The UCL Practitioner

MCLE program: Consumer Attorneys of San Diego 5th Annual Class Action Symposium

The 5th Annual Class Action Symposium sponsored by Consumer Attorneys of San Diego will take place on September 14 and 15, 2012 at the Rancho Bernardo Inn Hotel and Resort in San Diego. 

The symposium is always excellent and this year it looks like a particularly good group of speakers has been lined up.  The panelists include both plaintiff-side and defense-side attorneys, as well as numerous judges.  Dean Erwin Chemerinsky of U.C. Irvine Law School will give the keynote address.

New UCL and CLRA opinion considers the economic abstention doctrine: Shuts v. Covenant Holdco LLC

In Shuts v. Covenant Holdco LLC, ___ Cal.App.4th ___ (Aug. 15, 2012), the Court of Appeal (First Appellate District, Division Four) held that the trial court erred by holding plaintiffs' UCL and CLRA claims barred by the economic abstention doctrine (sometimes referred to as the equitable abstention doctrine). 

Notably, the Court held that the economic abstention doctrine does not apply to CLRA claims for damages, which are not equitable in nature:

Having satisfied the 30-day CLRA notice requirement, plaintiffs specifically sought to amend their complaint to seek damages for the alleged CLRA violation.  Instead, the trial court dismissed the complaint in its entirety without leave to amend.  As we have held, equitable abstention permits the court, under appropriate circumstances, to decline to adjudicate only equitable claims.  (See Alvarado, 153 Cal.App.4th at p. 1297 [noting that “courts have the discretion to abstain from employing” remedies that “are equitable in nature”].)  For that reason alone, the trial court abused its discretion when it dismissed plaintiffs’ claim under the CLRA without leave to amend based on the equitable abstention doctrine.

Slip op. at 19 (emphasis in original). 

Supreme Court issues "grant and hold" order in UCL statute of limitations case: People v. E*Poly Star

On Wednesday, the Supreme Court issued a "grant and hold" order in People v. E*Poly Star, No. S203477.  The case has been held pending action in Aryeh v. Canon Business Solutions, Inc., no. S184929 (review granted 10/20/10).  Both cases involve whether the delayed discovery rule and the continuing violation doctrine apply to UCL claims.  

My original post on E*Poly Star is here.  The Court of Appeal opinion is People v. E*Poly Star, Inc., 205 Cal.App.4th 1316 (May 14, 2012).

Review petitions pending in arbitration cases: Iskanian and Hoover

Petitions for review have been filed with the California Supreme Court in two cases involving class arbitration and Concepcion:

• Iskanian v. CLS Transportation, No. S204032 (petition for review filed 07/16/12)
• Hoover v. American Income Life Ins., No. S204218 (petition for review filed 07/23/12)

Several depublication requests have been filed in Hoover by defense-side interests.  Both of the cases involve wage and hour claims brought by a putative class of workers. 

Under Rule of Court 8.512(b)(1), the Supreme Court must grant or deny review within 60 days of the filing of a petition for review.  (The Rule also allows the Court to grant itself an extension of time.)  Accordingly, we may not see action in these cases for another month or so. 

My original blog posts on Iskanian and Hoover are here and here.

New Ninth Circuit class settlement opinion: Rodriguez v. Disner

You may remember that in 2009, the Ninth Circuit handed down an opinion approving the settlement in the BAR/BRI antitrust class action, but disapproving certain "ex ante incentive agreements" formed between some of the representative plaintiffs and their counsel.  Rodriguez v. West Publishing Corp., 563 F.3d 948 (9th Cir. 2009) (mentioned in this blog post). 

Last week, the Ninth Circuit considered the case again.  In Rodriquez v. Disner, ___ F.3d ___ (9th Cir. Aug. 10, 2012), the panel affirmed the district court's ruling that the attorneys who formed those incentive agreements had forfeited almost all of their fees, and reversed the district court's order denying fees to the objectors who were the first to bring the conflict of interest to the court's attention. 

Still another new class arbitration opinion: Truly Nolen of America v. Superior Court

In Truly Nolen of America v. Superior Court, ___ Cal.App.4th ___ (Aug. 9, 2012; pub. ord. Aug. 13, 2012), the trial court granted the defendant's petition to compel arbitration, but denied the defendant's request that the arbitration be limited to individual (as opposed to class) claims.  The Court of Appeal (Fourth Appellate District, Division One) reversed the latter part of the order. 

The opinion has an interesting discussion of whether Gentry survived Concepcion.  While concluding that Gentry probably did not survive Concepcion, the Court of Appeal nevertheless considered itself bound by Gentry until a higher court (either the California Supreme Court or the U.S. Supreme Court) explicitly held otherwise.  Slip op. at 21-24. 

The opinion went on to hold that "[a]ssuming the Gentry standard survives the United States Supreme Court holdings, the factual analysis as to whether the Gentry factors apply in any particular case must be specific, individualized, and precise."  Id. at 31. The declarations submitted by plaintiffs' counsel, the court determined, were too generalized to support the trial court's finding that the Gentry factors had been met.  Id. at 24-31.

Next, the court held that an implied, rather than an express, agreement to class (as opposed to individual) arbitration may satisfy Stolt-Nielsen.  Id. at 32-35.   The court remanded for further findings on this point.  See id. 

Finally, the court declined to follow D.R. Horton.  Slip op. at 35-36 (citing Nelsen v. Legacy Partners and Iskanian). 

UPDATE:  The Complex Litigator has a detailed post on Truly Nolen.

Seventh circuit construes Dukes: Bolden v. Walsh Constr. Co.

In Bolden v. Walsh Construction Co., ___ F.3d ___ (7th Cir. Aug. 8, 2012), the Seventh Circuit, in an opinion by Judge Easterbrook, reversed an order granting class certification of race discrimination claims under Title VII, distinguishing McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482 (7th Cir. 2012) (discussed in this blog post). 

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A thirteenth post-Tobacco II opinion: Tucker v. Pacific Bell Mobile Services

In Tucker v. Pacific Bell Mobile Services, ___ Cal.App.4th ___ (Aug. 7, 2012), the Court of Appeal (First Appellate District, Division Five) affirmed an order sustaining the defendants' demurrer to the complaint's class allegations, relying heavily on Knapp v. AT&T Wireless Services, Inc., 195 Cal.App.4th 932 (2011) and Cohen v. DirecTV, Inc., 178 Cal.App.4th 966 (2009).

The opinion contains a lengthy and interesting discussion of the legal standard governing challenges to class allegations at the pleading stage.  Slip op. at 5-10. 

This is the thirteenth significant Court of Appeal opinion construtiong In re Tobacco II Cases, 46 Cal.4th 298 (2009).  See this blog post for more on the first twelve cases. 

New Ninth Circuit class certification opinion: Evon v. Law Offices of Sidney Mickel

In Evon v. Law Offices of Sidney Mickel, ___ F.3d ___ (9th Cir. Aug. 1, 2012), the Ninth Circuit reversed an order denying class certification of claims brought under the federal Fair Debt Collection Practices Act.

This case presents the classic case for treatment as a class action: that is, the commonality linking the class members is the dispositive question in the lawsuit. It is not necessary that members of the proposed class “share every fact in common.” Rodriguez v. Hayes, 591 F.3d 1105, 1122 (9th Cir. 2010). Thus, the district court abused its discretion in finding that commonality was not satisfied.

Slip op. at 8495. 

The opinion also says that correspondence from an attorney's office is almost always bad news.  Id. at 8486.  (I sure do hope my clients don't think that.)

Another ruling interpreting Brinker: Paige v. Consumer Programs Inc.

In Paige v. Consumer Programs Inc., No. CV-07-2498-MWF (RCx) (C.D. Cal. Jul. 16.2012), Judge Michael W. Fitzgerald granted class certification of meal period and rest break claims:

The parties disagree about the meaning of Brinker and its impact on the Court’s assessment of the adequacy of the purported class under Rule 23(b)(1) and (3). As a result, it is important for the Court to clarify the import of the majority opinion in Brinker as it applies to this case. The portion of the Brinker decision relevant here examined whether, when assessing meal and rest break claims under California law, “individual questions or questions of common or general interest predominate.” Brinker Restaurant Corp. v. Superior Court, 53 Cal. 4th 1004, 1017, 139 Cal. Rptr. 3d 315 (2012). This determination is relevant to the analysis of class sufficiency. Fed. R. Civ. P. 23(b)(3) ....

The California Supreme Court in Brinker allowed for the possibility that meal and rest break claims could predominately feature questions of general interest. The Brinker Court ultimately held that, under California law, “an employer’s obligation is to relieve its employee of all duty, with the employee thereafter at liberty to use the meal period for whatever purpose he or she desires.” Brinker, 53 Cal. 4th at 1017. The employer’s duty is not to ensure that no work takes place during a given period, but to provide what is a substantively meaningful break. See generally id. The employer satisfies this obligation to uninterrupted, (2) is free to leave the premises, and (3) is relieved of all duty for the entire period.” Id. at 1036. Additionally, the Brinker court observed that 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 1040.

The Brinker court did not elaborate on every possible form of common proof that may satisfy a predominance assessment, but explained that, where it is alleged with support that common, uniform policies consistently applied resulted in the purported violations, class treatment is appropriate. Id. at 1033. Because the plaintiff in Brinker alleged such a uniform policy with regard to rest breaks, the Brinker court determined that the rest break claims could proceed on a class-wide basis. Id. at 1033.

Slip op. at 2-3.  This is one of the better and more accurate summaries of the opinion that I have seen by a lower court since the decision was handed down in April.  Judge Pregerson's summary in Ricaldi is also very good.

"Brinker v. Superior Court: Takeaways for California Workers"

The July 2012 issue of the California Labor & Employment Law Review, the official publication of the State Bar of California Labor and Employment Law Section, has a pair of articles on Brinker. 

The first article, "Brinker v. Superior Court: Takeaways for California Workers," is by yours truly and is an edited and somewhat expanded version of my original post on Brinker. 

The article includes two figures, the first of which was unfortunately distorted in the print copy of the Review.  The figure illustrates the Supreme Court's ruling on the meal period compliance question, and should have looked like this (click to view full-size image): 

As the article explains, the Supreme Court held that employers must actually relieve workers of all duty for meal periods, which is precisely what the workers argued.  Petition for Review, Statement of Issues on Review (issue no. 1); see Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004, 1017 (2012) ("an employer’s obligation is to relieve its employee of all duty").  While the Supreme Court did not accept the workers' further argument, based on Martinez v. Combs, that employers must also prevent all work from occurring, the Court flatly rejected the employers' assertion that meal periods need only be "offered" to workers. Those who assert that Brinker held that meal periods need only be "made available" are not reading the opinion with adequate care. 

The article is available to members of the State Bar Labor and Employment Law Section.  If you would like a copy, please drop me an email.

The second article in the pair, "Brinker v. Superior Court: Implications for Employers," is by Brinker's appellate counsel, Rex Heinke, and one of his colleagues, Damien DeLaney. 

Yet another new class action arbitration opinion: Caron v. Mercedes-Benz Financial Services USA LLC

Scott Leviant pulls no punches in his post on a new Court of Appeal opinion, Caron v. Mercedes-Benz Financial Services USA LLC, ___ Cal.App.4th ___ (Jun. 29, 2012; pub. ord. Jul. 30, 2012).  (Although the opinion was published on Monday, it did not appear on the new opinions page until Tuesday.)

In Caron, the Court of Appeal (Fourth Appellate District, Division Three) held that the FAA preempts the CLRA's "no waiver" provision (Civ. Code section 1751).  Scott's critique of the court's analysis is pretty spot-on.  As he observes, the opinion creates a split in authority with Fisher v. DCH Temecula Imports LLC, 187 Cal. App. 4th 601 (2010) (discussed in this blog post), so this is another case to add to the Supreme Court watch list.

MCLE program: "Hot Topics in Employment Class Actions"

On August 8, 2012 from noon to 1:45 p.m., the Bar Association of San Francisco will present "Hot Topics in Employment Class Actions," featuring Jeff Grube of Paul Hastings and David Lowe of Rudy, Exelrod, Zieff & Lowe. 

The program will take place in the BASF Conference Center, 301 Battery Street, San Francisco. 

Recent UCL "unfair" prong decision: Wilson v. Hynek

In Wilson v. Hynek, ___ Cal.App.4th ___ (Jun. 20, 2012; pub. ord. Jul. 16, 2012), the Court of Appeal (Fourth Appellate District, Division One) applied the post-Cel-Tech formulation of the "unfair" prong, and held that the trial court had properly sustained the defendant's demurrer to the UCL claim without leave to amend:

The Wilsons do not assert on appeal that any of the defendants' actions were "unlawful" or "fraudulent."  Rather, the sole basis for their assertion they have adequately pled such a cause of action under section 17200 is that the defendants' actions were "unfair."  This contention is unavailing.  

"Determination of whether a business practice or act is 'unfair' within the meaning of [section 17200] entails examination of the impact of the practice or act on its victim, '" ... balanced against the reasons, justifications and motives of the alleged wrongdoer.  In brief, the court must weigh the utility of the defendant's conduct against the gravity of the harm to the alleged victim ...."  [Citation.]'  [Citation.]  In general the 'unfairness' prong 'has been used to enjoin deceptive or sharp practices ....'"  (Klein v. Earth Elements, Inc. (1997) 59 Cal.App.4th 965, 969-970.)  

There is a split of authority in California as to the proper definition of "unfair."  The Wilsons assert the proper test for the unfairness prong is whether the practice "'offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.'"  (State Farm Fire & Casualty Co. v. Superior Court, supra, 45 Cal.App.4th at p. 1104.)

However, this court has, on three occasions, rejected that test and has applied a much narrower test, the so-called "Cel-Tech test" for establishing unfairness.  (See Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1366; Scripps Clinic v. Superior Court (2003) 108 Cal.App.4th 917, 940; Byars v. SCME Mortgage Bankers, Inc. (2003) 109 Cal.App.4th 1134, 1147.)  Under that test, a plaintiff must prove that the defendant's "conduct is tethered to an[] underlying constitutional, statutory or regulatory provision, or that it threatens an incipient violation of an antitrust law, or violates the policy or spirit of an antitrust law."  (Durell, at p. 1366.)

In both their opening and reply briefs, the Wilsons ignore these cases.  Moreover, they do not even attempt to show how their allegations in the second amended complaint can meet this test.  Nor can they.  As detailed, ante, their claims of alleged wrongdoing are directly contradicted by the terms of the deeds of trust, which they omitted as exhibits to their second amended complaint.  Accordingly, the court did not err in sustaining the defendants' demurer to the section 17200 claim.

Slip op. at 11-12 (footnote omitted).