The UCL Practitioner

Briefs from Aryeh v. Canon Business Solutions, Inc.

Many thanks to the blog readers who kindly forwarded the briefs listed below from Aryeh v. Canon Business Solutions, Inc., no. S184929.  The case addresses UCL statute of limitations issues, and will be argued next Tuesday, December 4, 2012 at 9:00 a.m. in Los Angeles. 

I am still seeking a volunteer to attend the argument and provide a report for posting here, so if you're interested, please let me know. Your report can be with or without attribution, your choice. 

• Petition for Review (filed 07/30/10)
• Answer to Petition for Review (09/01/10)
• Reply in Support of Petition for Review (09/10/10)
• Letter from the Office of the Attorney General in Support of Review (dated 08/30/10)
• Opening Brief on the Merits (filed 11/19/10)
• Answer Brief on the Merits (filed 01/31/11)
• Reply Brief on the Merits (filed 02/22/11)
• Amicus Curiae Brief of Consumer Attorneys of California (filed 03/30/11)
• Amicus Curiae Brief of Beverly Clark et al. (filed 03/30/11)
• Amicus Curiae Brief of the Office of the Attorney General (filed 05/05/11)
• Amicus Curiae Brief of the Association of Southern California Defense Counsel (filed 05/05/11)
• Response of Canon Business Solutions, Inc. to Amicus Curiae Briefs (filed 06/03/11)

New class arbitration opinion: Franco v. Arakelian Enterprises, Inc.

In Franco v. Arakelian Enterprises, Inc., ___ Cal.App.4th ___ (Nov. 26, 2012), the Court of Appeal (Second Appellate District, Division One) affirmed an order denying a petition to compel arbitration in a wage and hour class action, holding (among other things) that Gentry remains good law and was not overturned by either Concepcion or Stolt-Nielsen. 

The comprehensive (and unanimous) opinion tops out at 65 pages, and cites a number of secondary authorities, including these law review articles:

• Note, There Is Still Hope For The Little Guy:  Unconscionability Is Still A Defense Against Arbitration Clauses Despite AT&T v. Concepcion (2012) 33 Whittier L.Rev. 651
• Gilles & Friedman, After Class:  Aggregate Litigation in the Wake of AT&T Mobility v. Concepcion (2012) 79 U.Chi. L.Rev. 623

Ninth Circuit schedules en banc oral argument in class arbitration case: Kilgore v. KeyBank N.A.

On November 13, 2012, the Ninth Circuit issued its calendar notice setting oral argument in Kilgore v. KeyBank National Assn., No. 09-16703 (9th Cir.).  The argument will take place before the en banc court on Tuesday, December 11, 2012 Wednesday, December 12, 2012 at 10:00 a.m. in Pasadena. CORRECTION: The date of the argument is Tuesday, December 11 (not the 12th).

If anyone is interested in attending the argument and writing a report for publication here, please let me know. 

The Ninth Circuit just granted the petition for en banc rehearing in September.  In March, the three-judge panel held (among other things) that the FAA, as interpreted in Concepcion, preempts the California Supreme Court's Broughton and Cruz decisions, which held that CLRA and UCL claims seeking public injunctions are not arbitrable as a matter of public policy.  Kilgore v. KeyBank Nat'l Assn., 673 F.3d 947 (2012). 

Unlike many of the post-Concepcion cases, this is not an employment case.  Rather, it is a consumer action on behalf of students who enrolled in a "helicopter vocational school" and took out student loans from KeyBank.  An arbitration clause was put into the notes the students signed.  This differentiates the case from traditional consumer false advertising claims, which rarely involve a contract into which an arbitration clause could be inserted. 

My original post on Kilgore is here, and additional coverage is here and here. 

Some of the briefs filed at the rehearing stage are available at these links (with thanks to the blog reader who forwarded them):

• Petition for Rehearing and Rehearing En Banc (filed 03-21-12)
• Amicus Brief of Arbitration Professors (filed 03-27-12)
• Amicus Brief of National Association of Consumer Advocates et al. (filed 03-29-12)
• Amicus Brief of National Employment Lawyers Association et al. (filed 04-02-12)

New Seventh Circuit class certification opinion: Butler v. Sears, Roebuck and Co.

On November 13, 2012, the Seventh Circuit (Judge Posner) handed down a new class certification opinion, Butler v. Sears, Roebuck and Co., ___ F.3d ___ (7th Cir. Nov. 13, 2012).  The 8-page opinion may set a new record for succinctness.  An excerpt:

Predominance is a question of efficiency. See Amchem Products, Inc. v. Windsor, 521 U.S. 591, 615-16 (1997); Committee Notes to 1966 Amendment to Fed. R. Civ. P. 23; Jackson v. Motel 6 Multipurpose, Inc., 130 F.3d 999, 1005 n. 12 (11th Cir. 1997); William B. Rubenstein, 2 Newberg on Class Actions § 4:49 (5th ed. 2012). Is it more efficient, in terms both of economy of judicial resources and of the expense of litigation to the parties, to decide some issues on a class basis or all issues in separate trials? A class action is the more efficient procedure for determining liability and damages in a case such as this involving a defect that may have imposed costs on tens of thousands of consumers, yet not a cost to any one of them large enough to justify the expense of an individual suit.  ....  

Sears argues that most members of the plaintiff class did not experience a mold problem [with their washing machines]. But if so that is an argument not for refusing to certify the class but for certifying it and then entering a judgment that will largely exonerate Sears—a course it should welcome, as all class members who did not opt out of the class action would be bound by the judgment.

Slip op. at 4-5.  The opinion reversed the order denying class certification of the breach of warranty claims, and affirmed a separate order granting certification of claims alleging defective control units in the machines.  Id. at 8. 

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Supreme Court schedules UCL statute of limitations case for oral argument: Aryeh v. Canon Business Solutions, Inc.

Last week, the Supreme Court issued its oral argument calendar for December.  On December 4, 2012 at 9:00 a.m. in Los Angeles, the Court will hear argument in Aryeh v. Canon Business Solutions, Inc., no. S184929. 

The issues on review in Aryeh, according to the docket, are as follows:

(1) May the continuing violation doctrine, under which a defendant may be held liable for actions that take place outside the limitations period if those actions are sufficiently linked to unlawful conduct within the limitations period, be asserted in an action under the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.)?

(2) May the continuous accrual doctrine, under which each violation of a periodic obligation or duty is deemed to give rise to a separate cause of action that accrues at the time of the individual wrong, be asserted in such an action?

(3) May the delayed discovery rule, under which a cause of action does not accrue until a reasonable person in the plaintiff's position has actual or constructive knowledge of facts giving rise to a claim, be asserted in such an action?

On a 2-1 vote, the Court of Appeal found none of these doctrines applicable to the case before it.  Aryeh v. Canon Business Solutions, Inc., 185 Cal.App.4th 1159 (2010).  My earlier coverage of the case can be found in these two posts. The Supreme Court's opinion will be important because the lower courts are currently divided on whether the delayed discovery rule applies in UCL cases. 

If anyone has copies of the merits and amicus briefs, I would appreciate receiving copies of them.  Additionally, I will be seeking a Southern California correspondent to provide a report on the argument, so please let me know if you are available and interested in attending on December 4. 

U.S. Supreme Court grants cert. in class arbitration case: American Express Co. v. Italian Colors Restaurant

Last Friday, the U.S. Supreme Court granted cert. in one of the cases I've been following, American Express Co. v. Italian Colors Restaurant, No. 12-133. 

AmEx is a class arbitration case. The question presented, which tracks the cert. petition, reads:

Whether the Federal Arbitration Act permits courts, invoking the "federal substantive law of arbitrability," to invalidate arbitration agreements on the ground that they do not permit class arbitration of a federal-law claim.

In In re American Express Merchants Litigation, 667 F.3d 204 (2d Cir. 2012), the Second Circuit refused to enforce a no-class-action arbitration clause notwithstanding Concepcion because doing so would interfere with the effective vindication of the federal antitrust laws.  The Supreme Court has addressed this issue in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985). 

SCOTUSblog has a case page with links to the briefing to date, including:

• Cert. petition
• Opposition
• Reply

The petitioners' brief on the merits will be due in 45 days, or by appproximately December 24, 2012.

Ninth Circuit vacates UCL standing and preemption opinion: Degelmann v. Advanced Medical Optics Inc.

On October 30, 2012, the Ninth Circuit vacated its opinion in Degelmann v. Advanced Medical Optics Inc., 659 F.3d 835 (2011), which addressed UCL standing after Kwikset (among other issues). My original blog post on the opinion is here.

I have heard, but have not confirmed, that the action settled while a petition for en banc rehearing was pending.  The Ninth Circuit not only vacated the opinion, but also dismissed the appeal. 

New class certification opinion: Morgan v. Wet Seal, Inc.

In Morgan v. Wet Seal, Inc., ___ Cal.App.4th ___ (Oct. 12, 2012; pub. ord. Nov. 7, 2012), the Court of Appeal (First Appellate District, Division Two) affirmed an order denying class certification of wage and hour claims involving expense reimbursements.  

Second Circuit applies California law in declining to enforce arbitration provision: Schnabel v. Trilegiant Corp.

This case has been on the "to-blog" list for a few weeks.

In Schnabel v. Trilegiant Corp., ___ F.3d ___, 2012 WL 3871366 (2d Cir. Sept. 7, 2012), the defendant sent an email to the plaintiffs after they had signed up for the defendant's service.  The email contained a link to the company's terms of service, which included an arbitration clause with a class action ban. The Second Circuit, applying California contract law, held that the plaintiffs had not agreed to be bound by the clause:

As regards the email, under the contract law of Connecticut or California –- either of which may apply to this dispute –- the email did not provide sufficient notice to the plaintiffs of the arbitration provision, and the plaintiffs therefore could not have assented to it solely as a result of their failure to cancel their enrollment in the defendants' service.

Slip op. at 3.

Upcoming appellate MCLE programs of interest

Two MCLE programs of interest to appellate lawyers are coming up in San Francisco this month:

• On November 9, 2012, the Appellate Practice Section of the Bar Association of San Francisco will present "The First District Appellate Symposium," a day-long program (9:00-4:30) at the Administrative Office of the Courts, 455 Golden Gate Avenue:

This unique full-day program is returning after a four-year hiatus. Justices from every Division of the First District Appellate Court of Appeal will address critical areas of practice, from nuts and bolts to recent developments such as the advent of e-filing. This program is a must for anyone practicing before the First District.  The program features Associate Justice Carol Corrigan, California Supreme Court as the luncheon speaker.

• On November 28, 2012, the Impact Fund will present "Writing Effective Amicus Briefs," a lunchtime program (12:00-1:15 p.m.) at the State Bar offices on Howard Street:

In appeals raising important legal issues, an amicus curiae or “friend of the court” brief can make a difference. When done well, an amicus brief can alert a reviewing court to the broader implications of a case or bring a different perspective to the issues. This CLE program will provide a rare opportunity to hear from two respected jurists about effective amicus briefs.

The first event unfortunately conflicts with the CAOC Convention, but I'm planning to attend the second. For those attending the CAOC Convention, I will hope to see you on Saturday afternoon, when I will be presenting a panel segment on Brinker.

Transcript in second U.S. Supreme Court case now available: Amgen Inc. v. Connecticut Retirement Plans

Most of the news reports about yesterday's oral argument in Comcast Corp. v. Behrend pointed out that a second case involving class action issues was also argued yesterday.  The case is Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, no.11-1085, and the argument transcript is available at this link. 

Amgen is a securities class action and the questions presented have to do with materiality and the "fraud on the market" theory. 

The news reports I've seen so far contain little substantive analysis of the two arguments.  Reports are available from The New York Times, The Washington Post, Bloomberg News, Business Week, and Reuters. 

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U.S. Supreme Court hears oral argument today in Comcast Corp. v. Behrend

The U.S. Supreme Court will hear oral argument today at 10:00 a.m. Eastern (7:00 a.m. Pacific) in Comcast Corp. v. Behrend, no. 11-864. 

Normally, the Court makes oral argument transcripts available later the same day.  When the Behrend argument transcript is posted online, it should be available at this link. UPDATE: The transcript has been posted.

SCOTUSblog has a detailed oral argument preview on the case.  The Court is expected to elaborate, to some as-yet unknown extent, on Dukes.  The Court's statement of the issue reads as follows:

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). 

"An Express Warranty Defines Materiality Under the UCL and CLRA"

The latest issue of Competition, the journal of the Antitrust and Unfair Competition Law Section of the State Bar of California, has an article of interest to those handling UCL cases:

• "'Revisiting Materiality' is Revisionist History: An Express Warranty Defines Materiality Under the UCL and CLRA Absent an Unreasonable Safety Hazard," by Paul J. Riehle and Jia-Ming Shang

The article is a response to a piece published in the Spring 2012 issue, "Revisiting Materiality in the Context of CLRA and UCL Claims: Why Materiality Does Not Equal a Safety Risk," by James C. Shah and Rose F. Luzon (mentioned in this blog post). 

These articles both address an important issue originating in Daugherty v. American Honda Motor Co., 144 Cal.App.4th 824 (2006), namely, whether product manufacturers enjoy an escape hatch from liability under the CLRA and UCL for concealing known defects in their products.  The escape hatch suggested by Daugherty (and seized on in later decisions) is offering an express warranty, and the hatch is open to all manufacturers unless the concealed defect creates a safety hazard for consumers. 

In my view, this is an issue that the Supreme Court should take up when a proper case presents itself, because Daugherty  (as interpreted, or rather misinterpreted, in later cases) upended years of UCL and CLRA jurisprudence. 

The Court of Appeal's most recent word on this question is Collins v. eMachines, Inc., 202 Cal.App.4th 249 (2011). The Supreme Court denied review in Collins early this year.  At the Golden State Institute last week, I learned of an unpublished Ninth Circuit opinion on the issue, Vitt v. Apple Computer, Inc., 469 Fed.Appx. 605 (9th Cir. 2012). 

The two articles are both very well done and effectively present two opposing views on this question.