Review by Supreme Court denied in Bufil v. Dollar Financial Group, Inc.

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Yesterday, the California Supreme Court denied review in Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193.  Other commentators noted this denial as significant because Bufil contains language that appears to conflict with Brinker Restaurant Corp., et al. v. Hohnbaum, et al. (2008) ___ Cal.App.4th ___.  (See, e.g., Wage Law.)  While I find the Brinker connection of great interest, I find this denial most significant because it let stand a rather significant reduction in the impact of Alvarez v. May Dept. Stores Co. (2006) 143 Cal.App.4th 1223.  My initial post on Bufil discusses the Alvarez connection in painful detail.

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DLSE will immediately enforce Brinker decision, despite risk

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Greatsealcal100Multiple sources are now reporting that the DLSE has already updated its materials to require hearing officers to follow Brinker Restaurant Corporation, et al. v. Hohnbaum, et al (July 22, 2008).  Reporting sources include California Labor & Employment Law Blog, What's New In Employment Law, and Wage Law.  Adding to the general coverage, Storm's California Employment Law blog has a brief but insightful obsevation about the fact that the DLSE's rush to implement pro-employer policies may ultimately harm them. 

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After reviewing the play, Sprint's "home run" declared a ground-rule double

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On June 12, 2008, Sprint avoided liability when a California jury ruled in its favor in a trial involving the contentious issue of early termination fees (ETFs) in wireless service contracts.  In later commentary, this blog characterized that result as a "home run" for Sprint.  It turns out that such a declaration was premature.  Late Monday, issues of law decided by the Court did not go in Sprint's favor.  Sprint was ordered to refund almost $20 million to consumers that paid ETFs.  (David Kravetz, Sprint Ordered to Pay Millions in Early Termination Fee Flap (July 29, 2008) blog.wired.com.)

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Tillery makes case that class action suits are essential

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Stephen Tillery is using the recent settlement of a nationwide class action settlement against Sears Roebuck and Co. to make the case that class actions are an essential tool for consumer protection.  (Stanford Schmidt, Lawyer makes case for class action suits (July 28, 2008) www.thetelegraph.com.)  The article is a quick read, but it offers specific examples of where governmental enforcement of consumer protection standards has failed, necessitating class actions as a private remedy for such failures.

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Even more on Brinker Restaurant Corporation, et al. v. Hohnbaum, et al.

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Greatsealcal100One measure of a decision's significance is the amount of commentary it generates. By that standard, Brinker Restaurant Corporation, et al. v. Hohnbaum, et al (July 22, 2008) is moving rapidly towards the rarefied air set aside for events like the passage of Proposition 64.  The Complex Litigator has already run several posts on this decision, noting its issuance and summarizing coverage here and here.  To help readers stay on top of the coverage and the dialog, I'm adding to the coverage collection:

I will continue to follow the commentary about Brinker, collecting new articles in further posts as appropriate.  Stay tuned.

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And now for a change of pace...

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KpandalogoI've worked at Arias Ozzello & Gignac LLP for over three and a half years.  But I have decided to explore new opportunities, and so my time there is over.  I will be working at a rapidly expanding plaintiffs' firm in Los Angeles, Khorrami Pollard & Abir, LLP.  I am looking forward to this new opportunity; I will be one of the attorneys charged with day-to-day management of the class action practice group.  I will continue to handle wage & hour and consumer class actions.  In addition, I will endeavor to develop a supportive appellate practice that can compliment the work of other practice groups.

I will continue to develop The Complex Litigator.  As an aside, while considering the opportunity at KP&A, I was pleased to hear how supportive they were of my blogging efforts.  As of July 28, 2008, I can be reached at:

H. Scott Leviant
Khorrami Pollard & Abir, LLP
444 S. Flower Street, 33rd Floor
Los Angeles, California 90071
Tel:  (213) 596-6000
Fax:  (213) 596-6010

My e-mail address is listed on the contact information page, where it is mildly obfuscated with a small script.

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Brinker Restaurant Corporation, et al. v. Hohnbaum, et al. covered in Daily Journal

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Greatsealcal100Brinker Restaurant Corporation, et al. v. Hohnbaum, et al. (July 22, 2008) keeps on making news.  Yesterday, I attempted to collect as much coverage as I could in one post.  However, Brinker isn't remotely done making news.  In today's edition of the Daily Journal (July 25, 2008), D. Gregory Valenza asks, "Meal and Break Class Actions: On the 'Brink' of Extinction?"  (Subscription required.)  Mr. Valenza's article follows closely on the heels of a July 23, 2008 article by Daily Journal Staff Writer Pat Broderick, which briefly summarized the core of the Brinker decision.

Mr. Valenza's analysis is substantially more thorough than the July 23, 2008 article, but it is, essentially, a further summary of the Court's primary holdings.  While the article discusses several sources of law at issue in the Brinker decision, Mr. Valenza doesn't delve into the competing policies that are suggested but left unresolved by that opinion.  In fact, no commentator has yet addressed the full set of economic incentives at play within and without the Brinker world view of wage & hour class actions.  The Brinker opinion opens the door to this analysis but fails to step through.  Instead, the Court picks one of many economic incentives at work to justify its conclusion:  "It would also create perverse incentives, encouraging employees to violate company meal break policy in order to receive extra compensation under California wage and hour laws."  (Slip op., at p. 44, quoting Brown v. Federal Express Corp. (C.D.Cal. 2008) ___ F.R.D. ___ [2008 WL 906517 at *6].)  In selectively discussing such incentives, the Court overlooks employer economic incentives to cheat the system and employee economic incentives to adhere to a meal break policy where job loss is the consequence for failure to do so.  These incentives are likely far stronger, due to the amounts at issue, than one employee's desire to obtain an extra hour of pay.

If policy considerations are going to drive the judicial determination of the meal and rest break obligations, the Brinker decision must be viewed with some measure of skepticism until the full picture of incentives is faily presented and fully analyzed.

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More on Brinker Restaurant Corporation, et al. v. Hohnbaum, et al.

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Greatsealcal100Brinker Restaurant Corporation, et al. v. Hohnbaum, et al. (July 22, 2008) dropped a bit of a bombshell in the busy field of wage & hour class actions, at least judging by the early and numerous reactions.  The Complex Litigator noted the issuance of the opinion shortly after it was posted to the California Courts website.  Other blogs and media outlets followed with commentary and analysis, some of it extensive.  Defense-oriented firms proclaimed it a much-needed victory, while plaintiff-side commentators lamented the irrationality of the decision and the need for speedy review by the California Supreme Court.  To keep up with the dialog, a round-up of coverage, in no particular order, is in order:

  • Wage Law has two posts on the decision.  The first post hits the highlights of the decision.  The second post comments on the Governor's statement in support of the decision, noting that the fact of the Governor's comment, in and of itself, demonstrates that Supreme Court review is needed to "settle an important question of law."
  • Storm's California Employment Law blog offers its own collection of comments from the blawgosphere and internet.
  • California Workforce Resource Blog also has two posts on the Brinker.  The first post is an extensive discussion of the decision, offered from the vantage point of a firm that represents employers.  The second post provides a collection of comments about the decision.
  • What's New In Employment Law offers a decidedly partisan cheer for the Brinker decision, but notes that it is premature to celebrate.
  • The UCL Practitioner, one of the many counsel in Brinker, judiciously limits her comments to a refutation of quotes attributed to her about the decision in the Recorder.  Importantly, Ms. Kralowec takes exception with the attributed statement that the decision "creates an appellate split that likely will ensure Supreme Court review."  Ms. Kralowec notes that she would never be so presumptuous as to declare what the Supreme Court will, in the exercise of its discretion, decide to do about Brinker.
  • California Labor And Employment Law Blog also offers two posts on Brinker.  The first post describes the "favorable" outcome in Brinker.  The second mentions the Governor's pro-Brinker statement.
  • In its customarily business-like fashion, Class Action Defense Blog just explains Brinker in a detailed post.
  • The Recorder article to which UCL Practitioner reacted can be found at Law.com.
  • Market Watch declares that the Brinker decision "reverberates" through workplaces.
  • The Sacramento Bee describes the decision as one backing "flexible" rules on meal breaks.
  • And, finally, Brinker thinks that the case will just proceed back to the trial court with no further interruptions.  Uh huh.

You can now mark your calendars.  The Petition for Review should be on file anywhere between August 22nd and the end of August.

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The little-used defendant class is recognized in Farwell v. Sunset Mesa Property Owners Association, Inc.

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Greatsealcal100 The Court of Appeal (Second District, Division Eight) penned a brief gem of a comment that will be of interest to class action practitioners (and nobody else on the planet).  In Farwell v. Sunset Mesa Property Owners Association, Inc. (June 18, 2008) ___ Cal.App.4th ___, the Court, probably unnecessarily, went to the trouble of summarizing the long history of defendant class actions (actions in which a class of defendants comprise the class, as opposed to plaintiff class actions, where a class of plaintiffs comprise the class):

“We note here that the adequacy of the representation of a defendant class is not a novel problem and has engaged the attention of the courts and text writers. (See cases and materials collected in 2 Conte & Newberg, Newberg on Class Actions (4th ed. 2002) § 4:60, pp. 375-384.) It is by no means an insurmountable task to identify persons who can serve as representatives of a defendant class, although the dynamics of such a class are different from that of a plaintiff class. (Id., § 4.46, pp. 336-339.)  Indeed, defendant classes have a long history, dating back to 1853.  (Id., § 4.46, p. 338, citing Smith v. Swormstedt (1853) 57 U.S. 288.) California has also long recognized defendant classes. (E.g., Wheelock v. First Presb. Church (1897) 119 Cal. 477, 481-482; Rosicrucian Fellow. v. Rosicrucian Etc. Ch. (1952) 39 Cal.2d 121, 139-140.)

(Slip op., at p. 6.)  As it turns out, the Court of Appeal decided that the Order in question was not appealable.  Thus, the wind-up about defendant class actions is purely of academic interest.

The only problem with this opinion is its title.  Whenever I see that a home owners' association is involved in litigation, I immediately write off the opinion as resulting from a mundane but intractable dispute between a nutball resident (likely with too many cats) and group of self-anointed potentates that enjoy too much their tiny universe of almost boundless power.  And so I learn my lesson.  Occasionally, even home owners' association litigation results in something interesting.  And if it wasn't for the more tolerant eyes of the UCL Practitioner, I would have remained blissfully ignorant of this opinion.

[Via UCL Practitioner]

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Enforcing Mediated Settlement Agreements Post-Simmons v. Ghaderi

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Greatsealcal100What happens when Evidence Code section 1115, et seq. (the "mediation privilege"), collides with an allegation that an enforceable, oral settlement agreement was reached during a mediation?  The mediation privilege steamrolls the allegation.  This is true even where a party stipulates to events at the mediation, submits evidence of events at the mediation, and then, at trial invokes the mediation privilege for the first time.

In Simmons v. Ghaderi (July 21, 2008), the Supreme Court held "that the Court of Appeal improperly relied on the doctrine of estoppel to create a judicial exception to the comprehensive statutory scheme of mediation confidentiality and that the evidence relating to the mediation proceedings should not have been admitted at trial."  After reciting the policy behind the mediation privilege, and the basic rule of inadmissibility, the Supreme Court set forth the very particular requirements for admissibility of mediation statements:

“Sections 1122 and 1124 specifically lay out exceptions for the admission of evidence produced during mediation. As relevant here, section 1122, subdivision (a)(1) provides that “[a] communication or a writing . . . that is made or prepared for the purpose of, or in the course of, or pursuant to, a mediation or a mediation consultation, is not made inadmissible, or protected from disclosure, by provisions of this chapter if . . . the following condition[] is satisfied: [¶] (1) All persons who conduct or otherwise participate in the mediation expressly agree in writing, or orally in accordance with Section 1118, to disclosure of the communication, document, or writing.”

(Slip op., at p. 8.)  When entering into a mediation of a complex matter or class action, take note of sections 1122 and 1124.  If a settlement is reached, generate a memorandum of understaning on the spot and include a provision allowing disclosure of the document, signed by all parties.

The Supreme Court then spent another 8 or so pages of opinion discussing all the reasons why the mediation privilege is nearly impenetrable, what the Legislature intended, and so on.  A certain momentum (coupled with repetition) was building at this point in the discussion.  Then the Supreme Court discussed the highly limited scenarios where a policy consideration would overcome the privilege (such as where a child's due process right to confront a witness would be impeded).  After all of that, the Supreme Court then said:

“Despite the clear legislative intent, the Court of Appeal majority nonetheless estopped the defendant from invoking mediation confidentiality because she herself used and did not object to plaintiffs’ use of evidence describing the events of mediation.

(Slip op., at p. 16.)  At this point, it doesn't look too good for you if you are the Court of Appeal majority.  Thereafter, the Supreme Court concludes that implied waiver of the mediation privilege does not exist.  (Slip op., at pp. 22-23.)

Again, don't leave a mediation where a settlement was reached without at least memorializing the major terms in writing, with a waiver of the privilge to the full extent necessary to effectuate and enforce the settlement.

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