The UCL Practitioner

Still time to register for the Rutter Group 17200 Program March 1 and 3

It's not too late to register for the Rutter Group's annual UCL program, which will take place this coming Monday, March 1 in San Francisco and Wednesday, March 3 in Los Angeles (6:00-9:15 p.m.). I will be a speaker, along with Will Stern (author of Prop. 64 and the Rutter Group practice guide) and Justice H. Walter Croskey of the Second District Court of Appeal.

We will be discussing all of the recent decisions interpreting Tobacco II, including McAdams, Steroid Hormones, Weinstat, Vioxx, Princess Cruise Lines, Cohen, Kaldenbach, Morgan, and possibly even the unpublished opinion handed down yesterday in Pfizer.  It should be a lively discussion, and I'm looking forward to it very much myself. 

BREAKING NEWS: Two new cases handed down today and yesterday

Yesterday, the Supreme Court handed down its opinion in the CAFA case, Hertz Corp. v. Friend, ___ U.S. ___ (Feb. 23, 2010).

Today, the Court of Appeal (Third Appellate District) handed down its opinion in McAdams v. Monier, Inc., ___ Cal.App.4th ___ (Feb. 24, 2010), once again reversing the order denying class certification of the CLRA and UCL claims.

I will have more on these opinions later.

Supreme Court takes up class certification appellate issue: Baycol Cases I and II

Last Thursday, February 18, 2010, the Supreme Court granted review in Baycol Cases I and II, no. S178320.  This is the summary of the issue on review:

Did the "death knell doctrine" require plaintiff to immediately appeal the sustaining of a demurer as to class claims when the ruling resolved both individual and class claims, or did the one final judgment rule apply and require a single appeal from the subsequent entry of final judgment on all claims?

In an unpublished opinion filed on October 20, 2009, the Court of Appeal (Second Appellate District, Division Seven) held that the notice of appeal was untimely:

An order denying class certification is appealable. (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435.) However, an order sustaining a demurrer without leave to amend “is ordinarily not appealable, since the order is not a final judgment.” (Alch v. Superior Court (2004) 122 Cal.App.4th 339, 359.)

An exception to the latter rule arises “in a class action if the legal effect of the order is ‘tantamount to a dismissal of the action as to all members of the class other than plaintiff,’ and if the order ‘has virtually demolished the action as a class action.’ [Citation.] California allows direct appeal of such a ‘death-knell’ order as a matter of state law policy.” (Alch v. Superior Court, supra, 122 Cal.App.4th at pp. 359-360.) “Since, in theory, the individual plaintiff’s action can go forward, the death knell doctrine fits comfortably into the exception to the ‘one final judgment’ rule that arises when parties have separate and distinct interests; when this is true, there can be a final and appealable judgment for each such party. [Citation.]” (Farwell v. Sunset Mesa Property Owners Assn., Inc. (2008) 163 Cal.App.4th 1545, 1547.)

An exception to the rule regarding the appealability of an order sustaining a demurrer without leave to amend has been applied where, as here, the trial court sustains a demurrer without leave to amend as to both the class action allegations and the individual causes of action. (See, e.g., Los Altos Golf & Country Club v. County of Santa Clara (2008) 165 Cal.App.4th 198, 202.) We are reluctant to carve out exceptions to the rule and thus introduce an element of uncertainty into what has otherwise been the established rule. Would the exception apply only where, as here, a single order sustains the demurrer without leave to amend as to both the class and individual claims? Would it apply where separate orders address the class and individual claims? A bright-line rule would eliminate any uncertainty. Accordingly, we adhere to the rule that “in a class action if the legal effect of the order is ‘tantamount to a dismissal of the action as to all members of the class other than plaintiff,’ and if the order ‘has virtually demolished the action as a class action,’” the order is immediately appealable. (Alch v. Superior Court, supra, 122 Cal.App.4th at pp. 359-360.)

Since the April 27, 2007 order sustaining Bayer’s demurrer to Shaw’s class claims was immediately appealable, Shaw’s December 20, 2007 notice of appeal was untimely as to these claims. We therefore affirm the judgment dismissing the class claims.

Slip op. at 8-9.  I haven't seen the briefs, but it appears that review was granted to address the split in authority with the Los Altos case. 

Baycol has been added to my list of pending Supreme Court cases of interest to attorneys practicing in this area.   

New Ninth Circuit class certification opinion: Yokoyama v. Midland National Life Ins. Co.

In Yokoyama v. Midland National Life Ins. Co., ___ F.3d ___ (9th Cir. Feb. 8, 2010), the Ninth Circuit reversed an order denying class certification of claims brought under Hawaii's consumer protection law, which bears a strong resemblance to the UCL. 

Like the UCL's "fraudulent" prong, Hawaii's Deceptive Practices Act (Haw. Rev. Stat. § 480.2) does not require proof of actual reliance or deception; rather, "the capacity to deceive is sufficient."  Slip op. at 2131 (citation omitted).  Hence, "there is no reason to look at the circumstances of each individual purchase" in assessing whether common questions predominate under Rule 23.  Id.  Instead, "the fact-finder need only determine whether [the defendant's marketing] brochures were capable of misleading a reasonable consumer."  Id.

This opinion should be useful for practitioners handling UCL "fraudulent" prong cases in federal court under CAFA. 

New class certification opinion: Jaimez v. DAIHOS USA, Inc.

In Jaimez v. DAIHOS USA, Inc., ___ Cal.App.4th ___ (Jan. 12, 2010; pub. ord. Feb. 8, 2010), the Court of Appeal (Second Appellate District, Division One) reversed an order denying class certification of various wage and hour claims.

Court of Appeal adds new section to opinion: Steroid Hormone Product Cases

On February 8, 2010, the Court of Appeal (Second Appellate District, Division Four) issued a modification order adding a new, three-page section to its opinion in Steroid Hormone Product Cases, ___ Cal.App.4th ___ (Jan. 21, 2010).  As my post on the original opinion explained, this panel correctly interpreted Tobacco II (in a manner directly contrary to the Court of Appeal in Cohen). 

Evidently, a rehearing petition was filed on February 2, urging the Court to follow Cohen and Vioxx.  The quickly-issued modification order (which also denied rehearing with no change in the judgment) makes the panel's disagreement with those opinions clear.  It is reasonable to assume that a review petition will be filed. 

In other appellate activity of note, a rehearing petition was filed on January 22 and denied on January 26 in the Weinstat case (see this post).  Again, a petition for review would not be surprising.  And we still await opinions in the two "grant and hold" cases, Pfizer and McAdams. 

UPDATE:  Many thanks to the blog reader who wrote to advise that a petition for review was already filed last Thursday, February 11, in the Weinstat case.  Weinstat v. Dentsply Int'l., no. S180179.  I have also received copies of the petition for review and the rehearing petition, which will go up in a later post. 

Recent Supreme Court activity in three UCL cases: Princess Cruise Lines, Cohen and Zhang

On February 4, 2010, the Supreme Court denied review in Princess Cruise Lines v. Superior Court (Wang), no. S178842.   Here is my original post on the case, which interpreted Tobacco II.

On February 10, 2010, the Supreme Court denied review and depublication in Cohen v. DirecTV, no. S177734.  Justice Werdegar voted to grant review.  Here is my original post on the case, and follow-up posts with some of the briefs.

On February 10, 2010, the Supreme Court granted review in Zhang v. Superior Court (Cal. Cap. Ins.), no. S178542.  This case will address whether insurance companies enjoy any special exemption from UCL liability.  The statement of issues on review reads:

(1) Can an insured bring a cause of action against its insurer under the unfair competition law (Bus. & Prof. Code, § 17200) based on allegations that the insurer misrepresents and falsely advertises that it will promptly and properly pay covered claims when it has no intention of doing so? (2) Does Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287 bar such an action?

Here is my original post on the case.  It has been added to my list of pending Supreme Court cases of interest.

Ninth Circuit strikes down another no-class-action arbitration clause: Omstead v. Dell, Inc.

In Omstead v. Dell, Inc., ___ F.3d ___ (9th Cir. Feb. 5, 2010), the Ninth Circuit struck down a no-class-action arbitration clause as unconscionable under Discover Bank.

Rutter Group 17200 Seminar March 1 and 3

The Rutter Group's annual seminar on 17200 practice will take place on Monday, March 1, 2010 at the Hotel Nikko in San Francisco and on Wednesday, March 3, 2010 at the Los Angeles Mariott Downtown. 

This year, I am pleased to be a co-speaker with Will Stern, author of the Rutter Group's Bus. & Prof. Code §17200 Practice.  Justice H. Walter Croskey of the Second Appellate District, Division Three, will be our moderator. 

The program will run from 6:00 p.m. to 9:15 p.m. (registration starts at 5:30), and the program fee of $310 includes a copy of Will's book (or subtract $150 if you already have the book).  You can also register to attend a video replay of the program in Costa Mesa on March 16, San Diego on March 23, and Sherman Oaks on March 25.  I look forward to seeing some of you there. 

"Getting What You Paid For"

The February 2010 issue of California Lawyer has this article on Kwikset Corp. v. Superior Court (Benson), which is now pending before the California Supreme Court.  The article is by Mark P. Pifko of Arnold & Porter in Los Angeles.

Orange County Bar Association Appellate Law Section Meeting on Wednesday, Feb. 3

Today's meeting of the Appellate Law Section of the Orange County Bar Association will take place at noon in Santa Ana and will feature three speakers on appellate ADR.  Appellate specialization MCLE credit is offered.  Click here for more information. 

Significant appellate practice decision: Brown, Winfield & Cazonieri, Inc. v. Superior Court

In Brown, Winfield & Cazonieri, Inc. v. Superior Court (Great Am. Ins. Co.), ___ Cal.4th ___ (Feb. 1, 2010), the Supreme Court elaborated on what appellate practitioners refer to as Palma notices.  This is the introduction to the majority opinion by Chief Justice George:

In Palma v. U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171 (Palma), we outlined the rare circumstances in which an appellate court may grant accelerated writ relief in the form of a peremptory writ in the first instance, in lieu of following the usual procedures associated with the issuance of an alternative writ or an order to show cause. We held that, at a minimum, a peremptory writ of mandate or prohibition may not issue in the first instance without notice that the issuance of such a writ in the first instance is being sought or considered. (Palma, supra, 36 Cal.3d at p. 180.) In addition, we emphasized that “an appellate court, absent exceptional circumstances, should not issue a peremptory writ in the first instance without having received, or solicited, opposition from the party or parties adversely affected.” (Ibid.) Pursuant to Palma, our Courts of Appeal — prior to ordering issuance of a peremptory writ in the first instance — provide notice that such a writ may issue, and invite informal opposition, in orders routinely called “Palma notices.”

At issue in the present case is the propriety of so-called “suggestive” Palma notices. A suggestive Palma notice — sometimes denominated a “coercive” or “speaking” Palma notice — typically contains the following: notice that the Court of Appeal intends to issue a peremptory writ in the first instance granting the relief requested by the petitioner; a discussion of the merits of the writ petition, with a suggestion that the trial court erred in the manner claimed by the petitioner; a specific grant to the trial court of “power and jurisdiction” to change the disputed interim order and enter in its place a new order consistent with the views of the appellate court, in which event the writ petition will be vacated as moot; and a solicitation of opposition to the issuance of a peremptory writ in the first instance, should the trial court elect not to follow the appellate court’s recommendation.

As discussed below, we conclude that it is not improper for an appellate court to issue a suggestive Palma notice, and that it may do so without first having received or solicited opposition from the real party in interest. A suggestive Palma notice is not the equivalent of a peremptory writ, which requires both notice and an opportunity for opposition before the writ may issue in the first instance. Although a suggestive Palma notice may be styled as an order, such a notice in no way commands or otherwise obligates the lower court to follow the course of action suggested by the appellate court. Rather, a suggestive Palma notice is analogous to a tentative ruling, in that it sets forth the appellate court’s preliminary conclusions with respect to the merits of the writ petition — conclusions that, similar to those reflected in a tentative ruling, are not binding upon either the trial court or the appellate court.

It appears, however, that upon receiving a suggestive Palma notice from an appellate court, a trial court often will quickly vacate, modify, or otherwise reconsider the challenged ruling in order to conform its action to the views expressed in the notice — all before the party adversely affected has filed (or has had an opportunity to file) any opposing papers in response to the Palma notice. When the trial court takes such action, the Court of Appeal will dismiss the writ petition.

We conclude that if a trial court decides on its own motion to revisit its interim ruling in response to a suggestive Palma notice — an action within its inherent authority (see Le Francois v. Goel (2005) 35 Cal.4th 1094, 1107-1109 (Le Francois)) — that court must inform the parties of its intent to do so, and provide them with an opportunity to be heard. (See id. at pp. 1108-1109.) Requiring adherence to this procedure is consistent with our relevant case law, and reasonably balances the interests of conservation of scarce judicial resources with the parties’ right to notice and an opportunity to be heard.

Slip op. at 1-3.  Justice Werdegar drafted a concurring and dissenting opinion, in which justices Moreno and Corrigan joined.

New UCL economic abstention doctrine decision: Acre v. Kaiser Foundation Health Plan, Inc.

In Acre v. Kasier Foundation Health Plan, Inc., ___ Cal.App.4th ___ (Jan. 27, 2010), the trial court sustained a demurrer to a UCL action without leave to amend based on: (a) the economic abstention doctrine; and (b) the conclusion that the complaint failed to allege a sufficient community of interest for class certification purposes.   Slip op. at 5-6.

The Court of Appeal (Second Appellate District, Division Seven) determined that the economic abstention doctrine did not apply (id. at 25-33) and also that the trial court had erred by dismissing the class certification allegations at the pleading stage (id. at 11-25).  The opinion is quite interesting and worth a full read.