The UCL Practitioner

Supreme Court takes up additional "grant and hold" arbitration case: Caron v. Mercedes-Benz Fin. Servs.

Last week, on October 24, 2012, the Supreme Court issued a "grant and hold" order in Caron v. Mercedes-Benz Financial Services LLC, No. S205263.  Briefing has been deferred pending resolution of Iskanian (as expected).

Here is my original post on Caron, in which the Court of Appeal held, among other things, that the FAA preempts the CLRA's "no waiver" provision (Civ. Code section 1751). 

Petitions for review are pending in at least three other arbitration cases:

• Nelsen v. Legacy Partners Residential, No. 204953 (petition for review filed 08/27/12)
• Reyes v. Liberman Broadcasting, No. S205907 (petition for review filed 10/11/12)
• Goodrich v. KDF Automotive Group, No. 206153 (petition for review filed 10/23/12)

On October 22, 2012, the Supreme Court gave itself an extension of time, through November 21, 2012, to grant or deny review in Nelsen.  UPDATE: On October 31, 2012, the Supreme Court denied review in Nelsen.

For those with a particular interest in this subject, all of this blog's posts on arbitration cases are collected in the "Class actions - arbitration" category page.  Visiting that page will lead you to the blog's original coverage of Nelsen, Reyes, and Goodrich, as well as a couple of other cases in which no review petition was apparently filed. 

U.S. Supreme Court to hear oral argument next week in Comcast Corp. v. Behrend

The U.S. Supreme Court will hear oral argument on Monday, November 5, 2012 in Comcast Corp. v. Behrend, no. 11-864.  Arguments always begin at 10:00 a.m. Eastern (7:00 a.m. Pacific), and normally the transcript is posted later the same day.  Check here for the link on Monday. 

This is the case in which the Supreme Court may elaborate on Dukes. The question presented, which normally tracks the language of the cert. petition, was restated by the Supreme Court when it granted cert.  The restated question reads: 

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 Third Circuit's opinion is Behrend v. Comcast Corp., 655 F.3d 182 (3d Cir. 2011).  My post on the cert. grant is here. 

Merits and amicus briefs are available at SCOTUSblog.  The reply brief on the merits was just filed last week on October 24, 2012. 

New UCL opinion addresses Moradi-Shalal insurer liability issue: Henderson v. Farmers Group, Inc.

In Henderson v. Farmers Group, Inc., ___ Cal.App.4th ___ (Oct. 24, 2012), the trial court granted summary adjudication of the UCL claim, holding it barred by Moradi-Shalal v. Fireman’s Fund Ins. Companies, 46 Cal.3d 287 (1988).  The Court of Appeal (Second Appellate District, Division Four) reversed:

The Unfair Insurance Practices Act (UIPA), provides that no person may engage in an unfair or deceptive act or practice in the business of insurance.  (§ 790.02.)  An unfair practice is defined as the failure to attempt in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.  (§ 790.03, subd. (h)(5).) 

In Moradi-Shalal, supra, 46 Cal.3d at page 304, the California Supreme Court held that the UIPA does not create a private cause of action.  Rather, enforcement of the UIPA is left primarily to the California Insurance Commissioner.

A party cannot plead around Moradi-Shalal by relabeling a cause of action for violations of UIPA as a cause of action under the UCL.  (Manufacturers Life Ins. Co. v. Superior Court (1995) 10 Cal.4th 257, 283 (Manufacturers Life).)  In other words, UIPA’s provisions may not be “borrowed” to serve as a basis for a UCL action.  (Id. at pp. 283-284.)   

There is a split of authority on whether a breach of contract or bad faith cause of action may serve as a predicate for a UCL claim where the allegations supporting the claim also would constitute a violation of the UIPA. 

In State Farm Fire & Casualty Co. v. Superior Court (1996) 45 Cal.App.4th 1093 (State Farm), ... [t]he court held that Moradi-Shalal did not bar a UCL claim based on common law theories of fraud or bad faith, even though such alleged acts might also violate the provisions of the UIPA.  (State Farm, at pp. 1098-1099.)  ....

The court in Textron Financial Corp. v. National Union Fire Ins. Co. (2004) 118 Cal.App.4th 1061 (Textron), disagreed with State Farm.  ....

....

The Supreme Court has granted review to clarify the issue.  (Zhang v. Superior Court (2009) 178 Cal.App.4th 1081, review granted Feb. 10, 2010, S178542.) 

We follow State Farm, and based on the reasoning of Manufacturers Life, we conclude that Moradi-Shalal does not bar a UCL cause of action based on an insurer’s bad faith, even though the conduct in question may also constitute a violation of the UIPA.  Since “courts retain jurisdiction to impose civil damages or other remedies against insurers in appropriate common law actions,” including those based on breach of the implied covenant of good faith and fair dealing (Moradi-Shalal, supra, 46 Cal.3d at p. 304), a UCL claim based on those actions is not an end-run around Moradi-Shalal.  Thus, we conclude the trial court’s grant of summary judgment on this basis was erroneous.

Slip op. at 20-23.  I would expect this case to be taken up as a "grant and hold" pending resolution of Zhang.  The Daily Journal had an article on Zhang last Wednesday (Oct. 24), which will be of interest to those of us following the case.

UPDATE:  On January 16, 2013, as expected, the Supreme Court took up this case as a "grant and hold" pending resolution of Zhang.  Henderson v. Farmers Group, No. S207068.

Supreme Court depublishes class certification opinion: Harris v. Superior Court (Liberty Mutual)

On October 24, 2012, the Supreme Court denied review but granted depublication in Harris v. Superior Court (Liberty Mutual), No. S205097. 

This is the case in which the Supreme Court addressed the administrative exemption but did not reach the issue of class certification. Harris v. Superior Court (Liberty Mutual), 53 Cal.4th 170 (2011). The Court of Appeal, on remand, held that the trial court should not have granted the defendant's motion to decertify the class.  Harris v. Superior Court (Liberty Mutual), 207 Cal.App.4th 1225 (2012) (depublished). 

The depublication request, filed by the California Employment Law Council, argued that Court of Appeal did not follow the Supreme Court's directives when it applied the administrative exemption on remand. 

My original post on the Court of Appeal opinion on remand in Harris is here. 

UPDATE:  A link to the depublication request of CELC has been added. 

New Ninth Circuit class certification opinion: Meyer v. Portfolio Recovery Associates, LLC

In Meyer v. Portfolio Recovery Associates, LLC, ___ F.3d ___ (9th Cir. Oct. 12, 2012), the Ninth Circuit held that district courts are authorized to grant provisional class certification under Rule 23(b)(2) when issuing a preliminary injunction:

[Defendant] also argues that the district court lacked authority to certify a provisional class pursuant to FRCP 23(b)(2) because that rule only provides for final, not preliminary, injunctive relief.

FRCP 23(b) states, “A class action may be maintained if Rule 23(a) is satisfied and if ... the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” The plain language of FRCP 23(b)(2) does not restrict class certification to instances when final injunctive relief issues; it only requires that final injunctive relief be appropriate. [Defendant] did not show the district court incorrectly interpreted or applied FRCP 23(b)(2).

Slip op. at 12260.  The opinion also holds that the district court correctly certified the class.  Id. at 12257-59.

"Dukes and Common Proof in California Class Actions"

The latest issue of Competition, the Journal of the Antitrust and Unfair Competition Law Section of the State Bar of California, recently arrived in the mail.

It has an article by yours truly, "Dukes and Common Proof in California Class Actions."

The article addresses the "trial by formula" catchphrase used in Dukes and explains that this part of the Supreme Court's analysis is limited to Title VII class actions, which have unique statutory requirements not present in UCL cases and other types of cases commonly litigated as class actions.  In particular, the clever language does not mean that evidentiary extrapolations are impermissible Rule 23(b)(3) class actions, nor does it place any kind of due process limitation on the class action device, as some courts have recently and erroneously held.  The article also discusses the Court of Appeal opinion in Duran, which misconstrued Dukes and is now under review by the California Supreme Court.  Brinker is also touched on. 

My thanks to the editor of Competition, John Cove, for including the article in the issue.  Thanks are also due to the attorneys (you know who you are) who reviewed and provided helpful comments on drafts of the article. 

22nd Annual Golden State Antitrust and UCL Institute, Thursday, October 25, 2012 in San Francisco

Registration is still open for the 22nd Annal Golden State Antitrust and Unfair Competition Law Institute, which will take place on Thursday, October 25, 2012 at the St. Regis Hotel in San Francisco.  (That is the same day as Game 2 of the World Series, Go Giants!)  I encourage everyone to register and attend.  This event is always excellent, and it was my privilege to assist with organizing it once again this year.

We are expecting to have some very great panels, including two afternoon sessions on UCL issues in particular.  I'm looking forward to those panels very much.  I hope to see some of you there on Thursday.  Click here for more information and to register.

Another new consumer arbitration opinion: Phillips v. Sprint PCS

In Phillips v. Sprint PCS, ___ Cal.App.4th ___ (Sept. 26, 2012), the Court of Appeal (First Appellate District, Division Three) affirmed an order compelling arbitration of a claim brought under the UCL's "fraudulent" prong. 

The opinion does not address the issue taken up by the en banc Ninth Circuit panel in Kilgore, namely, whether UCL claims for public injunctive relief remain inarbitrable after Concepcion.

U.S. Supreme Court denies cert. in post-Dukes case: McReynolds v. Merrill Lynch

On Monday, the U.S. Supreme Court declined to take up a post-Dukes case in which the Seventh Circuit reversed denial of class certification of race discrimination claims under Title VII.  Merrill Lynch, Pierce, Fenner & Smith, Inc. v. McReynolds, No. 12-113.

The Seventh Circuit's opinion is McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482 (7th Cir. 2012).  My original post on the case is here.

Still no action in two other cases of interest:

• American Express Co. v. Italian Colors Restaurant, No. 12-133 (petition filed 07-30-12) (post-Concepcion)
• RBS Citizens, N.A. v. Ross, No. 12-165 (petition filed 08-01-12) (post-Dukes)