The UCL Practitioner

Court of Appeal addresses improper communications with putative class members: Barriga v. 99 Cents Only Stores LLC

In Barriga v. 99 Cents Only Stores LLC, ___ Cal.App.5th ___ (Jun. 26, 2020), the Court of Appeal (Fourth Appellate District, Division Two), in a 2-1 decision, reversed an order denying class certification of certain wage and hour claims, holding that the trial court failed to apply the correct legal standard in ruling on plaintiff's motion to strike the defendant's "happy camper" declarations.  Because "an ongoing business relationship between the class opponent and putative class members—especially a current employer-employee relationship—is rife for abuse and coercion," the trial court should have "carefully scrutinized" the declarations "for actual or threatened abuse."  Slip op. at 4. 

The opinion contains a lengthy discussion of the problems with inappropriate pre-certification communications with proposed class members and the court's power to prevent or rectify them.  Id. at 28-47. 

Provisional class certification in the Ninth Circuit: Al Otro Lado v. Wolf

In Al Otro Lado v. Wolf, ___ F.3d ___ (9th Cir. Mar. 5, 2020), the district court granted provisional class certification in order to issue a preliminary injunction.  The Ninth Circuit had this to say about that procedure:

The government does not challenge the district court's provisional certification of the class for purposes of the preliminary injunction. We have approved provisional class certification for purposes of preliminary injunction proceedings. See Meyer v. Portfolio Recovery Assocs., LLC, 707 F.3d 1036, 1041-43 (9th Cir. 2012) (affirming provisional class certification for purposes of a preliminary injunction).

Slip op. at 15 n. 4.  This blog's coverage of Meyer is at this link. 

Ninth Circuit affirms class certification of UCL claims: Walker v. Life Insurance Co. of the Southwest

Last week, the Ninth Circuit affirmed class certification in a UCL action alleging misrepresentations in connection with the sale of life insurance policies.  Walker v. Life Ins. Co. of the Southwest, ___ F.3d ___ (9th Cir. Mar. 23, 2020). 

In so doing, the Court construed and applied Tobacco II as follows: 

The UCL bans “unlawful, unfair or fraudulent business act[s] or practice[s] and unfair, deceptive, untrue or misleading advertising.” Cal. Bus. & Prof. Code § 17200. To bring a UCL claim, a plaintiff must establish he suffered “as a result of” the defendant’s conduct. Id. § 17204. In the seminal California case on UCL class actions, In re Tobacco II Cases, the defendants moved to decertify a UCL class for the reason that individualized issues—i.e., whether all class members were exposed to, relied on, and were injured by allegedly false and deceptive advertisements—predominated over common ones. 207 P.3d 20, 28 (Cal. 2009). The California Supreme Court interpreted this statute to mean that named plaintiffs, but not absent ones, must show proof of “actual reliance” at the certification stage. Id. at 38. Relying on California cases, wherein courts “repeatedly and consistently . . . h[eld] that relief under the UCL is available without individualized proof of deception, reliance and injury,” the court reasoned that “requiring all unnamed members of a class action to individually establish standing would effectively eliminate the class action lawsuit as a vehicle for the vindication” of rights under the UCL. Id. at 35–36.

We have repeatedly relied on Tobacco II in recognizing “what amounts to a conclusive presumption” of reliance in UCL cases. Stearns [v. Ticketmaster Corp.], 655 F.3d [1013,] 1021 n.13 [(9th Cir. 2011)]. The presumption serves to relieve UCL plaintiffs of their obligation to establish absent class members’ reliance, see 2 Newberg on Class Actions § 4:60 (5th ed. 2019)—an issue that, in other contexts, can raise so many individualized questions as to defeat predominance, id. § 4:58.

Slip op. at 11-12 (citing In re Tobacco II Cases, 46 Cal.4th 298 (2009)). 

The Court went on to explain that in UCL actions, non-common questions might predominate when the defendant distributed "disparate information" across the class, rather than "pervasive[]" "material misrepresentations."  See id. at 12 (citing cases).  (In prior blog posts, I have described this as a "Kaldenbach problem.")  Certification was properly granted of a class defined to include only those purchasers to whom the alleged misstatements were made.  See id. at 13-15. 

Compare this analysis to the Court of Appeal's reasoning in Downey v. Public Storage, Inc., 44 Cal.App.5th 1103 (Feb. 6, 2020), discussed yesterday in this blog post. 

The Ninth Circuit also considered "whether a district court can, as it did here, define a class in a way that automatically gives rise to a presumption of reliance."  Slip op. at 18.  The answer is yes: 

This question appears to be one of first impression in our circuit. In our prior UCL class-certification cases, we have relied on allegations and evidence establishing class-wide dissemination of alleged misrepresentations to determine whether a presumption of reliance applies. [Citations.] Can a class definition, which extends membership only to those who were exposed to alleged misrepresentations, automatically trigger the presumption? We cannot think of any good reason why not, or any evils that allegations and evidence of class-wide dissemination could cure that a class definition cannot.

Id. at 18-19. 

Also of interest is the Court's holding than when reviewing class certification orders on appeal, "[t]he Court 'accord[s] the district court noticeably more deference' to a grant of certification 'than when [it] review[s] a denial.'"  Id. at 9 (quoting Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168, 1171 (9th Cir. 2010); In re Salomon Analyst Metromedia Litig., 544 F.3d 474, 480 (2d Cir. 2008)) (emphasis added).

The last section of the opinion is a lengthy and interesting discussion of the requirements for timely filing a Rule 23(f) petition for permission to appeal when reconsideration is sought.  Id. at 19-25.  Plaintiffs' attempt to "cross-appeal" (so to speak) in order to challenge a certain aspect of the class definition was untimely.  See id.

Another post-Tobacco II class certification opinion: Downey v. Public Storage, Inc.

In Downey v. Public Storage, Inc., 44 Cal.App.5th 1103 (Feb. 6, 2020), the Court of Appeal (Second Appellate District, Division Two) affirmed an order denying class certification of UCL and FAL claims based on the defendant storage facility's allegedly deceptive "$1-for-the-first month" promotion. 

I disagree with most of the reasoning of this opinion because I think it misapplies Tobacco II.  This opinion, in effect, requires classwide proof of elements that are necessary for the named plaintiff's standing after Prop. 64, but that need not be shown for the unnamed class members.   In my humble opinion, it makes no sense to deny class certification based on issues that may very well be non-common, but that pertain to facts that will not have to be proven at trial.   For example, if actual deception is not an element of a UCL "fraudulent" prong claim, as the Supreme Court held in Tobacco II and other cases, then it should not matter if some class members were actually deceived by the allegedly false advertising and some may not have been.   In re Tobacco II Cases, 46 Cal.4th 298, 320 (2009) ("relief under the UCL is available without individualized proof of deception, reliance and injury" (citations omitted)). 

I've been saying this for a long time, but in spite of my most sincere and earnest protestations (that's my attempt at some humor, folks), many opinions have gone the same way as Downey.  Most of these are cited in Downey.  Some decisions have gone the other way.  For a few years after Tobacco II, I tracked the post-Tobacco II opinions falling on both sides of this split. (See these five blog posts.)  Downey is the fifteenth such case I have covered on this blog (there may be some others I've missed over the years), with cases falling on both sides of the question. 

The Supreme Court has yet to weigh in on how Tobacco II applies at the class certification stage.  A petition for review was filed in Downey on March 13, 2020.  Downey v. Public Storage, no. S261212. 

UCL class certification case set for oral argument: Noel v. Thrifty Payless

The Supreme Court has posted its early May argument calendar. The case of Noel v. Thrifty Payless, no. S246490, will be heard on Wednesday, May 8, 2019 at 9:00 a.m. in San Francisco.  As I reported earlier this month, in Noel, the Supreme Court will consider the ascertainability element of class certification in the specific context of retail sales to consumers. 

This should be an interesting argument, and I will try to attend and report on it here if my work schedule permits. 

Update on Noel v. Thrifty Payless

Just over a year ago, in March 2018, the Supreme Court granted review in Noel v. Thrifty Payless, no. S246490. Noel is a false advertising case under the UCL, CLRA and FAL (see this blog post).  It presents the following question (according to the Supreme Court's docket):

Must a plaintiff seeking class certification under Code of Civil Procedure section 382 or the Consumer[s] Legal Remedies Act demonstrate that records exist permitting the identification of class members?

The Court of Appeal (First Appellate District, Division Four) said yes to this question, and therefore concluded that the proposed class of of approximately 20,000 persons who purchased a certain type of inflatable pool at Rite-Aid could not be certified. Noel v. Thrifty Payless, Inc., 17 Cal.App.5th 1315 (2017).

This holding appears to run counter to Daar v. Yellow Cab Co., 67 Cal.2d 695 (1967), which pronounced—50 years before Noel—that "[i]f the existence of an ascertainable class has been shown, there is no need to identify its individual members in order to bind all members by the judgment." Id. at 706. 

Briefing was completed in November 2018.  Numerous amicus briefs were filed.  Last month, on March 15, 2019, the Supreme Court notified the parties that the case "could [be] set ... for argument within the next few months."  Presumably, that means the May or June argument calendars, because the Court does not hear arguments in July or August. This case will be one to watch. 

Another recent class certification opinion: Jimenez-Sanchez v. Dark Horse Express, Inc.

Well, perhaps it's not so recent, having been decided in January.  Everything is relative.  In Jimenez-Sanchez v. Dark Horse Express, Inc., 32 Cal.App.5th 224 (Jan. 16, 2019; pub. ord. Feb. 14, 2019), the Court of Appeal (Fifth Appellate District) reversed an order denying class certification of certain wage and hour claims, including a claim that the defendant failed to provide paid rest breaks to the plaintiff piece-rate truck drivers, in violation of Wage Order 9 as construed in Bluford v. Safeway Stores, Inc., 216 Cal.App.4th 864 (2013).

One curious aspect of this opinion is the Court's apparent assumption that Bluford applies prospectively only: 

In sum, at least as to claims arising after the decision in Bluford, plaintiffs’ claims for separate compensation for rest breaks presented some common factual and legal issues that the trial court should have considered ....

Jimenez-Sanchez, 32 Cal.App.5th at 709 (emphasis added).  Elsewhere in the opinion, the panel offered a similar comment about Gonzalez v. Downtown LA Motors, LP, 25 Cal.App.4th 36 (2013):

We note that the Gonzalez decision was issued in 2013 .... The proposed class period began in 2010. Plaintiffs assume the legal issue is a common issue, without discussing whether the law remained the same throughout the class period. Plaintiffs have not discussed the state of the law on this issue prior to Gonzalez.

Id. at 703.

The California Supreme Court has repeatedly recognized that new opinions construing civil statutes are given retroactive effect because they simply declare what the statutes have always required.  (The exceptions to this principle are exceedingly narrow, such as when a new opinion overrules a settled prior holding of a court of last resort and retroactive application would be manifestly unjust.)  In Bluford, the Court of Appeal construed Wage Order language dating back decades.  Since 1952, Wage Order 9 has always said that "[a]uthorized rest period time shall be counted as hours worked" and that "all hours worked" shall be paid.  Regardless of when Bluford was decided, Bluford's holding has been the law for more than sixty-five years; Bluford simply applied that law in the specific context of piece-rate compensation (a method of compensation that dates back to the very first Wage Order (adopted in 1916) and was permitted by Wage Order 9-52). 

In the Bluford case itself (in which I served as co-counsel after the appeal was concluded), there was no question the appellate opinion applied to all of the defendant's violations preceding the opinion's publication.  The class period began, not when Bluford was decided, but on October 1, 2000, the effective date when premium wages for rest break violations first became law.  (Incidentally, after remand, the trial court in Bluford held that premium wages were recoverable for failing to provide paid rest breaks--a "legal question" that Jimenez-Sanchez says "may be common for all putative class members, at least for the time period after the decision in Bluford."  32 Cal.App.5th at 708.)

The retroactivity issue was obviously not briefed in Jimenez-Sanchez, and given settled Supreme Court law, I can certainly understand why the parties saw no need to address it.  An order for further briefing on the topic would have been an excellent way for the Jimenez-Sanchez court to proceed.  I observe that depublication requests and a petition for review are pending.

New class certification opinion: Myers v. Raley's

In Myers v. Raley's, ___ Cal.App.5th ___ (Mar. 12, 2019), the Court of Appeal (Third Appellate District) reversed an order denying class certification of certain wage and hour claims.  The trial court failed to adequately explain its finding that common questions did not predominate, inhibiting appellate review and requiring reversal. 

The panel directed the trial court to issue a new statement of decision adequately explaining its reasoning and addressing new authority post-dating its original order:

Our review of the trial court’s denial of class certification is governed by a unique standard of review requiring us to examine the trial court’s reasons, not the propriety of the outcome.  Because the trial court’s cursory finding renders our task impossible and because cases decided after the court’s ruling expose the dangers of employing the wrong legal criteria, asking the wrong questions, or inflating the significance of the opposing parties’ evidence, we must remand this case to the trial court for reconsideration in light of Ayala and Jones and for a statement of reasons to ensure the court has not employed improper criteria or relied on erroneous legal assumptions.

Slip op. at 2 (citing Ayala v. Antelope Valley Newspapers, Inc., 59 Cal.4th 522 (2014); Jones v. Farmers Ins. Exchange (2013) 221 Cal.App.4th 986 (2013)). 

Ninth Circuit on admissibility of evidence at the class certification stage: Sali v. Corona Regional Med. Ctr.

In Sali v. Corona Regional Medical Center, ___ F.3d ___ (9th Cir. May 3, 2018), the district court denied class certification because (among other reasons) the plaintiffs' evidence of adequacy and typicality was not admissible.  The Ninth Circuit reversed, holding that admissible evidence is not required at the class certification stage:

Because a class certification decision “is far from a conclusive judgment on the merits of the case, it is ‘of necessity . . . not accompanied by the traditional rules and procedure applicable to civil trials.’” [In re] Zurn Pex [Plumbing Prod. Liab. Litig.], 644 F.3d [604,] 613 [(8th Cir. 2011)] (quoting Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974)). Notably, the evidence needed to prove a class’s case often lies in a defendant’s possession and may be obtained only through discovery. Limiting class-certification-stage proof to admissible evidence risks terminating actions before a putative class may gather crucial admissible evidence. And transforming a preliminary stage into an evidentiary shooting match inhibits an early determination of the best manner to conduct the action.

It follows that we have found an abuse of discretion where a “district court limited its analysis of whether” class plaintiffs satisfied a Rule 23 requirement “to a determination of whether Plaintiffs’ evidence on that point was admissible.” Ellis v. Costco Wholesale Corp., 657 F.3d 970, 982 (9th Cir. 2011). Although we have not squarely addressed the nature of the “evidentiary proof” a plaintiff must submit in support of class certification, we now hold that such proof need not be admissible evidence.

Inadmissibility alone is not a proper basis to reject evidence submitted in support of class certification. “Neither the possibility that a plaintiff will be unable to prove his allegations, nor the possibility that the later course of the suit might unforeseeably prove the original decision to certify the class wrong, is a basis for declining to certify a class which apparently satisfies” Rule 23. Blackie v. Barrack, 524 F.2d 891, 901 (9th Cir. 1975). Therefore, in evaluating a motion for class certification, a district court need only consider “material sufficient to form a reasonable judgment on each [Rule 23(a)] requirement.” Id. The court’s consideration should not be limited to only admissible evidence.

Slip op. at 13-15 (footnote omitted).

Supreme Court affirms class certification in misclassification case: Dynamex Operations West, Inc. v. Superior Court (Lee)

In Dynamex Operations West, Inc. v. Superior Court (Lee), ___ Cal.5th ___ (Apr. 30, 2018), the Supreme Court determined that the trial court correctly granted class certification of certain wage and hour claims, all of which were based on the theory that the defendant had misclassified the plaintiffs as independent contractors instead of employees.  (My post on the Court of Appeal's opinion in this case is here.) 

Those who handle wage and hour matters will be very interested in the Court's lengthy discussion of the test for determining whether a worker is an employee or an independent contractor for purposes of the obligations imposed by the Wage Orders.  Slip op at. 22-77. 

In brief summary, the Wage Orders set forth "three alternative definitions of employment": "'(a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship.'"  Slip op. at 40 (quoting Martinez v. Combs, 49 Cal.4th 35, 64 (2010)) (emphasis in original). 

The parties disagreed on whether definitions (a) or (b) should apply for purposes of determining whether an employer-employee relationship exists (as opposed to other purposes, such as whether a joint employer relationship exists).  Id. at 46.  The defendant argued that only definition (c), the common-law test, should apply.  See id.  

The Supreme Court determined that it need not decide whether definition (a) applied, because it held that definition (b) did, and under that definition, the claims were properly certified for class treatment.   Id. at 46-47, 78-81. 

Construing definition (b), the Court held that whether a hiring business "employed" a worker within the meaning of the "suffer or permit to work" standard should be determined using what has come to be known as the "ABC test."  Id. at 64-77.  The Court explained: 

The ABC test presumptively considers all workers to be employees, and permits workers to be classified as independent contractors only if the hiring business demonstrates that the worker in question satisfies each of three conditions: (a) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact; and (b) that the worker performs work that is outside the usual course of the hiring entity’s business; and (c) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Id. at 64. 

The Court adopted the ABC test, in part, because it was a "simpler, more structured test for distinguishing between employers and independent contractors" (that is, it was simpler than the "multifactor, all the circumstances" standard advocated by the employer) and because it "does not purport to render every individual worker an employee rather than an independent contractor."  Id. at 61, 64, 66.  Instead, the ABC test maintains a clear distinction between: (1) employees for whose protection the Wage Orders were adopted; and (2) "traditional independent contractors ..., like independent plumbers and electricians, who could not reasonably have been intended by the wage order to be treated as employees of the hiring business."  Id. at 54; see also id. at 7 ("individual workers, like independent plumbers or electricians, who have traditionally been viewed as genuine independent contracts who are working only in their own independent business" (emphasis in original)). 

Turning to class certification, the Court concluded that "the trial court's view of the suffer or permit to work standard was too broad."  Id. at 78-79.  Nevertheless, class certification was properly granted, because "under a proper interpretation of the suffer or permit to work standard, the trial court’s ultimate determination that there is a sufficient commonality of interest to support certification of the proposed class is correct and should be upheld."  Id. at 79.  

Skipping part A of the ABC test, the Court found a "sufficient commonality of interest within the certified class" on whether part B of the test was met, which, the Court held, was sufficient to uphold the order granting class certification:

Because each part of the ABC test may be independently determinative of the employee or independent contractor question, our conclusion that there is a sufficient commonality of interest under part B of the ABC test is sufficient in itself to support the trial court’s class certification order. (See Brinker Restaurant Corp. v. Superior Court, supra, 53 Cal.4th at p. 1032 [class certification is not an abuse of discretion if certification is proper under any theory].)

Id. at 80.  For purposes of providing "guidance" on remand and for other actions, the Court turned to part C of the ABC test, and found a "sufficient commonality of interest" on that part, too.  Id. at 80-81.  The final paragraph of the Court's analysis reads:

For the foregoing reasons, we conclude that under a proper understanding of the suffer or permit to work standard there is, as a matter of law, a sufficient commonality of interest within the certified class to permit the question whether such drivers are employees or independent contractors for purposes of the wage order to be litigated on a class basis. Accordingly, we conclude that with respect to the causes of action that are based on alleged violations of the obligations imposed by the wage order, the trial court did not abuse its discretion in certifying the class and in denying Dynamex’s motion to decertify the class.

Id. at 81.

For those of us who are more concerned with the class certification aspects of the case, the following footnote from earlier in the opinion will be of interest:

A trial court order denying a motion to decertify a class is generally subject to review pursuant to an abuse of discretion standard. (See, e.g., Duran v. U.S. Bank Nat. Assn. (2014) 59 Cal.4th 1, 49; Sav-on Drug Stores, Inc. v . Superior Court (2004) 34 Cal.4th 319, 326; Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435-436.) The question of what legal standard or test applies in determining whether a worker is an employee or, instead, an independent contractor for purposes of the obligations imposed by a wage order is, however, a question of law (cf., e.g., Martinez, supra, 49 Cal.4th at pp. 57-60 ), and if the trial court applied the wrong legal standard and that error affected the propriety of its class certification ruling, the order denying decertification would constitute an abuse of discretion. (See, e.g., Duran v. U.S. Bank Nat. Assn., supra, 59 Cal.4th at p. 49.)

Id. at 45 n. 16 (emphasis added).  This passage, and its reliance on Brinker, are also of interest:

For the reasons discussed below, we conclude that there is no need in this case to determine whether the exercise [of] control over wages, hours or working conditions definition [i.e., the first definition of "employ" from Martinez] is intended to apply outside the joint employer context, because we conclude that the suffer or permit to work standard [i.e., the second definition from Martinez] properly applies to the question whether a worker should be considered an employee or, instead, an independent contractor, and that under the suffer or permit to work standard, the trial court class certification order at issue here should be upheld. (See Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1032 [when plaintiffs in a class action rely on multiple legal theories, a trial court’s certification of a class is not an abuse of discretion if certification is proper under any of the theories].)

Id. at 46-47 (emphasis added). 

"Class action objectors defend 9th Circuit's infamous Hyundai ruling"

This article includes links to some of the briefs filed in connection with the rehearing petitions in the Hyundai case (discussed here).

According to the article, both the plaintiffs and the defendants have petitioned for rehearing, leaving the objectors to attempt to defend the decision. See In re Hyundai and Kia Fuel Economy Litigation, ___ F.3d ___ (9th Cir. Jan. 23, 2018).

Recent class certification opinion: Lampe v. Queen of the Valley Medical Center

In Lampe v. Queen of the Valley Medical Center, ___ Cal.App.5th ___ (Jan. 2, 2018; pub. ord. Jan. 23, 2018), the Court of Appeal (First Appellate District, Division Four) affirmed the trial court's order denying class certification of various wage and hour claims.  The general thrust of the opinion is that the plaintiffs did not identify any overarching common policies that led to the asserted overtime and meal period violations.  See, e.g., slip op. at 17. 

Supreme Court takes up UCL/CLRA class case: Noel v. Thrifty Payless, Inc.

On Wednesday, the Supreme Court granted review in Noel v. Thrifty Payless, no. S246490.  In this case, the Court of Appeal (First Appellate District, Division Four) affirmed the trial court's order denying class certification of UCL, CLRA, and FAL claims.  Noel v. Thrifty Payless, Inc., ___ Cal.App.5th ___ (2017).  The opinion was handed down in December.  It addressed several different issues, and it is unclear at this time which one(s) caught the Supreme Court's eye.  The docket does not yet indicate the issues for review.

"VW class counsel: Nationwide deal won’t be undone by 9th Circuit’s Hyundai ruling"

This is a very interesting article by Alison Frankel about the Ninth Circuit's recent opinion in In re Hyundai and Kia Fuel Economy Litigation, ___ F.3d ___ (9th Cir. Jan. 23, 2018) (discussed briefly in this blog post). 

Among other things, the article says that "proponents of the settlement intend to ask the full 9th Circuit to rehear the case." It also quotes a statement by Elizabeth Cabraser explaining the myriad reasons why the Hyundai case shouldn't derail the VW emissions settlements.

Alison Frankel also wrote a second article about the impact of Hyundai a few days after her earlier one.

(h/t: How Appealing)

Class certification and expert testimony in California: Apple Inc. v. Superior Court (Shamrell)

On Tuesday, the Court of Appeal (Fourth Appellate District, Division One)  handed down an interesting opinion on expert testimony in the class certification context. 

In Apple Inc. v. Superior Court (Shamrell), ___ Cal.App.5th ___ (Jan. 29, 2018), the defendant objected to the plaintiffs' expert testimony in support of class certification, arguing that the testimony was unreliable and therefore inadmissible under Sargon Enterprises, Inc. v. University of Southern California, 55 Cal.4th 747 (2012).  Apple, slip op. at 6, 8, 13.  The trial court declined to apply Sargon at the class certification stage, and certified the class.  Id. at 15-16.  

The Court of Appeal reversed. holding that the trial court's express refusal to apply Sargon was error:

Sargon applies to expert opinion evidence submitted in connection with a motion for class certification.  A trial court may consider only admissible expert opinion evidence on class certification, and there is only one standard for admissibility of expert opinion evidence in California.  Sargon describes that standard.

....

And, even were we free to disregard Sargon (and we are not), we would conclude that its standards for admissibility apply here.  Although class certification is merely a procedural device, and not a determination on the merits, it has profound consequences for the trial court's management of the litigation and the rights of the parties.  The corrosive effects of improper expert opinion testimony may be felt with substantial force at class certification, just as at summary judgment or at trial.  The trial court's gatekeeping role serves a similar salutary purpose in each of these contexts.

Id. at 1, 22-23. 

One of the trial court's concerns was that if Sargon applied at the certification stage, class certification motions would become "these massive hearings."  Id. at 9.  The Court of Appeal dispelled this concern by explaining:

Sargon's discussion of admissibility is plainly substantive, and nothing in that opinion mandates or even encourages holding such a hearing for every expert, at trial or otherwise.  Whether to hold a hearing remains in the trial court's discretion.  And Sargon's substance is not unduly burdensome for trial courts.  It merely ensures that expert opinion evidence is reasonable, reliable, and logical.

Id. at 24.

Apple is the latest of three recent decisions addressing expert testimony at the certification stage. 

In ABM Industries Overtime Cases, ___ Cal.App.5th ___ (Dec. 11, 2017; pub. ord. Jan. 10, 2018) (discussed in this blog post), the Court of Appeal (First Appellate District, Division Four) cited Sargon, but reversed the trial court's order excluding the opinion testimony of plaintiffs' expert witness.  The Court held that the witness was in fact qualified to offer such opinion testimony, and that "questions regarding the degree of an expert’s knowledge go more to the weight of the evidence presented than to its admissibility."   ABM Industries, slip op. at 13-15 (emphasis in original). 

The other recent decision on expert testimony at the class certification stage did not mention Sargon at all.  Duran v. U.S. Bank Nat'l Assn., ___ Cal.App.5th ___ (Jan. 17, 2018) (First Appellate District, Division One) (also discussed in this blog post).  Presumably, the defendant did not argue that the testimony was inadmissible, but rather that it was insufficient to prove that common questions predominated. 

Ninth Circuit reverses nationwide class action settlement: In re Hyundai and Kia Fuel Economy Litigation

On Tuesday, the Ninth Circuit handed down a lengthy opinion in a UCL and CLRA class action in which it reversed, on a 2-1 vote, the district court's order granting certification of a nationwide settlement class.  In re Hyundai and Kia Fuel Economy Litigation, ___ F.3d ___ (9th Cir. Jan. 23, 2018). 

The opinion extensively analyzes Mazza v. American Honda Motor Co., 666 F.3d 581 (9th Cir. 2012) (discussed in this blog post), in which certification of a similar nationwide class was also reversed.  

I have not yet had a chance to fully absorb the new opinion, but Perry Elizabeth Cooper wrote up an interesting report at bna.com.  I would imagine that a petition for en banc rehearing is in the offing, and it might even be granted.  On the other hand, en banc rehearing was denied in Mazza, which was also decided on a 2-1 vote.

Two new class certification opinions: Duran redux and ABM Industries Overtime Cases

The First Appellate District published two new class certification opinions in the last week.  Both are wage and hour cases.

In ABM Industries Overtime Cases, ___ Cal.App.5th ___ (Dec. 11, 2017; pub. ord. Jan. 10, 2018), Division Four reversed an order denying class certification of meal period, expense reimbursement, and other claims, with directions to certify the class and subclasses.  This opinion has a very interesting discussion of class definitions and the ascertainability element of class certification.  It also addresses the use of expert testimony and "database analysis of timekeeping and payroll records" "as a means to show common practices for purposes of class certification."  Slip op. at 20.

Then, yesterday, Division One handed down a new opinion in the long-running Duran litigation, which is a misclassification case involving an exemption defense (namely, the outside salesperson exemption).  Years ago, class certification was granted and the plaintiffs prevailed at trial.  The defendant appealed.  The lengthy appellate process culminated in the California Supreme Court's 2014 Duran opinion (discussed here), which remanded the case back to the trial court for class certification to be addressed anew.  This time, class certification was denied below, and the Court of Appeal affirmed.  Duran v. U.S. Bank Nat'l Assn., ___ Cal.App.5th ___ (Jan. 17, 2018).  

Like the opinion in ABM Industries, the new Duran opinion also discusses expert testimony, but of a different kind than considered in ABM Industries.  The latter case is addressed in a footnote in Duran (slip op. at 24-25 n. 16).

New class certification opinion: Hefczyc v. Rady Children's Hospital-San Diego

In Hefczyc v. Rady Children's Hospital-San Diego, ___ Cal.App.5th ___ (Nov. 17, 2017), the Court of Appeal (Fourth Appellate District, Division One) affirmed the trial court's denial of class certification in a declaratory relief action.  The opinion's main holding is that Code of Civil Procedure section 382 does not have an equivalent to Federal Rule of Civil Procedure 23(b)(1)(A) or (b)(2), the elements of which are less onerous for declaratory or injunctive relief actions than for damages actions.  See slip op. at 11-25. 

As a result, section 382's usual requirements apply to declaratory relief, injunctive relief and damages actions alike:

[T]here is no gap in California precedent to be filled by reference to Federal Rules of Civil Procedure, rule 23(b)(1)(A) or (b)(2) (28 U.S.C.) on the issue of what class certification standards must be met when a plaintiff seeks only declaratory or injunctive relief on behalf of a class.  Even when the plaintiff seeks solely declaratory or injunctive relief, California case law follows the well-established requirements that our Supreme Court has consistently stated, namely, (as relevant here) that the plaintiff must establish that (1) the class is ascertainable; (2) common questions predominate; and (3) a class action would provide substantial benefits, making it superior to other procedures for resolving the controversy.

Id. at 24-25. 

Ninth Circuit holds Rule 23(f) time limit not jurisdictional: Lambert v. Neutraceutical Corp.

In Lambert v. Neutraceutical Corp., ___ F.3d ___ (9th Cir. Sept. 14, 2017), the Ninth Circuit considered a UCL, FAL and CLRA action against the manufacturer of an "aphrodisiac dietary supplement."  Slip op. at 5.  The complaint alleged that the defendant sold the product in violation of certain FDA regulations and that the product was falsely labeled.  Id. 

The district court "initially granted class certification on the basis of the full refund damages model. That model applies when a product is shown to be worthless, and damages may be calculated by multiplying the average retail price by the number of units sold."  Id. at 6.  Subsequently, the defendant moved to decertify the class, and a different judge granted the motion.  Id.  Plaintiff moved for reconsideration, which was denied.  Id. at 7.  Within 14 days thereafter, plaintiff filed a Rule 23(f) petition.  Id. at 8. 

The Ninth Circuit held that the fourteen-day deadline to file a Rule 23(f) petition is "not jurisdictional, thus equitable exceptions apply."  Slip op. at 1.  In particular, "a motion for reconsideration filed within the Rule 23(f) deadline will toll the deadline," as will "additional equitable circumstances."  Id. at 1, 10.  In a lengthy discussion, the Court concluded that the plaintiff's Rule 23(f) petition was timely.  Id. at 9-21.

Then, the Court turned to the merits, and held that the district court erred in granting the defendant's motion to decertify the class.  Slip op. at 21-25.  Variations in damages do not defeat class certification; UCL, FAL, and CLRA damages (or restitution) calculations need not be precise; and the plaintiff's proposed "full refund" damages model was a "workable method" to determine and award damages.  See id.

This analysis relies heavily on Pulaski & Middleman, LLC v. Google, Inc., 802 F.3d 979 (9th Cir. 2015) (discussed in this blog post) and Leyva v. Medline Industries Inc., 716 F.3d 510 (9th Cir. 2013) (discussed here).

Supreme Court depublishes class certification opinion: Bartoni v. American Medical Response West

Yesterday, the Supreme Court issued an order depublishing the Court of Appeal's opinion in Bartoni v. American Medical Response West, 11 Cal.App.5th 1084 (2017).  Under Rule of Court 8.1115, the opinion is no longer a citable precedent. 

In Bartoni, the plaintiffs alleged that their employer required them to remain "on call" at all times, including during all meal periods. The trial court denied their motion for class certification, holding that an "on-call" meal period was compliant unless actually interrupted, and that as a result, non-common questions predominated.  The Court of Appeal agreed, and affirmed.  11 Cal.App.5th at 1092, 1101-02.  (The Court of Appeal reversed a similar ruling as to the rest break claim.  Id. at 1102.) 

The depublication requests, one of which was filed by yours truly, argued that this holding was inconsistent with Augustus and Brinker, which together held that meal periods (and rest breaks), to be compliant, must be entirely "off-duty," and that an "on-call" meal period (or rest break) is not an "off-duty" one.  See Augustus v. ABM Security Services, Inc., 2 Cal.5th 257, 269-72 (2016) (citing Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004, 1039-40 (2012)). 

The Bartoni opinion was reminiscent of several post-Brinker opinions that the Supreme Court depublished in 2012 and 2013.  See these blog posts for more on those depublication orders.  [Disclosure: I am co-counsel of record for the plaintiffs in Bartoni.] 

New UCL class certification opinion: Kizer v. Tristar Risk Management

In Kizer v. Tristar Risk Management, ___ Cal.App.5th ___ (Jun. 26, 2017; pub. ord. Jul. 26, 2017), the Court of Appeal (Fourth Appellate District, Division Three) affirmed an order denying class certification of Labor Code claims arising out of the defendant's alleged misclassification of its claims examiners, and of the UCL "unlawful" prong claim stemming from that. 

Basically, the Court of Appeal reasoned that misclassification, standing alone, is not unlawful; instead, a violation occurs only when the misclassified employees are denied overtime pay (or other statutory protections afforded to non-exempt employees).  Slip op. at 12-20.  Even if the elements relevant to assessing the applicability of the administrative exemption might be amenable to common proof, this was not sufficient for class certification, because the plaintiffs had failed to offer any proof of a uniform policy policy or practice to deny overtime pay to the claims examiners.  See id.

For similar reasons, the Court of Appeal affirmed the ruling as to the UCL claim.  Id. at 20-23.  The plaintiffs relied on Tobacco II, arguing that individualized proof of causation and injury are not elements of a UCL claim.  Id. at 21-22.  But the Court of Appeal found a more basic problem in the plaintiffs' failure to introduce any common proof of an unlawful practice (i.e., denying overtime pay to claims examiners):

As explained above, and contrary to Plaintiffs’ contention, the trial court did not deny Plaintiffs’ class certification motion based on their failure to present individualized proof of injury by each potential class member.  Rather, the court denied the motion because Plaintiffs failed to satisfy the commonality requirement by presenting evidence to show they could establish through common proof that Tristar required claims examiners to work overtime.  Substantial evidence supports that finding and it is consistent with the governing legal standards.

Id.  at 23. 

The Kizer opinion is one for the list of post-Tobacco II class certification decisions.  (See my prior series of posts: "Nine post-Tobacco II decisions," "A tenth post-Tobacco II opinion," "New UCL class certification decision," and "A thirteenth post-Tobacco II opinion.") 

Although the opinion cites Cohen v. DIRECTV, Inc., 178 Cal.App.4th 966 (2009) and Davis‑Miller v. Automobile Club of Southern California, 201 Cal.App.4th 106 (2011) (discussed in these blog posts), I would still put in on the plaintiffs' side of the ledger.  Unlike those cases, Kizer did not hold that certification could be properly denied due to predominance of non-common questions as to reliance or injury (which are not even elements of a UCL claim).  Rather, Kizer focused on whether the unlawful conduct itself could be established through common proof.  In so holding, Kizer also relied heavily on Steroid Hormone Product Cases, 181 Cal.App.4th 145 (2010) (discussed in this blog post), which illustrates the proper focus of the class certification inquiry in a UCL "unlawful" prong case. 

New UCL and class certification opinion: Espejo v. The Copley Press, Inc.

In Espejo v. The Copley Press, Inc., ___ Cal.App.5th ___ (Jul. 7, 2017), the Court of Appeal (Fourth Appellate District, Division One) considered a series of challenges to a post-trial judgment in a certified class action alleging that the plaintiff newspaper carriers were incorrectly classified as independent contractors, in violation of the Labor Code and thus the UCL. The 81-page opinion affirmed the judgment on liability, but directed that certain adjustments be made to the amount of the restitution and attorneys' fees awards on remand. 

Given that trials in UCL class actions are relatively rare, this case is instructive procedurally. 

The trial court bifurcated the equitable UCL claim from the remaining claims, and heard the equitable claim first, in a bench trial.  Slip op. at 5-9.  Because the plaintiffs prevailed in the bench trial and were awarded full monetary restitution, no jury trial went forward.  See id.  Attorneys' fees were awarded under Code of Civil Procedure section 1021.5, rather than under any applicable Labor Code provision.  See id.  A portion of the fees were to be paid by the defendant, with the rest payable from the common fund.  Id. at 9-10.

In the first section of its opinion, the Court of Appeal affirmed the trial court's holding that the newspaper carriers were the defendant's employees, not independent contractors.  Slip op. at 10-25.

In the next section, the court rejected the defendant's argument that the class should have been decertified because the class representatives became inadequate after certification, adhering to the "changed circumstances" rule: "We find no significant change in circumstances between the time the class was certified and the time of trial that would support our decertifying the class or reversing the judgment on the ground of inadequacy of the class representatives."  Id. at 28 (citing Kight v. CashCall, Inc., 231 Cal.App.4th 112, 125-26 (2014)).  The court also rejected the argument that all but one of the class representatives became inadequate because they did not testify at the trial.  Id. at 30. 

The third section considered the defendant's argument that the trial court had awarded classwide relief on an uncertified claim.  The opinion examined the trial court's class certification order and found it broad enough to encompass that claim.  Id. at 32-36.

The next section affirmed the trial court's order allowing post-trial amendment of the complaint to conform to proof, rejecting the defendant's argument that such amendments should not be allowed in a certified class action.  Id. at 36-39.  "We see no reason why a trial court has any less discretion to allow amendment of a pleading to conform to proof in a class action than in other civil actions."  Id. at 37.

Next, the opinion considered the trial court's order bifurcating the equitable UCL claim and trying it first, and held that the defendant had acquiesced in the order and therefore could not challenge it on appeal.  Id. at 39-42.

The defendant's next series of arguments challenged various aspects of the $4.95 million in restitution and prejudgment interest awarded to the class, which included several different types of expense reimbursements under Labor Code section 2802, as construed in Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal.4th 554 (2007).  Slip op. at 42-67.

Several of the holdings in this section of the opinion are worthy of note:

• The court had no difficulty concluding that unpaid expense reimbursements were recoverable as restitution under the UCL because such reimbursements are considered part of an employee's wages. Id. at 50-51 (citing, inter alia, Cortez v. Purolater Air Filtration Products Co., 23 Cal.4th 163 (2000)).
• The court also held that certain "credits and reversals" should have been subtracted from the restitution award because those sums had been "already paid" to the class.  Id. at 51-56.
• A UCL restitution award, like a damages award, need not be calculated with strict "mathematical precision," and the trial court did not err in accepting the plaintiffs' expert's "reasonable estimate" of the amount owed the class in mileage reimbursements.  Id. at 57-58 (citing Duran v. U.S. Bank Nat. Assn., 59 Cal.4th 1, 40 (2014)). 
• However, the trial court did err in accepting an unreasonable estimate of the amount of another type of reimbursement.  Id. at 59-61.
• The trial court properly exercised its discretion to award prejudgment interest on the restitution award.  Id. at 62-67.  The panel rejected the defendant's argument that prejudgment interest is not recoverable under the UCL, but determined that the amount of interest should be recalculated after the adjustments to the base restitution award, discussed above, were made.  See id.

The final sections of the opinion largely affirmed the attorneys' fees award under section 1021.5, but remanded for the trial court to determine, in the first instance, whether the amount of the award should be reduced because the base restitution award would be adjusted downward on remand.  Slip op. at 67-76.  The opinion also held that the trial court did not abuse its discretion in declining to apply a lodestar multiplier in fixing the amount of the fee award.  Id. at 77-80.

U.S. Supreme Court addresses appealability of class certification rulings: Microsoft Corp. v. Baker

In Baker v. Microsoft Corp., 797 F.3d 607 (9th Cir. 2015), the district court granted the defendant's motion to strike the class allegations.  The plaintiff sought discretionary review under Rule 23(f), but that petition was  denied.  Thereafter, to facilitate appellate review, the named plaintiff voluntarily dismissed the action with prejudice.  The Ninth Circuit exercised appellate jurisdiction, observing that the dismissal was not the result of a settlement, and reversed the order striking the class allegations.  (See this blog post for more on that decision.) 

The U.S. Supreme Court granted the defendant's cert. petition on the appellate jurisdiction question only, and this month, reversed.  The Court held that a judgment resulting from a voluntary dismissal does not qualify as a "final" decision within the meaning of 28 U.S.C. section 1291, settlement or no.  Microsoft Corp. v. Baker, ___ U.S. ___ (Jun. 12, 2017). 

The opinion (by Justice Ginsburg) includes an interesting discussion of the "death knell" doctrine as it exists under federal law.  Slip op. at 2-4.  Of course, California law on appealability of class-certification-related orders is quite different from federal law.  See, e.g., In re Baycol Cases I & II, 51 Cal.4th 751 (2011). 

The good news (for plaintiffs) is that the Ninth Circuit's substantive discussion of the class certification ruling has not been disturbed.  As to those holdings, the opinion remains a citable precedent, albeit one that has been "vacated on other grounds." 

Class certification not required for broad-ranging "public" injunctive relief under the UCL: McGill v. Citibank, N.A.

This morning, the California Supreme Court handed down its long-awaited opinion, McGill v. Citibank, N.A., ___ Cal.5th ___ (Apr. 6, 2017). 

In McGill, the Court was expected to address whether the Federal Arbitration Act, as construed in Concepcion, preempts the Broughton-Cruz rule (see this blog post for more on that rule).  However:

[I]t is now clear that the Broughton-Cruz rule is not at issue in this case.  As detailed above, late in the Court of Appeal proceedings, McGill asserted that the arbitration provision purports to preclude her from seeking public injunctive relief in any forum.  She repeats that assertion in this court ....   At oral argument before us, Citibank agreed with McGill’s reading of the arbitration provision.

Slip op. at 7 (emphasis in original).

Accordingly, the opinion addressed whether such a contractual provision—one purporting to completely eliminate the right to seek public injunctive relief under the UCL, FAL, and CLRA—was void, under ordinary contract-law principles, as contrary to public policy.  The Court held that it was.  Id. at 14. 

The opinion then addressed whether the FAA, construed in Concepcion, preempted this principle of California contract law.  It held that Concepcion did not.  Slip op. at 14-22. 

Here's the part that's really interesting.   The opinion addresses, at length, whether Prop. 64 eliminated the ability of private plaintiffs to seek broad-ranging public injunctive relief.  Not only did the Court say "no" to that (id. at 10-14), it also held that class certification is not required of a UCL or FAL claim seeking such relief!  Id. at 13-14. 

This has been an open question for the past twelve years, since Prop. 64 passed in November 2004.  (For example, see this 2005 blog post, this one from 2006, and this one from 2007.) 

Truthfully, I did not expect the Court to reach or decide it in McGill, but I think the Court's conclusion is absolutely the correct one.  Attempting to apply class certification principles to forward-reaching injunctive relief claims just doesn't make any sense, procedurally:  

[W]e have held that the phrase “compl[y] with Section 382 of the Code of Civil Procedure” (Bus. & Prof. Code, §§ 17203, 17535) “imposes a requirement that the action be brought as a class action.”  (Arias v. Superior Court (2009) 46 Cal.4th 969, 978.)  This requirement has never been imposed with regard to requests to enjoin future wrongful business practices that will injure the public, and we find nothing in the ballot materials for Proposition 64 suggesting an intent to link or restrict such relief to the class action context.  Indeed, imposing this requirement would largely eliminate the ability of a private plaintiff to pursue such relief, because class certification requires “the existence of both an ascertainable class and a well-defined community of interest among the class members” (Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906, 913), and “ ‘the general public’ . . . fails to meet” this requirement (Czap v. Credit Bureau of Santa Clara Valley (1970) 7 Cal.App.3d 1, 6). 

Slip op. at 13 (emphasis added).  The opinion holds that the class certification requisite added by Prop. 64 applies only to claims by private plaintiffs "seek[ing] disgorgement and/or restitution on behalf of persons other than or in addition to the plaintiff.'"  Id. at 13-14 (quoting Kraus v. Trinity Management Services, Inc., 23 Cal.4th 116, 126 n.10 (2000))(emphasis in original). 

The opinion also strongly suggests that a defendant's "voluntary cessation of wrongful conduct" does not automatically preclude forward-reaching injunctive relief.  Id. at 10.  Notably, the opinion favorably cites Robinson v. U-Haul of California, 4 Cal.App.4th 304 (2016) (discussed in this blog post), in which the Court of Appeal rejected an argument that no injunction may issue under the UCL if the defendant voluntarily stops engaging in wrongful acts. 

For those interested in a general overview of the McGill opinion, this is the Court's introductory paragraph:

In previous decisions, this court has said that the statutory remedies available for a violation of the Consumers Legal Remedies Act (CLRA; Civ. Code, § 1750 et seq.), the unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq.), and the false advertising law (id., § 17500 et seq.) include public injunctive relief, i.e., injunctive relief that has the primary purpose and effect of prohibiting unlawful acts that threaten future injury to the general public.  (Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 315-316 (Cruz); Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066, 1077 (Broughton).)  The question we address in this case is the validity of a provision in a predispute arbitration agreement that waives the right to seek this statutory remedy in any forum.  We hold that such a provision is contrary to California public policy and is thus unenforceable under California law.  We further hold that the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) does not preempt this rule of California law or require enforcement of the waiver provision.  We therefore reverse the judgment of the Court of Appeal.

Slip op. at 1.

Ninth Circuit finds no "administrative feasibility" requisite to class certification: Briseno v. ConAgra Foods, Inc.

In Briseno v. ConAgra Foods, Inc., ___ F.3d ___ (9th Cir. Jan. 3, 2017), the Ninth Circuit held that Rule 23 does not require plaintiffs seeking class certification to prove "that there is an 'administratively feasible' means of identifying absent class members."  Slip op. at 1.  As the opinion explains,

[a] separate administrative feasibility prerequisite to class certification is not compatible with the language of Rule 23. Further, Rule 23’s enumerated criteria already address the policy concerns that have motivated some courts to adopt a separate administrative feasibility requirement, and do so without undermining the balance of interests struck by the Supreme Court, Congress, and the other contributors to the Rule.

Id. at 4.

In so holding, the Ninth Circuit explicitly parted company with Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013), as did the Sixth, Seventh and Eighth Circuits before it.  See slip op. at 11-12 (citing Sandusky Wellness Ctr., LLC, v. Medtox Sci., Inc., 821 F.3d 992 (8th Cir. 2016); Rikos v. Procter & Gamble Co., 799 F.3d 497 (6th Cir. 2015);  Mullins v. Direct Digital, LLC, 795 F.3d 654 (7th Cir. 2015)). 

In September, I reported on the oral argument in this case.  It is false advertising class action alleging that the defendant mislabeled its Wesson Oil products as "100% Natural."  

"Never Say Never"

Happy New Year to my lovely readers!  I hope everyone enjoys the long weekend. 

The Fall 2016 issue of Competition (the journal of the Antitrust, UCL and Privacy Section of the State Bar of California) has a very interesting article by my friend John Landry, entitled "Never Say Never: The Ninth Circuit's Misguided Categorical Approach to Individual Damages Questions When Assessing Rule 23(b)(3) Predominance."

The article provides an interesting defense perspective on recent Ninth Circuit class certification decisions, which, according to John's analysis, adopt a "categorical" rule that "individual damages questions alone never, ever defeat class certification."  You won't hear an argument from me on that, although I must respectfully disagree with John's conclusion that such a "categorical" rule is inconsistent with Comcast.  (See this blog post for my take on Comcast.)

If you are a member of the Section, you should have received your copy of Competition in the mail.  If you are not a member, I encourage you to join when you renew your bar membership this year. 

Happy Thanksgiving and new class certification opinion: Lubin v. The Wackenhut Corp.

I hope everyone has a Happy Thanksgiving and that you're all planning to enjoy the long holiday weekend.

As a special Thanksgiving treat for those of us on the plaintiffs' side, take a look at Lubin v. The Wackenhut Corporation, ___ Cal.App.5th ___ (Nov. 21, 2016), handed down on Monday by the Second Appellate District, Division Four.

In Lubin, the trial court initially granted class certification of the meal period, rest break, and wage statement claims, but then decertified the classes after Dukes came down in 2011.  Five years later, this opinion holds that the decertification was error on every level, heavily relying on Brinker and a number of post-Brinker opinions.  The opinion also explains in detail why the trial court's reliance on Dukes was misplaced, and that the concerns raised in Dukes are inapplicable outside the context of Title VII cases, which involve unique statutory requirements.

In my 2012 article on Dukes, I cited the Wackenhut decertification order as an example of a misapplication of the Dukes "trial by formula" holding.  "Dukes and Common Proof in California Class Actions," 21 Competition 9, 12 & n.26 (Summer 2012).  It's very nice to see the Court of Appeal agree in a published opinion.

Congratulations to my good friends Emily Rich and Ted Franklin on their amazing win!  I know they both worked incredibly hard on this appeal.  You can tell by reading the opinion that the briefing was extremely thorough.

Ninth Circuit also considers disqualification of class counsel: Radcliffe v. Hernandez

First of all, I want to encourage everyone to get to the polls today and vote!  I certainly will be voting today (Go Hillary!).

When I was reading the Walker opinion for my post yesterday, I realized the Ninth Circuit had handed down an opinion on a similar subject earlier this year (March) that I hadn't covered yet.

In Radcliffe v. Hernandez, 818 F.3d 537 (9th Cir. 2016), the court considered whether the attorneys who had included improper promises concerning incentive awards in a class action settlement agreement, thereby creating a conflict of interest for class counsel between the class representatives and the unnamed class members, should be disqualified from continuing to represent the class.  In 2013, the Ninth Circuit had reversed final approval of the settlement because of the incentive award provisions.  See Radcliffe v. Experian Information Solutions, Inc., 715 F.3d 1157 (9th Cir. 2013) (briefly discussed in this blog post). 

On remand, the objectors who had obtained that reversal moved to disqualify the firms previously appointed as lead counsel, who had negotiated the settlement with the problematic provisions.  The district court denied the motion, but certified the questions to the Ninth Circuit, which granted permission to appeal.  818 F.3d at 540-41.  The Ninth Circuit affirmed, holding that "California law does not require automatic disqualification in class action cases."  Id. at 541.

In so holding, the Court considered a number of California decisions involving conflicts in non-class cases, but concluded that none of these:

fits the circumstances of the lawyer who represents a class of plaintiffs whose interests may in some ways be adverse to each other, but all of whose interests are adverse to the defendant. In a class action, conflicts often arise not because an attorney simultaneously represents litigation adversaries but because they simultaneously represent different members of the same class who develop divergent interests regarding how to prevail on their shared claims. Thus, in Radcliffe I, we explained that the conditional incentive award was improper because it “undermined [the named plaintiffs'] ability to ‘fairly and adequately protect the interests of the class.’ ”  Radcliffe I, 715 F.3d at 1165 (quoting Fed. R. Civ. Pro. 23(a)(4)). “This requirement is rooted in due-process concerns—‘absent class members must be afforded adequate representation before entry of a judgment which binds them.’ ” Id. (quoting Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998)).  These concerns with adequate representation and due process for absent party members are simply not present in individual plaintiff suits. And because the California Supreme Court has never discussed the automatic disqualification rule in the context of class actions, it also has never been required to confront the ethical issues and conflicts of interest that are unique to class action cases. Given this vacuum, we are not willing to assume that California courts would apply the same disqualification rules to a class action case as they do in individual plaintiff cases.

Id. at 544-45.  In particular, given the specific type of conflict that the settlement agreement created, disqualification was not warranted:

[I]n this case the district court could reasonably conclude that the conflict of interest was appropriately cured when we rejected the settlement agreement that contained the improper conditional incentive award. This conflict was not inherent to the relationship between Hernandez Counsel [i.e., class counsel] and the rest of the class but rather, as in Rodriguez, resulted from a particular provision in an agreement that was later held invalid.

Id. at 546.  The opinion goes on to hold that class counsel remained adequate to represent the class and should not be replaced by objectors' counsel.  Id. at 547-49. 

The opinion concludes:

We previously found that Hernandez Counsel created a significant conflict of interest between themselves, their clients, and the rest of the class, and nothing in the present order diminishes or qualifies that holding. We are not convinced, however, that the conflict we found requires automatic disqualification of class counsel. We believe that, given the unique ethical and due process concerns involved in class actions, district courts must have the discretion to address attorney representation and disqualification issues based on the details of each case, and we further believe the California Supreme Court would agree. Accordingly, we hold that the district court did not abuse its discretion in denying White Counsel's motion to disqualify Hernandez Counsel and to be appointed as class counsel, and granting Hernandez Counsel's cross-motion to be appointed as class counsel.

Id. at 549.

New opinion considers attorney-client conflicts in class action context: Walker v. Apple, Inc.

In Walker v. Apple, Inc., ___ Cal.App.5th ___ (Sept. 28, 2016; pub. ord. Oct. 28, 2016), the Court of Appeal (Fourth Appellate District, Division One) affirmed an order disqualifying a law firm from serving as class counsel in a wage and hour action against Apple. 

The law firm represented a certified class in one case against Apple, and the putative class in a second, later-filed case against Apple.  Apple moved to disqualify the firm in the second case on the ground that a store manager, who was an unnamed member of the certified class in the first case, would be a critical adverse witness in the second case.  Slip op. at 3-6.  The trial court granted the motion, and the Court of Appeal affirmed.  It reasoned, first of all, that the order granting class certification in the first case rendered this particular unnamed class member (but not necessarily all unnamed class members) the firm's client for conflicts purposes.  Id. at 10-15. 

Then, the Court concluded that Apple's evidence supported the trial court's holding that in order to advance the class claims in the second case, the firm would have to cross-examine this unnamed class member in a manner that would conflict with her "employment interests."  Id. at 15-20.  This part of the analysis was highly dependent on the particular facts of the second class case, including the specific arguments to be presented by both sides on liability.  Given those facts, automatic disqualification was warranted.  Id. at 22-24.

The opinion recognizes that not all unnamed class members automatically become the firm's clients for conflicts purposes (as opposed to other purposes, such as the rule of ethics prohibiting opposing counsel from communicating with represented parties, and the attorney-client privilege).  See id. at 10-11.  The conclusion that the specific unnamed class member/witness should be considered a firm client for conflicts purposes turned on the fact that the two cases were factually related as well as "additional undisputed evidence regarding [the class member's] identity and likely role in this case."  Id. at 11. 

Pending U.S. Supreme Court case of interest: Microsoft Corp. v. Baker

In January, the U.S. Supreme Court granted cert. in Microsoft Corp. v. Baker, No. 15-457.  The case is now fully briefed and awaiting oral argument. 

In Baker v. Microsoft Corp., 797 F.3d 607 (9th Cir. 2015), the district court granted the defendant's motion to strike the class allegations, and the plaintiffs filed a Rule 23(f) petition, which was denied.  Thereafter, the parties stipulated to dismiss the action with prejudice, and the plaintiffs filed an ordinary appeal from the ensuing judgment.  The Ninth Circuit rejected the defendant's argument that the judgment was not appealable:

As this case did not involve a settlement, Berger establishes that “[w]e have jurisdiction under 28 U.S.C. § 1291 because a dismissal of an action with prejudice, even when such dismissal is the product of a stipulation, is a sufficiently adverse—and thus appealable—final decision.”

Id. at 512 (quoting Berger v. Home Depot USA, 741 F.3d 1061 (9th Cir. 2014)) (discussed in this blog post). 

On the merits, the Court reversed the order striking the class allegations, holding that individualized issues of causation did not preclude class certification in a product defect action for breach of express and implied warranty.  Id. at 612-15. 

[I]n this case, although individual factors may affect the timing and extent of the disc scratching, they do not affect whether the Xboxes were sold with a defective disc system. Plaintiffs contend that (1) whether the Xbox is defectively designed and (2) whether such design defect breaches an express or an implied warranty are both issues capable of common proof. We agree that, as in Wolin, these issues are susceptible to proof by generalized evidence and do not require proof of individual causation.

....

Similarly, proof that the allegedly defective disc system caused individual damages is not necessary to determine whether the existence of the alleged design defect breaches Microsoft's express warranty. Rather, plaintiffs' breach of express warranty claim presents a common factual question—is there a defect?—and a common mixed question of law and fact—does that defect breach the express warranty? We conclude, as we did in Wolin, that the district court erred in finding that individual issues of causation predominate over these common questions.

Id. at 613 (citing Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168, 1172-74, 1176 (9th Cir. 2010)) (see this blog post). 

In its cert. petition, Microsoft challenged only the appealability ruling.  When the Supreme Court granted cert., it framed the issue as follows: 

Whether a federal court of appeals has jurisdiction under both Article III and 28 U. S. C. §1291 to review an order denying class certification after the named plaintiffs voluntarily dismiss their individual claims with prejudice.

The SCOTUSblog case page, with links to all the briefs, is here.  Nine amicus curiae briefs have been filed, including briefs by Public Justice and Public Citizen, as well as a number of defense-side organizations.