EFFECTIVE JANUARY 1, 2010, the Los Angeles Clerk's Office of the Supreme Court of California will be closed. The Supreme Court will no longer accept filings at Court of Appeal locations. All petitions for review, writs, and legal briefs must be filed at:
Supreme Court of California Office of the Clerk, First Floor 350 McAllister Street San Francisco, CA 94102
The Supreme Court will continue its practice of conducting oral argument in Los Angeles, typically in the months of April, June, October, and December.
(1) A document is deemed filed on the date the clerk receives it.
(2) Unless otherwise provided by these rules or other law, a filing is not timely unless the clerk receives the document before the time to file it expires.
(3) A brief, a petition for rehearing, an answer to a petition for rehearing, a petition for review, an answer to a petition for review, or a reply to an answer to a petition for review is timely if the time to file it has not expired on the date of:
(A) Its mailing by priority or express mail as shown on the postmark or the postal receipt; or
(B) Its delivery to a common carrier promising overnight delivery as shown on the carrier's receipt.
(4) The provisions of (3) do not apply to original proceedings.
Tuesday's Daily Journal had a perspective article, "Attacking Class Certification Motions" (subscription), on Tobacco II, Cohen, and Kaldenbach. The article is by attorneys Michael Cypers and Joshua Stokes of Crowell & Moring in Los Angeles.
Blue Cross of California, Inc. v. Superior Court, ___ Cal.App.4th ___ (Dec. 15, 2009), is a public prosecutor UCL action brought by the City of Los Angeles against a health insurer "concerning coverage rescission practices," also known as postclaims underwriting. Slip op. at 2-6. The Court of Appeal (Second Appellate District, Division One), held that the trial court (Judge Mohr) correctly overruled the defendant's demurrer to the complaint.
The opinion includes an interesting discussion of the equitable abstension and primary jurisdiction doctrines. Slip op. at 21-25. The analysis should be relevant to cases involving public prosecutors and private litigants alike.
If you happen to be handling a case against a defendant regulated by the Department of Managed Health Care ("DMHC") (such as a "health care service plan" as defined in the Knox-Keene Act), the opinion's holding that the DMHC does not enjoy exclusive regulatory authority over such defendants will also be of interest:
[A]lthough the Knox-Keene Act expressly authorizes the DMHC to enforce the statute and does not include a parallel authorization for suits by private individuals, private individuals can bring suit under the UCL for violations of the Knox-Keene Act. (Bell v. Blue Cross of California (2005) 131 Cal.App.4th 211, 216-217 (hereafter Bell).)
As applied in this case, the foregoing authorities point unambiguously to the conclusion that the city attorney has authority to sue under the UCL for violation of Health and Safety Code section 1389.3 (i.e., the Knox-Keene Act’s prohibition of postclaims underwriting) unless there is a statute that expressly precludes the city attorney from doing so. Defendants do not cite any such statute. Indeed, the DMHC effectively concedes in its amicus brief that no such statute exists. ....
Id. at 13.
The defendant and the DMHC (which participated in the case an amicus curiae) contended that while private litigants could bring such UCL claims, public prosecutors could not, for a variety of reasons. Id. at 20. The Court of Appeal disagreed with each argument advanced in support of that contention. See id. at 13-21.
On Thursday, January 28, 2010, CAOC will present its 4th Annual Class Action Seminar at the Sir Francis Drake Hotel in San Francisco. This is an all-day program. Speakers include Brad Seligman of The Impact Fund, Monique Olivier of The Sturdevant Law Firm, Michael Sobol of Lieff Cabraser, Niall McCarthy of Cotchett, Pitre & McCarthy, and (last but not least) Alameda County Superior Court Judge Robert B. Freedman. I've attended this program each year since its inception and it is always excellent.
It's not yet possible to register online for this event, but check CAOC's website in a week or two.
UPDATE: You can now register online for the class action seminar. The early-bird registration fee is $150 for CAOC or SFTLA attorney members and $175 for non-members. Those prices go up by $10 after 01/23/10. The seminar provides 5 hours of MCLE credit, including 1 hour of ethics credit.
The order grants class certification of both UCL and CLRA claims. The UCL part of the ruling is largely based on In re Tobacco II, while the CLRA claim was certified based on a Vasquez theory of presumed reliance. Order at 7.
What are the obligations of class counsel when he learns that the defendant in the class action he is prosecuting has ceased operations, sold its assets to a third party, and intends to file for bankruptcy?
Slip op. at 1. Obviously, this means that the ruling the Court is about to announce applies only to male class counsel. (Seriously, aren't we beyond the generic "he" by now?)
The opinion goes on:
In the case before us, counsel obtained a stipulated default and a default judgment that included more than $4 million in aggregate damages for the class, plus more than $1 million in prejudgment interest. So far, so good. But counsel then asserted that his job would be completed once his motion for attorney fees was heard, i.e., that he had no obligation to enforce the judgment on behalf of the class. The trial court disagreed. It ruled that “by assuming the responsibility of pursuing claims on behalf of the class, class counsel assumed the obligation to pursue it until the end (i.e., enforcement of the judgment) and not just until judgment.” Based upon the principles guiding class actions, we agree that class counsel’s obligations to the class do not end with the entry of judgment, and hold that class counsel’s obligations continue until all class issues are resolved, which may include enforcement of the judgment.
Id. Or perhaps the Court meant to imply that female class counsel would not abandon the class in such a manner. That must be it.
(I should add that I have heard, through the grapevine, that the conduct of class counsel in this case was not nearly so egregious as the opinion makes it seem. I was told that the case was filed in 2004, that five years of hard-fought litigation ensued, including a successful appeal from the trial court's original order denying class certification, and that plaintiffs' counsel eventually obtained a default judgment (not a settlement) of nearly $6 million, after spending tens of thousands of dollars in expert witness fees to establish damages (and other expenses, none of which has been recovered). The reason plaintiffs' counsel sought to be relieved from any further duties was that the defendant had no assets and they believed there was nothing to collect — not even their own fees or out-of-pocket costs.)
In any event, the Court of Appeal held that the "general common law rule" that "the duties of an attorney employed to conduct litigation end upon entry of judgment in the absence of an agreement to the contrary" — and do not include enforcement of the judgment — does not apply in class action cases. See id. at 6-8. Class actions are different from normal litigation, the Court explained:
[U]nlike situations in which the litigant has retained an attorney to conduct litigation, where the litigant and the attorney agree upon the scope of the engagement, and their rights and duties are governed by their agreement, in class actions, where there is no agreement with absentee class members to define the scope of the engagement, class counsel must represent all of the absent class members’ interests throughout the litigation to the extent there are class issues, and it is the duty of the trial court to ensure at every stage of the proceeding that counsel is adequately representing those interests.
Slip op. at 7-8 (emphasis added). Because "it seems unlikely (based upon counsel’s own assertions) that there are sufficient assets to pay each class member what is owed, plus attorney fees, there remains an important class issue — i.e., how the recoverable assets (if any) are to be distributed. In short, class counsel’s job — to represent the class in resolving class issues — is not yet done." Id. at 8.
But suppose class counsel has no experience in attempting to enforce judgments against defendants who have sold all their assets, ceased operations, and intend to declare bankruptcy? The Court held that "nothing prevents class counsel from associating in counsel with that expertise, and the cost of that association can be paid by the class from any recovery achieved." Id. I wonder, though, how likely it is that a specialist with expertise in enforcing judgments would be interested in becoming involved in this case on a contingency-fee basis. From the opinion, it appears that no common fund from which fees could be paid has been created, nor is one likely to be. It is unclear whether the panel expects class counsel to pay collections counsel by the hour.
Will class counsel ever be free of this case, even after making (unsuccessful) efforts to enforce the judgment? The opinion answers that question:
[I]f, after diligent inquiry, class counsel determines there are no recoverable assets, counsel may present such findings to the trial court, and the trial court, as guardian of the rights of the absent class members, may determine whether counsel should be relieved of any further obligations to the class.
Id. at 8-9. It will be interesting to see what eventually happens in this case and whether any money is ever collected. There may also be additional appellate activity. According to the docket, a rehearing petition was filed last Friday, December 4, and denied on Monday, December 7.
The other interesting holding of Davis v. Ford Motor Credit Co., ___ Cal.App.4th ___ (Nov. 19, 2009), relates to attorneys' fees. After the trial court sustained the defendant's demurrer without leave to amend, the defendant moved for attorneys' fees, arguing that the statute that plaintiff borrowed for his UCL "unlawful" prong claim (the Rees-Levering Act) contained a reciprocal attorneys' fees provision (specifically, Civil Code section 2983.4), which should apply. The trial court disagreed, and denied the motion for fees. The Court of Appeal affirmed.
As an initial matter, the Court of Appeal explained that "the UCL does not provide for attorney fees" and that prevailing plaintiffs generally "seek attorney fees as a private attorney general pursuant to Code of Civil Procedure section 1021.5." Slip op. at 22 (quoting Walker v. Countrywide Home Loans, Inc., 98 Cal.App.4th 1158, 1179 (2002)). "There is no provision for such a right for a successful defendant." Id. (quoting Walker) (emphasis in original). As a result,"where a plaintiff sues only under the unfair competition law, fees may not be recovered by a prevailing defendant." Id. (quoting Walker).
The Court of Appeal expressly rejected the argument that an attorneys' fees provision in a "borrowed" statute should apply in a UCL "unlawful" prong case:
Here, ... although the underlying transaction was subject to the provisions of Rees-Levering, the action was not prosecuted under Rees-Levering. Davis did not sue directly under Rees-Levering -- rather, the alleged Rees-Levering violation was merely a predicate to the complaint’s UCL claims. We hold Rees-Levering’s reciprocal fee provision is inapplicable when an alleged Rees-Levering violation is merely a predicate to a UCL claim, in that the public policy underlying the UCL must prevail over the reciprocal fee provision of Rees-Levering. Therefore, Ford was not entitled to recover attorney fees pursuant to Rees-Levering’s attorney fees provision (Civ. Code, § 2983.4).
Slip op. at 24 (footnote omitted).
One reciprocal attorneys' fees provision this holding brings to mind is Labor Code section 218.5, which applies to certain actions for nonpayment of wages. Query whether bringing such actions solely under the UCL's "unlawful" prong might be the better route, particularly since Cortez holds that earned but unpaid wages are recoverable as UCL "restitution." The UCL has a longer statute of limitations than the Labor Code, which is another advantage. And the Supreme Court is now considering (in Pineda v. Bank of America, no. S170758) whether the penalties available for some Labor Code violations are recoverable in a UCL "unlawful" prong case.
As mentioned here, the Court of Appeal will hear argument this morning at 9:30 a.m. in Pfizer v. Superior Court (Galfano), no. B188106, one of the Tobacco II "grant and hold" cases. I'm not expecting to receive a formal report on the argument, but I'd be interested to hear how it goes from anyone who attends today.
In Davis v. Ford Motor Credit Co., ___ Cal.App.4th ___, 2009 WL 3859327 (Nov. 19, 2009), the Court of Appeal (Second Appellate District, Division Three) discussed in detail the split in authority over the definition of "unfair" in UCL consumer actions. Slip op. at 14-17. The court decided to adopt the third formulation, first established in Camacho v. Automobile Club of Southern California, 142 Cal.App.4th 1394 (2006) (Second Appellate District, Division Eight). Slip op. at 17-19. As explained in my original blog post on Camacho, the third formulation borrows the definition of "unfair" from section 5 of the Federal Trade Commission Act (15 U.S.C. § 45(n)).
The Davis court held that the trial court had properly sustained the defendant's demurrer without leave to amend because, as a mattter of law, plaintiff could not satisfy the third formulation. Slip op. at 19-20. The most significant barrier was the third formulation's requirement of "an injury that consumers themselves could not reasonably have avoided." Id. at 19 (citing Camacho).
Before Davis, the only other case to follow Camacho's lead was another decision of the same three-judge panel, Daugherty v. American Honda Motor Co., 144 Cal.App.4th 824 (2006). Other courts have declined to follow Camacho. See, e.g., Lozano v. AT&T Wireless Services, Inc., 504 F.3d 718 (9th Cir. 2007); Overstock.com v. Gradient Analytics, Inc., 151 Cal.App.4th 688, 715 (2007) ("the California UCL contains no directive to interpret our consumer protection statute consistently with the FTC Act." Id. at 715.
This case might be a good vehicle for the Supreme Court to finally take up the question of what "unfair" means in consumer cases. I note from the docket that a rehearing petition was filed last Friday.
On November 6, 2009, a petition for review was filed in Cohen v. DirecTV, no. S177734, followed by a depublication request on November 23, 2009. (My original blog post on Cohen is available at this link.)
Here's an appellate practice question for you: When are depublication requests due in this case?
The Court of Appeal opinion was originally filed on September 28, 2009. However, it was not published until thirty days later, on October 28 (the last possible day). Under Rule of Court 8.264(b)(3): “If a Court of Appeal certifies its opinion for publication or partial publication after filing its decision and before its decision becomes final in that court, the finality period runs from the filing date of the order for publication.” Under that Rule, the decision would be final 30 days after October 28, which would be last Friday, November 27 (a Court holiday). (I leave it to you to determine whether the date of finality is extended to the following Monday, November 30.)
Under Rule of Court 8.1125(a)(4), depublication requests “must be delivered to the Supreme Court within 30 days after the decision is final in the Court of Appeal.” In this case, thirty days after finality (calculated as November 27) is December 27, 2009 (a Sunday). (Again, I leave it to you to determine whether the final deadline might be a couple of days earlier or later, given the way the dates fall.)
(1) The court may order review within 60 days after the last petition for review is filed. Before the 60-day period or any extension expires, the court may order one or more extensions to a date not later than 90 days after the last petition is filed.
(2) If the court does not rule on the petition within the time allowed by (1), the petition is deemed denied.
Unless it gives itself an extension of time, the Supreme Court's deadline to grant or deny review will be Tuesday, January 5, 2010.
But now look at the Supreme Court's conference calendar for December and January (calendar for 2009 and calendar for 2010). The Court's last conference before January 5 will take place on December 23--which is several days before the probable deadline to file depublication requests in this case. If the Supreme Court has any interest in this case, I expect it will grant itself an extension of time on or before the conference on December 23. It would be prudent for anyone planning to file a depublication request (or, for that matter, a letter in support of review) to do so before that December 23 conference date.
UPDATE: Today, after I posted the above, a new line was added to the docket deeming December 1, 2009 as the filing date of the petition for review. That would mean that the Supreme Court's deadline to grant or deny review would not be until January 30, 2010 (a Saturday). The last conference before January 30 will take place on the preceding Wednesday, January 27, 2010.