California Supreme Court depublishes Liceaga v. Debt Recovery Solutions LLC, 169 Cal.App.4th 901 (December 29, 2008)

Greatsealcal100In Liceaga v. Debt Recovery Solutions LLC (December 29, 2008) the Court of Apppeal (First Appellate District, Division One) held that the federal Fair Credit Reporting Act completely preemted private rights of action under California's Consumer Credit Reporting Agencies Act.  Today, the Supreme Court directed The Reporter of Decisions not to publish the opinion in the official report.  This depublication is something of a boon consumers.  Until a Court in California holds otherwise, private actions under California’s Consumer Credit Reporting Agencies Act, Civil Code section 1785.1 et seq. (CCRAA), are not preempted by the corresponding federal Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) (FCRA)).  For some reason, the Court's weekly conference summary isn't available online, but the docket confirms the depublication Order of April 29, 2009.  My original post on Liceaga is here.

in brief: Gomez v. Lincare, Inc. provides a satisfying "I told you so"

Greatsealcal100In Gomez v. Lincare (April 28, 2009), the Court of Appeal (Fourth Appellate District, Division Three) reversed portions of various Trial Court Orders that caused the dismissal of a putative class action by employees that provided respiratory services and medical equipment setup to patients in their homes. The opinion, from the habitually conservative Fourth Appellate District, was originally unpublished. I find the decision particularly satisfying because I worked on that case for several years while employed by Plaintiffs' counsel. I may post more on this decision later.

in brief: another employment class arbitration waiver is rejected as unconscionable in Olvera v. El Pollo Loco, Inc.

Greatsealcal100Once again, an employer tried to avoid the potential for class-wide liability to employees by creating an arbitration agreement that included a class action waiver provision. Once again, that effort met with failure. In Olvera v. El Pollo Loco, Inc. (April 27, 2009), the Court of Appeal (Second Appellate District, Division Three) affirmed the Trial Court (Judge Peter Lichtman) Order denying a motion to compel arbitration.

Ninth Circuit gives some solace to class action objectors when it directs trial court to re-consider whether a fee award to objectors' counsel is justified

NinthClass action objectors don’t get much love. Usually the trial court overrules their objections. Usually their attorneys get nothing or some sliver of fees paid out by class counsel to buy the objector’s silence. But in Rodriguez, et al. v. West Publishing Corporation, et al. (April 23, 2009), the Ninth Circuit gives a little bit of that much-needed love to some objectors. But first, the bad news for the objectors: the Court affirmed the trial court’s approval of a class action settlement in the antitrust class action brought by those who purchased BAR/BRI bar review course materials between August 1, 1997 and July 31, 2006.

Now the good news for the objectors: the Court remanded the matter for consideration of several issues, including whether the class counsel fee award should be reduced and whether the objectors’ counsel should receive some compensation for benefits conferred upon the class:

The district court should have recognized that Objectors’ position on the impropriety of incentive agreements had some effect on its decision to deny the request for incentive awards; and it should have considered what effect, if any, the ethics implications of a conflict of interest created by the incentive agreements had on class counsel’s request for an award of attorney’s fees.

Therefore, we affirm approval of the settlement. We reverse and remand the award of attorney’s fees to class counsel for consideration of the effect, if any, of the incentive agreements on entitlement to fees. We also reverse and remand the denial of fees to Objectors’ counsel for a determination of a reasonable amount given their contribution to the denial of the requests for incentive awards.

(Opinion, at pp. 4776-77.) Class counsel bought themselves quite a bit of unnecessary grief by including some provisions in their retainers that promised requests for incentive awards of specific size if various settlement value targets were achieved:

By tying their compensation — in advance — to a sliding scale based on the amount recovered, the incentive agreements disjoined the contingency financial interests of the contracting representatives from the class. As the district court observed, once the threshold cash settlement was met, the agreements created a disincentive to go to trial; going to trial would put their $75,000 at risk in return for only a marginal individual gain even if the verdict were significantly greater than the settlement. The agreements also gave the contracting representatives an interest in a monetary settlement, as distinguished from other remedies, that set them apart from other members of the class. Further, agreements of this sort infect the class action environment with the troubling appearance of shopping plaintiffships. If allowed, ex ante incentive agreements could tempt potential plaintiffs to sell their lawsuits to attorneys who are the highest bidders, and vice-versa. In addition, these agreements implicate California ethics rules that prohibit representation of clients with conflicting interests. See Image Tech. Serv., Inc. v. Eastman Kodak Co., 136 F.3d 1354, 1358 (9th Cir. 1998) (noting that “[s]imultaneous representation of clients with conflicting interests (and without informed written consent) is an automatic ethics violation in California”); Flatt v. Superior Court, 885 P.2d 950, 955 (Cal. 1994).

(Opinion, at pp. 4760-61, footnote omitted.) Not a great outcome when the Ninth Circuit goes out of its way to note various ethics rules that are “implicated” by the conduct of class counsel. Beyond this case (in which counsel actually obtained a commendable $49 million settlement), the result, if any, will be to encourage objectors to try their luck in contesting a settlement in the hope that some modest fee award is issued by the trial court to safeguard against any appellate review.

Time to eat some crow and serve some compliments about the iPhone 3G

Last November I dished out a heaping spoonful of grief, aimed at some class action lawsuits alleging problems with cracks appearing in iPhone 3G casings.  Smugly I said:

My iPhone 3G is still looking sharp, but I don't (1) drop it, (2) drop it, (3) drop it, (4) put it in my pocket and sit on it, (5) drop it, (6) put it in my backpack and crush it with books, (7) drop it, or (8) catch it with my foot when I drop it and try to keep it from hitting the ground, resulting in it flying through the air and slamming into a brick wall and then falling to the ground.  But that's just how I am with gadgets - overly cautious.

(November 14, 2008 Post.)  Unfortunately, a few days ago, while admiring my pristine iPhone 3G (that lives in a holster at all times, that has a screen protector, and that has never been dropped), I noticed a hairline crack spreading out from the volume mute switch.  I went by an Apple store to discuss this issue.  Much to their credit, after inspecting my phone, the employee acknowledged (1) that there was a known problem with cracking in white iPhone 3G's and (2) that I had maintained my phone in exceptionally good condition, so they knew it wasn't cracking from abuse.  The employee also said that my phone was the first black iPhone 3G that they had seen with the same sort of hairline cracks as the white iPhones.  All of this pleasant service was obtained without any "I'm a class action lawyer/blogger" unpleasantness.  I just showed them the phone, they inspected it, and set up an appointment for a warranty exchange tomorrow (after I backup my phone data tonight).  So, if Apple is honoring the warranty for any non-abuse cracking, what's left to recover in the class actions about this issue?

Now let's just hope that the cracking issue in casing materials is resolved when the third generation iPhone is released this summer (allegedly), since I will likely need to have one of those (uncomfortably referring to it as "my precious").

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California Supreme Court grants review in Pineda v. Bank of America, N.A., which construed Labor Code section 203

In Pineda v. Bank of America, N.A., plaintiff Pineda advanced the theory that restitution of "penalties" recoverable under Labor Code section 203 (waiting time penalties) was available under the UCL because the penalty was a vested property interest due upon failure to timely pay wages.  The Court of Appeal rejected that theory and held that restitutionary recovery of waiting time penalties was not available to Pineda.  Today, the Supreme Court granted review.  Pineda is no longer citable.  My earlier post about Pineda is here.  The UCL Practitioner also has a comment about Pineda.

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in brief: Supreme Court holds that insurance is not a "service" under the CLRA

In Fairbanks v. Superior Court, the California Supreme Court held that, for purposes of the CLRA, insurance is not a "service" subject to the Act's provisions. Since version 3.0 software, with cut-and-paste, isn't out for the iPhone yet, you'll have to come back later for the longer post with key quotes and insightful analysis. Or at least analysis.

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Initiative Legal Group LLP is seeking seasoned attorneys to help lead firm expansion

Initiative Legal Group LLP is seeking experienced attorney applicants for its expanding offices.  The job advertisement is as follows:

Initiative Legal Group, LLP – a growing plaintiff’s law firm located on the Westside of Los Angeles – is looking for seasoned litigators with at least 7 years of experience in general civil litigation. Attorneys with backgrounds in wage & hour, consumer protection, ERISA, Qui Tam, employment, mass torts, and high-value personal injury are particularly encouraged to apply. Please fax resume as well as compensation history and requirement to 310.943.1588.

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AB 298, the latest class action "reform" bill in California, died in committee

According to the San Fernando Valley Business Journal, AB 298, CJAC's latest incarnation of its perennial effort to permit interlocutory appeals by defendants when a trial court certifies a class action, died in committe.  (Tom Senzee, Class Action Bill Dead, Reformers Vow to Keep Trying (April 13, 2009) www.sfvbj.com.)  AB 298 was discussed in this earlier post here.

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Tarkington v. California Unemployment Insurance Appeals Board (Albertson’s, Inc.) strictly limits instances where class actions can be decided on the pleadings

Greatsealcal100On April 13, 2009, the Court of Appeal (Second Appellate District, Division One) ordered the publication of its March 12, 2009 opinion in Tarkington v. California Unemployment Insurance Appeals Board (Albertson’s, Inc.). The appeal followed a somewhat complex effort to obtain unemployment insurance benefits by locked-out employees of Albertsons, Inc. If you are curious about such things as writ petitions following adverse administrative ruling and the disdainful lack of honor by defendants that demand procedural compliance only to throw that compliance in the plaintiffs’ face when they satisfy those demands, then I urge you to read the opinion since I won’t be discussing those niceties here.

The very basic procedural summary of the case is as follows:

This is an appeal from the denial of a writ petition, styled as a class action, filed by employees of Albertson’s Inc. (Albertson’s) seeking to reverse an administrative decision denying them unemployment insurance benefits during an 18-week lockout by Albertson’s. On demurrer, the trial court ruled that the employees failed to allege sufficient facts supporting equitable tolling. The trial court also struck the class allegations as overly broad. The employees elected not to amend their petition in order to pursue the present appeal. We reverse and remand for further proceedings.

(Slip op., at p. 2.) The aspect of the opinion of interest in the context of class action litigation is the near-adamant holding that class actions should be decided at the pleading stage only in mass tort and similar actions not well-suited to class treatment. That section is quoted here in full:

“California’s judicial policy [is to allow] potential class action plaintiffs to have their action measured on its merits to determine whether trying their suits as a class action would bestow the requisite benefits upon the litigants and the judicial process to justify class action litigation.” (Beckstead v. Superior Court (1971) 21 Cal.App.3d 780, 783.) “In order to effect this judicial policy, the California Supreme Court has mandated that a candidate complaint for class action consideration, if at all possible, be allowed to survive the pleading stages of litigation.” (Id. citing La Sala v. American Sav. & Loan Assn. (1971) 5 Cal.3d 864, 868-869 [reversing trial court’s sustaining of demurrer against class action suit]; Vasquez v. Superior Court (1971) 4 Cal.3d 800, 816 [same]; Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 716-717 [same]; Jones v. H. F. Ahmanson & Co. (1969) 1 Cal.3d 93, 121 [affirming trial court’s overruling of demurrer attacking class allegations].)

“The wisdom of allowing survival is elementary. Class action litigation is proper whenever it may be determined that it is more beneficial to the litigants and to the judicial process to try a suit in one action rather than in several actions . . . . It is clear that the more intimate the judge becomes with the character of the action, the more intelligently he may make the determination. If the judicial machinery encourages the decision to be made at the pleading stages and the judge decides against class litigation, he divests the court of the power to later alter that decision . . . Therefore, because the sustaining of demurrers without leave to amend represents the earliest possible determination of the propriety of class action litigation, it should be looked upon with disfavor.” (Beckstead, supra, 21 Cal.App.3d at p. 783.) Despite the policy disfavoring the determination of class suitability issues at the pleading stage, several cases, including those cited by Albertson’s, have done exactly that. (See, e.g, Silva v. Block (1996) 49 Cal.App.4th 345, 348 [trial court properly determined class issues on demurrer, since it was apparent from the face of the pleading that issues requiring separate adjudication—both of liability and damages—predominated over common questions]; Clausing v. San Francisco Unified School Dist. (1990) 221 Cal.App.3d 1224, 1234 [in this mass-tort action, “it would be a waste of time and judicial resources to require a full evidentiary hearing [on class suitability] when the matter can properly be disposed of by demurrer”; Brown v. Regents of University of California (1984) 151 Cal.App.3d 982, 990-991 [determination of class status by demurrer proper in mass-tort action].)

In Prince v. CLS Transportation, Inc. (2004) 118 Cal.App.4th 1320, after an exhaustive review of the relevant case law, this division determined that the apparent conflict was in fact not a conflict at all: “[I]t is only in mass tort actions (or other actions equally unsuited to class action treatment) that class suitability can and should be determined at the pleading stage. In other cases, particularly those involving wage and hour claims, class suitability should not be determined by demurrer.” (Id. at p. 1325.) We reasoned that in mass tort actions individual questions of liability and damages frequently predominate over common questions and resolving class suitability at the pleading stage is therefore proper. (Id. at pp. 1327-1328.) In contrast, we explained, “wage and hour disputes (and others in the same class) routinely proceed as class actions” because they usually involve “’a single set of facts applicable to all members’,” and “’one question of law common to all class members.’” (Ibid.) As long as a plaintiff “alleges institutional practices . . . that affected all of the members of the potential class in the same manner, and it appears from the complaint that all liability issues can be determined on a class-wide basis,” we held that “no more is required” at the pleading stage. (Id. at p. 1329.)

In our view, the petition in this case is more like a wage and hour case than a mass-tort action. It involves a single set of facts (i.e., those allegations pertaining to Albertson’s selective lockout and illegal hiring of locked out employees), one question of law common to all class members (i.e., whether employees who could not work because of Albertson’s lockout fall under the ambit of section 1262), and one institutional practice (i.e., the denial of benefits to locked out employees by the EDD and CUIAB Board). While there may be individual questions of the amount of benefits, if any, to which each claimant is entitled, we do not see these questions as predominant over the common factual allegations and legal questions cited above. (Accord Vasquez v. Superior Court (1971) 4 Cal.3d 800, 809 [“the fact that each member of the class must prove his separate claim to a portion of any recovery by the class is only one factor to be considered in determining whether a class action is proper”]; Reyes v. Board of Supervisors (1987) 196 Cal.App.3d 1263, 1272, 1279 [rejecting county’s argument that denial of governmental benefits was not suitable for class treatment because “each recipient’s right to recover depends on the facts peculiar to his/her case” and noting that “it is especially appropriate to proceed with a class action to provide effective relief when, as here, a large number of [class members] have been allegedly, improperly denied governmental benefits on the basis of an invalid administrative practice”].)

In line with our decision in Prince, we conclude that it was premature for the trial court to make determinations pertaining to class suitability on demurrer. We reverse the court’s order granting Albertson’s motion to strike and the court’s accompanying legal ruling that the class definition was “too broad.” The putative class definition alleged in the petition, which we cite here, is sufficient to move forward past the pleading stage:

“Petitioners . . . bring this petition for writ of administrative mandamus on behalf of the entire class of individuals who were employed by Albertson’s at any time during the period October 11, 2003 through February 26, 2004, and who filed timely claims with the EDD for unemployment insurance benefits for all or some of this period, and were denied such benefits on the basis of the trade dispute exception, California Unemployment Insurance Code § 1262 . . . .”

(Slip op., at pp. 17-20.) This holding is likely to see immediate use in every class action challenged by way of demurrer or motion to strike, and it may deter these procedural wastes of time.  At least I hope so.  Nothing ruins a perfectly good day like receiving the obligatory demurrer to class allegations.

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