see also Prince, supra, 118 Cal.App.4th at p. 1326.)

Slip op., at 7-8.  The Court then agreed with the defendant that there have been occasions where class allegations were resolved at the demurrer phase.  But the Court went on to explain that wage & hour cases were not amongst those relatively rare examples:

The Club is correct that there are circumstances in which granting a motion to strike or sustaining a demurrer without leave to amend a class action complaint will be appropriate. A review of the cases in which courts have approved the use of demurrers to determine the propriety of class actions, however, reveals that the majority of those actions involved mass torts or other actions in which individual issues predominate.

Slip op., at 8.  In contrast to mass tort actions, the Court found that wage & hour cases were generally unsuited to evaluation of class claims on the pleadings:

There is no discernible difference between this action and the wage and hour cases (or their type) at issue in Prince and, more recently, in Tarkington. As we explained in Prince and reiterated in Tarkington, such cases "'routinely proceed as class actions' because they usually involve '"a single set of facts applicable to all members,"' and '"one question of law common to class members."'" (Tarkington, supra, 172 Cal.App.4th at p. 1511, quoting Prince, supra, 118 Cal.App.4th at pp. 1327–1328.) As long as the lead plaintiff "'alleges institutional practices . . . that affected all of the members of the potential class in the same manner, and it appears from the complaint that all liability issues can be determined on a class-wide basis,'" no more is required at the pleading stage. (Tarkington at p. 1511.)

Slip op., at 9.  The Court finished its discussion with emphasis:

We return again to and rely upon the well-established principle, that "only in mass tort actions (or other actions equally unsuited to class action treatment) [should] class suitability . . . be determined at the pleading stage. In other cases, particularly those involving wage and hour claims, [such as the instant action,] class suitability should not be determined by demurrer." (Prince, supra, 118 Cal.App.4th at p. 1325, italics added; see also Tarkington, supra, 172 Cal.App.4th at p. 1512.)

Slip op., at 11.

While their message should be clear, somehow I doubt that it will appreciably reduce that massive waste of resources devoted to pleadings challenges.

Ninth Circuit: Rule 12(f) cannot be used to strike a claim for damages unavailable as a matter of law

Rule 12(f) of the Federal Rules of Civil Procedure states that a district court “may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.”  In Whittlestone v. Handi-Craft Co. (9th Cir. Aug. 17, 2010), the Ninth Circuit answered a question of first impression regarding the permissible uses of a Motion to Strike.  The district court struck a claim for damages that it found to be unavailable as a matter of law.  The Court wasted no time answering the question and reversing the district court:

It is quite clear that none of the five categories covers the allegations in the pleading sought to be stricken by Handi- Craft. First, the claim for damages is clearly not an insufficient defense; nobody has suggested otherwise. Second, the claim for damages could not be redundant, as it does not appear anywhere else in the complaint. Third, the claim for damages is not immaterial, because whether these damages are recoverable relates directly to the plaintiff’s underlying claim for relief. See Fogerty, 984 F.2d at 1527 (“Immaterial matter is that which has no essential or important relationship to the claim for relief or the defenses being plead.”) (quoting 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1382, at 706-07 (1990) (quotation marks omitted)). Fourth, the claim for damages is not impertinent, because whether these damages are recoverable pertains directly to the harm being alleged. Id. (“Impertinent matter consists of statements that do not pertain, and are not necessary, to the issues in question.”) (quotation marks and citation omitted). Finally, a claim for damages is not scandalous, and Handi-Craft has not alleged as much.

Slip op., at 12066-67.  The Court concluded that to permit the use attempted by the defendant would create a redundancy within the federal rules.  I say let's have less time-wasting on pleadings squabbles and more time on substance.

Arbitration is the new preemption

A few years ago, preemption arguments were used everywhere in an attempt to disable state law protections for employees and consumers.  When the majority of preemption arguments failed, defendants moved on to more fertile pastures.  Today, the first place defendants look in their effort to shift the balance of power in their direction is to arbitration.  In Greenwood v. CompuCredit Corporation (9th Cir. Aug. 17, 2010), the Ninth Circuit examined whether a defendant, sued under the Credit Repair Organization Act (“CROA”) for offering "credit rebuilding" credit cards with credit lines of $300 and annual fees of about $257 the first year, could compel arbitration.  In a divided decision, the Court concluded that the language of the statute was sufficient to answer the question:

The CROA gives consumers the “right to sue,” and prevents any waiver of “any right” under the statute. We find this sufficient to demonstrate Congress intended that consumers cannot waive their right to sue under the CROA, and instead submit to arbitration. Therefore, we affirm the district court’s holding that the forced arbitration clause is void and the court’s denial of the motion to compel arbitration of the CROA claims.

Slip op., at 12091. 

Ninth Circuit: Court faced with question of first impression when asked to construe CCRAA

In a suit alleging violation of the California Consumer Credit Reporting Agencies Act (“CCRAA”), Cal. Civ. Code § 1785.1 et seq., the Ninth Circuit, in Carvalho v. Equifax Information Services LLC (9th Cir. Aug. 18, 2010), faced a question of statutory interpretation not yet answered by a California Court.  Explaining its task, the Court said:

The California courts have yet to consider whether a plaintiff must demonstrate that a disputed item is inaccurate to obtain relief for a violation of the CCRAA’s reinvestigation provisions. However, because the CCRAA “is substantially based on the Federal Fair Credit Reporting Act, judicial interpretation of the federal provisions is persuasive authority and entitled to substantial weight when interpreting the California provisions.” Olson v. Six Rivers Nat’l Bank, 3 Cal. Rptr. 3d 301, 309 (Ct. App. 2003) (internal citations omitted).

Slip op., 12117.  After examining how federal courts approached the same question under the FCRA, the Court concluded that "inaccuracy" would be a requirement of a claim arising under California's CCRAA:

“We generally adhere to the maxim of statutory construction that similar terms appearing in different sections of a statute should receive the same interpretation.” United States v. Nordbrock, 38 F.3d 440, 444 (9th Cir. 1994); see also Chiang v. Verizon New Eng. Inc., 595 F.3d 26, 37 (1st Cir. 2010) (deeming the term “inaccurate” in section 1681i(a) to be “essentially the same” as the term “incomplete or inaccurate” in section 1681s-2(b)). Moreover, we operate under the assumption that California courts would interpret the FCRA and CCRAA consistently. See Olson, 3 Cal. Rptr. 3d at 309. Accordingly, in considering whether Carvalho’s credit report was inaccurate within the meaning of the CCRAA, we are guided by Gorman’s “patently incorrect or materially misleading” standard.

Slip op., at 12119.

The Court also rejected a preemption argument, finding that the savings provision of the FCRA would not have saved a state law violation statute if the state law remedy were not also available.

COMPLEX TECH: Give this sweet browser a test drive

If you are slightly adventurous, you moved over to Firefox as your browser.  If you are a little more daring, you moved to something even lighter, Google Chrome.  Pshaw.  If you want to browse with the newest hotness, give Google Chrome Beta a test drive.  It is stable and squeaky clean in its minimalism.  If you are running Windows 7, it is the perfect compliment to a polished operating system.

Two sides of the arbitration agreement unconscionability coin

Two recent Court of Appeal decisions show, through contrasting facts, how an unconscionability analysis applies to a purported class action waiver.  In the first, the Court of Appeal (Fourth Appellate District, Division Two) upholds a trial court's finding of unconsctionability related to a class action ban in an automobile RISC contract arbitration provision.  Fisher v. DCH Temecula Imports (August 13, 201).  In the second, the Court of Appeal (Third Appellate District) upheld an Order striking class allegations according to a class action ban in an arbitration agreement between walnut growers and a walnut processor. Walnut Producers v. Diamond Foods (August 16, 2010).  The Walnut Producers case contains a thorough discussion of whether the doctrine of unconscionability applies to commercial contracts (short answer: it does - the facts of formation, not the classification of the contract type, govern unconscionability analysis).

I will try to post more on these two cases soon.

Gutierrez v. Wells Fargo Bank Findings of Fact and Conclusions of Law now available

The Findings of Fact and Conclusions of Law After Bench Trial by United Stated District Court Judge William Alsup (Northern District of California) in Gutierrez v. Wells Fargo & Co. is now available for review - all 90 pages of it.

You can view the embedded opinion in the acrobat.com flash viewer below:

If the viewer isn't working for you (say, if you are viewing this on an iPad or iPhone), you can download the opinion here.

Wells Fargo ordered to repay an estimated $203 million in overdraft fees to customers

United Stated District Court Judge William Alsup (Northern District of California) issued a number of Orders, including injunctive relief and an order requiring refunds in the estimated amount of $203 million, after finding defendant Wells Fargo guilty of "gouging and profiteering" when it reordered bank charges from highest to lowest so as to maximize the number of overdrafts that could occur in an account.  Gutierrez v. Wells Fargo & Co.  See this previous post for more on the case.