This will be my last post for 2006. Posting will resume during the first week of January 2007. Meanwhile, please continue to email me with UCL and class certification decisions, briefs, news, etc. Happy Holidays to everyone!
On November 8, 2006, the Court of Appeal (Second Appellate District, Division Eight) published its opinion in Daugherty v. American Honda Motor Co., ___ Cal.App.4th ___ (Oct. 31, 2006). The opinion is well summarized in the petition for review that was filed with the Supreme Court on December 19, 2006. See Daugherty v. American Honda Motor, no. S148931. Many thanks for counsel for Ms. Daugherty for sharing his brief. Both the opinion and the review petition are worth reading.
In Daugherty, the Court of Appeal affirmed the judgment that resulted after the trial court sustained the defendant's demurrer to all causes of action without leave to amend. The complaint alleged that a design defect in certain Honda vehicles "causes oil loss and contamination of nearby engine parts and, in severe cases, requires repair or replacement of the engine." Slip op. at 2. According to the plaintiffs, Honda knew or should have known about the defect, yet failed to disclose it to consumers. The complaint pleaded causes of action for breach of warranty and for violation of the Magnuson-Moss Warranty–Federal Trade Commission Improvement Act, the CLRA, and the UCL. Id. at 3. The Court of Appeal's treatment of the latter two causes of action is particularly problematic.
Regarding the CLRA, the court held that Honda had no duty to disclose the alleged defect because the defect did not represent a safety risk. Id. at 11-13. The court further held that the CLRA does not impose liability for a defendant's failure to disclose material facts absent an independent duty to disclose. Unless the defect presents a safety risk, the court held, there is no such duty. See id. at 12. In other words, according to the Daugherty court, the CLRA only prohibits affirmative misrepresentations. This holding is contrary to well-established CLRA jurisprudence, most notably Massachusetts Mutual Life Ins. Co. v. Superior Court, 97 Cal.App.4th 1282 (2002). It also contravenes the CLRA's statutorily-declared consumer protection purpose by curtailing the CLRA's scope. Civ. Code § 1780.
The UCL claim fared no better with the Daugherty court. The "unlawful" prong claim failed because the statutory claims on which it was predicated (including the CLRA claim) failed. Slip op. at 15. The "fraudulent" prong claim failed because: "We cannot agree that a failure to disclose a fact one has no affirmative duty to disclose is 'likely to deceive' anyone within the meaning of the UCL. " Id. at 16. And the "unfair" prong claim failed, too: "[T]he failure to disclose a defect that might, or might not, shorten the effective life span of an automobile part that functions precisely as warranted throughout the term of its express warranty cannot be characterized as causing a substantial injury to consumers, and accordingly does not constitute an unfair practice under the UCL." Id. at 18 (citing Camacho v. Automobile Club of Southern California, 142 Cal.App.4th 1394, 1403 (2006) (adopting FTC Act formulation of of "unfair" )).
The "fraudulent" prong holding is particularly problematic. Plenty of cases hold that failure to disclose material information to consumers violates the "fraudulent" prong. See, e.g., Mass. Mutual, 97 Cal.App.4th at 1292 (failure to disclose information that "should have been disclosed given the characteristics” of the transaction); Day v. AT&T Corp., 63 Cal.App.4th 325, 333 (1998) (“failure to disclose other relevant information”); Podolsky v. First Healthcare Corp., 50 Cal.App.4th 632, 651 (1996) (failure to disclose “all the pertinent facts”); Schnall v. Hertz Corp., 78 Cal.App.4th 1144, 1164 (2000) (concealment of information “relevant to the … decision” faced by the consumer). Failure to disclose information about a design defect that could affect a product's value should be actionable under the UCL's fraudulent prong. Restitution would then be measured based on the proportion of the purchase price attributable to the non-disclosure. See Colgan v. Leatherman Tool Group, Inc., 135 Cal.App.4th 663 (2006).
For this and other reasons, the Supreme Court should take a close look at this case. It represents the danger of conflating the UCL and the CLRA with warranty law—a entirely separate body of law intended to remedy different wrongs. The Supreme Court should either take the case up or depublish it.
Last week, the Supreme Court announced in a press release that effective April 1, 2007, Rule of Court 976(c) will be amended. That Rule addresses the standards for publication of Court of Appeal opinions. Currently, Rule 976(c) prohibits publication of most opinions ("No opinion ... may be certified for publication ... unless ... "). The amended Rule almost creates a presumption in favor of publication ("An opinion ... should be certified for publication ... if ..."). In addition, three new grounds for publication have been added. Amended Rule 976(c) (which will be renumbered as Rule 8.1105(c) as of January 1, 2007) will read:
(c) Standards for certification
NoAn opinion of a Court of Appeal or a superior court appellate division — whether it affirms or reverses a trial court order or judgment —mayshould be certified for publication in the Official Reports unlessif the opinion:
(1) Establishes a new rule of law,;
(2) Applies an existing rule of law to a set of facts significantly different from those stated in published opinions;, or
(3) Modifies, explains, or criticizes with reasons given, an existing rule of law;
(4) Advances a new interpretation, clarification, criticism, or construction of a provision of a constitution, statute, ordinance, or court rule;
(2)(5)ResolvesAddresses or creates an apparent conflict in the law;
(3)(6) Involves a legal issue of continuing public interest; or
(4)(7) Makes a significant contribution to legal literature by reviewing either the development of a common law rule or the legislative or judicial history of a provision of a constitution, statute, or other written law.;
(8) Invokes a previously overlooked rule of law, or reaffirms a principle of law not applied in a recently reported decision; or
(9) Is accompanied by a separate opinion concurring or dissenting on a legal issue, and publication of the majority and separate opinions would make a significant contribution to the development of the law.
In addition, new subdivision (d) has been added, specifying the factors that the Court of Appeal should not consider in deciding whether to publish an opinion:
(d) Factors not to be considered
Factors such as the workload of the court, or the potential embarrassment of a litigant, lawyer, judge, or other person should not affect the determination of whether to publish an opinion.
Yesterday, in Konig v. U-Haul Co., ___ Cal.App.4th ___ (Dec. 19, 2006), the Court of Appeal (Second Appellate District, Division Five), held 2-1 that a "no class action" abitration provision in an employment contract was enforceable under Discover Bank v. Superior Court, 36 Cal.4th 148 (2005). The majority's reasoning hinged on the potential size of the class members' claims:
Here, plaintiff failed to establish “predictably . . . small amounts” of damages payable to class members are at issue as required under the Discover Bank test. Thus, plaintiff failed to sustain his burden of proving substantive unconscionability. The complaint in this case alleges defendant has engaged in a scheme to defraud its employees out of overtime compensation. Plaintiff presented no evidence in the trial court the potential damages and penalties payable to class members would be “predictably . . . small.” Thus, plaintiff failed to establish that the class action waiver was substantively unconscionable under the Discover Bank test. In the absence of any evidence the potential damages payable to class members would be predictably small, the trial court reasonably could have found plaintiff failed to sustain his burden of proving the class action waiver was procedurally unconscionable.
Slip op. at 11. The dissenting justice disagreed with this analysis:
The plaintiff employee here alleged that he and other similarly-situated employees were covered by the Labor Code and California Industrial Welfare Commission orders, and asserted a claim for damages for various Labor Code violations, including damages and penalties for overtime compensation, waiting time, and failures to provide required rest breaks. He further alleged that the members of the proposed class have “relatively small claims.” The damages for the members of the class that have been employed for short periods of time would be especially small.
Although the damage amounts in employment cases may not be as small as the damage amounts in some consumer class actions, generally the amounts are still relatively small. As a result, the employee in a case such as this one is at a severe disadvantage vis-à-vis the employer in connection with pursuing a claim against the employer.
Slip op. at 2-3 (footnote omitted) (Mosk, J., dissenting). The dissent goes on:
If the waiver of class actions in employment cases such as this one is validated, such waivers likely will be included in all employment manuals and policies applicable to employees. Employee class actions would become rare. As a result, employees and the courts would be deprived of the beneficial effects of class actions for employee-employer disputes. Accordingly, I would reverse the judgment.
Id. at 5. The Supreme Court has expressed a lot of interest in "no class action" arbitration cases lately, and has granted review in several. I could see the Court taking this case up as well.
In Sony Electronics, Inc. v. Superior Court, ___ Cal.App.4th ___ (Nov. 28, 2006), which was published yesterday, the Court of Appeal (Fourth Appellate District, Division One) reversed an order granting class certification of UCL, CLRA, and Song-Beverly Consumer Warranty Act claims, holding that the class, as certified, was not ascertainable. The trial court had certified a class consisting of: "All persons and entities who [bought certain Sony laptops] in which the memory connector pins for either of the two memory slots were inadequately soldered." Slip op. at 4-5. The Court of Appeal relied on the rule that a class must be defined in terms of objective facts, not in terms of liability:
Unfortunately, because there is no evidence showing that this alleged manufacturing defect is universal to all GRX Series Notebook computers, the class definition requires a merits-based determination in order to establish whether a particular GRX Series Notebook owner is a member of the class. The members of such a class are thus not readily identifiable so as to permit appropriate notice to be given and the definition would not permit persons who receive notice of this action to determine whether they are part of the class.
Id. at 12. The opinion concludes by directing the trial court "to conduct further proceedings on the issue of whether an alternative class is properly certifiable." Id. at 14.
On December 13, 2006, the California Supreme Court granted review in Farm Raised Salmon Cases, no. S147171. The case raises the following issue:
Does the Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 301 et seq.) impliedly preempt plaintiffs’ state law claims against defendants for deceptive marketing of food products by failing to disclose that farmed salmon sold in their stores contains artificial coloring?
My original post on the Court of Appeal's opinion, Farm Raised Salmon Cases, 142 Cal.App.4th 805 (2006), is here. As the post points out, the underlying state-law claims included UCL and CLRA claims.
Law.com has the first article I've seen that discourages lawyers from blogging. The article, by Larry Bodine of LawMarketing, describes "the five most common snafus that can dead-end your blog." His basic advice to bloggers: don't post too little or too much, stick to your topic, be interesting and concise, and stop blogging if you're getting no return. Probably the best piece of advice is not to create a blog unless you're sure you'll stick with it. I would refine that advice and say don't publicize your blog until you're sure you'll stick with it. Most people won't really know whether they'll take to blogging until they try it. I made no effort to publicize this blog for six months after I started.
In In re African-American Slave Descendants Litigation, ___ F.3d ___ (7th Cir. Dec. 13, 2006), the Seventh Circuit (Judges Easterbrook, Posner and Manion) upheld, at the pleading stage, a UCL claim predicated on the defendants' failure to disclose to consumers their past involvement in slavery. In the opinion, Judge Posner writes:
The second qualification [to the court's holding that certain other claims are legally barred] concerns a claim, rather buried in the complaint but not forfeited, that in violation of state fraud or consumer protection law members of the plaintiff classes have bought products or services from some of the defendants that they would not have bought had the defendants not concealed their involvement in slavery. This claim has nothing to do with ancient violations and indeed would be unaffected if the defendants’ dealings with slaveowners had been entirely legal. It is a complaint of consumers’ being deceived because sellers have concealed a material fact. The injury is the loss incurred by buying something that one wouldn’t have bought had one known the truth about the product.
It is true that under no consumer protection law known to us, whether a special statute or a doctrine of the common law of contracts or torts, has a seller a general duty to disclose every discreditable fact about himself that might if disclosed deflect a buyer. To fulfill such a duty he would have to know much more about his consumers than he possibly could. But the plaintiffs are charging the defendants with misrepresenting their activities in relation to slavery. A seller who learns that some class of buyers would not buy his product if they knew it contained some component that he would normally have no duty to disclose, but fearing to lose those buyers falsely represents that the product does not contain the component, is guilty of fraud. An example would be a manufacturer who represented that his products were made in the United States by companies that employ only union labor, whereas in fact they were made in Third World sweatshops. See Kasky v. Nike, Inc., 45 P.3d 243, 248 (Cal. 2003); Price v. Philip Morris, Inc., 848 N.E.2d 1, 19 (Ill. 2005); Oliveira v. Amoco Oil Co., 776 N.E.2d 151, 154-55 (Ill. 2002); Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1185 (3d Cir. 1993).
We do not offer an opinion on the merits of the consumer protection claims, but merely reject the district court’s ruling that they are barred at the threshold.
Slip op. at 14-15 (emphasis added). The citation of Kasky v. Nike, a UCL case, is very significant here, as Consumer Law & Policy Blog explains in more detail. Please visit that blog for more about the decision and the underlying actions, including clarification that the underlying state consumer protection claims included a UCL claim.
The November 2006 issue of FORUM, the magazine of Consumer Attorneys of California, just arrived in the mail. It contains an article by yours truly entitled "The Consumers Legal Remedies Act: An Alternative to the UCL in the Post-Prop. 64 World." The article discusses, from a plaintiffs' perspective, the key differences between the CLRA and the UCL as amended by Prop. 64. My conclusion is that in certain cases, the CLRA may be a more attractive cause of action than the post-Prop. 64 UCL.
The November 2006 issue is not yet available online, but when it is, it will be accessible to CAOC members only at this link.
Thursday's Daily Journal had this article (subscription) on class certification in the wage and hour context. The article is quite interesting and discusses the impact Sav-on has had at the trial court level, as well as recent Court of Appeal class certification decisions such as Alvarez and Dunbar. The article says that depublication is being sought in Dunbar, which the docket confirms.
UPDATE: On December 13, 2006, the Supreme Court denied the depublication request in Dunbar. Thanks to the reader who pointed this out in the comments. As a further update, a depublication request was filed in Alvarez on December 8, 2006.
The Fall 2006 issue of California Courts Review (a "quarterly magazine, by, for and about the state judicial branch") has this article by Alameda County Superior Court Judge Ronald M. Sabraw on my firm's Wal-Mart trial last year. The article describes some of the innovative procedures he implemented during the trial.
I received a couple of emails from readers in response to my summary of Tuesday's oral argument in the Pioneer Electronics case. Here's what one reader, who also attended the argument, had to say:
I read your report of the argument with great interest and some amazement that you could recount so accurately everything that was said. .... I'm not sure, though, that I agree with your crystal-gazing on what the outcome will be. It seemed clear to me from the remarks made at argument that Justice Kennard was with the plaintiffs and that Justices Chin and Baxter were with the defendants. I'm also guessing that Justice Corrigan was with the defendants, too, because she placed such emphasis on the desirability of giving the putative class members as much control as possible about whether they would be contacted or not. If I'm right, it would just take one more vote to turn the balance to the defense side, and I'm guessing that that vote would be most likely to come from the chief justice. Now all we have to do is wait 90 days.
It's interesting that two people who sat through the same argument could reach such differing conclusions. I thought Justice Corrigan's and Justice Chin's comments were the most plaintiff-favorable of all. We'll see what happens. Thank you, readers, for sharing your thoughts.
Yesterday's oral argument in Pioneer Electronics did not focus on the fact that the case was a class action. The attorneys and justices spent more time debating whether the putative class members (whom Justice Kennard referred to as "percipient witnesses") had any right to privacy under the circumstances of the case, whether it was fair that the defendant, but not the plaintiffs, had access to these witnesses, and how hard it would really be for the witnesses to return a card if they did not want to be contacted.
By way of background, the action alleged that certain Pioneer DVD players would not play some types of DVDs because of compatibility problems. The plaintiffs sought the names and addresses of persons who had contacted Pioneer to complain about the performance of their DVD players. Pioneer produced its summaries of the complaints, but refused to identify the complainants, citing the right to privacy. Plaintiffs moved to compel. Ultimately, the Court of Appeal held that the complainants' names and contact information could be released only if they affirmatively consented after notice was sent to them by first class mail.
Jeff S. Westerman of Milberg Weiss argued for the plaintiffs. He started out by saying that, regardless of whether it's a class action or not, the case involved three issues: (1) whether there was a right to privacy under the circumstances of the case; (2) whether parties to litigation should be allowed equal access to witnesses; and (3) whether it is appropriate to allow witnesses to "self-select" or "veto their role in the case."
Justice Corrigan interrupted to ask who should be in control of a witness's role. If other people have decided to litigate over an issue, she asked, do we mandate a witness's participation? Westerman responded that the court should be involved in deciding whether a witness will have to participate in a case. Justice Chin then interrupted to ask whether it was appropriate for the Court of Appeal to rely on the Colonial Life case (which adopted a notice procedure similar to that mandated by the Court of Appeal). Westerman said no. The problem is in letting the witnesses self-select. It sets up a situation where the witnesses who are the maddest, or who have the most free time, participate in the case, but these witnesses are not necessarily those with the most relevant information. Also, he pointed out, the other side has full access to all witnesses with no limits. He cited the Discovery Act, the purpose of which is to ensure equal access by all parties to all relevant information.
Justice Chin then asked whether the procedures in Colonial Life were mandated by a statute? Westerman answered yes (and this, in my view, is a key distinction between this case and Colonial Life). Chin said, "Do we have such a statute in this case?" Westerman said, "No." Chin said, "Isn't that the difference?" Westerman said, "That's a big difference."
Justice Kennard (whose questions tend to be more detailed than those of the other justices) then mentioned the fact that the case was brought as a class action. She pointed out that Pioneer redacted the names of the complainants, and asked Westerman whether his argument was that his client has the right to know the identities of those persons. She then said that she assumes Westerman relies heavily on the Court's opinion in Hill, and that he focuses on the first element of Hill, and argues that the complainants have no privacy right because they voluntarily gave their identifying information to Pioneer, so that would be the end of the analysis.
Westerman responded that his answers were yes and yes. He also mentioned the second and third prongs of Hill, and said that the complainants did not request privacy, they weren't offered privacy, there's no privacy agreement, and Pioneer's website says it can do whatever it wants with information provided by customers.
Justice Corrigan said, "So if I complain, I no longer have a reasonable privacy expectation?" Westerman said yes, you have a diminished expectation of privacy. The fact that the person complained suggests that the person is a more knowledgeable witnesses (than a DVD owner who did not complain). Justice Corrigan asked if they had given up the right to privacy. Westerman said that's a case-by-case question, but in this case, the Court of Appeal went too far. Justice Kennard interjected that a key fact in this case is that the people who complained are "not just potential witnesses but percipient witnesses" with knowledge of a defect. Percipient witnesses have no right to conceal their knowledge from the court, she said, but then she asked Westerman if he would acknowledge that they have the right to refuse to talk to plaintiffs' counsel if contacted. Westerman agreed with that, and said that if he were to attempt to contact them, it would be in his best interest to try not to antagonize them.
Here, Justice Kennard interrupted again, but if she had not it would have been interesting to see if Westerman was going to point out that ultimately, they could be compelled to participate by subpoena. In any event, Justice Kennard made the point that witnesses have no legally protected right to conceal their identities as witnesses. Westerman readily agreed. He mentioned that law enforcement agencies have filed amicus briefs suggesting that the Court of Appeal's opinion would hinder their own enforcement efforts. He said that the way to deal with the problem is to enter a protective order restricting the use of information about the witnesses.
Justice Chin then asked Westerman's opinion on the trial court's ruling (which required notices to be sent to the witnesses, but their failure to respond would be deemed consent to disclose their names to plaintiffs' counsel). Westerman said that he would not have challenged that order in the appellate courts, even though he thought that a letter was not strictly necessary.
Justice Baxter asked about the "chilling effect on consumers who knew that if they choose to complain they'd suddenly be open game for use in a class action lawsuit. Shouldn't we be concerned about this?" He then asked whether "the most important thing is that the consumer be told in a very conspicuous way what his failure to respond will mean?" Westerman cited the Valley Bank case, and said that someone who complains about a product has no more reasonable expectation of privacy than someone who gets up in the morning, drives down the street and witnesses an accident. He argued that there would be no chilling effect because people make decisions to return products for all kinds of reasons and that would not stop.
Justice Moreno asked whether notice by first class mail is appropriate. Westerman said yes. Justice Moreno asked if he agreed with the concern that some people won't read it and therefore won't respond. Westerman said that if there's a notification on the outside of the envelope stating that it relates to a lawsuit people will be more likely to open it. Justice Chin said what about notice by fax or email. Westerman pointed out that this was the only contact information available for some people. Justice Chin asked if that's all you have, what's wrong with giving notice that way. Westerman said nothing's wrong with it; in fact it indicates a preference on the part of the witness as to how they'd like to be contacted.
Westerman's argument time was then over.
William T. Bissett of Hughes Hubbard & Reed argued for Pioneer. He started out by saying that although he's Pioneer's counsel, he's representing the interests of the witnesses. He said that Pioneer is trying to do what the consumers would want. Justice Kennard interrupted to point out that we're not just dealing with potential witnesses, but rather with percipient witnesses. Bissett said we have to start out with the proposition that everyone has a constitutional right to be left alone. Justice Chin said, "Is it absolute?" Bissett said no. Chin said, "How is it limited?" Bissett explained that it depends on whether another interest outweighs it. He then went into a detailed discussion of the facts, and was not interrupted for some time. He said that out of 1.5 million DVD players sold, between 700 and 800 people contacted the company. Not all of these were complaints about the DVD players; some were just inquiries. He said that the notice program (presumably that required by the Court of Appeal's opinion) was implemented; 731 letters were sent; 88 were returned as undeliverable; 178 people wrote back and said that plaintiffs' counsel may contact them.
He then asked whether you can really say, in the context of this case, this class action case, which alleges that everyone is similarly situated, and you have 178 people who waived their right to privacy, do you really need 500 more?
Justice Corrigan then said, "What about the argument that you know who they are and the plaintiffs don't?" Bissett said that these people provided information to Pioneer for a limited purpose and did not agree to let Pioneer do anything else with it. Justice Corrigan observed that you're reading something into it either way (i.e., either you assume that they thought Pioneer would not use their complaints for any other purpose, or you assume that they willingly shared their information with Pioneer thereby waiving any privacy right). Bissett said that when you call a company with a complaint you expect them to get back to you in response to the complaint, not to be called by a lawyer. Justice Corrigan says that goes to what's a reasonable expectation. Bissett said yes, it becomes a policy question. Justice Corrigan said she agreed. Bissett said that the 800 million people who signed up for the "do not call" list think it's important to be left alone. (I would point out, however, that those people affirmatively said they did not want to be contacted. The "do not call" list operates in the manner plaintiffs are advocating, not Pioneer (i.e., people may be called unless they affirmatively say "do not call").)
Justice Kennard then said that if you go back to the allegations of the complaint, she would think that these people would expect to be contacted later. Bissett said that they would expect someone at the company to get back to them, but they don't expect to hear from anyone else. "If a class had been certified," he started to say, but then Justice Kennard interrupted and said "I know this is a pre-certification case, but getting back to the point, what is your response to the argument that the name and address isn't particularly sensitive because it doesn't relate to business secrets, intimate information, things of that nature, nor does it constitute an undue intrusion such as a marketing campaign." Bissett said that if we were only talking about the name and address, it would not be a problem, but what we're really talking about is people being contacted at home, with some kind of court approval of that.
Justice Kennard then asked, "If we agree with you," how should the court deal with the argument made by the California District Attorneys' Association that it would have an adverse impact on government attorneys' ability to investigate and remedy consumer-related problems. Bissett said, basically, that it has to depend on the particular case. This is not a situation where one size fits all. You have to balance the rights. Justice Kennard asked whether the court has to engage in balancing when the other side is arguing under the first prong of Hill that there is no privacy right at all. Bissett then talked about the Hill case at some length, basically saying that it's factually distinguishable. Justice Chin joined in discussing the Hill case as well. Eventually Bissett circled back to the argument that 178 people have consented; why do you need 500 more? He pointed out that no one is going to call 500 witnesses to the stand at trial, and argued that all it would do is establish that everyone's circumstances are different (thereby defeating class certification).
Justice Baxter asked what happens if you tell them that if they don't respond, their information will be disclosed? Bissett said that you put the burden on them to act. Justice Chin asked what's wrong with that? Tell them if you really want to be left alone, return this post card. Bissett said it should be made as easy as possible for people to exercise their privacy rights. Justice Corrigan said both are easy. Requiring them to respond to protect their privacy rights is "not hair-raisingly unreasonable." Bissett had to agree with the "not hair-raisingly unreasonable" characterization. Justice Corrigan said that this puts the individual consumer in the driver's seat AND serves to strike a balance between the adversaries in the litigation. (I think this strongly suggests where she is going; in fact Corrigan, Chin and Baxter all seem to be favoring the plaintiffs' position so far.)
Bissett then made what might be described, with 20-20 hindsight, as a mistake. He said he did not think that the fact that one side does not know all the witnesses is that important. Justice Chin said, "But that's becase you know!" and the courtroom chuckled. Bissett re-grouped. If you're saying someone can waive the right to privacy, he argued, why not make it an affirmative choice? Why presume someone has chosen to waive their rights by inaction? Justice Corrigan said, "Why not? It is such a huge deal either way?" Bissett said, "Well, you have to pick." Justice Corrigan said, "Yes, yes, that's why we're here." (This was an interesting exchange because during an earlier argument that morning, Justice Corrigan had said that she was trying to keep the argument focused on a particular issue because "we have to write a rule" on that issue.)
Bissett gamely responded that in this particular case, we are way at one end of the spectrum, there's just no need to presume that people waived their rights. Both sides know what these people's complaints were (about the DVD players). Justice Corrigan pointed out that both sides don't know whether the people who affirmatively consented are the ones who had the most serious complaints. Bissett said that all of the complaints had to do with the compatibility problem alleged in the action, and that there's no need to call people at home if you already know what they said, and especially where you have 178 people who have consented to being called—unless the court holds that merely contacting Pioneer constitutes waiver. Why burden the exercise of the right to complain without a significant need on the other side? There might be other cases in which the balancing of the rights comes out differently, and he posed as a hypothetical a case in which the private information might help find a kidnapped child. But in this case, the rights at stake are not very important. He said that Pioneer has won summary judgment in five out of five cases (apparently there are other cases pending in other states that allege the same defect; Bissett took pains to point out that these were "filed by the same law firm"). The claim is that some DVDs won't play right.
And that was the end of Bissett's time.
Before Westerman could say word one in rebuttal, Justice Kennard broke in with a lengthy summary of what she understood Westerman's argument to be. Westerman agreed that she had accurately summarized his position. He pointed out that Pioneer did produce their summaries of the complaints, but that those summaries are not evidence. To establish the right to class certification, he needs evidence. He then pointed out that this issue happens to have arisen in the context of a class action, but the principles laid out by the Court of Appeal apply to all cases. He said that the "defense bar" has seized on the right to privacy as a way to prevent access to witnesses. But if the Court of Appeal's opinion stands, then "if I'm in an auto accident and a witness gives me his card, I can refuse to identify that person" to the other side. Nothing in the Court of Appeal's opinion prevents its application that way.
And that was the end of the argument. Neither Chief Justice George nor Justice Werdegar made any comments, so it is hard to read their tea leaves, but I think on balance the justices' comments suggest that they are leaning in favor of the plaintiffs, primarily due to the unequal access to witnesses and because of how easy it would be for a potential witness to return a card affirmatively saying that they do not wish to be contacted. I also think that the argument would have been very different if the witnesses had been members of a certified class. It does not seem that the fact that they are putative class members is going to affect the court's analysis at all; it had no impact on the argument. A decision is due in ninety days.
Today, the California Supreme Court will hear oral argument in Pioneer Electronics v. Superior Court, no. S133794, which involves pre-certification communications with putative class members. I am planning to attend the argument, and hope to be able to put up a post either later today or tomorrow morning.
My prior posts on this case are collected here, and one of the amicus briefs is available here. In a nutshell, the Court of Appeal imposed a limitation on the plaintiff's right to discover information about the putative class members, citing the right to privacy: "The court must take reasonable steps to assure that the consumer receives actual notice of his or her right to grant or withhold consent of the release of personal information, and that consent for such release be by the consumer's positive act, rather than by mere failure to respond." Pioneer Electronics (USA), Inc. v. Superior Court (Olmstead), 128 Cal.App.4th 246, 249 (2005) (Second Appellate District, Division Four). The amicus brief linked to above refers to this as an "opt-in discovery mechanism" and argues that it is inconsistent with the policies behind the class action device and will hinder employment and civil rights litigation.
In Saab v. Home Depot U.S.A., Inc., ___ F.3d ___ (8th Cir. Nov. 22, 2006), the Eighth Circuit held that the CAFA provision permitting interlocutory appeals from remand orders (28 U.S.C. section 1453(c)(1)) "does not permit us to accept an appeal from the denial of a motion to remand when a class action has been removed to federal court on the basis of traditional diversity jurisdiction, § 1332(a)":
Saab urges us to interpret § 1453(c)(1) expansively and to give federal courts of appeal the jurisdiction to review the grant or denial of a motion to remand any class action. This argument does not differentiate between class actions removed pursuant to § 1332(a) (traditional diversity jurisdiction) or § 1332(d) (CAFA diversity jurisdiction). We reject this contention.
California practitioners should also note that the most recent amendments to the California Rules of Court will go into effect on January 1, 2007. The rules are being completely reorganized and renumbered. For example, the rules about publication of appellate opinions will now be numerically adjacent to the rest of the appellate rules—definitely an improvement. [Thanks to Jeff Lewis of So Cal Law Blog for the email reminder.]
On Wednesday, in Hodge v. Superior Court, ___ Cal.App.4th ___ (Nov. 29, 2006), the Court of Appeal (Second Appellate District, Division Eight), confirmed that UCL claims are equitable and carry no right to a jury trial. (Coincidentally, I made this exact point in a post three days ago.) In so holding, it rejected the argument that when a plaintiff pursues a UCL "unlawful" prong claim, the Court should look at whether the "borrowed" law carries a jury trial right. Instead, the focus should be on the UCL claim and its available remedies, which are equitable. (This holding is consistent with my recent post explaining that the UCL's "unlawful" prong only borrows the liability principles, not the remedies.) The Court also held that the assertion of non-equitable affirmative defenses does not alter the analysis of whether a claim carries the right to a jury trial.
As a final interesting point, it appears that in this case the plaintiffs wanted the bench trial, while the defendants asked for a jury:
[P]laintiffs amended the complaint to state only a cause of action for violation of section 17200. Plaintiffs’ stated rationale was strategic: they wanted a bench trial instead of a jury trial.
Slip op. at 3. In my experience, the reverse is usually true. In this case, the fact that a prior attempt to try the case to a jury resulted in a mistrial probably explains it. Thanks to the readers who emailed me about this case.