The UCL Practitioner

Recent UCL "injury in fact" decision: Peterson v. Cellco Partnership

In Peterson v. Cellco Partnership, ___ Cal.App.4th ___ (Jun. 26, 2008; pub. ord. Jul. 21, 2008), the Court of Appeal (Fourth Appellate District, Division Three) held that the trial court properly sustained the defendant's demurrer without leave to amend. It determined that the plaintiff had not alleged sufficient facts to establish that he suffered "injury in fact" within the meaning of the UCL's standing provisions.

New class action attorneys' fees decision: In re Lugo

Here is an interesting case. In In re Lugo, 164 Cal.App.4th 1522 (Jul. 21, 2008), the class action device was used in the context of a habeas corpus proceeding to compel the Board of Parole Hearings to provide timely parole consideration hearings as required by the Penal Code. The class was defined as "all prisoners serving indeterminate terms of life with the possibility of parole who have approached or exceeded their minimum eligible parole dates without receiving their parole hearings within the time required" by law. The trial court issued a remedial injunction requiring the Board to take various steps to come into compliance with the law, then awarded attorneys' fees to the prisoners' counsel, including a 1.5 multiplier. Slip op. at 3-5.

The Court of Appeal (First Appellate District, Division Three) reversed certain aspects of the remedial injunction, but affirmed the attorneys' fees award, holding that the 1.5 multiplier (a figure that is "not large by comparison to those typically seen in reported cases") was not an abuse of discretion. Slip op. at 21-23.

Recent class-action-related opinions from other Circuits

The Second, Fifth and Eleventh Circuits have issued some interesting class-action-related opinions in recent weeks:

• In In re: Nortel Networks Corp. Securities Litig., ___ F.3d ___ (2d Cir. Aug. 19, 2008), the Second Circuit affirmed an attorneys' fees award in a securities class action settlement.

• In Silvercreek Mgmt. Inc. v. Banc of America Securities LLC, ___ F.3d ___ (5th Cir. Jul. 7, 2008), the Fifth Circuit affirmed the trial court's approval of a class action settlement, holding that the objectors' objections were properly overruled and that others had failed to timely opt out. [Via Blawgletter.]

• In Kenny A. v. Perdue, ___ F.3d ___ (11th Cir. Jul. 3, 2008), the Eleventh Circuit addressed the concept of "extraordinary results" for purposes of a fee multiplier. [Via How Appealing.]

New class certification decision: Medrazo v. Honda of North Hollywood

In Medrazo v. Honda of North Hollywood, ___ Cal.App.4th ___ (Jul. 29, 2008; pub. ord. Aug. 21, 2008), the Court of Appeal (Second Appellate District, Division Four) reversed an order denying class certification of UCL and CLRA claims predicated on the defendant's violation of certain Vehicle Code provisions. (The opinion refers to the UCL as the "Unfair Business Practices Act" or "UPA." Slip op. at 3.)

The Court of Appeal determined (among other things) that the trial court had erred by interpreting the relevant Vehicle Code provisions and deciding whether the defendant could have violated them. That, the Court of Appeal held, was an improper merits determination prohibited at the class certification stage. Id. at 8-9 (citing Linder v. Thrifty Oil Co., 23 Cal.4th 429 (2000)). The Court of Appeal expressedly declined to reach or decide the statutory interpretation question itself, and pointed out that other remarks the trial court made on the record also crossed the line into the merits. Id. at 9 n.4.

This is a good opinion because the types of merits determinations the trial court made seem to be more and more common, yet Linder prohibits them, as the Medrazo court recognized. The Medrazo opinion also discusses typicality, the use of subclasses, predominance of common questions as a comparative concept under Sav-on, and acertainability. For more on the opinion, see this post from The Complex Litigator.

New Ninth Circuit UCL restitution decision: Theme Promotions, Inc. v. News America Marketing FSI

In Theme Promotions, Inc. v. News America Marketing FSI, ___ F.2d ___ (9th Cir. Aug. 20, 2008), the Ninth Circuit affirmed the trial court's determination that the monetary loss the plaintiff suffered did not constitute "restitution" within the meaning of the UCL. Slip op. 11082-84.

New Third Circuit preemption decision: Fellner v. Tri-Union Seafoods, L.L.C.

In Fellner v. Tri-Union Seafoods, L.L.C., ___ F.3d ___ (Aug. 19, 2008), the Third Circuit held that the FDA's "regulatory actions" did not preempt certain non-disclosure claims brought under New Jersey law. On Aug. 20, The Legal Intelligencer reported that "3rd Circuit Revives Mercury-in-Tuna Class Action."

This decision is of interest to California practitioners in light of this paragraph:

The factual landscape of this case is colored by recent litigation in California. On June 21, 2004, then-Attorney General of California, Bill Lockyer, filed a lawsuit against Tri-Union and other defendants under California’s “Proposition 65,” CAL. HEALTH & SAFETY CODE § 25249.6, seeking an injunction and civil penalties for defendants’ failure to warn consumers that their tuna products contain dangerous mercury compounds. While that suit was pending, the Commissioner of the FDA sent a letter to Mr. Lockyer expressing the opinion that the FDA’s prior regulatory actions preempt the State’s lawsuit. In the Commissioner’s view, the defendants would be unable to comply both with that approach and state law and the existence of the lawsuit would “frustrate the [FDA’s] carefully considered federal approach” to the issue of mercury in fish. See People v. Tri-Union Seafoods, 2006 WL 1544377 (Cal. Super. Ct. May 12, 2006) (taking judicial notice of the letter). In May 2006, following a bench trial, the Superior Court of California found the Attorney General’s lawsuit preempted by federal law. People v. Tri-Union Seafoods, 2006 WL 1544384 (Cal. Super. Ct. May 11, 2006), appeal docketed, No. A116792 (Cal. Ct. App. 1st Dist. Feb. 20, 2007).

Slip op. at 4-5. The Third Circuit panel disagreed, at least with respect to the particular New Jersey claims before it:

This is a situation in which the FDA has promulgated no regulation concerning the risk posed by mercury in fish or warnings for that risk, has adopted no rule precluding states from imposing a duty to warn, and has taken no action establishing mercury warnings as misbranding under federal law or as contrary to federal law in any other respect. Fellner’s lawsuit does not conflict with the FDA’s “regulatory scheme” for the risks posed by mercury in fish or the warnings appropriate for that risk because the FDA simply has not regulated the matter. Fellner’s duty-to-warn claim does not conflict with an FDA determination deliberately to forego warnings because the FDA took no action to preclude state warnings – at least, no binding action via ordinary regulatory procedures, and no action whatsoever until after Tri-Union allegedly wrongfully failed to warn. Finally, Fellner’s lawsuit does not conflict with the FDCA’s food misbranding provision or the FDA’s actions thereunder because the FDA has not exercised its misbranding authority under the FDCA with respect to methylmercury warnings for fish.

Id. at 37-38.

New UCL "safe harbor" decision: Yabsley v. Cingular Wireless, LLC

In Yabsley v. Cingular Wireless, LLC, ___ Cal.App.4th ___ (Aug. 18, 2008), the Court of Appeal (Second Appellate District, Division Six) held that an administrative regulation (specifically, a provision of the California Code of Regulations) can provide a Cel-Tech "safe harbor" for conduct that might otherwise violate the UCL.

New UCL/CLRA choice-of-law decision: Brack v. Omni Loan Co.

In Brack v. Omni Loan Co., ___ Cal.App.4th ___ (Jun. 17, 2008; pub. ord. Jul. 16, 2008), the Court of Appeal (Fourth Appellate District, Division One) refused to enforce a choice-of-law provision in a consumer loan contract, holding that California had a greater interest in the transactions and the claims than Nevada. The court relied primarily on the fundamental policy underlying the Finance Lenders Law (Fin. Code §§ 22000 et seq.), but also cited the CLRA's anti-waiver provision (Civ. Code § 1751). Slip op. at 14-15, 21. The Court observed that earlier opinions have held that the CLRA's anti-waiver provision precludes enforcement of choice-of-law and forum selection clauses. Id. at 14-15 (citing American Online, Inc. v. Superior Court, 90 Cal.App.4th 1, 15 (2001)).

Free webinar: "Introduction to Law Blogs - What Works and What Doesn't"

On Thursday, August 21, at 9:00 a.m. Pacific, Kevin O'Keefe of LexBlog fame will offer a free webinar called "Introduction to Law Blogs - What Works and What Doesn't." The webinar will cover, among other things:

Advantages of law blogs for law firms
What are the challenges in law firms' use of blogs?
How law firms are using law blogs?
Which law firms are using blogs?
How much time does blog publishing take?
Liability and ethical issues
Law firm blog policies
Getting law firm management buy-in for blogs
Alternative blog publishing systems
Resources for blog information
Your questions
What are professional marketing blogs?

Click here to register.

UPDATE: I have been told that the registration link may not be working. If you have trouble registering, I suggest you contact Kevin O'Keefe directly.

Final approval and attorneys' fees orders in Ford Explorer Cases

Many thanks to the blog reader who forwarded these orders signed by Judge De Alba in the Ford case (Ford Explorer Cases, JCCP Nos. 4266 & 4270):

• (Amended) Final Order and Judgment of Final Approval of Class Action Settlement (filed Jul. 30, 2008)

• Ruling on Application for Attorneys' Fees and Expenses; Request for Multiplier; Plaintiffs' Incentive Awards; and Objections (filed Jun. 27, 2008)

"UCL Standing to Seek Injunctive Relief: Is a Restitutionary Loss Required?"

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 [email protected] if you would like a copy of the article.

Recent class certification decision: In re BCBG Overtime Cases

In In re BCBG Overtime Cases, 163 Cal.App.4th 1293 (Jun. 13, 2008), the Court of Appeal (Fourth Appellate District, Division Three) approved the filing of an evidentiary, preemptive motion by the defendant to deny class certification — before the plaintiff has sought certification.

A couple of points for plaintiffs' attorneys facing such motions:

1. This holding conflcts with Sharp v. Next Entertainment, Inc., 163 Cal.App.4th 410 (2008), in which the Court of Appeal (Second Appellate District, Division Three) held that a defense evidentiary motion to “preemptively” determine the class representatives’ adequacy “was an end-run around the certification procedures and an attempt to deny plaintiffs the ability to present their case." Id. at 439. (For more on Sharp, see this blog post.)

2. The Rules of Court do not authorize defense evidentiary motions to deny class certification. Such a motion is not listed in Rule of Court 3.764(a), which sets forth the kinds of motions that may be filed to determine whether or not a class may be certified. The omission was intentional. The Judicial Council Committee report accompanying the adoption of the class action rules (current Rules 3.760-3.771 [former Rules 1850-1861], adopted eff. Jan. 1, 2002) states: "The rule does not include a provision that would allow a party to move for a determination that a class action is not appropriate; this argument may be made in opposition to a certification motion."

More briefs from Fairbanks v. Superior Court

Many thanks to the blog reader who forwarded some additional amicus curiae briefs from Fairbanks v. Superior Court (no. S157001), the CLRA/insurance case now pending before the Supreme Court:

• Amicus Curiae Brief of Consumer Attorneys of California (filed 07/17/08)
  

• Amicus Curiae Brief of United Policyholders (filed 07/14/08)
  

• Amici Curiae Brief of American Council of Life Insurers et al. (filed 07/09/08)

Any more briefs? Please forward to me at [email protected].

"L.A. Targets Insurers With Unlikely Law"

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.

Some of the recently-filed complaints can be accessed at this link. The complaint against Blue Shield was particularly well done.

Recent Ninth Circuit UCL decision: Clemens v. DaimlerChrysler Corp.

In Clemens v. DaimlerChrysler Corp., ___ F.3d ___, 2008 WL 2840662 (9th Cir. July 24, 2008), the Ninth Circuit addressed the UCL's "fraudulent" prong:

Generally, to be actionable under the UCL, a concealed fact must be material in the sense that it is likely to deceive a reasonable consumer. Aron v. U-Haul Co. of Cal., 143 Cal. App. 4th 796, 806 (2006). Unlike a common law fraud claim, a UCL fraud claim requires no proof that the plaintiff was actually deceived. Daugherty, 144 Cal. App. 4th at 838. Instead, the plaintiff must produce evidence showing “a likelihood of confounding an appreciable number of reasonably prudent purchasers exercising ordinary care.” Brockey v. Moore, 107 Cal. App. 4th 86, 99 (2003). Surveys and expert testimony regarding consumer assumptions and expectations may be offered but are not required; anecdotal evidence may suffice, although “a few isolated examples” of actual deception are insufficient. Id. (repudiating federal district court decisions which, like the subsequent case Chamberlan v. Ford Motor Co., 369 F. Supp. 2d 1138, 1145 (N.D. Cal. 2005), suggest anecdotal evidence of materiality is always insufficient under a “reasonable consumer” standard).

Slip op. at 9136. The court went on to affirm the district court's grant of summary judgment in the defendant's favor on the UCL claim, citing Daugherty and Bardin. Id. at 9136-37.

For class action junkies, the opinion also addresses "cross-jurisdictional" American Pipe tolling. Id. at 9134-35.

Merits briefs from Supreme Court CLRA case: Fairbanks v. Superior Court

Thanks to a loyal blog reader, I can share with you the following briefs from Fairbanks v. Superior Court (Farmers New World Life Ins. Co.), no. S157001 (review granted 11/14/07), in which the Supreme Court will address whether the CLRA applies to insurance:

• Opening Brief on the Merits (filed 01/14/08)
  

• Answer Brief on the Merits (filed 03/14/08)
  

• Reply Brief on the Merits (filed 05/08/08)
  

• Amicus Curiae Brief of Consumer Watchdog (filed 07/18/08)

If you have copies of additional briefs from this case, please send them to me at [email protected].

Supreme Court sets attorneys' fees case for oral argument: Vasquez v. Superior Court

The Supreme Court has set Vasquez v. Superior Court, no. S143710, for oral argument on September 3, 2008 at 9:00 a.m. in San Francisco. The Court will be deciding this issue:

Does the rule that, in order to receive attorney fees under Code of Civil Procedure section 1021.5, the plaintiff must first reasonably attempt to settle the matter short of litigation, apply to this case? (See Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 557; Grimsley v. Board of Supervisors (1985) 169 Cal.App.3d 960, 966-967.)

The Court of Appeal determined that the party opposing the fee award waived that issue by not raising it below. Vasquez v. State of California, 138 Cal.App.4th 550 (2006) (Fourth Appellate District, Division Two).

"The Blog and Short of It"

Greg May, author of The California Blog of Appeal, writes about what it's like to be a law blogger in an article in the August 2008 issue of Citations, the magazine of the Ventura County Bar Assosication.

Other countries have class actions, too: International Justice

An interesting new new web page, International Justice, introduces us to class action laws around the globe:

More than 30 countries have now adopted systems of group litigation, and other countries are actively debating enactment of such procedures. In some of the countries, the United States for example, class action practice has been active for many decades. In many other countries, such laws are new or merely a few years old.

From the site's home page:

Welcome to International Justice, an informational resource for human rights. Included are discussions of significant United States human rights statutes, international courts, listings of prominent human rights organizations, and information on the growth of class action/ group litigation laws worldwide.

Supreme Court grants review in attorney advertising case: Simpson Strong-Tie Co. v. Gore

On July 30, 2008, the Supreme Court granted review in Simpson Strong-Tie Co. v. Gore, no. S164174. These are the issues on review:

(1) Which party bears the burden of persuasion with respect to the applicability of the anti-SLAPP exemptions set forth in Code of Civil Procedure section 425.17, subdivision (c)? (2) Does Code of Civil Procedure section 425.17, subdivision (c), exempt from anti-SLAPP protection an advertisement by a lawyer soliciting clients for a contemplated lawsuit?

This case may be particularly interesting to class action attorneys because the contemplated lawsuit was a class action (although it was never filed). An attorney placed an ad in the San Jose Mercury News and the Los Gatos Weekly Times seeking potential clients who had purchased the prospective defendant's galvanized screws. The ad said that "you may have certain legal rights and be entitled to monetary compensation ...." The prospective defendant sued for defamation, UCL violations, and other claims, arguing that the ad "communicates that [the] galvanized screws are defective." The trial court dismissed the action under the anti-SLAPP law, and the Court of Appeal (Sixth Appellate District) affirmed. Sampson v. Strong-Tie Co. v. Gore, 162 Cal.App.4th 737 (Apr. 30, 2008).

It can often happen that an attorney becomes aware of a violation of law -- such as a material nondisclosure, a latent defect, a price-fixing conspiracy -- that the product purchasers would have had no reason to suspect because it was concealed from them. Nor would the product purchasers necessarily know that they might have a valid legal claim. What is an attorney to do? Placing an ad in a newspaper might be an extreme measure, but this case illustrates a situation that arises more often than you might think.

I've added Simpson Strong-Tie Co. v. Gore to my list of pending Supreme Court cases of interest to class action and UCL practitioners.

New CLRA decision: Ball v. FleetBoston Financial Corp.

In Ball v. FleetBoston Financial Corp., ___ Cal.App.4th ___ (Jun. 5, 2008; pub. ord. Jul. 7, 2008), the Court of Appeal (Fourth Appellate District, Division Three) addressed whether the Consumers Legal Remedies Act ("CLRA") applies to credit card transactions. Citing Berry v. American Express Publishing, Inc., 147 Cal.App.4th 224 (2007), the Court held that it does not.

The Supreme Court has recently granted review in two other CLRA cases. In Fairbanks v. Superior Court (Farmers New World Life Ins. Co.), no. S157001 (review granted 11/14/07), it will address whether the CLRA applies to insurance, and in Meyer v. Sprint Spectrum, no. S153846 (review granted 08/16/07), it will address whether the CLRA's prohibition of "unconscionable" contract terms provides a remedy against a defendant who included an unconscionable term, but had not yet enforced it.

Whether the CLRA applies to extensions of credit has been addressed in a number of decisions, with conflicting results. In Knox v. Ameriquest Mortgage Co., 2005 WL 1910927 (N.D. Cal. Aug. 10, 2005), for example, the court held (in contrast to Berry and Ball) that "California courts generally find financial transactions subject to the CLRA," and concluded that “because other types of financial transactions involving banking services appear to be covered by the CLRA, the Court finds that the CLRA covers the mortgages at issue.” Id. at *4 (citing Kagan v. Gibraltar Savings & Loan Association, 35 Cal.3d 582 (1984); Corbett v. Hayward Dodge, Inc., 119 Cal.App.4th 915 (2004)). Two other federal district courts have reached the same conclusion. Hernandez v. Hilltop Financial Mortgage, Inc., 2007 WL 3101250 (N.D. Cal. Oct. 22, 2007); Jefferson v. Chase Home Finance LLC, 2007 WL 1302984 (N.D. Cal. May 3, 2007). On the other hand, in McKell v. Washington Mutual, Inc., 142 Cal.App.4th 1457 (2006), the court held that the CLRA did not apply to “transactions resulting in the sale of real property.” Id. at 1488.

In sum, the question is ripe for review, and a petition for review was filed in Ball on July 15, 2008 (no. S165154). It will be interesting to see what happens.

UPDATE: On October 1, 2008, the Supreme Court denied the petition for review.

New Mexico Supreme Court strikes down no-class-action arbitration clause: Fiser v. Dell Computer Corp.

I'm still catching up with some of the decisions handed down while my blog was on hiatus in June. In Fiser v. Dell Computer Corp., ___ S.W.3d ___ (N.M. Jun. 27, 2008), the New Mexico Supreme Court refused to enforce a class action ban in an arbitration clause in a consumer contract:

We hold that, in the context of small consumer claims that would be prohibitively costly to bring on an individual basis, contractual prohibitions on class relief are contrary to New Mexico’s fundamental public policy of encouraging the resolution of small consumer claims and are therefore unenforceable in this state. We reverse.

This pronouncement in some respects goes even further than our own Supreme Court's Discover Bank decision, which was cited in Fiser. The Fiser opinion is full of choice quotations from class action decisions from across the country. It is definitely worth a read.

On July 3, 2008, the Wall Street Journal reported on Fiser in an article called "Recent Rulings Bolster the Case for Class Actions." And yesterday's National Law Journal had an opinion piece on mandatory arbitration clauses called "Big Business Acts the Bully."

New Ninth Circuit class certification decision: Parra v. Bashas', Inc.

In Parra v. Bashas', Inc., ___ F.3d ___ (July 29, 2008), the Ninth Circuit reversed an order denying class certification of plaintiffs' claim for pay discrimination based on national origin in violation of Title VII of the Civil Rights Act of 1964 (42 U.S.C. § 1981). The plaintiffs were Hispanic employees of a grocery store chain. The opinion focuses on the commonality element of class certification:

[T]he Plaintiffs here establish commonality even though their individual factual situations differ because they all seek a common legal remedy for a common wrong. Plaintiffs here not only presented evidence of discriminatory pay scales, but also provided statistical and anecdotal evidence of discrimination by Bashas’, Inc. These pay scales were common for all Bashas’, Inc. employees and provided for different pay for similar jobs based only on the store where the employee worked. The proposed class here shares the alleged discriminatory pay scales of Bashas’, Inc. The class definition seeks to reach those Hispanic employees who suffered past discrimination under these pay scales.

Finally, at oral argument, Bashas’, Inc. argued that the difficulty in redressing the harm and calculating the various pay disparities for the different employment positions precludes class certification. We disagree. We have previously held that classes with far more complex remedies can seek redress in the form of a class action. See, e.g., Staton [v. Boeing Co.], 327 F.3d [938,] 953-57 [(9th Cir. 2003)]. The claimed difficulties in the calculations of damages, as they affected the various class members, do not preclude class certification.

In this case, the Plaintiffs presented the district court with extensive evidence showing Bashas’, Inc.’s discriminatory pay practices commonly affected all members of the proposed class. We conclude the district court abused its discretion in failing to find commonality existed in the original class definition.

Slip op. at 9642 (emphasis and hyperlink added). Footnote 3 of the opinion is also quite interesting:

Although this circuit has, up to now, never reversed a district court finding that commonality was lacking in an employment suit, other circuits have. See, e.g., Forbush v. J.C. Penny Co., 994 F.2d 1101, 1106 (5th Cir. 1993); Cox v. Am. Cast Iron Pipe Co., 784 F.2d 1546, 1557 (11th Cir. 1986); Paxton v. Union Nat’l Bank, 688 F.2d 552, 561 (8th Cir. 1982).

Id. at 9641 n.3. The Ninth Circuit has frequently affirmed commonality findings in employment cases, however. See, e.g., Dukes v. Wal-Mart, Inc., 474 F.3d 1214 (9th Cir. 2007).

"High Court Justices Go Digital to Access Founding-Era Documents"

Law.com had an article earlier in the week on The Constitutional Sources Project, which "has digitized and made freely available online more than 11,000 historical documents relating to the Constitution and the amendments." That's a link to bookmark.

[Via How Appealing.]