If you thought that Court under-funding in California was unconstitutional last year.... "Whoa, Nelly!"

According to press reports, the legislature's court budget cuts of $150 million for operations and $310 million in court construction funding have increased after Governor Jerry Brown used line item veto power to slash another $22 million from California trial court operations and security.  Underfunding at this level is unconstitutional.  The judiciary is a co-equal, constitutional branch of government.  It cannot function correctly at this funding level.  The Legislature and Governor do not suffer equivalent operational impairment from the budget cuts they impose elsewhere.  Only the judicial branch must suplicate, hat in hand, for enough money to do the people's work.

The past three years account for a 30% general funding cut for California's Courts.  I don't think their obligations decreased by 30%.  If anything, a difficult economy creates more litigation events.

I wrote about this previously here and copied a Daily Journal article on the subject here.

Sullivan v. Oracle Corporation addresses how California law applies to nonresident employees working both in and outside California

Today, the California Supreme Court issued an Opinion following its acceptance of questions about the construction of California law from the United States Court of Appeals for the Ninth Circuit.  In Sullivan v. Oracle Corporation (June 30, 2011), the Court addressed (1) whether the Labor Code's overtime provisions apply to plaintiffs' claims for compensation for work performed in this state [with the ancillary question of whether the same claims can serve as predicates for claims under California's unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.)], and (2) whether the plaintiffs' claims for overtime compensation under the federal Fair Labor Standards Act of 1938 (FLSA) (29 U.S.C. § 201 et seq.; see id., § 207(a)) for work performed in other states can serve as predicates for UCL claims.

The Court responded "yes" to the first question group, and "no" to the second.

On the first issue, the Court said:  "The California Labor Code does apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week. (See Sullivan III, supra, 557 F.3d 979, 983.)"  (Slip op., at 18.)

On the related UCL question, the Court said: "Business and Professions Code section 17200 does apply to the overtime work described in question one. (See Sullivan III, supra, 557 F.3d 979, 983.)"  Slip op., at 19.)

The full answer to the last issues was:  "Business and Professions Code section 17200 does not apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs in the circumstances of this case based solely on the employer's failure to comply with the overtime provisions of the FLSA."  (Slip op., at 23.)

The Opinion was issued by a unanimous Court.

Update on 2011-06-30 17:42 by The Complex Litigator

The post title was corrected after the initial posting.

The Complex Litigator is now on Alltop

The Complex Litigator is now listed on Alltop, in the legal news section.  Alltop is the magazine newsrack for the Internet.  Here's how Alltop describes its purpose:

The purpose of Alltop is to help you answer the question, “What’s happening?” in “all the topics” that interest you. You may wonder how Alltop is different from a search engine. A search engine is good to answer a question like, “How many people live in China?” However, it has a much harder time answering the question, “What’s happening in China?” That’s the kind of question that we answer.

Alltop is a unique way to view current events or issues of current interest in any particular field.  I recommend skimming the legal news section from time to time, to spot trends if nothing else.

So...cool.

Breaking News: Walmart Stores, Inc. v. Dukes decided by Supreme Court; Reversed

I'll preface this brief post by noting that I have not had a chance to read the entire opinion, but the opnion in Walmart Stores, Inc. v. Dukes (June 20, 2011) was released this morning by the United States Supreme Court.  The Court reversed the Ninth Circuit and the District Court, finding that the matter was not suitable for class certification.  The core majority was authored by Justice SCALIA. ROBERTS, C. J., and KENNEDY, THOMAS, and ALITO, JJ., joined in that opinion, and GINSBURG, BREYER, SOTOMAYOR, and KAGAN, JJ., joined as to Parts I and III.  Justice GINSBURG authored an opinion concurring in part and dissenting in part.  BREYER, SOTOMAYOR, and KAGAN joined in Justice GINSBURG'S opinion.

Some key aspects of the holding are:

• Proof of commonality necessarily overlaps with respondents’ merits contention that Wal-Mart engages in a pattern or practice of discrimination. The crux of a Title VII inquiry is “the reason for a particular employment decision,” Cooper v. Federal Reserve Bank of Richmond, 467 U. S. 867, 876, and respondents wish to sue for millions of employment decisions at once. Without some glue holding together the alleged reasons for those decisions, it will be impossible to say that examination of all the class members’ claims will produce a common answer to the crucial discrimination question.
• General Telephone Co. of Southwest v. Falcon, 457 U. S. 147, describes the proper approach to commonality. On the facts of this case, the conceptual gap between an individual’s discrimination claim and “the existence of a class of persons who have suffered the same injury,” id., at 157–158, must be bridged by “[s]ignificant proof that an employer operated under a general policy of discrimination,” id., at 159, n. 15. Such proof was absent here.
• Claims for monetary relief may not be certified under Rule 23(b)(2), at least where the monetary relief is not incidental to the requested injunctive or declaratory relief.
• The mere “predominance” of a proper (b)(2) injunctive claim does nothing to justify eliminating Rule 23(b)(3)’s procedural protections, and creates incentives for class representatives to place at risk potentially valid monetary relief claims.

Justice Ginsburg is concerned that the majority imported too much of the "predominance" analysis into the Rule 23(a) requirement that common questions of law or fact must exist:

The Court’s emphasis on differences between class members mimics the Rule 23(b)(3) inquiry into whether common questions “predominate” over individual issues. And by asking whether the individual differences “impede” common adjudication, ante, at 10 (internal quotation marks omitted), the Court duplicates 23(b)(3)’s question whether “a class action is superior” to other modes of adjudication.

Slip op., Ginsburg concurring and dissenting, at 9.  Otherwise, Ginsburg agrees that the class should not have been certified under Rule 23(b)(2) but would  have saved the issue of whether certification was appropriate under Rule 23(b)(3) for the District Court on remand.

The opinion looks as though it will prove to have the greatest impact on cases of this type.  While the Rule 23(a) construction seems to be inconsistent with well-settled standards, the balance of the opinion was predictable, given the massive size of the class.

Court of Appeal finds no privacy interest in residential address

I'm playing catch-up again, which explains the date on this post vis-a-vis the date on the opinion I want to mention.  In Folgelstrom v. Lamps Plus, Inc. (pub. ord. May 20, 2011, mod. June 7, 2011), the Court of Appeal (Second Appellate District, Division Five) reviewed a judgment entered following a successful demurrer to a complaint principally challenging the collection of customer zip codes during credit card transactions.  The super easy part of the decision was the portion where the Court said, "Based on the holding of Pineda v. Williams-Sonoma Stores, Inc. (2011) 51 Cal.4th 524 (Pineda), we reverse the judgment and order the trial court to overrule the demurrer to plaintiff's cause of action alleging a violation of the SongBeverly Credit Card Act of 1971 (Credit Card Act) (Civ. Code, § 1747 et seq.)."  Easy.

That's not the interesting part.  That's the part where the plaintiff lucked out.  The interesting part comes when the Court discusses the causes of action that didn't pass muster: invasion of common law and constitutional rights to privacy, and violation of Business and Professions Code section 17200, the Unfair Competition Law (UCL).  Discussing the privacy interest in a residential address, the Court said:

Plaintiff offers no explanation of why we should find a privacy interest in plaintiff's address based on the Supreme Court's conclusion that performing a bodily function under the watchful eye of strangers implicates a privacy interest.

Slip op., at 4-5, referencing Hill v. National Collegiate Athletic Assn., 7 Cal. 4th 1 (1994).  Just another arrow in the quiver when arguing about whether a plaintiff is entitled to discovery of contact information for putative class members.

Upcoming seminar for young attorneys

On June 25, 2011, I will be speaking at a seminar entitled "Basic Training For Young Lawyers," presented by Attorney Boot Camp, an educational provider created to "1) help young attorneys bridge the gap from a legal education to practical legal skills and 2) to provide all attorneys with specialized training seminars on a wide variety of subjects."

The semindar details are as follows:

• Date: June 25, 2011
• Time: 8:30 a.m. to 5 p.m.
• Location: Southwestern Law School, 3050 Wilshire Blvd., Los Angeles, CA 90010
• MCLE: 6 hours, including 1 hour of Ethics

For more on their seminars, visit Attorney Boot Camp.

Ninth Circuit discusses individual privacy interests in FOIA context

While not directly applicable to class member identity discovery, the Ninth Circuit recently provided some guidance about individual privacy interests and how they are weighed against a countervailing set of interests to keep them confidential.  Prudential Locations LLC v. U.S. Department of Housing and Urban Development (9th Cir. June 9, 2011) involved a Freedom of Information Act request for identification of various informants that advised the U.S. Department of Housing and Urban Development (“HUD”) about their suspicions that Prudential Locations LLC was violating the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601-2617, which was passed, in part, to “eliminat[e] . . . kickbacks or referral fees that tend to increase unnecessarily the costs of certain settlement services.” 12 U.S.C. § 2601(b)(2).

The Court described the process of review as one in which the Court must first identify a non-trivial privacy interest.  If such an interest is identified, the Court must then “balance the privacy interest protected by the exemption[ ] against the public interest in government openness that would be served by disclosure.”  Finally, the Court said that it must evaluate the likelihood that a privacy invastion would occur.  The Court concluded that HUD had failed to provide the trial court with sufficient information to rule on the request and remanded to give HUD an opportunity to do so.

While not precisely analagous to the test applied when discovery of class member identity is sought, this opinion at least suggests the type of analysis that must occur then balancing an asserted privacy interest in identity and contact information with the strong right to discover that information.

All credit cards issued for consumer credit purposes are protected under Civil Code section 1747.08, even if sometimes used for business purposes

Pineda v. Williams-Sonoma Stores, Inc., 51 Cal. 4th 524 (2011) added some clarity to the types of personal identification information protected from collection by merchants.  As it turns out, section 1747.08 of the Song-Beverly Credit Card Act of 1971 (SBCCA) (Civ. Code, § 1747 et seq.) even precludes collection of zipcodes.  But Pineda didn't answer every unresolved question related to SBCCA-based claims.  In Archer v. United Rentals, Inc. (May 19, 2011), the Court of Appeal considered several issues surrounding the SBCCA, described as follows:

This appeal presents these significant issues: (1) Have plaintiffs established standing to pursue a UCL claim by demonstrating they "suffered injury in fact and . . . lost money or property as a result of the unfair competition" (Bus. & Prof. Code, § 17204); (2) does the privacy protection of Civil Code section 1747.08 cover the use of a business credit card; (3) does such protection extend to a cardholder who uses a personal credit card regardless of whether such use is "primarily" or "occasionally" for business purposes; and (4) is class certification foreclosed by the unreasonableness of ascertaining class membership?

Slip op., at 2.  The Court of Appeal answered "no" to the first two questions, but reversed the trial court on the third when the Court concluded that a personal credit card was protected under the SBCCA, regardless of how often it was used for business purposes.  Having ruled as it did on the third issue, the Court then remanded for reconsideration of the ascertainability question, since the trial court's orginal ruling turned on the need to evaluate the frequency with which a credit card was used for business purposes.

The Court relied upon Kwikset Corp. v. Superior Court, 51 Cal. 4th 310 (2011) when it concluded that violation of SBCCA, alone, was insufficient to establish the requisite injury under the UCL.

Today, June 13, 2011, the Court issued a modification to its Order.  The modification adds a paragraph on the issue of standing to appeal:

Defendants contend plaintiffs lack standing to appeal the order denying class certification because they are not aggrieved by the trial court’s rulings in that they each were awarded $250 and “they should have moved for the substitution of new class representatives who do, in fact, have standing to appeal.” We disagree because plaintiffs were denied certification of their class claims. Issues regarding proper class representatives are for the trial court to address on remand. (Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th 1305, 1351, fn. 35.)

June 13, 2011 slip op., at 1.

Class-based equitable tolling does not extend period for filing under Government Claims Act

In an interesting twist to class action equitable tolling, the Court of Appeal (Fourth Appellate District, Division One), in California Restaurant Management Systems v. The City of San Diego (June 1, 2011), examined "whether the 'equitable tolling' principles outlined in American Pipe & Construction Co. v. Utah (1974) 414 U.S. 538 (American Pipe) and Crown, Cork & Seal Co., Inc. v. Parker (1983) 462 U.S. 345 (Crown Cork) apply to extend the period within which a claim must be filed under the Government Claims Act (Gov. Code, § 810 et seq.)."  Slip op., at 2.  The issue arose after it was learned that San Diego had overcharged several classes of customers using the City's wastewater system.  A residential customer timely filed a governmental claim seeking a refund on behalf of residential customers who were overcharged and, after the claim was denied, filed a proposed class action lawsuit on behalf of that class of customers.  After that action was settled and dismissed, California Restaurant Management Systems (CRMS) filed its own governmental claim and then filed a putative class action on behalf of restaurant owners.  The City moved for summary judgment, contending CRMS's governmental claim was not timely filed, mandating dismissal of CRMS's proposed class action lawsuit. CRMS opposed the summary judgment motion, arguing the pendency of the first action tolled all limitations periods, including the period for filing a governmental claim. The trial court disagreed, and entered judgment in favor of City.

While the Court supplied an extensive background discussion of Government Claims Act requirements and equitable tolling, the ultimate basis for its decision was simply stated: "We conclude a prior class action does not equitably toll or satisfy the governmental claims requirement for claimants not within the class description contained in a timely-filed governmental claim on which the prior class action was predicated."  Slip op., at 18.  The first action described the claiming class as "residential" customers.  This eliminated the possibility that commercial customers could claim to have placed the City on notice of their claims.  The Court declined to extend the class claim filing exception recognized in City of San Jose v. Superior Court, 12 Cal. 3d 447 (1974).