The UCL Practitioner

New Sixth Circuit class action objector opinion: In re Cardizem CD Antitrust Litigation

Last week, the Sixth Circuit issued an interesting opinion relating to class action objectors. In re Cardizem CD Antitrust Litigation, ___ F.3d ___ (6th Cir. Feb. 22, 2007). Specifically, the opinion relates to the costs that may (or may not) be charged to a class action objector whose objections were frivolous and served only to delay implementation of a beneficial settlement. [Via How Appealing.]

More thoughts on First American Title Ins. Co. v. Superior Court (Sjobring)

I was taking another look at First American Title Insurance Co. v. Superior Court (Sjobring), ___ Cal.App.4th ___ (Jan. 25, 2006) (see my original post here), and came across this paragraph:

California law is clear that a representative plaintiff must be a member of the class he seeks to represent. Indeed, Proposition 64 was enacted to prevent abuses of the class action system by “ ‘prohibit[ing] private attorneys from filing lawsuits for unfair competition where they have no client who has been injured in fact.’ ” (Californians for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 228.) We cannot permit attorneys to make an “end-run” around Proposition 64 by filing class actions in the name of private individuals who are not members of the classes they seek to represent and then using precertification discovery to obtain more appropriate plaintiffs.

Slip op. at 19 (emphasis added). This paragraph does not accurately capture the purpose of Proposition 64. Proposition 64 was not enacted "to prevent abuses of the class action system." Rather, it was enacted to prevent purported abuses of the "non-class" (to borrow a term from Will Stern) representative action system, which allowed unaffected plaintiffs to seek relief on behalf of the general public without class certification. The actions filed by the Trevor Law Group and others were not class actions; they were non-class, private attorney general actions. In fact, as the 1999 edition of Will's treatise noted, "these cases typically are not brought as class actions." William L. Stern, Unfair Business Practices and False Advertising: Bus. & Prof. Code §17200, para. 7:28 (Rutter Group 1999). Proposition 64 sought to prevent abuses of the non-class, representative action system by bringing UCL actions into the ambit of the class action system, a system of which such actions were not previously a part. Therefore, it is not correct to say that Proposition 64 was intended to prevent "abuses of the class action system."

If a plaintiff files a putative class action (as distinct from a pre-Prop. 64, non-class, representative action) knowing that he or she is not a putative class member, that really doesn't have anything to do with Proposition 64. Perhaps the plaintiff has abused the court system, or violated Code of Civil Procedure section 128.7, but Proposition 64 is not implicated. The First American Title case bears this out. In that case, the plaintiff pleaded causes of action for violation of the CLRA, breach of fiduciary duty, constructive fraud, and unjust enrichment, in addition to a UCL claim. Slip op. at 4. The Court of Appeal basically held that it was improper for the plaintiff to continue to pursue the class claims once he realized he was not a member of the class he sought to represent, and that such a plaintiff should not be allowed to conduct discovery to identify an appropriate class representative. Id. at 18-21, passim. That conclusion would obtain regardless of what causes of action the plaintiff was pursuing. In fact, the Court could simply delete the paragraph quoted above without altering the import of its holding. It should consider doing so, because the paragraph is misleading.

New Ninth Circuit CAFA decision: Serrano v. 180 Connect, Inc.

On Thursday, in Serrano v. 180 Connect, Inc., ___ F.3d ___ (9th Cir. Feb. 22, 2007), the Ninth Circuit held that the party seeking remand bears the burden of proving the "home state" and "local controvery" exceptions to CAFA removal jurisdiction. In so holding, the court discussed Lao v. Wickes Furniture Co., 455 F.Supp.2d 1045 (C.D. Cal. 2006), a decision that generated a lot of attention, including this Daily Journal article (subscription) (see also this blog post).

In Lao, District Judge Stephen G. Larsen held that CAFA's "home state" and "local controversy" exceptions are not "exceptions" at all but rather "integral component[s] of the removal provisions themselves." Lao, slip op. at 20. The Ninth Circuit disagreed:

We are not persuaded by Lao's reasoning because it is inconsistent with the statute. As noted above, §§ 1332(d)(4)(A) and (B) require federal courts – although they have jurisdiction under § 1332(d)(2) – to “decline to exercise jurisdiction” when the criteria set forth in those provisions are met. Subsections (d)(4)(A) and (B) are not part of the prima facie elements of jurisdiction ... but, instead, are exceptions to jurisdiction.

Serrano, slip op. at 13-14. The Ninth Circuit went on to conclude that the party seeking remand bears the burden of proving the "home state" and "local controversy" exceptions, just like any other exceptions to federal removal jurisdiction. Id. at 14-17.

"Blogs, Wikis and Podcasts, Oh My!"

On April 19, 2007 at noon, the Bar Association of San Francisco will present an MCLE program called "Blogs, Wikis and Podcasts, Oh My! Unravel New Media's Ethical Impact on Your Law Practice." Speakers include Denise Howell, author of one of the first California-based law blogs, Bag and Baggage.

Of related interest, read "Wikis for the Legal Profession" by bloggers Dennis Kennedy and Tom Mighell in this month's issue of Law Practice Today. [Via Law Blog Metrics]

UPDATE: An article called "A Brave New Wikiworld" in today's (02/24/07) Washington Post begins: "In the past year, Wikipedia, the online encyclopedia that 'anyone can edit,' has been cited four times as often as the Encyclopedia Britannica in judicial opinions, and the number is rapidly growing." The article concludes: "In just a few years, Wikipedia has become the most influential encyclopedia in the world, consulted by judges as well as those who cannot afford to buy books. If the past is prologue, we're seeing the tip of a very large iceberg." [Via How Appealing]

Supreme Court issues "grant and transfer" order in Mervyn's II

Yesterday, the Supreme Court issued a "grant and transfer" order in Californians for Disability Rights v. Mervyn's LLC, no. S148962 (docket), granting review in that proceeding for the second time (I'll call it "Mervyn's II"). The Court of Appeal (First Appellate District, Division Four) will be reconsidering whether Californians for Disability Rights should be permitted to amend its complaint to substitute a new, affected plaintiff under Branick v. Downey Savings & Loan Assn., 39 Cal.4th 235 (2006).

As everyone knows, the first grant of review resulted in the Supreme Court's retroactivity opinion, Californians for Disability Rights v. Mervyn's LLC, 39 Cal.4th 223 (2006) (Mervyn's I). On August 8, 2006, Californians for Disability Rights filed a petition for rehearing, asking the Supreme Court to clarify whether, under Branick, it would be permitted leave to seek to amend its complaint to substitute an affected plaintiff (as explained in this post). On August 30, 2006, the Supreme Court denied the petition for rehearing (as explained here).

The case then went back to the Court of Appeal (First Appellate District, Division Four). On November 13, 2006, that Court issued this brief order:

Appellant's request to grant leave to move for substitution of plaintiff in this court, or in the alternative for an order vacating the judgment and remanding the case to the trial court with leave to permit amendment, is denied. The appeal is dismissed for lack of standing.

As I observed in this post, "[t]he Court of Appeal's original opinion in Mervyn's came after the defendant moved to dismiss the appeal, arguing that Prop. 64 had stripped away the plaintiff/appellant's standing. It seems that the motion to dismiss has now, at long last, been granted." Because the appeal was from a judgment in favor of Mervyn's, the trial court would have lost jurisdiction long ago, and no further relief could be had from that court. Because the Court of Appeal refused to grant relief, Californians for Disability Rights was nearly out of options, even though no appellate court had ever reached the merits of its appeal.

On December 21, 2006, Californians for Disability Rights filed another petition for review with the Supreme Court (Mervyn's II). I have not seen the petition or other briefs, but I gather that the petition challenged the Court of Appeal's holding that amendment could not be sought in any court, in apparent contravention of Branick. Yesterday's "grant and transfer" order reads:

Request for judicial notice granted. Petition for review GRANTED. The above-entitled matter is transferred to the Court of Appeal, First Appellate District, Division Four, with directions to vacate its decision and to reconsider the cause in light of United Investors Life Insurance Co. v. Waddell & Reed, Inc. (2005) 125 Cal.App.4th, 1300 and Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235. (Cal. Rules of Court, rule 8.528(d).)

It strikes me as somewhat unusual that the Supreme Court would direct a Court of Appeal to reconsider its ruling in light of another Court of Appeal opinion. Such opinions are not binding on sister appellate courts. Perhaps it did so because the Court of Appeal did not prepare a written opinion explaining why it denied amendment.

It is also very interesting that the Supreme Court would cite United Investors in particular. As I explained in this post from January 2005, in that case, the Court of Appeal (Second Appellate District, Division Five) held that Prop. 64 did not strip away a plaintiff's appellate-level standing, even if it stripped away its trial-level standing: "Even if plaintiff has no authority to maintain its suit in superior court, it is sufficiently aggrieved by the dismissal of its complaint that it has standing to appeal under Code of Civil Procedure section 902." United Investors, 124 Cal.App.4th at 1305. I even mentioned on the blog back in January 2005 that in Mervyn's, the First District could have simply followed the lead of United Investors and denied the motion to dismiss, then addressed Prop. 64 retroactivity when it decided the merits of the appeal. I also observed in February 2005 that it was very interesting that the First District's opinion in Mervyn's did not even mention, much less follow, United Investors. If the First District follows United Investors now, I do not see how it could avoid either (a) holding that Branick requires that Californians for Disability Rights be allowed to seek leave to amend, whether at the trial or the appellate level, or (b) reaching the merits of CDR's appeal. What's more, it hardly seems fair that CDR should be trapped in the appellate twilight zone simply because Proposition 64 passed after its appeal was already pending.

In any event, it will be very interesting to see how this plays out. Congratulations to counsel for Californians for Disability Rights for effectively nagivating the appellate rules to achieve this result.

New attorneys' fees opinion: MBNA America Bank, N.A. v. Gorman

On December 19, 2006, the Appellate Department of the Santa Clara County Superior Court handed down its opinion in MBNA America Bank, N.A. v. Gorman, ___ Cal.App.4th Supp. ___ (Dec. 12, 2006). On January 2, 2007, the court ordered the opinion published, and on February 13, 2007, the opinion was posted online along with the rest of the published appellate opinions. Because it is an opinion of a Superior Court's appellate department, it will appear in the Supplement to the Official Reports. Published Superior Court Appellate Division opinions are relatively rare. It seems that the operators of the appellate courts' website had to add an "Appellate Division" category to its pulldown menu in order to accommodate this case.

In any event, in this case, MBNA America Bank commenced an arbitration proceeding against one of its card holders, Mr. Gorman. After obtaining an arbitration award, the bank filed a petition in the trial court to confirm the award. Mr. Gorman opposed the petition by arguing that “under Badie v. Bank of America (1998) 67 Cal.App.4th 779, ‘a mailed insert or “bill stuffer” cannot serve as a waiver of the procedural right of trial by jury or as a basis for enforcement of an ADR clause by a unilaterally issued change in the original agreement.’” The trial court found this argument persuasive, and denied the petition to confirm the arbitration award. Slip op. at 2. Mr. Gorman then moved for attorneys' fees and costs. The trial court granted the motion and awarded over $23,000. The bank appealed. Id.

The Appellate Division affirmed the attorneys' fees award, holding that the award was proper both under the attorneys' fees provision in the credit card contract (which Civil Code section 1717 made reciprocal) and under the private attorney general doctrine of Code of Civil Procedure section 1021.5. Slip op. at 3-8. In reaching the latter conclusion, the Appellate Division determined that Mr. Gorman vindicated "an important public right" by obtaining a ruling that "bill stuffer inserts were not an enforceable means of waiving the procedural right of trial by jury," thus protecting that constitutionally-protected right. Id. at 6. Mr. Gorman also conferred a "significant public benefit" because the order he obtained "should effectively deter [the bank] from [enforcing the arbitration agreement] at least with regard to customers similarly situated to [Mr. Gorman]." Id. at 7. Finally, the court determined that the burden on Mr. Gorman of challenging the arbitration provision was disproportionate to his individual stake in the outcome, because even though the bank said it planned to sue Mr. Gorman in court to recover the debt, Mr. Gorman incurred attorneys' fees that were three times as high as the debt amount. Id. at 7-8.

The Appellate Division also affirmed the amount of the fees award, finding it reasonable, and further held that Mr. Gorman would be entitled to recover his attorneys' fees incurred on appeal. Id. at 11. While challenges to unconscionable arbitration clauses come up quite often in class action litigation, this decision certainly provides an incentive for credit card holders and other consumers to challenge such clauses even in individual actions.

More on Grishman v. Philip Morris and the UCL's statute of limitations

In Grisham v. Philip Morris U.S.A., Inc., ___ Cal.4th ___ (Feb. 15, 2007), the plaintiffs sued several tobacco companies for physical and economic injuries resulting from their addiction to cigarettes and resulting health problems. One of the plaintiffs sought, among other theories of recovery, restitution under the UCL of money she paid to buy defendants’ cigarettes, arguing that the tobacco companies fraudulently concealed cigarettes’ addictive properties and unlawfully marketed cigarettes to minors. Slip op. at 5. (The complaint also included several other causes of action.) She argued that as a result of the defendants’ unlawful and fraudulent conduct, she was “compelled by the addiction to devote a steady stream of her income to the purchase of cigarettes.” Id. at 5, 20. The opinion describes this as a “novel” claim. Id. at 10.

The Supreme Court had to determine whether the face of the complaint demonstrated that the UCL claim was barred by the statute of limitations. Id. at 1-3, passim. For purposes of its analysis, it assumed that the “discovery rule” applied to UCL claims:

We assume for purposes of this discussion that the delayed discovery rule applies to unfair competition claims. We note that this point is currently not settled under California law (compare Snapp & Associates Ins. Services, Inc. v. Robertson (2002) 96 Cal.App.4th 884, 891 [discovery rule does not apply] with Massachusetts Mutual Life Ins. Co. v. Superior Court (2002) 97 Cal.App.4th 1282, 1295 [discovery rule “probably” applies]), and we do not address it.

Because the Court assumed the discovery rule applied, the rest of its discussion is almost academic. Until it is conclusively resolved one way or the other whether the discovery rule applies to UCL claims, the best practice for plaintiffs is to include delayed discovery allegations (if they are needed), and to allege the facts the Supreme Court says are required (if such facts exist). In this case, the Supreme Court held:

[A]lthough there is no reason to judicially create a special presumption of awareness that smoking cigarettes is addictive, a plaintiff who alleges that accrual of this cause of action is delayed because of delayed discovery of her addiction must plead facts explaining the delay.

Slip op. at 2. In other words:

[I]f a plaintiff’s cause of action depends upon delayed discovery of his or her addiction to tobacco in order to be timely, he or she must plead facts showing an inability to have discovered that addiction, such as reasonable reliance on tobacco company misrepresentations.

Id. at 16 (emphasis added.) The Court determined that the plaintiff’s UCL claim was time-barred because her complaint “admits actual or at least constructive knowledge that she was addicted to cigarettes long before filing the complaint.” Id. at 2; see also id. at 16-17. The Court concluded:

We … conclude from the face of the complaint that Grisham knew or should have known of her tobacco addiction and the economic injury it was causing her by at least 1993-1994, outside the limitations period. (Bus. & Prof. Code, § 17208 [unfair competition law claim must be brought within four years of accrual].)

Id. at 17.

The second half of the opinion discusses whether the plaintiff’s tort claim for physical ailments resulting from her cigarette addiction accrued at the same time her UCL claim did. Id. at 17-27. The Court held that it did not, and that the UCL claim is “a qualitatively different type of action.” Id. at 27. To quote from the opinion once more:

We need not resolve whether and under what circumstances two different physical injuries arising out of the same wrongdoing can give rise to two separate lawsuits, or whether the two injuries in the present case can be conceived of as invading two different primary rights. Here, what is alleged are two different types of injury, one serious physical injury or injuries, the other an economic injury, giving rise to two different types of action. The economic injury was a more or less immediate result of Grisham’s addiction to cigarettes, whereas her physical injuries occurred after many years of smoking. The addictiveness of a product is distinct from its capacity to cause serious physical injury, as demonstrated by the fact that other addictive products are not associated with the same harmful consequences. (See Juliano, Is Caffeine a Drug of Dependence? (Feb. 2001) Psychiatric Times [as of Feb. 15, 2007] [caffeine documented as commonly creating significant physical and psychological dependence].)

….

We therefore conclude that Grisham’s discovery of her alleged unfair competition cause of action and related causes of action for economic injury based on smoking addiction did not start the statute of limitations running on her tort causes of action based on later-discovered appreciable physical injury. Rather, these latter causes of action did not begin to accrue until the physical ailments themselves were, or reasonably should have been, discovered.

Slip op. at 24, 27.

Supreme Court addresses the UCL's statute of limitations: Grisham v. Philip Morris U.S.A., Inc.

In Grisham v. Philip Morris U.S.A., Inc., ___ Cal.4th ___ (Feb. 15, 2007), handed down yesterday, the Supreme Court addressed the UCL's four-year statute of limitations. The opinion, which I have not yet had time to read in detail, appears to discuss accrual of individual restitution claims under the UCL. I will try to put up more on the opinion next week, after I have read it more closely.

Supreme Court oral argument and conference calendar for 2007

The California Supreme Court just put up a very cool calendar (pdf) showing the Court's oral argument schedule (with locations), conference dates, and court holidays for 2007. This will be an extremely useful tool for anyone who is following pending Supreme Court cases and review petitions. I don't think they made such a calendar available in 2006, or if they did, I never saw it on their site. (Now, if the court would only publish an RSS feed for new opinions like the Eleventh Circuit does ....)

"Inside Blogging"

Monday's Recorder had an interesting article (subscription) on in-house lawyers who blog. The article begins:

Although online blogging has gone mainstream in some professions, there's one group of people mostly absent from the blogosphere: the in-house bar. That said, a few in-house blogs do exist, and their numbers are growing steadily. They range from company-sanctioned sites to anonymous blogs hosted by services such as TypePad and BlogSpot.

What the article should have done, but did not, was provide active hyperlinks to the in-house blogs mentioned. If those had been provided, I would have linked to them here. I don't have time to look up all the links myself on Google. In this day and age, in an article about blogging, the Recorder could have done better.

Federal numerosity decision ("a class of one"): McGaughey v. Treistman

The "numerosity" requirement of class certification it is almost always satisfied, so the case law very rarely discusses it. In McGaughey v. Treistman, 2007 WL 24935 (S.D.N.Y. Jan. 4, 2007), however, the court denied class certification of "a class of one" for failure to satisfy the numerosity requirement:

Plaintiff here appears to be a potential class of one. Although Plaintiff has been given the opportunity to conduct discovery regarding class certification – as well as an extension of discovery on that issue, at Plaintiff’s request – Plaintiff has provided no evidence that either Defendant or NY Essex has ever sent more than one fax arguably in violation of the [Telephone Consumer Protection Act, 47 U.S.C. §§ 227 et seq.], and that one to this Plaintiff. See Weiss v. Fein, Such, Kahn & Shepard, P.C., 2002 U.S. Dist. LEXIS 4783, at *5-6 (S.D.N.Y. 2002) (denying class certification on grounds of numerosity, stating, “there is nothing in the record to indicate that anyone besides plaintiff received a letter from defendants containing the allegedly violative language.”). Plaintiff has failed to even submit a Statement of Facts pursuant to Local Rule 56.1 rebutting Defendant’s assertion that one, and only one, fax to one and only one plaintiff is at issue in this litigation.

Plaintiff has failed to meet his burden to satisfy the Rule 23(a) requirement of numerosity. Because Plaintiff has failed to meet this burden, it is unnecessary for me to consider the remaining Rule 23 requirements.

Slip op. at 4 (footnotes omitted). The court went on to dismiss the action for lack of federal jurisdiction, the only basis for which was either CAFA or the general federal diversity statute. Once it was clear that the case was not a class action, and that the $75,000 amount-in-controversy requirement could not be met, neither CAFA nor the general diversity statute provided subject matter jurisdiction, compelling dismissal of the action. Id. at 5. [Via Federal Civil Practice Bulletin.]

More thoughts on the Fireside Bank oral argument

On January 30, I posted a summary of the Fireside Bank oral argument, which a reader who attended the argument kindly provided. Another reader who also attended the argument subsequently emailed me with some more thoughts about the argument:

I was interested in seeing the observations one of your readers sent about oral argument before the Supreme Court last week. I think the reader generally got the gist of both the argument and the Court’s questions, but I hope that reader’s prediction about the outcome is wrong.

Your reader missed one central [fact about the underlying case]. The trial court ruled on [the plaintiff's] motion for judgment on the pleadings (MJOP)—which the trial court said would be off-calendar but was decided anyway—at the same time it granted [the plaintiff's] motion for class certification. The MJOP ruling itself was a mistake which no one expected. That ruling was what Fireside claimed was the impermissible one-way intervention.

But [the plaintiff's] MJOP only tested the validity of Fireside’s collection complaint against [him]. The validity of the class claims—[the plaintiff's] cross-complaint against Fireside—were never litigated or determined. Thus, the [plaintiff's] central [argument was] that the “rule” against one-way intervention only applies when the class claims are decided. Put another way, the rule only comes into play when the defendant’s liability is determined. Here, [the plaintiff's] liability to Fireside was determined.

.... I was really puzzled by the Supreme Court’s questions (or lack thereof). No one questioned Fireside’s counsel about its position that “the merits” of anything can’t be decided until after the class is certified; no one pointed out that the “rule” now applies only to the merits of class claims, not to the merits of any issue in the case, including the cross-complaint; no one asked about the conflict that Civil Code § 1781(c) seems to present in allowing class certification and “no merits” rulings in CLRA cases to be decided independent of each other or at the same time. Just a few questions about whether Fireside thought the case should be remanded to a different trial judge and why did the trial judge rule on the MJOP anyway??

After thinking about this ... , I conclude that the Court had already decided the case and didn’t feel like asking too many questions after its very active questioning in Balboa Island Village Inn v. Lemen, the first case argued.

Your point that defendants often agree to have the merits of class claims decided before class certification is well taken, and supported by authority. Here, you are correct that Fireside didn’t waive the “rule.” Rather, it asserted the rule at the same time it was withholding discovery necessary for the plaintiff to determine whether class certification was appropriate. (As the Ct of Appeal observed, delay is often the main defense tactic.) If the Supreme Court reverses, it will have to expand the “rule.” [Perhaps] the Court will note that the factual grounds of this case never presented an opportunity for one-way intervention; otherwise, in my opinion, defendants are likely to seize on any merits ruling in a case as critical to the class claims, and insist that the class be certified and notified before any merits issues can be decided.

This is quite interesting and adds another dimension to the argument. Many thanks again to the reader who took the trouble to write and share these thoughts.

New class action decision: LaLiberte v. Pacific Mercantile Bank

Amid the excitement over Pioneer Electronics, another new case decided on the same day, LaLiberte v. Pacific Mercantile Bank, ___ Cal.App.4th ___ (Jan. 25, 2007), was almost overlooked. In LaLiberte, the Court of Appeal (Fourth Appellate District, Division Three) addressed what it means for a proposed class representative to be a member of the class he or she seeks to represent.

In LaLiberte, the named plaintiffs filed an individual action in May 2003. In November 2003, they filed an amended complaint with class action allegations. The defendant pointed out, by demurrer, that the cause of action (for statutory damages under TILA) carried a one-year statute of limitations that limits the size of the class. The named plaintiffs amended their complaint again, and sought to represent a class of borrowers who obtained their loans in November 2002 or later. The defendant renewed its demurrer, arguing that the named plaintiffs were not members of the class they sought to represent, because they had not obtained their loans during the class period of November 2002 or later, but in April 2002. The named plaintiffs responded that they could amend the class definition to include themselves and all borrowers who obtained their loans in November 2002 or later. The trial court held this would not cure the problem: "Because the named Plaintiffs were never a member of the class they purport to represent, they have no standing to sue on its behalf." The trial court sustained the demurrer to the class allegations without leave to amend. Slip op. at 2-5.

The plaintiffs appealed, and the Court of Appeal reversed, holding that leave to amend should have been granted and that the plaintiffs were, in fact, adequate to represent the proposed class. Citing La Sala v. American Sav. & Loan Assn., 5 Cal.3d 864 (1971), the Court of Appeal held that "plaintiffs' nonmembership in the class defined by the complaint stems not from a lack of a community of interest between plaintiffs and the class, but from arbitrary and inadvertent limitation of the class" created through operation of the statute of limitations. Slip op. at 6. The Court of Appeal determined that the named plaintiffs "have standing to bring individual claims mirroring those of the class members," that the "dates on which they obtained their loans do not in any way affect the community of interest alleged between the named plaintiffs and class members," and that any differences in situation resulting from the dates of the named plaintiffs' loans are "of no significance." Id. at 6, 8.

The defendant complained that the named plaintiffs had "nothing in common with other class members" and that a person should not be allowed "to become a class representative by simply adding his or her name to the class definition." Id. at 7. The Court of Appeal thought that argument stemmed from a misunderstanding of the "community of interest" concept:

True, one may become a class member by adding his or her name to the class. Doing so, however, does not ipso facto make that person an adequate class representative. The named plaintiffs' adequacy as class representatives in the present case derives from the community of interest in the law and facts involved in the case, not merely because they add[ed] themselves to the class definition.

Id. (emphasis added). (In the second half of the opinion, the Court of Appeal held that TILA recission claims cannot be asserted on a classwide basis as a matter of law. Id. at 8-12.)

In sum, LaLiberte reconfirms that the community of interest requirement of Code of Civil Procedure section 382 does not require strict and inflexible identity between the plaintiffs' claims and the letter of the class definition. The Court of Appeal's analytical approach to this issue provides a stark contrast to the approach taken in First American Title Ins. Co. v. Superior Court (Sjobring), ___ Cal.App.4th ___ (Jan. 25, 2007), also decided on the same day as Pioneer Electronics (and briefly discussed in this post).

"Rookie Mistakes" in brief writing

This month's California Lawyer has an article (subscription) by legal writing specialist Clyde Leland on brief-writing mistakes commonly made by new attorneys. The article concludes: "The good news is that lawyers' writing gets better with practice. The key is to remember your audience and your goals: Write so that readers too busy to read everything you wrote will understand what the problem is and how the law applies to address that problem." I had the pleasure of working with Clyde Leland once. In 1999, I helped him present an MCLE program called "Persuasive Statements of Fact" for the Bar Association of San Francisco, Appellate Practice Section. In fact, you can still order the video of that program from BASF.

And while we're on the subject of brief writing, last Monday's Daily Journal had a focus column, "Once More Into the Brief" (subscription) by Robert D. "Bo" Links. A snippet: "The foremost principle of writing briefs is right in front of you: be brief. .... To be sure, a significant case will probably require a significant effort. But to be effective, every advocate should follow the command that applies to every speaker: be brilliant, be brief, and be seated."

Supreme Court denies review in Daugherty and Alvarez

Yesterday, the Supreme Court denied review and depublication in both Daugherty and Alvarez. Daugherty is the CLRA/UCL case involving liability for non-disclosures; my original post on Daugherty is here. Alvarez is the class certification/res judicata case; prior Alvarez posts are here and here.

Two unpublished opinions on "no-class-action" arbitration clauses: Firchow v. Citibank and In re Cingular Cases

Two recent unpublished opinions address "no-class-action" arbitration clauses:

• Firchow v. Citibank (South Dakota), N.A. (January 10, 2007), no. B187081 (Second Appellate District, Division Seven). In Firchow, the Court of Appeal affirmed the trial court's holding that the defendant's "no class action" arbitration clause was unconscionable under Discover Bank.

• In re Cingular Cases (January 16, 2007), no. D047603 (Fourth Appellate District, Division One). In this case, the Court of Appeal also affirmed the trial court's holding that the defendant's "no class action" arbitration clause was unconscionable under Discover Bank. The court also held that the Federal Arbitration Act (9 U.S.C. section 2) did not preempt California law concerning the interpretation of arbitration clauses and whether they are unconscionable or not. [I learned about the Cingular case at the MCLE program "Class Action Hurdles from the Plaintiff's Perspective," which was excellent.]

Supreme Court denies review in Aguiar v. Cintas Corp.

Two weeks ago today, the Supreme Court denied a petition for review challenging the Court of Appeal's holding in Aguiar v. Cintas Corp. No. 2, ___ Cal.App.4th ___ (Sept. 27, 2006). In that case, the Court of Appeal reversed an order denying class certification, and in the process, offered more guidance on the concept of subclassing than in any prior published opinion. My original posts on Aguiar are here and here. Also, the blog Wage Law mentioned the denial of review in an interesting post.

BREAKING NEWS: Ninth Circuit affirms class certification in Dukes v. Wal-Mart gender discrimination case

This morning, the Ninth Circuit handed down its opinion in Dukes v. Wal-Mart, Inc., ___ F.3d ___ (9th Cir. Feb. 6, 2007). The court affirmed the order granting class certification of plaintiffs' gender discrimination claims under Title VII, with one judge dissenting. [Via How Appealing.]

New pre-certification discovery case: First American Title v. Superior Court (Sjobring)

On the same day that the Supreme Court decided Pioneer Electronics, the Court of Appeal (Second Appellate District, Division Three) handed down First American Title Ins. Co. v. Superior Court (Sjobring), ___ Cal.App.4th ___ (Jan. 25, 2007), which relates to pre-certification discovery in a somewhat different context:

If a class action representative plaintiff is not – and never was – a member of the class he purports to represent, may he obtain precertification discovery from the defendants for the express purpose of identifying a member of the class who is willing to become a named plaintiff and pursue the action? As the current plaintiff is, in effect, a stranger to the action, we conclude the grant of such discovery would sanction an abuse of the class action procedure. We therefore conclude the trial court’s order granting the discovery was an abuse of discretion, and grant the defendants’ petition for writ relief.

Slip op. at 2.

New CLRA decision: Berry v. American Express Publishing

In Berry v. American Express Publishing, Inc., ___ Cal.App.4th ___ (Jan. 31, 2007), the Court of Appeal (Fourth Appellate District, Division Three) held: "After considering CLRA’s text and legislative history, we conclude the extension of credit, such as issuing a credit card, separate and apart from the sale or lease of any specific goods or services, does not fall within the scope of the act." Slip op. at 2.

Interestingly, the opinion does not cite McKell v. Washington Mutual, Inc., 142 Cal.App.4th 1457 (2006), from September, in which the Court of Appeal (Second Appellate District, Division One) held that a transaction resulting in the sale of real property does not fall within the scope of the CLRA because real property is not a "good or service."

Nor does the opinion cite another decision that came to my attention last week as a result of my membership in Consumer Attorneys of California: Knox v. Ameriquest Mortgage Co., 2005 WL 1910927 (N.D. Cal. 2005). Knox held that "California courts generally find financial transactions to be subject to the CLRA." Id. at *4 (citing Corbett v. Hayward Dodge, Inc., 119 Cal.App.4th 915 (2004); Kagan v. Gibraltar Savings and Loan Ass'n, 35 Cal.3d 582 (1984)).

UCL "unlawful" prong hypothetical

A reader writes in with the following question:

Can a California plaintiff assert an action against a California defendant under the UCL based on a violation of another state's laws? According to the 17200 Rutter Group treatise, this is an open question. I believe it would be possible in the proper circumstances. But, I would be interested in seeing if there are any trial court decisions around the state that opine on this issue.

What do you think?