The UCL Practitioner

Oral argument set in UCL/CLRA arbitration case: McGill v. Citibank

On October 6, 2016 at 9:00 a.m. in San Francisco, the Supreme Court will hear oral argument in McGill v. Citibank, No. S224086.  This case presents the question of whether the Federal Arbitration Act, as construed in Concepcion, preempts the Broughton-Cruz rule. 

The Court of Appeal (Fourth Appellate District, Division Three) said that it does.  See McGill v. Citibank, N.A., 232 Cal.App.4th 753 (2014), review granted.  

The Broughton-Cruz rule basically holds that claims for public injunctive relief, such as that available under the UCL and CLRA, are inarbitrable. For more on the rule, see this blog post.  For more on the Court of Appeal's opinion, see this blog post.

On Monday, the defendant filed a request that the argument be moved to the December calendar, but the docket indicates no ruling on that request as of Tuesday afternoon.  UPDATE:  The argument will be moved to the December calendar, exact date and time to be announced. 

"Ninth Circuit Uneasy About a Higher Bar for 'Ascertainability'"

Yesterday, the Recorder had an article (subscription) about Monday's oral argument in In re ConAgra Foods, a false advertising case alleging that the defendant mislabeled its Wesson Oil products as "100% Natural."  The district court found the classes ascertainable in a lengthy order about eighteen months ago.  In re ConAgra Foods, Inc., 90 F.Supp.3d 919 (C.D. Cal. 2015).  On appeal, the defendant is urging the Ninth Circuit to adopt the Third Circuit's truncated view of "ascertainability" set forth in in Carrera v. Bayer Corp., 727 F. 3d 300 (3d Cir. 2013).

According to the Recorder article, the panel's comments suggested skepticism of Carrera's heightened approach to ascertainability, which the Seventh Circuit considered and rejected in Mullins v. Direct Digital, LLC, 795 F.3d 654 (7th Cir. 2015).   It will be interesting to see what the Ninth Circuit does, although I would be very surprised if it were to adopt Carrera's reasoning.

Recent opinion addresses class notice in CLRA settlements: Choi v. Mario Bodescu Skin Care, Inc.

In the published portion of Choi v. Mario Bodescu Skin Care, Inc., 248 Cal.App.4th 292 (Jun. 21, 2016), the Court of Appeal (Second Appellate District, Division Three) affirmed final approval of a class action settlement involving UCL, CLRA and other claims. 

In so doing, the panel rejected the objector's argument that, for purposes of the CLRA claim, the published notice was deficient because it failed to comport with Civil Code section 1781(d).  Id. at 298-300.  That section, the Court held, does not apply to settlement notices, which are governed by section 1781(f).  Id. at 299.  The published notice was fully compliant with the latter provision, which grants the trial court broader "discretion to fashion notice of a settlement class."  Id.  The trial court did not abuse its discretion in approving one-time published notice in Parade magazine.  See id.

The panel also questioned whether the CLRA's notice provisions were intended to apply to nationwide class actions, or in actions asserting both CLRA and other claims:

Furthermore, it is infeasible to comply with the requirement in Civil Code section 1781, subdivision (d) to give notice in “a newspaper of general circulation in the county in which the transaction occurred.” Determining in which counties around the United States sales of the creams occurred in this case would be impossible. Civil Code section 1781 does not appear to govern nationwide consumer class actions. The McLaren Objectors have not demonstrated that Civil Code section 1781, subdivision (d) applies to require four-times notice to a nationwide settlement class, particularly where other class claims were alleged and all of the remedies were obtained under causes of action other than the CLRA.

Id. at 300. 

New UCL "unlawful" prong opinion: Local TV LLC v. Superior Court (Knutssen)

In Local TV LLC v. Superior Court (Knutssen), ___ Cal.App.4th ___ (Sept. 2, 2016), the Court of Appeal (Second Appellate District, Division Five) concluded that the plaintiff's UCL "unlawful" prong claim failed because the underlying, "borrowed" claims (for common-law and statutory misappropriation of name and likeness) failed.  Slip op. at 14-15.  Evidently, the plaintiff did not separately plead a violation of the UCL's "unfair" prong. 

The discussion of the UCL claim reads, in full:

Plaintiffs also alleged that LTV violated Business and Professions Code section 17200 et. seq., the unfair competition law.  Section 17200 provides a private cause of action for any “unlawful, unfair or fraudulent business practice and unfair, deceptive, untrue or misleading advertising.”  Section 17200, however, is not a substitute for a tort or contract action, and it generally is limited to providing injunctive relief and restitution to prevent ongoing or threatened acts of unfair competition.  (Zhang v. Superior Court (2013) 57 Cal.4th 364, 371.)  Our Supreme Court has stated that “‘section 17200 “borrows” violations of other laws and treats them as unlawful practices’ that the unfair competition law makes independently actionable.  (State Farm Fire & Casualty Co. v. [Superior Court] (1996) 45 Cal.App.4th 1093, 1103, citing Farmers Ins. Exchange v. Superior Court [(1992) 2 Cal.4th 377, 383]).”  (Cel-Tech Communications, Inc. v. L.A. Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.)

Here, as alleged against LTV, the sole factual basis for the section 17200 claim is the same as for the misappropriation tort discussed in section II above.  Plaintiffs seek the precise monetary damages that they seek in the misappropriation cause of action.  Because summary judgment in favor of LTV was proper on the cause of action that the section 17200 claim “borrows,” summary judgment is likewise warranted on the unfair business practices claim.

Id.

New Ninth Circuit class certification opinion: Ruiz Torres v. Mercer Canyons Inc.

I hope everyone had a restful Labor Day weekend.  Last week, in Ruiz Torres v. Mercer Canyons Inc., ___ F.3d ___ (9th Cir. Aug. 31, 2016), the Ninth Circuit affirmed an order granting class certification of wage claims brought by domestic farm workers. 

Among other things, the defendant argued that the common questions identified by the district court for purposes of Rule 23(a) were phantom, non-questions because they misconstrued the governing legal standard.  Slip op. at 10-12. The Ninth Circuit declined the defendant's invitation to resolve these merits arguments (which the defendant had also raised in an unsuccessful, pre-certification summary judgment motion), reconfirming the rule that "we consider merits questions at the class certification stage only to the extent they are relevant to whether Rule 23 requirements have been met."  Id. at 10.

The court also rejected the defendant's arguments concerning predominance (id. at 13-17), as well as the assertion that a class cannot not be certified if it includes both injured and non-injured members (id. at 17-23).  As to the latter point:

Mercer’s statement is inaccurate, as even a well defined class may inevitably contain some individuals who have suffered no harm as a result of a defendant’s unlawful conduct. See Newberg on Class Actions § 2:3; Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 823 (7th Cir. 2012) (“[S]ome class members’ claims will fail on the merits if and when damages are decided, a fact generally irrelevant to the district court’s decision on class certification.”).

Id. at 17.  (See this blog post for a short discussion of Messner.) 

Elaborating on this point, the court distinguished Mazza v. American Honda Motor Co., 666 F.3d 581 (9th Cir. 2012), which also involved a class comprised of assertedly injured and non-injured members:

Mercer’s claim that the presence of certain “non-injured” individuals within the Inaccurate Information class defeats predominance is also mistaken. Empirically, Mercer contends that the class is too broad because it includes a subset of people exposed to—yet ultimately not harmed by—a policy of non-disclosure. This merely highlights the possibility that an injurious course of conduct may sometimes fail to cause injury to certain class members. However, it fails to reveal a flaw that may defeat predominance, such as the existence of large numbers of class members who were never exposed to the challenged conduct to begin with. See Mazza v. Am. Honda Motor Co., 666 F.3d 581, 596 (9th Cir. 2012); see also Berger v. Home Depot USA, Inc., 741 F.3d 1061, 1068–69 (9th Cir. 2014).

....

This stands in contrast to the situation in Mazza, where many class members were not injured by virtue of the fact that they “were never exposed to the allegedly misleading advertisements.” 666 F.3d at 597. In Mazza, the defendant subjected only a small segment of an expansive class of car buyers to misleading material as part of a “very limited” advertising campaign. Id. at 595. Under those circumstances, we found that Rule 23 predominance was defeated, since “it was unreasonable to assume that all class members purchasing cars had seen the potentially misleading ads.” Id. at 596. That is not the situation here, where the existence of a common policy or practice, if proven, is evidence that the class as a whole was exposed to purportedly misleading omissions about H-2A jobs.

Ruiz Torres, slip op. at 17-19 (footnote omitted; hyperlinks added).  I think this analysis, and this means of distinguishing Mazza and Berger, easily can be carried over into class actions involving UCL and CLRA claims.  See this post for my original discussion of Mazza, and this post for my original discussion of Berger.

The opinion goes on to discuss a number of other class certification issues, including typicality.  It is worth a full read. 

Ninth Circuit addresses "local controversy" exception to CAFA: Allen v. Boeing Co.

In Allen v. Boeing Co., 821 F.3d 1111 (9th Cir. May 5, 2016), the Ninth Circuit held that the district court had correctly applied the "local controversy" exception to CAFA jurisdiction, and that the case, a mass tort class action, was correctly remanded to state court. 

Urging the inapplicability of the "local controversy" exception put the out-of-state defendant in the odd position of arguing that it bore greater responsibility for the alleged harm than its co-defendant, who was local.  See id. at 1116-21.  The Ninth Circuit concluded that the plaintiffs did, in fact, seek "significant relief" from the local defendant, and that the local defendant's conduct formed a "significant basis" for the plaintiff's claims.  Id.  The out-of-state defendant also argued that the plaintiffs failed to state a valid claim against the local defendant -- another very strange thing to hear a defendant asserting.  See id. at 1121-23.  The court disagreed, without addressing the threshold question of whether a defendant can escape application of the "local controversy" exception by attacking the merits of the underlying claim.  Id.

It seems like this case has a long history, even though it is just getting started.  This is the second CAFA-related appeal heard by the Ninth Circuit. I reported on the earlier Ninth Circuit opinion here.