Yesterday's San Francisco Chroniclereported that City Attorney Dennis Herrera filed a UCL action against a group of "payday loan" firms for "marketing of short-term installment loans at unlawful interest rates to low-income borrowers." A copy of the complaint, which seeks injunctive relief, restitution, and civil penalties under the UCL, is available at this link, along with the city attorney's press release.
The complaint invokes the UCL's "unlawful" prong by alleging violations of the California Deferred Deposit Transaction Law (Fin. Code §§23000 et seq.), the California Finance Lenders Law (Fin. Code §§22000 et seq.), and other laws. The complaint also invokes the "unfair" prong by alleging that the defendants' "lending and brokering practices constitute unfair business practices because they offend established public policy, and because the harm they cause to consumers in California greatly outweights any benefits associated with those practices." This, of course, is the pre-Cel-Tech formulation of "unfair." The complaint's "aiding and abetting" allegations are also interesting.
The blog will be on hiatus for the rest of the week. Please continue to email me with UCL or class action related developments or anything else of interest.
If you want to talk to me about working on a specific case, feel free to skip the email and call me at my office (415-433-2070). One of the things I do, which may not be widely known, is write specific motions (or opposition papers) and argue them in court on an hourly basis. I can associate into your case to do this. I also write and argue appellate-level briefs. And finally, my firm is always interested in exploring full-fledged co-counseling arrangements in contingency cases. If you're interested in working together on a case, give me a call.
On May 18, 2007, I will be speaking at the 5th Annual Unfair Competition Law Program sponsored by the State Bar's Antitrust and Unfair Competition Law Section. This year the day-long program will take place in Los Angeles at the Millennium Biltmore Hotel. A pdf copy of the program brochure is available at this link.
My panel will be called "Section 17200—The State of the Law Today" and I'm very pleased to be able to announce that my co-speaker will be Will Stern of Morrison & Forester, author of the Rutter Group practice guide on 17200. I hope that a number of readers of this blog will sign up to attend. It looks like the program will very good with a host of knowledgeable speakers. Here is the schedule:
8:30 – 8:45 a.m.: Introduction and Welcome
Bonny Sweeny, Chair, Antitrust and Unfair Competition Law Section of the State Bar of California
Elaine Foreman, Vice Chair, UCL Program, Antitrust and Unfair Competition Law Section of the State Bar of California
8:45 - 10 a.m.: Section 17200—The State of the Law Today
Kimberly A. Kralowec, Furth Lehmann & Grant LLP
William L. Stern, Morrison & Foerster LLP
Moderated by Franklin D. Kang, Sidley Austin LLP
10 - 10:15 a.m.: Break
10:15 - 11:30 am: Class Actions Since CAFA
Gerald E. Hawxhurst, Baker Marquart Crone & Hawxhurst LLP
Gail Lees, Gibson, Dunn & Crutcher LLP
Bruce L. Simon, Pearson, Simon, Soter, Warshaw & Penny, LLP
Moderated by Dennis Stewart, Hulett Harper Stewart LLP
11:45 a.m. - 1:15 p.m.
Lunch and Keynote Address: Federal Trade Commission Commissioner J. Thomas Rosch
1:15 - 2:30 p.m.: The Reliance Element in 17200 Practice
Sharon J. Arkin, Arkin & Glovsky
Howard Holderness, Morgan Lewis & Bockius LLP
Harvey Saferstein, Mintz Levin Cohn Ferris Glovsky and Popeo P.C.
Moderated by Albert J. Boro, Jr., Pillsbury Winthrop Shaw Pittman LLP
2:30 - 2:45 p.m.: Break
2:45 – 4:00 p.m.: The New Frontier? The Consumers Legal Remedies Act
Katherine Kinsella, Kinsella/Novak Communications, Ltd.
Daveed A. Schwartz, Pillsbury Winthrop Shaw Pittman LLP
Steve Newman, Stroock & Stroock & Lavan LLP
Reed Kathrein, Hagens Berman Sobol Shapiro LLP
Moderated by Thomas A. Papageorge, Los Angeles County District Attorney’s Office
Today's San Francisco Chronicle has this story by Bob Egelko on the unpublished opinion in Mervyn's (discussed in this post from yesterday). The story quotes Monique Olivier of The Sturdevant Law Firm, who represented Californians for Disability Rights:
"It's been a long and winding road, but at last the Court of Appeal will hear the merits of the case,'' Monique Olivier, a lawyer for the organization, said Thursday. She said the evidence is largely undisputed and the disability group will ask the appeals court to ... order Mervyn's to widen its aisles.
My initial impression was that this case was a win for the plaintiffs. And for the named plaintiffs in this specific case, it is. Their class certification order has been affirmed, and they will get to re-file their summary adjudication motion motion for judgment on the pleadings after notice has been given and opt-out period has expired. Summary adjudication The motion was granted before, and will likely be granted again. They are sitting pretty.
Was this case also a win for class action plaintiffs generally? That is less certain. The opinion does contain some plaintiff-favorable class certification language and, because it is a UCL case, some interesting language there as well. I will start out, in this post, by talking about the class certification and UCL aspects of the opinion, leaving the "one-way intervention" aspects for a later post.
Fireside Bank challenged only the "typicality" and "superiority" elements of class certification. As to typicality, Fireside Bank argued first of all that the named plaintiff "failed to present evidence establishing she has standing and has suffered injury typical of the class." Slip op. at 24.
The Supreme Court disagreed. What's interesting for UCL purposes is the way the Court analyzed the standing question. It addressed the declaratory and injunctive relief remedies separately from the restitution remedies:
Gonzalez has standing. She, like other members of the putative class, was subjected to the same alleged wrong: deprivation of a fair opportunity to redeem the financed vehicle, followed by an unlawful demand for payment. The record demonstrates Fireside Bank repossessed Gonzalez’s vehicle and pursued a deficiency judgment against her. She thus has standing to seek a declaration that Fireside Bank is unlawfully asserting a debt against her, as well as an injunction against all further collection efforts. The record further shows Gonzalez (or someone on her behalf) made a postrepossession payment against the alleged deficiency; upon proof she made that payment, Gonzalez also has standing to seek restitution.
Id. (footnote omitted). This is interesting because the Court is saying that the named class representative would have standing to seek injunctive relief under the UCL even if she could not recover restitution—in other words, even if she had not lost money or property as a result of the defendant's UCL violation. All she would have to show was that she was "depriv[ed] of a fair opportunity to redeem the financed vehicle, followed by an unlawful demand for payment" (not an actual payment). This may very well answer a previously-unanswered question in the brave new post-Prop. 64 world: In a UCL action for injunctive relief only, is "lost money or property" required for standing purposes? Under Fireside Bank, the answer is no. It is enough to show that the defendant's UCL violations threaten harm.
The Supreme Court made this even more clear in the footnote accompanying the language quoted above:
We leave it for the trial court to determine whether, on remand, it may be appropriate or necessary to designate subclasses consisting of those subjected to demands who made payments and have restitution claims, and those who did not and thus have only injunctive and declaratory relief claims. Contrary to Fireside Bank’s assertion, the fact the record does not (as yet) disclose in which general group Gonzalez falls does not render the trial court’s conclusion that her claims are typical an abuse of discretion.
Id. n.8. This language obviously very favorable as to the "typicality" prong. But it also could hardly be clearer that an out-of-pocket payment of money is not a prerequisite to a UCL injunctive or declaratory relief action, even after Prop. 64.
Fireside Bank's second attack on typicality was the argument that the class representative was subject to unique defenses not typical of the class. Slip op. at 25-26. Again, the Supreme Court disagreed: "Contrary to Fireside Bank’s assertion ... , a defendant’s raising of unique defenses against a proposed class Fireside Bank's alleged "unclean hands" defense "may be resolved without significant distraction from the common class issues at the heart of this case." Id. at 26.
Finally, the Court addressed Fireside Bank's "superiority" challenge. That challenge was based on pre-Prop. 64 authorities, most notably Frieman v. San Rafael Rock Quarry, Inc., 116 Cal.App.4th 29 (2004) and Alch v. Superior Court, 122 Cal.App.4th 339 (2004), holding that a certified UCL class action would not be "superior" to the more streamlined representative procedure afforded by the UCL. According to Fireside Bank, a non-class UCL representative action would "provide a simpler alternative" to class certification. Slip op. at 28. (See this prior post for more on that argument.) The Supreme Court confirmed that after Prop. 64, which eliminated the non-class, representative procedure of yore, this superiority argument fails. Id.
Those are my preliminary thoughts on some of the class certification and UCL aspects of this case. Thanks to the readers who emailed me to share your insights earlier in the week. More comments, anyone?
Pamela Pressley, litigation director for the Santa Monica-based Foundation for Taxpayer and Consumer Rights, insists voters were deceived by major corporations that are now trying to pervert the initiative for their own interests.
"It was a bait and switch," Pressley says. "Voters were told one thing, and now the companies are turning around and using [Prop 64] as a shield against liability."
Pressley's allegations are the central theme of an amicus curiae brief her nonprofit group filed 10 days ago with the California Supreme Court in In re Tobacco Cases II, S147345, a major unfair-advertising suit against six of the nation's largest tobacco manufacturers.
Prop 64, which limits private attorney general suits, was heavily funded by corporate interests. The brief — which enters territory not even raised by the plaintiffs in the case — claims that support was given under the guise of stopping frivolous suits against small businesses and protecting legitimate public interest cases.
Today's Daily Journal has this article (subscription) on the Court of Appeal's unpublished opinion in Californians for Disablitity Rights v. Mervyn's LLC (no. A106199) (Apr. 17, 2007). As I explained in this lengthy post, the Supreme Court issued a "grant and transfer" order after the Court of Appeal refused to allow Californians for Disability Rights to substitute a new plaintiff to pursue the case on appeal, and instead dismissed the appeal entirely, leaving CDR with no remedy in any court.
In its unpublished opinion, the Court of Appeal determined that neither dismissal nor substitution of parties would be necessary:
This case has had a strange procedural history on appeal. We denied Mervyn’s motion to dismiss the appeal, and the Supreme Court reversed. We then granted Mervyn’s motion to dismiss the appeal, and the Supreme Court reversed. This odd result is largely a product of the difficulty of applying Proposition 64—which is silent about its intended effect on pending cases—to particular cases in various stages of litigation. ....
[United Investors Life Insurance Co. v. Waddell & Reed, Inc. (2005) 125 Cal.App.4th 1300 and Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235], when read in conjunction, lead to the following conclusion: CDR is a party aggrieved by entry of judgment against it and thus has standing to appeal the judgment even if CDR has no authority to maintain its suit in superior court (United Investors, supra, 125 Cal.App.4th at pp. 1304-1305); and, if CDR succeeds in its effort to reverse the judgment on appeal, it may seek leave in the superior court to amend its complaint to substitute a plaintiff who meets the Proposition 64 standing requirement. (Branick, supra, 39 Cal.4th at pp. 240-244.)
We shall consider the merits of the appeal. Proposition 64 does not compel dismissal of the appeal given CDR’s appellate standing as an aggrieved person. (Code Civ. Proc., § 902.) Briefing on the merits was suspended when Mervyn’s filed its motion to dismiss the appeal. Only CDR’s opening brief has been filed. Briefing shall resume with the filing of Mervyn’s respondent’s brief.
In Lowery v. Alabama Power Co., ___ F.3d ___ (11th Cir. Apr. 11, 2007), the Eleventh Circuit "unravel[s] some of the mysteries of CAFA’s cryptic text." (Slip op. at 2.) The 77-page opinion addresses four issues:
The defendants’ appeals require us to address four distinct issues, and we address each in turn in the parts of this opinion that follow. In part II, we consider whether the removal of an action under CAFA by a defendant added as a party after CAFA’s effective date removes the claims against all of the defendants in the action – including those claims brought before the effective date. Part III dissects CAFA’s “mass action” provisions to identify the requirements for subject matter jurisdiction created by those provisions. In part IV, we set forth the applicable burden of proof in establishing subject matter jurisdiction in a removed case in which damages are unspecified, and we identify the party that bears this burden under CAFA. In part V, we determine what a district court may consider in reviewing the propriety of removal that is timely challenged by a motion to remand. This inquiry requires us to examine the significance of the existing removal procedures under 28 U.S.C. § 1446 – which are incorporated, in part, by CAFA – as well as the propriety of post-removal discovery on the issue of jurisdiction. Part VI applies the relevant legal principles to the instant case. Finally, part VII briefly concludes.
Slip op. at 13-14. The Court summarizes its holdings as follows:
A brief summary of our conclusions is warranted. First, we hold that any one defendant authorized under CAFA to remove the plaintiffs’ claims against that defendant to federal court may remove the action as a whole, regardless of whether other defendants in the action would be authorized to remove their claims.
Second, we hold that CAFA sets forth at least four threshold requirements for a federal court to have subject matter jurisdiction over a removed mass action. Where the parties are minimally diverse, the action consists of 100 plaintiffs or more, the plaintiffs’ claims share common questions of law or fact, and the potential aggregate value of all the claims exceeds $5,000,000, the action may be removed to federal court as a mass action.
Third, we hold that the defendants are not entitled to remand to the district court for limited jurisdictional discovery, nor may the district court conduct such discovery on its own initiative.
Moving to the merits, we hold that the defendants here are unable to meet their burden of establishing the requirements for federal jurisdiction over a mass action, because they are unable to establish that the plaintiffs’ claims are potentially valued at more than $5,000,000. Tracking § 1446(b), we note that the defendants’ notice of removal contained no document clearly indicating that the aggregate value of the plaintiffs’ claims exceeds that amount and, as such, they are unable to establish federal jurisdiction by a preponderance of the evidence.
In sum, though our reasoning diverges substantially from that of the district court, the disposition of this case remains the same. Remanding this action to state court was the appropriate course. The district court’s order is accordingly AFFIRMED.
My colleague, Jessica Grant, kindly wrote the following summary of the Supreme Court's decision yesterday in Murphy v. Kenneth Cole Productions, Inc., ___ Cal.4th ___ (Apr. 16, 2007), exploring the rationale behind the Court's unanimous conclusion that the extra hour of pay is a "wage," not a "penalty":
In an opinion authored by Justice Moreno, the California Supreme Court unanimously held [yester]day that the remedy provided in Labor Code section 226.7 constitutes a wage or premium pay that is governed by a three-year statute of limitations, as opposed to a one-year statute of limitations for penalties. The Supreme Court further held that a Section 98.2 de novo trial may include additional related wage claims that were not raised during a previous Berman hearing. The Court therefore reversed in full the contrary judgment of the Court of Appeal.
With respect to the classification of the Section 226.7 remedy, the Court first observed that the statutory language ("the employer shall pay the employee one additional hour of pay at the employee's regular rate of compensation") suggests that the additional hour of pay owed for meal period and rest break violations is a wage, as opposed to a penalty. The Court emphasized that Section 226.7 provides the only compensation for these injuries. The Court found it significant that the Legislature's decision not to label section 226.7 a penalty is particularly instructive because it simultaneously established penalties explicitly labeled as such in other Labor Code provisions. Thus, had the Legislature intended section 226.7 to be governed by a one-year statute of limitations, it could have so indicated by unambiguously labeling it a "penalty."
The Supreme Court also concluded that the administrative and legislative history demonstrates that Section 226.7 was intended to establish a premium wage to compensate employees for meal period and rest breaks that the employer failed to provide. In its analysis, the Supreme Court repeatedly noted that meal periods and rest breaks "have long been viewed as part of the remedial worker protection framework" and that "due to a lack of employer compliance, the IWC added a pay remedy to the wage orders" for such violations. The Court also found it significant that the Legislature eliminated the requirement that an employee file an enforcement action, and instead, created an affirmative obligation on the employer to pay the employee one hour of pay. In that way, "a payment owed pursuant to section 226.7 is akin to an employee's immediate entitlement to payment of wages or for overtime."
The Court rejected the employer's argument that the DLSE has determined that the Section 226.7 remedy is a penalty. The Court noted that the DLSE's most recent decision "flatly contradicts" its original interpretation that the remedy was in fact a wage.
The Court noted that its conclusion "is consistent with its prior holdings that statutes regulating conditions of employment are to be liberally construed with an eye toward protecting employees."
Turning to the issue of the scope of a Section 98.2 de novo trial, the Court first observed that "a trial court's power to hear a wage dispute extends to the consideration of related issues not reached by the Labor Commissioner" in a previous Berman hearing. The Court reasoned that "permitting trial courts to exercise jurisdiction over the entire wage dispute, including related wage claims not raised in front of the Labor Commissioner, is consistent with trial courts' broad discretion in adjudicating claims at trial." Finally, the Court noted that the "Legislature could not have intended to force employees to choose between effectively waiving claims and pursuing the Berman process. The Court of Appeal's interpretation of section 98.2 would put an employee using the Berman process in a worse position than an employee proceeding directly to court."
Today's Daily Journalreports here (subscription) on Murphy v. Kenneth Cole Productions, Inc., ___ Cal.4th ___ (Apr. 16, 2007), in which the Supreme Court unanimously held that "the remedy provided in Labor Code section 226.7 constitutes a wage or premium pay and is governed by a three-year statute of limitations." Slip op. at 1. And in an article called "California Justices Give Employees a Break on Wage Claims," today's Recorder reports that some management-side lawyers called the ruling "shocking." I don't think anyone publicly predicted the precise alignment of votes and reasoning that resulted in yesterday's ruling. Time permitting, I will have more on the decision later today.
In Murphy v. Kenneth Cole Productions, Inc., ___ Cal.4th ___ (Apr. 16, 2007), the Supreme Court unanimously held that the extra hour of pay is a wage, not a penalty, and that the three-year statute of limitations therefore applies. This is a huge win for the employees.
The Court's opinion in Fireside Bank v. Superior Court, ___ Cal.4th ___ (Apr. 16, 2007), requires further analysis, but a quick read suggests another win for the plaintiffs. The class certification order was affirmed, and it looks like they will have a chance to move for summary adjudication again, after notice has been given to the class. I will put up more on this case after I've had a chance to review it in greater detail.
My schedule takes me away from my computer this morning, but I anticipate putting up summaries of the decisions late in the day (probably early evening; possibly tomorrow morning). My colleague, Jessica Grant, has graciously signed on to write a summary of Murphy v. Kenneth Cole for posting here. Meanwhile, here is some background on each case:
In Murphy v. Kenneth Cole, the Supreme Court will address whether the extra hour of pay mandated by Labor Code section 226.7 for missed meal periods and rest breaks is a "wage," subject to a three-year statute of limitations, or a "penalty," subject to a one-year statute of limitations. The Court of Appeal's opinion is: Murphy v. Kenneth Cole Productions, Inc., 134 Cal.App.4th 728 (2005) (First Appellate District, Division One). My lengthy summary of the oral argument is available here, and some of the briefs can be found here.
Please feel free to post your thoughts on the opinions in the comments.
Many readers of this blog may be members of the settlement class in the BAR/BRI antitrust case, Rodriguez v. West Publishing Corp. I received this email from class counsel:
In the past, we have had the opportunity to discuss the BAR/BRI litigation. I wanted to provide you a quick update, as many of the readers of your blog are likely class members.
On March 26, 2007, the United States District Court for the Central District of California preliminarily approved a proposed Settlement in this matter. The proposed Settlement provides monetary relief in the amount of $49 million dollars and non-monetary relief that will promote competition in the bar review market. This action arose from allegations that BAR/BRI violated the federal antitrust laws by agreeing with Kaplan, Inc. to prevent competition in the market for full-service bar review courses. The action represents a significant recovery of the damages suffered by the class. The certified class consists of all persons who purchased a full-service bar review course from BAR/BRI anywhere in the United States anytime from August 1, 1997 through July 31, 2006. Class members have until September 17, 2007 to submit their proof of claim.
In an article titled "Limited Liability," which ran in the Daily Journal on March 22, the authors told of a "conundrum that could be explained with the well-worn phrase 'only in California.'" The "conundrum" was the specter of a product manufacturer being held liable for defrauding consumers merely "because it did not tell them that someday the product will wear out, break, or fail[.]" ....
But there's a problem with the characterization of the issues in Daugherty and the other case discussed in the article, Chamberlan v. Ford Motor Co., 223 F.R.D. 524 (N.D. Cal. 2004): The plaintiffs never sought any such thing in either of those cases. ....
... [A]t least for now, the lesson to be learned from Daugherty is that plaintiffs proceeding under a concealment theory must be vigilant about pleading facts that establish a disclosure duty that is independent of the CLRA and the UCL themselves.
According to Daugherty, one way to do this is by demonstrating the existence of a safety concern, or a violation of an independent duty to disclose. For example, establishing a violation of California's Secret Warranty Law, Civil Code Sections 1795.90-1795.93, would trigger such a duty. Alternatively, a plaintiff can show that the defendant had exclusive access to the concealed facts and/or actively concealed the facts that gave rise to the lawsuit. 5 Bernard E. Witkin, Summary of California Law, Torts Sections 793, 796-97 (10th ed. 2005). The Daugherty court found that the plaintiffs had not pled facts to support any of these theories.
Daugherty took two statutes that serve as the bulwark against deceptive and unfair business practices and transformed them into a statutory version of the common law — which is directly contrary to legislative intent. Yet lawyers who defend manufacturers tout Daugherty as a victory for common sense by constructing an argument that has nothing to do with the issues that were actually litigated. To paraphrase a hackneyed expression, "only in 21st Century America" could this be spun as a positive development in consumer-protection law.
In Belaire-West Landscaping, Inc. v. Superior Court, ___ Cal.App.4th ___ (Apr. 9, 2007), the Court of Appeal (Second Appellate District, Division Seven) applied Pioneer Electronics in the context of a wage and hour class action, rejecting the argument that the Supreme Court's decision should apply only to consumer cases, not employment actions:
While it is unlikely that the employees anticipated broad dissemination of their contact information when they gave it to Belaire-West, that does not mean that they would wish it to be withheld from a class action plaintiff who seeks relief for violations of employment laws. Just as the dissatisfied Pioneer customers could be expected to want their information revealed to a class action plaintiff who might obtain relief for the defective DVD players (Pioneer, supra, 40 Cal.4th at pp. 371-372), so can current and former Belaire-West employees reasonably be expected to want their information disclosed to a class action plaintiff who may ultimately recover for them unpaid wages that they are owed.
Slip op. at 8. In fact, the Court of Appeal held that the reasons for making sure class plaintiffs have access to putative class members are even stronger in employment actions than in consumer cases:
The balance of opposing interests here tilts even more in favor of the court’s disclosure order than it did in Pioneer, because at stake here is the fundamental public policy underlying California’s employment laws. “‘[T]he prompt payment of wages due an employee is a fundamental policy of this state.’ [Citation.]” (Phillips v. Gemini Moving Specialists (1998) 63 Cal.App.4th 563, 571.)
I had some more time to read Walsh v. IKON Office Solutions, Inc., ___ Cal.App.4th ___ (Mar. 1, 2007), and my original impression that the opinion adds little to California class certification jurisprudence has not changed. The following language is a useful confirmation of the limited scope of appellate review of class certification orders after Sav-on:
[T]he admonition to be gleaned from Sav-On is that a reviewing court must abide by the well-established deference afforded a trial court’s determination of commonality. Appellants ignore the language in Sav-On emphasizing that point: “Presuming in favor of the certification order, as we must, . . . we cannot say it would be irrational for a court to conclude that, tried on plaintiffs’ theory, questions of law or fact common to the class predominate over the questions affecting the individual members.” (Sav-On, supra, 34 Cal.4th at p. 329; see also id. at p. 331.)
By the same measure, presuming in favor of the decertification order now before us, we cannot say it would be irrational for a court to conclude that, tried on appellants’ theory, questions of law or fact common to the class do not predominate over the questions affecting individual class members. In accord with Sav-On, we affirm the trial court’s order.
Slip op. at 17. It's hard to get more deferential than whether the trial judge's action was "irrational." My original post on Walsh is here.
[O]ur ruling rejected class certification only of the class as certified by the District Court. Nothing in our decision precludes the Petitioners from returning to the District Court to seek certification of a more modest class, one as to which the Rule 23 criteria might be met, according to the standards we have outlined. District courts have ample discretion to consider (or to decline to consider) a revised class certification motion after an initial denial. [Citations.] ....
We do not think a district court’s authority to revise a class certification ruling requires a “without prejudice” reservation of authority, and we surely are not inviting Judge Scheindlin to certify a more limited class in the aftermath of our rejection of the broad class. Rather, we simply conclude that the Petitioners’ attempt to persuade us to revise our initial decision fails, and we leave it to the Petitioners in the first instance to seek whatever relief they deem appropriate from the District Court, which can be expected to give such a request full and fair consideration.
Slip op. at 5-7. The original opinion from December is In re Initial Public Offering Securities Litigation, 471 F.3d 24 (2d Cir. 2006). I presume that a petition for a writ of certiorari will be filed in the near future. There certainly are a lot of class-action-related developments in the federal appellate courts lately. We recently had the Enron decision (Regents v. Credit Suisse) from the Fifth Circuit, and also Dukes v. Wal-Mart from the Ninth Circuit. The interplay between these decisions is quite interesting. The Dukes v. Wal-Mart majority did not even mention In re IPO Securities, decided two months earlier, but instead continued to heavily rely on an earlier Second Circuit opinion, In re Visa Check/Mastermoney Antitrust Litig., 280 F.3d 124 (2d Cir. 2001), which In re IPO Securities all but overruled. All of these decisions address the extent to which merits determinations may be made at the class certification stage. In re Visa Check was a leading decision limiting such determinations, and the Ninth Circuit in Dukes v. Wal-Mart made its own position clear by citing Visa Check instead of IPO Securities. I'm just glad California law in this area is more settled. SeeLinder v. Thrifty Oil Co., 23 Cal.4th 429 (2000).
Today's Daily Journalreports (subscription) on what sounds like a very interesting order by Judge Komar in Santa Clara County Superior Court. Citing People ex rel. Clancy v. Superior Court, 39 Cal.3d 740 (1985), he ruled that public-entity plaintiffs may not retain outside attorneys on a contingency fee basis to handle public nuisance lawsuits (in this case, against the lead paint industry). A copy of the order is available at this link (via the blog Valueplays). It sounds like an appeal is inevitable. The reason I find this interesting is I wonder what impact, if any, this development might have on public entities' efforts to retain outside counsel to handle UCL litigation (an idea that was discussed a lot in the wake of Prop. 64).
Some lawyers from both sides say Komar's ruling, even if upheld on appeal, would only apply to affirmative litigation based on a public nuisance cause of action. Still, [Santa Clara County Counsel Ann] Ravel is likely to appeal.
"I believe Judge Komar is clearly wrong, and if that decision stands, it will impair the ability of cash-strapped public entities from proceeding against defendants who create nuisances in their communities," Ravel said.
The types of suits Ravel is concerned about include not only environmental and zoning-related suits brought as public nuisance claims, but also tobacco litigation and other claims that might be brought under § 17200 of the state's Business and Professions Code.
"The reasoning could certainly impact those cases," Ravel said.
The Rutter Group will present "§17200 Practice After Prop. 64," featuring Will Stern, on April 24 in San Francisco and on May 1 in Los Angeles (6:00-9:15 p.m., registration at 5:30). Video replays will be presented in San Diego on May 16, Sherman Oaks on May 21, and Costa Mesa on May 22. I attended this seminar last year, and it was extremely good.
I do not yet have copies of the opening brief on the merits (filed 12/15/06) or the answer brief on the merits (filed 01/30/07). If anyone has copies of additional amicus briefs, please send them to me at email@example.com. According to the docket, more amicus briefs are due to be filed on April 23, 2007.
UPDATES: Thanks to the editor of Mealey's California Section 17200 Report for sending a copy of the opening brief on the merits (filed 12/15/06). Also, thanks to the blog reader who forwarded a copy of the answer brief on the merits (filed 01/30/07). Two other amicus briefs have been submitted, by the Foundation for Taxpayer and Consumer Rights and the Civil Justice Association of California. I do not yet have copies of those. Also, the Supreme Court has granted six requests for extensions of time for other amici curiae to file their briefs. Those briefs are due on April 12 and 23, 2007. Finally, today the Supreme Court granted the Pacific Legal Foundation's application for permission to file its amicus brief. The Pacific Legal Foundation was the first to file an such an application. I anticipate that the rest of the applications will be granted apace.
Last week, the Court of Appeal (First Appellate District, Division Five) issued a partial publication order in Walsh v. IKON Office Solutions, Inc., ___ Cal.App.4th ___ (Mar. 1, 2007), a misclassification case. In the published portion of the opinion, the Court of Appeal affirmed an order granting the defendant's motion to decertify one of several subclasses. There is nothing particularly noteworthy about the decision; it does, however, provide more proof that after Sav-On, trial court orders either granting or denying class certification are unlikely to be touched on appeal.