The UCL Practitioner

"2007 Developments in California Class Action Law"

The Spring/Summer 2008 issue of Competition, the journal of the Antitrust and Unfair Competition Law Section of the State Bar of California, arrived in the mail last week. It includes several articles on antitrust law and one of interest to class action practitioners, "2007 Developments in California Class Action Law" by Pamela M. Parker of Coughlin Stoia Geller Rudman & Robbins LLP. The article is very comprehensive and discusses a number of recent class action cases of interest, including Capitol People First v. State Department of Developmental Services, 155 Cal.App.4th 676 (2007) and Lewis v. Robinson Ford Sales, Inc., 156 Cal.App.4th 359 (2007).

Articles from the Spring/Summer 2008 issue of Competition are not yet available online.

"SF Weekly penalty could rise to $15.6 million"

In today's San Francisco Chronicle, Bob Egelko reports that "SF Weekly penalty could rise to $15.6 million":

Judge Marla Miller of San Francisco Superior Court said she believes she's required under state law to increase the damages and issue an injunction in light of the jury's March 5 verdict that the SF Weekly, part of a national chain of alternative newspapers, cut its advertising rates below its costs to undermine the locally owned Guardian.

The jury awarded $6.3 million to the Guardian for its losses. Miller, in what she described as a tentative decision, said Friday she would triple the portion of those damages that equals one year of losses, bringing the total to $15.6 million, and prohibit the Weekly from selling below-cost ads in order to hurt the Guardian.

My prior post on this interesting Unfair Practices Act (and UCL) case is here. Business & Professions Code section 17082 requires trebling of any damages award in a UPA case ("any plaintiff in any such action shall be entitled to recover three times the amount of the actual damages, if any, sustained by the plaintiff"). It is unclear why the trebling would be limited to "one year of losses," however.

"Study Shows State Courts Vacating Many Arbitration Awards for Employees, but Not for Employers"

Yesterday's National Law Journal reported on a new study by Professor Michael H. LeRoy of the University of Illinois at Urbana-Champaign College of Law showing that courts reverse arbitration awards in favor of employees more frequently than awards that favor employers. The article also disusses various legislative reform proposals that lawmakers are considering. Marcia Coyle, "Study Shows State Courts Vacating Many Arbitration Awards for Employees, but Not for Employers," National Law Journal (April 21, 2008).

"Garment firm's owners off hook on unpaid wages"

In yesterday's San Francisco Chronicle, Bob Egelko had an article on the Court of Appeal's opinion in Bradstreet v. Wong, ___ Cal.App.4th ___ (Apr. 16, 2008). The article provides more of the unfortunate backstory leading up to the suit. My blog post on the published opinion is here.

On a related note, yesterday's Chronicle also had an editorial on the steps some large corporations take to avoid complying with wage and hour laws. Steven Greenhouse, "Tough times for American workers," San Francisco Chronicle (Apr. 18, 2008).

"Cutting Class"

Attorney H. Scott Leviant, author of the new blog The Complex Litigator, had a Forum piece in Tuesday's Daily Journal called "Cutting Class" (subscription). It primarily addresses A.B. 1905, which died in committee last month. That bill would have allowed defendants to immediately appeal orders granting class certification. As Scott ably points out, such a rule would create an automatic interruption of pretty much every class action case, while every order granting class certification is appealed. The interruption would probably last two years or more, depending on the docket of the particular appellate district where the appeal is filed.

There is a good reason why orders denying class certification are immediately appealable while orders granting certification are not. Orders denying certification of an entire class are considered final and not subject to reconsideration or later amendment. Orders granting certification, by contrast, are constantly subject to challenge through repeated motions for decertification both before and after trial. Defendants take advantage of this right — a right that plaintiffs who lose class certification do not enjoy — all the time. The proponents of A.B. 1905, who claimed to want parity in the system, could have drafted a bill that would make orders denying certification subject to reconsideration and amendment by the trial courts instead of immediately appealable. That, of course, does not comport with their broader goal, which is (in Scott's words) "the immediate cessation of litigation in the trial court upon the issuance of an order granting or denying certification" and the "plac[ing of] class actions in the deep freeze of appellate activity until the cost of litigation broke the plaintiff."

Congratulations to Scott on his second published Daily Journal article.

Preliminary Final approval granted in Ford UCL/CLRA case

The Sacramento Bee reports this morning that Judge De Alba granted final approval yesterday of the settlement in the Ford case (Ford Explorer Cases, JCCP nos. 4266 & 4270). The article reports that only some of the plaintiffs' attorneys' fee requests were approved and that further briefing on the remaining fee requests is expected. Crystal Carreon, "Ford case settled except for legal fees," Sacramento Bee (Apr. 16, 2008).

UPDATE: The Daily Journal also has a story on the settlement: "Judge Approves Settlement of Suit Against Ford," Daily Journal (Apr. 17, 2008) (subscription).

Article on impact of Second Circuit's "light" cigarettes opinion on consumer class actions

Findlaw.com had an article last week on the Second Circuit's recent class certification opinion, McLaughlin v. American Tobacco Co., ___ F.3d ___ (2d Cir. Apr. 3, 2008) (discussed briefly in this blog post). In "The U.S. Court of Appeals for the Second Circuit Deals a Severe Blow to the Plaintiffs in a Class Action Involving Allegations of Fraud Relating to 'Lights' Cigarettes," Findlaw.com (April 8, 2008), Professor Anthony J. Sebok asked whether McLaughlin "shuts the door for furture consumer class actions" in the Second Circuit. His ultimate answer was no, and he explains why:

I don't think so. It is important to note that the Second Circuit went out of its way to distance itself from the Fifth Circuit's 1996 decision in Castano v. Am. Tobacco Co., [84 F.3d 734 (5th Cir. 1996),] which the Second Circuit described as imposing a "blanket rule" against class certification whenever issues of individual reliance exist.

Furthermore, the phrase "material variation," which the court used to map out the boundary between acceptable and unacceptable class-wide treatment, is not meaningless -- although [plaintiffs' counsel Michael] Hausfeld, in oral argument, seemed to suggest it was.

Rather, "material variation" clearly contemplates that will be some individual differences between the reasons for reliance among the members of a class. Thus, it does not require, for certification, a presumption that all members of the class have identical reasons for acting (as is the case in fraud-on-the-market in the securities context, where investors are presumed to all know about and act on public information).

Consider, for example, a hypothetical consumer fraud claim based on the purchase of word-processing software that fails to work with a certain type of computer, despite contrary representations by the manufacturer on the box. It may be the case that some of the class of consumers who purchased the software did not, in fact, rely on that representation. For example, some of these purchasers might not have owned a computer incompatible with the software until after they bought the software, so the misrepresentation may have been irrelevant to them at the point of purchase.

However, one might assume that, at the point of purchase, all of the purchasers would have placed a value on the full functionality of the software, even if their decision to buy was not motivated by a desire to exploit that functionality. Let's assume -- quite realistically, I think -- that functionality with a typical range of computers is part of the core set of elements that consumers expect in a commercial software program. If so, then the fact that some did not actually subjectively respond to the misrepresentation about functionality should not be, even after last week's Second Circuit decision, a bar to class certification. That is because the differences in various class members' reasons for purchasing the software do not vary in any "material" sense, and thus, the hypothetical class proposed by this example should not fail the Second Circuit's "material variation" test.
If I am correct, then the news for consumer class actions is not as bleak as some commentators have suggested -- although Hausfeld's tactics in oral argument last year have not made things any easier for the plaintiffs' bar. Instead, it is most accurate to say simply that the rules for class-wide reliance in the Second Circuit were not settled in McLaughlin. If anything, the hard work of developing a coherent set of rules has just begun.

(Italics and hyperlink added.) While California class certification law looks nothing like McLaughlin, Professor Sebok's conceptualization of common reliance nonetheless could be useful in some UCL and CLRA cases.

"Sixth District Lets Counties Pay on Contingency"

In today's Recorder, Mike McKee reports that "Sixth District Lets Counties Pay on Contingency" (subscription):

The ruling is great news for local governments, which claim they would have a hard time prosecuting nuisance abatement suits — such as oil spill or toxic landfill cases — without outside lawyers.

"It's important to counties and cities throughout the state," said Santa Clara County Counsel Ann Ravel, whose office was leading the lead-paint litigation at the center of the ruling, "because, due to financial issues and the size of a lot of counties' and cities' offices … [they] can't pursue cases of this sort without the aid of contingency counsel." Government agencies, she said, simply can't afford to pay hourly fees.

Verdict in rare Unfair Practices Act case

Today's Recorder reports on a $15.6 million jury verdict in a case brought under the Unfair Practices Act (Bus. & Prof. Code §§17000-17101). Matthew Hirsch, "Newspaper Wins $15.6M in Suit Over Ads" (subscription), The Recorder (Mar. 6, 2008). According to the article, the lawsuit was predicated on the defendant newspaper's alleged violation of Business & Professions Code section 17043, which reads:

It is unlawful for any person engaged in business within this State to sell any article or product at less than the cost thereof to such vendor, or to give away any article or product, for the purpose of injuring competitors or destroying competition.

The Recorder also posted a copy of the jury verdict. It is unclear from the article whether a UCL claim was also pleaded, but my guess would be yes. That claim would be decided by the judge, not the jury. The jury's finding that the defendant violated the UPA probably compels the judge to also find a violation of the UCL's "unlawful" prong. It is doubtful, however, that any monetary relief that the UCL might afford would exceed the damages that the jury already awarded. If the judgment is appealed, the case is sure to be an interesting one to follow.

The San Francisco Chronicle also reports that "Bay Guardian wins suit with SF Weekly." In that article, a lawyer for SF Weekly is quoted as saying that an appeal is planned.

UPDATE: In an article in which I am quoted, Competition Law 360 reports that "$15.6M Awarded In San Francisco Newspaper Clash" (March 6, 2008) (subscription).

Articles in January/February 2008 issue of Forum

The January/February 2008 issue of Forum, the magazine of Consumer Attorneys of California, recently arrived in the mail. Two articles are of particular interest:

• H. Scott Leviant and Jason E. Barsanti, "Maximize Recovery in Unpaid Wage Cases" (discussing use of contract-based theories of recovery in unpaid overtime class actions)

• Michael D. Singer, "Pre-Certification Communication With Putative Class Members" (discussing recent decisional law on discovery of class member contact information as well as propriety of defense contacts with putative class members)

Both articles are very good and will soon be available online to CAOC members only.

"High Court OKs Suit Over Pink Salmon"

Today's Recorder has an article (subscription) on the Salmon decision. The Daily Journal also reports that "High Court Allows Suits Over Salmon" (subscription).

Looking at the decision more closely last night, it doesn't really say anything particularly new or interesting about the UCL or CLRA. The rationale for the decision was that the California law on which the UCL claim was predicated (i.e., the Sherman Food, Drug and Cosmetic Law (Health & Saf. Code §§ 109875 et seq.)) was "identical" to the relevant provisions of the Federal Food, Drug and Cosmetic Act (21 U.S.C. §§ 301 et seq.). The opinion did not analyze the CLRA claim separately from the UCL claim.

The opinion did have one interesting footnote that should remove any doubts concerning the propriety of citing unpublished federal district court rulings in California state courts:

In their briefs, the parties discuss an unpublished federal district court opinion which came to the same conclusion when considering nearly identical facts. (Vermont Pure Holdings, Ltd. v. Nestle Waters North America, Inc. (D.Mass., Mar. 28, 2006, No. Civ. A. 03-11465) 2006 WL 839486, *6, fn. 3.) Citing unpublished federal opinions does not violate our rules. (Cal. Rules of Court, rule 8.1115.) We find the court’s reasoning persuasive.

Slip op. at 22 n.18 (emphasis in original).

"Federal judge nominated to state appeals court"

Today's San Francisco Chronicle reports that U.S. District Judge Martin Jenkins has been nominated to serve on the First District Court of Appeal based in San Francisco, replacing Justice Joanne Parrilli, who recently retired. Bob Egelko, "Federal judge nominated to state appeals court," San Francisco Chronicle (Jan. 26, 2008). This is important because, according to the article, Judge Jenkins was assigned to the Wal-Mart gender discrimination case and is the judge who granted class certification in that case. Right now, after two opinions from a three-judge Ninth Circuit panel, a petition for en banc rehearing is pending. The article says that on remand the case would be assigned to a new judge.

Howard Bashman of How Appealing has posted a copy of the petition for en banc rehearing as well as a useful redline comparing the two Ninth Circuit opinions (pdf).

Preliminary approval granted in Ford case

Today's Sacramento Bee reports that Judge De Alba granted the preliminary approval motion in the Ford case (Ford Explorer Cases, JCCP nos. 4266 & 4270) yesterday: "Coupon deal in car suit cleared."

News on the settlement in the Ford case

Last Friday the Sacramento Bee reported on the terms of the settlement in the Ford case (Ford Explorer Cases, JCCP nos. 4266 & 4270):

Under the proposal, Ford would provide vouchers worth up to $500 each toward the purchase of a new Explorer or $300 toward another Ford vehicle to owners of Explorers purchased in the 1990s.

....

During a trial that began in June in Sacramento's downtown courthouse, plaintiffs' lawyers argued that Ford had misled car buyers by falsely claiming the Explorers built in the 1990s were safe, all-purpose family vehicles.

"They were peddling it as a safe vehicle that you could run up and down the highway at 70 mph," said lead plaintiffs' attorney Tab Turner. "But this vehicle does not perform as a safe and stable soccer mom kind of vehicle."

Ford knew the Explorer's high, narrow build made it prone to rollover in emergency maneuvers at highway speeds, the lawyers claimed.

When the dangerous defects came to light after a nationwide recall of the Explorers' Firestone tires in August 2000, each Explorer lost about $1,000 in value, the plaintiffs' lawyers argued.

They sued under California's false-advertising and unfair-competition laws, asking a judge to order Ford to disgorge more than $2 billion in profits.

"People are stuck with these vehicles after the value has dropped and cannot use them safely," Turner said Wednesday.

....

Turner said he'd agreed to the settlement in part because Ford's current financial weakness made it unable to afford a large cash payout. .... "Ford's not in a position to write a check for $500 million."

The article also says that the preliminary approval hearing is today at 1:00 p.m. before Judge DeAlba. More coverage appeared in Friday's Daily Journal, which reported that "Consumer Advocates Object to Ford Explorer Settlement Offer" (subscription).

Recorder article on Fairbanks and the CLRA

An article in Friday's Recorder, "Heller Lawyer Named GC at California Department of Insurance" (subscription), had some interesting commentary by Lisa Perrochet on the Fairbanks case and the CLRA:

In another development Wednesday affecting the insurance industry, the state Supreme Court agreed to hear Fairbanks v. Superior Court, S157001, a case that could limit plaintiffs' ability to challenge insurers under the Consumers Legal Remedies Act.

In August, the 2nd District Court of Appeal held that insurance is neither a "good" nor a "service" as defined and regulated by the CLRA. Since Proposition 64 made private claims under California's Unfair Competition Law more difficult to file, the CLRA has become a more attractive vehicle for consumer lawsuits, some lawyers have suggested.

While the Fairbanks case "is tied very closely to the issue of insurance," said Horvitz & Levy partner Lisa Perrochet, "it may be that [generally] people are focusing more on CLRA claims. This may be a harbinger of more aggressive use of those claims."

The CLRA provides for injunctive relief, punitive damages, attorney fees and other remedies, Perrochet said. The Unfair Insurance Practices Act, by contrast, only allows claims under a more narrow scope of circumstances, and it offers far fewer remedies than the CLRA, she said.

I think the better way to characterize Fairbanks would to say that it might confirm (not limit) plaintiffs' ability to challenge insurers under the CLRA (given the Court of Appeal's holding).

"An isolated case: The fall of a renowned class-action lawyer isn't evidence for curtailing such lawsuits"

On Wednesday, the Los Angeles Times ran an editorial pointing out that finding one bad apple in the barrel doesn't meant there aren't plenty of good, shiny red ones left:

Famous -- or make that infamous -- class-action attorney William S. Lerach pleaded guilty Monday to one count of conspiracy, admitting his role in a $11.3-million kickback scandal that has upended his former law firm, the pathbreaking shareholder advocacy firm of Milberg Weiss.

As part of his plea, Lerach will pay $8 million to the federal government, and could spend up to two years in prison. Responding to news of the deal, tort reform advocates seized the easy opportunity to make sport of Lerach's downfall. But for those tempted to argue that his crimes make the case for curtailing class-action suits sharply, we'd like to offer the objection that such an argument overstates the evidence. Paying plaintiffs to sue is illegal and should be. Zealously representing injured clients is not and shouldn't be.

To the contrary, it's a necessary calling that benefits victims and society. ....

.... The best outcome of Lerach's fall wouldn't be the demise or even the curtailing of the class-action lawsuit. It would be weeding out lawyers who abuse the system. Such action would assure that legitimate class-action suits get their fair hearing in court.

[Via How Appealing]

"Lawyers Strike Deal in Ford's SUV Class Suit"

Tuesday's Daily Journal reported that a settlement may be in the offing in the Ford case:

Ford Motor Co. and lawyers for more than 414,000 California owners of Explorers announced Monday that they have reached a tentative settlement in the nation's first consumer class action to go to trial over the sport-utility vehicle. Sacramento County Superior Court Judge David De Alba met with lawyers for a half hour before announcing he had canceled closing arguments in the non-jury case because the parties had reached an apparent resolution.

"Lawyers Strike Deal in Ford's SUV Class Suit: High-Stakes Trial of Explorer Avoids Closing Arguments" (subscription).

If a settlement is reached, I will certainly be happy for the class, but I will be very disappointed not to see the legal rulings that the case would have generated on some cutting-edge UCL issues!

"Engineer vs. lawyer in SUV suit: Court sparring focusses on claims that Ford hid its worries the Explorer was prone to tipping over"

On Saturday, the Sacramento Bee had this article on the Ford Explorer trial. Thanks to the blog reader who emailed me with the link.

Also, today's Recorder has a profile of Judge David De Alba (subscription), who is presiding over the Ford trial. An excerpt:

The Sacramento County Superior Court judge is in the midst of overseeing a three-month long, potentially multibillion-dollar class action against Ford Motor Co. The counsel tables are teeming with lawyers, the briefs are thick, the exhibits are many, and the lengthy testimony about the Ford Explorer's alleged rollover danger can be technical, if not tedious.

And after the plaintiffs surprised everyone by waiving their right to a jury on the first day of trial, De Alba became the center of attention.

"It's a fascinating trial," the judge said recently, declining to say more, given the trial's ongoing status.

....

De Alba will face another new challenge soon. Chief Justice Ronald George has assigned him to a "strike team" of retired and active judges that will temporarily relocate to Riverside County courts to try to whittle away at the backload of cases there. De Alba will leave when the Ford class action ends.

Press coverage of In re Tobacco Cases II

Today's Daily Journal reports that "State Justices Let Tobacco Precedent Fall" (subscription). The Recorder reports that "Justices Snuff Suit Aimed at Joe Camel" (subscription). The San Francisco Chronicle's coverage is titled, "State high court rules California can't restrict cigarette ads aimed at kids." And the Los Angeles Times reports that "Suit by tobacco ad foes tossed."

"Judge adds a twist to Explorer profits trial"

Yesterday's Sacramento Bee had an interesting update on the Ford Explorer trial now pending in Sacramento County Superior Court. As I previously reported, this case is a class action involving UCL and CLRA claims. According to the Sacramento Bee article, the trial court is considering whether the UCL or CLRA empowers it to order Ford to disgorge its ill-gotten profits:

The plaintiffs' lawyers have argued that Ford rushed the Explorer to market in 1990 to beat the competition and marketed it as a safe family vehicle, even though Ford engineers knew that its tall, narrow design made it prone to rolling over.

Ford then reaped $2.135 billion in ill-gotten profits, the plaintiffs claim. They argue that Judge David De Alba, who is hearing the case without a jury, has the power to order Ford to give back the money.

The plaintiffs' case relies in part on the testimony of Dr. Alan Goedde, an economist and hired expert on damage awards.

He analyzed Ford documents and determined the company made hundreds of millions of dollars because it did not take another year or more to fix the Explorer's safety problems.

Goedde was scheduled to testify Wednesday, but Ford's lawyers objected that his evidence was irrelevant because it concerned profits that De Alba could not order Ford to relinquish.

Ford lawyer Peter Herzog of St. Louis said the plaintiffs could offer evidence only about their claim that Explorers sold in the 1990s had lost value once problems with defective Firestone tires and rollovers came to light in 2000.

The plaintiffs' attorneys claim each Explorer lost approximately $1,100 to $1,300 in resale value, for a total of about $500 million.

De Alba asked why it was within his authority to award any profit "over and above that number."

San Francisco lawyer Elizabeth Cabraser responded that De Alba could order Ford to disgorge its profits if he found its behavior to have been "reprehensible and highly profitable."

The Daily Journal reports

The Daily Journal had two interesting articles this week — on Monday, "Strategy Uses Arbitration Terms to Break Up Class," discussing a new defense strategy involving arbitration clauses in employment cases, and on Tuesday, "Reversed Intervention" discussing the Supreme Court's decision in Fireside Bank v. Superior Court (Gonzalez), 40 Cal.4th 1069 (2007). A subscription is required to access these articles online.

"Did Ford aim to deceive? $2 billion trial in Explorer-safety suit opens in capital"

On Wednesday, the Sacramento Bee reported here on a very interesting UCL and CLRA class action in which trial began last week. As the article explains:

The lawyers outlined their cases in opening statements Tuesday in a class-action lawsuit filed on behalf of more than 400,000 Ford Explorer owners statewide.

The lawsuit consolidates cases from Northern and Southern California and seeks a return of unjust profits under the state's unfair competition and false advertising laws.

With a half-dozen high-powered lawyers on each side, it is being tried in Sacramento Superior Court before Judge David DeAlba, who will decide the case without a jury.

The case is Ford Explorer Cases, JCCP Nos. 4266 & 4270. I am informed that in March, Judge DeAlba denied defense motions to decertify the class and for summary judgment on the UCL and CLRA claims, allowing the action to proceed to trial.

"Coupon-Based Settlements Get Tougher"

Tuesday's Daily Journal had an article by reporter Rebecca Beyer called "Coupon-Based Settlements Get Tougher" (subscription). The article discusses limitations on coupon settlements that appear to be judicially emerging in state courts on the heels of CAFA.

"'Pioneer' a Boost To Plaintiffs"

Yesterday's Daily Journal had another focus article (I believe this makes four) on Pioneer Electronics. The article, by Susan E. Abitanta and Robert J. Drexler Jr. of The Quisenberry Law Firm, begins:

To hear defense counsel spin it, the California Supreme Court's unanimous decision in Pioneer Electronics minimizes all-important privacy rights to meet trivial discovery ends, yet at the same time is so narrow that it makes no difference in existing privacy law. Pioneer Electronics USA Inc. v. Superior Court, 40 Cal.4th 360 (Jan. 25, 2007).

In a similar fashion, the same voices quickly downplayed Sav-On Drug Stores Inc v. Superior Court, 34 Cal.4th 319 (2004), as an inconsequential opinion offering little help to class plaintiffs.

When viewed dispassionately, however, Pioneer greatly aids plaintiffs in class actions, because it improves counsel's access to precertification information from putative class members - witnesses with knowledge of the claims. Pioneer addresses critical discovery issues of whether plaintiffs may receive contact information for putative class members and, if so, what steps should be taken to protect their privacy rights.

"Leveling the Playing Field"

On Friday, May 4, 2007, the Daily Journal had another focus article on Pioneer Electronics. The article, "Leveling the Playing Field" (subscription) by H. Scott Leviant of Arias, Ozzello & Gignac, LLP, responds to recent defense-oriented articles on the decision. An excerpt:

Based on the rapid appearance of conflicting analyses, the Supreme Court decision in Pioneer Electronics (USA) Inc. v. Superior Court (Olmstead), 40 Cal.4th 360 (2007), likely will have significant consequences in class actions. See, e.g., Gordon E. Bosserman, "Too Much Information?" Daily Journal, March 19, 2007; Steven B. Katz, "Class-Action Dissonance," Daily Journal, March 5, 2007; Kimberly Kralowec, "Thoughts on the Class-Action Aspects of Pioneer Electronics," UCL Practitioner (www.uclpractitioner.com /2007/01/thoughts_on_the.html), Jan. 25, 2007.

The articles by Bosserman and Katz, in particular, suggest, in their attempts to downplay the significance of Pioneer Electronics, that the defense bar is rightly concerned about the long-term consequences of this decision on class defendants.

....

Defense-oriented commentators have seized on the facts of Pioneer Electronics as a basis for advocating that its application should be limited. In particular, commentators have suggested that the basis for the Supreme Court's decision turns uniquely on the fact that the complaining consumers in Pioneer Electronics "consented" to the disclosure of their personal contact information by their act of complaining.

However, the strength of the Pioneer Electronics decision does not support this limited construction. Its significance is greater than the sum of its facts.

A fairer construction of Pioneer Electronics is that, through this decision, the Supreme Court has provided clarification and guidance about the propriety of access by plaintiffs to potential class members. In providing that guidance, the Supreme Court reaffirmed and strengthened important principles which hold that discovery of contact information for potential class members is presumptively appropriate.

"'Payday loan' firm sued by city attorney"

Yesterday's San Francisco Chronicle reported 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.

"Appeal can go forward in suit against Mervyn's"

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.

"With Tobacco Case, a Side of Prop 64"

Today's Recorder has this article (subscription) by Mike McKee on an amicus brief submitted last week in Tobacco by the Foundation for Taxpayer and Consumer Rights. An excerpt:

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.

The Foundation for Taxpayer and Consumer Rights has put up a non-subscription copy of the Recorder article on its website.

“‘Honda’ Discord”

Yesterday's Daily Journal had a focus article (subscription) by Jeffrey L. Fazio called “‘Honda’ Discord.” The article addresses Daugherty v. American Honda Motor Co., 144 Cal.App.4th 824 (2006), and responds to another recent Daily Journal article on the Daugherty case. An excerpt:

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.

"Judge Limits Hiring of Outside Law Firms"

Today's Daily Journal reports (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).

UPDATE: Today's Recorder also has an article on the decision ("Judge Stops Fee Pacts in Lead Paint Suit") (subscription) that expresses that very concern:

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.

"Limits on Liability"

Yesterday's Daily Journal had a focus article (subscription) on Daugherty v. American Honda Motor Co., 144 Cal.App.4th 824 (2006), in which review was recently denied.

"Too Much Information?"

Monday's Daily Journal had another article (subscription) on Pioneer Electronics (USA), Inc. v. Superior Court, ___ Cal.4th ___ (Jan. 25, 2007). The first paragraph of the (rather oddly-titled) article reads:

Has the California Supreme Court changed the balance between the right to discovery and privacy rights in class actions? The answer is probably "no," but reasonable minds may differ. The court has now spoken on the issue, but did it really change anything? And what about class actions that are not about consumer products, such as employment and health care actions? A very good argument could be made that the court's opinion does not address privacy issues in those areas.

The article goes on to argue that Pioneer Electronics should have no impact on non-consumer cases.

"Calif. High Court Grapples With Limitations Period in Meal-Pay Law"

This morning's Recorder has this report on the argument in Murphy v. Kenneth Cole Productions. My own report on the argument is in the post immediately below.

"Court Limits Union's Stand-In Role"

This morning's Recorder has an article (subscription) on the Amalgamated Transit decision discussed in the post immediately below:

In a blow to labor unions seeking to enforce [certain wage and hour] protections, the Second District Court of Appeal ruled Wednesday(.pdf) that employees cannot transfer the ability to sue in a representative capacity.

The time I had yesterday to review and analyze this decision was limited. One thing that's not entirely clear to me is whether this decision answers the question about Proposition 64's impact on the rules of associational standing. The decision did not use that terminology, and I'm not 100% sure if the union's argument was, in fact, based on associational standing principles. Perhaps someone else who has had more time to look at the opinion and is familiar with these principles would like to post a comment.

Media coverage of Pioneer Electronics

In today's Daily Journal, reporter Itir Yakar reports that "Ruling Benefits Discovery in Class Actions" (subscription). And at the blog Wage Law, Michael Walsh heralds "A Resounding Victory For Plaintiffs in Pioneer Electronics."

UPDATE: In this morning's San Francisco Chronicle, Bob Egelko reports that "Class-action suits get access to files." And the blog Cal Biz Lit reports that "California Supreme Court Rules on Fishing for Plaintiffs in Class Actions."

I wouldn't call it "fishing." Remember, in Pioneer, an injured class representative had already filed suit. The purpose of the discovery requests was to gain information about potential witnesses who had also experienced problems with the allegedly defective product and to gather evidence to support class certification. A secondary purpose would be to identify possible substitute class representatives in case the original one became disqualified for any reason. Class counsel owe a fiduciary duty to the class as a whole, and one way to fulfill that duty is to ensure that if the original class representative can no longer proceed, others are waiting in the wings so that the action as a whole is not scuttled. Cf. Shapell Industries, Inc. v. Superior Court, 132 Cal.App.4th 1101 (2005) (discussed here).

"Tobacco Case Pushes Limits on Class Suits"

This morning's Daily Journal reports (subscription) on the Supreme Court's grant of review in Tobacco:

The main question the court will decide in the newest case, lawyers for both sides said, is whether plaintiffs must show that each individual member of the class has been harmed, a nearly impossible burden. Much easier would be to prove that the named plaintiffs have suffered a loss and then later evaluate damages to the entire class.

"Court to reconsider huge tobacco lawsuit"

The Sacramento Bee reports here on yesterday's developments at the Supreme Court:

The Court of Appeal in San Diego ruled against the cigarette plaintiffs in September. The unanimous three-judge ruling said their suit was barred by Proposition 64, a 2004 initiative limiting private class actions under the unfair competition law to injured plaintiffs who have lost money or property as a result of alleged unfair competition.

That finding is the likely focus of the Supreme Court's review, which was ordered without explanation or dissent after the justices' weekly closed-door meeting on pending petitions.

Consumer Law and Policy Blog also noted the grant of review. Its post says that Public Citizen's Consumer Justice Project will be filing an amicus brief on the merits.

Illegal hiring suit does not plead UCL after all

In July, The Recorder reported on contemplated UCL actions against employers who hired illegal aliens in violation of the immigration laws, to the detriment of competing companies who hired lawful workers. My coverage of that is here. The Recorder's blog now reports that the first of the suits has been filed in Kern County Superior Court, and helpfully provides a copy of the complaint (PDF). It does not include a UCL claim after all.

"Tour bus companies settle price-fixing suit"

An article in this morning's San Francisco Chronicle reports on a recent settlement in one of the antitrust/UCL cases I am handling. This unpublished Court of Appeal opinion from last September provides more background about the maneuverings in the case, and here is my firm's web page on the case.