a California-centric collection of comments and resources about complex litigation and class action practice
Having not taken a vacation in several years, it's about time for a week of R&R. I may post if some sufficiently crazy news comes out, but I would get in trouble if I were posting on run-of-the-mill stuff (I'd get "stink eye" from soon-to-be six-year-old, and that would hurt too much).
Tell the Supreme Court not to ban all class actions until I am back.
The California Supreme Court did not hold conferences for the weeks of December 27, 2010 and January 3, 2011. Expect a long conference activity report next week...when I will be on vacation.
United States District Court Judge Phyllis J. Hamilton (Northern District of California) denied plaintiff's motion to certify a class action against the famous defendant, Crab Addison, Inc. (which was responsible for the state appellate decision regarding class member contact information). Washington v. Joe's Crab Shack, 2010 WL 5396041 (N.D. Cal. Dec. 23, 2010). The order suggests that the defendant opposed every aspect of certification, even challenging the adequacy of class counsel, which isn't a major issue in most certification motions:
Crab Addison also asserts that plaintiff's counsel are not adequate, claiming that they “neglected” the case and repeatedly missed critical deadlines. The court finds, however, that plaintiff's counsel are experienced in class actions, including employment-related class actions. The record submitted by Crab Addison does not support a finding that plaintiff's counsel do not satisfy the requirements of Rule 23(a)(4).
Slip op, at 8. Instead, the Court focused on the predominance requisite, finding that individualized issues predominated.
United States District Court Judge Ronald M. Whyte (Northern District of California) granted in part a motion to certify a class of citizens of California who on or after March 23, 2003, purchased via Dell's web site Dell-branded products advertised with a represented former sales price. Brazil v. Dell, Inc., 2010 WL 5387831 (N.D. Cal. Dec. 21, 2010) [not to be confused with the Court's Order on a motion for judgment on the pleadings filed the same day]. The Court offered this interesting discussion concerning reliance:
In California, “a presumption, or at least an inference, of reliance arises wherever there is a showing that a misrepresentation was material,” In re Tobacco II Cases, 466 Cal.4th 298, 397 (2009). Materiality is an objective standard, see U.S. v. Watkins, 278 F.3d 961, 967-68 (9th Cir.2002), and is susceptible to common proof in this case. There is no dispute that the alleged misrepresentations were communicated to all class members, because the representations were made at the point of sale as part of a standardized online purchasing process.
Plaintiffs point to common evidence sufficient to show that the representations were material to plaintiffs. Although Dell points to some testimony from plaintiffs that it says “fails to establish legally sufficient reliance for even their individual claims,” the court finds that testimony read in context sufficiently indicated that the plaintiffs relied. There is evidence that Dell considered the representations material, and that external reference prices and semantic clues impact customers' perceptions of value and purchase decisions. Dell's marketing expert contends that while some purchasers may attach importance to a discount off Dell's list price, others will base their decision on wholly unrelated factors. But under California law, plaintiffs need not establish that each and every class member based his or her decision on the represented discounts. Plaintiffs' common evidence that the representations were material satisfies California's reliance presumption and Rule 23(b) (3)'s predominance requirement.
Slip op., at 5.
A similar practice by Dell almost caught me about a year ago. I ordered a computer on the basis of a claim that I was receiving a special, limited-time discount. I then discovered through another source that the prevailing price at the time was lower. I cancelled the order before it shipped and re-ordered at a significantly lower price. I'm pretty happy with Dell computers from a hardware standpoint, but their sales tactics have some room for improvement.
United States District Court Judge Lawrence J. O'Neill (Eastern District of California) granted a motion to certify a collective action of grape farm workers pursuant to he Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 210 et seq. Gomez v. H & R Gunlund Ranches, Inc., 2010 WL 5232973 (E.D.Cal. Dec 16, 2010). The Court applied the more common two-stage certification approach used in FLSA actions. The Court rejected the defendant's argument that the plaintiffs were obligated to provide evidence that other would opt-in if given the opportunity to do so. The Court then issued instructions on required revisions to the proposed notice, including removal of all references to state law claims. The Court refused to grant the defendant's request to limit the plaintiffs' ability to communicate with opt-in Plaintiffs. The Court also refused to preclude additional notice through Spanish language media, noting that maximizing notice was beneficial and rejecting the argument that such media, often used in class actions, would somehow constitute a violation of professional responsibility rules.
I decree that anything having to do with franchises or arbitration agreements is generally complex. Thus, a franchise law case in which arbitration issues are at issue is guaranteed to be complex litigation. That said, this next case is easy to summarize. In MKJA, Inc. v. 123 Fit Franchising, LLC (January 4, 2011), the Court of Appeal (Fourth Appellate District, Division One) considered whther a trial court properly lifted a stay of litigation that had been imposed pursuant to section 1281.4, on the ground that the plaintiffs could not afford to pay the costs associated with arbitration.
The plaintiffs sued for violation of the California Franchise Investment Law (Corp. Code, § 3100 et seq.), breach of contract, unfair business practices (Bus. & Prof. Code, § 17200 et seq.), and fraudulent inducement. The defendant filed a motion to stay pursuant to Code of Civll Procedure § 1281.4 on the ground that it had filed a petition in Colorado to compel arbitration of the disputes. The Court did note that section 1281.4 contained language that had not been interpreted by any California Court:
We assume, for purposes of this decision, that a trial court possesses some amount of discretion to lift a stay imposed pursuant to section 1281.4, prior to the completion of an ordered arbitration. However, the statute does not address the scope of that discretion. Based on the purpose of section 1281.4 as stated by the Federal Ins. Co. court and the context in which the operative statutory language appears, we conclude that a trial court may not lift a stay of litigation merely because a party cannot afford the costs associated with arbitration.
Slip op., at 20.
The Unites States Supreme Court moves right along once it grants a writ of certiorari. Wal-Mart Stores v. Dukes has been set for oral argument on Tuesday, March 29, 2011. We won't have to wait that long before (potentially) receiving some guidance from the current Supreme Court about class action standards. The only uncertainty is whether the Court will limit its analysis to sex discrimination cases or offer more widely applicable guidelines.
Thanks to SCOTUSblog for the argument schedule.
Plaintiff James Sheppard was a part-time instructor employed by defendant North Orange County Regional Occupational Program ("NOCROP"). NOCROP was created by four public school districts NOCROP is a regional occupational program established by one or more public school districts under Education Code section 52301. During his employment, Sheppard was required to spend 20 minutes of unpaid time preparing for every hour he spent teaching. Sheppard sued NOCROP and sought compensation for his unpaid preparation time by asserting claims for violation of the minimum wage law, pursuant to the Industrial Welfare Commission's (IWC) wage order No. 4-2001 (Wage Order No. 4-2001) and Labor Code section 218, breach of contract, and quantum meruit. To summarize a somewhat more complicated procedural history, the trial court effectively granted a motion for judgment on the pleadings, finding that neither "the wage order relied upon by the Plaintiff nor the implementing Labor Code sections expressly, or by necessary implication, obligate Defendant to pay Plaintiff hourly wages for 'preparation time' beyond the hourly wages mandated by Education Code section 45025."
In Sheppard v. North Orange County Regional Occupational Program (December 23, 2010), the Court of Appeal (Fourth Appellate District, Division Three) held that "(1) by its terms, the minimum wage provision contained in Wage Order No. 4-2001 applies to Sheppard‟s employment with NOCROP; (2) the Legislature authorized the IWC to so extend the application of the minimum wage law to apply to certain public employees; and (3) the Legislature has plenary authority over public school districts in California and was not otherwise barred by the state Constitution from requiring school districts to comply with the minimum wage provision of Wage Order No. 4-2001." Slip op., at 9.
The Court began its analysis by interpreting Wage Order 4-2001 and Labor Code section 1173. The Court examined the sovereign powers immunity and the broad reach of employment statutes and regulations. The Court then read Wage Order 4-2001 to impose, in clear terms, the minimum wage requirements to employees of the State or any political subdivision of the State. Next, the Court rejected NOCROP's argument that the IWC exceeded its authority when it issues a Wage Order purporting to regulate public employees. The Court concluded that the IWC was authorized to do so by the Legislature, which itself assumed that it had conferred such power on the IWC when it enacted Labor Code section 512.5 in 2003.
Looks like part time instructors stand to recover a good deal of unpaid wages for their uncompensated preparation time.
In Bright v. 99¢ Only Stores, 189 Cal. App. 4th 1472 (2010), on an issue of first impression, the Court of Appeal (Second Appellate District, Division Five) held that (1) violations of Wage Order No. 7, subdivision 14 are violations of section 1198; and (2) civil penalties under section 2699, subdivision (f) are available despite the fact that Commission wage order No. 7-2001 has its own general penalty provision. (Discussed on this blog, in a very serious post, here.) In other words, PAGA penalties are available for wage order violations, at least as far as the adequate seating requirement is concerned. But when a Court of Appeal tackles a question of first impression, you always have to wonder whether that holdling to stand up over time. Today, in Home Depot U.S.A., Inc. v. Superior Court (December 22, 2010), the Court of Appeal (Second Appellate District, Division Four) agreed with their fellow justices from Division Five and held that (1) violations of a Wage Order are violations of section 1198; and (2) civil penalties under section 2699, subdivision (f) are available unless some other penalty is specifically provided for in the Wage Order.
At this point, the best business opportunity in California would be small footprint stools that can fit behind registers at retail stores.
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.
