The UCL Practitioner

"Welcome to Food Court"

On March 1, 2013, the Recorder had this article on the numerous false advertising cases pending against food manufacturers in the Northern District of California, which the article says has "emerg[ed] as preferred venue for a new wave of class action litigation over food labels alleged to mislead consumers or violate federal regulations."

Many thanks to the blog reader who forwarded the link.

New podcast of interest: "Class Re-Action"

Scott Leviant of The Complex Litigator has launched a new podcast, "Class Re-Action." 

The inaugural episode of the podcast is now available through this link and through iTunes.  It runs approximately one hour and features attorneys Tim Blood of Blood, Hurst & O'Reardon, Michael Singer of Cohelan, Khoury & Singer, and Tom Kaufman of Sheppard Mullin.

Scott expects this to be a regular series, complete with CLE credit for listening. Congratulations to him on this new venture.  It sounds like it will be very interesting.

"Evidentiary Extrapolations in California Class Actions: Guidance From Brinker"

This article by yours truly appeared in the July 2012 issue of California Litigation. 

Daily Journal: "Depublication of employment appellate rulings stirs curiosity"

On Wednesday, the Daily Journal had a front-page article on the Supreme Court's decision to depublish three post-Brinker Court of Appeal opinions on meal periods (discussed here and here).  An excerpt:

Kimberly A. Kralowec of the Kralowec Law Group filed a depublication request for each of the three cases in question, though she was not otherwise involved in them. She asserts the decisions misstated the Supreme Court's analysis in Brinker by relying on an older analysis of the word "provide" that refers to the dictionary and interprets the phrasing to mean the employer meets the obligation by simply offering breaks.

"It's a lot more than just offering or authorizing a break," Kralowec said. "The employer has to take affirmative steps to relieve workers of all duty, and refrain from doing anything that would interfere with the employees' ability to take a break."

The reporter, Laura Hautala, also interviewed former Justice Carlos Moreno about the development:

[F]ormer Justice Carlos R. Moreno, who retired from the state Supreme Court in 2011, said that depublished cases typically have something in them that's inconsistent with the high court's own precedent. 

"If a case is really off the mark, then the court will elect that remedy," he said.

Mine were not the only depublication requests.  Michael Singer filed requests for CELA in Hernandez and Lamps Plus; Joseph Antonelli filed a request for his clients in Tien; and Eve Cervantez filed a request for a group of workers in Lamps Plus. 

All of the requests made essentially the same argument -- that the Court of Appeal was badly misinterpreting the Brinker opinion.  My requests also pointed out that in so doing, the Court of Appeal failed to adhere to the rule of stare decisis, which requires allegiance not only to the high court's holdings, but also its reasoning.  All three opinions were "really off the mark" because they did not adhere to either the ultimate holding or the reasoning of Brinker.

Recently, on January 7, 2013, The Recorder had a front-page article on the first two depublication orders.  The article, "High Court Tees Up Number of Post-Brinker Cases," preceded the depublication order in Tien, handed down on January 16.  An excerpt:

In a dramatic move, the state Supreme Court depublished two of those rulings — Lamps Plus Overtime Cases, 195 Cal.App.4th 389, and Hernandez v. Chipotle Mexican Grill, 208 Cal.App.4th 1487. In both cases, the Second District had denied class certification.

Kimberly Kralowec of The Kralowec Law Group said in both rulings the Second District had "misinterpreted the Brinker decision, in particular what employers have to do to comply with their meal period obligations." Depublishing, she said, "was a very strong signal that the court disagreed with the analysis" in those two cases.

Needless to say, I'm very pleased to have done my part to achieve depublication in these cases, and I think that depublishing the opinions was the correct outcome, given that the Supreme Court is apparently not ready to revisit any of the issues addressed in Brinker by granting review in these cases. 

I am equally pleased by the press attention these developments have garnered.   That the Supreme Court would depublish three opinions like this is pretty remarkable, whatever the issue.  Many lawyers have sent expressions of thanks and contratulations which I have been so pleased and proud to hear. Congratulations are also due to Michael, Joe and Eve. 

"The Supreme Court and the Class Action: Where We Are and Where We Might Be Going"

Professor Richard D. Freer of Emory University School of Law has a new article posted on SSRN entitled "The Supreme Court and the Class Action: Where We Are and Where We Might Be Going." [via]

The article is quite interesting. It discusses the five class-action-related opinions handed down last Term (Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., 130 S.Ct. 1431 (2010); AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011); Erica P. John Fund v. Halliburton Co., 131 S.Ct. 2179 (2011); Smith v. Bayer Corp., 131 S.Ct. 2368 (2011); and Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011)), and relates those opinions to four class-action cases on the Court's docket this Term:

• Comcast Corp. v. Behrend, No. 11-864 (argued Nov. 5, 2012)
• Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, no.11-1085 (argued Nov. 5, 2012)
• The Standard Fire Ins. Co. v. Knowles, No. 11-1450. (set for argument Jan. 7, 2013)
• American Express Co. v. Italian Colors Restaurant, No. 12-133 (set for argument Feb. 27, 2013)

Two more pending cases are also worth following this Term:

• Genesis HealthCare Corp. v. Symczyk, No. 11-1059 (argued Dec. 3, 2012)
• Oxford Health Plans LLC v. Sutter, No. 12-135 (cert. granted Dec. 10, 2012; argument date not set)

Additional discussion of these cases can be found on this blog's "Class actions - Supreme Court" category page.

"State Supreme Court mulls statute of limitations in commercial suit"

I have not received any reports on Tuesday's oral argument in Aryeh v. Canon Business Solutions, Inc., no. S184929, but Emily Green of the Daily Journal had an article yesterday. 

An excerpt:

In oral arguments Tuesday, state Supreme Court justices appeared sympathetic to a plaintiff who was barred from suing Canon Business Solutions Inc. because he failed to bring his lawsuit within a four-year statute of limitations time period.

....

The big picture question before the court was whether the multiple alleged overcharges by Canon were one distinct act, or if each overcharge was a separate act that triggered the statute of limitations clock anew. Aryeh's lawyers, adopting a position articulated by the dissenting justice in the appellate court, argued each overcharge should be considered a separate act.

....

The justices spent little time on a second question that had garnered the interest of many consumer attorneys: whether courts should take into account "delayed discovery," or the time the plaintiff finds out about the alleged unfair activity, in Unfair Competition Law cases.

The opinion is due in 90 days. 

Transcript in second U.S. Supreme Court case now available: Amgen Inc. v. Connecticut Retirement Plans

Most of the news reports about yesterday's oral argument in Comcast Corp. v. Behrend pointed out that a second case involving class action issues was also argued yesterday.  The case is Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, no.11-1085, and the argument transcript is available at this link. 

Amgen is a securities class action and the questions presented have to do with materiality and the "fraud on the market" theory. 

The news reports I've seen so far contain little substantive analysis of the two arguments.  Reports are available from The New York Times, The Washington Post, Bloomberg News, Business Week, and Reuters. 

[via]

"An Express Warranty Defines Materiality Under the UCL and CLRA"

The latest issue of Competition, the journal of the Antitrust and Unfair Competition Law Section of the State Bar of California, has an article of interest to those handling UCL cases:

• "'Revisiting Materiality' is Revisionist History: An Express Warranty Defines Materiality Under the UCL and CLRA Absent an Unreasonable Safety Hazard," by Paul J. Riehle and Jia-Ming Shang

The article is a response to a piece published in the Spring 2012 issue, "Revisiting Materiality in the Context of CLRA and UCL Claims: Why Materiality Does Not Equal a Safety Risk," by James C. Shah and Rose F. Luzon (mentioned in this blog post). 

These articles both address an important issue originating in Daugherty v. American Honda Motor Co., 144 Cal.App.4th 824 (2006), namely, whether product manufacturers enjoy an escape hatch from liability under the CLRA and UCL for concealing known defects in their products.  The escape hatch suggested by Daugherty (and seized on in later decisions) is offering an express warranty, and the hatch is open to all manufacturers unless the concealed defect creates a safety hazard for consumers. 

In my view, this is an issue that the Supreme Court should take up when a proper case presents itself, because Daugherty  (as interpreted, or rather misinterpreted, in later cases) upended years of UCL and CLRA jurisprudence. 

The Court of Appeal's most recent word on this question is Collins v. eMachines, Inc., 202 Cal.App.4th 249 (2011). The Supreme Court denied review in Collins early this year.  At the Golden State Institute last week, I learned of an unpublished Ninth Circuit opinion on the issue, Vitt v. Apple Computer, Inc., 469 Fed.Appx. 605 (9th Cir. 2012). 

The two articles are both very well done and effectively present two opposing views on this question. 

"Dukes and Common Proof in California Class Actions"

The latest issue of Competition, the Journal of the Antitrust and Unfair Competition Law Section of the State Bar of California, recently arrived in the mail.

It has an article by yours truly, "Dukes and Common Proof in California Class Actions."

The article addresses the "trial by formula" catchphrase used in Dukes and explains that this part of the Supreme Court's analysis is limited to Title VII class actions, which have unique statutory requirements not present in UCL cases and other types of cases commonly litigated as class actions.  In particular, the clever language does not mean that evidentiary extrapolations are impermissible Rule 23(b)(3) class actions, nor does it place any kind of due process limitation on the class action device, as some courts have recently and erroneously held.  The article also discusses the Court of Appeal opinion in Duran, which misconstrued Dukes and is now under review by the California Supreme Court.  Brinker is also touched on. 

My thanks to the editor of Competition, John Cove, for including the article in the issue.  Thanks are also due to the attorneys (you know who you are) who reviewed and provided helpful comments on drafts of the article. 

"Wage and Hour Class Actions: The Sky is Falling [Or is it?]: After Brinker and Duran, What Lies Ahead?"

The September 2012 issue of Plaintiff Magazine has an interesting and lengthy article by Oakland attorney Bryan Schwartz, who is a member of the Executive Committee of the State Bar Labor and Employment Law Section.  An excerpt:

I remember well April 12, 2012, because it was the day the sun broke through again on wage/hour class litigation: The long-awaited day the California Supreme Court ruled in Brinker (2012) 53 Cal.4th at 1004. Sure, the Court did not hand us strict liability for premiums where workers work during meal or rest breaks. Ironically, the employer-side spin doctors used this one holding, that employers cannot be liable for premiums by simply failing to police workers to ensure every break is taken, to paint Brinker as a great victory for their team. But those of us in the trenches of wage/hour class litigation – on both sides – immediately knew differently: That the chief result of Brinker would be to again empower employee advocates in claims where employers, with policies and common practices, refuse to relinquish all control over meal and rest periods owed to workers.

....

[The Court's]  holding that the “employer need not ensure that no work is done” during meal periods is really an employee victory, because of the reasoning behind it: “[T]he obligation to ensure employees do no work may in some instances be inconsistent with the fundamental employer obligations associated with a meal break: to relieve the employee of all duty and relinquish any employer control over the employee and how he or she spends the time.” (Brinker, 53 Cal.4th at 1038-1039.)  In other words, Brinker reasoned that employers cannot police employees to make sure that no work is performed because employers may exercise no control over employees during their meal periods. If an employer has a policy restricting employees’ activities during meal periods, that may now clearly be the basis for a meal period class action.

The article goes on to discuss numerous other issues of interest, including arbitration agreements post-Concepcion.  Bryan predicts that "[i]f the Supreme Court takes up Iskanian, it may be the defining case about the effect of Concepcion and Stolt-Nielsen on California laws protecting workers."  The Supreme Court granted review in Iskanian last week, so we will see if Bryan's prediction comes to pass.

"Food companies targeted for misleading consumers in class actions"

The Daily Journal had an interesting article Monday, noting an increase in food-related consumer class action filings since Concepcion and the Ninth Circuit's 2008 opinion, Williams v. Gerber Products Co., 523 F.3d 934 (9th Cir. 2008) (discussed in these blog posts).

A couple of snippets from the article:

[David T.] Biderman [of Perkins Coie] and others think the growth in filings can be credited in part to AT&T Mobility v. Concepcion, the landmark Supreme Court decision last year that excludes many consumers from class actions because of contracts they signed. Unlike many consumer products, food or goods bought in a local grocery store do not come with a contract.

....

Some attorneys say the Gerber decision has swayed some judges - particularly in the Northern District - to throw out motions to dismiss. 

"In the Northern District, they have been more accommodating to plaintiffs," [William L.] Stern said.

The article features a great photo of my former partner Will Stern of MoFo, as well as quotations from Tim Blood of Blood Hurst & O'Reardon and several other attorneys. 

"Brinker v. Superior Court: Takeaways for California Workers"

The July 2012 issue of the California Labor & Employment Law Review, the official publication of the State Bar of California Labor and Employment Law Section, has a pair of articles on Brinker. 

The first article, "Brinker v. Superior Court: Takeaways for California Workers," is by yours truly and is an edited and somewhat expanded version of my original post on Brinker. 

The article includes two figures, the first of which was unfortunately distorted in the print copy of the Review.  The figure illustrates the Supreme Court's ruling on the meal period compliance question, and should have looked like this (click to view full-size image): 

As the article explains, the Supreme Court held that employers must actually relieve workers of all duty for meal periods, which is precisely what the workers argued.  Petition for Review, Statement of Issues on Review (issue no. 1); see Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004, 1017 (2012) ("an employer’s obligation is to relieve its employee of all duty").  While the Supreme Court did not accept the workers' further argument, based on Martinez v. Combs, that employers must also prevent all work from occurring, the Court flatly rejected the employers' assertion that meal periods need only be "offered" to workers. Those who assert that Brinker held that meal periods need only be "made available" are not reading the opinion with adequate care. 

The article is available to members of the State Bar Labor and Employment Law Section.  If you would like a copy, please drop me an email.

The second article in the pair, "Brinker v. Superior Court: Implications for Employers," is by Brinker's appellate counsel, Rex Heinke, and one of his colleagues, Damien DeLaney. 

"Why Materiality Does Not Equal a Safety Risk"

The Spring 2012 issue of Competition, journal of the Antitrust and Unfair Competition Law Section of the State Bar of California, is just out.

The issue has an interesting article called "Revisiting Materiality in the Context of CLRA and UCL Claims:  Why Materiality Does Not Equal a Safety Risk" by James C. Shah and Rose F. Luzon.  Here is an excerpt from the introduction:

Some practitioners and courts now take the position that, in order to establish materiality in an omission-based claim under the CLRA and UCL, a plaintiff must allege that the subject product poses a safety risk.  ....

As this discussion will demonstrate, given what is and has been the prevailing materiality standard for years, the existence of a safety risk is clearly not a required element of this standard, and its absence should not be a basis for precluding otherwise viable CLRA and UCL claims that are brought to redress consumer wrongs.  This article discusses why the imposition of a "safety" requirement for pleading materiality in omission-based consumer fraud claims is both contrary to controlling legal authority and to the express legislative purpose of the CLRA and UCL.

The article is worth a read.  This is an important area of law and one in which we are seeing what is perhaps CAFA's most problematic side effect:  federal judges making California law.  Federal judges construe the law in removed class-action cases raising no federal questions, their rulings are cited by litigants in state courts, and those rulings are followed by state-court judges.  The intermediate Court of Appeal opinion in Brinker is another example of this phenomenon.  

"A Rising Tide Against Class-Action Suits"

Last Saturday the New York Times had this article on the impact of Concepcion.  An excerpt:

A year later, we’re starting to see how much the game has changed. On April 25, the consumer advocacy group Public Citizen released a report titled “Justice Denied” that said that since Concepcion, judges had cited the decision at least 76 times as a reason to prevent potential class-action lawsuits from moving ahead. In some of those cases, the judges made clear that they were ruling against the plaintiffs through gritted teeth, explaining that Concepcion basically made it impossible to come to any other decision.

"$40 million damages in hair-regrowth scam upheld"

An article by Bob Egelko in today's San Francisco Chronicle reports on an unpublished opinion handed down on Wednesday by the First Appellate District, Division Five.  Thomas v. Imbriolo, case no. A130517. 

The opinion upholds the jury verdict and judgment in a UCL and CLRA class action (certified by Judge Freedman) against the owner of a company that misrepresented the efficacy of its hair-regrowth product.

"Employer liability for rest breaks clarified by high court"

The Daily Journal reports this morning that "both management and labor find something to tout in high court's employment decision." 

Unfortunately, the article makes a significant misstatement that needs to be corrected.  According to the article, Brinker held that "[e]mployers must only make meal-and-rest breaks available."  That is not what Brinker held.

Brinker rejected that argument, holding instead that employers must take significant affirmative steps beyond making meal periods "available":

The employer satisfies [its meal period compliance] obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so.  What will suffice may vary from industry to industry, and we cannot in the context of this class certification proceeding delineate the full range of approaches that in each instance might be sufficient to satisfy the law.

 Slip op. at 36 (emphasis added) (citing, e.g., Cicairos v. Summit Logistics, Inc., 133 Cal.App.4th 949 (2005)); see id. at 31 ("Employers must afford employees uninterrupted half-hour periods in which they are relieved of any duty or employer control and are free to come and go as they please."); id. at 6, 27 (describing rejected employer argument that "an employer is obligated only to 'make available' meal periods"). 

Yes, the Court declined to accept the final additional bit of our argument, that employers must also "prohibit work" during meal periods (which, by the way, is not the same thing as "policing" the workplace, which was never part of our argument).  Slip op. at 33.  But the opinion adopts 90% of what we contended employers were obligated to do to comply with their meal period obligations, while rejecting the employers' contention that meals need only be "offered." 

Brinker press coverage

Here are links to some of the press coverage.  Some the press reports are misconstruing the opinion.  I recommend reading the opinion rather than relying on headlines:

"Brinker a win for employers, but plaintiffs cheering, too" (The Recorder) (This article says that "the court ruled that employers need only permit meal breaks for employees."  That is a misreading of the opinion.  Employers must not merely "permit" meal periods but must also take action to relieve workers of all duty, relinquish control over their activities, and create bona fide and uninterrupted breaks, without doing anything to interfere with breaks as in Cicairos.  Slip op. at, e.g., 36.  In other words, employers must take almost all of the affirmative steps that we advanced. The opinion places a significantly greater burden on employers than "offer" or "make available," the standard the employers advanced and that was adopted by the Court of Appeal below and in federal district court decisions like Brown and Starbucks.  The only step the employer need not take, according to the Court, is to "prohibit work.") 

"Workers' class action against Brinker can proceed, in part" (Reuters)

"California employers must give workers breaks, court rules" (Bloomberg)

"California employers must provide meal breaks, court says" (Wall Street Journal Law Blog)

"State high court rules workers get half-hour break" (San Francisco Chronicle)

"Restaurants must give employees breaks every five hours, state supreme court rules" (SF Weekly)

"California Supreme Court: It's not the boss's problem if employees work during breaks" (San Jose Mercury News) (See my comments above.)

"Employers not liable if workers skip breaks" (Los Angeles Times) (Again, that does not capture the opinion, which plainly held that employers must relieve workers of all duty for their meal periods, and that employers are liable if they don't -- which is precisely what we argued.)

"California businesses relieved by ruling on workplace breaks" (Ventura County Star)

"Class Dismissed"

The April 2012 issue of California Lawyer has an article by Pamela MacLean on the Ninth Circuit's decision in Mazza v. American Honda Motor Co., 666 F.3d 581 (9th Cir. 2012). 

As I mentioned in this blog post, rehearing was denied in Mazza on March 16, 2012.

Incidentally, on March 6, 2012, Judge David O. Carter of the Central District of California issued a very interesting order construing Mazza.  Bruno v. Quten Research Inst., LLC, ___ F.R.D. ___, 2011 WL 5592880, *15-*26 (C.D. Cal. Nov. 14, 2011). (For some reason, Westlaw appended the March 2012 order to the end of an earlier order and gave them both the same cite. The new order starts at page *15.)

Judge Carter denied the defendants' motion to decertify the nationwide class and/or for reconsideration of the class certification order based on Mazza:

Defendants' argument fails because Mazza is not a material change in the law, given that: (1) Mazza did not and could not change state substantive law articulated by the California Supreme Court; (2) Mazza did not and could not overrule Ninth Circuit precedent interpreting state law; and (3) Defendants' interpretation of Mazza contradicts the express purpose of the Class Action Fairness Act. Alternatively, Mazza is distinguishable from the present case because Defendants' briefing in the prior motion differs from that of the defendants in Mazza and the facts of this case differ from those in Mazza.

Id. at *15 (emphasis in original).  In short, Judge Carter recognized what many commentators have also perceived:  Mazza misapplied California choice-of-law rules.   The complete order is worth a careful read. 

"High Court Leans Toward in Employers in Brinker"

Yesterday's Recorder had this report on the Brinker argument.  An excerpt:

Lawyers watching the oral arguments on Tuesday sensed the court will most likely issue a nuanced ruling.

"I think the court is going to stake out a little bit of a compromise decision," said Rudy Exelrod Zieff & Lowe partner David Lowe, a plaintiff-side employment lawyer who wasn't involved in the case who tuned in to a webcast of the proceedings.

The court's likely to adopt some version of the "make available" standard, he said, but "they may also include some language in the opinion emphasizing that employers may not impede or discourage or dissuade workers from taking those breaks."

In particular, some of the justices seemed open to Altshuler Berzon partner Michael Rubin's argument that the Fourth District erred in completely throwing out the class certification order — particularly as it relates to the plaintiffs' claims about missing rest breaks.

Whatever the outcome, it was quite a remarkable experience being up there, looking the justices straight in the eyes and having a dialog with them on some very fascinating (and nuanced) issues. 

SCOTUSblog's arbitration symposium

Recently I posted on SCOTUSblog's class action symposium,which included a series of articles focusing primarily on Dukes. Most of the commentators in that symposium appear to have a defense-side focus.

SCOTUSblog now has a similar symposium on arbitration, focusing primarily on Concepcion.  This symposium features an interesting contribution from Michael Rubin of Altshuler Berzon LLP in San Francisco. 

Recent Daily Journal article on Concepcion in California

On August 31, 2011, the Daily Journal had an article by attorney Christian Scali of Arent Fox LLP called "Did the Supremes go too far? The backlash against Concepcion" (hyperlink not available).

The article discusses the application of Concepcion in consumer, employment and CLRA cases in light of three recent decisions:  Brown v. Ralphs Grocery Co., 197 Cal.App.4th 489 (2011), Arguelles-Romero v. Superior Court, 184 Cal.App.4th 825 (2010), and Fisher v. DCH Temecula Imports, 187 Cal.App.4th 601 (2010).  (For more on those cases, see these blog posts.) 

It is a very interesting article and worth finding in your pile of Daily Journals. 

On a related note, a petition for review was filed in Brown on August 23, 2011.  Brown v. Ralphs Grocery Co., no. S195850. 

Justice Liu confirmed to California Supreme Court

Happy Labor Day!  In case you haven't already heard, Justice Goodwin Liu was sworn in as the newest Associate Justice of the California Supreme Court on September 1, 2011, the day after his confirmation hearing.  (The video of the swearing-in ceremony is available here.)

On Friday, the Supreme Court issued an amended oral argument calendar for this week. It indicates that Justice Liu will hear six of the seven cases that are set for argument (in lieu of the pro tem justices previously assigned to those cases).  I imagine he is having a busy holiday weekend.

One of the cases is of particular interest (and no, I don't mean the Prop. 8 case, which will be argued Tuesday morning and broadcast live by California Channel).  In Serrano v. Stefan Merli Plastering, no. S183372 (review granted 08/18/10), the Court will consider Code of Civil Procedure section 1021.5 and whether a plaintiff is eligible for fees for work in a case that established a legal precedent.  The Court of Appeal said no in Serrano v. Stefan Merli Plastering Co., 184 Cal.App.4th 178 (2010).  

Serrano is scheduled for argument on Wednesday, September 7, 2011 at 1:30 p.m.  The argument is part of a special session taking place at U.C. Hastings College of the Law.   

SCOTUSblog's class action symposium

SCOTUSblog is holding an online class action symposium.  The symposium will feature a series of posts by experts (mostly law professors) on the impact of Dukes and Concepcion. 

Two installments have been posted so far:

• "Squeezing Class Actions" by Professor Scott Dodson of William & Mary Law School


• "The Supreme Court's one-two punch: Class actions in the wake of Wal-Mart v. Dukes and AT&T v. Concepcion" by Sarah Crawford, Director of the Workplace Fairness program at the National Partnership for Women & Families

The remaining installments will be available at this link as they are posted at SCOTUSblog over the next few days.

"Meal Periods: Waiting for Brinker"

The August 2011 issue of California Lawyer has an article by freelance reporter Pamela MacLean on the Brinker case (in which I am co-counsel for the workers). 

I am quoted in the article, along with my co-counsel Tracee Lorens of Lorens & Associates in San Diego (who is a joy to work with, by the way) and Kevin R. Kish, director of the employment rights project for Bet Tzedek Legal Services in Los Angeles. 

Articles of interest in new issue of Competition

The Spring 2011 issue of Competition, the journal of the Antitrust and Unfair Competition Law Section of the State Bar of California, is now out.  It contains several articles of interest, including two with contrasting perspectives on Kwikset:

"Kwikset Corp. v. Superior Court: Reaffirming the Vitality of Private Enforcement of the Unfair Competition Law After Proposition 64" by Pamela M. Parker and Alan M. Mansfield

"The California Supreme Court's Kwikset Opinion — A Glass Half-Empty and Half-Full" by Eric P. Enson

"Existing the Fun House of Mirrors: Clayworth v. Pfizer and the Handling of Pass-On in Post-Trial Allocation Proceedings in Federal and State Court" by Emilio E. Varanini

"Class Action Ruling an Earthquake for California Litigation"

Petra Pasternak of the Recorder had this article last week on the Concepcion decision.  The article quotes attorney Michael Rubin with an interesting take on the decision:

Michael Rubin of San Francisco's Altshuler Berzon said the decision doesn't actually prohibit class actions in arbitration, so the handful of class actions his firm has will likely move forward.

"All the decision today says is that a clause prohibiting class actions cannot be the basis for striking down an arbitration agreement as unconscionable," Rubin said. "That means arbitration agreements can still be struck down as unconscionable on other grounds," such as if it limits substantive rights or remedies. He said he expects to see a rise in mass tort cases to make up for the curb in class actions.

On Friday, the Recorder had another article on Concepcion, "Plaintiffs Don't See Easy Way Around AT&T Ruling" by Cheryl Miller (subscrption).  Among other things, this article says that a California State Senator plans to introduce "a legislative countermeasure" to the decision. 

In light of Justice Thomas's concurrence, I suppose such legislation would have to declare that contractual class action bans (whether related to an arbitration clause or not) are unlawful and void from inception (instead of merely unenforceable as Discover Bank held).  That would bring such bans within the savings clause of section 2 of the Federal Arbitration Act, as Justice Thomas interpreted it.  Presumably, that would in turn shift his vote over to align with the four dissenters. 

As Justice Thomas reads it,

[Section 2] require[s] enforcement of an agreement to arbitrate unless a party successfully asserts a defense concerning the formation of the agreement to arbitrate, such as fraud, duress, or mutual mistake.  [Citation.]  Contract defenses unrelated to the making of the agreement—such as public policy—could not be the basis for declining to enforce an arbitration clause.

Under this reading, the question here would be whether California’s Discover Bank rule relates to the making of an agreement. I think it does not.

Slip op. at 3-5 (Thomas, J. concurring) (emphasis added; footnote omitted). 

"Consumer Arbitrations at Risk"

The January 2011 issue of California Lawyer had a very interesting article by Pamela McLean on the Concepcion case, still pending before the U.S. Supreme Court.  The article begins:

It is no accident that AT&T Mobility's ban on class actions in arbitration caught the eye of the U.S. Supreme Court, which selected it from a runway parade of other challenges to mandatory arbitration clauses that include class waivers. The phone company had groomed its consumer contract for years, anticipating a model test case. It got one in AT&T Mobility LLC v. Concepcion, No. 09-893, argued before the Court in November.

....

In a highly unusual step two years ago, AT&T filed an amicus brief with the U.S. Supreme Court in an appeal by T-Mobile USA, Inc., whose own arbitration clause had been found unconscionable (T-Mobile USA, Inc. v. Laster, 407 F. Supp. 2d 1181 (S.D. Cal. 2005) cert. denied, 553 U.S. 1064 (2008)). In its brief for respondents, AT&T asked the Court to deny certiorari, suggesting that its arbitration clause was a "realistic and effective dispute resolution vehicle." When the Court denied cert, it opened the door for AT&T to submit Concepcion the following year.

"California Top Court Says ‘Labels Matter’; Fleshes Out Prop 64 Standing Requirements"

The BNA Class Action Litigation Reporter ran this article on Kwikset on February 11, 2011. 

I am quoted in the article, as is Matt Bailey of Pollard Bailey (author of the Bailey Class Action Daily) and defense attorneys William F. Tarantino of Morrison & Foerster and Cynthia H. Cwik of Jones Day. 

"Case Study: Zhang v. Superior Court"

On February 15, 2011, Competition Law 360 had an interesting article on Zhang v. Superior Court, no. 178542, which is currently pending before the California Supreme Court.  The full article, by Chris Micheletti and Jose Umbert of Zelle Hofmann, is available to subscribers only. Here is a brief excerpt:

It is likely that the decision in Zhang will clarify whether an insured can bring a cause of action against its insurer under the UCL based on allegations of fraudulent misrepresentation and false advertising. Therefore, the ruling may have a substantial impact on insurance litigation in California.

If the Supreme Court allows Section 17200 claims based on insurers' alleged advertising or other representations and promises regarding timely payment for covered losses, those causes of action likely will be regularly inserted in complaints against insurance companies and, given the broad scope of the UCL, will provide insureds with a potentially significant additional avenue for relief. While damages are not recoverable under the statute, the possibility of an injunction requiring changes in company practices may pose a significant threat for a carrier.

On the other hand, if the Supreme Court determines that UCL claims based on conduct that also violates the UIPA are not permitted, the policyholders' arsenal will generally be limited to causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing. Insurance practitioners should therefore pay close attention to the California Supreme Court's upcoming decision in Zhang.

The article mentions that damages are not recoverable under the UCL, and that injunctive relief would be a powerful remedy, but I think restitution would be available in such a hypothetical case against an insurer.  If the insured bought the policy in reliance on misrepresentations regarding settlement practices, the policy premiums (or some portion thereof) should be recoverable as restitution.  Also, the insured has a vested interest in policy benefits (created by contract and by statute), so if the insurer has refused to pay a covered claim, those benefits should likewise be recoverable as restitution.  I have never been able to agree with the idea that the insurance industry should enjoy a special exemption from UCL liability when its fraud relates to settlement practices.

As a reminder, these are the issues on review in Zhang:

(1) Can an insured bring a cause of action against its insurer under the unfair competition law (Bus. & Prof. Code, § 17200) based on allegations that the insurer misrepresents and falsely advertises that it will promptly and properly pay covered claims when it has no intention of doing so? (2) Does Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287 bar such an action?

 The case has been fully briefed since June 2010, so in theory it could be scheduled for argument at any time.  In practice, there are other cases closer to the head of the line.

"Getting your class settlement approved: Guidelines for motions for preliminary and final approval of class settlement"

Judge William Highberger and Judge Peter Lichtman of the Los Angeles County Superior Court had a great article on settlement approval motions in the January 2011 issue of Advocate, the monthly magazine of Consumer Attorneys Association of Los Angeles.

Unfortunately, the article is available online to CAALA members only.