The UCL Practitioner

SCOTUSblog's class action symposium

SCOTUSblog is holding an online class action symposium.  The symposium will feature a series of posts by experts (mostly law professors) on the impact of Dukes and Concepcion. 

Two installments have been posted so far:

• "Squeezing Class Actions" by Professor Scott Dodson of William & Mary Law School


• "The Supreme Court's one-two punch: Class actions in the wake of Wal-Mart v. Dukes and AT&T v. Concepcion" by Sarah Crawford, Director of the Workplace Fairness program at the National Partnership for Women & Families

The remaining installments will be available at this link as they are posted at SCOTUSblog over the next few days.

MCLE teleseminar next week on Twombly pleading standards

Next Wednesday, September 7, 2011 at 9:00 a.m. Pacific, the American Bar Association Section of Antitrust Law will present "OMG!  Has Twombly Been Overturned? The 7th Circuit's Text Messaging Case." 

The teleseminar is free, although no participatory MCLE credit is provided.  California attorneys may be able to claim self-study credit under State Bar Rule 2.83(A). 

Recent decisions of interest from other Circuits

Here are a few recent decisions of interest from other U.S. Courts of Appeals:

Behrend v. Comcast Corp., ___ F.3d ___ (3d Cir. Aug. 23, 2011) (affirming class certification of antitrust claims; "The factual and legal underpinnings of Wal-Mart—which involved a massive discrimination class action and different sections of Rule 23—are clearly distinct from those of this case. Wal-Mart therefore neither guides nor governs the dispute before us.")

In re Aqua Dots Products Liability Litigation, ___ F.3d ___  (7th Cir. Aug. 17, 2011) (affirming denial of class certification for lack of adequacy; Judge Easterbrook essentially held that a manufacturer recall already remedied the problem and a parallel class action would gain nothing)

In re Literary Works in Electronic Databases Copyright Litigation, ___ F.3d ___ (2d Cir. Aug. 17, 2011) (reversing certification of settlement class for lack of adequacy, finding conflicts among subgroups of class members and remanding for creation of subclasses represented by separate counsel)

Cruz v. Cingular Wireless, LLC, ___ F.3d ___ (11th Cir. Aug. 10, 2011) (applying Concepcion and upholding a no-class-action arbitration clause)

Lawson v. Life of the South Ins. Co., ___ F.3d ___ (11th Cir. Aug. 10, 2011) (declining to enforce a no-class-action arbitration clause under third-party beneficiary or equitable estoppel theories; the defendant was not a party to the contract containing the clause and the claims did not arise under that contract (citing Mundi v. Union Sec. Life Ins. Co., 555 F.3d 1042 (9th Cir. 2009))

Millea v. Metro-North Rwy Co., ___F.3d ___ (2d Cir. Aug. 8, 2011) (reversing statutory attorneys' fees award and remanding for recalculation; "Especially for claims where the financial recovery is likely to be small, calculating attorneys’ fees as a proportion of damages runs directly contrary to the purpose of fee-shifting statutes: assuring that civil rights claims of modest cash value can attract competent counsel.  The whole purpose of fee-shifting statutes is to generate attorneys’ fees that are disproportionate to the plaintiff’s recovery.  Thus, the district court abused its discretion when it ignored the lodestar and calculated the attorneys’ fees as a proportion of the damages awarded.")

In re Zurn Pex Plumbing Products Liability Litigation, ___ F.3d ___ (8th Cir. Jul. 6, 2011) ("[Defendant]'s desire for an exhaustive and conclusive Daubert inquiry before the completion of merits discovery cannot be reconciled with the inherently preliminary nature of pretrial evidentiary and class certification rulings.  [¶]  The main purpose of Daubert exclusion is to protect juries from being swayed by dubious scientific testimony. That interest is not implicated at the class certification stage where the judge is the decision maker."; affirming class certification of warranty and negligence claims and distinguishing Dukes)

Jock v. Sterling Jewelers, Inc., ___ F.3d ___ (2d Cir. Jul. 1, 2011) (interpreting Stolt-Neilsen and class arbitration proceedings)

"Meal Periods: Waiting for Brinker"

The August 2011 issue of California Lawyer has an article by freelance reporter Pamela MacLean on the Brinker case (in which I am co-counsel for the workers). 

I am quoted in the article, along with my co-counsel Tracee Lorens of Lorens & Associates in San Diego (who is a joy to work with, by the way) and Kevin R. Kish, director of the employment rights project for Bet Tzedek Legal Services in Los Angeles. 

New UCL "fraudulent" and "unfair" prong decision: Boschma v. Home Loan Center, Inc.

In Boschma v. Home Loan Center, Inc., ___ Cal.App.4th ___ (Aug. 10, 2011), the Court of Appeal (Fourth Appellate District, Division Three) reversed the judgment entered after an order sustaining a demurrer to UCL "fraudulent" and "unfair" prong claims without leave to amend.  The Court of Appeal also reversed as to the common-law fraud claims. 

The claims were predicated on partial omissions by a lender in connection with option adjustable rate mortgage loans ("Option ARM" loans).   The Court criticized the lender's "byzantine descriptions" of the loan terms, which were "hidden in the complexity" of the various loan documents and TILA disclosures.  Slip op. at 23, 29.  In other words, although the material facts were, technically speaking, fully disclosed, the deceptive manner in which they were allegedly disclosed made them actionable: 

Keeping in mind the procedural posture of this case, we conclude plaintiffs have adequately pleaded that material facts were concealed by inaccurate representations and half-truths.  If plaintiffs can show defendant intentionally used its Option ARM forms to deceive borrowers, plaintiffs may be able to establish a fraud claim.  Plaintiffs’ actual interest rates and monthly payments sufficient to amortize the loan (or at least pay the accruing interest) were hidden in the complexity of the Option ARM contract terms.  “‘The fact that a false statement may be obviously false to those who are trained and experienced does not change its character, nor take away its power to deceive others less experienced.  There is no duty resting upon a citizen to suspect the honesty of those with whom he [or she] transacts business.  Laws are made to protect the trusting as well as the suspicious.  [T]he rule of caveat emptor should not be relied upon to reward fraud and deception.’”  (Thompson v. 10,000 RV Sales, Inc. (2005) 130 Cal.App.4th 950, 976.)

Slip op. at 23.

The opinion also discusses the three-way split in authority over the proper formulation of the UCL's "unfair" prong.  Id. at 27.  While the opinion is a little ambiguous, the Court appears to hold that the allegations satisfied all three formulations.  See id. at 29. 

No more appendices of non-California authorities!

Effective July 1, 2011, Rule of Court 3.1113(i) has been amended.  This Rule previously required filing copies of any non-California authorities cited in your briefs.  No more.  Appendices of non-California authorities are now required only if the judge specifically orders it:

(i) Copies of authorities

(1)A judge may require that if any authority other than California cases, statutes, constitutional provisions, or state or local rules is cited, a copy of the authority must be lodged with the papers that cite the authority and tabbed as required by rule 3.1110(f).

(2)If a California case is cited before the time it is published in the advance sheets of the Official Reports, the party must include the title, case number, date of decision, and, if from the Court of Appeal, district of the Court of Appeal in which the case was decided. A judge may require that a copy of that case must be lodged and tabbed as required by rule 3.1110(f).

(3)Upon the request of a party to the action, any party citing any authority other than California cases, statutes, constitutional provisions, or state or local rules must promptly provide a copy of such authority to the requesting party.

(Subd (i) amended effective July 1, 2011 ....)

Previously, the Rule read as follows:

(i) Copies of non-California authorities

If any authority other than California cases, statutes, constitutional provisions, or state or local rules is cited, a copy of the authority must be lodged with the papers that cite the authority and tabbed as required by rule 3.1110(f).  If a California case is cited before the time it is published in the advance sheets of the Official Reports, a copy of  that case must also be lodged and tabbed as required by rule 3.1110(f). 

I first learned about this Rule amendment as a result of my membership in the San Francisco Trial Lawyers Association.

New Ninth Circuit class settlement decision: In re: Bluetooth Headset Products Liability Litig.

In In re: Bluetooth Headset Products Liability Litigation, ___ F.3d ___ (9th Cir. Aug. 19, 2011), the Ninth Circuit reversed a final approval order and remanded for the district court to make further findings regarding the fairness of the settlement terms and the attorneys' fees award.

Supreme Court grants review in UCL preemption case: People ex rel. Harris v. Pac Anchor Transportation, Inc.

Last week, on August 10, 2011, the Supreme Court granted review in a UCL preemption case, People ex rel. Harris v. Pac Anchor Transportation, Inc., no. S194388.  This is the issue on review:

Is an action under the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) that is based on a trucking company's alleged violation of state labor and insurance laws "related to the price, route, or service" of the company and, therefore, preempted by the Federal Aviation Administration Authorization Act of 1994 (49 U.S.C. § 14501)?

The Court of Appeal (Second Appellate District, Division Five) said no.  People ex rel. Harris v. Pac Anchor Transportation, Inc., 195 Cal.App.4th 765 (May 18, 2011) (review granted).

This case has been added to my list of pending Supreme Court cases.

MCLE program: "Wage & Hour Class Actions After AT&T Mobility v. Concepcion"

On Wednesday, August 17, 2011, the Labor and Employment Law Section of the State Bar of California will present a full-day seminar entitled "Wage & Hour Class Actions After AT&T Mobility v. Concepcion."  The seminar will take place at the JW Marriot Los Angeles, 900 West Olympic Blvd.

This looks like an excellent program.  One of the afternoon panels will feature Judge Emilie Elias, Judge Anthony Mohr and Judge Carl West of the Los Angeles County Superior Court and Judge David Velasquez of the Orange County Superior Court.  

New class certification decision: Department of Fish and Game v. Superior Court (Adams)

In Department of Fish and Game v. Superior Court (Adams), ___ Cal.App.4th ___ (Aug. 2, 2011), the Court of Appeal (Third Appellate District) reversed an order granting class certification of causes of action for public nuisance, negligence, and inverse condemnation.  The action arose out of the Department of Fish and Game's decision to attempt to eradicate the northern pike, an invasive species of fish, from Lake Davis in Plumas County by poisoning the lake.  Slip op. at 2-3.

The Court of Appeal held that the trial court "applied an erroneous procedure in assessing the evidence":

The trial court described its task in analyzing the evidence on the question of whether common issues predominate as follows:  “The proper legal criteria is whether the declarations presented by Plaintiffs constitute substantial evidence that predominant factual and legal issues make the case more amenable to class treatment.  When looking at Defendants’ declarations, the relevant inquiry is whether they rebut Plaintiffs’ substantial evidence.”  This description suggests the court first examines the proponent’s evidence in isolation to determine if it satisfies the proponent’s burden of showing that common issues predominate and then looks at the opponent’s evidence to see if it rebuts that showing.  In light of the trial court’s description of the expert evidence, as described above, it appears that is in fact what the court did.  However, that is not the proper procedure.  

....

... [When ruling on class certification,] the court does not look at the parties' evidence under a shifting burden of proof.  The burden remains with the proponent of class certification to show common issues predominate. However, when assessing whether the plaintiff has satisfied that burden, the evidence must be evaluated under the prism of the plaintiff’s theory of recovery.  What that means in the present matter is that the evidence must be examined in light of plaintiffs’ theory that the 2007 poisoning caused an overall decline in property values and economic activity, regardless of whether some members of the class may not have been harmed thereby.

Slip op. at 35-36, 38 (citing Jaimez v. DAIOHS USA, Inc., 181 Cal.App.4th 1286 (2010)). 

The 65-page opinion discusses a variety of other issues.

No "picking off" the class representative in the Ninth Circuit: Pitts v. Terrible Herbst, Inc.

The California Supreme Court held many moons ago that a defendant may not defeat a class action by "picking off" the class representatives.  La Sala v. American Sav. & Loan Assn., 5 Cal.3d 864 (1971).

The Ninth Circuit came to the same conclusion, based on essentially the same reasoning, in a decision handed down yesterday.  Pitts v. Terrible Herbst, Inc., ___ F.3d ___ (9th Cir. Aug. 9, 2011). 

The decision also contains some interesting language about the right to conduct discovery before moving for class certification.  See slip op. at 10457-58 & nn. 4, 5.

Interesting Ninth Circuit comment on UCL vs. Article III standing: TrafficSchool.com, Inc. v. Edriver Inc.

TrafficSchool.com, Inc. v. Edriver Inc., ___ F.3d ___ (9th Cir. Jul. 28, 2011), is primarily a Lanham Act decision.  However, the Ninth Circuit had this to say about UCL and Article III standing:

The district court found that plaintiffs “failed to prove . . . that they have suffered an injury in fact and lost money or property as a result of Defendants’ actions,” and that they “provided no evidence showing a causal connection between Defendants’ actions and any harm Plaintiffs incurred.” Defendants argue that this finding divested the district court of jurisdiction, and also that plaintiffs lacked standing under the Lanham Act.  The latter contention is wrong because a false advertising plaintiff need only believe that he is likely to be injured in order to bring a Lanham Act claim. 15 U.S.C. § 1125(a). Moreover, the district court made its findings of no injury when it analyzed plaintiffs’  state-law unfair competition claim. These findings conclusively establish that plaintiffs didn’t have standing to bring their state-law claim; but, because California’s unfair competition law defines “injury in fact” more narrowly than does Article III, the findings don’t necessarily preclude Article III standing. See Cal. Bus. & Prof. Code § 17204.1

1 Plaintiffs filing an unfair competition suit must prove a pecuniary injury, Hall v. Time Inc., 70 Cal. Rptr. 3d 466, 470-71 (Cal. Ct. App. 2008), and “immediate” causation, In re Tobacco II Cases, 207 P.3d 20, 40 (Cal. 2009). Neither is required for Article III standing.

Slip op. at 9740-41 & n.1. 

New Ninth Circuit UCL preemption decision: Aguayo v. U.S. Bank

In Aguayo v. U.S. Bank, ___ F.3d ___ (9th Cir. Aug. 1, 2011), the Ninth Circuit held that federal law (namely, the National Bank Act and implementing OCC regulations) did not preempt a UCL "unlawful" prong claim predicated on violation of the Rees-Levering Act.