The UCL Practitioner

"Roberts Pulls Supreme Court to the Right Step by Step"

Adam Liptak had another interesting article on the U.S. Supreme Court two days ago in The New York Times.

According to Liptak, "Chief Justice Roberts has proved adept at persuading the court’s more liberal justices to join compromise opinions, allowing him to cite their concessions years later as the basis for closely divided and deeply polarizing conservative victories." 

Supreme Court vacates submission in arbitration case: Sonic Calabasas A, Inc. v. Moreno

On April 3, 2013, the Supreme Court heard oral argument in Sonic-Calabasas A, Inc. v. Moreno, S174475.  Ordinarily, the opinion would be due within 90 days thereafter, which would be next week.

However, last week, on June 21, 2013, the Supreme Court issued this order: 

The parties are requested to serve and file supplemental briefs addressing the significance, if any, of the United States Supreme Court's recent decision in American Express Co. v. Italian Colors Restaurant (June 20, 2013) ___ U.S. ___ [2013 WL 3064410]. Those briefs are to be served and filed on or before July 12, 2013. Upon the filing of those briefs, each party will then have until July 19, 2013, to serve and file a response to the brief submitted by the opposing party. Submission of the cause is vacated. (See Cal. Rules of Court, rule 8.524(h)(1) [submission runs from expiration of the time in which to file briefs, including supplemental briefs].) The cause will be resubmitted on July 19, 2013.

(Hyperlink added.)  With this order, we can expect an opinion by mid-October. 

Although this case is not a class action, it is expected to be the first in which the Supreme Court substantively construes Concepcion -- and now AmEx. 

See this blog post for more on the case, and this blog post for a report on the oral argument in April. 

U.S. Supreme Court hands down class arbitration opinion today: American Express Co. v. Italian Colors Restaurant

This morning, the U.S. Supreme Court handed down its opinion in American Express Co. v. Italian Colors Restaurant, ___ U.S. ___ (Jun. 20, 2013).  I will have more on the opinion in a later post. 

According to the summary at SCOTUSblog, the Court held 5-3 that the arbitration clause was enforceable even though an arbitration proceeding would provide no effective means to vindicate the plaintiffs' statutory rights under the federal antitrust laws. 

Ninth Circuit addresses UCL standing and construes Kwikset: Hinojos v. Kohl's Corp.

In Hinojos v. Kohl's Corp., ___ F.3d ___ (9th Cir. May 25, 2013), the plaintiff's UCL and CLRA action challenged Kohl's practice of claiming that its prices are discounted off a "regular" or "original" price.  The district court dismissed the claim, finding that the plaintiff had not alleged that he had "lost money or property" sufficient for Prop. 64 standing. Slip op. at 4-6.

The Ninth Circuit disagreed, and reversed. 

The opinion observed, first of all, that California law explicitly prohibits advertising former prices "unless the alleged former price was the prevailing market price ... within three months next immediately preceding the publication of the advertisement."  Slip op. at 7 (quoting Bus. & Prof. Code § 17501). The complaint alleged that Kohl's advertising violated this requirement.  See id. at 5.

The Court then addressed standing and Kwikset, and concluded:

Hinojos has done everything Kwikset requires to allege an economic injury under the UCL and FAL. He alleges that the advertised discounts conveyed false information about the goods he purchased, i.e., that the goods he purchased sold at a substantially higher price at Kohl’s in the recent past and/or in the prevailing market. He also alleges that he would not have purchased the goods in question absent this misrepresentation. This is sufficient under Kwikset.

Slip op. at 10.

The opinion takes pains to debunk the defendant's argument (and the district court's holding) that Kwikset applies "only in cases involving 'factual misrepresentations about the composition, effects, origin, and substance of advertised products.'"  Id. at 11.  According to the defendant, "when a merchant misrepresents the 'regular' price of his wares, it does not misrepresent the innate value of those wares so the misled consumer has suffered no economic injury; he gets the product he expected at the price he expected."  Id.

The Ninth Circuit found this line of argument unsupported by Kwikset:

Kwikset cannot be so easily limited. It is true that Kwikset itself involved misrepresentations regarding how the merchandise in question was produced; the defendant in Kwikset was a manufacturer of locksets, which it falsely labeled as having been “Made in [the] U.S.A.” It is also true that Kwikset described a number of other examples of misrepresentations concerning a product’s origin or composition that would be actionable under the UCL and FAL: meat falsely labeled as kosher or halal, wine labeled with the wrong region or year, blood diamonds mislabeled as conflict-free, and goods falsely suggesting they were produced by union labor. Kwikset, 216 P.3d at 889–90.  Nothing in Kwikset, however, suggests that these examples were intended to be exhaustive instead of illustrative. ....

The district court’s “composition, effects, origin, and substance” test ignores the fact that, to other consumers, a product’s “regular” or “original” price matters; it provides important information about the product’s worth and the prestige that ownership of that product conveys. See Dhruv Grewal & Larry D. Compeau, Comparative Price Advertising: Informative or Deceptive?, 11 J. of Pub. Pol’y & Mktg. 52, 55 (Spring 1992) (“By creating an impression of savings, the presence of a higher reference price enhances subjects’ perceived value and willingness to buy the product.”); id. at 56 (“[E]mpirical studies indicate that as discount size increases, consumers’ perceptions of value and their willingness to buy the product increase, while their intention to search for a lower price decreases.”).  Misinformation about a product’s “normal” price is, therefore, significant to many consumers in the same way as a false product label would be. See Kwikset, 246 P.3d at 890 (recognizing that falsely labeling a watch as a Rolex would be an actionable misrepresentation even if the watch was a “functional[] equivalent” of a Rolex). That, of course, is why retailers like Kohl’s have an incentive to advertise false “sales.” It is also why the California legislature has prohibited them from doing so. In fact, the deceived bargain hunter suffers a more obvious economic injury as a result of false advertising than the Kwikset consumer who was duped into buying foreign-made goods, because the bargain hunter’s expectations about the product he just purchased is precisely that it has a higher perceived value and therefore has a higher resale value.

Slip op. at 12-13 (emphasis in original) (footnote omitted). 

"In sum," the discussion concludes, "price advertisements matter."  Id. at 16.

The rest of the opinion's analysis of this issue is quite interesting and worth a careful read. The panel reversed the dismissal of the CLRA claim for similar reasons.  Id. at 16-17.

Another U.S. Supreme Court decision hinges on a party concession: Oxford Health Plans LLC v. Sutter

Last Monday, the U.S. Supreme Court handed down its opinion in a post-Stolt-Nielsen arbitration case, Oxford Health Plans LLC v. Sutter, ___ U.S. ___ (Jun. 10, 2013).  The Court affirmed the arbitrator's determination that the parties had agreed to class arbitration, even though the contract made no explicit mention of class arbitration.  Slip op. at 4-9. 

Oxford maintained that under Stolt-Nielsen, class arbitration could not be compelled absent the parties' consent, but the problem for Oxford was that it "agreed with Sutter that an arbitrator should determine what their contract meant, including whether its terms approved class arbitration."  Id. at 8.  The arbitrator's determination on that point therefore "holds, however good, bad, or ugly."  Id.  The Court did not decide whether, absent such a concession, the question should be resolved by the arbitrator or the district judge. 

This is the third recent U.S. Supreme Court decision on class-action-related issues in which a party concession significantly impacted the analysis and result.

In Comcast Corp. v. Behrend, ___ U.S. ___ (Mar. 27, 2013), it was "uncontested" by the parties that predominance under Rule 23(b)(3) requires a common method of proving and measuring damages -- even though the ordinary and long-established rule is that common questions predominate notwithstanding any individualized damages issues.  The Court then held that the plaintiffs' proposed common method of proving damages (and liability) was inadequate for various fact-specific reasons.  (Comcast is discussed in this blog post.)

In Genesis Healthcare Corp. v. Symczyk, ___ U.S. ___ (Apr. 16, 2013), the parties agreed that the defendant's Rule 68 offer of judgment mooted the plaintiff's FLSA claim.  The Court then addressed whether a plaintiff with a moot claim could proceed with a FLSA collective action, and decided she could not. The opinion provides little or no guidance on whether defense-initiated "pick-off" attempts are effective in collective (or class) litigation. 

In Stolt-Nielsen itself (as the Court noted in Oxford Health), the parties "had entered into an unusual stipulation that they had never reached an agreement on class arbitration."  Oxford Health, slip op. at 6 (citing Stolt-Nielsen,  559 U. S. at 668-69, 673).

In another recent, non-class-action case, the opinion also turned on an issue that had been conceded.  In US Airways, Inc. v. McCutchen, ___ U.S. ___ (Apr. 16, 2013), handed down the same day as Genesis Healthcare, the four dissenting justices complained that "[t]he Court has no business deploying against petitioner an argument that was neither preserved, [citation], nor fairly included within the question presented."  Scalia, J., dissenting, slip op. at 2. 

The irony is that those dissenters did precisely the same thing in Comcast, as Justice Ginsburg took pains to point out in her dissent in that case.  Surely this was not lost on Justice Kagan, who authored the US Airways majority opinion, as well as the dissent in Genesis Healthcare, where she said that the Genesis Healthcare majority decision "resolve[d] an imaginary question, based on a mistake," and recommended that the opinion be "relegate[d] ... to the furthest reaches of your mind: The situation it addresses should never again arise."  Kagan, J., dissenting, slip op. at 1-2.  

It would be nice if the Court took up some clean cases in which party concessions played less of a role. Opinions in concession-driven cases are of limited value and can lead to confusion in the lower courts.

New opinions are expected from the Court this morning and Thursday morning. We are still waiting for the opinion in another arbitration-related case, American Express Co. v. Italian Colors Restaurant, No. 12-133 (argued 02/27/13). 

UPDATE: Many thanks to SCOTUSblog for linking to this post.   Welcome, SCOTUSblog readers!

Recent UCL "unlawful" prong opinion: Las Canoas Co. v. Kramer

In Las Canoas Co. v. Kramer, 216 Cal.App.4th 96 (May 7, 2013), the Court of Appeal (Second Appellate District, Division Six) affirmed dismissal of UCL "unlawful" and "unfair" prong claims predicated on alleged violations of Code of Civil Procedure section 2025.510, which, among other things, requires the fees charged by court reporters for copies of deposition transcripts to be "reasonable."

The Court of Appeal observed that the statute allows a motion to be brought in the original action to enforce this requirement.  Slip op. at 3. The Court then held that this mechanism is the exclusive remedy, and that a later UCL "unlawful" (or "unfair") prong claim is barred.  Id. at 3-4.  It concluded that:

a non-noticing party who does not move for such an order in the pending action may not bring a subsequent action to obtain restitution for "unreasonable" copy charges or obtain injunctive relief setting a "reasonable rate" to be charged by that court reporter in all future actions.

Id. at 1.

I think this case was incorrectly decided.  The decisional law is very clear that any statute may form the predicate of a UCL "unlawful" prong claim, regardless of whether the law carries its own, separate private enforcement mechanism.  The UCL "borrows" the statute's liability standards, engrafts the UCL's own more streamlined procedures and limited remedies, and disregards any remedies that may be written into the "borrowed" statute.  Here, the statute contains no explicit safe harbor or exclusive remedy language, which are, under Cel-Tech, the only things that should preclude a UCL claim for its violation. 

The Supreme Court is considering similar arguments in Zhang and Rose, which were heard last month.  The opinions in those cases are due to be handed down by approximately the first week of Augusut.  Las Canoas would be a good candidate for a "grant and hold" order pending resolution of one or both of those cases. 

UPDATE: On behalf of CAOC, I filed a request for depublication of this opinion, as well as an amicus letter urging the Court to issue a "grant and transfer" order following issuance of its opinions in Zhang and Rose.  On July 3, 2013, the Court granted itself an extension of time through September 4, 2013 to grant or deny review on its own motion.  Las Canoas Co. v. Kramer, No. S211651.  The time to grant review (or depublish) otherwise would have expired that week.  Ultimately, the Court may not depublish or take any other action, but I thought it was worth a try.  Counsel for the defendant filed response letters opposing both depublication and review. 

UPDATE:  On August 14, 2013, the Supreme Court denied the depublication request and declined to grant review on its own motion.

New UCL statute of limitations opinion: Fuller v. First Franklin Financial Corp.

In Fuller v. First Franklin Financial Corp., ___ Cal.App.4th ___ (May 1, 2013; pub. ord. May 29, 2013), the Court of Appeal (Third Appellate District) reinstated the plaintiffs' UCL and other claims, all of which the trial court had dismissed on the pleadings as barred by the statute of limitations.  The Court held that the complaint adequately alleged facts sufficient to bring the case within the doctrine of fraudulent concealment, as construed in Aryeh v. Canon Business Solutions, Inc., 55 Cal.4th 1185 (2013) (discussed in this blog post).

The case is not a class action.  It involves alleged misrepresentations by a lender and broker in connection with a home purchase. 

Another new post-Brinker class certification opinion: Bluford v. Safeway Stores, Inc.

In Bluford v. Safeway Stores, Inc., ___ Cal.App.4th ___ (May 8, 2013; partial pub. ord. May 24, 2013), the Court of Appeal (Third Appellate District) reversed an order denying class certification of rest break, meal period, and wage statement claims.  Only the rest break part of the analysis (pp. 7-10) was published, but according to the docket, requests for publication of the balance of the opinion remain pending. 

UPDATE:  The requests for publication of the balance of the opinion were denied.

Two new arbitration-related opinions: Brown v. Superior Court (Morgan Tire & Auto, LLC) and Vargas v. SAI Monrovia B, Inc.

Two new opinions addressing arbitration issues were handed down last Tuesday, June 4, 2013.

In Brown v. Superior Court (Morgan Tire & Auto, LLC), ___ Cal.App.4th ___ (Jun. 4, 2013), the Court of Appeal (Sixth Appellate District) followed the lead of the other Brown case, and held that a "no-class-or-representative-action" arbitration clause could not defeat the plaintiffs' statutory right to bring a representative PAGA claim and seek penalties on behalf of the state.  Slip op. at 13-20 (citing Brown v. Ralphs Grocery Co., 197 Cal.App.4th 489 (2011)). 

This case is likely to be taken up as a "grant and hold" pending resolution of Iskanian v. CLS Transportation, case no. S204032 (review granted 09/19/12).  The latest in Iskanian is that a significant number of amicus curiae briefs were filed in mid-May.  An extension of time was granted for the parties to file their consolidated answers to the amici briefs.  The answers are now due on July 15, 2013. 

In Vargas v. SAI Monrovia B, Inc., ___ Cal.App.4th ___ (Jun. 4, 2013), the Court of Appeal (Second Appellate District, Division One) struck down a no-class-action arbitration clause in a vehicle installment sales contract as "permeated by unconscionability" under Armendariz.  The opinion allows the action to proceed in court as a class action for violation of the UCL, CLRA and other statutes.

This case could well be taken up as a "grant and hold" pending resolution of Sanchez v. Valencia Holding Co., case no. S199119 (review granted 03/21/12).  Sanchez has been fully briefed since last year, and could be set for oral argument at any time.  The next argument dates on the Supreme Court's calendar are not until the first week of September. The cases to be heard that week should be announced by early August. 

The opinion in Sonic-Calabasas, case no. 174475, which was argued on April 3, 2013, must be filed no later than July 2, 2013.  Because that's a Tuesday, and the Supreme Court issues opinions on Mondays and Thursdays, we'll have it by Monday, July 1, 2013. 

Recent U.S. Supreme Court activity of interest: Sears, Roebuck & Co. v. Butler and Mississippi ex rel. Hood v. AU Optronics Corp.

On June 3, 2013, the U.S. Supreme Court granted cert., vacated the opinion, and remanded for reconsideration in a third post-Comcast case:  Sears, Roebuck & Co. v. Butler, no. 12-1067.

Butler is a consumer case in which the Seventh Circuit reversed the district court's order denying class certification of a breach of warranty claim involving mold growth in front-load washing machines.  Butler v. Sears, Roebuck & Co., 702 F.3d 359 (7th Cir. 2012) (Posner, J.).  My original post on the opinion is here. 

This is the third case that I'm aware of in which the Supreme Court directed reconsideration in light of Comcast.  The other two cases are Whirlpool Corp. v. Glazer, no. 12-322 (also involving front-load washers; see this blog post), and RBS Citizens, N.A. v. Ross, no. 12-165 (involving unpaid overtime wages; see this blog post).

It will be interesting to see what the Sixth and Seventh Circuits do in these cases on remand.

In the meantime, it is now June, which means that the Supreme Court will soon be handing down its opinions in the rest of the cases argued this Term.  I'm following these cases, among others: 

• Oxford Health Plans LLC v. Sutter, No. 12-135 (involving class arbitration; argued 03/25/13)
• American Express Co. v. Italian Colors Restaurant, No. 12-133 (involving class arbitration; argued 02/27/13)

In another development of interest, on May 28, 2013, the Supreme Court granted cert. in another case involving CAFA, Mississippi ex rel. Hood v. AU Optronics Corp., no. 12-0136.  This is the question presented according to the cert. petition:

Whether a state's parens patriae action is removable as a "mass action" under the Class Action Fairness Act when the state is the sole plaintiff, the claims arise under state law, and the state attorney general possesses statutory and common-law authority to assert all claims in the complaint.

The case arose out of the LCDs price-fixing litigation.  The Fifth Circuit reversed the remand order, finding the public prosecutor action removable under CAFA.  Mississippi ex rel. Hood v. AU Optronics Corp., 701 F.3d 796 (5th Cir. 2012). 

The Supreme Court's only other CAFA-related case to date is The Standard Fire Ins. Co. v. Knowles, 133 S.Ct. 1345 (2013), discussed in this blog post.

"Circuit's reversal in wage case complicates Comcast"

On May 29, 2013, the Daily Journal had a story on the Ninth Circuit's opinion last week in Leyva v. Medline Industries, Inc., ___ F.3d ___ (9th Cir. May 28, 2013), which reversed the district court's order denying class certification of certain wage and hour claims, and remanded with directions to certify the class.

As I mentioned to Laura Hautala of the Daily Journal, the most important thing about the opinion is its recognition that Comcast did not change the rule that individualized damages issues do not defeat class certification.  Slip op. at 7-9.  The opinion affirmed the general rule, which is that class certification can and should be granted in Rule 23(b)(3) cases not withstanding the need to calculate damages individually for each class member:

The district court denied certification because for each sub-class “the damages inquiry will be highly individualized.” But damages determinations are individual in nearly all wage-and-hour class actions. Brinker Rest. Corp. v. Superior Court, 273 P.3d 513, 546 (Cal. 2012) (“In almost every class action, factual determinations of damages to individual class members must be made. Still we know of no case where this has prevented a court from aiding the class to obtain its just restitution. Indeed, to decertify a class on sound the death-knell of the class action device.”) (internal citation and quotation marks omitted). Thus, “[t]he amount of damages is invariably an individual question and does not defeat class action treatment.” Blackie v. Barrack, 524 F.2d 891, 905 (9th Cir. 1975); see also Yokoyama, 594 F.3d at 1089 (“The potential existence of individualized damage assessments . . . does not detract from the action’s suitability for class certification.”). In deciding otherwise, the district court abused its discretion by applying the wrong legal
standard. See Hinkson, 585 F.3d at 1263.

Indeed, the Supreme Court clarified in Dukes that “individualized monetary claims belong in Rule 23(b)(3).” 131 S. Ct. at 2558. Thus, the presence of individualized damages cannot, by itself, defeat class certification under Rule 23(b)(3).  ....

Slip op. at 7-8.  The panel's citation of Brinker and Dukes in support of its ruling is notable, as is its reliance on Yokoyama (discussed in this blog post) and Blackie, which reconfirms the continuing vitality of both opinions post-Dukes and post-Comcast. 

This was my original report on Comcast.

I have been very busy in my day job lately, but I'm hoping to find time to catch up with my blogging in the coming weeks.