Northern District Court certifies under 23(b)(2) a class of shift workers alleging meal period violations at a Shell refinery

United States District Court Judge Claudia Wilken (Northern District of California) granted a motion for class certification in a suit alleging failure to comply with California's meal period requirements and pay an additional hour of pay for each instance of a violation.  Gardner v. Shell Oil Co., 2011 WL 1522377 (N.D.Cal. Apr 21, 2011).  The particularly interesting aspect of this case is the Court's decision to permit certification under Fed. R. Civ. P. 23(b)(2):

"Claims for money relief may be certified as part of a Rule 23(b)(2) class, but the rule ‘does not extend to cases in which the appropriate final relief relates exclusively or predominantly to money damages.’ "  Wang v. Chinese Daily News, Inc., 623 F.3d 743, 753 (9th Cir.2010) (internal quotation marks omitted) (citing Dukes, 603 F.3d at 615 n. 38).

Citing Allison v. Citgo Petroleum Corp., 151 F.3d 402, 412–16 (5th Cir.1998), Defendants contend that monetary relief in this case predominates because Plaintiffs seek damages for alleged unpaid wages and waiting-time penalties. However, the Ninth Circuit has expressly rejected the Allison approach to determining whether monetary relief in a given case disqualifies the class from certification under Rule 23(b)(2). In Wang, the Ninth Circuit explained, “In Dukes, we rejected as ‘deficient’ ... the Allison ‘incidental damages standard’ that permits certification of claims for monetary relief under Rule 23(b)(2) only when they are ‘incidental to requested injunctive or declaratory relief,’ because it is unduly restrictive.” 623 F.3d at 753–54. In this circuit, Rule 23(b)(2) is interpreted to require “only that claims for monetary relief not predominate over claims for injunctive relief” and certification is acceptable when the claims are on “equal footing.” Id. at 754.

Plaintiffs in the present case, like those in Wang, have a substantial claim for injunctive relief because they seek to end long-standing employment policies. Id. The claims for injunctive and monetary relief are closely related because back wages are sought for those who were deprived of lawful meal periods due to the policies Plaintiffs seek to enjoin. As a result of this close relationship, the request for monetary relief does not introduce “new and significant legal and factual issues,” nor raise particular due process or case management concerns. Id. Furthermore, courts have held that back wages are a form of relief that may be permitted in a Rule 23(b)(2) action. Dukes, 603 F.3d at 618–19 (holding that back pay in a Title VII case is fully consistent with certification of a Rule 23(b)(2) class action and noting that “every circuit to have addressed the issue has acknowledged that Rule 23(b)(2) does allow for some claims for monetary relief.”). In Dukes, the Ninth Circuit reasoned that back pay in the Title VII context generally involves relatively uncomplicated factual determinations and few individualized issues, and is an integral component of Title VII's “make whole” remedial scheme. Id. at 619. Nor are waiting-time penalties so significant or complex that they render Plaintiffs' monetary claim predominant over their request for injunctive relief. Accordingly, class certification under Rule 23(b)(2) is warranted.

Slip op., at 6.  The balance of the opinion discusses predominance, and the Court concluded that common issues predominate and certified a Rule 23(b)(3) class as well.

The slip opinion on Westlaw does not identify the counsel involved in this uncommon attempt at 23(b)(2) certification in the wage & hour context, and I don't have time to track that down.  Thus, I don't know who to applaud.  If you do, given them a pat on the back.

In Greenwood v. Compucredit Corp., District Court denies motion to decertify, criticizing Cohen line of cases

United States District Court Judge Claudia Wilken (Northern District of California) denied defendants' motion to decertify a class alleging violations of the federal Credit Repair Organization Act (CROA), 15 U.S.C. § 1679 et seq., and California's Unfair Competition Law (UCL), Cal. Bus. and Prof.Code § 17200 et seq.  Greenwood v. Computcredit Corp., 2010 WL 4807095 (N.D. Cal. Nov. 19, 2010).  The defendant relied, in part, on Avritt v. Reliastar Life Ins. Co., 615 F.3d 1023 (8th Cir.2010).  While my amicus briefing efforts were not successful in Avritt, this Court didn't pull any punches:

The decision in Avritt does not bind this Court, and it is unpersuasive. Avritt acknowledges that federal courts “do not require that each member of a class submit evidence of personal standing.” 615 F.3d at 1034.

Slip op., at 3.  The Court the criticized Avritt on another ground:

Defendants rely on Avritt for the additional argument that the class should be decertified for failure to satisfy Rule 23(b) (3), because of individualized issues of reliance. The present case is factually distinguishable on this point. First, class members in this case by definition have been exposed to Defendants' advertising, unlike the proposed class members in Avritt. The class in this case comprises California residents who were mailed a solicitation by CompuCredit Corporation for the issuance of an Aspire Visa by Columbus Bank and Trust. In Avritt, class members were not required to have received any promotional materials, and the named plaintiffs did not recall receiving any printed sales materials or brochures.

Slip op., at 4.  The Court then took exception with the analysis of Tobacco II supplied by Cohen:

To the extent that the court of appeal's decision in Cohen might be read to require individualized evidence of class members' reliance, it is inconsistent with Tobacco II. The California Court of Appeal made the same point in In re Steroid Hormone Product Cases, 181 Cal.App.4th 145, 158, 104 Cal.Rptr.3d 329 (2010). The court stated:

As Tobacco II made clear, Proposition 64 did not change the substantive law governing UCL claims, other than the standing requirements for the named plaintiffs, and “before Proposition 64, ‘California courts have repeatedly held that relief under the UCL is available without individualized proof of deception, reliance and injury.’ [Citation]” Id. (citing Tobacco II, 46 Cal.4th at 326, 93 Cal.Rptr.3d 559, 207 P.3d 20).

This is a question of the meaning of a California state law, on which the California Supreme Court's decision in Tobacco II is determinative.

Slip op., at 5.  Interesting that a District Court seems more clear on the weight given to California Supreme Court decisions than some Courts of Appeal.

Careful allegations can avoid collateral estoppel issues

United States District Court Judge Claudia Wilken (Northern District of California) denied a motion to strike class allegations when the Court concluded that allegations concerning Kenmore Dryers were sufficiently different from allegations in a prior suit that collateral estoppel could not bar the present suit.  Murray v. Sears, Roebuck and Co., 2010 WL 3490214 (Sept. 3, 2010).  The Court described the basics of the collateral estoppel doctrine as follows:  

Collateral estoppel, or issue preclusion, bars re-litigation of issues when:

(1) the issue necessarily decided at the previous proceeding is identical to the one which is sought to be relitigated; (2) the first proceeding ended with a final judgment on the merits; and (3) the party against whom collateral estoppel is asserted was a party or in privity with a party at the first proceeding.

Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 (9th Cir.2006). However, “it is inappropriate to apply collateral estoppel when its effect would be unfair.” Eureka Fed. Sav. & Loan Ass'n v. Am. Cas. Co. of Reading, Pa., 873 F.2d 229, 234 (9th Cir.1989).

Only the first element of collateral estoppel is at issue in this motion. Plaintiff disputes that the class certification issues necessarily decided in the previous proceeding are identical to those presently before the Court. The Court looks to four factors to aid in “[d]etermining whether two issues are identical for purposes of collateral estoppel: (1) is there a substantial overlap between the evidence or argument to be advanced in the second proceeding and that advanced in the first? (2) does the new evidence or argument involve the application of the same rule of law as that involved in the prior proceeding? (3) could pretrial preparation and discovery related to the matter presented in the first action reasonably be expected to have embraced the matter sought to be presented in the second? and (4) how closely related are the claims involved in the two proceedings?” Resolution Trust Corp. v. Keating, 186 F.3d 1110, 1116 (9th Cir.1999) (citations omitted).

Slip op., at 2-3.  The Court then compared the allegations from a prior case to those in the current one, concluding that the allegations in the current case were sufficient at the pleading stage to resolve the issue raised in the prior class action in the Seventh Circuit:

In granting class certification, the district judge said that because “Sears marketed its dryers on a class wide basis ... reliance can be presumed.” Reliance on what? On stainless steel preventing rust stains on clothes? Since rust stains on clothes do not appear to be one of the hazards of clothes dryers, and since Sears did not advertise its stainless steel dryers as preventing such stains, the proposition that the other half million buyers, apart from Thorogood, shared his understanding of Sears's representations and paid a premium to avoid rust stains is, to put it mildly, implausible, and so would require individual hearings to verify.

Id. at 748. In sum, the “deal breaker” against Thorogood's class allegations was “the absence of any reason to believe that there is a single understanding of the significance of labeling or advertising clothes dryers as containing a ‘stainless steel drum.’ ” Id.

Plaintiff has sufficiently amended his complaint so as to differentiate it from the complaint in Thorogood to avoid the application of collateral estoppel. Unlike the complaint in Thorogood, the amended complaint includes allegations that Defendants expressly advertised the significance of the fact that their dryers contain stainless steel drums. For instance, Sears' website describes the “Stainless Steel Drum” as “Durable Drum eliminates rusting and chipping for long lasting performance.” First Amended Complaint (1AC) ¶ 50 (emphasis added). Sears' website and in-store brochures state that Kenmore Dryers will “KEEP YOU CLOTHES LOOKING GREAT: An exclusive, all stainless steel drum provides lasting durability.” Id. ¶ 52 (upper case in original; emphasis added). These allegations are of the precise type that the Seventh Circuit said would distinguish Thorogood from a claim in which common issues might predominate.

Slip op., at 3-4.

Artful pleading saves the day.

Article III standing not shown and claims lacking necessary facts leads to dismissal of consumer class action alleging carcinogens in baby bath products

United States District Court Judge Claudia Wilken (Northern District of California) granted a motion to dismiss plaintiffs' Second Amended Complaint in a consumer class action alleging various defendants knowingly manufactured and sold bath products for children that contain probable carcinogens and other unsafe substances.  Herrington v. Johnson & Johnson Consumer Companies, Inc., 2010 WL 3448531 (Sept. 1, 2010).  The Court found the allegations related to the risk of harm too remote to satisfy the plaintiffs' Article III burden:

Plaintiffs do not cite controlling authority that the “risk of harm” injury employed to establish standing in environmental cases applies equally to product liability actions. At least two out-of-circuit cases are instructive on the nature of the increased risk of harm necessary to create an injury-in-fact. In Sutton v. St. Jude Medical S.C., Inc., a product liability case, the Sixth Circuit concluded that a plaintiff had standing when he alleged that the implantation of a medical device exposed him to “a substantially greater risk” of harm. 419 F.3d 568, 570-75 (6th Cir.2005). In Public Citizen, Inc. v. National Highway Traffic Safety Administration, the D.C. Circuit, addressing a petitioner's standing to challenge agency action, expressed doubts about finding that any increased risk of harm inflicted an injury-in-fact. 489 F.3d 1279, 1293-96 (D.C.Cir.2007). The court recognized that, under its precedent, standing was appropriate in such cases “when there was at least both (i) a substantially increased risk of harm and (ii) a substantial probability of harm with that increase taken into account.” Id. at 1295. These cases and Central Delta suggest that, to the extent that an increased risk of harm could constitute an injury-in-fact in a product liability case such as this one, Plaintiffs must plead a credible or substantial threat to their health or that of their children to establish their standing to bring suit.

Plaintiffs have not alleged such a threat. In essence, they complain that (1) 1,4-dioxane and formaldehyde are probable human carcinogens; (2) “scientists believe there is no safe level of exposure to a carcinogen,” 2AC ¶ 68; (3) children are generally more vulnerable to toxic exposure than adults; and (4) 1,4-dioxane and formaldehyde have been detected in Defendants' products. However, Plaintiffs do not allege that 1,4-dioxane and formaldehyde are in fact carcinogenic for humans. Nor do they plead that the amounts of the substances in Defendants' products have caused harm or create a credible or substantial risk of harm.  This contrasts with the showing in Central Delta, in which the landowners cited the defendant agency's own reports, which predicted that “the majority of the months during which the standard would be exceeded are projected to be peak-irrigation months during plaintiffs' growing seasons.” Central Delta, 306 F.3d at 948. The plaintiffs also cited reports showing “the negative effects of increased salinity on the various crops that they grow” and themselves reported that “their harvests were damaged in the past due to high salinity in the water.” Id. Here, Plaintiffs do not plead facts to suggest that a palpable risk exists. They only allege that 1,4-dioxane and formaldehyde may be carcinogenic for humans, that there could be no safe levels for exposure to carcinogens and that Defendants' products contain some amount of these substances. Indeed, as Plaintiffs plead, the Consumer Product Safety Commission (CPSC) has stated that, although the presence of 1,4-dioxane “is cause for concern,” the CPSC is merely continuing “to monitor its use in consumer products.” 2AC ¶ 64. The risk Plaintiffs plead is too attenuated and not sufficiently imminent to confer Article III standing.

Opinion, at 3.  The Court granted leave to amend, so it is unclear whether the plaintiffs can meet the challenging task of alleging facts that will satisfy their Article III standing.

The Court also offered some interesting remarks about Rule 9(b) as it pertains to the plaintiffs' fraud and UCL claims:

Herrington and Haley cite In re Tobacco II Cases, 46 Cal.4th 298, 93 Cal.Rptr.3d 559, 207 P.3d 20 (2009), to argue that they are not required to allege which representations they specifically saw. There, addressing the allegations necessary to plead reliance to establish standing to bring a UCL claim, the California Supreme Court stated that “where ... a plaintiff alleges exposure to a long-term advertising campaign, the plaintiff is not required to plead with an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements.” Id. at 328, 93 Cal.Rptr.3d 559, 207 P.3d 20; see also Morgan, 177 Cal.App.4th at 1257-58, 99 Cal.Rptr.3d 768. However, Plaintiffs have not plead that they viewed any of Defendants' advertising, let alone a “long-term advertising campaign” by Defendants. Even if they did, In re Tobacco II merely provides that to establish UCL standing, reliance need not be proved through exposure to particular advertisements; the case does not stand for, nor could it, a general relaxation of the pleading requirements under Rule 9(b). See, e.g ., In re Actimmune Mktg. Litig., 2009 WL 3740648, at *13 (N.D.Cal.).

As for alleged non-disclosures, a modified pleading standard applies “on account of the reduced ability in an omission suit ‘to specify the time, place, and specific content’ relative to a claim involving affirmative misrepresentations.” In re Apple & AT & TM Antitrust Litig., 596 F.Supp.2d 1288, 1310 (N.D.Cal.2008) (quoting Falk v. Gen. Motors Corp., 496 F.Supp.2d 1088, 1099 (N.D.Cal.2007)). Herrington and Haley's primary complaint is that Defendants did not disclose information concerning the presence of 1,4-dioxane and formaldehyde. See, e.g., 1AC ¶¶ 32, 198. Their failure to plead the time and place of these omissions will not defeat their claims. And reliance on these nondisclosures could be presumed if their allegations suggested that the omitted facts were material. See, e.g., Blackie v. Barrack, 524 F.2d 891, 906 (9th Cir.1975). However, Herrington and Haley have not made such allegations. Although they plead that they would not have purchased Defendants' products had they known of the presence of 1,4-dioxane and formaldehyde, a fact is material if a reasonable person “would attach importance to its existence or nonexistence in determining” whether to purchase the product. Morgan, 177 Cal.App.4th at 1258, 99 Cal.Rptr.3d 768 (citation and internal quotation marks omitted). Because Herrington and Haley have not averred facts that show that the levels of these substances caused them or their children harm, under the objective test for materiality, the alleged non-disclosures are not actionable.

Opinion, at 8.  Hmmm.  It's just a tiny bit of formaldehyde in your baby's bubble bath.  It's not a material fact.

AT&T's preemption argument based on Stolt-Nielsen is dead before it hits the floor

United States District Court Judge Claudia Wilken (Northern District of California) has already been gifted with the privilege of considering whether Stolt-Nielsen S. A. et al. v. AnimalFeeds International Corp. (discussed on this blog here) preempts any state law that would preclude enforcement of an arbitration agreement.  McArdle v. AT & T Mobility LLC, 2010 WL 1532334 (N.D.Cal. May 10, 2010).  Judge Wilken took care of that argument in one sharp paragraph:

Defendants assert that Stolt-Nielsen creates a substantial question as to whether the “FAA would preempt any holding that California law precludes enforcement of McArdle's agreement to arbitrate his disputes with” them on an individual basis. Mot. for Leave at 4. The Court disagrees. The issue presented in Stolt-Nielsen was “whether imposing class arbitration on parties whose arbitration clauses are ‘silent’ on that issue is consistent with the Federal Arbitration Act (FAA).” 2010 WL 1655826, at *4. The Supreme Court did not address FAA preemption. Nor did it overrule its precedent upon which the Ninth Circuit relied in Shroyer v. New Cingular Wireless Services, Inc., which held that California law on unconscionability could render an arbitration clause unenforceable, 498 F.3d 976, 986-87 (9th Cir.2007).  Stolt-Nielsen is distinguishable both on the facts and the law and, therefore, does not require this Court to reconsider its order on Defendants' motion to stay this action pending their appeal.

Slip op., at 1.  One interesting bit of information is also included in the Order.  The Ninth Circuit recently held that Shroyer continues to control the issue of unconscionability analysis under California law.  Laster v. AT & T Mobility LLC, 584 F.3d 849 (9th Cir.2009). AT&T filed a petition for certiorari in Laster, upon which they expect the Supreme Court to rule by May 24.  If the Supreme Court takes up Laster, they will be forced to explicitly address carve-outs alluded to by the dissent in Stolt-Nielsen but not addressed by the majority opinion.

District Court certifies a class of Kelly Services employees alleging unpaid wages

United States District Court Judge Claudia Wilken (Northern District of California) granted plaintiff's motion to certify a class of California-based staffing agency employees that spent time and incurred expenses for interviews with the staffing agency's clients.  Sullivan v. Kelly Services, Inc., 2010 WL 1729174 (N.D. Cal. Apr. 27, 2010).  After prior cross-motions for summary judgment, the Court held that Plaintiff Catherine Sullivan should be compensated for the time she spent in her interviews, but not for her time preparing for and traveling to the interviews or her commuting expenses.  While the Court gives attention to the defendant's arguments, it looks as though this certification was not a close call after the summary judgment rulings.