The UCL Practitioner

Recent class arbitration and CLRA opinion: Flores v. West Covina Auto Group

In Flores v. West Covina Auto Group, ___ Cal.App.4th ___ (Jan. 11, 2013), the Court of Appeal (Second Appellate District, Division Eight) affirmed an order compelling arbitration in a putative class action brought under the CLRA. 

The panel held (among other things) that under Concepcion, the FAA preempts the CLRA's no-waiver provision (Civil Code section 1751) and, accordingly, the no-class-action arbitration clause in the vehicle installment sale contract was enforceable.  Slip op. at 10-15. This part of the opinion concludes: 

In sum, the CLRA’s prohibition against class waivers is preempted by the FAA.  The waiver of class arbitration rights in appellants’ sales contract is not unenforceable under the CLRA.  The poison pill provision ‑‑ which makes the arbitration clause unenforceable if the class arbitration waiver is unenforceable ‑‑ is thus not triggered.

Id. at 15. 

The Court of Appeal reached a similar conclusion in Caron v. Mercedes-Benz Financial Services USA LLC, 145 Cal.Rptr.3d 296 (2012) (discussed in this blog post).  The Supreme Court granted review in Caron on October 24, 2012.  Caron v. Mercedes-Benz Fin. Servs. USA, No. S205263.  Briefing has been deferred in Caron pending resolution of Iskanian v. CLS Transportation, No. S204032. 

Like Caron, Flores creates a split in authority with Fisher v. DCH Temecula Imports LLC, 187 Cal. App. 4th 601 (2010) (discussed in this blog post).  A "grant and hold" order is very possible here as well, if a petition for review is filed. 

Another recent class certification opinion: Bradley v. Networkers Int'l, LLC

In Bradley v. Networkers International LLC, 211 Cal.App.4th 1129 (Dec. 12, 2012, modified Jan. 8, 2013), the Court of Appeal (Fourth Appellate District, Division One) reversed an order denying class certification of wage and hour claims, including meal period and rest break claims, and remanded the case back to the trial court for further proceedings. 

The opinion's discussion of predominance is of interest:

Brinker instructs that in determining whether common or individual issues predominate, a court must focus on the plaintiff's theory of recovery and assess the nature of the legal and factual disputes likely to be presented under this theory.  Applying this analysis, we again determine that the trial court erred in concluding that individual issues are likely to predominate on the independent contractor/employee issue.

....

.... The undisputed evidence showed Networkers had consistent companywide policies applicable to all employees regarding work scheduling, payments, and work requirements.  Whether those policies created an employer-employee relationship, as opposed to an independent contractor relationship, is not before us.  The critical fact is that the evidence likely to be relied upon by the parties would be largely uniform throughout the class.

....

Networkers argues, and we agreed in our initial opinion, that the issue of which employees had missed breaks and how many breaks were missed and whether those missed breaks were the result of Networkers' lack of a break policy was highly dependent on the testimony of each plaintiff, essentially requiring a mini-trial on each class member's case to determine the eligibility for recovery and the amount of damages to which each plaintiff would be entitled. 

However, this argument conflicts with Brinker's clear holdings that for meal breaks, an employer has an obligation to relieve its employee of all duty, permit the employee to take an uninterrupted 30-minute break, and to not impede or discourage the employee from doing so.  (Brinker, supra, 53 Cal.4th at p. 1040.)  Similarly, an employer has an obligation to provide a rest break, and if the employer fails to do so, the employer cannot claim the employee waived the break.  (Id. at p. 1033.)  Under the logic of these holdings, when an employer has not authorized and not provided legally-required meal and/or rest breaks, the employer has violated the law and the fact that an employee may have actually taken a break or was able to eat food during the work day does not show that individual issues will predominate in the litigation.

Slip op. at 21, 24-25, 30-31 (footnote omitted).  Bradley is one of the Brinker "grant and hold" cases, so its discussion of Brinker is of particular interest to those following the post-Brinker opinions. 

UPDATE:  On March 20, 2013, the Supreme Court denied the employer's petition for review in this case.  Therefore, unlike three other post-Brinker opinions, in which denial of class certification was affirmed rather than reversed, Bradley remains a published, citable precedent.

New UCL and FAL public prosecutor opinion: People v. JTH Tax, Inc.

In People v. JTH Tax, Inc., ___ Cal.App.4th ___ (Jan. 17, 2013), the Court of Appeal (First Appellate District, Division Four) affirmed the judgment in a public prosecutor action brought under the UCL and FAL.

Among other things, the opinion holds that ordinary agency principles apply in UCL cases:

[A]s the People point out, our Supreme Court has held, without the limitations urged by [defendant] in the present case, that “section 17500 [the FAL] incorporates the concept of principal-agent liability.”  (Ford Dealers Assn. v. Department of Motor Vehicles (1982) 32 Cal.3d 347, 361 (Ford Dealers).)  Since violations of the UCL “include any . . . unfair, deceptive, untrue or misleading advertising and any act prohibited by [the FAL]” (§ 17200), Ford Dealers establishes that persons can be found liable for misleading advertising and unfair business practices under normal agency theory.  To the extent that Toomey, supra, 157 Cal.App.3d 1, or Emery, supra, 95 Cal.App.4th 952 hold otherwise, which defendant implies without stating outright in the course of arguing its limiting theories, these cases are mistaken.

Slip op. at 24. 

The opinion also discusses how to determine the number of "violations" for purposes of awarding civil penalties under the UCL and FAL.  Id. at 33-40.  The analysis for the defendant's false TV advertisements differed from that employed for the false print ads.  See id.  The last section of the opinion affirms the trial court's detailed injunctive relief order.  Id. at 40-47. 

The trial judge in this case was Judge Curtis E.A. Karnow, who was recently reassigned to one of the two complex litigation departments of the San Francisco Superior Court.  Judge Kramer will now preside in a civil trials department. 

New class certification opinion: Miller v. Bank of America, N.A.

In Miller v. Bank of America, N.A., ___ Cal.App.4th ___ (Jan. 25, 2013), the Court of Appeal (First Appellate District, Division Three) affirmed the trial court's order denying class certification of claims involving certain allegely improper bank fees. 

This case follows Miller v. Bank of America, NT & SA, 46 Cal.4th 630 (2009) ("Miller I") (discussed in this blog post), in which the Supreme Court affirmed reversal of a $284 million judgment for damages and restitution under the UCL and CLRA.  The claims were predicated on Bank of America's deduction of bank fees from accounts containing accountholders' SSI disability proceeds.  The Supreme Court found this practice lawful. Slip op. at 2-3.

On remand, the plaintiff sought leave to amend his complaint to assert a revised theory of recovery, which was granted.  He then moved for class certification, which was denied.  Slip op. at 3-4. 

The Court of Appeal affirmed: 

Here, the trial court properly denied class certification because Miller failed to define an identifiable class of bank customers whose accounts were debited unlawfully.  Miller I is dispositive on this point.  ....  In short, as the trial court noted, “[t]he proposed description pulls into the class whole categories of legal setoffs.”  (Italics added.)

....

Accordingly, it was not enough for Miller to identify accounts that received exempt funds and were subjected to setoffs for obligations arising in a separate account; he must also be able to show which of those setoffs were in violation of section 864.  Despite an extended discovery period, Miller failed to show that any means exist to identify a class of bank customers who had been subjected to unlawful setoffs, a class the trial court reasonably found was likely to be substantially smaller than the proposed class.  Indeed, he has not even attempted to show that this can be done.  Class certification, therefore, was properly denied.

Slip op. at 5-6, 7 (italics in original; bold added). 

This reminds me of the Seventh Circuit's recent opinion, holding (under Rule 23) that class definitions may be considered fatally "overbroad" only if the defendant has shown that "a vast number," "a great many," or "a significant number" of persons are "improperly included."  Messner v. Northshore University HealthSystem, 669 F.3d 802, 824-26 (7th Cir. 2012).  In Miller II, the defendant argued (apparently convincingly) that the proposed class consisted "primarily" of "accounts as to which the alleged setoff transactions were entirely legal."  Miller II, slip op. at 4 (emphasis added).

Miller II also addresses merits deteriminations at the class certification stage (interestingly without mentioning Brinker, in which the Supreme Court discussed that topic at length).  Slip op. at 9-10.  The opinion also approves requests by plaintiffs for "additional discovery" after the defendant has filed its class certification opposition, if new evidence is needed for the reply.  Id. at 10-11.  Defendants sometimes argue that plaintiffs may not offer new evidence in reply; Miller II recognizes that in the class certification context, doing so is not only proper but sometimes necessary.  See id. 

Supreme Court holds that ordinary claims accrual rules, including the delayed discovery doctrine, apply to UCL claims: Aryeh v. Canon Business Solutions, Inc.

Yesterday, in Aryeh v. Canon Business Solutions, Inc., ___ Cal.4th ___ (Jan. 24, 2013), the Supreme Court held that common-law rules governing claims accrual (including the delayed discovery rule, the doctrine of equitable tolling, fraudulent concealment, the continuing violation doctrine, and the continuous accrual doctrine) apply to UCL claims -- just as they would to any other claim. The unanimous opinion was authored by Justice Werdegar. 

In so holding, the Court relied heavily on the UCL's legislative history, which "indicates the Legislature intended the UCL’s limitations period to be subject to the usual judicial rules governing accrual, rather than to special legislatively declared accrual rules." Slip op. at 7.  The opinion goes on:

Section 17208 was passed in 1977 as part of an act that consolidated and recodified existing state unfair competition laws without substantive change in the Business and Professions Code.  (Stats. 1977, ch. 299, § 1, p. 1203; Assem. Off. of Research, 3d reading analysis of Assem. Bill No. 1280 (1977-1978 Reg. Sess.) as introduced Mar. 31, 1977, p. 1.)  The adoption of an express statute of limitations was not intended to modify but to clarify the presumed applicable limitations period.  (Assem. Com. on Judiciary, Bill Digest of Assem. Bill No. 1280 (1977-1978 Reg. Sess.) p. 1.)  On the question of accrual, legislative committee reports are conspicuously silent, and the enrolled bill report expressly confirms the understanding that the subject is to be governed not by statute but by judicial construction:  “Questions concerning the point at which the statute of limitations begins will be left to judicial decision.”  (Governor’s Off. of Legal Affairs, Enrolled Bill Rep. on Assem. Bill No. 1280 (1977-1978 Reg. Sess.) June 27, 1977, p. 1.)  It thus appears the Legislature, by passing a bare-bones limitations statute and delegating to the judiciary the task of defining the point of accrual in particular cases, left courts free to determine whether the circumstances in each case call for application of either the general last element rule of accrual or any of its equitable exceptions.

Slip op. at 7-8 (emphasis added).

The Court also approved much of the reasoning in Broberg v. The Guardian Life Ins. Co., 171 Cal.App.4th 912 (2009) (discussed in this blog post). The opinion reads: 

Broberg involved a statute of limitations challenge to a claim of deceptive practices under the UCL.  The court reasoned that the underlying nature of the claim, not its form, should control.  (See Jefferson v. J. E. French Co. (1960) 54 Cal.2d 717, 718 [“[T]the nature of the right sued upon, not the form of action or the relief demanded, determines the applicability of the statute of limitations.”].)  Consequently, that the cause of action was pleaded under the UCL should not preclude application of an equitable exception to the usual accrual rule; just like common law claims challenging fraudulent conduct, a UCL deceptive practices claim should accrue “only when a reasonable person would have discovered the factual basis for a claim.”  (Broberg, at pp. 920-921.)  Broberg is consistent with both our precedent and the absence of anything in the text or legislative history of the UCL establishing a legislative desire either to categorically limit or categorically guarantee the application of common law accrual exceptions under the UCL.

Broberg also highlights an aspect of the statutory scheme salient for limitations purposes:  the UCL is a chameleon.  The UCL affords relief from unlawful, unfair, or fraudulent acts; moreover, under the unlawful prong, the UCL “ ‘ “borrows” violations of other laws and treats them as unlawful practices’ that the unfair competition law makes independently actionable.”  (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.)  Depending upon which prong is invoked, a UCL claim may most closely resemble, in terms of the right asserted, an action for misrepresentation (e.g., Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310), misappropriation (e.g., Glue-Fold, Inc. v. Slautterback Corp. (2000) 82 Cal.App.4th 1018), price fixing (e.g., Clayworth v. Pfizer, Inc., supra, 49 Cal.4th 758), interference with prospective economic advantage (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134), or any of countless other common law and statutory claims.  Given the widely varying nature of the right invoked, it makes sense to acknowledge that a UCL claim in some circumstances might support the potential application of one or another exception (e.g., Broberg v. The Guardian Life Ins. Co. of America, supra, 171 Cal.App.4th at pp. 920-921), and in others might not (e.g., M&F Fishing, Inc. v. Sea-Pac Ins. Managers, Inc. (2012) 202 Cal.App.4th 1509, 1531-1532 [concluding that while in theory delayed discovery might preserve an unfair competition claim, the nature of the particular UCL claim asserted precluded its application]). [1]

Accordingly, we conclude the UCL is governed by common law accrual rules to the same extent as any other statute.  That a cause of action is labeled a UCL claim is not dispositive; instead, “the nature of the right sued upon” (Jefferson v. J. E. French Co., supra, 54 Cal.2d at p. 718) and the circumstances attending its invocation control the point of accrual.  The common law last element accrual rule is the default (see Neel v. Magana, Olney, Levy, Cathcart & Gelfand, supra, 6 Cal.3d at p. 187), while exceptions to that rule apply precisely to the extent the preconditions for their application are met, as would be true under any other statute.  We disapprove Snapp & Associates Ins. Services, Inc. v. Robertson, supra, 96 Cal.App.4th 884, and Salenga v. Mitsubishi Motors Credit of America, Inc., supra, 183 Cal.App.4th 986, to the extent they hold otherwise.

---

[1]        As well, the UCL and its remedies are equitable.  (Korea Supply Co. v. Lockheed Martin Corp., supra, 29 Cal.4th at p. 1144.)  It would be inconsistent to conclude that while equity may drive the availability of remedies under the UCL, equitable exceptions have no place in determining whether a claim for relief has been timely asserted in the first instance.

Slip op. at 10-12 (emphasis added). 

The opinion then holds that in this particular case, the complaint adequately pleaded "a recurring unfair act," which was sufficient to support application of the continuous accrual doctrine.  Accordingly, the trial court erred in sustaining the defendant's demurrer without leave to amend.  Id. at 14-20.

In theory, the Court could have considered only the continuous accrual doctrine, held that it applied to UCL cases (including this case), and left the other doctrines for another day.  It did not, perhaps because the rationale for its decision would be identical for all the doctrines.  The approach also promotes judicial economy by resolving the split in authority among the lower courts, which revolved around the delayed discovery rule in particular. 

Supreme Court to hand down UCL statute of limitations opinion today: Aryeh v. Canon Business Solutions

Yesterday, in its notice of forthcoming filings, the Supreme Court announced that this morning it will hand down its opinion in Aryeh v. Canon Business Solutions, Inc., no. S184929.  When the opinion is posted online at approximately 10:00 a.m., is should be available at this link:

• Aryeh v. Canon Business Solutions, Inc., ___ Cal.4th ___ (2013)

These are the issues on review in the case, which was argued on December 4, 2012:

(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?

With one justice dissenting, the Court of Appeal found each doctrine inapplicable.  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.  Links to the briefs are available here. 

I will hope to have more on the opinion in a later post. 

Supreme Court takes up additional "grant and hold" case on UCL insurer liability: Hernandez Henderson v. Farmers Group

Last week, on January 16, 2013, the Supreme Court took up a second "grant and hold" case pending resolution of Zhang v. Superior Court (Cal. Cap. Ins.), no. S178542.   The new "grant and hold" case is Henderson v. Farmers Group, no. S207068, and my post on the Court of Appeal's opinion from October is here.

In Zhang, the Supreme Court will addresses whether insurers enjoy a special exemption from UCL liability not enjoyed by any other industry.  The issues on review in Zhang are as follows: 

(1) Can an insured bring a cause of action against its insurer under the unfair competition law (Bus. & Prof. Code, § 17200) based on allegations that the insurer misrepresents and falsely advertises that it will promptly and properly pay covered claims when it has no intention of doing so? (2) Does Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287 bar such an action?

The Supreme Court took up Zhang almost three years ago, on February 10, 2010. It would stand to reason that the case would be set for oral argument in the not-too-distant future.  The other "grant and hold" case is Hughes v. Progressive Direct Ins. Co., no. S195069, taken up in September 2011 (see this blog post). 

Henderson has been added to my list of pending California Supreme Court cases involving issues of interest related to the UCL, the CLRA, and class actions.  I have also updated this list to include several recent "grant and hold" cases involving class arbitration.

Supreme Court depublishes another post-Brinker opinion: Tien v. Tenet Healthcare Corp.

Yesterday, the Supreme Court depublished the opinion in a third Brinker "grant and hold" case, Tien v. Tenet Healthcare Corp., no. S206597. 

The Court of Appeal in Tien had affirmed the trial court's order denying class certification, but now the opinion (Tien v. Tenet Healthcare Corp., 209 Cal.App.4th 1077 (2012)) is no longer citable.  In December, the Supreme Court depublished two other opinions that similarly misinterpreted Brinker. In the Tien opinion, the Court of Appeal had heavily relied on those two other, now unpublished, opinions, instead of following Brinker itself. 

My depublication request in Tien is available at this link. A request was also filed by the plaintiff workers in the case. 

This is another strong signal that the Supreme Court disagrees with those who would misinterpret its Brinker opinion as supposedly holding that employers need only "offer" meal periods or make them "available."  As I have previously explained, that is not what Brinker held.

U.S. Supreme Court hears oral argument today in CAFA case: The Standard Fire Ins. Co. v. Knowles

Today at 10:00 a.m. Eastern, the U.S. Supreme Court is scheduled to hear oral argument in The Standard Fire Ins. Co. v. Knowles, No. 11-1450.  In Standard Fire, the Court will consider whether a class action plaintiff can avoid removal under CAFA by stipulating that the action does not seek to recover more than $5 million, which is the minimum amount in controversy required for federal diversity jurisdiction. 

Ordinarily, oral argument transcripts are posted to the Court's website later the same day.  When the Standard Fire argument transcript is posted online, it should be available at this link.

My original post on this case is here.  The Supreme Court's statement of the issue reads as follows: 

Last Term, this Court held that in a putative class action "the mere proposal of a class ... could not bind persons who were not parties." Smith v. Bayer Corp., 131 S. Ct. 2368, 2382 (2011). In light of that holding, the question presented is:

When a named plaintiff attempts to defeat a defendant's right of removal under the Class Action Fairness Act of 2005 by filing with a class action complaint a "stipulation" that attempts to limit the damages he "seeks" for the absent putative class members to less than the $5 million threshold for federal jurisdiction, and the defendant establishes that the actual amount in controversy, absent the "stipulation," exceeds $5 million, is the "stipulation" binding on absent class members so as to destroy federal jurisdiction?

UPDATE:  The oral argument transcript is now available at the link above.  Also, SCOTUSblog had this argument preview last Friday. 

Upcoming MCLE program features Orange County Superior Court complex panel judges

On Monday, January 14, 2013 at 12:00-1:30 p.m., the Labor and Employment Law Section of the Orange County Bar Association will present a program featuring four of the five judges of the Orange County Superior Court's complex litigation panel:

Orange County Superior Court Complex Panel’s Interactive “Class”

Our panelists will address the procedural and substantive issues the OCSC complex panel sees:

• In class action litigation
• Wage-and-hour class action
• Dialogue based on pre-submitted questions
• No “How would you rule” type questions, please
• Submit your questions to [email protected] or [email protected]

Orange County Complex Panel:

Honorable Gail A. Andler
Honorable Kim G. Dunning
Honorable Steven L. Perk
Honorable Nancy Wieben Stock

Sounds like a great opportunity to learn more about the workings of this court.  The program will take place in Santa Ana at the Civil Complex Center, Department CX101. Click here for more information or to register.

New Ninth Circuit UCL and class certification opinion: Gutierrez v. Wells Fargo Bank

In Gutierrez v. Wells Fargo Bank, NA, ___ F.3d ___ (9th Cir. Dec. 26, 2012), the Ninth Circuit reversed the judgment in a certified class action challenging the defendant bank's practice of "high-to-low" posting of debit card transactions (as opposed to "low-to-high" or chronological posting), which allegedly led to more frequent overdrafts and hefty charges.  However, the Court affirmed class certification as well as liability, and remanded for redetermination of the appropriate remedy.

Preliminarily, the Court held that the defendant had waived its right to seek to compel arbitration, and rejected the argument that doing so would have been "futile" before Concepcion.  Slip op. at 10-17.

The Court then held that the National Bank Act preempted the UCL to the extent that its "unfair" prong prohibited the defendant's "high-to-low" posting (which the district court had enjoined).  Slip op. at 20-25.  So applied, the UCL "prevent[ed] or significantly interfere[d] with a national bank’s federally authorized power to choose a posting order."  Id. at 24.   Likewise, the claim under the UCL's "fraudulent" prong for not adequately disclosing the posting method was also preempted.  Id. at 26.

However, the claim based on the bank's affirmative misstatements was a different story.  The UCL's "prohibition on misleading statements under the fraudulent prong of the statute is not preempted by the National Bank Act."  Id. at 27.  The Court relied on a 2002 OCC advisory letter warning that national banks may be subject to state UDAP statues such as the UCL.  Id. (citing OCC Advisory Letter, Guidance on Unfair or Deceptive Acts or Practices, 2002 WL 521380 (Mar. 22, 2002)). The panel further explained:

California’s prohibition of misleading statements does not significantly interfere with the bank’s ability to offer checking account services, choose a posting method, or calculate fees. Nor does the Unfair Competition Law mandate the content of any nonmisleading and nonfraudulent statements in the banking arena. On the flip side, the National Bank Act and other OCC provisions do not aid Wells Fargo, as neither source regulates deceptive statements vis-a-vis the bank’s chosen posting method.  Where, as here, federal laws do not cover a bank’s actions, states “are permitted to regulate the activities of national banks where doing so does not prevent or significantly interfere with the national bank’s or the national bank regulator’s exercise of its powers.” Watters, 550 U.S. at 12; see also Gibson v. World Sav. & Loan Ass’n, 103 Cal. App. 4th 1291, 1299 (2002) (the “state cannot dictate to the Bank how it can or cannot operate, but it can insist that, however the Bank chooses to operate, it do so free from fraud and other deceptive business  practices”).

Id. at 28.  The court then found ample evidence of classwide misleading statements in the record regarding the bank's posting practices, affirmed the judgment based on that UCL violation, and remanded for redetermination of the appropriate relief to be ordered (both injunctive and restitutionary).  Id. at 32-34.

The opinion also reaffirms the rule that in federal court, only a single named class representative must have standing, and affirmed the district court's finding of standing under Prop. 64.  Id. at 30-31 (citing Bates v. United Parcel Serv., Inc., 511 F.3d 974, 985 (9th Cir. 2007) (en banc) (“In a class action, standing is satisfied if at least one named plaintiff meets the requirements.”)).

Finally, the opinion affirmed the class certification order.  This section of the opinion reads in its entirety as follows: 

Next, class certification under Fed. R. Civ. P. 23(b)(3) requires that “questions of law or fact common to class members predominate over any questions affecting only individual members.” With respect to marketing materials, the district court found that:

A Wells Fargo marketing theme was that debit-card purchases were “immediately” or “automatically” deducted from an account.  This likely led the class to believe: (1) that the funds would be deducted from their checking accounts in the order transacted, and (2) that the purchase would not be approved if they lacked sufficient available funds to cover the transaction. This language was present on Wells Fargo’s website (TX 129), on Wells Fargo’s Checking, Savings and More brochures from 2001 and 2005 (TX 88, 89), and Wells Fargo’s New Account Welcome Jacket from 2004 (TX 82).

The pervasive nature of Wells Fargo’s misleading marketing materials amply demonstrates that class members, like the named plaintiffs, were exposed to the materials and likely relied on them. See Tobacco II, 46 Cal. 4th at 312 (to establish fraud under the Unfair Competition Law, plaintiffs must show “that members of the public are likely to be deceived”). In addition, the district court found that Wells Fargo knew that “new accounts generate the bulk of OD [overdraft] revenue.” Wells Fargo’s speculation—that “some class members would have engaged in the same conduct irrespective of the alleged misrepresentation”—does not meet its burden of demonstrating that individual reliance issues predominate. Unlike McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 223 (2d Cir. 2008) (partially abrogated on other grounds by Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008)), where individual class members could have had different motives for choosing “light” cigarettes, we are hard pressed to agree that any class member would prefer to incur multiple overdraft fees.

Slip op. at 31-32.  This case exemplifies how class certification should work under the UCL's "fraudulent" prong, which requires proof only that the defendant's conduct was "likely to deceive" a reasonable consumer.

The Recorder had this article on the opinion the day it was handed down.

"The Supreme Court and the Class Action: Where We Are and Where We Might Be Going"

Professor Richard D. Freer of Emory University School of Law has a new article posted on SSRN entitled "The Supreme Court and the Class Action: Where We Are and Where We Might Be Going." [via]

The article is quite interesting. It discusses the five class-action-related opinions handed down last Term (Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., 130 S.Ct. 1431 (2010); AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011); Erica P. John Fund v. Halliburton Co., 131 S.Ct. 2179 (2011); Smith v. Bayer Corp., 131 S.Ct. 2368 (2011); and Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011)), and relates those opinions to four class-action cases on the Court's docket this Term:

• Comcast Corp. v. Behrend, No. 11-864 (argued Nov. 5, 2012)
• Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, no.11-1085 (argued Nov. 5, 2012)
• The Standard Fire Ins. Co. v. Knowles, No. 11-1450. (set for argument Jan. 7, 2013)
• American Express Co. v. Italian Colors Restaurant, No. 12-133 (set for argument Feb. 27, 2013)

Two more pending cases are also worth following this Term:

• Genesis HealthCare Corp. v. Symczyk, No. 11-1059 (argued Dec. 3, 2012)
• Oxford Health Plans LLC v. Sutter, No. 12-135 (cert. granted Dec. 10, 2012; argument date not set)

Additional discussion of these cases can be found on this blog's "Class actions - Supreme Court" category page.