More on Morgan, et al. v. AT&T Wireless Services, Inc.

As promised shortly after Morgan, et al. v. AT&T Wireless Services, Inc. (September 23, 2009) was published, here is a longer post on the first substantial application of In re Tobacco II Cases, 46 Cal. 4th 298 (2009) by a California Court of Appeal.  Before commenting on the analysis in Morgan, a brief summary of the facts of the case are in order.  The plaintiffs alleged that they were ripped off when they purchased the premium Sony Ericsson T68i cell phone for use on the AT&T network but weren't told that AT&T was abandoning the 1900 MHz GSM spectrum in favor of the 850 MHz spectrum, rendering the phones useless.  Then AT&T sent the T68i owners an inferior replacement that they called an "upgrade."  After three successive rounds of pleadings, the trial court held that plaintiffs could not state any actionable claims.  In case you were wondering, I just summarized 20 pages of opinion for you.

 First, the Court examined the UCL cause of action by recapitulating the elements of a valid UCL cause of action:

[D]espite the changes to the standing requirements, the Proposition 64 amendments to the UCL "'left entirely unchanged the substantive rules governing business and competitive conduct. Nothing a business might lawfully do before Proposition 64 is unlawful now, and nothing earlier forbidden is now permitted.'" (In re Tobacco II Cases (2009) 46 Cal.4th 298, 314 (Tobacco II).) Thus, pre-Proposition 64 caselaw that describes the kinds of conduct outlawed under the UCL is applicable to post-Proposition 64 cases such as the present case. The only difference is that, after Proposition 64, plaintiffs (but not absent class members in a class action) must establish that they meet the Proposition 64 standing requirements. (Tobacco II, supra, 46 Cal.4th at p. 320.)

Slip op., at 20.  Then the Court cut through the extraneous allegations of the Third Amended Complaint to determine whether any prong of the UCL was sufficiently alleged:

The definitions of unlawful and fraudulent business practices are straightforward and well established. An unlawful business practice under the UCL is "'"'anything that can properly be called a business practice and that at the same time is forbidden by law.'"'" (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180 (Cel-Tech).) A fraudulent business practice is one in which "'"'members of the public are likely to be "deceived."'"'" (Tobacco II, supra, 46 Cal.4th at p. 312.)

Slip op., at 21-22.  The Court also noted the unsettled definition of "unfair" in cases not involving commercial competitors, but it did not need to resolve the dispute, concluding that the other two prongs were sufficient to resolve the appeal.  Returning to the fraudulent prong of the UCL, after underscoring that "fraudulent" under the UCL is distinct from common law fraud, the Court provided more detail about the type of conduct that is "fraudulent" under the UCL:

As noted above, a fraudulent business practice is one that is likely to deceive members of the public. (Tobacco II, supra, 46 Cal.4th at p. 312.) A UCL claim based on the fraudulent prong can be based on representations that deceive because they are untrue, but "'"also those which may be accurate on some level, but will nonetheless tend to mislead or deceive. . . . A perfectly true statement couched in such a manner that it is likely to mislead or deceive the consumer, such as by failure to disclose other relevant information, is actionable under"' the UCL." (McKell, supra, 142 Cal.App.4th at p. 1471.) For example, in Pastoria v. Nationwide Ins., supra, 112 Cal.App.4th 1490, the plaintiffs alleged: (1) they purchased insurance policies based upon the defendant insurance company's description of the premiums, lack of deductibles, and other policy benefits; (2) less than two months later the insurer notified them of significant changes to their policies, including material increases in premiums and substantial deductibles; and (3) the insurer knew of the impending changes to the policies at the time plaintiffs purchased them, but did not communicate that to the plaintiffs. (Id. at p. 1493.) We held that those allegations were sufficient to state a claim for relief under the fraudulent business practices prong of the UCL. (Id. at p. 1499.)

Slip op., at 23-24.  The Court then identified the allegation from Morgan that were comparable:

In the present case, plaintiffs alleged that (1) AT&T marketed and sold expensive T68i phones (which could be operated only on the AT&T GSM/GPRS network) in conjunction with multi-year service plans, and touted the improvements it was making to its GSM/GPRS network; (2) the improvements AT&T made to the network significantly degraded the portion of the network on which the T68i phones operated; and (3) AT&T knew at the time it sold the T68i phones that the improvements it was going make would soon render the T68i phones essentially useless.

Slip op., at 24.  Having concluded that a UCL fraudulent prong violation was alleged, the Court then determined that the plaintiffs had standing to bring the claim, citing Tobacco II:

In Tobacco II, supra, 46 Cal.4th 298, the Supreme Court held that this standing requirement applies only to the named plaintiffs in a class action (id. at pp. 320-321), and that it imposes an actual reliance requirement on named plaintiffs seeking relief under the fraudulent prong of the UCL (id. at p. 326). The court went on to explain what a plaintiff must plead and prove: “while a plaintiff must allege that the defendant's misrepresentations were an immediate cause of the injury-causing conduct, the plaintiff is not required to allege that those misrepresentations were the sole or even the decisive cause of the injury-producing conduct. Furthermore, where, as here, a plaintiff alleges exposure to a long-term advertising campaign, the plaintiff is not required to plead with an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements.” (Id. at p. 328.)

Slip op., at 27.  The Court found that the allegations of an extensive advertising campaign by AT&T, coupled with the plaintiffs' online research and similar representations made to them in AT&T stores sufficiently alleged the necessary reliance element.

The Court did not reach the same conclusion when it turned to the cause of action under the FAL (False Advertising Law), which was based on the claim that the T68i replacement phone was an "upgrade":

AT&T argues that plaintiffs do not have standing to bring this claim. AT&T is correct. Proposition 64 made identical changes to the standing requirements to bring an action under the FAL as it made to the requirements under the UCL. (Californians for Disability Rights v. Mervyn’s, LLC, supra, 39 Cal.4th at p. 229, fn. 2.) A person bringing an action under the FAL must establish that he or she “has suffered injury in fact and has lost money or property as a result of a violation of [the FAL].” (Bus. & Prof. Code, § 17535.) Even if it could be said that the return of a phone that plaintiffs alleged was “useless” constituted an injury in fact, plaintiffs alleged that each of them declined to return their T68i phone. Therefore, they cannot truthfully allege that they lost money or property as a result of AT&T's offer. Accordingly, the trial court did not err by sustaining the demurrer to the FAL cause of action.

Slip op., at 29.

Regarding the CLRA claim, the Court of Appeal clearly resolved a question with respect to CLRA notices for corrective action.  The question is whether the notice must be sent before the initial complaint is filed to permit an amendment seeking damages, or, alternatively, whether it can issue after the initial complaint is filed so long as at least 30 days pass before an amendment seeking damages is filed.  This question gained some traction when a federal district court ruled that the notice must be sent before the initial complaint is filed.  The Court of Appeal disagreed:

The federal district court cases upon which AT&T relies for its assertion that failure to comply with the notice requirement requires dismissal with prejudice fail to properly take into account the purpose of the notice requirement. That requirement exists in order to allow a defendant to avoid liability for damages if the defendant corrects the alleged wrongs within 30 days after notice, or indicates within that 30-day period that it will correct those wrongs within a reasonable time. (See, e.g., Meyer v. Sprint Spectrum L.P., supra, 45 Cal.4th at p. 642; Kagan v. Gibraltar Sav. & Loan Assn., supra, 35 Cal.3d at p. 590.) A dismissal with prejudice of a damages claim filed without the requisite notice is not required to satisfy this purpose. Instead, the claim must simply be dismissed until 30 days or more after the plaintiff complies with the notice requirements. If, before that 30-day period expires the defendant corrects the alleged wrongs or indicates it will correct the wrongs, the defendant cannot be held liable for damages.

Slip op., at 31.  I've been on the short end of this argument, and I'm glad that a California Court of Appeal put an end to what I viewed as an argument disconnected from the purpose of the statutory language.

Regarding the fraud cause of action, the Court of Appeal noted the general rule that fraud must be pled with particularity; however, it then described an important exception:

[T]he Supreme Court has noted, there are “certain exceptions which mitigate the rigor of the rule requiring specific pleading of fraud.” (Children’s Television, supra, 35 Cal.3d at p. 217.) For example, where a fraud claim is based upon numerous misrepresentations, such as an advertising campaign that is alleged to be misleading, plaintiffs need not allege the specific advertisements the individual plaintiffs relied upon; it is sufficient for the plaintiff to provide a representative selection of the advertisements or other statements to indicate the language upon which the implied misrepresentations are based. (Id. at p. 218.) But the court also noted that where a claim of fraud is based upon a long-term advertising campaign, which “may seek to persuade by cumulative impact, not by a particular representation on a particular date . . . [p]laintiffs should be able to base their cause of action upon an allegation that they acted in response to an advertising campaign even if they cannot recall the specific advertisements.” (Id. at p. 219.)

Slip op., at 33.

This opinion offers the first evidence that Tobacco II will prove to be yet another instance where the California Supreme Court has substantially redirected an anti-consumer trend in appellate and trial court rulings.

in brief: Top writing blogs for 2009

Complex litigation is primarily written advocacy.  Since you are reading a blog about complex litigation topics, you might be interested in the top blogs for writers for 2009.  You might find something that speaks to you if you poke around a bit.  Keep in mind that these are not legal writing blogs, but legal writing could stand for a regular dose of non-legal writing advice every so often.

It's about time for a reminder about the purpose of discovery in civil litigation, and Clement v. Alegre provides much needed medicine

Twenty-three years ago, the Legislature enacted the Civil Discovery Act of 1986 (Code Civ. Proc., § 2016.010, et seq.)1 (the Act), a comprehensive revision of pretrial discovery statutes, the central precept of which is that civil discovery be essentially self-executing. More than 10 years ago, Townsend v. Superior Court (1998) 61 Cal.App.4th 1431 (Townsend) lamented the all too often interjection of "ego and emotions of counsel and clients" into discovery disputes, warning that "[l]ike Hotspur on the field of battle, counsel can become blinded by the combative nature of the proceeding and be rendered incapable of informally resolving a disagreement." (Id. at p. 1436.) Townsend counseled that the "informal resolution" of discovery disputes "entails something more than bickering with [opposing counsel]." (Id. at p. 1439.) Rather, the statute "requires that there be a serious effort at negotiation and informal resolution." (Id. at p. 1438.)

Clement v. Alegre (September 23, 2009), slip op., at 1-2.

So begins Clement v. Alegre (September 23, 2009), authored by the Court of Appeal (First Appellate District, Division Two).  The case involves a dispute over a real property transaction, but that's not all that relevant.  But it certainly isn't a class action matter, and it's not all that complex of a case.  The issue, however, permeates civil litigation to its core.  The discovery process is nearly, but not quite, broken.  The higher the stakes (like in class actions), the more entrenched and obstructive the positions taken by counsel.  Compromise is now a pleasant surprise.  Bitterness is the norm.  Clement reminds counsel and courts that it shouldn't be.

The discovery fight began with a set of 23 special interrogatories:

As described by the referee, plaintiffs‘ objections were of two types:

"Special Interrogatory No. 1 requested a description of 'all economic damages you claim to have sustained. . . .'  Clement objected that the question was 'vague and ambiguous'. Clement's contention that the term 'economic damages' is vague is based on propounding party's failure to specifically refer to Civil Code section 1431.2, [subdivision] (b)(1) which defines economic damages. Thus, reasons Clement, 'Responding Party reasonably construes the failure to adopt this definition as expressing Propounding Party's intention to define economic damages in a manner different than as provided in California Civil Code Section [1431. 2, subdivision] (b)(1).' Clement goes on to supply a restricted definition of his own, to wit: the lost profit from the potential sale of the property to a third party buyer. Thus limited, he answers that he is aware of none."

"Special Interrogatory No. 2 asks: 'Please state the amount of such damages as identified in interrogatory number 1.'  Clement's objections this time were (1) that this Special Interrogatory violates [section] 2030.060[, subdivision] (d) because it is not full and complete in itself, requiring, as it does, reference to the answer to an earlier interrogatory in the same set. He brands the reference to the answer to an earlier question as reference to 'other materials' in order to answer the question, citing Catanese v. Superior Court (1996) 46 Cal.App.4th 1159, 1164 [(Catanese)]." Plaintiff Clement also stated that he did not have to answer the interrogatory, because it would deny him 30 days to respond, as interrogatory No. 2 was a follow-up question that referred to the answer to interrogatory No. 1, and there could be no answer to interrogatory No. 1 in existence until the response to interrogatory No. 1 was rendered. The 30 days to answer interrogatory No. 2 would start after the answer to interrogatory 1. Finally, Clement stated that he would meet and confer in good faith with defendant to resolve any dispute, without the need for a motion. However, he also stated no response to a meet and confer communications could be given without "reasonable time and opportunity to consult with [his] attorney."

Slip op., at 3-4.  A great deal of correspondence followed the initial objections.  Eventually the defendant filed a motion to compel.  An award of sanctions in excess of $5,000 followed soon thereafter, and an appeal of right was next.  The Court of Appeal was not sympathetic:

Ample evidence supports the referee‘s determination that plaintiffs "deliberately misconstrued the question."  Plaintiffs themselves quoted the statute defining the term in their initial response. Yet, they objected, and then deliberately provided an answer using a definition narrower than that provided by statute. Somewhat artfully, plaintiffs urge that Goldstein agreed in his January 23, 2008 letter to respond to any definition of economic damages that plaintiffs chose to provide. However, even after defendant's counsel advised that the term was being used as defined in the statute plaintiffs had cited, plaintiffs did not answer the question, but demanded that defendant supply the definition in writing and allow them an extra 30 days from the date of receipt in which to respond. Clearly this was "game-playing" and supports the referee's findings and the sanctions award.

Slip op., at 8.  Then the Court noted that, though they believed the plaintiff fully intended to obstruct discovery, that intent was irrelevant:

Even assuming we agreed that neither plaintiffs nor Goldstein intended to be evasive — and we do not — their intent is not relevant here. "There is no requirement that misuse of the discovery process must be willful for a monetary sanction to be imposed." (Cal. Civil Discovery Practice (Cont.Ed.Bar 4th ed. May 2009 update) § 15.94, p. 1440, citing Code Civ. Proc. § 2023.030, subd. (a); 2 Hogan & Weber, Cal. Civil Discovery (2d ed. 2004) Sanctions, § 15.4, p. 15-8 ["Whenever one party's improper actions — even if not 'willful' — in seeking or resisting discovery necessitate the court's intervention in a dispute, the losing party presumptively should pay a sanction to the prevailing party." (Fn. omitted)]; Kohan v. Cohan (1991) 229 Cal.App.3d 967, 971.)

Slip op., at 8.  Then the Court turned to the nonsense contention that an interrogatory that refers to a prior interrogatory answer is not "full and complete" by itself:

Plaintiffs do not contend that any of the interrogatories to which they objected on this basis were unclear, or that the interrogatories, considered either singly or collectively, in any way undermined or violated the presumptive numerical limit of 35 interrogatories of section 2030.030. Yet plaintiffs seized on what might have been at most an arguable technical violation of the rule, to object to interrogatories that were clear and concise where the interrogatories did not even arguably violate the presumptive numerical limitation set by statute. In so doing, plaintiffs themselves engaged in the type of gamesmanship and delay decried by the drafters of the Act.

Slip op., at 9.  The Court goes on to explain that the prohibition on preface instructions, definitions, and references to other materials were enacted solely to prevent circumvention of the presumptive 35 interrogatory limit.  More choice commentary:

Plaintiffs rely upon Catanese, supra, 46 Cal.App.4th at p. 1164, and upon Weil & Brown, California Practice Guide: Civil Procedure Before Trial (The Rutter Group 2009) paragraph 8:979.5, which provides: "No incorporation of other questions: The requirement that each interrogatory be 'full and complete in and of itself' is violated where resort must necessarily be made to other materials in order to answer the question. [Citation.]" (Weil & Brown, supra, at p. 8F-21, citing Catanese at p. 1164, italics added.)

First, the paragraph heading — "No incorporation of other questions:" — is not mirrored by the substance of the paragraph, which identifies the violation as interrogatories requiring resort to "other materials" — not to a previous question — to answer the interrogatory. Second, the treatise clearly is relying upon Catanese, supra, 46 Cal.App.4th 1159, which involves a very different situation and which is demonstrably distinguishable. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial, supra, ¶ 8:979.5, at p. 8F-21.)

In Catanese, supra, 46 Cal.App.4th 1159, after the plaintiff had been deposed for eight days, she propounded a series of five interrogatories inquiring whether the defendant contended that any of her answers to questions in the deposition were untruthful, and if so, what evidence supported that contention. (Id. at pp. 1161-1162.) The appellate court concluded that the interrogatories violated the "rule of 35" and the requirement of "self-containment" codified in the predecessor to the current statute.  (Id. at pp. 1163-1164.)  "This rule was violated here by interrogatories which necessarily incorporate, as part of each interrogatory, each separate question and answer in eight volumes of deposition. An interrogatory is not 'full and complete in and of itself' when resort must necessarily be made to other materials in order to complete the question. [Plaintiff] could have propounded interrogatories which inquire separately regarding each deposition question and answer, but if [she] had inquired separately in self-contained interrogatories, she would have violated the 'rule of 35.' " (Id. at p. 1164.) The court further explained that the "interrogatories as worded effectively posed upwards of 10,000 separate questions. It was a violation of the 'rule of 35' to propound these interrogatories without the supporting declaration required by [the statute]." (Id. at p. 1165.)

Slip op., at 11-12.  The opinion should be read fully and carefully by all litigators, but more is worth repeating here:

"It is a central precept to the Civil Discovery Act of 1986 (§ 2016 et seq.) . . . that civil discovery be essentially self-executing. [Citation.]" (Townsend, supra, 61 Cal.App.4th at p. 1434.) A self-executing discovery system is "one that operates without judicial involvement." (2 Hogan & Weber, Cal. Civil Discovery, supra, § 15.4, pp. 15-7 to 15-8.) Conduct frustrates the goal of a self-executing discovery system when it requires the trial court to become involved in discovery because a dispute leads a party to move for an order compelling a response. (Ibid.) The Reporter‘s Notes to the predecessor to section 2023.030, subdivision (a) confirms that revision of the "substantial justification" provision was "intended to encourage judges to be more alert to abuses occurring in the discovery process. On many occasions, to be sure, the dispute over discovery between the parties is genuine, though ultimately resolved one way or the other by the court. In such cases, the losing party is substantially justified in carrying the matter to court. But the rules should deter the abuse implicit in carrying or forcing a discovery dispute to court when no genuine dispute exists. And the potential or actual imposition of expenses is virtually the sole formal sanction in the rules to deter a party from pressing to a court hearing frivolous requests for or objections to discovery. . . . The proposed change provides in effect that expenses should ordinarily be imposed unless a court finds that the losing party acted justifiably in carrying his point to court.  At the same time, a necessary flexibility is maintained, since the court retains the power to find that other circumstances make an award of expenses unjust – as where the prevailing party acted unjustifiably. The amendment does not significantly narrow the discretion of the court, but rather presses the court to address itself to abusive practices. . . ." (2 Hogan & Weber, Cal. Civil Discovery, supra, Appendix D, Reporter‘s Notes at pp. AppD-19 to AppD-21, quoting Advisory Committee to Federal Rule of Civ. Proc. § 34(a)(4) as amended in 1970, italics added; see Cal. Law Revision Com. com., 21A West‘s Ann. Code Civ. Proc. (2007) foll. § 2023.030, p. 64.)

Slip op., at 14-15.  The Court concludes its discussion with a thorough review of the meet and confer efforts.  I won't quote from that discussion here, but it's cut from the same cloth.  I end with the Court's final admonitions:

Perhaps after 11 years it is necessary to remind trial counsel and the bar once again that "[a]rgument is not the same as informal negotiation" (id at p. 1437); that attempting informal resolution means more than the mere attempt by the discovery proponent "to persuade the objector of the error of his ways" (id. at p. 1435); and that "a reasonable and good faith attempt at informal resolution entails something more than bickering with [opposing]counsel . . . . Rather, the law requires that counsel attempt to talk the matter over, compare their views, consult, and deliberate." (Id. at p. 1439.)

Slip op., at 17-18.  I'd say these reminders were well overdue.

California Supreme Court activity for the week of September 21, 2009, and other Supreme Court news

The California Supreme Court held its (usually) weekly conference today.  Notable results include:

• A Petition for Review and a Request for Depublication were both denied in Doppes v. Bentley Motors (trial court abused discretion for failing to impose terminating sanctions).  This case is significant for a number of reasons, including its impact on aspects of Song-Beverly Consumer Warranty Act (Civ. Code, § 1790 et seq.) claims.

No other case developments jumped out at me as significant this week.

In other Supreme Court news, the briefs for the October oral argument calendar are now available here.  Lots of "People v." cases in October, so it's not as exciting as it sounds (unless you are a District Attorney...or a criminal).

in brief: Morgan, et al. v. AT&T Wireless Services, Inc. analyzes the sufficiency of allegations under the UCL, CLRA, FAL and common law fraud in a consumer class action

While a more thorough analysis will follow, reader may be interested in taking a look at Morgan, et al. v. AT& T Wireless Services, Inc. (September 23, 2009).  In Morgan, the Court of Appeal (Second Appellate District, Division Four) is called upon to address the sufficiency of allegations in a consumer class action alleging causes of action under the Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200 et seq.), the False Advertising Law (FAL) (Bus. & Prof. Code, § 17500 et seq.), the Consumers Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.), and for fraud and declaratory relief.  You can wade through the decision yourself, or wait for the Executive Summary in the next day or so.

Thanks to inter-alia.net for the mention

Inter-alia.net is a blog dedicated to furthering online legal research. The Complex Litigator was chosen as a Blawg of the Day last week. Thanks to Tom Mighell for the kind mention.  It's a rich resource for uncovering new sources in the ever-changing and expanding world of legal blogs and websites.

E-mail is "personal identification information," and CAN-SPAM does not pre-empt the Song-Beverly prohibition on requests for such information

Technology, which is forward looking, and law, which is backwards...looking, frequently bang heads.  In Powers v. Pottery Barn, Inc. (September 21, 2009), the Court of Appeal (Fourth Appellate District, Division One) examined whether the federal law "Controlling the Assault of Non-Solicited Pornography And Marketing Act of 2003" (tit. 15, U.S.C, § 7701 et seq.) (CAN-SPAM) pre-empted provisions of the Song-Beverly Credit Card Act of 1971 in a lawsuit challenging a merchant's practice of requesting consumer e-mail addresses at the time the consumer makes a credit card purchase.  The Court easily found that, because CAN-SPAM does not pre-empt state laws that "are not specific to electronic mail," it did not pre-empt the Song-Beverly prohibition on collecting personal identification information.  Slip op., at 2.

Regarding the purpose of Song-Beverly, the Court said:

Song-Beverly was enacted in 1971. "The act 'imposes fair business practices for the protection of the consumers. "Such a law is remedial in nature and in the public interest [and] is to be liberally construed to the end of fostering its objectives." ' [Citations.]" (Florez v. Linens 'N Things, Inc. (2003) 108 Cal.App.4th 447, 450.)

Slip op., at 4.  And the Court explained pre-emption by CAN-SPAM, and the limits on that pre-emption:

Congress expressly provided that CAN-SPAM pre-empts state anti-SPAM laws: "This chapter supersedes any statute, regulation, or rule of a State or political subdivision of a State that expressly regulates the use of electronic mail to send commercial messages, except to the extent that any such statute, regulation, or rule prohibits falsity or deception in any portion of a commercial electronic mail message or information attached thereto." (Tit. 15, U.S.C., § 7707(b)(1).) Importantly, Congress also expressly limited the pre-emptive impact of CAN-SPAM: "This chapter shall not be construed to preempt the applicability of—(A) State laws that are not specific to electronic mail, including State trespass, contract, or tort law; or (B) other State laws to the extent that those laws relate to acts of fraud or computer crime." (Tit. 15, U.S.C., § 7707 (b)(2).)

Slip op., at 7.  Applying both, the Court concluded that Song-Beverly was not pre-empted:

CAN-SPAM cannot be interpreted as pre-empting application of Song-Beverly to Pottery Barn's collection of e-mail from its credit card customers.  Song-Beverly does not expressly regulate any Internet activity, let alone use of "electronic mail to send commercial messages." (See Tit. 15, U.S.C § 7701(b)(1).) Rather, as we have discussed, Song-Beverly only governs the information businesses may collect in the course of transacting business with credit card users. Thus Song-Beverly does not fall within the scope of CAN-SPAM's express pre-emption provisions. Importantly, CAN-SPAM does not permit us to find any implied pre-emption here. CAN-SPAM not only has a carefully limited express pre-emption provision, but it also expressly excludes pre-emption of any state laws, such as Song-Beverly, which "are not specific to electronic mail."

Slip op., at 8.  So there you have it.  Collecting an e-mail address has now been recognized as collecting personal identification information, at least under Song-Beverly.

NOTE:  Sections V and VI of the opinion are not published.  However, the Court's Opinion inadvertently left out the Section V heading.  I believe that it should appear after the first two sentences of page 12, but that's just a best guess until they correct the opinion.

Update on 2009-09-21 22:50 by The Complex Litigator

The Court has issued a corrected opinion that inserts the missing roman numeral heading on page 12.  I commend their speedy correction.

The choice between amending a complaint and appealing a demurrer can be challenging

There have been instances in litigation where my confidence in a legal position has tempted me to eschew the filing of an amended complaint in favor of appealing an order sustaining a demurrer.  Thus far, I haven't chosen to bypass an occasion to amend, but I've been very close.  Today, the Court of Appeal (Second Appellate District, Division Three) offers a reminder that such a choice can have substantial consequences, holding, in Las Lomas Land Company, LLC v. City of Los Angeles (September 18, 2009), that "having expressly declined an opportunity to amend its pleading in the trial court, Las Lomas cannot seek leave to amend for the first time on appeal."  Slip op. at 2.

As an aside, the subject matter of this case, a dispute over a rejected land development project, doesn't necessarily have much to do with this blog, aside from the fact that a multi-million dollar dispute over a land development project is decidedly more "complex" than your average civil lawsuit.  But the issue presented at the end of the opinion, the waiver of the right to amend, can surface anywhere, and procedural wrinkles like this interest me.

The Court summarized the law governing when a right to amend is not waived:

The sustaining of a demurrer without leave to amend is an abuse of discretion if there is a reasonable possibility that the defect could be cured by amendment. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The burden is on the plaintiff to show in what manner the pleading could be amended and how the amendment would change the legal effect of the pleading. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) The failure to request leave to amend in the trial court ordinarily does not prevent a plaintiff from making such a request for the first time on appeal. (Code Civ. Proc., § 472c, subd. (a); Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1386.)

Slip op., at 30-31, fn. omitted.  But it doesn't work that way when a potential amendment is possible:

The general rule allowing a plaintiff to request leave to amend for the first time on appeal does not apply, however, if the trial court sustains a demurrer with leave to amend and the plaintiff elects not to amend the pleading. (Reynolds v. Bement (2005) 36 Cal.4th 1075, 1091.) In those circumstances, " 'it must be presumed that the plaintiff has stated as strong a case as he can.' " (Ibid.)  The trial court here did not enter an order sustaining the demurrer with leave to amend, but instead asked whether Las Lomas was requesting leave to amend.  By answering "No," counsel for Las Lomas expressly declined an opportunity to amend the pleading just as surely as if the court had granted leave to amend and Las Lomas had elected not to do so.  In our view, the result should be the same. We therefore conclude that Las Lomas forfeited its claim of error based on the denial of leave to amend and deny the motion for leave to amend its petition and complaint.

Slip op., at 31, fn. omitted.  Now, it may very well be the case that you want to frame an issue for appellate review in a specific way and decline an opportunity to amend for that very purpose.  Just be sure you intend the consequences if you pass on a chance to amend a complaint.

CAOC Board elections open online until September 18, 2009

If you are a member of the Consumer Attorneys of California (CAOC), and you haven't yet voted for the Board of Governors, you stil have a chance to do so.  Voting is open online until September 18, 2009 (note the conveniently included hyperlink).  If you are eligible to be a member of CAOC but aren't, get cracking and join CAOC.  More members means a louder, unified voice speaking on behalf of consumers and employees (you know, the down-trodden masses, the grist for the corporate mills).

It also happens that I am running again for the Board of Governors.  Remember that a vote for me is like a vote to feed hungry orphans, but slightly different.

In Cho v. Seagate Technology Holdings, Inc. (Klausner, Objector), Court holds that allegations of collusion, without evidentiary support, are insufficient to overturn settlement or allow discovery to objector

In Kullar v. Foot Locker Retail, Inc., 168 Cal. App. 4th 116 (2008), the Court of Appeal (First Appellate District, Division Three) set aside a settlement and permitted an objector to obtain discovery to assess whether the settlement was "fair, reasonable and adequate."  See blog post.  However, the objector in Cho v. Seagate Technology Holdings, Inc. (Klausner, Objector) (September 15, 2009) did not achieve similar results, despite appealing to the very same First Appellate District, Divsion Three.

Cho alleged that Seagate overstated the size of its hard drives (its an ego thing, really) by using the decimal definition of “gigabyte” (equal to 1 billion bytes) which differed from the binary definition (equal to approximately 1.073 billion bytes) that was used by computer operating systems.  Slip op., at 2.  Eventually the matter settled, on the following terms:

For disc drives purchased before January 1, 2006, class members could choose either a cash payment equal to 5 percent of the net purchase price, or the Seagate Software Suite (the Software) that would allow users to perform enhanced computer and disc management functions. The estimated average cash benefit payable per hard drive was $7, and the Software had an estimated retail value of approximately $40. For disc drives purchased after January 1, 2006, when the packaging included more precise disclosures added by Seagate, class members were entitled to receive the Software.

Slip op., at 3.  One objection was filed.  The objector contended that "the notices of settlement were insufficient and inconsistent with the agreement.  He claimed it was not possible to determine 'whether someone who purchased a Seagate Hard Drive (‘Drive’) from a retailer that is not a Seagate authorized retailer, but that retailer purchased the Drive from an authorized distributor, is a class member under the
settlement agreement.'"  Slip op., at 4.  In response to the objection, Cho and Seagate agreed that "'the words "authorized retailer or distributor" in the settlement agreement--which are not defined terms--are meant to include drives purchased either directly or indirectly from the Authorized Retailers or
Authorized Distributors listed on the website, meaning that they include retailers who are not themselves listed on the website, but who purchased from one of the entities that are listed on the website. The only excluded resellers are those whose drive sales are of fake, grey market, used, or stolen drives.'"  Slip op. at 4-5.  The tiral court did not find the objector's concerns persuasive:

The trial court overruled Klausner’s objections. The order approving settlement states: “Mr. Klausner’s objection to the term authorized retailers or distributors, the limitation of claims to purchases from authorized retailers or distributors, and his related claims that the class is impermissibly narrowed, that plaintiff’s counsel have not adequately represented the class and the plaintiff is an inadequate class representative are overruled. The court finds that it is appropriate to limit the class to purchasers from authorized retailers or distributors. . . . The Court received no information that any class member, other than Mr. Klausner, was confused by the term authorized retailer or distributor. In that regard, neither the Agreement nor the form of notice caused any prejudice to the Plaintiff Settlement Class.” Klausner was granted leave to file his additional objections, which were overruled, but his request to undertake discovery was denied.

Slip op., at 6.  After discussing the current authority governing the review of class action settlements, the Court of Appeal concluded that mere inferences of collusion, with nothing more than accusations to support them, would not be considered:

There is no evidence that the parties to the settlement were intentionally deceptive or that they tried to mislead the court in seeking approval. We will not indulge Klausner’s suggestion that approval be reversed on the basis of misconduct by counsel.

Slip op., at 10.  On the other hand, the Court of Appeal was concerned about ambiguity in the Notice to the class:

A class definition that is ambiguous presents a problem of class ascertainability that “ ‘goes to the heart of the question of class certification, which requires a class definition that is “precise, objective and presently ascertainable.” ’ ” (Global Minerals & Metals Corp. v. Superior Court (2003) 113 Cal.App.4th 836, 858.) In the absence of an ascertainable class, “ ‘it is not possible to give adequate notice to class members or to determine after the litigation has concluded who is barred from relitigating.’ ” (Ibid.) The goal in defining the class is to use terminology that will convey sufficient meaning to enable persons hearing it to determine whether they are members of the class plaintiff wishes to represent.

Slip op., at 12.  Applied to the facts of the case before it, the Court of Appeal said:

We have no disagreement with the parties’ objective and no quarrel with the trial court’s finding that exclusion of “those who purchased outside of Seagate’s authorized retail channels” is “rationally based on legitimate considerations.”  The problem is that a fair reading of the class definition and the notice has the potential to lead some of those who purchased within Seagate’s authorized retail channels to conclude they are not members of the class.

Slip op., at 13.  The Court of Appeal then clarified that the defect in the Notice was not fatal to the settlement and vacated the trial court's Order approving the settlement so that a revised Notice could issue to the class.

The final issue, Klausner's request for discovery, was quickly rejected by the Court of Appeal.  The Court noted that objectors are not entitled to discovery unless some evidence of collusion existed.  Because Klausner presented no evidence to the trial court, the Court of Appeal affirmed the trial court's decision to deny discovery rights to the objector.