Yesterday, the Supreme Court denied review and depublication in the Troyk case (docket). Justices Baxter, Chin and Corrigan voted to grant review. An article (subscription) by Mike McKee in yesterday's Recorder discussed this case in more detail.
In an article in this morning's Recorder, Mike McKee writes: "Big Tobacco and other major businesses took a hit Monday when the California Supreme Court ruled that class actions over alleged fraud can go forward, even if it's impossible to tell whether every plaintiff was harmed by deceptive ads."
Consumer class-action lawsuits are alive and well in California after a 4-3 decision Monday from the state Supreme Court that limited the reach of a 2005 voter initiative targeting frivolous lawsuits.
The ruling was a big win for plaintiff's attorneys, who feared the court would make it nearly impossible for them to use the state's unfair competition law to hold businesses responsible for false advertising claims.
The California Supreme Court decided 4-3 today that consumers can file class-action lawsuits against the tobacco industry and other businesses under a law voters limited in 2004, reversing a trend in the lower courts.
The decision, written by Justice Carlos R. Moreno, revived a class-action lawsuit against the tobacco industry that lower courts dismissed. ....
The ruling was the state high court’s most significant interpretation of Proposition 64, the 2004 initiative that limited suits under a major consumer law to people who claimed they had lost money or property as a result of a company’s wrongdoing.
By interpreting this so-called “standing” requirement flexibly, the court cleared the way for consumer class actions that many lower courts have been throwing out.
The Daily Journal has an article this morning on yesterday's argument in Miller v. Bank of America. The article begins:
While hearing a giant class action lawsuit against Bank of America Corp. over how it charges bank fees, several California Supreme Court justices suggested Tuesday that upholding a $1 billion dollar verdict against the bank could do more harm than good to the elderly and disabled customers bringing the suit.
Today's Recorderreports that yesterday, the EEOC filed an amicus brief supporting class certification in Dukes v. Wal-Mart. The case is still scheduled for argument before the Ninth Circuit en banc panel next Tuesday, March 24.
This article from Wednesday's Recorder provides an example of a federal case in which the court granted a defense motion to preemptively deny class certification.
In Picus v. Wal-Mart Stores, Inc., No. 2:07-CV-00682 (order filed 03/16/09), a district judge in Nevada construed the Nevada Deceptive Trade Practices Act ("NDTPA"), and in denying certification, distinguished Wiener v. Dannon Co., ___ F.R.D. ___, 2009 WL 383650 (C.D. Cal. Jan. 30, 2009) (discussed in this blog post), in which a district judge in California granted class certification of UCL and CLRA claims based on alleged misrepresentations about the defendants' products. The Nevada judge concluded that the Nevada Supreme Court would not adopt substantive elements of California law (specifically, presumed reliance based on materiality of the misrepresentation or nondisclosure) when construing the NDTPA. Slip op. at 11-12.
The opinion also asserts that California law "require[s] individual proof of reliance and causation." Id. at 13. That's not correct. Even if proof of reliance and/or causation is required under the UCL or CLRA, that proof is not necessarily, categorically, individualized, as the court seemed to conclude. The opinion itself cites California case law (namely, the Supreme Court's decision in Vasquez) holding that reliance can sometimes be presumed on a classwide basis, even in cases involving common-law fraud.
It's not clear why this decision warranted such extraordinary coverage in the Recorder.
This morning's Daily Journal has an interesting article on the oral arguments this week in Tobacco and Fairbanks. The article tells us why Chief Justice George will not hear Tobacco:
And while Chief Justice Ronald M. George is usually the swing vote in such close cases and a fair indicator of which way the decision will turn, he'll be sitting out Tuesday's oral argument and the decision because one of the defense firms in the case, Loeb & Loeb in Los Angeles, handles his estate planning.
His replacement, Justice Eileen C. Moore of the 4th District Court of Appeal, graduated from the conservative Pepperdine University School of Law and was honored a few years back by the Consumer Attorneys Association of Los Angeles.
The article also mentions the Supreme Court's opinion in Meyer and the recently-filed rehearing petition.
The issue also includes a new feature which I hope will repeat in each issue, "Class Action Appellate Report" by H. Scott Leviant, author of The Complex Litigator. The entire issue will soon be available online at CAOC's website to CAOC members only. Plaintiffs' attorneys, click here to join CAOC.
(3) Grant of Rehearing En Banc. When the court votes to rehear a matter en banc, the Chief Judge will enter an order so indicating. The vote tally is not communicated to the parties. The three-judge panel opinion shall not be cited as precedent by or to this court or any district court of the Ninth Circuit, except to the extent adopted by the en banc court.
After the en banc court is chosen, the judges on the panel decide whether there will be oral argument or additional briefing. If there is to be oral argument, the Chief Judge (or the next senior active judge as the case may be) will enter an order designating the date, time and place of argument. If no oral argument is to be heard, the Chief Judge will designate a date, time, and place for a conference of the en banc court. That date will ordinarily be the submission date of the case. If any issues have been isolated for specific attention, the order may also set forth those issues and additional briefing may be ordered. The opinion of the three-judge panel shall not be cited as precedent by or to this court or any district court of the Ninth Circuit, except to the extent adopted by the en banc court.
In this case, en banc rehearing was granted under Circuit Rule 35-3, which provides for a "limited en banc" court consisting of the Chief Judge plus 10 other judges selected at random by the clerk. The random selection is to take place on "the working day after" en banc rehearing is granted (here, Tuesday, February 17). The Ninth Circuit has 27 active judges, so, apparently, this means that the limited en banc panel might not include any of the members of the original three-judge panel (Judges Pregerson, Kleinfeld (who dissented), and Hawkins). It might also include judges who voted to deny the petition for en banc rehearing (which explains why the vote tally is not disclosed).
It should take at least a few weeks for the newly-chosen 11-judge en banc panel to decide whether to order oral argument or further briefing. Circuit Rule 35-3 also authorizes, "[i]n appropriate cases," full-court rehearing after limited en banc rehearing. Wal-Mart is likely to seek full-court rehearing, and/or U.S. Supreme Court review, if the class certification order is again affirmed, so this case will probably be with us for a long time to come.
You may have read news reports (such as this one from Law.com) about the false advertising case recently filed in the Northern District of California against Coca-Cola Co. for its VitaminWater product. Here is a copy of the complaint. It contains straight UCL, FAL, and CLRA claims on behalf a putative class of California residents who bought VitaminWater since January 15, 2005.
The UCL's three prongs (unlawful, unfair and fraudulent) are each pleaded as a separate cause of action (good). The "unlawful" prong claim is predicated on alleged violations of certain Health & Safety Code provisions (as well as the CLRA).
The FAL claim is also divided into separate causes of action, one for violation of the "misleading prong" and one for violation of the "untrue prong." I have never heard that terminology before, but it seems to work. The FAL prohibits advertising that is "untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading." Bus. & Prof. Code § 17500 (emphasis added).
More than four years ago, California voters passed Proposition 64, limiting suits filed under the state's unfair competition law to individuals actually injured by someone else's illegal acts.
On Thursday, the California Supreme Court took a similar step by restricting suits filed under the state's Consumer Legal Remedies Act to plaintiffs who have suffered real damage because of an allegedly unlawful practice.
The Complex Litigator, however, points out in this post that the Supreme Court in Meyer took pains to emphasize the difference between "any damage," as used in the CLRA, and "actual damage," and to explain that "the breadth of the phrase 'any damage' indicates a category that includes, but is greater than, 'actual damages." Meyer, slip op. at 5 (emphasis added). In other words, the CLRA's standing requirement remains less strict than the UCL's. As Monique Olivier told The Recorder, "The ruling ... [is] no 'death knell' for the CLRA."
Agreed. Most plaintiffs who bring CLRA cases have suffered "any damage" as interpreted in Meyer and won't have an issue with standing. Still, as I told The Daily Journal, "it's a significant problem when companies insert unconscionable provisions into their contracts and apparently no one can sue to stop them from doing that." Laura Ernde, "Justices Restrict Fine-Print Lawsuits," The Daily Journal (Jan. 30, 2009). Consumers could very well be deterred from attempting to enforce rights that, because of an unconscionable contract term, they thought they had given up.
Today's Legal Intelligencerreports on a Third Circuit class certification decision handed down yesterday, In re Hydrogen Peroxide Antitrust Litigation, ___ F.3d ___ (3d Cir. Dec. 30, 2008). Suffice it to say that the standards for certification enunciated in this decision do not parallel California law or even Ninth Circuit standards.
I'm looking forward to resuming more regular blogging after the new year. I have a whole stack of material in my blog pile, and hope to have a post next week with more thoughts on the Troyk decision. Meanwhile, I hope everyone's holidays were merry, and Happy New Year!
The September/October 2008 issue of CAOC Forum had an article by attorney David Arbogast, "Common Issues that Arise in Class Action Settlements." CAOC members may access the article at this members-only link. (Incidentally, a special forthcoming issue of Forum will be devoted to articles on class action topics. If you are a plaintiff-side attorney, now might be a good time to join CAOC.)
Attorney Michael Rubin of Altshuler Berzon in San Francisco ... said the opinion eliminates any potential confusion about when attorneys can collect fees.
"This ruling is consistent with the California Supreme Court's pragmatic, centrist approach to judicial decision-making," Rubin said. "It ended up with a result that is fair to all parties in this and future cases."
The attorney general's office had also weighed in on the state's side. The office was in the unique position of wanting to see public-interest lawyers get compensated for their work but also having to defend the state against such litigation.
Although the court did not adopt the rule the state sought, Supervising Attorney General Ed Weil said the new guidelines are an improvement.
"As a practical matter, if you're an attorney out there deciding what to do, the only prudent course is an effort to resolve the matter before filing," he said. "If you don't, the ruling may come back to haunt you."
Yesterday's Daily Journal had a Focus column (subscription) on the Prop. 64-related cases now pending before the Supreme Court:
Big business interests are now attempting to convert a shield, which protects against extortionate lawsuits, into a sword to eliminate valid ones. To do so, they seek to expand Proposition 64 to make it a tool to suppress valid consumer class actions brought under the Unfair Competition Law and False Advertising Law. They contend that Proposition 64 bars these class actions unless all potential class members show reliance on the deceptive act at issue. Consumer lawyers counter that only the named plaintiffs (the class representatives) need to do this.
The lower courts are divided, which has led to a high-stakes showdown soon to be decided by the state Supreme Court.
This reminded me of an article in the September 2008 issue of Los Angeles Lawyer, which had what can only be described as a gross error (since corrected in the online version). The article cited the Tobacco preemption decision (In re Tobacco II Cases, 41 Cal.4th 1257 (2007)), but completely overlooked the fact that an entirely separate case of the same name remains pending before the Supreme Court. (Thanks to Lisa Perrochet for bringing this article, and its error, to my attention.)
No activity has occurred in In re Tobacco since August, when Justice Kennard was appointed Acting Chief Justice for the case, in place of Chief Justice George, who has been recused. The briefing was completed in December 2007.
Yesterday's Daily Journal had an article (subscription) on the Court of Appeal's decision last Friday to publish its opinion in Kullar v. Foot Locker Retail, Inc., ___ Cal.App.4th ___ (Oct. 14, 2008; pub. ord. Nov. 7, 2008). In Kullar, the Court of Appeal reversed an order granting final approval of a class action settlement, holding that the record did not reflect whether the trial court considered evidence of the potential value of the claims being compromised.
Here is my blog post on Kullar, and here is an excerpt from the Daily Journal piece, which reports that a depublication request is anticipated:
Class counsel Scott E. Cole of Scott Cole & Associates in Oakland said the next version of the settlement will contain more information. He also said he is seeking depublication of the opinion because it does not create or modify law.
"Notoriety in my cases is something that attorneys generally want, but I'm a little surprised that the court thought this was worthy of going into the books ... just because it's such a fact-intensive situation that we had," Cole said.
Mediator Mariam Zadeh of First Mediation Corp. in Encino said the case could change the way parties treat class action mediations, which sometimes happen early in the cases before discovery has been conducted on all of the claims.
"What you might end up seeing is parties coming to mediation in class action suits a little bit further down the discovery road," she said.
A story (subscription) in yesterday's Recorder reported that "[a] federal judge has certified a class of all current, prospective and future female students at UC-Davis as part of a suit alleging the university provides unequal access between genders to varsity sports."
Here is a copy of the order granting class certification in Brust v. Regents of the University of California, E.D. Cal. case no. 2:07-cv-01488-FCD-EFB. Claims certified for class treatment include violation of Title IX and California's Unruh Civil Rights Act. A copy of the complaint is available at this link.
The July/August 2008 issue of CAOC's Forum magazine just arrived in the mail. It has my latest article, "UCL Standing to Seek Injunctive Relief: Is a Restitutionary Loss Required?" The article addresses two opposing federal decisions on that topic, Walker v. USAA Casualty Insurance Co. 474 F.Supp.2d 1168 (E.D. Cal. Feb. 12, 2007) and G&C Auto Body Inc. v. Geico General Insurance Co., 2007 WL 4350907 (N.D. Cal. Dec. 12, 2007). Focusing on the language of the UCL and relevant California decisional law, the article explains why a loss amounting to "damages" is sufficient to confer UCL standing, regardless of whether the loss also constitutes recoverable "restitution."
The article will soon be available at CAOC's website to CAOC members only. Other plaintiff-side attorneys, government lawyers, judges, research attorneys, etc., should email me at firstname.lastname@example.org if you would like a copy of the article.
Today's Daily Journal has an article, "L.A. Targets Insurers With Unlikely Law" (subscription) reporting on a group of UCL actions recently filed by the City Attorney of Los Angeles against a number of insurers for cancelling their customers' health insurance policies after a signficant claim is made:
Criminal probes, injunctions and misdemeanor charges - if these are the bread and butter of any big city prosecutor looking for career-propelling headlines, Los Angeles City Attorney Rocky Delgadillo has certainly gobbled his fair share.
But behind the scenes, the Los Angeles city attorney's office has increasingly replaced flashier criminal charges with less common civil litigation aimed at nailing companies for unfair business practices.
Nowhere has this unusual legal strategy played a more crucial role than in Delgadillo's widespread investigation of the health insurance industry. Recent lawsuits against the state's top insurers all rely on a broad and controversial law that gives prosecutors statewide powers to sue companies for perceived abuses, exposing them to hundreds of millions of dollars in penalties.
Invoking the lesser known statute instead of criminal charges holds appeal because a wide range of sanctions can be sought in cases which might not meet the high burden of proof required in criminal complaints, according to prosecutors.
On July 10, 2008, the Santa Ynez Valley Journal had an opinion piece by attorney Rosslyn (Beth) Hummer on Prop. 64 and In re Tobacco II, now pending before the California Supreme Court. After examining the issues on review in Tobacco, the piece explains what the outcome could mean for the average consumer:
But why should you care that the streamlined “non-class class” procedures of Section 17200 have changed? You should care because a brake on unscrupulous business tactics is gone. People wronged in small ways will have a much harder time getting relief. It just does not make sense to start up expensive litigation when your damages are the cost of an extra bottle of nail polish.
So while the frivolous lawsuit days may be behind us, the “fix” of this problem now means that you cannot easily get your money back if you bought a silk purse only to discover it was a sow’s ear, or if you sat down for your manicure only to learn just before the polish was applied that the polish is not included. Californians will have to wait to see how the Supreme Court rules. At this point it looks likely that streamlined unfair competition claims are no more in California.
This morning's Recorder has an article on the Court of Appeal's opinion, handed down yesterday, in Brinker Restaurant Corp. v. Superior Court (Hohnbaum), ___ Cal.App.4th ___ (July 22, 2008). The Brinker court reversed an order granting class certification of meal period (and other) claims after concluding, contrary to Cicairos v. Summit Logistics, Inc., 133 Cal.App.4th 949 (2005), that "meal breaks need only be 'made available' and not 'ensured.'" Slip op. at 4.
I was co-counsel for the employees in the appellate-level proceedings, and my normal policy is not to blog about my own cases (with an occasional exception if they are already getting outside press or blogosphere coverage). I am putting up this post only because I must clarify a comment that was attributed to me in the Recorder article:
[Kralowec] also said the 4th District's decision creates an appellate split that likely will ensure Supreme Court review. In Cicairos v. Summit Logistics Inc., 133 Cal.App.4th 949, Sacramento's 3rd District ruled in 2005 that employers have an affirmative duty to ensure that employees receive meal periods.
I do believe that the new Brinker decision creates a split in authority with Cicairos, and I also believe that the Supreme Court often grants review to resolve issues that are the subject of a split among the lower courts, particularly when two Court of Appeal panels have handed down conflicting published opinions. However, I did not say that I thought that in this specific case, the split between Brinker and Cicairos "likely will ensure Supreme Court review." I would never say something so presumptuous. It would have been more accurate to say that Brinker creates an appellate split, that such splits often lead to Supreme Court review, that Brinker is a particularly appropriate case for review, and that I certainly hope that the Supreme Court decides to grant review.
Brinker disagrees with many prior opinions, most specifically, Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, 962-963, which it discussed at length, and Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193, which it did not even mention, and more generally, a string of cases which promote class actions as an efficient way to resolve wage and hour disputes and a string of cases which discuss the remedial nature of wage and hour laws in California. With Brinker and Cicairos presenting such starkly contrasting views on California law, with Brinker presenting so many novel ideas regarding wage and hour claims and class actions, and with so many U.S. District Court cases disagreeing with Cicairos and each other, this case looks like an outstanding candidate for Supreme Court review.
Information Week had an article last Tuesday on a new UCL action that my firm recently filed against Google. The action challenges certain aspects of Google's AdWords program, specifically, the practice of charging advertisers for ads placed on parked domain and error pages. A copy of the complaint is available at the Courthouse News website. Legal Blog Watch and The Complex Litigator both have posts on the new case, and last Friday's print issue of the Recorder reprinted the Legal Blog Watch post verbatim ("Lawyer Sues Google Over Ad Placement").
If you are a Google AdWords advertiser interested in exploring the possibility of becoming involved in the case, please feel free to drop me a line (email@example.com) or give me a call (415-788-4220).