Watching how they make the sausage...Eastern District set to try Taco Bell wage & hour class actions

Class actions don't make it to trial all that often.  But when they get close, things can get pretty ugly.  In Medlock, et al. v. Taco Bell Corp., et al., the United States District Court for the Eastern District of California (Magistrate Stanley A. Boone presiding) issued an Order on nine motions in limine filed by the Plaintiffs. See 2016 WL 430438 (February 4, 2016).

In Medlock, the Court certified three classes, on claims for meal period violations, rest period violations, and improper time record adjustments.  With trial approaching on February 22, 2016, the Plaintiffs filed nine motions in limine to exclude expert testimony (motions 1 and 2), rates of meal and rest period violation (motion 3), challenges to the authenticity of raw time clock data (motion 4), evidence of job performance or discipline (motion 5), evidence related to elements of class certification (motion 6), evidence of explicit instructions to class members to skip meal or rest periods (motion 7), evidence of the likeability of working at Taco Bell (motion 8), and alterations to the testimony of Taco Bell's Rule 30(b)(6) designee.  The court denied all motions other than motion 6, and that motion was limited to ordering that the defendants could not discuss the Rule 23 elements before the jury.

Considering the evidence the Court described as potentially probative, it appears that the jury will get to hear the kitchen sink of Defendants' reasons why meal and rest periods were missed. 

And yes, I am not dead.

Order from In re Wal-Mart Stores, Inc. Wage and Hour Litigation highlights need to support incentive award requests with detailed facts when the requested award is substantial

Untited States District Court Judge Saundra B. Armstrong (Northern District of California) granted in part and denied in part the unopposed motion of plaintiffs for an award of incentive payments and attorney's fees.  In re Wal-Mart Stores, Inc. Wage and Hour Litigation, 2011 WL 31266 (N.D.Cal. Jan. 05, 2011).  Counsel requested 33.3% of the maximum settlement amount of $86 million.  The Court agreed that a departure from the 25% benchmark in the Ninth Circuit was appropriate but not to that degree.  The Court awarded a fee equal to 27% of the maximum settlement amount.

On the requested enhancement awards, the Court said:

Upon review of the record in this case, the Court finds that Plaintiffs are entitled to a reasonable incentive payment. However, the Court finds the requested award of $25,000 per named Plaintiff to be excessive, in view of the nature of their assistance in this case.  First, the Court notes that the named Plaintiffs have not indicated in their declarations the total number of hours they spent on this litigation. Rather, they generally explain that they were deposed, responded to written discovery, and assisted and met with counsel. Second, in arguing that $25,000 is an appropriate award, Plaintiffs cite to cases that are clearly distinguishable. For instance, in Brotherton v. Cleveland, 141 F.Supp.2d 907 (S.D.Ohio 2001), the court awarded $50,000 to a single named plaintiff, finding that “she has spent approximately 800 hours working on this litigation.” Id. at 914. By contrast, here, there is no evidence that the named Plaintiffs' involvement reached anywhere near this level.

Slip op., at 4.  The Court awarded $5,000 to each plaintiff.

Mileage reimbursement class certified in part; class definition corrected by Court

United States District Court Judge Susan Illston (Northern District of California) certified in part a class action alleging the failure to reimburse work-related mileage expenses.  Wilson v. Kiewit Pacific Co. (N.D. Cal. December 6, 2010).  As an initial matter, the Court refused to certify a class of "all" employees, noting that it was overbroad:

As an initial matter, plaintiff cannot seek to certify a class of “all current and former” California employees of defendant from July 6, 2006 to present. Motion at 3; Reply at 3-4. On its face, that definition is impermissibly overbroad as it includes employees who never incurred unreimbursed business mileage expenses under California law.

Slip op., at 3.  Next, the Court observed that the plaintiff did not submit evidence demonstrating that the Northern California district was operated under the same policies as the Southern California District.  The Court found the plaintiff inadequate to represent the Northern California District employees on the basis of thin evidence of any uniform policy that was actionable.

With respect to the Southern California District, the Court agreed with the defendant that the plaintiff's proposed class definition was problematic, but not for the reason argued:

The Court agrees that there is a problem with the way plaintiff has proposed to define this particular subclass, but not the ascertainability problem defendant asserts. Instead, plaintiff's proposed definition-all Southern California district employees who drove their non-company owned vehicles “over” 25/35 miles-would seem to include only those who received some reimbursement under defendant's policy and not those employees who drove under 25/35 miles but were nonetheless owed reimbursement for non-commute time under plaintiff's theories. The Court doubts plaintiff intended to exclude those employees from the proposed class.

Slip op., at 7.  The Court then revised the class definition, declaring it ascertainable and better defined:

All of defendant's past and present non-union employees working in the Southern California district at any time from July 6, 2005 to present who were not reimbursed for non-commute mileage expenses incurred in using personal vehicles to travel to off-site meetings or trainings.

Slip op., at 7.  This, in particular is very helpful to litigants.  It demonstrates an engaged Court that has provided a concrete example of how to refine and improve a class definition.

The Court found unpersuasive the defendant's argument that some class members had individual deals in place to get company cars.  The Court finished by offering some comments about the obligation to supplement witness lists provided with initial disclosures, finding that those concerns were not at issue due to the rapidly shifting nature of the plaintiff's claims.

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.

District Court denies motion to stay proceedings and compel arbitration while Concepcion is pending

United States District Court Judge Ronald M. Whyte (Northern District of California) denied a motion to compel arbitration, dismiss claims, or stay the matter.  Weisblatt v. Apple, Inc., 2010 WL 4071147 (N.D. Cal. Oct. 18, 2010).  The suit concerns the change away from the unlimited data plan associated with the Apple 3G-enabled iPad.  AT&T Mobility LLC moved to compel arbitration and to dismiss all claims against it.  In the alternative, AT&T Mobility moved for a stay pending a Supreme Court decision in AT&T Mobility LLC v. Concepcion, --- U.S. ----, 130 S.Ct. 3322, 176 L.Ed.2d 1218 (2010) (No. 09-893).  Defendant Apple joined in the motion to stay.

The Court denied the motion, without prejudice, saying:

Given the likelihood that the Supreme Court will speak directly to the class action waiver issue in Concepcion, compelling arbitration at this point would be unwarranted. Even though plaintiffs' arguments regarding the unconscionability of the class action waiver may have less merit under New York law, a Supreme Court decision in Concepcion is still likely to simplify the issue. Accordingly, ATTM's motion to compel arbitration is denied without prejudice.

Slip op., at 3.  The Court went on to hold:

On balance, the court finds that a stay is unwarranted. That said, the claims with respect to ATTM will likely be affected by the Supreme Court's decision in Concepcion.  Accordingly, it makes little sense to begin discovery with respect to the claims focused on ATTM. Also, the court at this time declines to decide whether plaintiff Hanna's iPhone 3GS arbitration agreement now applies to his iPad dispute. In any event, Concepcion is likely to clarify the enforceability of the iPhone 3GS arbitration agreement as well as the iPad arbitration agreement.

Slip op., at 4.  The Court then limited discovery to written discovery against Apple.

District Court denies certification in suit challenging property intrusions by telecommunications company Qwest Communications

United States District Court Judge William B. Schubb (Eastern District of California) denied, for the second time in the suit, a motion for class certification in a suit contesting the use of railroad right-of-ways by Qwest Communications International, Inc. (and other companies) to install fiber optic lines.   Regan v. Qwest Communications Intern., Inc., 2010 WL 3941471 (E.D.Cal. Oct. 5, 2010). The Court found that typicality issues of individual land ownership and the commonality problems relating to the many statutes conveying land in different ways were insurmountable problems.  For example, the Court said the following:

With regard to the miles of right-of-way subject to private conveyances, plaintiffs argue the individual deeds can be placed in groups based on common conveyance language and the court can decide motions for partial summary judgment with respect to each group on the fee versus easement issue. While plaintiffs have submitted a handful of such conveyances from the same railroad route in Kings County, California in order to show that these conveyances can use identical or similar language, (Ex. to Supp. Millea Aff. (Docket No. 193) Ex. B), the court has no evidence that there is a limited range of granting language or that there will be a limited number of potential deed “groups.” See Kirkman v. N.C. R. Co., 220 F.R.D. 40 (M.D.N.C.2004). When the private conveyances number somewhere between five hundred and two thousand, spanning hundreds of miles and multiple railroad routes, plaintiffs' offering is no assurance that interpretation of private deeds is a “common” issue at all.

Slip op., at 7.

Does Anderson v. Nextel presage assault on percentage-of-fund fee awards?

United States District Court Judge Stephen V. Wilson refused to award a percentage-of-fund fee award, choosing, instead, to apply a lodestar approach with no multiplier and refused to award an incentive payment to the plaintiffs, as part of an Order granting in part and denying in part a final award of attorneys' fees, costs and incentive payments.  Anderson, et al. v. Nextel Retail Stores LLC (June 30, 2010).

The opinion includes an incredibly thorough analysis of hourly rates and fee billing entries (it is helpful reading in that regard), among other things, as part of the Court's decision to examine the lodestar and then cross-check against the requested 25% of the available fund in the wage & hour class action settlement.  After determining that the lodestar would need to multiplied by all of 1.64 to arrive at the percentage-of-fund request at the 25% level, the Court offers this surprising analysis:

In the present case, the Court is unable to conclude that counsel is entitled to a multiplier over the lodestar amount. The lodestar amounts provide perfectly adequate compensation, see generally Perdue, 130 S.Ct. 1662, 1674-75, and none of the relevant considerations justify an upward increase in the amount of compensation. For example, the considerations raised in Vizcaino – the complexity of the case, the duration of the litigation, the risk of nonpayment – are inapplicable. This case was little more than a run-of-the-mill wage-and-hour dispute.

Slip op., at 17.  I find this statement astounding.  No wage & hour class action is "run-of-the-mill" in federal court.  A survey of outcomes in the last few years would, I submit, confirm that.

If a trend favoring lodestar awards over percentage of the fund awards develops, plaintiffs' firms will face an asymmetrical result when compared to firms paid on an hourly basis.  The contingent award (the percentage of the fund in class actions) offsets to some degree the fact that a good percentage of cases generate no recovery to speak of.  This mitigation of risk allows plaintiffs with no resources to challenge unlawful practices causing comparatively smaller amounts of harm on a per capita basis.  An increase in lodestar awards won't cause children to starve, but it will likely result in decisions to decline difficult cases and induce some unscrupulous members of the bar to inflate billing entries.  Courts will then view all fee bills with even more skepticism, further punishing the ethical billers in the plaintiffs' bar.

"See, with those plaintiffs' lawyers, it's all about the fees."  Come closer so I can do that Moe thing to your eyes.  "Why I oughta..."  You don't like working for free any more than I do or anyone else does.  If I won the lottery, I'd be willing to work for a trifling.  Then it would be just about the ability to help others and the intellectual reward.  But I digress.  Taking percentage of the fund awards off the table means that a good portion of the work done by plaintiffs' attorneys in class actions will be done for free.  I hear that at some defense firms, partners don't get paid their shares unless they collect their clients' accounts receivable.  Who's all about the fees again?

In another fairly uncommon move, the Court declined to award any incentive payment to the plaintiffs that obtained the recovery for the class.  So much for rewarding the plaintiffs that accept the stigma associated with suing their employer.

You can view the embedded opinion in the 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.  Thanks to the (other) reader that alerted me to this decision.

District Court de-CAFA-nates Hollinghurst v. Lacoste USA

United States District Court Judge Christina A. Snyder granted a motion to remand an action removed pursuant to the Class Action Fairness Act ("CAFA").  Hollinghurst v. Lacoste USA (C.D.Cal. June 28, 2010).  That part isn't so interesting.  The interesting part is that the Court found that the face of the initial complaint had enough information from which the defendant could have extrapolated an amount in controversy over $5 million.  The defendant argued that it was not until discovery responses were received that the calculation was possible.  The Court disagreed:

The only new information from plaintiff’s supplemental responses that defendant cites to in its notice was the frequency by which plaintiff was denied her meal breaks and rest periods (two to fifteen meal and/or rest breaks per week) and the amount of time plaintiff was made to work off-the-clock (twenty minutes to one hour per week). The frequency by which plaintiff was denied her meal breaks and rest periods was not a critical discovery because plaintiff has always sought unpaid wages and penalties based on the claim that all class members “were also prevented from taking all daily meal periods . . . and also prevented from taking any and all rest breaks.” See Compl. ¶ 5.  Therefore, from the outset defendant could have calculated the amount in controversy under the assumption that all rest breaks and meal periods had been denied to class members.

Slip op., at 8, fn. 5.  The Court briefly noted a second ground supporting remand:

Additionally, the Court finds that defendant waived its right to remove when it demurred to dismiss the class allegations, a substantial affirmative action in which defendant submitted issues for determination in state court. By doing so, defendant indicated its willingness to litigate in state court before it filed its notice of removal to federal court.

Slip op., at 9.  It's a one-two punch:  a strict standard applied to the timing of first awareness of the right to remove under CAFA and a definitive finding that a demurrer to class action allegations is a submission to the jurisdiction of the superior court.

You can view the embedded opinion in the 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.  Thanks to the reader that alerted me to this decision.

Will grant of certiorari in Laster v. AT&T Mobility LLC affect other cases? Not so far.

The Ninth Circuit's decision in Laster v. AT & T Mobility LLC, 584 F.3d 849 (9th Cir.2009) will be reviewed by the Supreme Court in AT & T Mobility LLC v. Concepcion, --- S.Ct. ----, 2010 WL 303962, 78 USLW 3454, 78 USLW 3677, 78 USLW 3687 (U.S. May 24, 2010) (NO. 09-893).  The issue presented in Concepcion has been framed by some as calling for a determination of whether the Federal Arbitration Act (“FAA”) preempts the State of California from conditioning the enforcement of an arbitration agreement on the availability of class-wide arbitration.  Others have more aggressively described the issue more broadly.  In either event, the question of concern to litigants now is the effect, if any, of that decision to grant review in other cases.  In at least one case, there was no evident effect.

United States District Court Judge Jeremy Fogel (Northern District of California) denied a motion to stay that was predicated upon the Supreme Court's decision to grant certiorari in Concepcion.  Kaltwasser v. Cingular Wireless LLC, 2010 WL 2348642 (June 8, 2010) (unpublished).

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.