The UCL Practitioner

New arbitration opinion: Sparks v. Vista Del Mar Child and Family Services

In Sparks v. Vista Del Mar Child and Family Services, ___ Cal.App.4th ___ (Jul. 30, 2012), the Court of Appeal (Second Appellate District, Division Five) affirmed an order denying arbitration of wrongful termination claims where the arbitration clause was buried in a lengthy employee handbook and was otherwise unconscionable.

While Sparks is not a class action, this excerpt is of interest:

The arbitration clause in question provides for the application of the Federal Arbitration Act.  Although that Act preempts state-law rules that stand as an obstacle to the accomplishment of the Act’s objective, i.e. rules that require classwide arbitration, (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. __, 131 S.Ct. 1740, 1748 (Concepcion)) the issue of whether the parties agreed to arbitration is ordinarily decided under state law.  (First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944; see also Cheng-Canindin v. Renaissance Hotel Associates, supra, 50 Cal.App.4th at p. 683 [“The question of whether the parties agreed to arbitrate is answered by applying state contract law even when it is alleged that the agreement is covered by the FAA [Federal Arbitration Act, 9 U.S.C. § 1 et seq.].  [Citations.]”].) Moreover, the United States Supreme Court in Concepcion did not eliminate state law unconscionability as a defense to the enforcement of arbitration agreements subject to the Federal Arbitration Act.  (Concepcion, supra, 563 U.S. __, 131 S.Ct. at p. 1746; Samaniego v. Empire Today LLC (2012) 205 Cal.App.4th 1138, 1150; Kanbar v. O’Melveny & Myers  (N.D. Cal. July 21, 2011, C-11-089211) __ F.Supp.2d__ [2011 WL 2940690 *6]; see also Rent-A-Center, West, Inc. v. Jackson (2010) __ U.S. __, 130 S.Ct. 2772, 2779 [arbitrator could decide unconscionability issue].)

Slip op. at 7 (emphasis added).

New Ninth Circuit class certification opinion: Hester v. Vision Airlines, Inc.

In Hester v. Vision Airlines, Inc., ___ F.3d ___ (9th Cir. Jul. 18, 2012), the Ninth Circuit affirmed an order granting class certification of claims brought by pilots and airline crew members for recovery of hazard pay earned in delivering supplies to military posts in Iraq and Afghanistan. 

Class certification opinion on remand: Harris v. Superior Court (Liberty Mutual)

On Monday, the Court of Appeal (Second Appellate District, Division One) handed down its opinion on remand in the employee misclassification case, Harris v. Superior Court (Liberty Mutual Ins. Co.), ___ Cal.App.4th ___ (Jul. 23, 2012).

The Supreme Court heard oral argument in this case last October, and handed down its opinion in late December.  Harris v. Superior Court (Liberty Mutual Ins. Co.), 53 Cal.4th 170 (2011).  The high court reversed the Court of Appeal's earlier holding that the administrative exemption did not apply to the plaintiff insurance adjusters, as the employer had argued, and remanded the case back to that court for further proceedings.  The opinion did not address class certification. 

In its opinion on remand earlier this week, the Court of Appeal held that the employer's reliance on the administrative exemption was misplaced, and that the workers' claims for unpaid overtime were properly certified for class treatment:

We hold that, with the few exceptions we have noted, Adjusters’ work duties do not satisfy the qualitative component of the “directly related” requirement because they are not carried on at the level of policy or general business operations.  Adjusters therefore are not primarily engaged in work that is “directly related to management policies or general business operations.”  (Fed. Regs. § 541.205(a) (2000).)  It follows that Adjusters are not exempt administrative employees under either Wage Order 4-1998 or Wage Order 4-2001.  Accordingly, Adjusters’ motion for summary adjudication should have been granted, and, because the qualitative component of the “directly related” requirement is a predominant common issue under both wage orders, Employers’ motion for class decertification should have been denied in its entirety.

Slip. op. at 25-26.

UPDATE:  On October 24, 2012, the Supreme Court depublished the Harris opinion.  It is no longer citable as precedent.

New unpublished collateral estoppel opinion: Ellis v. Pacific Health Corp.

In an unpublished opinion, the Court of Appeal (Second Appellate District, Division Seven) held again that orders denying class certification do not have collateral estoppel effect as to unnamed class members:

We agree with Bridgeford [v. Pacific Health Corp., 202 Cal.App.4th 1034 (2012)] and its adoption as a matter of California law of the United States Supreme Court’s analysis in Smith v. Bayer Corp., supra, 564 U.S. ___ [131 S.Ct. 2368].  Here, Ellis and McCrary were not named parties in Larner nor in privity with any party to that action for purposes of collateral estoppel.  Although their economic interests may have been substantially aligned with Larner’s when she began her lawsuit against Los Angeles Doctors, without class certification issues decided in the prior proceeding cannot bind absent putative class members.  (See Bridgeford, supra, 202 Cal.App.4th at p. 1044; see also Johnson v. GlaxoSmithKline, Inc., supra, 166 Cal.App.4th at p. 1513, fn. 8.)

Ellis v. Pacific Health Corp., No. B226609 (nonpub. Jul. 24, 2012) (slip op. at 7).

My original post on Bridgeford is here. 

New class arbitration opinion: Nelsen v. Legacy Partners Residential, Inc.

In Nelsen v. Legacy Partners Residential, Inc., ___ Cal.App.4th ___ (Jul. 18, 2012), the Court of Appeal (First Appellate District, Division One) denied a writ petition challenging an order compelling arbitration of various wage and hour claims.

The opinion discusses the U.S. Supreme Court's Concepcion and Stolt-Nielsen opinions, as well as the California opinions Gentry, Kinecta, and Iskanian, the NLRB's D.R. Horton decision, and the Ninth Circuit's Kilgore and Coneff. 

Answer brief on the merits filed in Rose v. Bank of America

Many thanks to the blog reader who forwarded the answer brief on the merits filed last week in Rose v. Bank of America, no. S199074.

• Opening Brief on the Merits (filed 05-15-12)
• Answer Brief on the Merits (filed 07-17-12)

Tomorrow's Brinker program CANCELLED

If you registered for the Alameda County Bar Association panel on Brinker, which was to take place tomorrow (Tuesday, July 24) in Oakland, please note that the event has been cancelled.  I will let everyone know when the program is rescheduled. 

MCLE program on Brinker tomorrow in Oakland CANCELLED

UPDATE: Tomorrow's panel on Brinker has been CANCELLED.

There is still time to register for  Tomorrow's MCLE program on Brinker, sponsored by the Labor and Employment Section of the Alameda County Bar Association, has been CANCELLED.

The program will run from 12:00 to 1:30 p.m. in Oakland.  I will be one of the speakers, and I hope to see some of you there!  Click here for more details and to register.

This is the panel description:

Please join the Labor & Employment section for this MCLE program that will provide a thorough analysis of the Supreme Court’s decision in Brinker v. Superior Court of San Diego County. The discussion will include analysis of the ruling and the scope of an employer’s duty to provide meal and rest breaks. The panelists will also explain how the ruling may impact wage and hour litigation going forward.

Speakers:

• Latika Malkani, Partner, Siegel, LeWitter & Malkani, Oakland
• Rhonda Nelson, Shareholder, Severson & Werson, San Francisco
• Kimberly Kralowec, Principal, The Kralowec Law Group, San Francisco
• Matthew Bainer, Senior Associate, Scott Cole and Associates, Oakland

U.S. Supreme Court takes up another case potentially affecting class action practice: Genesis HealthCare Corp. v. Symczyk

Many thanks to the blog reader who pointed out that on June 25, in addition to granting cert. on limited issues in Comcast Corp. v. Behrend, no. 11-864, the U.S. Supreme Court also granted cert. in another case that may turn out to be relevant to class action practice, Genesis HealthCare Corp. v. Symczyk, no. 11-1059.

Genesis is a FLSA collective action, not a class action under Rule 23.  The Third Circuit held that the defendant could not "pick off" the FLSA representative:

Laura Symczyk sought relief under the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 207 and 216(b), on behalf of herself and all others similarly situated. The District Court for the Eastern District of Pennsylvania dismissed Symczyk's complaint for lack of subject matter jurisdiction after defendants Genesis HealthCare Corporation and ElderCare Resources Corporation extended an offer of judgment under Fed.R.Civ.P. 68 in full satisfaction of her alleged damages, fees, and costs. At issue in this case is whether a collective action brought under § 216(b) of the FLSA becomes moot when, prior to moving for "conditional certification" and prior to any other plaintiff opting in to the suit, the putative representative receives a Rule 68 offer. We will reverse and remand.

Symczyk v. Genesis HealthCare Corp., 656 F.3d 189 (3d Cir. 2011).

This is the Supreme Court's statement of the question presented: 

Whether a case becomes moot, and thus beyond the judicial power of Article III, when the lone plaintiff receives an offer from the defendants to satisfy all of the plaintiff's claims.

The question is framed quite broadly, so the Court's holding may well impact ordinary class action litigation in the federal courts under Rule 23.  The Ninth Circuit recently held that defendants may not "pick off" the class representative in Rule 23 class cases.  Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th Cir. 2011) (discussed in this blog post).  The Seventh Circuit, by contrast, held that they can—if they do it before the class certification motion is filed.  Damasco v. Clearwire Corp., 662 F.3d 891 (7th Cir. 2011) (discussed in this blog post).  Both of these opinions are cited in the cert. petition in Genesis.

The following links to documents from Genesis are courtesy of SCOTUSblog:

• Opinion below (3d Cir.)
• Petition for certiorari
• Brief in opposition
• Motion for leave to file and amicus brief of DRI - The Voice of the Defense Bar
• Motion for leave to file and amicus brief of Chamber of Commerce of the United States of America et al.
• Reply of petitioners

Supreme Court denies review in arbitration case: Kinecta Alternative Financial Solutions v. Superior Court

Last week, I reported that on July 11, 2012, the Supreme Court had denied review in Samaniego v. Empire Today, no. S202510.  In Samaniego, the Court of Appeal affirmed an order denying a petition to compel arbitration. 

It turns out that on the same day, the Supreme Court also denied review in another arbitration case, Kinecta Alternative Financial Solutions v. Superior Court, no. S203076.  In Kinecta, the Court of Appeal affirmed an order granting a petition to compel arbitration.  My original post on Kinecta is here. 

The Supreme Court may have lost interest in taking up additional post-Concepcion cases, now that it has granted review in Sanchez v. Valencia Holding Co., no. S199119, and given that Sonic-Calabasas A, Inc. v. Moreno, no. S174475, remains pending on remand from the U.S. Supreme Court. 

We will have to watch for action on any review petitions that may be filed in the Iskanian and Hoover cases.

New Ninth Circuit UCL and CLRA opinion: Sateriale v. R.J. Reynolds Tobacco Co.

In Sateriale v. R.J. Reynolds Tobacco Co., ___ F.3d ___ (9th Cir. Jul. 13, 2012), the Ninth Circuit affirmed dismissal, for lack of standing, of UCL and CLRA claims based on alleged misrepresentations surrounding R.J. Reynolds' termination of its "Camel Cash" customer rewards program. 

Before addressing the UCL and CLRA claims, the court held that plaintiffs' complaint did adequately allege breach of contract and promissory estoppel.  Slip op. at 8090-8105.

The opinion's detailed discussion of those claims is quite interesting and brings back many pleasant memories of first-year contracts class.  Who could forget that the doctrine of mutuality of obligation, while fully applicable to bilateral contracts, does not apply to unilateral contracts?  Id. at 8102.  Or that "an enforceable termination clause that gives a promisor an unrestricted power to terminate a contract at any time" renders that contract illusory and unenforceable, at least so long as the contract remains wholly executory?  Id. at 8103.

The court then turned to the UCL and CLRA claims: 

Because the plaintiffs’ UCL claim sounds in fraud, they are required to prove “actual reliance on the allegedly deceptive or misleading statements,” Kwikset Corp. v. Superior Court, 246 P.3d 877, 888 (Cal. 2011) (quoting In re Tobacco II Cases, 207 P.3d 20, 26 (Cal. 2009)) (internal quotation marks omitted), and that “the misrepresentation was an immediate cause of [their] injury-producing conduct,” In re Tobacco II Cases, 207 P.3d at 39. The complaint does not satisfy these requirements.

In particular, the plaintiffs do not allege reliance.  They do not allege that they purchased additional Camel cigarettes in reliance on the October 1 announcement [that the rewards program would terminate six months later]. They also do not allege that they delayed redeeming their saved Camel Cash certificates in reliance on the announcement. Even if they had alleged delay, they do not explain how this delay could have caused their injury: under the allegations of the complaint, RJR ceased accepting C-Notes for redemption as soon as it delivered the October 1 announcement, so delay could not have caused the plaintiffs’ loss. Given the absence of an alleged causal connection between the alleged misrepresentations
and the plaintiffs’ injuries, the district court properly dismissed the UCL claim.

....

As with the UCL, consumers seeking to recover damages under the CLRA based on a fraud theory must prove “actual reliance on the misrepresentation and harm.” Nelson v. Pearson Ford Co., 112 Cal. Rptr. 3d 607, 638 (Ct. App. 2010); accord Durell v. Sharp Healthcare, 108 Cal. Rptr. 3d 682, 697 (Ct. App. 2010); In re Vioxx Class Cases, 103 Cal. Rptr. 3d 83, 94 (Ct. App. 2009).  

The plaintiffs have not satisfied these requirements here ...  as we explained in connection with the plaintiffs’ UCL claim. We therefore affirm dismissal of the plaintiffs’ CLRA claim as well.

Slip op. at 8105-06, 8107 (footnote omitted).

Ninth Circuit addresses cy pres doctrine in new class settlement decision: Dennis v. Kellogg Co.

In Dennis v. Kellogg Co., ___ F.3d ___ (9th Cir. Jul. 13, 2012), the Ninth Circuit reversed final approval of a class action settlement because the cy pres recipients who would receive the settlement fund residual were "divorced from the concerns embodied in consumer protection laws such as the UCL and the CLRA."  Slip op. at 8120-21.  The court also found the attorneys' fees award excessive.  Id. at 8125-29.

The case involved UCL and CLRA claims against Kellogg Co. for representing that Frosted Mini-Wheats cereal "was scientifically proven to improve children’s cognitive functions for several hours after breakfast."  Id. at 8114. 

MCLE program on Brinker next Tuesday in Oakland

On Tuesday, July 24, 2o12 from 12:00-1:30 p.m., the Labor and Employment Section of the Alameda County Bar Association will present a seminar on the Brinker decision.  I will be one of the speakers, along with three experienced and knowledgeable co-panelists.  Click here for more details and to register.

Here is the panel description:

Please join the Labor & Employment section for this MCLE program that will provide a thorough analysis of the Supreme Court’s decision in Brinker v. Superior Court of San Diego County. The discussion will include analysis of the ruling and the scope of an employer’s duty to provide meal and rest breaks. The panelists will also explain how the ruling may impact wage and hour litigation going forward.

Speakers:

• Latika Malkani, Partner, Siegel, LeWitter & Malkani, Oakland
• Rhonda Nelson, Shareholder, Severson & Werson, San Francisco
• Kimberly Kralowec, Principal, The Kralowec Law Group, San Francisco
• Matthew Bainer, Senior Associate, Scott Cole and Associates, Oakland

"Lessons from SCOTUSblog"

To follow up on my post from last Sunday, this past week The New Yorker had a piece called "Six Lessons from the Misreporting of the Health-Care Decision." 

For those of us (like me) fascinated by how far SCOTUSblog has come over the past ten years, this whole story is of keen interest.  SCOTUSblog is one of the first law blogs I became aware of and began following, and it is great to see it catapult to nationwide prominence.  It couldn't happen to a better blawg.

An excerpt from the New Yorker piece:

And then there is the matter of how we learned about the decision—and the media reports, notably by CNN and Fox News, that got it wrong. There are lessons there, several of which were drawn out in a seven-thousand-word post Tom Goldstein, of SCOTUSblog, wrote about how the story unfolded between 10:06 and 10:15 A.M. E.T. on Thursday, June 28th. Some of them we already know—for example, that SCOTUSblog itself did an exemplary job. But there’s more, too, with some conclusions that go beyond this case. Six of the lessons are below.

[via]

Supreme Court denies review in arbitration case: Samaniego v. Empire Today LLC

On Wednesday, July 11, 2012, the Supreme Court denied review in Samaniego v. Empire Today, no. S202510.

In this case, the Court of Appeal (First Appellate District, Division Three) refused to enforce an arbitration clause, finding it unconscionable under Armendariz and rejecting the defendant's argument that Concepcion precluded that result.  Samaniego v. Empire Today LLC, 205 Cal.App.4th 1138 (2012). 

Here is my original post on the unpublished opinion handed down on April 5, 2012.  The opinion was ordered published on May 7, 2012. 

Supreme Court UCL preemption opinion: Parks v. MBNA America Bank, N.A.

In Parks v. MBNA America Bank, N.A., ___ Cal.4th ___ (Jun. 21, 2012), the Supreme Court held that the National Bank Act preempted a UCL "unlawful" prong claim predicated on violation of Civil Code section 1748.9, "a California law requiring that certain disclosures accompany preprinted checks that a credit card issuer provides to its cardholders for use as credit."  Slip op. at 1. 

The opinion says nothing substantive about the UCL in particular; its focus is on section 1748.9 and the provisions of the National Bank Act.

New CLRA attorneys' fees opinion: Pierce v. Western Surety Co.

In Pierce v. Western Surety Co., ___ Cal.App.4th ___ (Jun. 22, 2012), the Court of Appeal (Fifth Appellate District) addressed the CLRA and its attorneys' fees provision in the context of evaluating the scope of a surety's liability for acts of its principal.  Slip op. at 8-10.

The Court of Appeal summarized its opinion:

In sum, [Vehicle Code] section 11711 does not provide for attorney fees.  Therefore, attorney fees are not recoverable based on that section.  However, a surety that issues a bond pursuant to section 11711 is subject to general surety law.  Under Civil Code section 2808, a surety’s liability is commensurate with that of the principal within the express terms of the bond and any applicable statutes.  Thus, if the principal would have been liable for attorney fees based on conduct secured by the bond, the surety is liable for such fees.

Slip op. at 10.  Because the principal would have been liable for attorneys' fees under the CLRA, the surety was similarly "liable for such fees." See id.

[Via California Personal Property Finance Law]

New class certification opinion: Sotelo v. MediaNews Group, Inc.

In Sotelo v. MediaNews Group, Inc., ___ Cal.App.4th ___ (May 31, 2012; pub. ord. July 2, 2012), the Court of Appeal (First Appellate District, Division Two) affirmed an order denying class certification of various wage and hour claims arising out the defendant's alleged treatment of workers as independent contractors rather than employees.  The opinion does not cite Brinker.

Court of Appeal hands down rare defendant class decision: City of San Diego v. Haas

In City of San Diego v. Haas, ___ Cal.App.4th ___ (Jun. 29, 2012), the Court of Appeal (Fourth Appellate District, Division One) affirmed class certification of a defendant class (also sometimes called a "defense class"). 

The opinion relied on both Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012) and Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011) (although the citation of the latter case is a little odd because that case did not address predominance, the issue for which it is cited in Haas).  Slip op. at 36-41.

SCOTUSblog vs. CNN: Real-time reporting on U.S. Supreme Court's healthcare ruling

Tom Goldstein of SCOTUSblog has a very interesting post on the real-time reporting that took place within the first 15 minutes after the U.S. Supreme Court handed down its healthcare ruling on June 28, 2012. 

Tom seems too modest to say it in quite this way, but essentially what happened is SCOTUSblog out-reported CNN.