In In re: Katrina Canal Breaches Litigation, ___ F.3d ___ (5th Cir. Dec. 16, 2010), the Fifth Circuit reversed an order granting final approval of a class action settlement. The opinion discusses the "limited fund mandatory class," and summarizes the holding as follows:
Appellants, objecting members of a proposed settlement class of plaintiffs damaged or injured by Hurricanes Katrina or Rita, seek review of the district court’s certification of a limited fund mandatory class under Federal Rule of Civil Procedure 23(b)(1)(B) and its approval of a final class settlement. We hold that the Supreme Court’s opinion in Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), requires decertification of the mandatory class because the settlement fails to provide a procedure for distribution of the settlement fund that treats class claimants equitably amongst themselves. We further hold that the settlement is not fair, reasonable and adequate because its proponents fail to show that the class members will receive some benefit in exchange for the divestment of their due process rights in a mandatory class settlement. We therefore reverse.
In Pineda v. Bank of America, N.A., ___ Cal.4th ___ (Nov. 18, 2010), the Supreme Court held that Labor Code section 203 penalties may not be recovered as "restitution" under the UCL. Slip op. at 13-15. The opinion contains an interesting discussion, which confirms that while unpaid wages are recoverable under the UCL, Labor Code remedies that amount to penalties, rather than wages, are not:
In explaining why section 203 penalties are not recoverable as restitution, it is first helpful to briefly discuss why unpaid wages are recoverable.
In Cortez, we held the plaintiff could seek restitution of unpaid overtime wages via the UCL. (Cortez, supra, 23 Cal.4th at p. 168.) We explained that, “[o]nce earned, those unpaid wages became property to which the employees were entitled.” (Ibid.) Thus, it was of no import that the overtime wages had never been in the possession of the employees; “earned wages that are due and payable pursuant to section 200 et seq. of the Labor Code are as much the property of the employee who has given his or her labor to the employer in exchange for that property as is property a person surrenders through an unfair business practice.” (Id. at p. 178.) “An order that earned wages be paid is therefore a restitutionary remedy authorized by the UCL.” (Ibid.)
By contrast, permitting recovery of section 203 penalties via the UCL would not “restore the status quo by returning to the plaintiff funds in which he or she has an ownership interest.” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1149.) Section 203 is not designed to compensate employees for work performed. Instead, it is intended to encourage employers to pay final wages on time, and to punish employers who fail to do so. In other words, it is the employers’ action (or inaction) that gives rise to section 203 penalties. The vested interest in unpaid wages, on the other hand, arises out of the employees’ action, i.e., their labor. Until awarded by a relevant body, employees have no comparable vested interest in section 203 penalties. We thus hold section 203 penalties cannot be recovered as restitution under the UCL.
Slip op. at 14-15 (footnote omitted).
The Court also held that a three-year, rather than a one-year, statute of limitations applies to all claims for penalties brought directly under Labor Code section 203, regardless of whether unpaid wages are also sought in the same action. Slip op. at 3-13. The Court of Appeal had concluded that a one-year statute of limitations applied in some cases. Id. at 3.
The practical effect of the opinion, therefore, is that workers will be able to recover section 203 penalties going back three years, not one year, as the Court of Appeal had held, and not four years, as the UCL would have permitted.
Today, the U.S. Supreme Court granted the cert. petition in Wal-Mart Stores, Inc. v. Dukes, no. 10-277, but limited the issues. The Order reads:
10-277 WAL-MART STORES, INC. V. DUKES, BETTY, ET AL.
The petition for a writ of certiorari is granted limited to Question I presented by the petition. In addition to Question I, the parties are directed to brief and argue the following question: "Whether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a)."
I. Whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2)—which by its terms is limited to injunctive or corresponding declaratory relief—and, if so, under what circumstances.
II. Whether the certification order conforms to the requirements of Title VII, the Due Process Clause, the Seventh Amendment, the Rules Enabling Act, and Federal Rule of Civil Procedure 23.
In other words, the Supreme Court will be taking a narrow look at Dukes and keeping its focus on class certification under Rule 23(b)(2), rather than on the broad constitutional and other challenges Wal-Mart brought against the class certification process more generally.
Once again, the U.S. Supreme Court is expected to announce whether it will be granting cert. in Wal-Mart Stores, Inc. v. Dukes, no. 10-277. According to the docket, the case was considered in conference last Friday, December 3, which means that the outcome of the conference should be released today.
When it is posted at approximately 10:00 a.m. Eastern, the Supreme Court's order list for December 6 should be available at this link.
In Ahanchian v. Xenon Pictures, Inc., ___ F.3d ___ (9th Cir. Nov. 3, 2010), the Ninth Circuit reversed a judgment obtained as a result of opposing counsel's refusal to grant routine professional courtesies, and had this note of warning for the bar:
As Supreme Court Justice David Brewer once recognized, attorneys have an obligation as professionals to assume positions of important social responsibility. See David J. Brewer, The Ideal Lawyer, Atlantic Monthly, November 1906, at 587, 598 (“[T]he true lawyer never forgets the obligations which he as a lawyer owes to the republic, . . . he always remembers that he is a citizen.”). Moreover, attorneys, like everyone else, have critical personal and familial obligations that are particularly acute during holidays. It is important to the health of the legal profession that attorneys strike a balance between these competing demands on their time. See Patrick J. Schiltz, On Being a Happy, Healthy, and Ethical Member of an Unhappy, Unhealthy, and Unethical Profession, 52 Vand. L. Rev. 871, 889-90 (1999).
Slip op. at 18146 n.7. Thank you, Ninth Circuit, for making us all feel less guilty if we spend some time away from the office this holiday season.
In Coleman v. Estes Express Lines, Inc., ___ F.3d ___ (9th Cir. Nov. 30, 2010), the Ninth Circuit addressed the "criteria to determine when it is appropriate to hear discretionary appeals under CAFA." Slip op. at 19022.