California Court of Appeal examines American Pipe tolling in Fierro v. Landry's Restaurant Inc.

It's easy to say that California courts look to Rule 23 decisions for guidance when there is a gap in California's jurisprudence on class-related issues.  But how that works out in practice is a different matter.  In Fierro v. Landry's Restaurant Inc. (May 14, 2018), the Court of Appeal (Fourth Appellate District, Division One) waded into uncharted procedural terrain when they sorted out how American Pipe tolling interacts with California's different procedural approach to certification as a "death knell" versus interlocutory issue.  The core of the American Pipe application issue is captured by the Court's discussion of how federal and state procedure differ:

In the federal system, because there can be no appellate review of an order denying class certification until after entry of a final judgment in the class action, there can be years of delay—including potentially a trial on the merits of the individual claims—before the parties have the benefit of appellate review of the denial of class certification. Under such a procedure, the policy of protecting the efficiency and economy of litigation is not furthered by the continuation of tolling—first, pending resolution of the remaining claims in the trial court and, then, pending review and disposition in the appellate court.

In contrast, in our state system, the death knell doctrine allows the parties the benefit of immediate appellate review of an order denying class certification. This procedure advances the efficiency and economy of class action litigation. Stated differently, neither efficiency nor economy will result if, upon the denial of class certification, an unnamed class member is required either to seek intervention in the individual action that remains in the trial court or to file a new action while an immediate appeal of the order denying class certification is pending. Thus, in both the state and federal systems, once the trial court denies certification, the putative class member is on notice that he or she must take action to protect his or her rights; however, in the state system, there is a right to immediate review of that decision, and to deny American Pipe tolling under such circumstances is to encourage a multiplicity of actions—i.e., to encourage inefficiency and expense—before the order denying class certification is final

Slip op., at 20. The Court's effort to get under the hood and examine how policy interacts with procedural differences is commendable.

Separately, this case presents an unusual procedural history in its own right, as the Court had to engage in some very proactive digging to try to get as complete a record as it could and still fell short of getting all of what it wanted.

Appellants were successfully represented by  Matthew Righetti and John J. Glugoski of Righetti Glugoski.

In Lambert v. Nutraceutical Corp., the Ninth Circuit examines Rule 23(f) petitions

I won't diminish the expectant quality of your Friday by providing a blow-by-blow of the decision, but Lambert v. Nutraceutical Corp. (9th Cir. Sept. 15, 2017) takes a thorough look at the timing requirements of Fed. R. Civ. P. 23(f) petitions, concluding that the 14-day filing deadline of Rule 23(f) is not jurisdictional and can be extended or tolled for a variety of reasons.  The opinion also reversed the District Court's decertification order in the consumer class action, concluding that it erred in its treatment of the plaintiff's damage model.

Appellant was successfully represented by Gregory Weston (argued) and David Elliott, The Weston Firm, San Diego, California; and, Ronald A. Marron, The Law Offices of Ronald A. Marron APLC, San Diego, California.

In Mohamed v. Uber Technologies, Inc., the Ninth Circuit adds to the list of decisions severing PAGA claims from claims sent to arbitration

Mohamed v. Uber Technologies, Inc. (9th Cir. Dec. 21, 2016) isn't the first decision to hold, in the face of a motion to compel arbitration in a wage and hour suit, that (1) PAGA claims should be severed from the rest of the claims and proceed in Court, and (2) the arbitrability of all other claims was for an arbitrator to determine.  The Court said:

In Iskanian v. CLS Transp. L.A., LLC, 327 P.3d 129 (Cal. 2014), the California Supreme Court held that where “an employment agreement compels the waiver of representative claims under the PAGA, it is contrary to public policy and unenforceable as a matter of state law.” Id. at 149. We have held that the Federal Arbitration Act does not preempt this rule. Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425, 427 (9th Cir. 2015). 

Slip op., at 21.

Morris v. Ernst & Young, LLP update

For those of you who recognized that the Ninth Circuit got it 100% right when it found in Morris v. Ernst & Young, LLP (9th Cir. Aug. 22, 2016) that an arbitration agreement that precludes collective actions violates rights protected by the NLRA, you may wish to know where things stand with that case on further appeal.  Right now, Morris is before the U.S. Supreme Court on a Petition for Writ of Certiorari.  Here is the Docket report:

• Sep 8 2016:  Petition for a writ of certiorari filed. (Response due October 11, 2016)
• Sep 21 2016:  Consent to the filing of amicus curiae briefs, in support of either party or of neither party, received from counsel for petitioners.
• Sep 29 2016:  Consent to the filing of amicus curiae briefs, in support of either party or of neither party, received from counsel for respondents
• Oct 3 2016: Brief amici curiae of National Association of Manufacturers, et al. filed. VIDED.
• Oct 3 2016: Brief amicus curiae of Chamber of Commerce of the United States filed.
• Oct 6 2016: Order extending time to file response to petition to and including November 14, 2016.
• Oct 7 2016: Brief amicus curiae of International Association of Defense Counsel filed.
• Oct 10 2016: Brief amicus curiae of Atlantic Legal Foundation filed.
• Oct 11 2016: Brief amicus curiae of The Employers Group filed.
• Oct 11 2016: Brief amicus curiae of The Retail Litigation Center, Inc. filed.
• Oct 11 2016: Brief amicus curiae of The Business Roundtable filed.
• Oct 11 2016: Brief amicus curiae of New England Legal Foundation filed.
• Nov 15 2016: Order further extending time to file response to petition to and including November 21, 2016.
• Nov 21 2016: Brief of respondents Stephen Morris, et al. in opposition filed.

Just look at those busy amicus filers.  I bet all those employers are telling the Supreme Court that the world would end in fire and death if they couldn't block class actions for wage and hour violations with arbitration agreements that employees have to sign to work.

Ninth Circuit examines arbitration and PAGA claims in Mohamed v. Uber Technologies, Inc.

The Ninth Circuit tackles a complicated set of arbitration issues in Mohamed v. Uber Technologies, Inc. (9th Cir. Sept. 7, 2016).  Among other things, the panel held that the District Court erred when it decided the question of arbitrability, since the question of arbitrability was delegated under the agreement to an arbitrator.  But the panel agreed that the defendants could not compel arbitration of the PAGA claim asserted in the case, severing that claim for further proceedings in before the trial court.  Finally, the panel agreed that a separate defendant not party to the arbitration agreement could not assert a right to enforce the agreement as an agent of Uber.

Allstate tests new method for mooting class claims; falls short in Chen v. Allstate Ins. Co.

Normal people see laws as barriers. Lawyers see laws as an agility course.  After Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th Cir. 2011) and Gomez v. Campbell-Ewald Co., 768 F.3d 871 (9th Cir. 2014), aff’d, 136 S. Ct. 663 (2016), you'd have to forgive ordinary citizens for thinking that the question of whether you can moot a class action by offering up full individual relief to the putative class representative was pretty well settled. But where some see finality, Allstate insurance saw...opportunity.  Specifically, Allstate looked to Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016) for the secret to mooting class representative claims.  In Chen v. Allstate Inc. Co. (9th Cir. Apr. 12, 2016), the Ninth Circuit sent the wily insurance coyote back to the drawing board.

The plaintiffs filed a class action complaint against Allstate, alleging he received unsolicited automated telephone calls to his cellphone, in violation of the Telephone Consumer Protection Act (TCPA). Before a motion for class certification had been made, Allstate made an offer of judgment to the plaintiffs under Rule 68 of the F.R.C.P., depositing $20,000 in full settlement of individual monetary claims in an escrow account “pending entry of a final District Court order or judgment directing the escrow agent to pay the tendered funds to Pacleb, requiring Allstate to stop sending non-emergency telephone calls and short message service messages to Pacleb in the future and dismissing this action as moot.”  Slip op. at 4, 7.  Allstate extended the Rule 68 offer beyond 14 days and then moved for entry of judgment and dismissal.  One plaintiff accepted the offer while the motion was pending.

The district court denied the motion, holding that, under Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th Cir. 2011), the plaintiff's class allegations presented a justiciable controversy and rejected the notion that Pitts was no longer good law.  The district court later certified the issue for interlocutory appeal.

On appeal, Allstate asked the Court to take up the hypothetical issue raised in Campbell-Ewald, which was whether the deposit of the full amount of a plaintiff's individual claim in an account payable to the plaintiff, followed by entry of judgment for the plaintiff in that amount, is sufficient to moot the case.  Allstate argued that the judgment it consented to would offer complete relief, the district should be compelled to enter judgment on those terms, mooting the plaintiff's individual claims, and the remaining class allegations would then be insufficient to preserve a live controversy.  While the Court agreed with the first contention, it rejected the second and third contentions.

The Court began by reviewing the relief that Allstate had consented to in the district court.  Considering both the monetary and injunctive aspects of that relief, the Court found that complete individual relief was offered.  Slip op., at 12-14.

Next, the Court considered whether the decision in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013) vitiated Pitts.  The Court concluded that it did not:

In Gomez, 768 F.3d at 875–76, however, we squarely rejected that very argument. Because Genesis Healthcare concerned collective actions brought under the Fair Labor Standards Act (FLSA) rather than class actions under Federal Rule of Civil Procedure 23, Gomez held Pitts was not clearly irreconcilable with Genesis Healthcare. See id. Although Genesis Healthcare “undermined some of the reasoning employed in Pitts . . . , courts have universally concluded that the Genesis discussion does not apply to class actions.” Id. at 875. “In fact, Genesis itself emphasizes that ‘Rule 23 [class] actions are fundamentally different from collective actions under the FLSA.’” Id. at 875–76 (alteration in original) (quoting Genesis Healthcare, 133 S. Ct. at 1529).

Slip op., at 16.  The Court then held that it was bound by Gomez, which was decided en banc.

Next, the Court went further, holding that even if Pitts were not controlling, the Court would reject an attempt to moot the action prior to a fair opportunity to move for class certification.  The Court noted that placing funds in an escrow account was not the same as the actual receipt of all relief by a plaintiff.  This will likely just bait the next enterprising defendant into actually tendering the funds into an account in the name of the plaintiff to see if the outcome is any different (remember, there are no obstacles, only new paths).

Finally, the Court considered whether to order the district court to enter judgment.  The Court concluded that doing so would be inconsistent with Campbell-Ewald, which affords a putative class representative with a live claim a fair opportunity to show certification is warranted:

Even if that is true, however, Campbell-Ewald clearly suggests it would be inappropriate to enter judgment under these circumstances. As Campbell-Ewald explained, “[w]hile a class lacks independent status until certified, a would-be class representative with a live claim of her own must be accorded a fair opportunity to show that certification is warranted.” Campbell-Ewald, 136 S. Ct. at 672 (emphasis added) (citation omitted) (citing Sosna, 419 U.S. at 399). Accordingly, when a defendant consents to judgment affording complete relief on a named plaintiff’s individual claims before certification, but fails to offer complete relief on the plaintiff’s class claims, a court should not enter judgment on the individual claims, over the plaintiff’s objection, before the plaintiff has had a fair opportunity to move for class certification.

Slip op., at 22-23.  The Court noted the long-recognized principle that class relief is the only feasible relief in many circumstances and concluded that "a district court should decline to enter a judgment affording complete relief on a named plaintiff’s individual claims, over the plaintiff’s objection, before the plaintiff has had a fair opportunity to move for class certification." Slip op., at 26.

The Court affirmed the district court.

If you anticipate that the Supreme Court will take up the first case to test its Genesis Healthcare hypothetical, don't hold your breath. If anything, the Supreme Court would want to see more than one Circuit tackle the issue and see if a significant split develops before wading back into these waters. That doesn't mean that enterprising defendants won't look for another way to moot class claims before certification.

Watching how they make the sausage...Eastern District set to try Taco Bell wage & hour class actions

Class actions don't make it to trial all that often.  But when they get close, things can get pretty ugly.  In Medlock, et al. v. Taco Bell Corp., et al., the United States District Court for the Eastern District of California (Magistrate Stanley A. Boone presiding) issued an Order on nine motions in limine filed by the Plaintiffs. See 2016 WL 430438 (February 4, 2016).

In Medlock, the Court certified three classes, on claims for meal period violations, rest period violations, and improper time record adjustments.  With trial approaching on February 22, 2016, the Plaintiffs filed nine motions in limine to exclude expert testimony (motions 1 and 2), rates of meal and rest period violation (motion 3), challenges to the authenticity of raw time clock data (motion 4), evidence of job performance or discipline (motion 5), evidence related to elements of class certification (motion 6), evidence of explicit instructions to class members to skip meal or rest periods (motion 7), evidence of the likeability of working at Taco Bell (motion 8), and alterations to the testimony of Taco Bell's Rule 30(b)(6) designee.  The court denied all motions other than motion 6, and that motion was limited to ordering that the defendants could not discuss the Rule 23 elements before the jury.

Considering the evidence the Court described as potentially probative, it appears that the jury will get to hear the kitchen sink of Defendants' reasons why meal and rest periods were missed. 

And yes, I am not dead.

Ninth Circuit joins the list of other Circuits rejecting Norris-LaGuardia and NLRA-based challenges to individual arbitration requirements

While I'm sad to report it, I am not particularly surprised at this point. Today, in Johnmohammadi v. Bloomingdale’s, Inc. (9th Cir. June 23, 2014), the Ninth Circuit came rather close to joining other Circuits when it rejected a challenge to the enforcement of an arbitration clause that precludes collective enforcement of claims in any forum, whether judicial or arbitral. While they Court recognized that there was some support for the plaintiff's position, it also found on the facts that the protections called for by the plaintiff were unavailable. A key passage is as follows:

Johnmohammadi contends that filing this class action on behalf of her fellow employees is one of the “other concerted activities” protected by the Norris-LaGuardia Act and the NLRA. There is some judicial support for her position. See, e.g., Eastex, Inc. v. NLRB, 437 U.S. 556, 565–66 (1978); Brady v. Nat’l Football League, 644 F.3d 661, 673 (8th Cir. 2011); Mohave Elec. Coop, Inc. v. NLRB, 206 F.3d 1183, 1189 (D.C. Cir. 2000); Salt River Valley Water Users’ Ass’n v. NLRB, 206 F.2d 325, 328 (9th Cir. 1953). But we need not decide whether Johnmohammadi has correctly interpreted this statutory phrase. To prevail, she must still show that Bloomingdale’s interfered with, restrained, or coerced her in the exercise of her right to file a class action. In our view, Bloomingdale’s did none of these things.

Slip op., at 8.

Romo v. Teva Pharmaceuticals USA, Inc. to be reheard en banc

Romo v. Teva Pharmaceuticals USA, Inc. was described as the end of the world by business interests when the Ninth Circuit held that attorneys could avoid CAFA removal by filing separate cases with fewer than 100 plaintiffs in each case to avoid the mass action provision in CAFA.  The Ninth Circuit is going to give those poor business interests a second bite at the apple; today the Ninth Circuit issued an order that the matter be reheard en banc.