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Friday, May 31, 2013

County of LA v. LA County Employee Relations Commission: County Must Disclose Employee Contact Information to Union that Represents Them

The Supreme Court of California has issued its decision in County of Los Angeles v. Los Angeles County Employee Relations Commission (5/30/13) --- Cal.4th ---, which involves "the balance between an employee's right of informational privacy and a union's right to obtain information it needs to represent the employee in collective bargaining." The Court held as follows: 

The Service Employees International Union, Local 721 (SEIU) is the exclusive bargaining representative of all Los Angeles County (County) employees. The question here is whether SEIU is entitled to obtain the home addresses and phone numbers of all represented employees, including those who have not joined the union. We agree with both courts below that it is so entitled but reverse the Court of Appeal's imposition of procedural requirements limiting disclosure.  
State and federal labor decisions have long held that unions are presumptively entitled to contact information for all employees they represent. These decisions, and applicable labor laws, generally obligate the County to give SEIU the requested information. Whether the right to privacy under article I, section 1 of the California Constitution prohibits disclosure is a question of first impression. We conclude that, although the County's employees have a cognizable privacy interest in their home addresses and telephone numbers, the balance of interests strongly favors disclosure of this information to the union that represents them. Procedures may be developed for employees who object to this disclosure. However, the Court of Appeal exceeded its authority in this administrative mandate proceeding by attempting to impose specific procedures on the parties. 
Slip op. at 1-2.  

The opinion is available here.

Thursday, May 30, 2013

Hatai v. Department of Transportation: Court Affirms Trial Court Decision To Exclude "Me Too" Evidence From Individuals Outside of Plaintiff's Protected Class

In Hatai v. Department of Transportation (3/4/13) --- Cal.App.4th ---, the plaintiff sued his supervisor and his employer, alleging that they discriminated against him because of his Japanese ancestry and Asian race. At trial, he sought to introduce evidence that his supervisor, who was of Arab descent, discriminated against any employee who was not of Arab descent. The trial court did not allow this evidence, but allowed evidence of anti-Asian animus. The jury found for the defendants, and the Court of Appeal affirmed.

It held that the trial court acted within its discretion in excluding "me too" evidence from individuals outside of the protected class that the plaintiff had alleged. The plaintiff had alleged anti-Japanese and anti-Asian discrimination. He had not alleged pro-Arab favoritism, and the trial court did not err in excluding evidence of such favoritism from trial. The Court d
istinguished Johnson v. United Cerebral Palsy/Spastic Children’s Foundation (2009) 173 Cal.App.4th 740 and Pantoja v. Anton (2011) 198 Cal.App.4th 87 because the evidence at issue in those cases came from individuals who were within the protected classes alleged by the plaintiffs.  Slip op. at 10-13. 

The opinion is available here

Wednesday, May 29, 2013

County of Los Angeles v. Los Angeles County Employee Relations Commission: Opinion To Issue Tomorrow

In County of Los Angeles v. Los Angeles County Employee Relations Commission, the California Supreme Court will decide the following issues:
(1) Under the state Constitution (Cal. Const., art. I, § 1), do the interests of non-union-member public employees in the privacy of their personal contact information outweigh the interests of the union representing their bargaining unit in obtaining that information in furtherance of its duties as a matter of labor law to provide fair and equal representation of union-member and non-union-member employees within the bargaining unit?  
(2) Did the Court of Appeal err in remanding to the trial court with directions to apply a specific notice procedure to protect such employees' privacy rights instead of permitting the parties to determine the proper procedure for doing so? 
The Court has just given notice that it will issue the decision tomorrow, May 30, 2013, at 10:00 a.m. The Court's web page for County of L.A. is here.  

Vasquez v. Greene Motors: Court Reverses Denial of Motion to Compel Arbitration In Auto Sale Action

Vasquez v. Greene Motors, Inc. (3/27/13) --- Cal.App.4th ---, is another case involving a standard arbitration agreement contained in many automobile sales contracts. This is the same arbitration agreement that is at issue in two other cases currently pending in the California Supreme Court: 
Sanchez v. Valencia Holding Co. LLC (2011) 201 Cal.App.4th 74 (discussed here) rev. granted 3/21/12 (Case No. S199119) (discussed here); and 
Goodridge v. KDF Automotive Group, Inc. (2012) --- Cal.App.4th --- (discussed here), rev. granted 12/19/12 and briefing deferred pending Sanchez v. Valencia Holding Company (discussed here). 
The question before the Court in Sanchez is as follows: 
Does the Federal Arbitration Act (9 U.S.C. section 2), as interpreted in AT&T Mobility LLC v. Concepcion (2011) 563 U. S. __, 131 S.Ct. 1740, preempt state law rules invalidating mandatory arbitration provisions in a consumer contract as procedurally and substantively unconscionable?
In Sanchez and Goodridge, the Courts found the arbitration agreement unconscionable and unenforceable. In Vasquez, the Court came to the opposite conclusion and reversed the trial court's decision to deny a motion to compel arbitration. The Court found a minimal level of procedural unconscionability and an "absence of significant substantive unconscionability."  

The Vasquez opinion is available here.  

I am not going to say more about Vasquez because the plaintiff has filed her petition for review (Case No. S210439), and the California Supreme Court likely will grant review and hold pending its decision in Sanchez. Of course, if it denies review... 

Tuesday, May 28, 2013

Heyen v. Safeway: Court Affirms Judgment for Employee In Individual Wage and Hour Action

Heyen v. Safeway Inc. (5/23/13) --- Cal.App.4th ---, began as a putative class action and -- eleven years later -- has ended as an individual case.

Linda Heyen worked for Safeway as an assistant store manager. In 2006, she was added as a named plaintiff in an existing putative class action as against Safeway. The plaintiffs alleged that Safeway should have treated them and other assistant store managers as nonexempt employees. The trial court denied their motion for class certification in 2008, and Heyen's individual action went to trial in 2009. An advisory jury and the trial court found that Safeway improperly classified her, and the court entered judgment in her favor. The Court of Appeal affirmed, holding:

The trial court did not apply an incorrect legal standard to determine that Heyen was a nonexempt employee.
Slip op. at 24-37. It properly found that time during which Heyen was performing both exempt and nonexempt tasks -- for example, when she was both running a cash register and simultaneously managing the front end of the store, including instructing and coaching other employees -- should count as nonexempt time for purposes of determining whether she was “primarily engaged in duties which meet the test of the exemption.” The Court drew four general principles from the Wage Order and the federal regulations incorporated therein: 
First, work of the same kind performed by a supervisor's nonexempt employees generally is “nonexempt,” even when that work is performed by the supervisor. If such work takes up a large part of a supervisor's time, the supervisor likely is a “nonexempt” employee. (§§ 541.108(g), 541.111(b), 541.115(b).)  
Second, the regulations do not recognize “hybrid” activities—i.e., activities that have both “exempt” and “nonexempt” aspects. Rather, the regulations require that each discrete task be separately classified as either “exempt” or “nonexempt.” (§§ 541.102(a), 541.108(a)-(g).)  
Third, identical tasks may be “exempt” or “nonexempt” based on the purpose they serve within the organization or department. Understanding the manager's purpose in engaging in such tasks, or a task's role in the work of the organization, is critical to the task's proper categorization. A task performed because it is “helpful in supervising the employees or contribute[s] to the smooth functioning of the department” is exempt, even though the identical task performed for a different, nonmanagerial reason would be nonexempt. (§ 541.108(a).)   
Finally, in a large retail establishment where the replenishing of stocks of merchandise on the sales floor “is customarily assigned to a nonexempt employee, the performance of such work by the manager or buyer of the department is nonexempt.” (§ 541.108(c).) Similarly, in such a large retail establishment, a manager's participation in making sales to customers is nonexempt, unless the sales are made for “supervisory training or demonstration purposes.” (§ 541.108(e).) 
Slip op. at 31. Based on these principles, the Court concluded that the following jury instruction was not erroneous: 
If a party claims that an employee is engaged in concurrent performance of an exempt and non-exempt work, you must consider that time to be either an exempt or a non-exempt activity depending on the primary purpose for which the employee undertook the activity at that time. The nature of the activity can change from time to time. 
Slip op. at 35. The trier of fact must determine the "objective purpose" of the employee's actions. "If such actions were taken to 'supervis[e] the employees or contribute to the smooth functioning of the department,' they were 'exempt work'; if they were taken for some other reason, they were 'nonexempt work.'" Slip op. at 37.  

Next, the Court held that the trial court did not fail to address the rule that the trier of fact must take into account the “employer's realistic expectations and the realistic requirements of the job.” Slip op. at 38-39. Substantial evidence supported the jury's finding that that "Heyen's practice of doing significant amounts of nonexempt work did not 'diverge[] from [Safeway's] realistic expectations.'" Slip op. at 39.  

The opinion is available here.  

Friday, May 24, 2013

Barnes, Crosby, Fitzgerald & Zeman LLP v. Ringler: Court Rules on Split of $13.5 Million Class Action Attorney Fee

Barnes, Crosby, Fitzgerald & Zeman LLP v. Ringler (1/16/13) --- Cal.App.4th ---, is an unusual case dealing with the split of $13.5 million in attorney fees in a class action lawsuit. 
In class actions, an attorney's agreement to share legal fees is governed by Rules of Professional Conduct, rule 2-200 (rule 2-200) and California Rules of Court, rule 3.769 (rule 3.769). Rule 2-200 permits an attorney to share legal fees with another lawyer only with the client's informed, written consent. Rule 3.769 requires an applicant seeking court approval of a class action settlement to inform the court of any fee-sharing agreement.   
In this case, we hold that an attorney may be equitably estopped from claiming that a fee-sharing contract is unenforceable due to noncompliance with rule 2-200 or rule 3.769, where that attorney is responsible for such noncompliance and has unfairly prevented another lawyer from complying with the rules' mandates.
Slip op. at 2.  

The case is highly unusual in that courts very rarely if ever excuse noncompliance with Rule 2-200.  The Court found the facts alleged here compelling.  

In 2004 or 2005, plaintiff referred a potential class action suit against a company known as EquiCo to defendants, who filed the action in 2006. In 2009, defendants obtained certification of the class, using information obtained from plaintiff. Soon after, defendants notified plaintiff that because plaintiff had signed a nondisclosure agreement with EquiCo in a separate action in 2006, defendants would not split fees with plaintiff and would not disclose their fee split agreement to the class representatives or the court. Plaintiff was not was not in contact or privity with the class representatives, and defendants “had the exclusive means and opportunity to” disclose the fee-splitting agreement to the class and the court.  

The Court held that, under the unique circumstances of this case, the parties’ noncompliance with Rule 2-200 did not preclude plaintiff from enforcing the referral fee agreement.  
Specifically, plaintiff offered to prove that defendants changed the named class representatives in a class action suit — that is, made "a calculated switch of clients" — in order to use rule 2-200 "as a 'sword' to escape a written referral fee agreement approved by the originally referred proposed class action representatives." 
Slip op. at 8-9.  

The Court remanded to the trial court with instructions to allow a trial on the issues, including whether the fee sharing agreement applied to the class action and whether defendants were equitably estopped from claiming the contract was unenforceable due to noncompliance with rule 2-200.  Slip op. at 16-17.  

The opinion is available here.  

Thursday, May 23, 2013

Zamora v. Lehman: Court Enforces One-Year Notice Provision In Derivative Action Against Corporate Officers

This is the second time that this case has resulted in a published decision and the second time that I'm discussing it on the blog. In the first decision, Zamora v. Lehman (2010) 186 Cal.App.4th 1 (discussed here), the Court of Appeal held that a corporation's officers, who were sued by the corporation for breach of fiduciary duty, waived their right to compel arbitration by delay in moving to compel and by engaging in discovery not available under their arbitration agreements. It did not matter that they had forgotten about their right to arbitrate because waiver of one's right to arbitrate does not require knowing relinquishment of that right. 

Zamora v. Lehman (3/7/13) --- Cal.App.4th ---, again presents interesting legal questions regarding arbitration:  
Three executives signed employment agreements with their corporate employer. Each agreement contained a provision stating that if either party — the executive or the corporation — had "[a]ny claim" against the other, the claiming party had to present the claim in writing to the other party within one year of the date the claiming party knew or should have known about the facts giving rise to the claim. Otherwise, the claim was forever barred. Subsequently, the employer filed for bankruptcy.  
Plaintiff, the trustee in bankruptcy, filed this action against the three executives, alleging a breach of fiduciary duty. After litigating the breach of fiduciary duty claim in court but before trial, all three executives moved to compel arbitration of the claim pursuant to an arbitration clause in their employment agreements. The trial court granted the motions to compel. On appeal, we reversed as to two of the executives on the ground they had waived the right to arbitration; we concluded the third executive had not waived the right to arbitration, but the trustee declined to arbitrate the claims against him, and he was therefore dismissed from the suit. Litigation proceeded in the trial court as to the other two executives.  
The trial court granted summary judgment in favor of the two executives on the ground that neither the corporation nor the trustee in bankruptcy had satisfied the contractual one-year notice provision. We agree with the trial court and affirm. 
Slip op. at 2. 

The Court held: 

The contracts' one-year notice provision was valid.  "[A] contractual notice provision is enforceable with respect to a claim against a professional or skilled expert as long as the provision incorporates the delayed discovery rule."  Slip op. at 12-18.  

The defendants did not need to make a showing of prejudice in order to invoke the notice provision. Slip op. at 18-21.  

Given that the bankruptcy trustee waited more than two years to request the corporation's records, her ignorance of the notice provision did not excuse her non-compliance with it. Slip op. at 21-23.  

The complaint alleged that the debtor became aware of the facts underlying the breach of fiduciary duty claim on November 22, 2002, and there was no triable issue of fact that neither the corporation nor the trustee gave notice of the claim within a year of that date.  Slip op. at 23.  

The opinion is available here.

Wednesday, May 22, 2013

In re: HP Inkjet Printer Litigation: Ninth Circuit Issues Decision on Attorney Fees In Coupon Class Action Settlements

In re: HP Inkjet Printer Litigation, ___ F.3d ___ (9th Cir. 5/15/13), addresses attorney fee awards in coupon settlements under the Class Action Fairness Act (CAFA). 28 U.S.C. Sec. 1712(a)-(c).  

Plaintiffs sued HP for alleged unfair business practices relating to the use of ink cartridges in its inkjet printers. After years of litigation, the parties reached a global settlement, with HP agreeing to: provide class members up to $5 million worth of coupons; make additional disclosures on its website and in other materials; pay up to $950,000 for class notice and settlement administration costs; and pay up to $2,900,000 in attorneys’ fees and expenses. 

The district court approved the settlement.  It estimated the settlement's "ultimate value" to the class at $1.5 million, held that class counsel's fees should not exceed this figure, and awarded $1.5 million in fees and $600,000 in costs.  The objectors appealed, and the Ninth Circuit reversed, holding as follows: 

First, section 1712(a) provides that “the portion of any attorney’s fee award to class counsel that is attributable to the award of coupons shall be based on the value to class members of the coupons that are redeemed.” Attorneys’ fees are "attributable to" an award of coupons where "the [singular] award of the coupons is the condition precedent to the award of attorneys’ fees."  Slip op. at 16-20.  

Second, under section 1712(b), "if class counsel wants to be paid 'any' fees, and the 'recovery of the coupons is not used to determine' those fees, the entirety of the payment 'shall be' calculated 'based upon the amount of time class counsel reasonably expended working on the action,' i.e., using the lodestar method. Section 1712(b)(2) further confirms that a court may, in its discretion, apply an appropriate multiplier to any lodestar amount it awards under subsection (b)(1) for obtaining non-coupon relief."  Slip op. at 20-22.  

Third, section 1712(c) controls when the settlement includes both coupon and equitable relief, and the district court sets attorneys’ fees based on the value of the entire settlement, rather than solely on the basis of injunctive relief. In that case, 
the district court must perform two separate calculations to fully compensate class counsel. First, under subsection (a), the court must determine a reasonable contingency fee based on the actual redemption value of the coupons awarded. Second, under subsection (b), the court must determine a reasonable lodestar amount to compensate class counsel for any non-coupon relief obtained. This lodestar amount can be further adjusted upwards or downwards using an appropriate multiplier. § 1712(b)(2). In the end, the total amount of fees awarded under subsection (c) will be the sum of the amounts calculated under subsections (a) and (b).
Slip op. at 22-26.  

In the present case, the district court erred in awarding attorney fees based on its estimate of the "ultimate value" of the settlement.
The district court awarded lodestar fees based on its supposition that the “ultimate value” of this settlement is $1.5 million. This $1.5 million figure included the court’s valuation of both the injunctive and coupon relief. But § 1712(a) and (c) required the district court to calculate the redemption value of the coupons before awarding any attorneys’ fees that were “attributable to” the coupon relief. Hence, the district court abused its discretion where it made a rough estimate of the ultimate value of this settlement, and then awarded fees in exchange for obtaining coupon relief without considering the redemption value of the coupons.  
We note, however, that the responsibility for this error lies principally with the parties. Because the settlement agreement specifies that no coupons may issue until after entry of a final judgment, it would have been impossible for the district court to calculate the redemption value of the coupons as required by § 1712(a). By structuring the settlement in this way, the parties essentially invited the error here. Of course, had the settlement been structured so that the redemption value of the coupons was ascertainable before final settlement approval, plaintiffs’ attorneys would have been entitled to seek compensation for both the coupon and the injunctive relief obtained for the class. See § 1712(c). Because the parties did not do so, however, we are required to reverse. 
Slip op. at 27-28. The Court concluded:  

Under § 1712 of CAFA, a district court may not award attorneys’ fees to class counsel that are “attributable to” an award of coupons without first considering the redemption value of the coupons. A district court may, however, award lodestar fees to compensate class counsel for any non-coupon relief they obtain, such as injunctive relief. Because the attorneys’ fees award in this case violates § 1712, we reverse and remand to the district court for further proceedings consistent with this opinion. 
The opinion is available here.  

Tuesday, May 21, 2013

McCoy v. Pacific Maritime Association: Court of Appeal Reverses Plaintiff's Verdict In Retaliation Action

McCoy v. Pacific Maritime Association (5/14/13) --- Cal.App.4th ---, addresses a number of issues that we see frequently in harassment and retaliation actions, as well as a number of more esoteric issues. 

Pacific Maritime Association (PMA) serves as a bargaining agent for its membership, which includes stevedore companies, steamship lines, and port terminal operators. Yusen is a port terminal operator and a member of PMA.

Catherine McCoy worked as a marine clerk for Yusen. In 1998, she and others filed a federal lawsuit against Yusen and PMA based on allegations of unlawful discrimination. The lawsuit led to a confidential settlement that provided McCoy with training to become a vessel planner. 

McCoy then filed a second action, alleging that the defendants deprived her of training materials and opportunities, harassed and shunned her in retaliation for her having brought the initial action. She also alleged that her supervisors made racially and sexually inappropriate comments, creating a hostile work environment.  She brought claims for sexual harassment and retaliation in violation of FEHA, negligent supervision, hiring, and retention, and intentional infliction of emotional distress. 

The trial court granted summary adjudication for defendants of all claims other than retaliation. The jury returned a retaliation verdict for McCoy against Yusen and PMA, but the trial court granted defense motions for JNOV and new trial. The Court of Appeal held: 

The trial court did not err in granting summary adjudication on McCoy's sexual harassment claim. Comments by coworkers about other women's bodies on five to nine occasions over a four month period were insufficient to support a sexual harassment claim on a hostile workplace theory. "Although crude and offensive, these remarks were not so severe and pervasive as to alter the conditions of appellant's employment; the conduct did not create a work environment 'permeated' with sexual harassment." Slip op. at 7-9. 

The same evidence, together with evidence that McCoy faced isolation and ostracism, was not sufficient to support a claim for intentional infliction of emotional distress, and the trial court did not err in adjudicating that claim in favor of defendants. Slip op. at 9-10. 

Regarding the trial of McCoy's retaliation claim, the trial court did not err in excluding evidence that one of McCoy's trainers "referred to other women's buttocks in racial terms and mocked the vernacular of other African-American employees." These "stray comments" were made by a nonparty, nonsupervisory employee, and had little probative value as to the retaliation claim.  Slip op. at 10-11. 

However, the trial court did err in excluding evidence that other employees who had filed the earlier litigation also faced retaliation.  The trial court should have conducted a hearing to learn the details of the evidence and to determine the similarity to the conduct alleged by McCoy.  Slip op. at 11-13. 

The trial court erred in entering judgment for the defendants notwithstanding the verdict. McCoy presented substantial evidence from which the jury could conclude that she suffered retaliation: management exposed details of the prior litigation's confidential settlement to McCoy's supervisor and coworkers; these workers, upon whom McCoy relied for training, subjected McCoy to harassment and ignored her requests for assistance; McCoy's supervisor failed to intervene despite witnessing this abuse and being told of its impact on McCoy; and McCoy suffered "major depressive disorder and generalized anxiety" as a result.  Slip op. at 15-17. 

McCoy did not need to bring a claim for constructive discharge in order to prevail on her retaliation claim.  Slip op. at 17. 

However, the trial court did not err in granting JNOV for PMA, as McCoy did not present substantial evidence to support her claim that PMA was her joint employer: 
There was uncontradicted testimony that Yusen employed her, managed the site where the retaliation took place, and supervised and employed those individuals responsible for the retaliatory acts. Under the widely accepted control test, PMA had very little if any control over appellant or her workplace. It was Yusen that paid her salary, owned the equipment she worked on, controlled the location where she worked and where the retaliation took place, was responsible for her training, had the right to promote or discharge her and was the only party to supervise her work. There is no evidence that PMA participated in any of these functions. 
Slip op. at 17-19. 

Plaintiff's counsel repeatedly violated the trial court's rulings on motions in limine, and the trial court's order granting a new trial based on irregularity in the proceedings was not a “manifest and unmistakable abuse of discretion.” Slip op. at 19-22.  
The record reveals appellant was specifically directed not to discuss certain evidence, but then immediately proceeded to cite that evidence in closing argument to the jury in flagrant disobedience of the court's orders. Appellant's closing argument implied, many times, that race and gender played a role in respondents' conduct toward appellant. In addition, appellant's attorney began the rebuttal argument by flashing a photo of a decapitated man to the jury, suggesting that the image captured what respondents wanted to do to appellant. 
Slip op. at 19-22.  

Counsel's use of this photo in closing also supported the trial court's decision to grant a new trial on the basis of surprise. Slip op. at 22-23. 

Because McCoy did not sue for wrongful discharge, her damages were limited, and the jury's award of 88 years worth of economic damages was in error, supporting the trial court's decision to grant new trial on the basis of excessive damages. Slip op. at 23-24. 

On the defendants' protective cross-appeal, the Court held that McCoy could recover economic damages in her retaliation action, even though she did not bring an action for constructive discharge.  Slip op. at 24-26.

The opinion is available here.

Monday, May 20, 2013

Ogundare v. DIR: Court Addresses Debarment of Contractor From Public Works Projects for Violation of Prevailing Wage Requirements

Ogundare v. Department of Industrial Relations, Division of Labor Standards Enforcement (2/27/13) --- Cal. App.4th --- deals with the DLSE and its enforcement of the state's prevailing wage requirements for public works projects. As stated in the opinion: 
Ayodeji A. Ogundare, individually and doing business as Pacific Engineering Company (together Pacific), filed a petition for writ of administrative mandate asking the trial court to set aside a “debarment” decision adopted by the State of California, Department of Industrial Relations, Division of Labor Standards Enforcement (DLSE) that would have precluded Pacific from bidding or working on public works construction projects for one year. The trial court reviewed the administrative record and concluded there was no credible evidence to support a finding that Pacific violated prevailing wage laws with intent to defraud, which finding was necessary in this case for debarment to be imposed under Labor Code section 1777.1.2 Accordingly, the trial court granted Pacific's petition. DLSE appeals, arguing that (i) the trial court failed to apply the correct standard of review (i.e., the substantial evidence test) and (ii) there was substantial evidence in the record to support the administrative finding of intent to defraud. We agree on both points and will reverse.  
Slip op. at 2. 

The case makes two important points:  

1. The decision to prohibit a contractor from working on public works projects does not affect a "a fundamental vested right" of the contractor, and the reviewing court does not "conduct an independent review of the entire record to determine whether the weight of the evidence supports the administrative findings."  Instead, its review is limited to "determining whether the administrative findings are supported by substantial evidence."  Slip op. at 6-9. 

2. Substantial evidence supported the DLSE's finding of the contractor's "intent to defraud" where an employee testified, and his paycheck showed, that he worked 61 hours at $15 per hour (less than the prevailing wage rate), while the contractor submitted certified payroll records to the DLSE showing that the employee worked only 25 hours at the correct prevailing wage rate of $36.10 per hour.  Slip op. at 9-12.  

The opinion is available here.

Dailey v. Sears, Roebuck: Court Affirms Order Denying Certification of Manager / Assistant Manager Misclassification Action

In Dailey v. Sears, Roebuck and Co. (3/27/13) --- Cal.App.4th ---, the Court of Appeal affirmed a trial court order denying certification of a putative class action alleging that the employer, Sears, violated California wage and hour laws by classifying its auto center managers and assistant managers as exempt employees.  The Court held that the record contained "substantial evidence that Dailey's theory of liability — i.e., that Sears acted in a uniform manner toward the proposed class members, resulting in their widespread
misclassification as exempt employees — is not amenable to proof on a classwide basis" and that the trial court did not abuse its discretion in denying certification.  Slip op. at 3.

Specifically, the Court held: 

The trial court did not fail to explain sufficiently its reasons for denying class certification. The law does not demand great detail from the trial court, and while the order was "succinct," and a more detailed order may have been "desirable," the lack of detail did not preclude "meaningful review" by the Court of Appeal.  Slip op. at 14-17. 

The trial court did not abuse its discretion in denying class certification. The parties presented conflicting evidence of Sears's policies and practices and the effect of those policies and practices on the putative class members. The trial court did not improperly evaluate the merits of the case in evaluating the evidence presented by both sides and crediting the evidence presented by Sears, which indicated "that highly individualized inquiries would dominate resolution of the key issues in this case."  Slip op. at 17-25. 

Substantial evidence supported the trial court's finding that common questions did not predominate. For example, Sears presented evidence that there was no shortage of hourly labor, and the putative class members were not required to fulfill the roles of their nonexempt employees.  Given this and other evidence, "showing a wide variation in proposed class members' job duties," the trial court did not abuse its discretion in finding that plaintiff's theory of liability was not susceptible of common proof at trial.  Slip op. at 25-33. 

Dailey's proposal to use random sampling as a means of managing any individual questions did not "cure the deficiencies of his evidentiary showing." The sampling proposal was "not tied specifically to the facts of this case, or tailored to the evidence presented by the parties," and the trial court did not err in rejecting it.  Slip op. at 34-38.  

Dailey failed to present substantial evidence that "Sears employed any policy or routine practice to deprive proposed class members of 'off duty' meal and rest breaks and, accordingly, Dailey failed to show that this allegation could be proved on a classwide basis." Evidence that Sears had no formal written policy regarding meals and rest periods for the putative class members, provided "no evidence of a policy or widespread practice of Sears  to deprive nonexempt employees of uninterrupted meal periods and rest breaks." Indeed, such evidence was consistent with Sears's treatment of them as exempt employees.  Slip op. at 38-42. 

The trial court did not err in ruling on Sears's motion to preclude certification, even though it was addressed to a broader, statewide class that Dailey subsequently narrowed, in the second amended complaint, to a San Diego district class.  Evidence presented by Sears was relevant to the more narrow class defined by Dailey, and the trial court's order was not "so broad as to preclude any class beyond the San Diego district class."  Slip op. at 42-44. 

The opinion is available here.  

Dailey filed his petition for review in the California Supreme Court on April 30, 2013.  My gut reaction is this: after Brinker and all of its progeny, I would be surprised if the Court were to grant review, but I would not be surprised if it were to grant a petition for depublication.  

Friday, May 17, 2013

Dan’s City Used Cars, Inc., v. Pelkey: SCOTUS Issues FAAAA Preemption Decision

One of the big issues in wage and hour law in the last few years has been what has become known as "F-quad-A preemption." The Federal Aviation Administration Authorization Act of 1994 (FAAAA) preempts state laws "related to a price, route, or service of any motor carrier . . . with respect to the transportation of property." The question is whether state wage and hour laws fall within the preemptive scope of the FAAAA when applied to employees in the transportation industry. 

This issue is before the California Supreme Court in People ex rel. Harris v. Pac Anchor Transportation, Inc. (Case No. S194388) (discussed here and here).  See also Dilts v. Penske Logistics LLC, 819 F.Supp.2d 1109 (2011) (FAAAA preempts meal period and rest period claims by delivery drivers).  

In Dan’s City Used Cars, Inc., v. Pelkey, 569 U. S. ____ (5/13/13), a unanimous Supreme Court has decided a related issue, holding that the FAAAA does not preempt state law claims stemming from the storage and disposal of a towed vehicle.  
Pelkey’s state-law claims escape preemption because they are “related to” neither the “transportation of property” nor the “service” of a motor carrier. Although §14501(c)(1) otherwise tracks the ADA’s air-carrier preemption provision, the FAAAA formulation’s one conspicuous alteration— addition of the words “with respect to the transportation of property”— significantly limits the FAAAA’s preemptive scope. It is not sufficient for a state law to relate to the “price, route, or service” of a motor carrier in any capacity; the law must also concern a motor carrier’s “transportation of property.” Title 49 defines “transportation,” in relevant part, as “services related to th[e] movement” of property, “including arranging for . . . storage [and] handling.” §13102(23)(B). Pelkey’s Consumer Protection Act and negligence claims are not “related to th[e] movement” of his car. Chapter 262 regulates the disposal of vehicles once their transportation— here, by towing—has ended. Pelkey seeks redress only for conduct occurring after the car ceased moving and was stored. Dan’s City maintains that because §13102(23)(B)’s definition of “transportation” includes “storage” and “handling,” Pelkey’s claims fall within §14501(c)(1)’s preemptive ambit. But “storage” and “handling” fit within §13102(23)(B)’s definition only when those services “relat[e] to th[e] movement” of property. Thus temporary storage of an item in transit en route to its final destination qualifies as “transportation,” but permanent storage does not. Here, no storage occurred in the course of transporting Pelkey’s vehicle.   
Pelkey’s claims are also unrelated to a “service” a motor carrier renders its customers. The transportation service Dan’s City provided — removal of Pelkey’s car from his landlord’s parking lot — did involve the movement of property, but that service ended months before the conduct on which Pelkey’s claims are based. Because chapter 262, on which Pelkey relies, addresses “storage compan[ies]” and “garage owner[s] or keeper[s],” not transportation activities, it has neither a direct nor an indirect connection to transportation services a motor carrier offers its customers. 
The conclusion that state-law claims regarding disposal of towed vehicles are not preempted is in full accord with Congress’ purpose in enacting §14501(c)(1), which was to displace “a State’s direct substitution of its own governmental commands for ‘competitive market forces’ in determining . . . the services that motor carriers will provide.” Id., at 372. The New Hampshire prescriptions Pelkey invokes hardly constrain participation in interstate commerce by requiring a motor carrier to offer services not available in the market. Nor do they “freez[e] into place services that carriers might prefer to discontinue in the future.” 
Slip op. 8-11.  

Although this does not tell us whether the FAAAA preempts state wage and hour laws, lawyers on both sides of the issue will want to read it carefully.  

Dan’s City Used Cars, Inc., v. Pelkey  is available here.  The SCOTUSblog page for the case, which includes the opinion below and the parties' briefing, is here.  

Thursday, May 16, 2013

Convergent Outsourcing, Inc. v. Zinni: Supreme Court Declines to Hear Follow-Up to Genesis Healthcare on Effect of Settlement Offer to Representative Plaintiff

Thank you to Andrew Frisch of the FLSA Overtime Law Blog for noting that the Supreme Court has denied a petition for certiorari in Convergent Outsourcing, Inc. v. Zinni:  
On the heels of last month’s Genesis Healthcare Corp. v. Symczyk, the Supreme Court had the chance to decide a case which actually would help define the true parameters of the mootness doctrine, vis a vis cases where the plaintiff claims finite (and typically relatively small) individual damages, but seeks to represent a putative class. However, as in Symczyk, the Supremes left some observers scratching their heads and declined to answer the question posed to it. Although the Zinni case was a case brought under the Fair Credit Reporting Act (FCRA) and not the FLSA, the issue presented is common in FLSA cases. Specifically, the issue presented by the Zinni case was: 
Does an offer to provide a plaintiff with all of the relief he has requested, including more than the legal amount of damages plus costs and reasonable attorney’s fees, fail to moot the underlying claim because the defendant has not also offered to agree to the entry of a judgment against it? 
As noted in the Eleventh Circuit's decision below, Zinni v. ER Solutions, Inc., 692 F.3d 1152 (11th Cir. 2012) (available here), there is a split among the Circuit Courts of Appeals on the question presented.  

The SCOTUSblog page for the case is here.  

Wednesday, May 15, 2013

Wang v. Chinese Daily News: On Remand From SCOTUS After Wal-Mart, Ninth Circuit Reverses In Part Judgment for Class of Employees and Remands

In Wang v. Chinese Daily News, 623 F.3d 743 (9th Cir. 2010) (discussed here), the Ninth Circuit affirmed judgment after trial in favor of a class of newspaper employees. In 2011, the United States Supreme Court vacated that decision and ordered the Ninth Circuit to reconsider it in light of Wal-Mart Stores, Inc. v. Dukes, 564 U.S. ___ (2011) (discussed here). In its re-vamped opinion, Wang v. Chinese Daily News, ___ F.3d ___ (9th Cir. 3/4/13), the Ninth Circuit reversed the judgment for the class members, holding: 

Defendant Chinese Daily News (CDN) could challenge the district court's finding that the commonality requirement of Federal Rule 23(a)(2) was satisfied, even though it originally did not brief the issue.  "We conclude that the Court’s decision in Wal-Mart presents a sufficiently significant legal development to excuse any failure of CDN to discuss the commonality requirement of Rule 23(a)(2) in its opening brief."  Slip op. at 7-8. 

Although Wal-Mart differed substantially from Wang, the district court should reconsider its commonality finding in light of Wal-Mart
On remand, the district court must determine whether the claims of the proposed class “depend upon a common contention . . . of such a nature that it is capable of classwide resolution — which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Plaintiffs must show “significant proof that [CDN] operated under a general policy of [violating California labor laws].” However, plaintiffs need not show that every question in the case, or even a preponderance of questions, is capable of classwide resolution. So long as there is “even a single common question,” a would-be class can satisfy the commonality requirement of Rule 23(a)(2). 
Slip op. at 10 (citations omitted). 

In light of Wal-Mart, the district court erred in certifying a class seeking monetary relief under Rule 23(b)(2)Further, "none of the named plaintiffs had standing to pursue injunctive relief on behalf of the class, as none of them is a current CDN employee."  Slip op. at 11. 

The district court should reconsider class certification under Rule 23(b)(3) because: (1) the Ninth Circuit recently has held that an employer's uniform policy of classifying all reporters and account executives as exempt employees is not sufficient to support Rule 23(b)(3) certification in and of itself; and (2) the California Supreme Court recently clarified meal period requirements in Brinker v. Superior Court.  Slip op. at 11-14.  

Finally, the Court held: "If the district court again certifies a class under Rule 23(b)(3), it should calculate damages in light of the Supreme Court’s admonitions in Wal-Mart."  Slip op. at 15.  

Wang v. Chinese Daily News is available here

Tuesday, May 14, 2013

Faulkinbury v. Boyd & Associates: On Remand After Brinker, Court of Appeal Reverses Denial of Certification In Wage and Hour Action

In Faulkinbury v. Boyd & Associates, Inc. (2010) 185 Cal. App. 4th 1363 (discussed here), the Court of Appeal affirmed in part and reversed in part a trial court order denying certification of claims for meal period, rest period, and off-the-clock violations. The California Supreme Court granted review and held pending Brinker, then remanded to the Court of Appeal for reconsideration.

On May 10, the Court of Appeal changed its earlier position and reversed in full the trial court's order denying class certification.

First, the plaintiffs alleged that the employer had a unlawful, uniform policy of requiring employees to sign an on-duty meal period agreement and take on-duty meal periods, and the Court held that this claim was amenable to class treatment. Slip op. at 12-16. Although the Court did not determine whether the alleged policy was lawful or not, it held: "The lawfulness of Boyd's policy of requiring all security guard employees to sign the on-duty meal break agreement can be determined on a classwide basis." Slip op. at 13. The Court explained:

In Brinker, the Court of Appeal, in reversing class certification, had concluded that because rest breaks could be waived, any showing on a class basis that class members missed or took shortened rest breaks would not “necessarily establish, without further individualized proof,” that the employers had violated the Labor Code and the relevant IWC wage order. (Brinker, supra, 53 Cal.4th at p. 1033.) The Supreme Court stated that conclusion was error. An employer is required to permit and authorize the required rest breaks, and if it adopts a uniform policy that does not do so, then “it has violated the wage order and is liable.” (Ibid.) In other words, the employer's liability arises by adopting a uniform policy that violates the wage and hour laws. Whether or not the employee was able to take the required break goes to damages, and “[t]he fact that individual [employees] may have different damages does not require denial of the class certification motion.” 
Slip op. at 15-16, citing Jaimez v. Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286, 1301 (discussed here); Bradley v. Networkers International, LLC (2012) 211 Cal.App.4th 1129, 1150-1151 (discussed here and here).  

Second, the plaintiffs alleged that the employer had no policy to provide rest periods and required the putative class members to remain at their posts at all times. The Court held that this claim also was amenable to class treatment. Slip op. at 16-19. Citing Brinker and Bradley, the Court held that the employer's evidence that some employees received rest periods could not defeat certification:

While, in Faulkinbury I, we concluded this evidence established individual issues of liability, we are now convinced, in light of Brinker, this evidence at most establishes individual issues of damages, which would not preclude class certification. Boyd's liability, if any, would arise upon a finding that its uniform rest break policy, or lack of policy, was unlawful.  
Slip op. at 19. 

Third, the plaintiffs alleged that the employer had a uniform practice of excluding certain amounts from its calculation of overtime compensation. The Court held that this claim also was amenable to class treatment, even if eligibility for recovery would have to be shown on an individual basis. Slip op. at 20. 

Finally, the Court held that all three subclasses satisfied the ascertainability requirement. 

The trial court found the Meal Break Class and the Rest Break Class were not ascertainable ... because membership depended on individual questions whether the nature of the work at each post prevented an employee from being relieved of all duty in order to take a meal or rest break. As we have explained, those questions do not prevent certification of the classes. 
Slip op. at 22. 

Faulkinbury v. Boyd & Associates is available here.  

I assume that the employer and/or amici will petition the Supreme Court for review and/or depublication. On March 20, the Supreme Court denied review in Bradley, and I would be surprised if it reached a different result in this case.  

Monday, May 13, 2013

Gonzalez v. Downtown LA Motors: Court Holds That Employer Must Compensate Piece Rate Workers Separately for “Non-Productive” Time

Gonzalez v. Downtown LA Motors, LP (3/6/13 pub. 4/2/13) --- Cal.App.4th ---, considers "whether California's minimum wage law requires an employer that compensates its automotive service technicians on a 'piece-rate' basis for repair work must also pay those technicians a separate hourly minimum wage for time spent during their work shifts waiting for vehicles to repair or performing other non-repair tasks directed by the employer." Slip op. at 2.  The Court of Appeal held that class members were entitled to separate hourly compensation for time spent waiting for repair work or performing other non-repair tasks, as well as Labor Code section 203 waiting time penalties.  

The employer, DTLA, used a "flag hour" compensation system. Each employee had a flag rate, and each repair job had a set number of flag hours, regardless of the actual time spent doing the job. At the end of each pay period, DTLA multiplied the flag rate by the flag hours to compute total compensation. If that amount fell short of the minimum wage for the actual hours worked, 
DTLA paid minimum wage for the actual hours worked, rather than the flag rate. 

Gonzalez filed suit, alleging that this system failed to compensate the employees at minimum wage rates for hours waiting for repair work or otherwise engaged in non-repair tasks.  After a bench trial, the court entered judgment for the class, and DTLA appealed. The Court of Appeal affirmed, finding: 

The holding in Armenta v. Osmose, Inc. (2005) 135 Cal.App.4th 314 -- that employers must pay for all hours worked and may not average paid, productive hours with non-paid, non-productive hours -- applies equally to employees paid on a piece rate basis.  Slip op. at 12-18.  The Court added an interesting note: 
Averaging piece-rate wages over total hours worked results in underpayment of employee wages required “by contract” under Labor Code section 223, as well as an improper collection of wages paid to an employee under Labor Code section 221.  
Slip op. at 14. 

Next, although the Court did not rule on whether DTLA's use of the flag rate system justified imposition of Labor Code section 203 waiting time penalties, it held that substantial evidence of other conduct supported the award:  

Although DTLA stated that its policy was to supplement its technicians' pay when flag hour compensation fell below the minimum wage floor, there was evidence that DTLA did not always follow this policy. DTLA's expert witness testified that he reviewed technicians' pay records and found instances when DTLA failed to cover shortfalls between piece-rate wages and the minimum wage floor. 
Slip op. at 18-19. 

Gonzalez v. Downtown LA Motors is here.

Friday, May 10, 2013

Petersen v. Boeing: Ninth Circuit Reverses Decision Enforcing Saudi Arabia Forum Selection Clause

Petersen v. Boeing Company, ___ F.3d ___ (9th Cir. 4/26/13) (Case No. 11-18075), is an interesting decision on forum selection, even if it is likely to be of limited application because of its unique facts. I hate to use big block quotes, but the decision details the facts clearly and concisely:  
Plaintiff Robin P. Petersen, who appears pro se and in forma pauperis on appeal, is a former Navy pilot with the rank of Commander who was recruited to work in Saudi Arabia as a flight instructor for Boeing International Support Services (“BISS”), a wholly-owned subsidiary of The Boeing Corporation (“Boeing”)... 
Prior to departing for Saudi Arabia, Petersen was required to sign a preliminary employment agreement. That agreement did not contain a forum selection clause. On arrival in Saudi Arabia, however, he was forced to sign a second employment agreement—which he was not given time to read and which he was told he must sign or else return immediately to the United States at his own expense. This agreement contained a forum selection clause requiring any contractual disputes to be resolved in the Labor Courts of Saudi Arabia. Petersen signed the second agreement without reading it, as he was instructed to do by his employer.  
Petersen’s passport was then confiscated; he was effectively imprisoned in his housing compound under miserable living conditions; and his work environment was marked by rampant safety and ethics violations. When he attempted to resign and return to the United States, his employer refused to return his passport for a period of nearly three months. During his time in Saudi Arabia, Petersen contracted an upper respiratory infection as a result of his living conditions and was permanently maimed as a result of receiving inadequate surgical treatment for an Achilles tendon tear, which he would have had treated in the United States had he been permitted to leave Saudi Arabia.  
When he finally returned to the United States (after the intervention of the United States Consulate in Jeddah), Petersen brought suit against Boeing and BISS alleging breach of contract as well as several statutory and common law claims. In addition to his Complaint, his submissions to the district court included a sworn affidavit claiming that (1) he was not financially capable of traveling to Saudi Arabia in order to institute proceedings against his employer; (2) he would be subjected to harsh conditions and internal travel restrictions if he were somehow able to return to Saudi Arabia; and(3) the forum selection clause was foisted on him through fraud and undue pressure. He also submitted a report from the United States Department of State tending to demonstrate that (1) he would not be legally permitted to travel to Saudi Arabia; (2) he would not in any event be able to obtain a fair trial in Saudi Arabia; and (3) his employer could detain him in Saudi Arabia for the entire duration of any legal proceedings. The district court nonetheless dismissed the entire lawsuit without a hearing under Federal Rule of Civil Procedure 12(b)(3) for improper venue, holding that the forum selection clause was enforceable, relying largely on our opinion in Spradlin v. Lear Sigler Mgmt. Servs. Co., 926 F.2d 865 (9th Cir. 1991). The district court then denied Petersen leave to amend his Complaint in order to address some of the supposed shortfalls identified by the district court. 
Slip op. at 3-5.  The Court of Appeals reversed, holding:  
  1. Petersen provided specific evidence to show that he "would effectively be deprived of his day in court were the clause enforced."  As a result, the district court abused its discretion by not -- "at the very least" -- conducting an evidentiary hearing on the issue and by dismissing the complaint without leave to amend.  Slip op. 6-10.  
  2. Petersen provided specific evidence to show that inclusion of the forum selection clause in the agreement was the product of fraud or coercion. "Therefore, the district court abused its discretion by dismissing on the basis of the forum selection clause without at the very least holding an evidentiary hearing as to whether Petersen was induced to assent to the forum selection clause through fraud or overreaching."  Slip op. 11-12. 
Petersen v. Boeing is available here.  

Thursday, May 9, 2013

Kuxhausen v. BMW: Ninth Circuit Issues Decision on Timeliness of CAFA Removal

A quick note on this decision. In Kuxhausen v. BMW Financial Services NA LLC (9th Cir. 2/25/13) the Ninth Circuit held that where an initial pleading does not state the amount in controversy, the plaintiff has not pled all the facts necessary for diversity jurisdiction under the Class Action Fairness Act (CAFA), and the removal clock under Section 1446(b) is not triggered.

The plaintiff filed a putative class action against a car dealer and financing company, asserting ten California causes of action, including alleged violations of the Consumer Legal Remedies Act (CLRA), and the Automobile Sales Finance Act. She sought statutory damages of up to $1,000 per consumer and $5,000 for senior-citizen consumers under the CLRA. The plaintiff filed a first amended complaint, and the defendants removed the action to district court. The district court remanded, and the defendants appealed.

The Ninth Circuit reversed, holding:

"To avoid saddling defendants with the burden of investigating jurisdictional facts, we have held that 'the ground for removal must be revealed affirmatively in the initial pleading in order for the first thirty-day clock under § 1446(b) to begin.'" Slip op. at 7.

The complaint's statement that it sough to "provide remedies for hundreds of affected consumers" satisfied CAFA's requirement that the proposed class must have at least 100 members because "hundreds" means "at least 200." Slip op. at 8.

However, because the complaint did not state that each of the 200 alleged class members was owed at least $25,000 (200 x $25,000 = $5 million), it did not allege that the amount in controversy was at least $5 million, and "it fell short of triggering the removal clock under Section 1446(b)." Slip op. at 8-11.

The opinion is available here.

Wednesday, May 8, 2013

Choate v. Celite Corporation: Waiver of Vacation Pay in CBA Must Be "Clear and Unmistakable"

In Choate v. Celite Corporation (5/2/13) --- Cal.App.4th ---, the Court of Appeal held that a collective bargaining agreement abrogates an employee's statutory right under Labor Code section 227.3 to immediate payment for vested vacation time "only if the agreement clearly and unmistakably waives that right."  

I will not go through the facts at any length.  The plaintiffs worked for Celite under a collective bargaining agreement.  They alleged that Celite failed to pay them all earned vacation time promptly on termination.  Celite paid the vacation pay at issue, the plaintiffs dismissed their unfair competition claim to expedite appellate review, and the parties stipulated to class certification on the plaintiffs' claim for waiting time penalties.  

The Court of Appeal held: 
  • A waiver of an employee's right to vacation pay under Labor Code section 227.3 must be "clearly and unmistakably" stated in the CBA itself.  It may not be inferred from parole evidence of mutual understanding or past practices. Slip op. at 4-7. 
  • The CBA at issue did not "clearly and unmistakably" waive the employees' section 227.3 rights.  Slip op. at 7. 
  • Substantial evidence did not support the trial court's finding that Celite acted "willfully" in failing to pay the employees their vacation pay and was not liable for Labor Code section 203 waiting time penalties.  Slip op. at 8-9. 
  • Determining the plaintiffs' Labor Code claims did not require the court to interpret the CBA, and Section 301 of the Labor Management Relations Act (LMRA) did not preempt those claims.  Slip op. at 9-10. 
The opinion is available here.  

Tuesday, May 7, 2013

Gutierrez v. Wells Fargo Bank: Ninth Circuit Rules on Preemption and Class Certification In Action Alleging that Bank Charged Improper Overdraft Fees

In Gutierrez v. Wells Fargo Bank, NA, 704 F.3d 712 (9th Cir. Dec. 26, 2012), the plaintiffs alleged that Wells Fargo violated the Unfair Competition Law (UCL) by imposing overdraft fees based on the high-to-low posting order and by misleading clients as to the actual posting order used. The district court enjoined Wells from using the high-to-low method and ordered it to pay over $200 million in restitution. Wells appealed, and the Ninth Circuit affirmed in part and reversed in part, holding:

Wells waived the right to demand arbitration by failing to make the demand in the district court, and only doing so on appeal, and ordering the case into arbitrate would frustrate, rather than advance, the Federal Arbitration Act (FAA) goal of expeditious litigation. Slip op. at 10-17.

The National Bank Act of 1864, 12 U.S.C. § 1 et seq., preempts application of the UCL's "unfair" prong to control a bank's method of posting transactions. Slip op. at 17-25. 

The National Bank Act does not preempt application of the UCL's "fraudulent" prong to control a bank's use of allegedly fraudulent communications with customers regarding the method of posting transactions or the impact of use of that method.  Slip op. at 25-30. 

The district court did not err in finding that the plaintiffs had standing to pursue the UCL claims because each had read and relied upon the bank's statements regarding its posting methods.  Slip op. at 30-31.  

The district court did not err in certifying the class because "class members, like the named plaintiffs, were exposed to the materials and likely relied on them." Citing Tobacco II, 46 Cal. 4th at 312 (to establish fraud under the Unfair Competition Law, plaintiffs must show 'that members of the public are likely to be deceived').  Slip op. at 31-32. 

In a line that reminds me of Jimmy Fallon's Capitol One commercials, the court said: "Unlike McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 223 (2d Cir. 2008) ... where individual class members could have had different motives for choosing 'light' cigarettes, we are hard pressed to agree that any class member would prefer to incur multiple overdraft fees." Slip op. at 32.  

Finally, the Court held that the district court did not err in holding that "Wells Fargo violated the Unfair Competition Law by making misleading statements likely to deceive its customers."  Slip op. at 32-34.  

The opinion is available here

Monday, May 6, 2013

Sanchez v. Swissport: Employer's Compliance With PDLL Does Not Invalidate Employee's Causes of Action Under Other Provisions of the FEHA

In Sanchez v. Swissport, Inc. (2/21/13) --- Cal.App.4th ---, the Court of Appeal has held that an employee who has exhausted all of her leave under the Pregnancy Disability Leave Law (PDLL) may nevertheless state a cause of action under other provisions of the Fair Employment and Housing Act (FEHA).

Sanchez sued her former employer, Swissport, alleging, inter alia, that it violated California law by terminating her because she could not return to work after taking just over 19 weeks in accrued vacation, CFRA leave, and PDLL leave. The trial court sustained Swissport's demurrer without leave, and the Court of Appeal reversed.

After reviewing the basics of the PDLL and the FEHA, the Court held that the PDLL's "remedies augment, rather than supplant, those set forth elsewhere in the FEHA." Slip op. at 8.
In short, we conclude the superior court erred in sustaining the demurrer on the ground that appellant had no actionable claim under the FEHA because respondent had provided her with 19 weeks of leave under the PDLL.
Slip op. at 12. 

The opinion is available here

Friday, May 3, 2013

Natalini v. Import Motors: Supreme Court Grants Review of Arbitration Unconscionability Decision

As anticipated, the California Supreme Court on May 1 granted review of Natalini v. Import Motors (1/7/13, pub. 2/5/13) (discussed here), in which the Court of Appeal held:
  • Concepcion does not invalidate unconscionability analysis. 
  • The arbitration agreement was procedurally unconscionable because: (a) the seller presented it on a take it or leave it basis, and the buyer could not negotiate it; and (b) it was located on the back of the purchase contract and was not pointed out to the buyer. 
  • The arbitration agreement was substantively unconscionable because it was designed to benefit the seller in a number of ways: (a) it permitted an appeal only in case of an award of $0 or greater than $100,000; (b) it permitted an appeal if the award included injunctive relief; and (c) it allowed self-help remedies, including repossession. 
The Court has deferred briefing pending its decision in Sanchez v. Valencia Holding Co. (Case No. S199119), which raises the following issue:

Does the Federal Arbitration Act, as interpreted in AT&T Mobility LLC v. Concepcion (2011) 563 U. S. __, 131 S.Ct. 1740, preempt state law rules invalidating mandatory arbitration provisions in a consumer contract as procedurally and substantively unconscionable?  

Sanchez is fully briefed.  The Court's web page for it is here.  

Natalini is case no. S209324. The Court's web page for it is