The Trial Practice Tips Weblog: another blog worth bookmarking

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It has been a while since this site's Blogs of Note section saw an update.  That is a reflection of the demands of work and life, and not a comment on the state of the legal blogosphere, which is exploding with new content.  However, one long-established blog (heading into its sixth year) couldn't escape the recognition that it was due forever:  The Trial Practice Tips Weblog.

Class action litigation is, ultimately, about bringing a case to trial  (though it happens rarely).  To get to that mythical trial, a great deal of preparation is required.  The Trial Practice Tips Weblog offers advice that applies to all phases of civil litigation and encourages lawyers to prepare smarter and better.  Congratulations to The Trial Practice Tips Weblog for its longevity and quality.

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Judges in Los Angeles county will likely lose over $40,000 in county benefits after taxpayer challenge

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Greatsealcal100Salaries for judges in California are "prescribed" by the legislature via constitutional mandate. In Sturgeon v. County of Los Angeles (October 10, 2008) the Court of Appeal (Fourth Appellate District, Division One) all but declared unlawful a substantial benefits package provided by Los Angeles county to its superior court judges. The Court of Appeal reversed a summary judgment granted to Los Angeles county in a taxpayer suit challenging the payments by Los Angeles county. The Court summarized the conclusion:

“Section 19, article VI of the California Constitution requires that the Legislature "prescribe compensation for judges of courts of record." The duty to prescribe judicial compensation is not delegable. Thus the practice of the County of Los Angeles (the county) of providing Los Angeles County superior court judges with employment benefits, in addition to the compensation prescribed by the Legislature, is not permissible. Accordingly, we must reverse an order granting summary judgment in favor of the county in an action brought by a taxpayer who challenged the validity of the benefits the county provides to its superior court judges.

(Slip op., at pp. 1-2.) The benefits in question are not insubstantial:

“In sum, in addition to the salary, benefits and retirement prescribed by the Legislature, in fiscal year 2007 each superior court judge in Los Angeles was eligible to receive $46,436 in benefits from the county. This amount represented approximately 27 percent of their prescribed salary and cost the county approximately $21 million in fiscal 2007.

(Slip op., at p. 3.)  On December 23, 2008, the California Supreme Court declined to review the decision.  Based on the analysis in the opinion, it seems unlikely that the result will be anything but a ruling that Los Angeles must terminate the benefits package.

While the outcome may be constitutionally correct, the result is not ideal.  It is already difficult enough to entice qualified candidates to leave behind lucrative private practice for the often thankless work of the judiciary.  A loss of over $45,000 in benefits won't help.  As maxims go, "you get what you pay for" is one of the habitually accurate ones.  How many judges on the fence will now hit the eject button for the greener pastures of private mediation and arbitration?

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Private actions under the California’s Consumer Credit Reporting Agencies Act are preempted by the Fair Credit Reporting Act

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Greatsealcal100There has been a fair bit of speculation that the weak economy would generate a substantial amount of consumer class action activity in areas of finance, including lending, consumer credit and debt collection.  In California, the door to one such area was slammed shut, absent action by the California Supreme Court or the United States Supreme Court.  In 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. 

“Plaintiff and appellant Rebecca Liceaga, apparently the victim of identity theft, filed a complaint against Debt Recovery Solutions, LLC, a collection agency, for damages that she claims were caused when it furnished to a consumer credit reporting agency information about her which it knew or should have known was inaccurate. The complaint alleged a violation of California’s Consumer Credit Reporting Agencies Act, Civil Code section 1785.1 et seq. (CCRAA). The trial court granted defendant’s motion for judgment upon the pleadings upon the ground that any private right of action provided by the CCRAA is preempted by the corresponding federal Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) (FCRA)).

In this appeal we are called upon to determine whether the FCRA preempts private rights of action as to “furnishers” of wrongful information and whether, if so, Congress has specifically excepted California actions from preemption. We conclude that private actions under the CCRAA are preempted, without exception, by FCRA.

(Slip op., at p. 1.)  The opinion that follows is a fairly standard analysis under the Supremacy Clause.  It is a loss for consumers, since economic downturns and debt collection misconduct have been known to loiter in each other's company.  Actions by California are not preempted, but it is a metaphysical certainty that cash-strapped California won't be keeping up with the prosecution of CCRAA actions at a level consistent with the likely rate of abuse.

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Comcast, Time Warner sued for anti-competitive prohibition on set-top box purchases

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The cell phone companies like providing subsidized handsets because the long-term contracts are worth more to them than the subsidy they provide on the hanset.  Cable companies use their oligopoly position to provide hardware through an entirely different model.  They "rent" consumers the hardware customers need for digital and enhanced services (movies on demand, information services, etc.).  Customers can't buy the set-top box on the open market and still receive the full set of services from their cable provider.  Those fees add up when a customer has multiple televisions on which enhanced services are desired.


As it turns out, consumers are challenging this scheme as an illegal tying arrangement, alleging Sherman Act violations, among other things.  In August 2008, class action lawsuits were filed in, among other states, California and Kansas, challenging Time Warner's practice of preventing customers from purchasing their set-top boxes.  You can read some background on those suits here.

Now Comcast is in the crosshairs.  Ars Technica reports, via Multichannel News, that Comcast was sued in late November for similar anti-competitive practices.  (Nate Anderson, Comcast sued for not selling set-top boxes, Cable-CARDs (December 26, 2008) arstechnica.com.)

Let me just add, on a personal note, that I can't think of a more deserving industry.  Earlier tonight I spent some time unplugging (to reset) the pathetic set-top box that I received from Time Warner after they took my beautiful MOXI boxes from me (while I sobbed uncontrollably).  As I noted in a June 4, 2008 post, Time Warner acquired Adelphia in my part of Southern California.  Time Warner then set about pushing their junky boxes with their junky menu systems on anyone that had Adelphia equipment.  The conspiracy theorist in me thinks that they intentionally fried my two boxes, which both "failed" within a month of each other.  Of course, it could have been bad luck.  But since I can't go out and buy the control box I want, I'll never know.

Suits like these broke the AT&T phone monopoly (back when you couldn't buy a home telephone of your choosing).  If these suits have any effect on the cable industry and its anti-competitive behaviors, I'll be a big fan.
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Marin v. Costco Wholesale Corporation explains how to calculate overtime on certain bonuses

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Greatsealcal100One might be tempted to conclude that all of the novel issues surrounding overtime pay would long ago have been exhausted.  But being that this is a law blog, and seeing as how this blog emphasizes developments in California law, you already know that this is a post about a new issue in overtime litigation.  In Marin v. Costco Wholesale Corporation (December 23, 2008), the Court of Appeal (First Appellate District, Division One), in a case of first impression, reviewed the lawfulness of Costco's formula for calculating overtime pay on semi-annual bonuses paid to hourly employees.

First, some clarifying information is in order.  The bonuses at issue in Marin were "nondiscretionary" bonuses that were paid out based upon the number of hours that certain long-term employees worked during the six months period before the semi-annual bonus dates.  (Slip op., at pp. 1-2.)  This type of bonus is distinguished from discretionary bonuses (such as year-end bonuses issued only when the employer declares a bonus) because nondiscretionary bonuses are, essentially, deferred compensation tied in some way to production (which, in this case, is simply the hours worked).  The Court explained generally how Costco's plan functions:

“Costco pays a formulaic bonus, based on paid hours, to long-term hourly employees. To be eligible for the bonus, paid in April and October, these employees must: (1) have been paid a specified number of hours for continuous service—8,000 hours (approximately four years) for those hired before March 15, 2004, and 9,200 hours (approximately 4.6 years) for those hired after that date; (2) generally be at the top of their pay scale; and (3) have been employed by defendant on April 1 for the April bonus and October 1 for the October bonus. The maximum semi-annual base bonus amount is $2,000 for those with less than 10 years of service, $2,500 for those with 10 to 14 years of service, $3,000 for those with 15 to 19 years of service, and $3,500 for those with 20 or more years of service.

To qualify for the maximum base bonus, the employee must have been paid for at least 1,000 hours in the six-month period preceding April 1 and October 1. Bonuses are prorated for those paid for less than 1,000 hours; the formula for the base bonus is thus: hours paid up to 1,000 ÷ 1,000 × maximum bonus amount.

(Slip op., at pp. 1-2, footnote omitted.)  The Court then explained how the parties calculated overtime owed to certain employees:

“Defendant calculated the overtime owed on the bonus by dividing the employee’s maximum base bonus by the minimum number of paid hours required to achieve that maximum bonus (1,000) to determine a regular hourly bonus rate, and then by multiplying the number of overtime hours worked during the bonus period by one-half of that regular bonus rate. Plaintiffs contend that defendant was required to calculate the regular bonus rate by dividing the base bonus the employee earned by the number of straight time hours worked during the bonus period, and then multiply the number of overtime hours by 1.5 times that regular bonus rate.

For example, under defendant’s formula, an employee who achieves a maximum base bonus of $2,500 by virtue of being paid for 840 straight time hours, 100 overtime hours, and 100 vacation hours during the bonus period is entitled to $125 of overtime pay on the bonus, calculated as follows: $2,500 (maximum base bonus) ÷ 1,000 (paid hours required for maximum base bonus) = $2.50 (regular hourly bonus rate) × 100 (overtime hours) × 0.5 = $125. Under plaintiffs’ formula, the same employee would receive $477 overtime on the bonus: $2,500 (base bonus earned) ÷ 840 (straight time hours worked) = $2.98 (regular bonus rate) × 100 (overtime hours) × 1.5 = $447.

(Slip op., at pp. 3-4.)

Turning to the opinion's analysis, the Court examined Skyline Homes, Inc v. Department of Industrial Relations (1985) 165 Cal.App.3d 239, Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557 and the "Division of Labor Standards Enforcement’s (DLSE) 2002 Enforcement Policies and Interpretations Manual (Manual) distinguishing 'flat sum' bonuses (Manual § 49.2.4.2) from bonuses 'based on a percentage of production or some formula other than a flat amount' (Manual § 49.2.4)" in its search for a framework in which to evaluate Costco's plan. The Court concluded that no source of controlling law specified a formula for calculating overtime on the nondiscretionary bonuses issued by Costco:

“In sum, no California court decision, statute, or regulation governs bonus overtime, the DLSE Manual sections on the subject do not have the force of law, and the DLSE advice letters on the subject are not on point. Consequently, defendant’s bonus plan cannot be deemed to violate California law. While this conclusion is dispositive of plaintiffs’ state law claims, we proceed to explain why in practical effect defendant’s bonus plan comports with the rationales for the pertinent sections of the Manual.

(Slip op., at p. 13.)  The primary reason that Costco's bonus plan caused any difficulty is that it operates as a hybrid of a "production" bonus and a "flat amount" bonus when employees work more than 1,000 hours in the six-month period used to calculate the bonus: "Defendant’s bonus does not fit neatly into either of the categories the DLSE has posited: bonuses for a “flat sum, such as $300 for continuing to the end of the season, or $5.00 for each day worked” (Manual § 49.2.4.2) and bonuses earned each payday “based on a percentage of production or some formula other than a flat amount” (Manual § 49.2.4)." (Slip op., at p. 13.).

After examining the public policies surrounding overtime premiums, and the various incentives created by overtime premiums, the Court concluded that Costco's plan did not run afoul of those concerns in a way that required a court to declare Costco's plan unlawful:  "To recapitulate, defendant’s bonus is in the nature of a production bonus until the 1,000 paid hour threshold is reached, and while the bonus has some qualities of a flat sum bonus on hours paid thereafter, it does not encourage imposition of overtime during the post-1,000 hour period in a way that would support the use of the DLSE’s flat sum bonus formula even as to overtime worked during that period." (Slip op., at p. 17.)

Of note, the Court of Appeal concluded that section 49.2.4.2 of the DLSE's Manual governing "flat sum" bonuses is a void regulation under Tidewater, because it was not  "'a standard of general application interpreting the law the DLSE enforce[s],' and 'not merely a restatement of prior agency decisions or advice letters.'" (Slip op., at p. 12.)

Of further note, the appellate counsel on both sides of this appeal were highly qualified, so I assume that they provided the Court of Appeal with high-quality policy arguments in a case of first impression where even suggestive authority is sparse.

Other blogs noting the decision include What's New in Employment Law.

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Petition for Review denied in Johnson v. Glaxosmithkline, Inc.

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Greatsealcal100This blog briefly reported on a new opinion in Johnson v. Glaxosmithkline, Inc. (September 19, 2008). You can read that post here. A Petition for Rehearing was filed on October 7, 2008. It was denied the day it was filed. On October 14, 2008, the Court of Appeal modified its opinion, without changing the judgment. In a later post, I guessed (not a stretch) that a Petition for Review was coming. The expected Petition was filed with the Supreme Court.  Today, the Supreme Court denied the Petition as part of its weekly conference.

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Cohn v. Corinthian Colleges, Inc., et al. suggests developing statutory construction trend in Fourth Appellate District, Division Three

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Greatsealcal100Statistically speaking, it is difficult to ascribe trends to any particular Court of Appeal on the basis of just a few opinions on a given topic. That said, one Appellate District in particular appears, at minimum, to be skeptical of the validity of class actions predicted upon statutory violations. In Cohn v. Corinthian Colleges, Inc. (pub. order December 19, 2008), the Court of Appeal (Fourth Appellate District, Division Three) affirmed a summary judgment granted in favor of various defendants, including Angels Baseball LP, in a case in which a Mother's Day tote bag giveaway to mothers was alleged to have violated the Unruh Civil Rights Act (Civ. Code, §§ 51, 52.).

In describing the nature of the appeal, the Court left little doubt about the nature of the opinion to follow:

“As we will explain, the Unruh Act protects against intentional discrimination that is unreasonable, arbitrary, or invidious. This important piece of legislation provides a safeguard against the many real harms that so often accompany discrimination. For this reason, it is imperative we not denigrate its power and efficacy by applying it to manufactured injuries such as those alleged by the plaintiff in this case.

(Slip op., at p. 2.)  The Court later suggest that the outcome was appropriate in light of the plaintiff's prior litigation activities:

“Cohn’s complaint gathers further suspicion because Cohn, his friends, and his counsel have been involved in numerous of what have been characterized as “‘shake down’” lawsuits. (E.g., Angelucci v. Century Supper Club (2007) 41 Cal.4th 160, 178.) They proclaim themselves equal rights activists, yet repeatedly attempted to glean money from the Angels through the threat of suit. The Unruh Act is a valuable tool for protecting our citizens and remedying true injuries. We are not convinced the Angels’ tote bag giveaway was in anyway unreasonable, arbitrary, or invidious discrimination.

(Slip op., at p. 6.)  However, if the Court was satisfied that the claim was so lacking in merit that summary judgment was the appropriate means of disposition, the need for the discussion about Cohn's motiviation seems unclear.  In fact, it weakens the Court's analysis by suggesting that the hinted inequity is a necessary supporting factor in the decision.  Presumably, the outcome would have been the same for a first-time litigant with no known associations with activists.

This decision could be viewed in isolation, as a fact-driven outcome.  However, there are some legitimate indications that this Division's construction of statutory rights favors a strict construction that tends to limit claims.  For example, in Starbucks v. Superior Court (Lords) (December 10, 2008) the District reversed an Order certifying a class action and denying summary judgment, holding that plaintiff job applicants lacked standing to sue and obtain penalties under a statutory scheme precluding inquiry into certain drug convictions.  (Full disclosure - I assisted with some of the appellate briefing in that matter)   There was no language in the statutory scheme suggesting that the legislature sought to limit standing only to convicted job applicants, as opposed to all job applicants.  Nevertheless, the Court limited the parties entitled to enforce a statutory mandate by the legislature.

And in McCoy v. Superior Court (Kimco) (2007) 157 Cal.App.4th 225 (review denied), the Third Division disregarded a discussion in Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094 when it held that Labor Code § 203 waiting time penalties are governed by a one-year statute of limitation.

At least circumstantially, it appears that the Third Division is not inclined to view statutory protection schemes as strict liability standards entitled to uniform enforcement.

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The Complex Litigator passes 20,000 visit mark

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While there are plenty of legal blogs that can boast orders of magnitude higher traffic levels per day (like Overlawyered, that just took out one of my kneecaps), The Complex Litigator is proud and thankful for the readers that pushed this blog passed the (arbitrary) 20,000 visits benchmark during this blog's first year of operation.  Here's hoping for many more benchmarks to come.


Warmest regards,

H. Scott Leviant
Founder and Editor
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Management changes coming to Complex Litigation Court in Los Angeles County

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The batons will pass at Central Civil West (CCW), the courthouse designated to for Los Angeles County's complex litigation panel.  Judge Peter Lichtman will assume Presiding/Supervising status from Juddge Carolyn Kuhl.  Judge Carl West will assume Assistant Presiding/Supervising status from Judge Victoria Chaney.

As a result of this change, Judge West will review all new class actions filed in Los Angeles County to determine whether each such action will be designated as "complex" and assigned to a judicial officer at CCW.  Judge Lichtman will handle a similar function with respect to non-class cases provisionally designated as "complex."  In addition, Judge Lichtman will review Petitions for Coordination.

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BREAKING NEWS: In 5-4 ruling, Supreme Court rejects federal preemption argument in “light cigarette” litigation, suggesting that preemption may not fly in pending Wyeth matter

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Seal-USSC100 In a 5-4 decision, the United States Supreme Court held that neither the Federal Cigarette Labeling and Advertising Act's pre-emption provision nor the Federal Trade Commission's actions in this field pre-empt plaintiffs’ state-law fraud claim related to “light cigarette” advertisements. The plurality, comparing and contrasting with Cipollone v. Liggett Group, Inc., 505 U. S. 504 (1992), determined that the alleged duty not to deceive was unrelated to the Labeling Act’s regulation of “smoking and health” information. (Slip op., at pp. 5-20.)

The mass media has extensive coverage of this decision. For general media coverage of this ruling, see, for example, The New York Times, FoxNews and Forbes.

One interesting theme, missed by much of the general media coverage, is whether this opinion offers any guidance as to how the Supreme Court will determine the preemption issue in Wyeth. If nothing else, this decision suggests that the current Supreme Court does not have a specific preemption agenda that has yet revealed itself. The law and fact-specific analysis of the Labeling Act makes any comparison with Wyeth somewhat challenging.

Stevens, J., delivered the opinion of the Court, in which Kennedy, Souter, Ginsburg, and Breyer, JJ., joined. Thomas, J., filed a dissenting opinion, in which Roberts, C. J., and Scalia and Alito, JJ., joined.

You can review the opinion here:

For those using browsers without flash, the direct link to the file is here.

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