In oral arguments Tuesday, state Supreme Court justices appeared sympathetic to a plaintiff who was barred from suing Canon Business Solutions Inc. because he failed to bring his lawsuit within a four-year statute of limitations time period.
The big picture question before the court was whether the multiple alleged overcharges by Canon were one distinct act, or if each overcharge was a separate act that triggered the statute of limitations clock anew. Aryeh's lawyers, adopting a position articulated by the dissenting justice in the appellate court, argued each overcharge should be considered a separate act.
The justices spent little time on a second question that had garnered the interest of many consumer attorneys: whether courts should take into account "delayed discovery," or the time the plaintiff finds out about the alleged unfair activity, in Unfair Competition Law cases.
The Recorder's blog, Legal Pad, had an interesting post last Saturday on the makeup of the en banc panel in Kilgore v. KeyBank National Assn., No. 09-16703 (9th Cir.).
We're about to find out more about the Obama judges, as four have been assigned to an en banc
panel in a closely watched case on consumer arbitration contracts .... With the rest of each
11-member en banc panel more or less evenly divided among
established conservatives, liberals and moderates, the Obama appointees
as a group would appear to hold the balance of power in each case.
Judge Mary Murguia, appointed to the court in 2010, and Judges Morgan
Christen, Paul Watford and Andrew Hurwitz, all of whom arrived this
year, will join Chief Judge Alex Kozinski and Judges Harry Pregerson, M.
Margaret McKeown, William Fletcher, Richard Tallman, Consuelo Callahan
and Milan Smith for argument Dec. 11 in Kilgore v. KeyBank National Association. The case will determine whether the Federal Arbitration Act preempts a
California rule that prohibits the arbitration of claims for broad,
public injunctive relief.
The case is set for argument before the Ninth Circuit in Pasadena on December 11, 2012 at 10:00 a.m. Some of the briefs are available at this link.
On September 4, 2012, in Dennis v. Kellogg Co., 2012 WL 3800230 (9th Cir. Sept. 4, 2012), the U.S. Court of Appeals for the Ninth Circuit reissued its July 2012 opinion striking down a consumer class action settlement solely on the basis of a faulty cy pres distribution provision. Among other things, the court found that the cy pres distribution of Kellogg product to "unspecified charities involved in feeding the indigent" did not bear a sufficient nexus to the claims in the false advertising action to support a class settlement. The panel of experts will discuss the Dennis decision and others, and offer their insights into the future of class settlements containing cy pres provisions.
Aaron Blynn,Genovese Joblove & Battista P.A.
Alexis Amezcua, Morrison Foerster
Don Beshada, Beshada Farnese LLP
Lee Peeler, Advertising Self-Regulatory Council, Council of Better Business Bureaus
Today at 10:00 a.m. Eastern, the U.S. Supreme Court will hear oral argument in Genesis HealthCare Corp. v. Symczyk, no. 11-1059. This case involves whether a defendant may "pick off" the named plaintiff in a FLSA collective action by offering full, individual relief to that plaintiff.
Oral argument transcripts are generally posted on the Supreme Court's website later the same day. The transcript in this case should be available this afternoon at this link.
My previous post on this case is here. The case is worth following because it could potentially impact how courts approach attempts to "pick off" the class representative in a Rule 23 class action. Last year, the Ninth Circuit held that such "picking off" is not permitted. Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th Cir. 2011) (discussed in this blog post). In this case, the Third Circuit agreed in the FLSA context. Symczyk v. Genesis HealthCare Corp., 656 F.3d 189 (3d Cir. 2011).
SCOTUSblog has a detailed oral argument preview as well as a case page with links to all of the briefs. One interesting development is that the Solicitor General filed an amicus brief supporting affirmance and has requested oral argument time.
UPDATE: The ever-reliable SCOTUSblog has a detailed recap of the argument.
Many thanks to the blog readers who kindly forwarded the briefs listed below from Aryeh v. Canon Business Solutions, Inc., no. S184929. The case addresses UCL statute of limitations issues, and will be argued next Tuesday, December 4, 2012 at 9:00 a.m. in Los Angeles.
I am still seeking a volunteer to attend the argument and provide a report for posting here, so if you're interested, please let me know. Your report can be with or without attribution, your choice.
In Franco v. Arakelian Enterprises, Inc., ___ Cal.App.4th ___ (Nov. 26, 2012), the Court of Appeal (Second Appellate District, Division One) affirmed an order denying a petition to compel arbitration in a wage and hour class action, holding (among other things) that Gentry remains good law and was not overturned by either Concepcion or Stolt-Nielsen.
The comprehensive (and unanimous) opinion tops out at 65 pages, and cites a number of secondary authorities, including these law review articles:
Note, There Is
Still Hope For The Little Guy:
Unconscionability Is Still A Defense Against Arbitration Clauses Despite
AT&T v. Concepcion (2012) 33 Whittier L.Rev. 651
On November 13, 2012, the Ninth Circuit issued its calendar notice setting oral argument in Kilgore v. KeyBank National Assn., No. 09-16703 (9th Cir.). The argument will take place before the en banc court on Tuesday, December 11, 2012 Wednesday, December 12, 2012 at 10:00 a.m. in Pasadena. CORRECTION: The date of the argument is Tuesday, December 11 (not the 12th).
If anyone is interested in attending the argument and writing a report for publication here, please let me know.
The Ninth Circuit just granted the petition for en banc rehearing in September. In March, the three-judge panel held (among other things) that the FAA, as interpreted in Concepcion, preempts the California Supreme Court's Broughton and Cruz decisions, which held that CLRA and UCL claims seeking public injunctions are not arbitrable as a matter of public policy. Kilgore v. KeyBank Nat'l Assn., 673 F.3d 947 (2012).
Unlike many of the post-Concepcion cases, this is not an employment case. Rather, it is a consumer action on behalf of students who enrolled in a "helicopter vocational school" and took out student loans from KeyBank. An arbitration clause was put into the notes the students signed. This differentiates the case from traditional consumer false advertising claims, which rarely involve a contract into which an arbitration clause could be inserted.
My original post on Kilgore is here, and additional coverage is here and here.
Some of the briefs filed at the rehearing stage are available at these links (with thanks to the blog reader who forwarded them):
On November 13, 2012, the Seventh Circuit (Judge Posner) handed down a new class certification opinion, Butler v. Sears, Roebuck and Co., ___ F.3d ___ (7th Cir. Nov. 13, 2012). The 8-page opinion may set a new record for succinctness. An excerpt:
Predominance is a question of efficiency. See Amchem Products, Inc. v. Windsor, 521 U.S. 591, 615-16 (1997); Committee Notes to 1966 Amendment to Fed. R. Civ. P. 23; Jackson v. Motel 6 Multipurpose, Inc., 130 F.3d 999, 1005 n. 12 (11th Cir. 1997); William B. Rubenstein, 2 Newberg on Class Actions § 4:49 (5th ed. 2012). Is it more efficient, in terms both of economy of judicial resources and of the expense of litigation to the parties, to decide some issues on a class basis or all issues in separate trials? A class action is the more efficient procedure for determining liability and damages in a case such as this involving a defect that may have imposed costs on tens of thousands of consumers, yet not a cost to any one of them large enough to justify the expense of an individual suit. ....
Sears argues that most members of the plaintiff class did not experience a mold problem [with their washing machines]. But if so that is an argument not for refusing to certify the class but for certifying it and then entering a judgment that will largely exonerate Sears—a course it should welcome, as all class members who did not opt out of the class action would be bound by the judgment.
Slip op. at 4-5. The opinion reversed the order denying class certification of the breach of warranty claims, and affirmed a separate order granting certification of claims alleging defective control units in the machines. Id. at 8.
The issues on review in Aryeh, according to the docket, are as follows:
(1) May the continuing violation doctrine, under which
a defendant may be held liable for actions that take place outside the
limitations period if those actions are sufficiently linked to unlawful
conduct within the limitations period, be asserted in an action under
the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.)?
May the continuous accrual doctrine, under which each violation of a
periodic obligation or duty is deemed to give rise to a separate cause
of action that accrues at the time of the individual wrong, be asserted
in such an action?
(3) May the delayed discovery rule, under which a
cause of action does not accrue until a reasonable person in the
plaintiff's position has actual or constructive knowledge of facts
giving rise to a claim, be asserted in such an action?
On a 2-1 vote, the Court of Appeal found none of these doctrines applicable to the case before it. Aryeh v. Canon Business Solutions, Inc., 185 Cal.App.4th 1159 (2010). My earlier coverage of the case can be found in these twoposts. The Supreme Court's opinion will be important because the lower courts are currently divided on whether the delayed discovery rule applies in UCL cases.
If anyone has copies of the merits and amicus briefs, I would appreciate receiving copies of them. Additionally, I will be seeking a Southern California correspondent to provide a report on the argument, so please let me know if you are available and interested in attending on December 4.
Whether the Federal Arbitration Act permits courts, invoking the "federal substantive law of arbitrability," to invalidate arbitration agreements on the ground that they do not permit class arbitration of a federal-law claim.
In In re American Express Merchants Litigation, 667 F.3d 204 (2d Cir. 2012), the Second Circuit refused to
enforce a no-class-action arbitration clause notwithstanding Concepcion because doing so would interfere with the effective vindication of the federal antitrust laws. The Supreme Court has addressed this issue in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985).
SCOTUSblog has a case page with links to the briefing to date, including:
In Morgan v. Wet Seal, Inc., ___ Cal.App.4th ___ (Oct. 12, 2012; pub. ord. Nov. 7, 2012), the Court of Appeal (First Appellate District, Division Two) affirmed an order denying class certification of wage and hour claims involving expense reimbursements.
This case has been on the "to-blog" list for a few weeks.
In Schnabel v. Trilegiant Corp., ___ F.3d ___, 2012 WL 3871366 (2d Cir. Sept. 7, 2012), the defendant sent an email to the plaintiffs after they had signed up for the defendant's service. The email contained a link to the company's terms of service, which included an arbitration clause with a class action ban. The Second Circuit, applying California contract law, held that the plaintiffs had not agreed to be bound by the clause:
As regards the email, under the contract law of Connecticut or California –- either of which may apply to this dispute –- the email did not provide sufficient notice to the plaintiffs of the arbitration provision, and the plaintiffs therefore could not have assented to it solely as a result of their failure to cancel their enrollment in the defendants' service.
Two MCLE programs of interest to appellate lawyers are coming up in San Francisco this month:
On November 9, 2012, the Appellate Practice Section of the Bar Association of San Francisco will present "The First District Appellate Symposium," a day-long program (9:00-4:30) at the Administrative Office of the Courts, 455 Golden Gate Avenue:
This unique full-day program is returning after a four-year hiatus.
Justices from every Division of the First District Appellate Court of
Appeal will address critical areas of practice, from nuts and bolts to
recent developments such as the advent of e-filing. This program is a
must for anyone practicing before the First District. The program features Associate Justice Carol Corrigan, California Supreme Court as the luncheon speaker.
In appeals raising important legal issues, an amicus curiae or “friend of the court” brief can make a difference. When done well, an amicus brief can alert a reviewing court to the broader implications of a case or bring a different perspective to the issues. This CLE program will provide a rare opportunity to hear from two respected jurists about effective amicus briefs.
The first event unfortunately conflicts with the CAOC Convention, but I'm planning to attend the second. For those attending the CAOC Convention, I will hope to see you on Saturday afternoon, when I will be presenting a panel segment on Brinker.
The U.S. Supreme Court will hear oral argument today at 10:00 a.m. Eastern (7:00 a.m. Pacific) in Comcast Corp. v. Behrend, no. 11-864.
Normally, the Court makes oral argument transcripts available later the same day. When the Behrend argument transcript is posted online, it should be available at this link. UPDATE: The transcript has been posted.
SCOTUSblog has a detailed oral argument preview on the case. The Court is expected to elaborate, to some as-yet unknown extent, on Dukes. The Court's statement of the issue reads as follows:
Whether a district court may certify a class action without resolving
whether the plaintiff class has introduced admissible evidence,
including expert testimony, to show that the case is susceptible to
awarding damages on a class-wide basis.
"'Revisiting Materiality' is Revisionist History: An Express Warranty Defines Materiality Under the UCL and CLRA Absent an Unreasonable Safety Hazard," by Paul J. Riehle and Jia-Ming Shang
The article is a response to a piece published in the Spring 2012 issue, "Revisiting Materiality in the Context of CLRA and UCL Claims: Why Materiality Does Not Equal a Safety Risk," by James C. Shah and Rose F. Luzon (mentioned in this blog post).
These articles both address an important issue originating in Daugherty v. American Honda Motor Co., 144 Cal.App.4th 824 (2006), namely, whether product manufacturers enjoy an escape hatch from liability under the CLRA and UCL for concealing known defects in their products. The escape hatch suggested by Daugherty (and seized on in later decisions) is offering an express warranty, and the hatch is open to all manufacturers unless the concealed defect creates a safety hazard for consumers.
In my view, this is an issue that the Supreme Court should take up when a proper case presents itself, because Daugherty (as interpreted, or rather misinterpreted, in later cases) upended years of UCL and CLRA jurisprudence.
On October 22, 2012, the Supreme Court gave itself an extension of time, through November 21, 2012, to
grant or deny review in Nelsen. UPDATE: On October 31, 2012, the Supreme Court denied review in Nelsen.
For those with a particular interest in this subject, all of this blog's posts on arbitration cases are collected in the "Class actions - arbitration" category page. Visiting that page will lead you to the blog's original coverage of Nelsen, Reyes, and Goodrich, as well as a couple of other cases in which no review petition was apparently filed.
The U.S. Supreme Court will hear oral argument on Monday, November 5, 2012 in Comcast Corp. v. Behrend, no. 11-864. Arguments always begin at 10:00 a.m. Eastern (7:00 a.m. Pacific), and normally the transcript is posted later the same day. Check here for the link on Monday.
This is the case in which the Supreme Court may elaborate on Dukes. The question presented, which normally tracks the language of the cert. petition, was restated by the Supreme Court when it granted cert. The restated question reads:
Whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a class-wide basis.
The Unfair Insurance Practices Act (UIPA), provides that no person
may engage in an unfair or deceptive act or practice in the business of
insurance. (§ 790.02.) An unfair practice is defined as the failure
to attempt in good faith to effectuate prompt, fair, and equitable settlements
of claims in which liability has become reasonably clear. (§ 790.03, subd. (h)(5).)
Moradi-Shalal, supra, 46 Cal.3d at page 304, the California Supreme Court held that
the UIPA does not create a private cause of action. Rather, enforcement of the UIPA is left
primarily to the California Insurance Commissioner.
A party cannot plead around Moradi-Shalal
by relabeling a cause of action for violations of UIPA as a cause of action
under the UCL. (Manufacturers Life Ins. Co. v. Superior Court (1995) 10 Cal.4th
257, 283(Manufacturers Life).) In other
words, UIPA’s provisions may not be “borrowed” to serve as a basis for a UCL
action. (Id. at pp. 283-284.)
is a split of authority on whether a breach of contract or bad faith cause of
action may serve as a predicate for a UCL claim where the allegations
supporting the claim also would constitute a violation of the UIPA.
Farm Fire & Casualty Co. v. Superior Court (1996) 45 Cal.App.4th 1093 (State Farm), ... [t]he court held that Moradi-Shalal did not
bar a UCL claim based on common law theories of fraud or bad faith, even though
such alleged acts might also
violate the provisions of the UIPA. (State Farm, at pp. 1098-1099.) ....
court in Textron Financial Corp. v. National Union Fire Ins. Co. (2004)
118 Cal.App.4th 1061 (Textron), disagreed with State
The Supreme Court has granted review to clarify the issue. (Zhang
v. Superior Court (2009) 178 Cal.App.4th 1081, review granted Feb.
10, 2010, S178542.)
follow State Farm, and based on the
reasoning of Manufacturers Life, we
conclude that Moradi-Shalal does not
bar a UCL cause of action based on an insurer’s bad faith, even though the
conduct in question may also constitute a violation of the UIPA. Since “courts retain jurisdiction to impose civil damages or other remedies
against insurers in appropriate common law actions,” including those based on
breach of the implied covenant of good faith and fair dealing (Moradi-Shalal, supra, 46 Cal.3d at
p. 304), a UCL claim based on those actions is not an end-run around Moradi-Shalal. Thus, we conclude the trial court’s grant of
summary judgment on this basis was erroneous.
Slip op. at 20-23. I would expect this case to be taken up as a "grant and hold" pending resolution of Zhang. The Daily Journal had an article on Zhang last Wednesday (Oct. 24), which will be of interest to those of us following the case.
UPDATE: On January 16, 2013, as expected, the Supreme Court took up this case as a "grant and hold" pending resolution of Zhang. Henderson v. Farmers Group, No. S207068.
This is the case in which the Supreme Court addressed the administrative exemption but did not reach the issue of class certification. Harris v. Superior Court (Liberty Mutual), 53 Cal.4th 170 (2011). The Court of Appeal, on remand, held that the trial court should not have granted the defendant's motion to decertify the class. Harris v. Superior Court (Liberty Mutual), 207 Cal.App.4th 1225 (2012) (depublished).
The depublication request, filed by the California Employment Law Council, argued that Court of Appeal did not follow the Supreme Court's directives when it applied the administrative exemption on remand.
My original post on the Court of Appeal opinion on remand in Harris is here.
In Meyer v. Portfolio Recovery Associates, LLC, ___ F.3d ___ (9th Cir. Oct. 12, 2012), the Ninth Circuit held that district courts are authorized to grant provisional class certification under Rule 23(b)(2) when issuing a preliminary injunction:
[Defendant] also argues that the district court lacked authority to certify a provisional class pursuant to FRCP 23(b)(2) because that rule only provides for final, not preliminary, injunctive relief.
FRCP 23(b) states, “A class action may be maintained if Rule 23(a) is satisfied and if ... the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” The plain language of FRCP 23(b)(2) does not restrict class certification to instances when final injunctive relief issues; it only requires that final injunctive relief be appropriate. [Defendant] did not show the district court incorrectly interpreted or applied FRCP 23(b)(2).
Slip op. at 12260. The opinion also holds that the district court correctly certified the class. Id. at 12257-59.
The article addresses the "trial by formula" catchphrase used in Dukes and explains that this part of the Supreme Court's analysis is limited to Title VII class actions, which have unique statutory requirements not present in UCL cases and other types of cases commonly litigated as class actions. In particular, the clever language does not mean that evidentiary extrapolations are impermissible Rule 23(b)(3) class actions, nor does it place any kind of due process limitation on the class action device, as some courts have recently and erroneously held. The article also discusses the Court of Appeal opinion in Duran, which misconstrued Dukes and is now under review by the California Supreme Court. Brinker is also touched on.
My thanks to the editor of Competition, John Cove, for including the article in the issue. Thanks are also due to the attorneys (you know who you are) who reviewed and provided helpful comments on drafts of the article.
Registration is still open for the 22nd Annal Golden State Antitrust and Unfair Competition Law Institute, which will take place on Thursday, October 25, 2012 at the St. Regis Hotel in San Francisco. (That is the same day as Game 2 of the World Series, Go Giants!) I encourage everyone to register and attend. This event is always excellent, and it was my privilege to assist with organizing it once again this year.
We are expecting to have some very great panels, including two afternoon sessions on UCL issues in particular. I'm looking forward to those panels very much. I hope to see some of you there on Thursday. Click here for more information and to register.
In Phillips v. Sprint PCS, ___ Cal.App.4th ___ (Sept. 26, 2012), the Court of Appeal (First Appellate District, Division Three) affirmed an order compelling arbitration of a claim brought under the UCL's "fraudulent" prong.
The September 2012 issue of Plaintiff Magazine has an interesting and lengthy article by Oakland attorney Bryan Schwartz, who is a member of the Executive Committee of the State Bar Labor and Employment Law Section. An excerpt:
I remember well April 12, 2012, because it was the day the sun broke through again on wage/hour class litigation: The long-awaited day the California Supreme Court ruled in Brinker (2012) 53 Cal.4th at 1004. Sure, the Court did not hand us strict liability for premiums where workers work during meal or rest breaks. Ironically, the employer-side spin doctors used this one holding, that employers cannot be liable for premiums by simply failing to police workers to ensure every break is taken, to paint Brinker as a great victory for their team. But those of us in the trenches of wage/hour class litigation – on both sides – immediately knew differently: That the chief result of Brinker would be to again empower employee advocates in claims where employers, with policies and common practices, refuse to relinquish all control over meal and rest periods owed to workers.
[The Court's] holding that the “employer need not ensure that no work is done” during meal periods is really an employee victory, because of the reasoning behind it: “[T]he obligation to ensure employees do no work may in some instances be inconsistent with the fundamental employer obligations associated with a meal break: to relieve the employee of all duty and relinquish any employer control over the employee and how he or she spends the time.” (Brinker, 53 Cal.4th at 1038-1039.) In other words, Brinker reasoned that employers cannot police employees to make sure that no work is performed because employers may exercise no control over employees during their meal periods. If an employer has a policy restricting employees’ activities during meal periods, that may now clearly be the basis for a meal period class action.
The article goes on to discuss numerous other issues of interest, including arbitration agreements post-Concepcion. Bryan predicts that "[i]f the Supreme Court takes up Iskanian, it may be the defining case about the effect of Concepcion and Stolt-Nielsen on California laws protecting workers." The Supreme Court granted review in Iskanian last week, so we will see if Bryan's prediction comes to pass.
If you have copies of additional documents that should be added to the list above (such as the defendant's filing(s)), please forward them.
Since my post on Monday, Kilgore has been added to the Ninth Circuit's pending en banc cases page. That page indicates that the case is "[t]o be calendared the week of December 10, 2012, in Pasadena, California."
As reported in the Bailey Class Action Daily, the Court of Appeal (Second Appellate District, Division Two) has handed down a new opinion addressing appealability of orders denying class certification. Aleman v. AirTouch Cellular, ___ Cal.App.4th ___ (Sept. 20, 2012).
The relevant discussion appears at pp. 29-31 of the slip opinion.