The UCL Practitioner

New class arbitration opinion: Securitas Security Services USA, Inc. v. Superior Court (Edwards)

In Securitas Security Services USA, Inc. v. Superior Court (Edwards), ___ Cal.App.4th ___ (Feb. 27, 2015), the Court of Appeal (Fourth Appellate District, Division One) considered an arbitration clause purporting to bar all class and representative actions, including representative PAGA actions.

Applying Iskanian, the Court of Appeal held not only that the purported waiver of representative PAGA claims was unenforceable, but also that this rendered the entire no-class-action arbitration clause invalid:

We conclude the trial court correctly ruled that Iskanian rendered the PAGA waiver within the parties' dispute resolution agreement unenforceable.  However, the court then erred by invalidating and severing the waiver provision, including an enforceable class action waiver, from the agreement and sending Edwards's entire complaint, including her class action and PAGA claims, to arbitration.  Under the plain language of the parties' agreement, in the event Edwards sought to arbitrate a PAGA claim, her PAGA waiver (or any other waiver of the right to bring a dispute as a class or collectively) was not severable from the remainder of the agreement, thus rendering the entire dispute resolution agreement unenforceable and precluding the court from requiring the parties to arbitrate their disputes. 

Slip op. at 2-3.

Thoughts on the oral argument in In re Cipro Cases I & II

On Tuesday, March 3, 2015, I attended the oral argument in In re Cipro Cases I & II, No. S198616.  (See this post for more on the case.)

The argument was extremely interesting, and very well handled by both sides.  The UCL issue was not mentioned at all, which is not surprising, given the significant and complex antitrust issue the case presents.  All of the justices were active questioners, with the exception of Justice Corrigan, who had no questions until the rebuttal argument.   The two new justices, Justice Cuéllar and Justice Kruger, asked as many questions as any of their colleagues.  This was the first time I had the pleasure of attending an argument since they joined the Court.  They were both very astute questioners.  (Justice Cuéllar's questions boomed out very audibly across the courtroom, but I sometimes had trouble hearing Justice Kruger, even though I was sitting closer to her.) 

On the antitrust question -- which is whether pay-for-delay agreements between pharmaceutical patent-holders and generic-manufacturer competitors should be judged under the per se rule, the rule of reason, or some modified version of the latter -- I predict a split decision. Justice Liu's questions suggested that he favored the per se rule, but the other justices seemed skeptical.  I would not be surprised if they decide to follow the U.S. Supreme Court's lead in Actavis, albeit in a split decision.  That having been said, predicting case outcomes based on appellate arguments is an art that can't be mastered. 

I must say that both of the lawyers who argued this case were extremely well prepared and both did a very good job. 

The opinion is due in 90 days, which means we should see it by no later than Thursday, May 28 (the last opinion-issuance day before the deadline).

Oral argument preview: In re Cipro Cases I & II

This morning at 9:00 a.m. in San Francisco, the Court will hear oral argument in In re Cipro Cases I & II, No. S198616.   This case involves some interesting questions of antitrust law as well as a sleeper UCL issue. 

From the court's docket:

This case presents the following issue:  May a suit under the Cartwright Antitrust Act (Bus. & Prof. Code, § 16720 et seq.) be brought to challenge "reverse exclusionary payments" made by pharmaceutical manufacturers to settle patent litigation with generic drug producers and prolong the life of the patents in question?

Put another way, this is a "pay-for-delay" case.  The question before the Court is whether "pay for delay" agreements are per se unlawful under the Cartwright Act.  In 2013, the U.S. Supreme Court held that such agreements "can sometimes" violate the Sherman Act, and that they should be evaluated under the "rule of reason."  FTC v. Actavis, Inc., 133 S.Ct. 2223 (2013).  In late 2013, the California Supreme Court ordered the parties to file supplemental briefs on the impact of Actavis. 

The sleeper UCL issue is whether a defendant's conduct may be found "unfair" within the meaning of the UCL even if the conduct does not violate the Cartwright Act. The Court of Appeal said no (as discussed here).  I believe this answer contravenes Cel-Tech (as explained here and in my amicus brief for CAOC).

If my schedule permits, I plan to attend the argument today and report back on whether the Court or the parties discuss the UCL issue during what promises to be a very engaging argument.

New class certification opinion: Mies v. Sephora U.S.A., Inc.

In Mies v. Sephora U.S.A., Inc., ___ Cal.App.4th ___ (Feb. 2, 2015; pub. ord. Feb. 26, 2015), the Court of Appeal (First Appellate District, Division One) affirmed an order denying class certification in an employee misclassification case. 

The Court's analysis relied heavily on Duran.  See slip op. at 11-14. The opinion also includes this footnote of interest:

This is not a case like Williams v. Superior Court (2013) 221 Cal.App.4th 1353, 1358, 1369–1370 or Jones v. Farmers Ins. Exchange (2013) 221 Cal.App.4th 986, 996, in which the class disputes (which were not misclassification disputes) centered on whether application of a uniform policy (no compensation for time before arrival at first worksite; no compensation for at home “computer sync time”) was lawful.  If unlawful, some class members would be damaged and some might not be, but the employer would face liability as to each.  Here, the question is not the legality of Sephora’s operational procedures.  Instead, the parties dispute the evidentiary value of the policies—Mies claims they demonstrate total uniformity in the tasks Specialists perform and the manner in which they perform them.  Sephora disagrees, and points to the varied declarations of Sephora employees, evidence the trial court credited.  Thus, unlike in Williams and Jones, the policies here are just a piece of a far more complicated puzzle and do not, in light of the trial court’s factual determinations, provide a means of readily determining liability issues for the entire proposed class.  The same rationale distinguishes Benton v. Telecom Network Specialists, Inc. (2013) 220 Cal.App.4th 701, 726, in which the issue was whether a policy regarding meal and rest breaks was unlawful on its face as to all class members.

Id. at 19 n.15.  And the opinion had this to say concerning proffered statistical evidence:

Finally, the trial court did not err in rejecting Mies’ proposal to use statistical evidence to prove liability with respect to absent class members.   Mies’ proposal was undeveloped and unsubstantiated, and the court was not required to accept her unjustified assurances regarding what she could prove, especially given the declaration of Sephora’s expert stating the use of sampling to determine liability with respect to absent class members would not work.  (Duran, supra, 59 Cal.4th at pp. 31–32 [“a statistical plan for managing individual issues must be conducted with sufficient rigor”]; Dailey, supra, 214 Cal.App.4th at pp. 998–999 [“a mere proposal for statistical sampling” not “an adequate evidentiary substitute for demonstrating the requisite commonality”], italics omitted; cf. Mora v. Big Lots Stores, Inc. (2011) 194 Cal.App.4th 496, 510 [“Dr. Hoffman had not yet conducted a survey and his declaration describing the proper method for designing and implementing a scientific survey did nothing to refute the evidence presented by Big Lots that it did not operate its stores or supervise its managers in a uniform and standardized manner.”].)

Id. at 20-21 (footnote omitted).