This article appeared in the Daily Journal a few weeks ago, on May 8, 2014, while I was immersed in several briefing projects. I was pleasantly surprised to see my photo on the front page, and I received a number of kind congratulatory emails from friends and acquaintances.
[P]laintiffs' attorneys such as Kimberly Kralowec of The Kralowec Law Group say the pendulum of appellate decisions has swung in their clients' direction.
Kralowec argued Brinker before the Court of Appeal and ... before the state Supreme Court .... She said appellate decisions favor class certification if there is a blaket policy on employee breaks that doesn't square with the law. "It doesn't matter that it may have been applied differently, affected class members differently, or not affected some plaintiffs at all," she said.
In the raft of published opinions that apply Brinker, six favored class certification, and two did not. The state Supreme Court denied review on all of them. What's more, the high court depublished three appellate cases that favored the defense in early 2013.
The legal press is covering Duran. Here's an excerpt from the article by Marisa Kendall in The Recorder:
The California Supreme Court tossed a $15 million overtime award to bank employees Thursday because of a faulty statistical sample, but justices were careful not to toss at-large reliance on statistics in wage-and-hour class actions.
Kimberly Kralowec, who filed an amicus brief in the case on behalf of the California Employment Lawyers Association, said the court shot down U.S. Bank's claim that it should have a right to call every class member individually to the stand. "Essentially they were arguing you never get to have a class action," she said.
[Plaintiffs' counsel Ed] Wynne called Thursday's opinion more favorable than the original court of appeal decision, which had dismissed the case permanently. Corrigan's opinion instead remands the case for fresh class certification proceedings and a new trial.
"We're really pleased," Wynne said. "While it's regrettable that the judgment wasn't upheld and the case was decertified, the court has given us valuable guidance for getting the case recertified." Wynne hasn't ruled out using a statistical model in round two of litigation.
"We're going to get the case certified again," he said. "I see no reason not to use statistical modeling again."
I just came across this late January interview by the Sacramento Bee's editorial board with Chief Justice Tani Cantil-Sakauye. An excerpt:
Gary Reed: What are the most interesting cases before the Supreme Court?
Cantil-Sakauye: One of our most interesting cases was the Garcia bar admission case (authorizing Sergio Garcia to practice law though he had come to California as a child without documentation), because of the interplay of state and federal law. I’m finding class-action cases interesting, and wage and hour cases.
Miller v. Alabama (in which the U.S. Supreme Court struck down mandatory life imprisonment without parole sentences for juvenile offenders.) We’re seeing broad cases at the California Supreme Court in reaction to U.S. Supreme cases. I wish I had all the time in the world to focus on those issues.
Dan Morain: Which justices do you most admire?
Cantil-Sakauye: I feel privileged to work with the group I’m in. I respect their history and how they look at law and tradition. I feel privileged because I don’t know how long it will last.
I like working with Goodwin Liu. He didn’t come from a trial court. He didn’t come from an appellate court. He came from academia. He will say, ‘Why are you doing this?’ He challenges us. This group is the mix of the old and the new.
This interview was before Justice Kennard announced her retirement, or I am sure the Chief would have been asked about her legacy.
You have probably already heard the news last week, when Justice Joyce Kennard of the California Supreme Court announced that she would be retiring as of April 5, 2013, which will mark her 25th anniversary as a member of the Court.
Yesterday's San Francisco Chronicle had an interesting article by Bob Egelko about some of Justice Kennard's most significant opinions. An excerpt:
Kennard's majority opinions included a 1991 ruling declaring high school graduation prayers unconstitutional, a conclusion the U.S. Supreme Court reached in a separate case a year later; another 1991 decision establishing an employee's right to sue for age discrimination; and a 1997 ruling allowing a suit against a city by a woman who was stopped by a police officer, taken into custody and raped - an abuse, Kennard said, of the "formidable power" the city had granted to the officer.
She voted often with the court's moderate-to-liberal bloc, but not always - for example, she joined a 1991 ruling that upheld legislative term limits and slashed the lawmakers' operating budget. But Kennard was impossible to pigeonhole.
When the court upheld the enforcement of surrogate-motherhood contracts in 1993, Kennard cast a lone dissent and told the all-male majority that a pregnant woman "is more than a mere container or breeding animal; she is a conscious agent of creation."
There is no indication that Justice Kennard will not remain on the bench for the March argument calendar, which includes the Duran case. If the opinion is handed down after the date of her retirement, she will almost certainly be appointed by the Chief Justice to continue to serve on the panel pro tem, as was Chief Justice George in the Kwikset case. (Kwikset was argued on November 3, 2010; Chief Justice George retired on January 2, 2011; he was appointed the next day as a pro tem justice for the mater; and the opinion was handed down on January 27, 2011.)
Last week, the Daily Journal offered some speculation on possible candidates to fill Justice Kennard's seat. The blog At the Lectern has more on this. The list of possible candidates recognizes that the current Court has no Latino members and no one from Southern California.
A thorough explanation of the strongest arguments in favor of the Board’s decision, which embraces the Board’s distinctions from earlier Supreme Court pronouncements on arbitrations and adding some of its own, appears in a recent law review article. Charles A. Sullivan & Timothy P. Glynn, Horton Hatches the Egg: Concerted Action Includes Concerted Dispute Resolution, 64 ALA. L. REV. 1013 (2013). We do not adopt its reasoning but note our consideration of its advocacy.
This morning's Daily Journal has a story by Laura Hautala on Judge Dato's order yesterday granting class certification of the meal period class on remand in Brinker. The story begins:
The meal and rest breaks case against Brinker Restaurant Corp. that led to a landmark state Supreme Court decision in 2012 is moving closer to trial after a judge Thursday granted class certification to hourly employees seeking damages for missed breaks.
Adam Liptak had another interesting article on the U.S. Supreme Court two days ago in The New York Times.
According to Liptak, "Chief Justice Roberts has proved adept at persuading the court’s more
liberal justices to join compromise opinions, allowing him to cite their
concessions years later as the basis for closely divided and deeply
polarizing conservative victories."
On May 29, 2013, the Daily Journal had a story on the Ninth Circuit's opinion last week in Leyva v. Medline Industries, Inc., ___ F.3d ___ (9th Cir. May 28, 2013), which reversed the district court's order denying class certification of certain wage and hour claims, and remanded with directions to certify the class.
As I mentioned to Laura Hautala of the Daily Journal, the most important thing about the opinion is its recognition that Comcast did not change the rule that individualized damages issues do not defeat class certification. Slip op. at 7-9. The opinion affirmed the general rule, which is that class certification can and should be granted in Rule 23(b)(3) cases not withstanding the need to calculate damages individually for each class member:
The district court denied certification because for each sub-class “the damages inquiry will be highly individualized.” But damages determinations are individual in nearly all wage-and-hour class actions. Brinker Rest. Corp. v. Superior Court, 273 P.3d 513, 546 (Cal. 2012) (“In almost every class action, factual determinations of damages to individual class members must be made. Still we know of no case where this has prevented a court from aiding the class to obtain its just restitution. Indeed, to decertify a class on sound the death-knell of the class action device.”) (internal citation and quotation marks omitted). Thus, “[t]he amount of damages is invariably an individual question and does not defeat class action treatment.” Blackie v. Barrack, 524 F.2d 891, 905 (9th Cir. 1975); see also Yokoyama, 594 F.3d at 1089 (“The potential existence of individualized damage assessments . . . does not detract from the action’s suitability for class certification.”). In deciding otherwise, the district court abused its discretion by applying the wrong legal standard. See Hinkson, 585 F.3d at 1263.
Indeed, the Supreme Court clarified in Dukes that “individualized monetary claims belong in Rule 23(b)(3).” 131 S. Ct. at 2558. Thus, the presence of individualized damages cannot, by itself, defeat class certification under Rule 23(b)(3). ....
Slip op. at 7-8. The panel's citation of Brinker and Dukes in support of its ruling is notable, as is its reliance on Yokoyama (discussed in this blog post) and Blackie, which reconfirms the continuing vitality of both opinions post-Dukes and post-Comcast.
Emily Green of the Daily Journal had a story on the Zhang argument in last Thursday's paper. An excerpt:
Plaintiffs lawyers and insurance companies have waited more than three years for the state Supreme Court to take up the case of Yanting Zhang, a homeowner who sued her insurance company for false advertising after it repeatedly stalled her efforts to get recovery after an apartment fire.
But at oral argument Wednesday, ... the questions posed by the justices suggested the court is inclined to rule in favor of Zhang, who wants to move forward with her claim.
The backdrop to the case is a prior California Supreme Court decision that says private citizens can't privately sue insurers who commit unfair practices under the state's Unfair Insurance Practices Act. Only the insurance commissioner can do that. Moradi-Shalal v. Fireman's Fund Ins. Companies, 46 Cal.3d 287 (1988).
Much of oral argument centered on whether Moradi-Shalal affected Zhang's case. ....
[Justice] Corrigan questioned why Zhang should be precluded from suing the company for false advertising. If one of the parties has no intention of living up to its side of the contract, she said, then the contract is "fraudulently induced."
Justice Corrigan is one of the more conservative members of the Court, so if her questions favored the plaintiff, that is a strong signal that the plaintiff may ultimately prevail.
I have seen no press coverage of Rose, but an attorney present reported that the questioning in that case also seemed to favor the plaintiffs' position. The attorney said that from the questioning, it appeared that the justices were accepting the argument that the repeal of the private right of action for violations of the Truth in Savings Act (12 U.S.C. § 4301
et seq.) did not
affect the Act's preemption language or establish a federal policy precluding state enforcement of its provisions.
Both opinions are due to be filed no later than the week of August 5, 2013.
Today is the one-year anniversary of the Supreme Court's issuance of its opinion in Brinker. It is an opportune day for me to publicly congratulate my co-counsel, Tracee Lorens and Michael Rubin, who were both selected by California Lawyer magazine as recipients of 2013 CLAY Awards in Employment Law for their work on behalf of the employees in Brinker. (I was also an honoree.) The Awards were announced in the March 2013 issue of the magazine.
I am so proud of them, as I am of Michael Singer and Dave Mara, whose contributions were invaluable and who really should have been honored too. With three lawyers from the plaintiffs' team already selected by the editors of California Lawyer for our work, however, it seems not everyone could be named.
As I have saidbefore, we could not be happier with the Supreme Court's ruling that employers may not simply "offer" meal periods, but rather must take affirmative steps to actually relieve workers of all duty, while at the same time refraining from doing anything to interfere with employees' ability to actually take their meal periods. We are pleased that the editors of California Lawyer saw fit to recognize our work.
Congratulations also to the rest of the 2013 CLAY Award recipients. My co-counsel in LCDs, Fran Scarpulla, received a well-deserved award for his work on that antitrust class action, and Michael Rubin's partner Danielle Leonard was the first attorney ever to receive two CLAY Awards in the same year (Education Law and Voting Rights). Contratulations to her and to all.
you can see clear trends developing in legal ethics. We are seeing an explosion
of unfair competition law claims against lawyers, by lawyers, and against
online legal service providers. By the way, according to insurance mavens, your
coverage should include UCL claims, since they are incurred in the performance
of legal services.
The article does mention a pending bill that would allow the State Bar to recover the civil enforcement penalties authorized by the UCL for public prosecutor actions. The bill does not add the State Bar to the list of public prosecutor offices permitted to bring UCL claims; rather, it would allow the State Bar to bring civil enforcement actions for violations of some of the Business & Professions Code provisions governing lawyers, and to recover the civil penalties of the UCL (Bus. & Prof. Code section 17206) in such actions.
In other words, if passed, the new law would "borrow" the UCL's civil penalty provisions.
Higbee is a UCL competitor action and the opinion is quite interesting. From the article:
A state appeals court has reinstated a lawyer's suit against a company
offering cut-rate legal services, ruling that - despite a voter-approved
law limiting unfair-competition suits - a business that's being
undercut by a rival's practices can still seek redress in court.
On March 1, 2013, the Recorder had this article on the numerous false advertising cases pending against food manufacturers in the Northern District of California, which the article says has "emerg[ed] as preferred venue for a new wave of class action litigation over food
labels alleged to mislead consumers or violate federal regulations."
Many thanks to the blog reader who forwarded the link.
On Wednesday, the Daily Journal had a front-page article on the Supreme Court's decision to depublish three post-Brinker Court of Appeal opinions on meal periods (discussed here and here). An excerpt:
Kimberly A. Kralowec of the Kralowec Law Group filed a depublication request for each of the three cases in question, though she was not otherwise involved in them. She asserts the decisions misstated the Supreme Court's analysis in Brinker by relying on an older analysis of the word "provide" that refers to the dictionary and interprets the phrasing to mean the employer meets the obligation by simply offering breaks.
"It's a lot more than just offering or authorizing a break," Kralowec said. "The employer has to take affirmative steps to relieve workers of all duty, and refrain from doing anything that would interfere with the employees' ability to take a break."
The reporter, Laura Hautala, also interviewed former Justice Carlos Moreno about the development:
[F]ormer Justice Carlos R. Moreno, who retired from the state Supreme Court in 2011, said that depublished cases typically have something in them that's inconsistent with the high court's own precedent.
"If a case is really off the mark, then the court will elect that remedy," he said.
Mine were not the only depublication requests. Michael Singer filed requests for CELA in Hernandez and Lamps Plus; Joseph Antonelli filed a request for his clients in Tien; and Eve Cervantez filed a request for a group of workers in Lamps Plus.
All of the requests made essentially the same argument -- that the Court of Appeal was badly misinterpreting the Brinker opinion. My requests also pointed out that in so doing, the Court of Appeal failed to adhere to the rule of stare decisis, which requires allegiance not only to the high court's holdings, but also its reasoning. All three opinions were "really off the mark" because they did not adhere to either the ultimate holding or the reasoning of Brinker.
Recently, on January 7, 2013, The Recorder had a front-page article on the first two depublication orders. The article, "High Court Tees Up Number of Post-Brinker Cases," preceded the depublication order in Tien, handed down on January 16. An excerpt:
In a dramatic move, the state Supreme Court depublished two of those rulings — Lamps Plus Overtime Cases, 195 Cal.App.4th 389, and Hernandez v. Chipotle Mexican Grill, 208 Cal.App.4th 1487. In both cases, the Second District had denied class certification.
Kimberly Kralowec of The Kralowec Law Group said in both rulings the Second District had "misinterpreted the Brinker
decision, in particular what employers have to do to comply with their
meal period obligations." Depublishing, she said, "was a very strong
signal that the court disagreed with the analysis" in those two cases.
Needless to say, I'm very pleased to have done my part to achieve depublication in these cases, and I think that depublishing the opinions was the correct outcome, given that the Supreme Court is apparently not ready to revisit any of the issues addressed in Brinker by granting review in these cases.
I am equally pleased by the press attention these developments have garnered. That the Supreme Court would depublish three opinions like this is pretty remarkable, whatever the issue. Many lawyers have sent expressions of thanks and contratulations which I have been so pleased and proud to hear. Congratulations are also due to Michael, Joe and Eve.
The article is quite interesting. It discusses the five class-action-related opinions handed down last Term (Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., 130 S.Ct. 1431 (2010); AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011); Erica P. John Fund v. Halliburton Co., 131 S.Ct. 2179 (2011); Smith v. Bayer Corp., 131 S.Ct. 2368 (2011); and Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011)), and relates those opinions to four class-action cases on the Court's docket this Term:
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.
"'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.
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.
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.
The Daily Journal had an interesting article Monday, noting an increase in food-related consumer class action filings since Concepcion and the Ninth Circuit's 2008 opinion, Williams v. Gerber Products Co., 523 F.3d 934 (9th Cir. 2008) (discussed in these blogposts).
A couple of snippets from the article:
[David T.] Biderman [of Perkins Coie] and others think the growth in filings can be credited in part to AT&T Mobility v. Concepcion, the landmark Supreme Court decision last year that excludes many consumers from class actions because of contracts they signed. Unlike many consumer products, food or goods bought in a local grocery store do not come with a contract.
Some attorneys say the Gerber decision has swayed some judges - particularly in the Northern District - to throw out motions to dismiss.
"In the Northern District, they have been more accommodating to plaintiffs," [William L.] Stern said.
The article features a great photo of my former partner Will Stern of MoFo, as well as quotations from Tim Blood of Blood Hurst & O'Reardon and several other attorneys.
The first article, "Brinker v. Superior Court: Takeaways for California Workers," is by yours truly and is an edited and somewhat expanded version of my original post on Brinker.
The article includes two figures, the first of which was unfortunately distorted in the print copy of the Review. The figure illustrates the Supreme Court's ruling on the meal period compliance question, and should have looked like this (click to view full-size image):
As the article explains, the Supreme Court held that employers must actually relieve workers of all duty for meal periods, which is precisely what the workers argued. Petition for Review, Statement of Issues on Review (issue no. 1); see Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004, 1017 (2012) ("an employer’s obligation is to relieve its employee of all duty"). While the Supreme Court did not accept the workers' further argument, based on Martinez v. Combs, that employers must also prevent all work from occurring, the Court flatly rejected the employers' assertion that meal periods need only be "offered" to workers. Those who assert that Brinker held that meal periods need only be "made available" are not reading the opinion with adequate care.
The article is available to members of the State Bar Labor and Employment Law Section. If you would like a copy, please drop me an email.
The second article in the pair, "Brinker v. Superior Court: Implications for Employers," is by Brinker's appellate counsel, Rex Heinke, and one of his colleagues, Damien DeLaney.
The issue has an interesting article called "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. Here is an excerpt from the introduction:
Some practitioners and courts now take the position that, in order to establish materiality in an omission-based claim under the CLRA and UCL, a plaintiff must allege that the subject product poses a safety risk. ....
As this discussion will demonstrate, given what is and has been the prevailing materiality standard for years, the existence of a safety risk is clearly not a required element of this standard, and its absence should not be a basis for precluding otherwise viable CLRA and UCL claims that are brought to redress consumer wrongs. This article discusses why the imposition of a "safety" requirement for pleading materiality in omission-based consumer fraud claims is both contrary to controlling legal authority and to the express legislative purpose of the CLRA and UCL.
The article is worth a read. This is an important area of law and one in which we are seeing what is perhaps CAFA's most problematic side effect: federal judges making California law. Federal judges construe the law in removed class-action cases raising no federal questions, their rulings are cited by litigants in state courts, and those rulings are followed by state-court judges. The intermediate Court of Appeal opinion in Brinker is another example of this phenomenon.
Last Saturday the New York Times had this article on the impact of Concepcion. An excerpt:
A year later, we’re starting to see how much the game has changed. On April 25, the consumer advocacy group Public Citizen released a report titled “Justice Denied” that said that since Concepcion, judges had cited the decision at least 76 times as a reason to prevent potential class-action lawsuits from moving ahead. In some of those cases, the judges made clear that they were ruling against the plaintiffs through gritted teeth, explaining that Concepcion basically made it impossible to come to any other decision.