The UCL Practitioner

Supreme Court hands down long-anticipated arbitration opinion: Sonic-Calabasas A, Inc., v. Moreno

Yesterday, the Supreme Court handed down its long-awaited opinion in Sonic-Calabasas A, Inc. v. Moreno, ___ Cal.4th ___ (Oct. 17, 2013) (Sonic II).  Justice Liu drafted the 70-page majority opinion; Justice Chin, joined by Justice Baxter, dissented.

Although the case is not a class action, the opinion is of keen interest because this is the California Supreme Court's first consideration of AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011). 

Review was first granted in this case in 2009.  In 2011, the Supreme Court issued an opinion (Sonic I), but the U.S. Supreme Court granted the defendant's cert. petition, vacated the 2011 opinion, and remanded for reconsideration in light of Concepcion.  After further briefing and re-argument, this is the opinion we have been waiting for. 

In essence, Sonic II holds that the Federal Arbitration Act, as construed in Concepcion, does not preempt generally applicable state-law rules of contractual unconscionability.  That is also what the Ninth Circuit held in Kilgore and Coneff, although neither case is cited in Sonic II. 

Sonic II also contains a multi-page discussion of American Express Co. v. Italian Colors Restaurant, 133 S.Ct. 2304 (2013).  Slip op. at 42-50. 

Although the impact is somewhat softened by the similar holdings of Kilgore and Coneff, as well as earlier opinions of the Court of Appeal on the same issue (most of which have been taken up for review), this is a landmark decision. 

Major contratulations to Miles Locker and Rachel Folberg for their monumental win! 

Register now for the State Bar's Golden State Antitrust and Unfair Competition Law Institute next week (Updated)

The 23rd annual State Bar Golden State Antitrust and Unfair Competition Law Institute will take place next Thursday, October 25 October 24, 2013 at the Julia Morgan Ballroom in San Francisco. [UPDATED:  Please note that the correct date is Thursday, October 24th (not Friday the 25th).]

This is going to be a really interesting event, and I would encourage everyone who handles UCL and CLRA matters to sign up and attend.  During the afternoon, yours truly will be moderating a panel on UCL and CLRA trials.  The panel will feature the attorneys who tried the McAdams v. Monier class action (discussed here, here and here) earlier this year.  McAdams resulted in one of the nine published post-Tobacco II appellate opinions, in which the Court of Appeal reversed the trial court's order denying class certification. 

When McAdams went to trial, the defendant was represented by Will Stern of MoFo, author of the Rutter Group guide on 17200 practice.  Attorney Jeff Cereghino of Ram Olson Cereghino & Kopczynski represented the plaintiffs.  They and I have had several preparatory calls, and I have already learned some facsinating things about the practical aspects of taking a class action case to trial in the post-Dukes and post-Duran world. We will be talking about the jury instructions, the special verdict, the post-trial ruling (it was a remarkable one), and more. 

In addition to that panel, the morning update session will cover UCL developments (in addition to antitrust ones), and the big-stakes trials panel will be of interest to anyone who tries class action cases. 

If that is not enough to tempt you, at lunchtime, we will be welcoming California Supreme Court Justice Goodwin Liu as our keynote speaker.  I am very much looking forward to hearing his remarks. 

And last but not least, at the dinner, we will honor Senior Assistant Attorney General Kathleen E. Foote, of the California Department of Justice, who has been named 2013 Antitrust Lawyer of the Year.  Ms. Foote is only the second woman to be so honored in the history of the award. 

I hope to see you there.  The complete schedule for the day appears below.  Click here to register. 

8 a.m. - 9 a.m.	Registration & Continental Breakfast
8:30 a.m. - 8:45 a.m.	General Session Welcoming Remarks Kenneth R. O’Rourke – Incoming Section Chair O’Melveny & Myers LLP - Los Angeles, CA Paul J. Riehle – Incoming Section Vice Chair, Golden State Institute Sedgwick LLP - San Francisco, CA
8:45 a.m. - 10:15 a.m.	Plenary Session #1 Legal Update: Recent Developments in Antitrust and Unfair Competition Law This popular panel returns once again this year. Our dynamic speakers will provide an overview of recent California and federal developments in antitrust and unfair competition law. Thomas A. Papageorge, Professor, University of San Diego School of Law, Special Prosecutor, San Diego County District Attorney’s Office - San Diego, CA Thomas Greene, Special Litigation Counsel, Bureau of Competition of the Federal Trade Commission - San Francisco, CA Hon. J. Thomas Rosch, Latham & Watkins LLP - San Francisco, CA
10:15 a.m. - 10:30 a.m.	Morning Break
10:30 a.m. - 12:30 p.m.	Plenary Session #2: Trials “Big Stakes” Antitrust Trials For years, very few large antitrust cases went to trial let alone reached a jury verdict. That era has changed. We have witnessed an abundance of high stakes antitrust jury trials in the past couple of years. Last year, trial lawyers from two of these important cases, USA v. AU Optronics and Rambus v. Micron and Hynix, spoke to us about trial challenges they faced and how they addressed them. This year we are again very fortunate to have some of the country’s leading antitrust trial lawyers tell us about their recent trial experiences and, importantly, lessons they learned that will benefit litigators on both sides of a case as well as the in-house lawyers and clients overseeing antitrust litigation. The trials on our agenda for this year are: In re Vitamin C Antitrust Litigation In March 2013, a federal court jury in Brooklyn, New York, returned a $54.1 million verdict (trebled to $162.3 million) in favor of a class of vitamin C buyers. Plaintiffs claimed that the defendants, four Chinese producers of vitamin.C, conspired to fix prices and production levels for vitamin C exported to the United States. A key part of their defense was that their prices were set at the direction of the Chinese government. In re TFT-LCD Antitrust Litigation / Direct Purchasers Class v. Toshiba In July 2012, a San Francisco federal court jury found Toshiba liable for participating in an international price fixing cartel in violation of the Sherman Act. This trial was one of the first direct purchaser antitrust class actions to be tried to a jury in a long time. Plaintiffs claimed that Toshiba conspired with other international manufacturers to fix the prices at which LCDs were sold. The jury agreed, finding for the plaintiffs and awarding $87 million. In re Urethanes Antitrust Litigation / Direct Purchasers Class v. Dow Chemical In February 2013, a federal court jury in Kansas returned a verdict in favor of a class of purchasers of urethanes for $400 million (trebled to $1.2 billion). Post-trial motions and briefing are underway. Co-moderators:  Niall E. Lynch, Latham & Watkins LLP - San Francisco, CA  Heather S. Tewksbury, U.S. Department of Justice, Antitrust Division Panelists: Robert E. Freitas, Freitas Tseng & Kaufman LLP – Redwood Shores, CA Joseph Goldberg, Freedman Boyd Hollander Goldberg Urias & Ward PA- Albuquerque, New Mexico Co-Lead Plaintiffs’ Counsel for Direct Purchaser Class - Urethanes William A. Isaacson, Boies Schiller & Flexner LLPWashington, D.C. Lead Trial Counsel for Plaintiffs Class of Direct Purchasers - Vitamin C Daniel S. Mason, Zelle Hofmann Voelbel & Mason LLP - San Francisco, CA Lead Trial Counsel for Defendant Weisheng Pharmaceutical Co. Ltd. - Vitamin C Bruce L. Simon, Pearson Simon & Warshaw LLP -San Francisco, CA Co-Lead Trial Counsel for Direct  Purchaser Class - LCD Howard Varinsky, Varinsky & Associates - Emeryville, CA Jury Consultant - LCD
12:30 p.m. - 2 p.m.	Golden State Institute Luncheon Luncheon Keynote Speaker: Hon. Goodwin Liu, Associate Justice of the California Supreme Court - San Francisco, CA We are honored to have Justice Liu, the newest member of our state’s highest court, join us to present his keynote address.
2:15 p.m. - 3 p.m.	Plenary Session #3: Antitrust and IP Reverse Payment Settlements The U.S. Supreme Court issued a watershed ruling this summer on “reverse payment” settlements -- settlements of pharmaceutical patent litigation in which a branded drug company compensates a generic entrant to delay its entry into the market. In FTC v. Actavis, the Court held these agreements are to be analyzed using the Rule of Reason, not a presumption of unlawfulness or lawfulness. Our distinguished panelists will discuss the Court’s opinion and what it means for litigation challenging these agreements, patent litigation settlements, and the pharmaceutical industry and beyond, as well as for the California Supreme Court’s decision in the pending Cipro case. Our panelists include the attorney who argued Actavis in the Supreme Court, the leading academician on the subject, trial counsel in Cipro and other class action challenges to reverse settlements, and is moderated by the attorney who filed the Actavis Case. Moderator: Cheryl L. Johnson, Office of California Attorney General - Los Angeles, CA Panelists: Professor Michael A. Carrier, Rutgers Law School - Camden, NJ J Douglas Richards, Cohen Milstein -New York, NY Jeffrey I. Weinberger, Munger Tolles & Olson LLP - Los Angeles, CA
2:15 p.m. - 3 p.m.	Plenary Session #4: Unfair Competition Law and Consumers Legal Remedies Act - Class Certification Issues and Trial Techniques for UCL and CLRA Class Actions This outstanding panel is comprised of lead plaintiffs’ and defense counsel from McAdams v. Monier, Inc., a UCL/CLRA trial that went to verdict earlier this year. The plaintiffs consisted of a certified class of 128,000 members who sought more $250 million. The trial court overturned a $7.4 million plaintiffs’ verdict after rejecting their expert’s testimony. Our panelists will discuss the issues they faced regarding class certification, as well as how they presented their liability case and damages and restitution theories. The panel includes the author of The Rutter Group’s UCL treatise and is moderated by the author of the “The UCL Practitioner” blog and plaintiffs’ oral advocate before the California Supreme Court in Brinker. Moderator Kimberly Kralowec, The Kralowec Law Group - San Francisco, CA Panelists: Jeffrey B. Cereghino, Ram Olson Cereghino & Kopczynski LLP - San Francisco, CA William L. Stern Morrison, Foerster LLP - San Francisco, CA
3:45 p.m. - 4 p.m.	Afternoon Break
4 p.m. - 5:15 p.m.	Plenary Session #5: Judge's Panel Class Certification Proceedings in Antitrust and Unfair Competition Law Cases A distinguished group of state and federal judges will discuss certification of class actions and other pretrial and trial proceedings in complex litigation. The focus will be their “real world” experiences and practice pointers. This is a unique opportunity to learn directly from these highly experienced state and federal judges who adjudicate major class actions, antitrust and unfair competition cases, and other complex business litigation. Moderator: Penny Preovolos, Morrison & Foerster LLP - San Francisco, CA Panelists: Hon. Marsha S. Berzon, U.S. Circuit Judge, Ninth Circuit Court of Appeals - San Francisco, CA Hon. Curtis Karnow, Complex Litigation Judge, San Francisco Superior Court – San Francisco, CA Hon. Virginia A. Phillips, U.S. District Court Judge for the Central District of California - Riverside, CA Hon. John S. Wiley, Complex Litigation Judge, Los Angeles County Superior Court - Los Angeles, CA
5:30 p.m. - 7 p.m.	Reception for Antitrust Lawyer of the Year – Hosted Reception
7 p.m. - 9:30 p.m.	Antitrust Lawyer of the Year Award Dinner and Program Honoree Kathleen E. Foote, Senior Assistant Attorney General, California Department of Justice

"Appeals court revives suit against Skype"

Yesterday's San Francisco Chronicle had this article (subscription) by Bob Egelko on the Court of Appeal's latest UCL and CLRA opinion, Chapman v. Skype Inc., ___ Cal.App.4th ___ (Oct. 4, 2013).

Chapman stands in rather stark contrast to Simpson v. The Kroger Corp., ___ Cal.App.4th ___ (Sept. 25, 2013), decided the preceding week (see this blog post).  More details on Chapman can be found on Professor Tushnet's blog, which also had a post on Simpson.

Ninth Circuit shuts the door on "pick-off" attempts: Diaz v. First American Home Buyers Protection Corp.

In Diaz v. First American Home Buyers Protection Corp., ___ F.3d ___ (9th Cir. Oct. 4, 2013), the Ninth Circuit held that "an unaccepted Rule 68 offer that would fully satisfy a plaintiff’s claim is insufficient to render the claim moot."  Slip op. at 3.

This shuts the door to "picking off" the class representative—a door some believed was left open by Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013).  As the Diaz court observed, the Supreme Court did not decide the issue in that case.  Slip op. at 8 (citing Genesis Healthcare, 133 S. Ct. at 1528-29).  The substantive analysis in Diaz relies heavily on Justice Kagan's dissent, however, which did address it.  Diaz, slip op. at 10-15.

New UCL "fraudulent" prong and preemption decision: Simpson v. The Kroger Corp.

In Simpson v. The Kroger Corp., ___ Cal.App.4th ___ (Sept. 25, 2013), the Court of Appeal (Second Appellate District, Division Four) affirmed dismissal of plaintiff's UCL, FAL and CLRA claims, which asserted that the defendant, who makes Challenge butter, mislabeled its spreadable "butter" products. (The action also named the supermarket where the plaintiff purchased the products.)  According to the complaint, the spread is not "butter" because it contains canola and/or olive oil (sounds like margarine to me, although later the opinion clarifies that this was not plaintiff's contention).  Slip op. at 2-4, 8-9. 

This is one of the challenged labels (no pun intended):

Id. at 22 (Appx. B).

First, the opinion addresses preemption, holding that the federal Food Drug and Cosmetic Act (21 U.S.C. §§ 301 et seq.) preempts the California Milk and Milk Products Act of 1947 (Food & Agr. Code §§ 32501 et seq.) (which appears to have a more narrow definition of "butter" than the federal Act) but not the California Sherman Food, Drug and Cosmetic Law (Health & Saf. Code §§ 109875 et seq.).  Slip op. at 5-16.

Then, the opinion holds that regardless of the preemption analysis, the UCL, FAL and CLRA claims failed because "plaintiff has not, and as a matter of law cannot, allege that a reasonable consumer would have been mislead [sic] by the labels here."  Id. at 17.  Of interest, the opinion confirms the substantive "likely to deceive" standard for these claims:

Although California “courts have held that reasonable reliance is not an element of the claims under [the three statutory schemes alleged],” a plaintiff must establish that consumers were likely to be deceived by the product.  ([Yumul v. Smart Balance, Inc. (C.D. Cal. 2010) 733 F.Supp.2d 1117,] 1125; In re Vioxx Class Cases (2009) 180 Cal.App.4th 116, 130 [to state a claim for deceptive advertising under the Consumer Legal Remedies Act, a plaintiff “need only establish that members of the public were likely to be deceived by the advertising.”]; Colgan v. Leatherman Tool Group, Inc. (2006) 135 Cal.App.4th 663, 682 [to establish a false advertising claim, “a plaintiff need only show that members of the public are likely to be deceived” under a “‘reasonable consumer’ standard”].)

....

....  The labels on the products here clearly informed any reasonable consumer that the products contain both butter and canola or olive oil.  This was plain on both the top and side panels of the tubs in which the products are sold.  No reasonable person could purchase these products believing that they had purchased a product containing only butter.  The trial court did not abuse its discretion in denying leave to amend.

Id. at 18, 19.