The UCL Practitioner

U.S. Supreme Court hands down important new class certification opinion: Amgen Inc. v. Connecticut Retirement Plans and Trust Funds

Yesterday, the U.S. Supreme Court handed down its opinion in a securities class action case, Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, ___ U.S. ___ (Feb. 27, 2013).  Justice Ginsburg wrote the majority opinion, in which the Court addressed the predominance element of Rule 23(b)(3) and affirmed the Ninth Circuit's judgment upholding the district court's class certification order. Although the case arose in the securities context, the opinion contains language that will be relevant in many other types of cases.

Here is an excerpt from the introduction:

Rule 23(b)(3) requires a showing that questions common to the class predominate, not that those questions will be answered, on the merits, in favor of the class. Because materiality is judged according to an objective standard, the materiality of Amgen’s alleged misrepresentations and omissions is a question common to all members of the class Connecticut Retirement would represent. The alleged misrepresentations and omissions, whether material or immaterial, would be so equally for all investors composing the class.

Slip op. at 2 (emphasis in original).  The rest of the opinion elaborates on this basic holding. 

The same is true of UCL "fraudulent" prong claims.  In such cases, the question is whether the defendant's conduct is likely to mislead a reasonable consumer — an objective standard.  For UCL cases pending in federal court under CAFA, Amgen will be a highly relevant binding precedent. 

For common-law fraud cases, too, where a presumption of reliance arises based on the materiality of the misrepresentation, Amgen teaches that common questions predominate.  In this regard, the opinion can be considered an analog of the California Supreme Court's leading class certification opinion, Vasquez v. Superior Court, 4 Cal.3d 800 (1971).  In Vasquez, the Supreme Court observed (among other things) that "[s]ome federal class action cases in which stockholders have alleged fraud on the basis of printed misrepresentations in a corporation prospectus hold that individual proof may not be required to establish reliance by each stockholder."  Id. at 815.  Later federal cases confirmed this. 

The Amgen opinion also has this to say on merits determinations at the certification stage:

Although we have cautioned that a court’s class-certification analysis must be "rigorous" and may "entail some overlap with the merits of the plaintiff ’s underlying claim," Wal-Mart Stores, Inc. v. Dukes, ___ U. S. ___, ___ (2011) (slip op., at 10) (internal quotation marks omitted), Rule 23 grants courts no license to engage in free-ranging merits inquiries at the certification stage.  Merits questions may be considered to the extent—but only to the extent—that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied.  [Citation.]

Amgen, slip op. at 9. 

U.S. Supreme Court hears oral argument today in class arbitration case: American Express Co. v. Italian Colors Restaurant

Today at 10:00 a.m. Eastern, the U.S. Supreme Court will hear oral argument in American Express Co. v. Italian Colors Restaurant, No. 12-133.  This case involves whether an arbitration clause is enforceable under federal law if it interferes with the effective vindication of statutory rights.  The Second Circuit said no.  In re American Express Merchants’ Litig., 667 F.3d 204 (2nd Cir. 2012). 

When the transcript of the oral argument is posted online later today, it should be available at this link. 

SCOTUSblog has a case page with links to the merits briefs as well as the numerous amicus briefs, plus a detailed oral argument preview summarizing the history of the case. 

New opinion analogizes to class communications in striking down gag order: San Francisco Unified Sch. Dist. ex. rel. Contreras v. First Student, Inc.

In San Francisco Unified School District ex. rel. Contreras v. First Student, Inc., ___ Cal.App.4th ___ (Feb. 19, 2013), the Court of Appeal (First Appellate District) reversed an order prohibiting the named plaintiffs from communicating with the defendant's current employees. 

This was a False Claims Act case, not a class action, but the opinion has this passage of interest:

Paragraph 2 of the January 2012 order also implicates the individual plaintiffs’ First Amendment rights.  “Orders which restrict or preclude a citizen from speaking in advance are known as ‘prior restraints,’ and are disfavored and presumptively invalid.  Gag orders on trial participants [for example] are unconstitutional unless (1) the speech sought to be restrained poses a clear and present danger or serious and imminent threat to a protected competing interest; (2) the order is narrowly tailored to protect that interest; and (3) no less restrictive alternatives are available.”  (Hurvitz v. Hoefflin (2000) 84 Cal.App.4th 1232, 1241, fns. omitted.)  These principles have been applied to orders that restrict parties’ communications with other parties or witnesses.  In Maggi v. Superior Court, the court held that orders restricting those plaintiffs’ counsel’s contacts with witnesses (and potential clients) was an unconstitutional prior restraint unjustified by a discovery violation.  (Maggi v. Superior Court (2004) 119 Cal.App.4th 1218, 1223–1226.)  “Absent a ‘protected competing interest’ on a level equivalent to the constitutional guarantee of free speech, orders limiting speech are not appropriate sanctions.”  (Id. at p. 1226.)  In Bernard v. Gulf Oil Co., the United States Court of Appeal for the Fifth Circuit held that an order restricting communications by named plaintiffs and their counsel with potential class members was an unconstitutional prior restraint.  (Bernard v. Gulf Oil Co. (1980) 619 F.2d 459, 463, 477.)  The Supreme Court affirmed on nonconstitutional grounds, while acknowledging the constitutional concern.  (Gulf Oil Co. v. Bernard (1981) 452 U.S. 89, 103–104 [“[a]lthough we do not decide what standards are mandated by the First Amendment in this kind of case, we do observe that the order involved serious restraints on expression”]; see also Parris v. Superior Court (2003) 109 Cal.App.4th 285, 290 [precertification communication with potential class members is constitutionally protected speech].)  These free speech concerns support the conclusion that rule 2-100 must not be construed in a manner that will unduly interfere with the right of parties to communicate with one another absent compelling evidence of abuse, which we do not find present here.

Slip op. at 29-30 (footnote omitted) (emphasis added).

The Gulf Oil case is an important one in this area of practice but hasn't been cited all that often by California's appellate courts.

Recent opinion holds arbitration clause unconscionable: Natalini v. Import Motors, Inc.

In Natalini v. Import Motors, Inc., ___ Cal.App.4th ___ (Jan. 7, 2013; pub. ord. Feb. 5, 2013), the Court of Appeal (First Appellate District, Division Five) affirmed the trial court's determination that a no-class-action arbitration clause was procedurally and substantively unconscionable, and therefore unenforceable.  The case involves claims under the Rees-Levering Act, the UCL and the CLRA. 

In its order modifying and publishing the opinion, the Court added the following footnote:

We recognize that, following the original filing of the decision in the present case, the Second District concluded in Flores v. West Covina Auto Group (2013) 212 Cal.App.4th 895, that a very similar provision was not substantively unconscionable.  We adhere to our analysis and conclusion.

Slip op. at 12 n.7.  This blog's post on Flores is here.  Both cases may be destined to become "grant and holds" pending resolution of Iskanian.

Third Circuit considers cy pres settlements: In re Baby Prods. Antitr. Litig.

In In re Baby Products Antitrust Litigation, ___ F.3d ___ (3d Cir. Feb. 19, 2013), the Third Circuit considered cy pres settlement distributions in class action cases for the first time.  It held that cy pres distributions are permissible, but vacated the order approving the particular settlement before it and remanded for further proceedigs. 

An excerpt:

Although we agree with the ALI that cy pres distributions are most appropriate where further individual distributions are economically infeasible, we decline to hold that cy pres distributions are only appropriate in this context. Settlements are private contracts reflecting negotiated compromises. Sullivan, 667 F.3d at 312. The role of a district court is not to determine whether the settlement is the fairest possible resolution—a task particularly ill-advised given that the likelihood of success at trial (on which all settlements are based) can only be estimated imperfectly. The Court must determine whether the compromises reflected in the settlement—including those terms relating to the allocation of settlement funds—are fair, reasonable, and adequate when considered from the perspective of the class as a whole.

Slip op. at 18.

Supreme Court issues "grant and hold" order in another arbitration case: Franco v. Arakelian Enters.

Last week, the Supreme Court issued a "grant and hold" order in another arbitration case, Franco v. Arakelian Enters., No. S207760.  The case has been held pending resolution of Iskanian.  My original post on the Court of Appeal opinion in Franco is here.

This means that three lead cases, plus five "grant and hold" cases, are now pending before the Supreme Court on post-Concepcion issues. 

These are the three lead cases:

• Iskanian v. CLS Transportation, No. S204032 (review granted 09/19/12)
• Sanchez v. Valencia Holding Co., No. S199119 (review granted 03/21/12)
• Sonic-Calabasas A, Inc. v. Moreno, No. S174475 (review granted 09/09/09)

Sonic-Calabasis is the oldest of these cases and has been fully briefed for some time.  Sanchez is also fully briefed (including amicus briefs and responses) as of November.  I had not previously noticed that in April, the Supreme Court granted calendar preference in Sanchez, which may mean the case is resolved much sooner than it otherwise would be.  In September, the Court denied an application by an amicus participant for an extension of time to file its brief.  Such requests are almost routinely granted in other cases.  Given the preference order I think this case could be set for oral argument at any time. 

In Iskanian, the opening brief on the merits was filed on December 20, 2012, and the answer brief on the merits on February 19, 2013. It will be some months before this case is ready for argument. 

In other arbitration-related news, the Ninth Circuit recently refused to allow Toyota to take advantage of a no-class-action arbitration clause in the purchase agreement between the plaintiff car buyers and the dealership.  Kramer v. Toyota Motor Corp., ___ F.3d ___ (9th Cir. Jan. 30, 2013).

Ninth Circuit addreses UCL extraterritorial reach: AT&T Mobility LLC v. AU Optronics Corp.

In AT&T Mobility LLC v. AU Optronics Corp., ___ F.3d ___ (9th Cir. Feb. 14, 2013), the Ninth Circuit took up one of the indirect-purchaser opt-out cases in the LCDs price-fixing matter, and held as follows:

To the extent a defendant’s conspiratorial conduct is sufficiently connected to California, and is not “slight and casual,” the application of California law to that conduct is “neither arbitrary nor fundamentally unfair,” and the application of California law does not violate that defendant’s rights under the Due Process Clause. See Allstate Ins. Co. v. Hague, 449 U.S. 302, 312–13 (1981).

Slip op. at 4.  The Court reinstated the action, which sought recovery for purchases made outside California of mobile handsets with price-fixed LCD screens.  Id. at 8-17.  The opinion addressed only the due process question, and not the choice-of-law question.  See id. at 15.  If California law is ultimately chosen, this could allow nationwide indirect purchaser class actions in cases where the conspiracy originated from or was substantially connected to this state.

The opinion focuses on the Cartwright Act claim, but it has this footnote on the UCL:

We focus on Plaintiffs’ claims under the California Cartwright Act, Cal. Bus. & Prof. Code §§ 16700–16770 (Cartwright Act or Act), but the principles articulated herein apply equally to Plaintiffs’ claims under California’s Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200 et seq. (UCL). The UCL provides a cause of action for harms caused by “any unlawful, unfair or fraudulent business act or practice.” Id. It thereby “‘borrows’ violations from other laws by making them independently actionable as unfair competitive practices.” Korea Supply Co. v. Lockheed Martin Corp., 63 P.3d 937, 943 (Cal. 2003). Because a violation of the Cartwright Act is, by definition, actionable under the UCL, we do not belabor our analysis in this case with respect to Plaintiffs’ UCL claims.

Slip op. at 4 n.1 (emphasis added). 

See this post for more on the UCL's extraterritorial reach.

Amicus briefs in pending Supreme Court UCL case: Rose v. Bank of America

The merits briefing in Rose v. Bank of America, no. S199074, was completed in August.  After that, amicus curiae briefs were filed by a number of organizations: 

• Amicus Curiae Brief of the Center for Biological Diversity (filed 09/20/12)
• Amicus Curiae Brief of the California Bankers Association and the American Bankers Association (filed 09/27/12)
• Amicus Curiae Brief of the California Chamber of Commerce and the Chamber of Commerce of the United States (filed 09/27/12)
• Amicus Curiae Brief of Consumer Attorneys of California and the National Employment Law Center (filed 09/27/12)
• Amicus Curiae Brief of the Civil Justice Association of California (filed 09/27/12)
• Amicus Curiae Brief of the City Attorneys of San Francisco and Los Angeles (filed 10/16/12)

All of the above links are courtesy of plaintiffs' counsel, Henry Rossbacher, whose website has a case page devoted to the proceeding. The merits briefs are available there, or at these links:

• Opening Brief on the Merits (filed 05-15-12)
• Answer Brief on the Merits (filed 07-17-12)
• Reply Brief on the Merits (filed 08-21-12)

RIP, appellate lawyer Sandy Svetcov

I was very saddened to hear the news of the untimely passing of appellate attorney Sandy Svetcov of the Robbins Geller firm, who died last Friday of cancer at age 72.  Sandy was so kind and encouraging to younger appellate lawyers.  The plaintiffs' bar has suffered an irreplaceable loss.  

The Ninth Circuit issued this press release, and the Recorder had this story.

My sympathies go out to his family and his colleagues at Robbins Geller.   [Via How Appealing]

UPDATE:  On Monday, the San Franciso Chronicle had this obituary by Bob Egelko.

New UCL public prosecutor opinion: People ex rel. City of Dana Point v. Holistic Health

In this UCL public prosecutor action, the Court of Appeal (Fourth Appellate District, Division Three) reversed summary judgment in favor of the City of Dana Point, finding triable issues of fact on whether the defendant medical marijuana dispensary had violated the Compassionate Use Act.  People ex rel. City of Dana Point v. Holistic Health, ___ Cal.App.4th ___ (Feb. 13, 2012).

What's interesting about the opinion are the civil penalties the trial court had imposed for violating the UCL: $1,315,000.  Slip op. at 7.  The trial court also permanently enjoined the defendant from "selling, serving, storing, keeping or giving away marijuana within the municipal boundaries of the City."  Id.  Although the Court of Appeal reversed this judgment, it shows what the trial court is likely to do if the City ultimately prevails in the action.

It also shows what a powerful tool the UCL can be in public prosecutor actions. 

New opinion addresses UCL "unfair" prong: Jolley v. Chase Home Finance, LLC

In Jolley v. Chase Home Finance, LLC, ___ Cal.App.4th ___ (Feb. 11, 2013), the Court of Appeal (First Appellate District, Division Two) revived a variety of claims stemming from a lender's attempts to foreclose on a construction loan.

The Court had this to say about the UCL's "unfair" prong:

There is a split of authority on what constitutes an “unfair” practice.  (Bardin v. DaimlerChrysler Corp. (2006) 136 Cal.App.4th 1255, 1260-1261.)  Some cases hold an “unfair” practice is one that offends established public policy, that is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers, or that has an impact on the victim that outweighs defendant’s reasons, justifications, and motives for the practice.  (Pastoria v. Nationwide Ins. (2003) 112 Cal.App.4th 1490, 1498; Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93 Cal.App.4th 700, 718-719; Podolsky v. First Healthcare Corp. (1996) 50 Cal.App.4th 632, 647.)  Others, including at least one from our district (Gregory v. Albertson’s, Inc. (2002) 104 Cal.App.4th 845, 853-854), hold that the public policy which is a predicate to a claim under the “unfair” prong of the UCL must be tethered to specific constitutional, statutory, or regulatory provisions.  (See also, Scripps Clinic v. Superior Court (2003) 108 Cal.App.4th 917, 938.)  Either way, unfairness is independently sufficient to state a claim under the statute.  (Allied Grape Growers v. Bronco Wine Co. (1988) 203 Cal.App.3d 432, 451; see Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180 [indicating that conduct may be “unfair” without being “unlawful”].)

Slip op. at 37-38.  There is  actually a three-way split in authority on the definition of "unfair" conduct in consumer actions.  The so-called "Section 5" test asks whether "(1) the consumer injury is substantial; (2) the injury is not outweighed by any countervailing benefits to consumers or competition; and (3) the injury could not reasonably have been avoided by consumers themselves."  Boschma v. Home Loan Center, Inc., 198 Cal.App.4th 230, 253 (2011). 

In any event, the Jolley opinion goes on:

With respect to Chase’s own conduct, we have already decided that North’s statements may be construed as misstatements of fact, with possible liability for such conduct left to the trier of fact.  That raises a triable issue as to “fraudulent.”  We have also concluded that dual tracking has been alleged and supported by Jolley’s declaration.  And while dual tracking may not have been forbidden by statute at the time, the new legislation and its legislative history may still contribute to its being considered “unfair” for purposes of the UCL.  Summary adjudication of Jolley’s fifth cause of action was improper.

Slip op. at 38 (emphasis added).  This is very interesting.  Under the post-Cel-Tech formulation, a finding of "unfair" conduct can be predicated on an expression of legislative policy embodied in the Legislature's subsequent enactment of a bill outlawing the conduct. 

New podcast of interest: "Class Re-Action"

Scott Leviant of The Complex Litigator has launched a new podcast, "Class Re-Action." 

The inaugural episode of the podcast is now available through this link and through iTunes.  It runs approximately one hour and features attorneys Tim Blood of Blood, Hurst & O'Reardon, Michael Singer of Cohelan, Khoury & Singer, and Tom Kaufman of Sheppard Mullin.

Scott expects this to be a regular series, complete with CLE credit for listening. Congratulations to him on this new venture.  It sounds like it will be very interesting.

Jury verdict thrown out in UCL false advertising case: Wallace v. Monier, Inc.

According to articles in The Recorder and Law360 (both subscription), as well as a press release by Morrison & Foerster, in late January, the judge overturned a $7 million jury verdict in a Placer County Superior Court case called Wallace v. Monier, Inc.   This is the same lawsuit that resulted in a published opinion on class certification three years ago, McAdams v. Monier, Inc., 182 Cal.App.4th 174 (2010).

I have not seen the order(s) or any of the briefs.  If and when I receive copies, I will post them here. 

UPDATE:  The order, dated January 28, 2013, is available at this link.  Many thanks to the blog reader who forwarded it.

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"Evidentiary Extrapolations in California Class Actions: Guidance From Brinker"

This article by yours truly appeared in the July 2012 issue of California Litigation. 

U.S. Supreme Court cert. petition to watch: Whirlpool Corp. v. Glazer

In September 2012, a cert. petition was filed in the U.S. Supreme Court in a case worth watching, Whirlpool Corp. v. Glazer, No. 12-322.  The case has been relisted twice as of January, and is apparently being held pending resolution of another matter, probably Comcast Corp. v. Behrend, No. 11-864 (argued on November 5). 

In Glazer, the Sixth Circuit affirmed the district court's order granting class certification of claims for breach of warranty, negligent design, and negligent failure to warn under Ohio law. In re Whirlpool Corp. Front-Loading Washer Products Liab. Litig., 678 F.3d 409 (6th Cir. 2012).

A brief excerpt:

The case involves multi-district litigation concerning alleged design defects in Whirlpool's Duet®, Duet HT®, Duet Sport®, and Duet Sport HT® front-load washing machines (“the Duets”).  Named plaintiffs Gina Glazer and Trina Allison alleged on behalf of the class that the Duets do not prevent or eliminate accumulating residue, which leads to the growth of mold and mildew in the machines, ruined laundry, and malodorous homes.

....

Based on the evidentiary record, the district court properly concluded that whether design defects in the Duets proximately caused mold or mildew to grow and whether Whirlpool adequately warned consumers about the propensity for mold growth are liability issues common to the plaintiff class. These issues are capable of classwide resolution because they are central to the validity of each plaintiff's legal claims and they will generate common answers likely to drive the resolution of the lawsuit.

Whirlpool asserts that proof of proximate cause will require individual determination, but the record shows otherwise. Whirlpool's own documents confirm that its design engineers knew the mold problem occurred despite variations in consumer laundry habits and despite remedial efforts undertaken by consumers and service technicians. Plaintiffs' expert, Dr. Gary Wilson, opined that consumer habits and the home environment in which a Duet sits could influence the amount of biofilm buildup, but those factors were not the underlying cause of biofilm buildup. Whirlpool contends that Dr. Wilson did not evaluate later design changes to the Duets to see if they rectified the mold problem. As we read the pertinent testimony and expert report, Dr. Wilson acknowledged that Whirlpool made some changes to the “Access” platform tub design, but there continued to be other areas in the machine that collected debris. He also examined a new “Horizon” platform washer and found that it still had cavities on the inside of the tub exposed to the water side, increasing the likelihood of biofilm collection. Dr. Wilson testified that even removing those cavities would not eliminate the biofilm problem. See Samuel–Bassett v. KIA Motors Am., Inc., 34 A.3d 1, 13 (Pa. 2011) (rejecting claim that design changes defeated commonality and predominance where modifications did not significantly alter the basic defective design).

Id. at 412, 419 (footnote omitted).

A copy of Whirlpool's cert. petition is available at this link. The respondents' brief is here and the reply brief is here.

New UCL opinion teaches pleading lesson: Hutton v. Fidelity National Title Co.

In Hutton v. Fidelity National Title Co., ___ Cal.App.4th ___ (Jan. 31, 2012), the Court of Appeal (Fifth Appellate District) affirmed summary judgment in a UCL case predicated on the defendant's alleged violation of a Government Code provision capping notary fees. 

After holding that the defendant had not violated that provision, thereby eliminating the UCL "unlawful" prong claim, the Court of Appeal refused to consider whether the plaintiff could proceed under the UCL's "unfair" or "frauduent" prongs because those prongs had not been adequately pleaded in the complaint:

In arguing that defendant did not address certain other potential causes of action, plaintiff’s appeal emphasizes that the UCL has three separate grounds of liability.  That is a correct statement of the law.  (See Bus. & Prof. Code, § 17200.)  “Since section 17200 is in the disjunctive, it establishes three separate types of unfair competition.  The statute prohibits practices that are either ‘unfair,’ or ‘unlawful,’ or ‘fraudulent.’  [Citation.]”  (Pastoria v. Nationwide Ins. (2003) 112 Cal.App.4th 1490, 1496.)  Plaintiff argues that it stated a cause of action for potential unfair or fraudulent practices ....  Whatever we may think about the viability of such theories, the problem for plaintiff at this stage is that no such claim or cause of action was ever alleged.

In an effort to persuade us that these theories were somehow pled, plaintiff notes that the first cause of action included a statement that defendant’s conduct was “unlawful, unfair or fraudulent.”  But that was a bare conclusion, not the factual basis of a cause of action.  Moreover, we cannot ignore that the next sentence of the complaint made it unmistakably clear that the first cause of action was based solely on “unlawful” conduct.  It stated, as we previously noted above, as follows:  “Namely, [Defendant] overcharged Plaintiff … by assessing and collecting set Notary Fees in each Real Estate Transaction irrespective of the number of signatures actually notarized.  Plaintiff … [was] charged more than California law allowed, and thus lost money due to [Defendant’s] unlawful business practices.”  (Italics added.)  ....  Plainly then, the actionable wrongdoing for which relief was sought in the complaint was not a failure to disclose or itemize, nor a notary’s unauthorized practice of law, but that of overcharging plaintiff by exceeding the amount permitted under section 8211.

....

What we said at the outset of our discussion bears repeating here:  For purposes of a summary judgment motion, the pleadings set the boundaries of the issues to be resolved.  (Conroy, supra, 45 Cal.4th at p. 1250.)  Defendant, therefore, met its burden as the moving party when it negated the sole basis of plaintiff’s claims—namely, the alleged excessive notary fee under section 8211.  It was not incumbent on defendant to refute liability on some theoretical possibilities not included in the pleadings.  (Conroy, supra, at p. 1254; County of Santa Clara v. Atlantic Richfield Co., supra, 137 Cal.App.4th at p. 332.)  Each of the suggested other grounds for liability argued by plaintiff were simply theoretical possibilities that were not included in the pleadings.  Finally, plaintiff cannot use his opposition papers as a substitute for an amended pleading, and his failure to seek an amendment below forfeits the issue.  (Conroy, supra, at p. 1254; County of Santa Clara v. Atlantic Richfield Co., supra, at pp. 333; Lackner v. North, supra, 135 Cal.App.4th at pp. 1201-1202, fn. 5.)

Slip op. at 15-17 (italics in original; bold added).

This case illustrates why the better way to plead a UCL claim in most cases will be to assert each prong as a separate, independent cause of action.  At a minimum, each prong should be pleaded in a separate paragraph or subparagraph specifically tailored to the elements of that prong.  The process of drafting separate allegations for each independent prong will force you to focus in on precisely how the defendant's conduct ran afoul of each prong. 

New opinion addresses economic abstention doctrine: Acosta v. Brown

Although it's not a UCL case, Acosta v. Brown, ___ Cal.App.4th ___ (Jan. 30, 2013), is instructive.  It discusses several leading UCL decisions on the economic abstention doctrine, such as Alvarado v. Selma Convalescent Hospital, 153 Cal.App.4th 1292 (2007) (discussed in this blog post), Arce v. Kaiser Foundation Health Plan, Inc., 181 Cal.App.4th 471 (2010) (discussed here), and Desert Healthcare Dist. v. PacifiCare FHP, Inc., 94 Cal.App.4th 781 (2001).

This doctrine is sometimes referred to as the "equitable abstention doctrine," but this is a misnomer.  It applies only in cases involving "complex economic and/or political issues [and where] the nature of the relief sought would uncommonly burden the court."  Acosta, slip op. at 12 n.7 (citing Alvarado).

Supreme Court grants review in class certification/employment case: Ayala v. Antelope Valley Newspapers, Inc.

Last week, on January 30, 2013, the Supreme Court granted review in Ayala v. Antelope Valley Newspapers, No. S206874, a case involving class certification of a series of claims brought by newspaper carriers against their employer.  The claims stem from the employer's decision to treat the carriers as independent contractors rather than employees. 

Here is the docket's description of the issues on review:

This case presents questions concerning the determination of whether common issues predominate in a proposed class action relating to claims that turn on whether members of the putative class are independent contractors or employees.

In Ayala v. Antelope Valley Newspapers, Inc., 210 Cal.App.4th 77 (Sept. 19, 2012; pub. ord. Oct. 17, 2012), after the trial court denied class certification, the Court of Appeal (Second Appellate District, Division Four) reversed the order as to five of the eight claims.

The opinion contains this passage, holding that whether, under applicable law, the workers were employees or independent contractors could be established by common proof: 

In denying class certification, the trial court agreed with AVP that no commonality exists regarding AVP’s right to control because individualized questions predominate as to who performs the services, when and where they perform the services, and how they perform the services.  Many of the court’s observations (and AVP’s arguments), however, actually point to conflicts in the evidence regarding AVP’s right to control rather than individualized questions. ....

Simply put, much of AVP’s evidence, upon which the trial court relied, merely contradicts plaintiffs’ allegations that AVP had policies or requirements about how carriers must do their jobs.  The parties do not argue that some carriers operating under the form agreements are employees while others are not.  Both sides argue that AVP has policies that apply to all carriers.  The difference between the parties is the content of those policies.  Plaintiffs argue that the policies are ones that control the way in which the carriers accomplish their work; AVP argues the policies impose certain requirements about the result of the work but allow the carriers to determine manner and means used to accomplish that result.  While there may be conflicts in the evidence regarding whether the policies plaintiffs assert exist, the issue itself is common to the class.  Similarly, whether the policies that exist are ones that merely control the result, rather than control the manner and means used to accomplish that result, is an issue that is common to the class.

Slip op. at 17-18 (italics in original; bold added).

I have not seen the petition for review, answer or reply in this case and would be grateful to anyone who can forward copies. 

Ayala has been added to my list of pending Supreme Court cases. 

Daily Journal: "Depublication of employment appellate rulings stirs curiosity"

On Wednesday, the Daily Journal had a front-page article on the Supreme Court's decision to depublish three post-Brinker Court of Appeal opinions on meal periods (discussed here and here).  An excerpt:

Kimberly A. Kralowec of the Kralowec Law Group filed a depublication request for each of the three cases in question, though she was not otherwise involved in them. She asserts the decisions misstated the Supreme Court's analysis in Brinker by relying on an older analysis of the word "provide" that refers to the dictionary and interprets the phrasing to mean the employer meets the obligation by simply offering breaks.

"It's a lot more than just offering or authorizing a break," Kralowec said. "The employer has to take affirmative steps to relieve workers of all duty, and refrain from doing anything that would interfere with the employees' ability to take a break."

The reporter, Laura Hautala, also interviewed former Justice Carlos Moreno about the development:

[F]ormer Justice Carlos R. Moreno, who retired from the state Supreme Court in 2011, said that depublished cases typically have something in them that's inconsistent with the high court's own precedent. 

"If a case is really off the mark, then the court will elect that remedy," he said.

Mine were not the only depublication requests.  Michael Singer filed requests for CELA in Hernandez and Lamps Plus; Joseph Antonelli filed a request for his clients in Tien; and Eve Cervantez filed a request for a group of workers in Lamps Plus. 

All of the requests made essentially the same argument -- that the Court of Appeal was badly misinterpreting the Brinker opinion.  My requests also pointed out that in so doing, the Court of Appeal failed to adhere to the rule of stare decisis, which requires allegiance not only to the high court's holdings, but also its reasoning.  All three opinions were "really off the mark" because they did not adhere to either the ultimate holding or the reasoning of Brinker.

Recently, on January 7, 2013, The Recorder had a front-page article on the first two depublication orders.  The article, "High Court Tees Up Number of Post-Brinker Cases," preceded the depublication order in Tien, handed down on January 16.  An excerpt:

In a dramatic move, the state Supreme Court depublished two of those rulings — Lamps Plus Overtime Cases, 195 Cal.App.4th 389, and Hernandez v. Chipotle Mexican Grill, 208 Cal.App.4th 1487. In both cases, the Second District had denied class certification.

Kimberly Kralowec of The Kralowec Law Group said in both rulings the Second District had "misinterpreted the Brinker decision, in particular what employers have to do to comply with their meal period obligations." Depublishing, she said, "was a very strong signal that the court disagreed with the analysis" in those two cases.

Needless to say, I'm very pleased to have done my part to achieve depublication in these cases, and I think that depublishing the opinions was the correct outcome, given that the Supreme Court is apparently not ready to revisit any of the issues addressed in Brinker by granting review in these cases. 

I am equally pleased by the press attention these developments have garnered.   That the Supreme Court would depublish three opinions like this is pretty remarkable, whatever the issue.  Many lawyers have sent expressions of thanks and contratulations which I have been so pleased and proud to hear. Congratulations are also due to Michael, Joe and Eve.