The UCL Practitioner

New UCL opinion: Rutledge v. Hewlett Packard Co.

The Court of Appeal (Sixth Appellate District) handed down an important new UCL opinion last week. 

In Rutledge v. Hewlett Packard Co., ___ Cal.App.4th ___ (Jul. 22, 2015), the Court of Appeal reinstated a UCL "fraudulent" prong claim, and a CLRA claim, against a product manufacturer for failing to disclose material information about the product -- even though the nondisclosure was not about a safety-related defect, and even though for some class members the product did not fail until after the expiration of the manufacturer's warranty.  Slip op. at 6-12. 

Put another way, the opinion places some important limitations on Daugherty v. American Honda Co., 144 Cal.App.4th 824 (2006), and its successor opinion, Bardin v. DaimlerChrysler Corp., 136 Cal.App.4th 1255 (2006).  (For more on Daugherty, see these blog posts.  For more on Bardin, see this one.)  Before this new opinion, the Court of Appeal's most recent word on these issues had been Collins v. eMachines, Inc., 202 Cal.App.4th 249 (2011).

This is what the opinion has to say about the warranty issue:

HP argues [one of the named plaintiffs] and class members similar to him do not have a claim for fraudulent concealment under the UCL, because they received notebooks with inverters that functioned for the duration of the one-year warranty, and were not damaged by HP’s alleged failure to disclose the fact of the faulty inverter.  However, a claim for fraudulent business practices “reflects the UCL’s focus on the defendant’s conduct, rather than the plaintiff’s damages, in service of the statute’s larger purpose of protecting the general public against unscrupulous business practices.”  (In re Tobacco II Cases (2009) 46 Cal.4th 298, 312.)  The question under the UCL is related to HP’s conduct in failing to disclose the faulty inverter, not on whether the notebook’s computer functioned for one-year.  HP’s argument that the expiration of the warranty period precludes a claim for fraudulent concealment under the UCL is incorrect.

Slip op. at 10-11 (emphasis added).

Back in 2008, the same division of the Court of Appeal declined to disturb the trial court's order granting class certification of the UCL claim in the same case.   My post on the 2008 opinion is here.  In the opinion handed down last week, the Court of Appeal not only reaffirmed that result, but also held that certification should have been granted of a nationwide class.  Slip op. at 23-29.

New class certification opinion: Safeway, Inc. v. Superior Court (Esparza)

In Safeway, Inc. v. Superior Court (Esparza), ___ Cal.App.4th ___ (Jul. 22, 2015), the Court of Appeal (Second Appellate District, Division Four) refused to disturb an order granting class certification of a UCL claim predicated on violations of Labor Code section 226.7, which requires employers to pay premium wages for missed meal periods.  

The trial court granted class certification, and the Court of Appeal affirmed, even though the defendant filed more than 2,000 class member declarations in an effort to oppose certification.  Slip op. at 12.  (Just imagine the number of hours it took to gather those.  Probably equivalent to an attorney billing full time for a couple of years.)

The Court of Appeal reached the merits of the UCL claim to some degree, finding it necessary in order "to adjudicate the propriety of a class action."  Id. at 15 (citation omitted).  The Court concluded:

[A] UCL claim may be predicated on a practice of not paying premium wages for missed, shortened, or delayed meal breaks attributable to the employer’s instructions or undue pressure, and unaccompanied by a suitable employee waiver or agreement.  (See Cortez, supra, 23 Cal.4th at p. 177 [under UCL, employer’s failure to pay earned wages was an unlawful business practice]; Sullivan v. Oracle Corp. (2011) 51 Cal.4th 1191, 1206 [under UCL, California employer’s failure to pay overtime wages to out-of-state employees was an unlawful business practice]; Tomlinson v. Indymac Bank F.S.B (2005) 359 F.Supp.2d 891, 895-897 [employer’s failure to pay meal break premium wages was an unlawful business practice under the UCL].)

Slip op. at 18.  The Court also held that the conduct did not fall within any Cel-Tech safe harbor.  Id. at 19-20.

As for whether this UCL claim was suitable for class treatment, the Court concluded it was, relying heavily on Justice Werdegar's concurrence in Brinker.  Slip op. at 23-25.  Most notably, the Court adopted the presumption, recognized by Justices Werdegar and Liu, that if the employer's records show no meal period taken when one was required, this creates a rebuttable presumption that a violation occurred:

Here, establishing that a significant number of employees accrued unpaid meal break premium wages is capable of common proof, in view of petitioners’ time punch data and the presumption identified by Justice Werdegar.  There is no dispute that the applicable wage order is Wage Order 7-2001 (Cal. Code Regs., tit. 8, § 11070), which obliges employers to provide at least one 30-minute meal break for shifts of over five hours (absent a waiver available only in limited circumstances) (id., subd. (11)(A)), requires employers to record meal breaks (id., subd. (7)(A)(3)), and permits an “on duty” meal break only with the employee’s express written agreement (id., subd. (11)(C)).  The time punch data and records identified by [plaintiffs' accounting expert] are capable of raising a rebuttable presumption that a significant portion of the missed, shortened, and delayed meal breaks reflected meal break violations under section 226.7.  Because that fact potentially can be shown without consideration of an unwieldy number of individualized issues, the record shows that the facts necessary to establish liability are capable of common proof.

Slip op. at 25 (emphasis added).

The whole opinion is worth a good read. 

New UCL preemption opinion: Eckler v. Neutrogena Corp.

In Eckler v. Neutrogena Corp., ___ Cal.App.4th ___ (Jun. 9, 2015; pub. ord. Jul. 1, 2015), the Court of Appeal (Second Appellate District, Division Seven) held that the federal Food, Drug and Cosmetics Act preempted claims under the UCL and False Advertising Law concerning the labeling of Neutrogena sunscreen.