The UCL Practitioner

Welcome to the 21st century: Electronic Discovery Act signed into law in California

At last year's CAOC convention, I pointed out during my presentation, "Discovery Techniques in Class Action Cases," that the California Judicial Council had painstakingly drafted a set of electronic discovery rules for California, but that Governor Schwarzenegger vetoed the implementing legislation for non-substantive reasons in September 2008. 

The legislation was reintroduced last December, and on Monday, Governor Schwarzenegger signed A.B. 5, the Electronic Discovery Act.  The full text of the Act is here.  It takes effect immediately. 

Recorder Roundtable on Prop. 64, July 22 in San Francisco

A Recorder Roundtable on Prop. 64 has been scheduled for July 22, 2009 from 9:00 to 11:00 a.m. at the Commonwealth Club in San Francisco.  I will be one of the panelists, along with Will Stern of Morrison & Foerster (author of the Rutter Group's UCL practice guide and, of course, Prop. 64), Reed Kathrein of Hagens Berman, and Trent Norris of Arnold & Porter.  Steven Pressman of GC California, a Recorder affiliate, will be the moderator.  Earn two hours of MCLE credit for the bargain price of $95.  Click here to register. 

If you haven't attended a Recorder Roundtable in the past, I can tell you the format makes for a lively and interesting discussion. I attended the last one on Prop. 64 in February 2005, three months after the initiative passed, and it was great.  Will was one of the speakers then as well.  The main topic of our discussion on July 22nd will be In re Tobacco and where the law is headed from there. 

Also, save the date of October 22, 2009 for the annual program of the State Bar's Antitrust and Unfair Competition Law Section. 

"Class Status Not Needed for Private AG Suits"

Mike McKee has an article (subscription) in this morning's Recorder on the PAGA holding in Arias and Amalgamated, which is being hailed as "a victory for employees." 

This morning's Daily Journal has an article on same topic, "Class-Action Rules Eased by State Supreme Court in Win for Workers." 

A quick post on the Arias and Amalgamated holdings

The opinions are both up. Here are quick excerpts from the introductions:

We hold that an employee who, on behalf of himself and other employees, sues an employer under the unfair competition law (Bus. & Prof. Code, § 17200 et seq.) for Labor Code violations must satisfy class action requirements, but that those requirements need not be met when an employee‘s representative action against an employer is seeking civil penalties under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.).

Arias, slip op. at 1.

This case presents two issues. First, may a plaintiff labor union that has not suffered actual injury under the unfair competition law, and that is not an "aggrieved employee" under the Labor Code Private Attorney General Act of 2004, nevertheless bring a representative action under those laws (1) as the assignee of employees who have suffered an actual injury and who are aggrieved employees, or (2) as an association whose members have suffered actual injury and are aggrieved employees? The answer is "no." Second, must a representative action under the unfair competition law be brought as a class action? The answer is "yes," for the reasons stated in the companion case of Arias v. Superior Court (June 29, 2009, S155965) ___ Cal.4th ___.

Amalgamated, slip op. at 2 (emphasis in original).

BREAKING NEWS: Supreme Court to hand down Arias and Amalgamated decisions Monday

This morning the Supreme Court announced that on Monday at 10:00 a.m., it will be handing down its decisions in the Arias and Amalgamated cases, which were argued in early April.  These cases address, among other issues, whether formal class certification is required in PAGA and UCL actions (post-Prop. 64) in which relief is sought on behalf of others.  Amalgamated may also address whether associational standing survived Prop. 64. 

See this blog post for the statements of the issues and links to the Court of Appeal opinions.  Reports on the oral arguments are available here and here.  When the decisions are posted, they will be avialable at these links:

• Arias v. Superior Court, ___ Cal.4th ___ (Jun. 29, 2009)
  

• Amalgamated Transit Union v. Superior Court (First Transit, Inc.), ___ Cal.4th ___ (Jun. 29, 2009)

More Supreme Court developments

Today, the Supreme Court granted itself an extension of time (through August 14) to grant or deny the petition for rehearing in Tobacco (docket).

Yesterday, the Supreme Court denied review and depublication in the Troyk case (docket).  Justices Baxter, Chin and Corrigan voted to grant review.  An article (subscription) by Mike McKee in yesterday's Recorder discussed this case in more detail. 

Today's Recorder has an article (subscription) about yesterday's grant of review in Kwisket. 

Supreme Court grants review in Kwikset Corp. v. Superior Court

Today, the Supreme Court granted review (unanimously) in another significant Prop. 64 case, Kwikset Corp. v. Superior Court, no. S171845.  The Court of Appeal opinion is no longer citable as precedent.  My original post on Kwikset is here.  Thanks to the blog reader who emailed with this development. 

Another blog hiatus and a request to readers relating to Tobacco

I'm coming up on a particularly busy period at work and am therefore putting the blog on hiatus once again.  You can always reach me at my office by phone (415-788-4220) or by email at uclpractitioner@gmail.com.  I will interrupt the hiatus for significant events of interest (such as the Ninth Circuit's Dukes v. Wal-Mart ruling or any ruling on the Tobacco rehearing petition).

One thing I hope to follow is trial courts' application of the Tobacco case.  If you learn of any trial-level rulings (state or federal) addressing Tobacco, please forward them.  I can post them online for everyone's benefit, as I did back in 2004 when the trial courts started ruling on the Prop. 64 retroactivity question.  I will probably interrupt my hiatus to do this if I receive copies of orders.  Thanks! 

Petition for rehearing filed in Tobacco

On Tuesday, June 2, 2009, a petition for rehearing was filed in In re Tobacco Cases II, no. S147345.  The answer will be due on Wednesday, June 10, and the Supreme Court's ruling can be expected by June 17 (unless the court grants itself an extension of time). 

Additionally, on Monday, June 1, a substitution of attorneys was filed, substituting Reed Smith in place of Loeb & Loeb as counsel for one of the defendants.  According to the Daily Journal, Loeb & Loeb represents Chief Justice George in connection with his estate planning, which is why he was recused from hearing the case.  Justice Eileen Moore of the Fourth Appellate District, Division Three, sat in his stead.  

A rehearing petition was also filed, and denied, recently in Meyer v. Sprint Spectrum, no. S153846.  In that case, the Supreme Court granted itself an extension of time before denying the petition. 

New consumer law blog: Going to Court

Consumer Watchdog has launched a new blog, Going to Court, covering consumer law issues in California.  On May 19, attorneys Pam Pressley and Harvey Rosenfield had an interesting and lengthy post on the Tobacco decision. 

"Supreme Court Appointee Sotomayor’s Judicial Record in Class Actions"

Paul Karlsgodt, author of ClassActionBlawg.com, has a very interesting post on Judge Sotomayor's rulings in class action cases.  According to Paul, she was a member of the three-judge panels in both In re Visa Check/MasterMoney Antitrust Litigation, 280 F.3d 124 (2d Cir. 2001) and In re Initial Public Offering Securities Litigation, 471 F.3d 24 (2d Cir. 2006).  (See this post for more on those cases.)

UPDATE:  Legal Blog Watch has a post on Judge Sotomayor's rulings in the Visa Check and IPO cases. 

"Consumers win with court's Prop. 64 decision"

Today's San Francisco Chronicle has an editorial on the Tobacco decision and Prop. 64. 

Supreme Court affirms reversal of UCL/CLRA judgment: Miller v. Bank of America, NT & SA

This morning, the Supreme Court affirmed the Court of Appeal's reversal of a $1 billion verdict in a UCL/CLRA case.  Miller v. Bank of America, NT & SA, ___ Cal.4th ___ (Jun. 1, 2009).  The opinion contains no particular discussion of any UCL or CLRA issue.  Instead, it focuses in on certain provisions of the Financial Code governing fee setoffs by banks, and holds that BofA's practices did not run afoul of those provisions. 

Supreme Court to hand down opinion Monday in Miller v. Bank of America

The Supreme Court announced today that it will be handing down its opinion in Miller v. Bank of America, no. S149178, on Monday at 10:00 a.m. When it is posted, the opinion will be available at this link: Miller v. Bank of America, ___ Cal.4th ___ (Jun. 1, 2009).

The case raises UCL and CLRA claims in the following context:

Does California law, which provides that a bank account into which public benefit funds or Social Security payments have been electronically deposited is exempt from attachment and execution, prohibit a bank from exercising its right to setoff as to charges—such as overdraft fees and insufficient fund fees—arising out of use of that same account?

Here are some prior blog posts on the case.

Impact of Tobacco on the Walker/G&C Auto Body split in authority

I have previously written (see these two posts) about the split in authority respecting whether a plaintiff who has suffered "damages" has Prop. 64 standing to seek injunctive relief, even if the loss does not constitute recoverable restitution.  The federal district courts have split on this point.  Compare Walker v. USAA Casualty Ins. Co., 474 F.Supp.2d 1168 (E.D. Cal. 2007) ("damages" insufficient to confer Prop. 64 standing) with G&C Auto Body Inc. v. Geico General Insurance Co., 2007 WL 4350907 (N.D. Cal. Dec. 12, 2007) (contra). 

The California Courts of Appeal also disagree. Compare, e.g., Overstock.com, Inc. v. Gradient Analytics, Inc., 151 Cal.App.4th 688, 716 (2007) (damages sufficient) with Buckland v. Threshold Enters., Ltd., 155 Cal.App.4th 798 (2007) (contra) (dicta) and Citizens of Humanity LLC v. Costco Wholesale Corp., 171 Cal.App.4th 1, 22 (Feb. 11, 2009) (same).  

In March, in a very cursory opinion, the Ninth Circuit affirmed the district court's ruling in Walker. Walker v. Geico General Ins. Co., 558 F.3d 1025 (9th Cir. Mar. 10, 2009). This is the sum total of the Ninth Circuit's analysis:

Walker's position is that, although he cannot establish the requisite “lost money or property” for purposes of monetary relief under the UCL, he is nevertheless entitled to an injunction effectively requiring these insurers in the future to pay higher rates for their insureds' auto body repairs. His argument is supported neither by the language of the amended statute nor its purpose. See Buckland v. Threshold Enters. Ltd., 155 Cal.App.4th 798, 66 Cal.Rptr.3d 543, 557 (2007) (“Because remedies for individuals under the UCL are restricted to injunctive relief and restitution, the import of the requirement is to limit standing to individuals who suffer losses of money or property that are eligible for restitution.”). The history and purpose of the law are outlined more fully in the district court's opinion, with which we agree. See Walker, 474 F.Supp.2d at 1172.

Walker, 558 F.3d at 1027 (bold added). 

Contrary to the Ninth Circuit's holding, the argument is fully unsupported by the amended statute.  It says "suffered injury in fact and lost money or property."  Damages falls squarely within that definition.  Also contrary to the Ninth Circuit's position, "lost money or property" is not "requisite ... for purposes of monetary relief under the UCL."  (See the language in bold, above.)

The district court in Walker made that same mistake, erroneously saying that the California Supreme Court had interpreted the words "lost money or property" "for section 17203 purposes" in Korea Supply and Cortez. Walker, 474 F.Supp.2d at 1172. But those words appeared nowhere in the UCL before Prop. 64, and they still appear nowhere in section 17203 (the UCL's remedies provision).  Accordingly, neither Korea Supply nor Cortez could have said (or did say) anything about what "lost money or property" meant -- either in section 17203 (where those words do not appear at all) or in section 17204 (where they appear only post-Prop. 64).  The district court in Walker went badly astray by concluding that "lost money or property" as used in section 17204 "should be interpreted identically to the 'lost money or property' California courts require for section 17203 purposes" -- because no such "requirement" has ever existed in section 17203.   (The other problems with the district court's analysis in Walker are discussed in my article last year for CAOC Forum.)

Indeed, the Supreme Court in Tobacco took pains to explain that "the language of section 17203 with respect to those entitled to restitution — 'to restore to any person in interest any money or property, real or personal, which may have been acquired' (italics added) by means of the unfair practice — is patently less stringent than the standing requirement for the class representative — 'any person who has suffered injury in fact and has lost money or property as a result of the unfair competition.' (§ 17204, italics added.)"  In re Tobacco II Cases, ___ Cal.4th ___ (May 26, 2009) (bold added) (slip op. at 22).   Far from holding that the two standards should be "interpreted identically" (Walker, 474 F.Supp.2d at 1172), the Supreme Court in Tobacco held that they are "patently" different.  Tobacco exposes the two Walker opinions' flawed reasoning and undermines the value of the Ninth Circuit's Walker opinion as a precedent. 

Three weeks ago (before Tobacco), Judge Maxine Chesney of the Northern District wrote an interesting order discussing both the Ninth Circuit's Walker opinion and the Court of Appeal's opinion in Buckland:

In support of its argument, Logitech relies on Walker v. Geico Gen. Ins. Co., 558 F.3d 1025 (9th Cir.2009), and Buckland v. Threshold Enters., Ltd., 155 Cal.App.4th 798(2007), wherein standing under the UCL was stated to be limited "to individuals who suffer losses of money or property that are eligible for restitution ." See Walker, 558 F.3d at 1027 (quoting Buckland, 155 Cal.App.4th at 817, 66 Cal.Rptr.3d 543). In so stating, however, neither Walker nor Buckland was suggesting that the only type of action that may be brought under the UCL is one for restitution, nor would such a holding be consistent with the language of the UCL, which, for purposes of standing, requires only that the plaintiff have "suffered injury in fact and [ ] lost money or property." See Cal. Bus. & Prof.Code § 17204. Rather, those courts, by the use of the phrase "eligible for restitution," were endeavoring to distinguish between the losses claimed in the respective cases before them and the type of loss cognizable under the UCL, specifically, a loss of "money or property" in which the plaintiff has "either prior possession or a vested legal interest." See Walker v. USAA Cas. Ins. Co., 474 F.Supp.2d 1168, 1172 (E.D.Cal.2007); see also Walker, 558 F.3d at 1027 ("agree[ing]" with district court's analysis). In particular, as determined in both Walker and Buckland, neither of the respective plaintiffs therein had actually "lost money or property" of any sort. See Walker, 474 F.Supp.2d at 1173 (finding plaintiff lacked vested interest where claim based on "estimate for proposed work"; distinguishing case where claim based on non-payment for work performed); Buckland, 155 Cal.App.4th at 818 & n. 11 (noting Buckland "voluntarily [bought] [the] defendant's product to pursue a UCL action in the public interest," and, consequently, her purchase "[could not] reasonably be viewed as 'lost' money or property under the standing requirement").

By contrast, where a plaintiff has adequately alleged "loss of income," "loss of financial resources," or "economic loss," a number of courts, subsequent to the enactment of the UCL standing requirement at issue herein, have found such plaintiff has standing under the UCL, irrespective of any such plaintiff's inability to seek restitution from the defendant named therein. See, e.g., White v. Trans Union LLC, 462 F.Supp.2d 1079, 1084 (C.D.Cal.2006) (holding, where plaintiff alleges "loss of income" and seeks only injunctive relief, UCL "does not require that the losses in question were the product of the defendant's wrongful acquisition of the plaintiff's property"); So. Cal. Housing Rights Ctr. v. Los Feliz Towers Homeowners Ass'n, 426 F.Supp.2d 1061, 1069 (C.D.Cal.2005) (holding plaintiff Housing Rights Center had standing under UCL "because it present[ed] evidence of actual injury based on loss of financial resources in investigating [a discrimination] claim and diversion of staff time from other cases to investigate the allegations [therein]"); Aron v. U-Haul Co. of Cal., 143 Cal.App.4th 796, 802-03 (2006) (holding plaintiff had standing where plaintiff alleged "he suffered economic loss by being required to purchase excess fuel" from third party before returning rental truck to defendant).

Fulford v. Logitech, Inc., 2009 WL 1299088, *1 (N.D. Cal. May 08, 2009) (footnotes omitted) (bold added). 

Notwithstanding Tobacco, this question may not be resolved until the Supreme Court specifically takes it up in an appropriate case.