The UCL Practitioner

District court construes Mazza: Keegan v. American Honda Motor Co.

In Keegan v. American Honda Motor Co., ___ F.R.D. ___, 2012 WL 2250040 (C.D. Cal. Jun. 12, 2012), Judge Margaret M. Morrow of the Central District of California construed and distinguished the Ninth Circuit's opinion in Mazza v. American Honda, 666 F.3d 581 (9th Cir. 2012), and partially granted class certification of UCL, CLRA and other claims.

Here is one passage addressing Mazza:

The court is mindful of the Ninth Circuit's warning that differences in state law concerning the need for proof of reliance can “spell the difference between the success and failure of the claim.” Mazza, 666 F.3d at 591. Mazza, however, addressed omissions in advertisements and oral statements that included differing information. The Ninth Circuit concluded that “[a] presumption of reliance [could] not arise when class members ‘were exposed to quite disparate information from various representatives of the defendant.’ “ Id. at 596 (quoting Stearns, 655 F.3d at 1020). It noted further: “For everyone in the class to have been exposed to the omissions, as the dissent claims, it is necessary for everyone in the class to have viewed the allegedly misleading advertising. Here the limited scope of that advertising makes it unreasonable to assume that all class members viewed it.” Id.

 In this case, by contrast, plaintiffs allege that defendants did not disclose to any member of the class information regarding the potential for excessive and premature tire wear caused by negative camber. There is no question of different statements being made to different groups of consumers, or certain class members being exposed to information others were not. Consequently, the court concludes that any potential differences in state law concerning the proof of reliance that is necessary to prevail on consumer protection claims do not defeat predominance in this case.

Keegan, 2012 WL 2250040 at *33-*34.

The order also has this passage on class certification of a UCL "fraudulent" prong claim:

As is clear from the California Supreme Court's decision in In re Tobacco II Cases, 46 Cal.4th 298 (2009), moreover, there is no need to prove reliance on an individual basis. Rather, “In re Tobacco II Cases set out a liberal approach to the reliance inquiry,” permitting plaintiffs to prove a UCL violation by presenting “generalized evidence that Defendants' conduct was ‘likely to deceive’ members of the public.” Plascencia v. Lending 1 st Mortgage LLC, 259 F.R.D. 437, 448 (N.D. Cal. 2009). Indeed, as with the CLRA, materiality is relevant to prove reliance, since “a presumption, or at least an inference, of reliance arises wherever there is a showing that a misrepresentation was material.” In re Tobacco II,46 Cal.4th at 327. Consequently, a violation of the UCL can be proved with common evidence regarding the nature of the design defect in question, the likely effect of the defect on class vehicles, its likely impact on vehicle safety, what Honda knew or did not know, and what it disclosed or did not disclose to consumers. See Yamada, 275 F.R.D. at 578 (“[I]t is unlikely that a member of the putative class would have purchased the NobelDirect product without having been influenced by Defendants' uniform marketing claims. Furthermore, it is reasonable to assume that no rational member of the putative class would have purchased and used the NobelDirect implant had he or she been aware of the alleged defective design”); Delarosa v. Boiron, Inc., 275 F.R.D 582, 594 (C.D. Cal. 2011) (“In addition, Defendant's arguments that it can present proof that Coldcalm worked for some individual class members goes to the proof of the merits of Plaintiff's claim, not to the common question as to the overall efficacy of the product”).

Id. at *23.

Many thanks to the friend who forwarded this decision.

BREAKING NEWS: U.S. Supreme Court grants cert. on limited issues in Comcast Corp. v. Behrend

Today, the U.S. Supreme Court announced that it has granted cert. on a limited question in Comcast Corp. v. Behrend, no. 11-864:  

The petition for a writ of certiorari is granted limited to the following question: “Whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a class-wide basis.”

The order was issued today, after the case was relisted seven times. The Third Circuit's opinion is Behrend v. Comcast Corp., 655 F.3d 182 (3d Cir. 2011). 

I hope to have more on this development, including the cert. petition and other documents, later. 

UPDATE:  The following links to documents from the Behrend case are courtesy of SCOTUSblog:

• Opinion below (3d Cir.)
• Petition for certiorari
• Brief in opposition
• Reply of petitioners

New private attorney general attorneys' fees opinion: Azure Limited v. I-Flow Corp.

The Court of Appeal (Fourth Appellate District, Division Three) addressed attorneys' fees under the private attorney general doctrine (Code of Civil Procedure § 1021.5) in a new opinion handed down last Thursdsay.  Azure Limited v. I-Flow Corp., ___ Cal.App.4th ___ (Jun. 21, 2012).

The opinion construed (and distinguished) the Supreme Court's decision last year in Serrano v. Stefan Merli Plastering Co., 52 Cal.4th 1018 (2011). 

 

Ninth Circuit addresses UCL standing: Pom Wonderful LLC v. The Coca-Cola Co.

The end of a recent Ninth Circuit opinion, Pom Wonderful LLC v. The Coca-Cola Co., ___ F.3d ___ (9th Cir. May 17, 2012), contains this passage on UCL standing:

To have standing to bring a claim under the UCL, a private plaintiff must show that it “has suffered injury in fact and has lost money or property as a result of” unfair competition; to have standing under the FAL, a private plaintiff must make the same showing of injury and loss as a result of an FAL  violation. Cal. Bus. & Prof’l Code §§ 17204, 17535. The district court interpreted the “lost money or property” language to require a plaintiff to show that it is entitled to restitution from the defendant—even if the plaintiff seeks only injunctive relief. That was error. The California Supreme Court has now made clear that standing under section 17204 (the UCL standing provision) does not depend on eligibility for restitution. See Kwikset Corp. v. Superior Ct., 246 P.3d 877, 895 (Cal. 2011); Clayworth v. Pfizer, Inc., 233 P.3d 1066, 1088 (Cal. 2010). We are inclined to interpret the materially identical language in section 17535 (the FAL standing provision) the same way. Nevertheless, because these cases came down after the district court entered judgment in this case, we will vacate the judgment as to Pom’s state law claims and remand to the district court to rule on standing in light of Kwikset and Clayworth.

Slip op. at 5258-59.

This was a UCL competitor and Lanham Act case brought by Pom Wonderful against Coca-Cola over the labeling of the latter's "Pomegranate Blueberry" juice, which "contains about 99.4% apple and grape juices, 0.3% pomegranate juice, 0.2% blueberry juice, and 0.1% raspberry juice."  Id. at 5248.  In the first part of its analysis, the Ninth Circuit held that the federal Food, Drug and Cosmetic Act did not bar the Lanham Act claim.  Id. at 5252-58. 

Recent UCL public prosecutor decision addresses statute of limitations: People v. E*Poly Star, Inc.

In People v. E*Poly Star, Inc., 205 Cal.App.4th 1316 (May 14, 2012), the Court of Appeal (Second Appellate District, Division Seven) held that the trial court erred in concluding that the UCL's four-year statute of limitations barred public prosecutor claims brought under the UCL's "fraudulent" prong. 

As the opinion notees, the Supreme Court is considering whether the delayed discovery rule and the continuing violation doctrine apply to UCL claims.  Aryeh v. Canon Business Solutions, Inc., no. S184929 (review granted 10/20/10).  Aryeh has been fully briefed and is awaiting oral argument.

Seventh Circuit construes Smith v. Bayer Corp.: Smentek v. Dart

In Smentek v. Dart, ___ F.3d ___ (7th Cir. Jun. 19, 2012), the Seventh Circuit (Judge Posner) construed the U.S. Supreme Court's opinion last year in Smith v. Bayer Corp., 131 S. Ct. 2368 (2011).  The question considered was whether, under Smith, federal judges must afford "comity" to each other's orders denying class certification.  The answer was no:

Whatever the scope of the Supreme Court’s current concept of comity, the defendants’ argument that Smith v. Bayer Corp. adopted a rule of comity in class action suits that precludes granting class certification in a copycat class action must be rejected ....

The rule urged by the defendants in this case that the denial of class certification bars the certification of the same or a similar class in a suit by a member of the same class as the previous suit ... would contradict the holding of Smith v. Bayer Corp., which is that a class member who did not become a party to the previous parallel class action is not precluded from seeking class certification in his class action. ....

We are left with the weak notion of “comity” as requiring a court to pay respectful attention to the decision of another judge in a materially identical case, but no more than that even if it is a judge of the same court or a judge of a different court within the same judiciary. We emphasize, however, the qualification in “materially identical.” Even two class actions involving the same class may differ materially, for example in the suitability of the class representative or the adequacy of class counsel, and where they do the judge in the second, or third, or nth class action is on his own. This is not such a case; nevertheless the district judge gave plausible reasons for her disagreement with the judges in the two previous Cook County dental cases. Can more be required? The defendants’ claim that she was bound by the decisions of the other judges just because those decisions preceded and were contrary to her decision has no basis in law and flouts the principle that a district court decision does not have precedential effect. Camreta v. Greene, 131 S. Ct. 2020, 2033 n. 7 (2011); Wirtz v. City of South Bend, 669 F.3d 860, 862-63 (7th Cir. 2012). The defendants would have such decisions treated not as mere precedents but as super-precedents that no court lacking appellate authority could question.

The district judge’s grant of class certification is therefore affirmed.

Slip op. at 6, 7, 8-9 (emphasis added).

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What is a "business act or practice"? That v. Alders Maintenance Assn.

In That v. Alders Maintenance Assn., ___ Cal.App.4th ___ (Jun. 15, 2012), the Court of Appeal (Fourth Appellate District, Division Three) held that the conduct of an election by a homeowners association is not a "business act or practice" within the meaning of the UCL:

Plaintiff’s second cause of action, offered to circumvent the statute of limitations on the first, is under the UCL.  The UCL is codified in Business and Professions Code section 17200 et seq.  Section 17200 prohibits any “unlawful, unfair or fraudulent business act or practice.”  (Italics added.) 

We cannot find, and plaintiff does not cite, a single published case in which a homeowners association has been treated as a “business” under the UCL, and we are unpersuaded by plaintiff’s claims in favor of such a reading of the statute.  Plaintiff argues that associations are businesses, citing O’Connor v. Village Green Owners Assn. (1983) 33 Cal.3d 790.  That case is readily distinguishable.  In O’Connor, the California Supreme Court held that an association was a “business establishment” under the Unruh Civil Rights Act (Civ. Code, §51).  Treating associations as businesses in that context is consistent with — and indeed, necessary for — fulfilling the fundamental purposes of that statutory scheme, the protection of civil rights. 

The UCL’s purpose does not require the same broad construction of the word “business.”  “The UCL’s purpose is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services.  [Citation.]”  (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949.)  An association does not participate as a business in the commercial market, much less compete in it.  The dispute here is not related to any activity that might be deemed in the least bit commercial.  Indeed, it is solely related to the conduct of association elections, a subject covered thoroughly by the Davis-Stirling Act itself.  (Civ. Code, § 1363.03 et seq.) 

We do not foreclose entirely the notion that the UCL could apply to an association.  If, for example, an association decided to sell products or services that are strictly voluntary purchases for members or nonmembers, it might be liable for such acts under the UCL.  But applying the UCL to an election dispute would simply make no sense.  An association, operating under its governing documents to maintain its premises and conduct required proceedings, possesses none of the relevant features the UCL was intended to address.  Applying the UCL in this context would both misconstrue the intent of that statute and undermine the specific procedures set forth in the Davis-Stirling Act.  An action under the UCL “is not an all-purpose substitute for a tort or contract action.”  (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 173.)  We therefore find the court properly sustained defendant’s demurrer to the second cause of action.

Slip op. at 13-14 (footnote omitted) (emphasis added).

New opinion on arbitrability of public injunction claims: Hoover v. American Income Life Ins. Co

In Hoover v. American Income Life Ins. Co., ___ Cal.App.4th ___ (May 16, 2012; pub. ord. June 13, 2012), the Court of Appeal (Fourth Appellate District, Division Two), in refusing to enforce an arbitration clause in a collective bargaining agreement, said this: 

Certainly, the injunctive relief claim under the Unfair Business Practices Act (Bus. & Prof. Code, § 17200) is not arbitrable.  (Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 315-316; Brown v. Ralphs Grocery Co., supra, 197 Cal.App.4th at pp. 500-501.)

Slip op. at 19.

The citations of Cruz and Brown are significant. The California and U.S. Supreme Courts both declined to review Brown. The opinion’s reasoning may well be followed by other California state courts analyzing whether Cruz survived Concepcion -- notwithstanding the Ninth Circuit's opinion in Kilgore.

On an unrelated subject, Matt Cain's perfect game was beyond amazing.  Go Giants.

UPDATE:  The Complex Litigator has a detailed post on Hoover.  The post also discusses Iskanian (which this blog covered here).

Interesting passage on UCL standing in Ninth Circuit concurrence: Carijano v. Occidental Petroleum

A recent Ninth Circuit opinion concurring in the denial of en banc rehearing had this to say about UCL standing and Kwisket: 

Whoa!!! The Chief has put the proverbial cart before the horse. .... Occidental is free, on remand, to renew its motion to dismiss on the ground that Amazon Watch may not have standing to assert its claim under California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 et seq. ....

The question of standing cannot be resolved on the bare pleadings, which is all we have before us given the procedural posture of this appeal. .... Here, Occidental disputes the existence, the cause and the redressability of the harm alleged by Amazon Watch. Resolving these issues will require factual development on a number of fronts. For example, to show harm, Amazon Watch may produce evidence of the manner in which Occidental’s conduct forced it to divert resources from its central mission of protecting the rainforest and advancing the rights of the indigenous people of the Amazon.  See Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 322-24 (2011) (requiring economic harm to prove UCL standing). To show causation, Amazon Watch may also produce evidence linking Occidental’s alleged deceptive practices to Amazon Watch’s diminished ability to carry out its mission. See id. at 326 (affirming that fraud or reliance is a causal mechanism recognized under the UCL). Further, Amazon Watch may prove a continuing injury, which may be redressed through, for example, injunctive relief compelling Occidental to research and remediate environmental harms or to conduct outreach and education about health risks with the indigenous people. See id. at 336-37 (standing under the UCL is not dependent on the availability of restitution as a remedy).

The district court did not address standing, and we need not—indeed, could not—do so in the first instance here.

Carijano v. Occidental Petroleum, ___ F.3d ___, 2012 WL 1970375 (May 31, 2012) (Wardlaw, J., concurring in denial of en banc rehearing) (slip op. at 6009-11) (emphasis added). 

Judges Schroeder and Gould joined in Judge Wardlaw's concurrence.  Four judges joined Chief Judge Kosinski in dissenting from the denial of en banc rehearing. 

Judge Wardlaw wrote the opinion of which rehearing was sought, Carijano v. Occidental Petroleum, 643 F.3d 1216 (2011).  Her views in this concurrence will be useful not only on remand in this case, but in other cases as well. 

There can be little remaining doubt that harms such as investigative costs and diversion of resources caused by a defendant's UCL violations are sufficient to confer Prop. 64 standing.  Another recent case similarly interpreted Kwikset.  Glen Oaks Estates Homeowners Assn. v. Re/Max Premier Properties, Inc., 203 Cal.App.4th 913 (2012) (discussed in this blog post).

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New opinion affirms order strking class allegations: Ortega v. Topa Ins. Co.

In Ortega v. Topa Ins. Co., ___ Cal.App.4th ___ (May 25, 2012), the Court of Appeal (Second Appellate District, Division Three) affirmed an order striking class allegations from the complaint.

Among other things, the Court affirmed the applicability of the "death knell" doctrine to such rulings:

While generally an order granting a motion to strike is not an appealable order, in this case, the trial court’s order is effectively a final judgment.  The order at issue in this case struck all class allegations from the complaint.  Such an order is appealable, even if made at the pleading stage.  “Whatever its form, an order that has the effect of denying certification as a class action disposes of that action and is an appealable final judgment.”  (Prince v. CLS Transportation, Inc. (2004) 118 Cal.App.4th 1320, 1322, fn. 2.)

Slip op. at 9. 

On a related note, a recent unpublished opinion from the Fifth Appellate District, Barnes v. Bakersfield Dodge, Inc., No. F063370 (Cal. App. May 22, 2012), held that the "death knell" doctrine applies to an order granting a motion to compel arbitration in a putative class case if the arbitration clause bans class proceedings.  At least one publication request has been filed there.  The appellate court reversed the order, holding that the defendant had waived its right to seek to compel arbitration.

UPDATE: The publication requests in Barnes were denied.

U.S. Supreme Court relists Comcast Corp. v. Behrend for the fifth time

On Monday, the U.S. Supreme Court relisted the Behrend case for the fifth time.  Comcast Corp. v. Behrend, no. 11-864.  It was scheduled for conference on Thursday, June 7, and if it is not relisted again, the up-or-down vote on certiorari should be announced in the Court's order list on Monday, June 11.

This case involves class certification of antitrust claims and could provide an opportunity for elaboration on Dukes.  The Third Circuit's opinion is Behrend v. Comcast Corp., 655 F.3d 182 (3d Cir. 2011). 

UPDATE:  On Monday, June 11, 2012, the case was relisted yet again, for the conference of June 14, 2012.  We'll have to check the docket again on the 18th.

UPDATE: On Monday, June 18, 2012, the case was relisted again for the conference of June 21, 2012.  Check back on June 25.  I'm pretty sure this sort of serial relisting is not normal. 

UPDATE:  On June 25, 2012, the Supreme Court granted cert. in this case.

District court relies on Brinker concurrence: Ricaldi v. U.S. Investigation Services, LLC

One question raised since the Supreme Court handed down Brinker is the extent to which lower courts will follow the concurring opinion of Justices Werdegar and Liu, which elaborates on both the Labor Code and the class certification issues addressed in Justice Werdegar's majority opinion. 

In a recent order,  Judge Dean Pregerson of the U.S. District Court for the Central District of California found the concurring opinion persuasive on at least the former point. 

First, Judge Pregerson summarized the Brinker majority decision regarding employers' legal obligations with respect to meal periods: 

The California Supreme Court recently clarified the law regarding meal periods, in Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004, 139 Cal.Rptr.3d 315, 273 P.3d 513 (Cal.2012). Relevant here, the court concluded that “an employer must relieve the employee of all duty for the designated period, but need not ensure that the employee does no work.” Id. at 338. The court further explained that a “worker must be free to attend to anypersonal business he or she may choose during the unpaid meal period.” Id. at 340 (quoting Cal. Dep't of Indus. Relations, Div. of Labor Standards Enforcement, Opinion Letter No.1991.06.03, at 1). Accordingly, the meal period requirement is only “satisfied if the employee (1) has at least 30 minutes uninterrupted, (2) is free to leave the premises, and (3) is relieved of all duty for the entire period.” Id.

The court also emphasized that, although employers are not required to ensure that employees do not voluntarily choose to work during a meal period, “an employer may not undermine a formal policy of providing meal breaks by pressuring employees to perform their duties in ways that omit breaks.” Id. at 343 (citing Cicairos v. Summit Logistics, Inc., 133 Cal.App.4th 949, 962–63, 35 Cal.Rptr.3d 243 (2005) (finding potential meal period violations where “defendant's management pressured drivers to make more than one daily trip, making drivers feel that they should not stop for lunch”); Jaimez v. DAIOHS USA, Inc., 181 Cal.App.4th 1286, 1304–05, 105 Cal.Rptr.3d 443 (2010) (finding potential violations based on evidence that scheduling policy “made it extremely difficult” for employees to both timely complete deliveries and take all required breaks); Dilts v. Penske Logistics, LLC, 267 F.R.D. 625, 638 (S.D.Cal.2010) (finding potential violations given evidence of informal anti-meal-period policies “enforced through ‘ridicule’ or ‘reprimand’ ”)).

In other words, the “wage orders and governing statute do not countenance an employer's exerting coercion against the taking of, creating incentives to forego, or otherwise encouraging the skipping of legally protected breaks.” Brinker, 133 Cal.App.4th at 343, 34 Cal.Rptr.3d 635. Thus, as the court summarized: “The employer satisfies [its meal period] obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30–minute break, and does not impede or discourage them from doing so.” Id.

Ricaldi v. U.S. Investigation Services, LLC, 2012 WL 1900660, *2-*4 (C.D. Cal. May 25, 2012).

Judge Pregerson then had this to say regarding the concurring opinion: 

Finally, in a concurring opinion joined by Justice Liu, Justice Werdegar emphasized that relevant IWC wage orders also require employers to record meal periods. Id. at 353 (Werdegar, J., concurring) (citing Cal.Code Regs. tit. 8, § 11050); see alsoCal.Code Regs. tit. 8, § 11040(7)(A)(3) (same). The Justices therefore concluded that the burden is on the employer to show that it relieved an employee of all duty for a meal period, if the employer fails to record the meal period as required. ....

....

As an initial matter, the court notes its agreement with Justices Werdegar and Liu that it is the employer's burden to rebut a presumption that meal periods were not adequately provided, where the employer fails to record any meal periods. Otherwise, employers would have an incentive to ignore their recording duty, leaving employees the difficult task of proving that the employer either failed to advise them of their meal period rights, or unlawfully pressured them to waive those rights. See Brinker, 133 Cal.App.4th at 353 & n. 1, 34 Cal.Rptr.3d 579 (Werdegar, J., concurring) (citing Cicairos, 133 Cal.App.4th at 961, 35 Cal.Rptr.3d 243 (“[W]here the employer has failed to keep records required by statute, the consequences for such failure should fall on the employer, not the employee.” (internal quotation marks omitted))). Here, as mentioned, there is no dispute that USIS failed to record any meal periods.

Id. at *4, *5 (empahsis added).  The order goes on to deny the defendant's summary judgment motion. 

While the order does not address the class certification aspects of Brinker (either the majority or concurring opinions), there is no reason not to expect that judges will find the concurrence persuasive on class certification as well.  After all, what non-binding authority could be more persuasive than further elaboration by Justice Werdegar, author of not only the Brinker majority opinion, but also Sav-on, Baycol, Fireside Bank, and Lockheed Martin -- five of the nine landmark class certification decisions issued by the Supreme Court since 2000? 

UPDATE: The post now includes a link to Judge Pregerson's order.

Free webinar on Dukes, June 21, 2012, 9:00 a.m.

The law firm Arnold & Porter will be presenting a free webinar on Dukes on Thursday, June 21, 2012 at 9:00 a.m. Pacific.  Click here for more information and to register. 

I am assured that the webinar will be balanced even though all the presenters are Arnold & Porter attorneys (including my friend Angel Garganta).  This is the panel description:

Wal-Mart v. Dukes: One Year Later

In June 2011, the Supreme Court decided Wal-Mart v. Dukes,  arguably the most significant class action opinion ever issued by the Court. Wal-Mart imposed uniform, and uniformly rigorous, class certification standards in all federal courts. On the first anniversary of this landmark decision, members of Arnold & Porter LLP's litigation practice group and consumer industry group will provide in-house counsel with practical analyses of the Supreme Court's decision and will examine its impact to date on class actions and class action law.

 Speakers:

• Angel A. Garganta
• James F. Speyer
• Kelly A. Welchans

On a related note, I will have an article forthcoming in the next issue of Competition, the journal of the State Bar's Antitrust and Unfair Competition Law Section, called "Dukes and Common Proof in California Class Actions."   The article covers Dukes, Brinker and Duran, among other decisions.

New opinion on the arbitration front: Iskanian v. CLS Transportation Los Angeles, LLC

Yesterday, the Court of Appeal (Second Appellate District, Division Two) affirmed a post-Concepcion order compelling arbitration and dismissing the (previously-certified) class claims.  Iskanian v. CLS Transportation Los Angeles, LLC, ___ Cal.App.4th ___ (Jun. 4, 2012).  In so doing, the Court addressed a number of very interesting issues that are currently the subject of active litigation in the lower courts, state and federal. 

Among other things, the opinion holds that "the Concepcion decision conclusively invalidates the Gentry test. ....  A rule like the one in Gentry—requiring courts to determine whether to impose class arbitration on parties who contractually rejected it—cannot be considered consistent with the objective of enforcing arbitration agreements according to their terms."  Slip op. at 8-9 (hyperlink added). 

This conflicts with the statement a few weeks ago in Kinecta Alternative Financial Solutions, Inc. v. Superior Court (Malone), ___ Cal.App.4th ___ (Apr. 25, 2012; modified May 1, 2012), that Gentry "appears to remain the binding law in California."  Kinecta, slip op. at 10.  (Kinecta is discussed in more detail in this blog post.) 

The opinion also creates a split in authority on whether representative PAGA actions remain inarbitrable post-Concepcion, as held in Brown v. Ralphs Grocery Co., 197 Cal.App.4th 489 (2011):

Respectfully, we disagree with the majority’s holding in Brown.  We recognize that the PAGA serves to benefit the public and that private attorney general laws may be severely undercut by application of the FAA.  But we believe that United States Supreme Court has spoken on the issue, and we are required to follow its binding authority.

Iskanian, slip op. at 15 (citing Southland Corp. v. Keating, 465 U.S. 1 (1984); Kilgore v. KeyBank, N.A., 673 F.3d 947 (9th Cir. 2012)).  The U.S. Supreme Court denied cert. in Brown in April.

Finally, the Court declined to follow D.R. Horton.  Slip op. at 11-13 (discussing In re D. R. Horton, Inc., 357 NLRB No. 184, 2012 WL 36274 (N.L.R.B. Jan. 3, 2012)). 

We should all watch this case to see if the California Supreme Court takes it up. 

UPDATE:  The blog California Mediation and Arbitration also has a post on Iskanian.  As that post observes, "Kinecta, Brown, and Iskanian create a sharp split in authority" in this "active area of the law." 

Second Circuit denies en banc rehearing in In re American Express Merchants' Litigation

On Tuesday, May 29, 2012, the Second Circuit denied en banc rehearing in In re American Express Merchants' Litigation, No. 06-1871 (2d Cir. May 29, 2012). 

That is the case in which the three-judge panel declined, post-Concepcion, to enforce an arbitration clause with a class-action ban because doing so would preclude effective vindication of statutory rights.  In re American Express Merchants’ Litig., 667 F.3d 204 (2nd Cir. 2012) ("Amex III"). 

The order denying en banc rehearing is accompanied by a concurring opinion and three dissenting opinions, all of which are of interest.  The dissenting opinion of Judge Cabranes reads, in full:

I concur fully in the thorough opinion of Chief Judge Jacobs dissenting from the denial of in banc review. I write separately simply to underscore that the issue at hand is indisputably important, creates a circuit split, and surely deserves further appellate review. This is one of those unusual cases where one can infer that the denial of in banc review can only be explained as a signal that the matter can and should be resolved by the Supreme Court.

According to Chief Judge Jacobs' dissenting opinion, the split is with the Ninth Circuit's opinion in Coneff v. AT&T Corp., 673 F.3d 14 1155, (9th Cir. 2012).  The concurring opinion by Judge Pooler, however, explains that there is in fact no split between Amex III and Coneff. 

Certainly we can expect a cert. petition to be filed in this case.  Whether it will be granted is another question.

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