The UCL Practitioner

New Ninth Circuit class settlement decision: Nachshin v. AOL, LLC

In Nachshin v. AOL, LLC, ___ F.3d ___ (9th Cir. Nov. 21, 2011), the Ninth Circuit confirmed the propriety of cy pres distributions in class action settlements, but rejected the particular cy pres distribution plan before it:

The cy pres doctrine allows a court to distribute unclaimed or non-distributable portions of a class action settlement fund to the “next best” class of beneficiaries.  See Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1307-08 (9th Cir. 1990).  Cy pres distributions must account for the nature of the plaintiffs’ lawsuit, the objectives of the underlying statutes, and the interests of the silent class members, including their geographic diversity.   See id.  The cy pres distributions here do not comport with our cy pres standards.  While the donations were made on behalf of a nationwide plaintiff class, they were distributed to geographically isolated and substantively unrelated charities.

Slip op. at 20288-89.  The Ninth Circuit remanded for the parties to propose and the district court to approve cy pres distributions to different charities.  See id. at 20295-97.

New UCL "safe harbor" decision: Rose v. Bank of America, N.A.

In Rose v. Bank of America, N.A., ___ Cal.App.4th ___ (Nov. 21, 2011), the Court of Appeal (Second Appellate District, Division Two) held that a UCL "unlawful" prong claim could not be predicated on alleged violations of the federal Truth in Savings Act (TISA), 12 U.S.C. § 4301 et seq.

The Court reasoned that Congress evinced a clear intent not to allow private enforcement of that Act by repealing the statute creating a private right of action:

We do not believe that California consumers can seek injunctive relief and restitution against a bank for “unlawful” conduct when Congress has clearly rejected a private right to enforce TISA.  Congress indicated its intent in 1996, when it enacted a sunset clause that expressly repealed the statute allowing individuals to enforce TISA.  It reconfirmed that intent when, in 2001, it rebuffed legislation to reinstate civil liability suits against noncompliant banks.  When the legislative history shows that legislators expressly considered and rejected specific legislation, we need not speculate about legislative intent.  (City of Santa Cruz v. Municipal Court (1989) 49 Cal.3d 74, 88-89.)  Only federal authorities have standing to enforce bank compliance with TISA.  Allowing private plaintiffs to recover on a UCL claim based solely on TISA violations would constitute an “end run” around the limits on enforcement set by Congress.  (Gunther v. Capital One, N.A., supra, 703 F.Supp.2d at pp. 270-271.)

Slip op. at 9-10.   The opinion's discussion of the limits on UCL "unlawful" prong claims is quite interesting.  Id. at 5-8.  The opinion also addresses the UCL's "unfair" prong, holding that the complaint failed to state a claim under any of the three formulations that have developed in the case law.  Id. at 10-11.

MCLE program: AT&T Mobility v. Concepcion and its Aftermath

On Thursday, December 1, 2011, the Arbitration Committe of the ADR Section of the Bar Association of San Francisco will present AT&T Mobility v. Concepcion and its Aftermath.  It sounds like an excellent program: 

Speakers
Donald M. Falk
Mayer Brown LLP
Represented AT&T in the case

Jonathan E. Gertler
Chavez & Gertler
President, San Francisco Trial Lawyers Association

Moderator
John S Worden
Schiff Hardin, LLP
Chair, Arbitration Committee

Topics
On April 27, 2011, the United States Supreme Court ruled (5–4) that the Federal Arbitration Act preempts state laws that prohibit contracts from disallowing class action lawsuits. By permitting contracts that exclude class action arbitration, the high court’s decision will make it much harder for consumers to file class action lawsuits. The lawyers who handled the case and oppose its result will discuss and debate the following:

• How has the decision shaken out so far?
• What is left to find out on the California and federal levels?
• What is the next shoe to drop?
• What is the plaintiffs bar doing to adjust/adapt?
• Is there any chance of legislative or executive intervention?
• How does the defense bar view the future?

Location

BASF Conference Center
301 Battery Street
3rd Floor
San Francisco, CA 94111

Schedule

MCLE Registration: 11:30 a.m. - 12:00 p.m.
Program: 12:00 - 1:30 p.m.

New Ninth Circuit class certification decision: Connecticut Retirement Plans and Trust Funds v. Amgen Inc.

Last week, the Ninth Circuit handed down a decision in a securities class action, Connecticut Retirement Plans and Trust Funds v. Amgen Inc., ___ F.3d ___ (9th Cir. Nov. 8, 2011).  The panel interpreted the U.S. Supreme Court's decision last Term, Erica P. John Fund v. Halliburton, 131 S. Ct. 2179 (2011), and also placed clear limits on merits determinations at the class certification stage.  Among other things, the materiality of the alleged misrepresentations is a merits issue not to be resolved at the class certification stage in a securities fraud action.  

From the introduction: 

What must a plaintiff do to invoke the fraud-on-the-market presumption in aid of class certification?  Today we join the Third and Seventh Circuits in holding that the plaintiff must (1) show that the security in question was traded in an efficient market (a fact conceded here), and (2) show that thealleged misrepresentations were public (a fact not contested here).  As for the element of materiality, the plaintiff must plausibly allege — but need not prove at this juncture — that  the claimed misrepresentations were material. Proof of materiality, like all other elements of a 10b-5 claim, is a merits issue that abides the trial or motion for summary judgment.  Likewise, rebuttal of the fraud-on-the-market presumption, at least by showing that the alleged misrepresentations were not material, is a matter for trial or summary judgment, not a matter to be taken up in a class certification motion.

Slip op. at 20104-05 (italics in original; bold added).

[Via]

New footnote addresses Concepcion: Roberts v. El Cajon Motors, Inc.

In Roberts v. El Cahon Motors, Inc., ___ Cal.App.4th ___ (Nov. 8, 2011), the Court of Appeal (Fourth Appellate District, Division One) rejected the argument that it was okay for a defendant to wait and see how the Supreme Court would rule in Concepcion before seeking to compel arbitration:

At oral argument, El Cajon argued it waited to compel arbitration because it was unsure of the state of the law regarding the enforceability of the waiver of classwide claims in the arbitration provision at issue here, as evidenced by the U.S. Supreme Court's recent decision in Concepcion and by other recent cases (see e.g., Smith v. Americredit Fin. Servs., Inc. (S.D.Cal. 2009) 2009 WL 4895280).  We find this excuse unavailing.  El Cajon cannot proverbially "have its cake and eat it too."  That is, if El Cajon wanted to arbitrate the dispute involving Roberts, it should have promptly invoked arbitration regardless of the validity of the waiver provision in the arbitration provision.  After all, Concepcion was not decided until April 2011, more than a year after El Cajon moved to compel arbitration.  In addition, El Cajon's argument assumes that Concepcion would have been decided favorably to El Cajon, which of course was entirely speculative at the time El Cajon moved to compel arbitration.  Finally, Concepcion arguably does not preempt "all California law relating to unconscionability" because "[g]eneral state law doctrine pertaining to unconscionability is preserved unless it involves a defense that applies 'only to arbitration or that derive[s its] meaning from the fact that an agreement to arbitrate is at issue.' "  (Mission Viejo Emergency Medical Associates. v. Beta Healthcare Group (2011) 197 Cal.App.4th 1146, 1158, fn. 4, quoting Concepcion, supra, 563 U.S. at p. ___ [131 S.Ct. at p. 1746].)  Here, whether the arbitration provision was valid and enforceable notwithstanding the waiver of classwide claims in that provision was an issue between the parties, as evidenced by the trial court's alternative finding the arbitration provision was substantively and procedurally unconscionable.  (See fn. 7, ante.)

Slip op. at 19 n.10.  The quotation from Mission Viejo is interesting because that case was not a class action (which Roberts is). 

Matt Bailey has a lengthier post on Roberts over at his blog, Bailey Class Action Daily.

MCLE reminder: Complex Courts Symposium tomorrow afternoon in San Francisco

Don't forget to register for the Complex Courts Symposium 2011, which will take place tomorrow at 3:30-6:30 p.m., followed by a reception with the (many) participating judges. Registration opens at 3:00 at the auditorium of the Administrative Office of the Courts, 445 Golden Gate Avenue, San Francisco.

This event is sponsored by the Litigation Section of the Bar Association of San Francisco and the Association of Business Trial Lawyers.  It sounds like it will be an extremely interesting program.  It's not every day that practitioners have an opportunity to hear practical advice and wisdom from a dozen judges presiding over complex litigation departments in counties across the state.

Click here for more information and to preregister. 

California Courts YouTube channel

Here is the link to the YouTube channel of the California Courts: The Judicial Branch of California.  "Video content on this channel was produced exclusively by or in partnership with the California Administrative Office of the Courts." 

It includes video of Judicial Council meetings; speeches by court officials including the Chief Justice; courthouse groundbreaking ceremonies; confirmation ceremonies; and various other videos. 

The channel was created in January 2009, but I will admit I was unaware of it until now.  This explains how the Brinker video could have been posted on YouTube before it was available on the California Channel website. 

"High Court Leans Toward in Employers in Brinker"

Yesterday's Recorder had this report on the Brinker argument.  An excerpt:

Lawyers watching the oral arguments on Tuesday sensed the court will most likely issue a nuanced ruling.

"I think the court is going to stake out a little bit of a compromise decision," said Rudy Exelrod Zieff & Lowe partner David Lowe, a plaintiff-side employment lawyer who wasn't involved in the case who tuned in to a webcast of the proceedings.

The court's likely to adopt some version of the "make available" standard, he said, but "they may also include some language in the opinion emphasizing that employers may not impede or discourage or dissuade workers from taking those breaks."

In particular, some of the justices seemed open to Altshuler Berzon partner Michael Rubin's argument that the Fourth District erred in completely throwing out the class certification order — particularly as it relates to the plaintiffs' claims about missing rest breaks.

Whatever the outcome, it was quite a remarkable experience being up there, looking the justices straight in the eyes and having a dialog with them on some very fascinating (and nuanced) issues. 

Supreme Court hears oral argument in class certification case: Brinker Restaurant Corp. v. Superior Court (Hohnbaum)

Yesterday, the Supreme Court heard oral argument in Brinker Restaurant Corp. v. Superior Court (Hohnbaum), no. S166350.  I had the privilege of presenting the argument on behalf of the workers along with my co-counsel Michael Rubin. 

The argument focused primarily on the substantive Labor Code issues.  There was comparatively little argument or questioning on the class certification issues.  Of the few questions asked during my brief rebuttal, none related to class certification. 

Matt Bailey has an interesting summary of the argument at his blog, the Bailey Class Action Daily.  Unfortunately it turns out that the live web feed had some technical glitches.

The complete video of the argument is available on YouTube at this link.  It should also soon be available at the California Channel website, but it isn't up yet.

There has been quite a bit of press coverage as well.   According to Laura Ernde's article in this morning's Daily Journal (link not available), the justices were "skeptical" of the idea that meal periods should be mandatory in the sense that workers can never choose to work through them, but seemed to accept the idea that employees cannot be required to work more than five hours at a time without a meal period.  The article does not address any of the class certification issues. 

The opinion will be due in 90 days, which is going to be no later than early February.

New UCL "unfair" prong decision: In re Cipro Cases I & II

In In re Cipro Cases I & II, ___ Cal.App.4th ___ (Nov. 1, 2011), the Court of Appeal (Fourth Appellate District, Division One) followed Chavez v. Whirlpool Corp., 93 Cal.App.4th 363 (2001) and held that conduct not unlawful under the Cartwright Act could not be deemed "unfair" under the UCL.  Slip op. at 50.

In my opinion, that holding (like the holding in Chavez) is inconsistent with the California Supreme Court's decision in Cel-Tech.  In 2005, another appellate panel declined to follow Chavez for that very reason.  Eddins v. Redstone, 134 Cal.App.4th 290 (2005) (discussed in this blog post).

UPDATE:  On February 15, 2012, the Supreme Court granted review in this case.  In re Cipro Cases I & II, no. S198616.  The statement of issues mentions only the Cartwright Act claim, but as plenary review was granted, the Court may also address the above UCL issue.