Ninth Circuit issues its first opinion on criteria that appellate courts should consider when deciding whether to accept an appeal of a remand order under CAFA

Under the Class Action Fairness Act of 2005 (“CAFA”), a party may seek leave to appeal a remand order to the court of appeals, which has discretion whether to accept the appeal. 28 U.S.C. § 1453(c)(1).  While other Circuits have discussed the criteria that an appellate court should consider when deciding whether it is appropriate to hear such a discretionary appeal, the Ninth Circuit, until today, had not set forth its own set of such criteria.  In Coleman v. Estes Express Lines (9th Cir. Nov. 30, 2010), the Ninth Circuit set forth criteria to guide a reviewing court.

Coleman sued both Estes West and Estes Express Lines for wage and hour violations.  After its acquisition, Estes West was an internal regional division of Estes Express Lines.  After removal, Coleman moved to remand under the local controversy exception to CAFA jurisdiction.  Estes Express Lines argued that, as a Virginia-based company from which any relief would be obtained, the local controversy exception did not apply.  The district court granted the motion to remand, noting that courts are divided as to whether to look beyond the complaint to determine whether the local controversy exception applies.

The Ninth Circuit used this petition as an opportunity to adopt the First Circuit's list of criteria to use in evaluating applications for leave to appeal under section 1453(c)(1):

In Dental Surgeons, the First Circuit held that a key factor in determining whether to accept an appeal is “the presence of an important CAFA-related question” in the case. Coll. of Dental Surgeons, 585 F.3d at 38. Because discretion to hear appeals exists in part to develop a body of appellate law interpreting CAFA, “[t]he presence of a non-CAFA issue (even an important one) is generally not thought to be entitled to the same weight.” Id. If the CAFA-related question is unsettled, immediate appeal is more likely to be appropriate, particularly when the question “appears to be either incorrectly decided [by the court below] or at least fairly debatable.” Id.

The First Circuit also enumerated several case-specific factors, including the importance of the CAFA-related question to the case at hand and the likelihood that the question will “evade effective review if left for consideration only after final judgment.” Id. The appellate court should also consider whether the record is sufficiently developed and the order sufficiently final to permit “intelligent review.” Id. Finally, the First Circuit observed that the court should conduct the familiar inquiry into the balance of the harms. Id. at 39.

Slip op., at 19025-26.  Applied to the case before it, the Court concluded that leave to appeal was appropriate because it would advance CAFA jursiprudence:

Applying these criteria, we grant Estes Express’ application for leave to appeal. Although the local controversy exception to CAFA jurisdiction is “narrow,” it is nonetheless an enumerated exception to a federal court’s CAFA removal jurisdiction. It is intended to “identify . . . a controversy that uniquely affects a particular locality” and to ensure that it is decided by a state rather than a federal court. See Evans v. Walter Indus., Inc., 449 F.3d 1159, 1163-64 (11th Cir. 2006) (internal quotation marks and citation omitted). The question whether the district court must rely only on the pleadings or should look to extrinsic evidence will often determine whether a case will be remanded under the local controversy exception. This case thus raises an important issue of CAFA law. As the district court recognized, this is an unsettled question in this Circuit. We do not say that district court’s decision “appears to be incorrectly decided,” but the array of courts on both sides of the question indicates that it is at least “fairly debatable” and that appellate review would be useful.

Slip op., at 19026.  The Court concluded that the issue would escape appellate review if not taken now and that no harm other than delay would be suffered by the plaintiff.  It follows that we can expect guidance from the Ninth Circuit in the next year or so on this issue.

Supreme Court holds that a single statue of limitation governs Labor Code section 203 claims

California Labor Code § 203 provides that, if an employer willfully fails to timely pay final wages, “the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days.”  Lab. Code § 203(a).  Usually, a one-year statute of limitation governs actions to recover penalties (Code Civ. Proc. § 340(a)), but section 203 states that an employee may sue for “these penalties at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise.” Lab. Code § 203(b).  In Pineda v. Bank of America, N.A. (November 18, 2010), the California Supreme Court answered two questions related to section 203 claims:  first, whether a different statute of limitation applies when an employee seeks to recover only section 203 penalties (in this case, final wages were paid late but before the filing of the action), as opposed to when an employee seeks both final wages and penalties; and, second, whether section 203 penalties recoverable as restitution under California's Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200 et seq.).  A unanimous Supreme Court answered both questions in the negative, holding that (1) the underlying wage claim statute of limitation is tied to the 203 cause of action, and (2) since employees have no ownership interest in section 203 penalties they cannot use the UCL to recover those penalties as a form of restitution.

The Court had little difficulty concluding that a single, longer statute of limitation applies to section 203 claims:

Plaintiff urges us to conclude the Legislature intended for a single statute of limitations — the one set forth in section 203(b) — to govern the filing of any and all suits for section 203 penalties, regardless of whether a claim for unpaid final wages accompanies the claim for penalties. He contends this is the only plausible construction of section 203, and his contention has merit.  Absent explicit statutory language to the contrary, common sense would suggest that, where the Legislature has set forth a statute of limitations in one part of a statute, the prescribed limitations period governs the filing of actions provided for in another part of the same statute. In providing when “[s]uit may be filed for [section 203] penalties” (§ 203(b)), the Legislature could have employed language unambiguously limiting the application of section 203(b)‟s limitations period to those suits that seek both unpaid wages and penalties. For example, it could have provided that “[s]uit for unpaid final wages and these penalties may be filed at any time before . . . .” It did not.

Slip op., at 5-6.  The Court then spent several pages dismissing the defendant's strained construction of the Legislature's grammatical choices, concluding by remarking on the important public policy served by the prompt payment of final wages.

As for the UCL, the Court was equally quick to reach its conclusion that 203 penalties cannot be recovered by means of restitution under the UCL:

By contrast, permitting recovery of section 203 penalties via the UCL would not “restore the status quo by returning to the plaintiff funds in which he or she has an ownership interest.” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1149.) Section 203 is not designed to compensate employees for work performed. Instead, it is intended to encourage employers to pay final wages on time, and to punish employers who fail to do so.  In other words, it is the employers' action (or inaction) that gives rise to section 203 penalties. The vested interest in unpaid wages, on the other hand, arises out of the employees' action, i.e., their labor. Until awarded by a relevant body, employees have no comparable vested interest in section 203 penalties. We thus hold section 203 penalties cannot be recovered as restitution under the UCL.

Slip op.,  at 14-15.

Compared to many others from the Supreme Court, this was a short opinion.  The direct language suggests that the Court found little over which to disagree as the opinion was prepared.  Congratulations to my colleague, Mr. Greg Karasik, on obtaining this partial reversal.

Supreme Court activity for the week of November 15, 2010

The California Supreme Court held its (usually) weekly conference on November 17, 2010.  Notable results include:

• On a Petition for Review, review was granted in  in Kirby v. Immoos Fire Protection, Inc. (July 27, 2010), covered previously here.  The issue under review is limited as follows:  "Does Labor Code section 218.5 govern attorney's fees awarded on a cause of action alleging violation of the statutorily mandated wage payment for missed meal and rest periods (Lab. Code, [sec.] 226.7), or is an attorney's fee award governed by Labor Code section 1194?"
• On a Request for Depublication, depublication was denied in Nelson v. Pearson Ford Co. (July 15, 2010).  Prior comments from this blog are here.

BREAKING NEWS: Pineda v. Bank of America, N.A. decision to be released November 18, 2010

Earlier today, the California Supreme Court posted a notice of forthcoming filings, indicating that  Pineda v. Bank of America, N.A. will be filed on November 18, 2010, at approximately 10:00 a.m.

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.  Pineda also argued that the correct statute of limitation was that for suits to recover wages (3 years), not the statute for recovery of penalties (generally 1 year).  The Court of Appeal rejected both theories.  My earlier post about Pineda is here.

Bright v. 99¢ Only Stores holds that PAGA penalties are available for certain wage order violations

Employer:  Give it to me straight, Doc, is it serious?

Defense Counsel:  You'll need to sit down for this one.

Employer:  Okay.  Wait, there aren't any chairs here.

Defense Counsel:  I know!  Get it?  No chairs?  Now don't be like that....

I'm delaying the reporting just to build the suspense.  You have been wondering whether violations of Wage Order No. 7, subdivision 14 are violations of Labor Code § 1198, and here I am writing my first play.  But your wait is over.  In Bright v. 99¢ ONLY STORES, the Court of Appeal (Second Appellate District, Division Five) held that (1) violations of Wage Order No. 7, subdivision 14 are violations of section 1198; and (2) civil penalties under section 2699, subdivision (f) are available despite the fact that Commission wage order No. 7-2001 has its own penalty provision.

This action arises from a claim for civil penalties under the Private Attorneys General Act of 2004 ("PAGA") for violation of the suitable seating order of the Commission.  Commission Wage Order No. 7, subdivision 14, provides, in part: Wage Order No. 7, subdivision 14 provides: “(A) All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats. [¶] (B) When employees are not engaged in the active duties of their employment and the nature of the work requires standing, an adequate number of suitable seats shall be placed in reasonable proximity to the work area and employees shall be permitted to use such seats when it does not interfere with the performance of their duties.”  Slip op., at 2, n. 2.  This requirement is sometimes known as the suitable seating requirement.  The trial court sustained the defendant's demurrer on the grounds that (1) failure to provide sufficient seating is not a condition “prohibited” by Wage Order No. 7, subdivision 14, and (2) even if it were, civil penalties are not recoverable under section 2699, subdivision (f), because Commission Wage Order No. 7-2001 contains its own civil penalty provision.

The Court of Appeal concluded that the issues raised in the appeal were matters of first impression.  On an issue of first impression, the Court began with the statute at issue:

We begin by examining the statutory and administrative scheme, starting with section 1198, which provides: “The maximum hours of work and the standard conditions of labor fixed by the commission shall be the maximum hours of work and the standard conditions of labor for employees. The employment of any employee for longer hours than those fixed by the order or under conditions of labor prohibited by the order is unlawful.”

Slip op., at 5.  The Court then held that, under the plain meaning of section 1198, suitable seating is a "standard condition of labor fixed by the commission."  Slip op., at 6.  The Court rejected defendant's argument that because the seating language was not expressed in prohibitory language, it was merely a suggestion.

Employer:  What about chairs that give off electric shocks at random intervals so nobody wants to sit in them?

Defense Counsel:  No.  Wait.  Yes, if that's what you want to do, but only after you augment your retainer.  Significantly.

Turning to the second question, the Court of Appeal quickly concluded that, because the suitable seating requirement did not have its own penalty provision, it is governed by section 2699, subdivision (f) of PAGA.  The Court noted that the penalty set forth in subdivision 20 is expressly described as a cumulative remedy, rendering it nonexclusive.

Employer:  I had a nightmare.  It was horrible.

Defense Counsel:  Tell  me about it.

Employer:  It was dark.  There was a sound.  It was like nothing I have ever heard before.  I think it was the sound of drool from a million plaintiff's attorneys splattering on the floor.

Defense Counsel:  It was no dream!

Employer:  Aaaaahhh!!!!..........

California Supreme Court activity for the week of November 8, 2010

The California Supreme Court held its (usually) weekly conference on November 10, 2010. Notable results include:

• On a Petition for Review, review was denied in Walnut Producers v. Diamond Foods (August 16, 2010), discussed briefly on this blog here.  [Arbitration agreement with class arbitration ban not unconscionable]
• On a Petition for Review, with an associated request to depublish, review and depublication were both denied in Gutierrez v. Commerce Club (August 23, 2010), discussed on this blog here.  [Reversal of Order sustaining demurrer to class allegations]

Windows Phone 7 powered phones now available to U.S. consumers

I have next to me one of the first crop of Windows Phone 7 handsets available to United States consumers (clarification: Windows Phone 7 launched internationally before it launched in the U.S.  2nd clarification: you could have purchased a European Windows Phone 7 handset from a supplier of unlocked handsets and had a phone prior to November 8th.)  The handset is the Samsung Focus.

First, a few comments about the Windows Phone 7 OS.  It is premium operating system; that much is beyond dispute.  Microsoft deserves credit for that.  It makes iOS look a bit stale by comparison.  There are elegant choices around every corner as you move through the phone's menus.  In fact, there are too many for me to even attempt to describe them, so I won't do what others have done.  Here is a detailed review by Paul Thurrott, who was provided early access to the development phones while writing a book about the new smartphone OS.

Almost everything I have encountered is very polished.  The glaring failure in my view is that the browser on Widows Phone 7 doesn't render this blog quite right.  Some buggy rounding error or css margin/padding handling screws up the alignment of the banner.  Shameful.

Will this phone prove useful to legal professionals?  I think so.  There are a few features not yet in the phone, like cut & paste, but that should be remedied with a pair of updates expected in the next few months.  The application store is sparse compared to the iTunes App store, but the top tier developers are, almost without exception, preparing their applications for Windows Phone 7.  And the secret sauce that most phone users would never know is that the development tools for Windows Phone 7 are reported to be far better than what Apple currently offers.  When you add in the fact that WP7's development platform tools are similar to those available for desktop Windows programming, it is much more efficient to port existing applications onto WP7.  If Microsoft continues to support its developers, the applications should follow.

As for the Samsung Focus itself, I will say this for it.  It has an amazing screen in all its bright, 4" AMOLED goodness.  Compared to my prior, personal-use phone, the iPhone 3GS, it blows it away.  The current iPhone 4 screen, with its slightly higher pixel density, look extremely sharp, but it is small.  The screen was the deciding factor in my decision.

On the other hand, the other materials used in the Samsung handset are just shy of pathetic.  The phone is almost entirely plastic.  It is beautiful and thin lying on a desk, but when you inspect the details, it doesn't look like it was made with materials that are appropriate for a full-powered, modern smartphone.  I wanted to test drive this operating system on AT&T.  I had two choices for phones at launch, the Samsung Focus and the HTC Surround.  The HTC surround has a ridiculous sliding speaker mechanism that makes the phone pointlessly thick.  If HTC had made that phone without the speaker, I probably would have chosen it over the Focus.  At least HTC used brushed metal detailing around the screen.  How can these handset manufacturers watch Apple drive itself into the smartphone world, now in the 4th position after just 4 years, and not respond to Apple's design dominance with better handsets?  I know that there are enough good designers in the world to allow at least one to work at each handset manufacturer.  And Apple can't have a monopoly on things like aluminum - the Earth's crust is chock full of it.  Unless I used it all drinking Diet Coke.

I will almost certainly replace the Focus next year with a handset befitting the OS on it - something more like the LG Optimus or HTC Mozart that were released in Europe.   I'm sucking up that extra cost so that I can report on my experiences with the newest OS on the block.  Until then, I will concentrate on the great screen.

Adobe rolls out new cloud services of interest to legal professionals

Two new Acrobat.com cloud services of interest to legal professionals, Adobe SendNow and Adobe CreatePDF, are now live.

E-mail systems still suffer from the lowest common denominator syndrome.  Your ability to send files is restricted by the lowest cap on attachment sizes in the e-mail transmission chain.  Systems for drop delivery of large files have been the solution for several years.  Adobe is offering a large file transmission service, but Adobe is differentiating itself from the crowd with additional transmission and monitoring features.  SendNow allows users to: 

• Send large files from one computer to one or many recipients.
• View files that they've sent in the past, and see when and to whom they were sent.
• Keep an eye out for files that have been sent to you.

As with SendNow, CreatePDF isn't the first of its kind online (in fact, it isn't the first such service from Adobe), but Adobe hopes to interest users in this latest cloud-based service with some fairly powerful features.  Adobe CreatePDF will (in addition to the standard conversion of Office documents, images and other supported files into an Adobe PDF from a web browser) enable users to: 

• Combine documents into a single PDF file.
• For users of Microsoft Windows, users will be able to install a special printer driver that will allow creation of a PDF file online from any application that can print.
• Within Adobe Reader X, a new Share pane provides a connection to the online Adobe CreatePDF service, making it easy to create a document that others will be able to view consistently.

CreatePDF looks like good stuff for the small firm or solo practitioner, and SendNow looks useful for any size firm.  I will give SendNow a test drive so that I don't have to create private websites for large file exchanges or find some other kludge to get the job done (like abuse Acrobat.com's file sharing feature as though it were a file drop service).

AT&T Mobility v. Concepcion set for oral argument next week

and the Los Angeles times notes that "Consumers' right to file class actions is in danger."  David Lazarus, Consumers' right to file class actions is in danger (November 5, 2010) www.latimes.com.

California ballot proposition results at 10:24 p.m.

As of 10:24 p.m., California's statewide ballot proposition results are as follows: 

Proposition	Yes %	No %
20 Redistricting of Congressional Districts	64.9	35.1
21 State Park Funding. Vehicle License Surcharge	39.5	60.5
22 Prohibit State From Taking Some Local Funds	63.9	36.1
23 Suspend Air Pollution Control Law (AB 32)	41.9	58.1
24 Repeal Allowance of Lower Business Tax Liability	39.4	60.6
25 Simple Majority Vote to Pass Budget	53.7	46.3
26 2/3 Vote for Some State/Local Fees	55.6	44.4
27 Eliminate State Redistricting Commission	39.1	60.9
19 Legalize Marijuana in CA, Regulate and Tax	43.9	56.1

Still doomed.