Source: https://www.uclpractitioner.com/class_actions_supreme_court/
Timestamp: 2019-04-23 06:24:46+00:00

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Posts categorized "Class actions - Supreme Court"
About a year ago, I reported that the U.S. Supreme Court had granted cert. in Frank v. Gaos, No. 17-961, and would be reviewing Ninth Circuit's opinion in In re Google Referrer Header Privacy Litigation, 869 F.3d 767 (2017). As discussed in this blog post, in Google Referrer, the Ninth Circuit affirmed the district court's order approving distribution of class action settlement proceeds to cy pres recipients only. The objectors probably hoped the Supreme Court would invalidate all such cy pres settlements. But on March 20, 2019, the U.S. Supreme Court disposed of the matter without reaching the cy pres question.
In a per curiam opinion, the Court remanded the case back to the Ninth Circuit for it (or for the district court) to address the question of the named plaintiffs' standing under Spokeo. Frank v. Gaos, ___ U.S. ___ (Mar. 20, 2019) (citing Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016)). The plaintiffs sought statutory remedies under the Stored Communications Act, which prohibits disclosures of certain types of electronic communications. According to the plaintiffs, Google's use of "referrer headers," which inform website owners of the search terms used to navigate to their sites, violated the Act. Id. (slip op. at 1-2). Spokeo, handed down while the appeal in Google Referrer was pending, "held that 'Article III standing requires a concrete injury even in the context of a statutory violation.'" Id. (slip op. at 4). Because the standing question "raise[d] a wide variety of legal and factual issues not addressed in the merits briefing before us or at oral argument," the Court chose to remand these issues back to the lower courts to determine in the first instance. Id.
In a dissenting opinion, Justice Thomas said he would reverse on the merits, and expressed the view that "cy pres payments are not a form of relief to the absent class members and should not be treated as such ...." Id. (Thomas, J., dissenting) (slip op. at 2).
Those who handle wage and hour matters will be very interested in the Court's lengthy discussion of the test for determining whether a worker is an employee or an independent contractor for purposes of the obligations imposed by the Wage Orders. Slip op at. 22-77.
In brief summary, the Wage Orders set forth "three alternative definitions of employment": "'(a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship.'" Slip op. at 40 (quoting Martinez v. Combs, 49 Cal.4th 35, 64 (2010)) (emphasis in original).
The parties disagreed on whether definitions (a) or (b) should apply for purposes of determining whether an employer-employee relationship exists (as opposed to other purposes, such as whether a joint employer relationship exists). Id. at 46. The defendant argued that only definition (c), the common-law test, should apply. See id.
The Supreme Court determined that it need not decide whether definition (a) applied, because it held that definition (b) did, and under that definition, the claims were properly certified for class treatment. Id. at 46-47, 78-81.
The ABC test presumptively considers all workers to be employees, and permits workers to be classified as independent contractors only if the hiring business demonstrates that the worker in question satisfies each of three conditions: (a) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact; and (b) that the worker performs work that is outside the usual course of the hiring entity’s business; and (c) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
The Court adopted the ABC test, in part, because it was a "simpler, more structured test for distinguishing between employers and independent contractors" (that is, it was simpler than the "multifactor, all the circumstances" standard advocated by the employer) and because it "does not purport to render every individual worker an employee rather than an independent contractor." Id. at 61, 64, 66. Instead, the ABC test maintains a clear distinction between: (1) employees for whose protection the Wage Orders were adopted; and (2) "traditional independent contractors ..., like independent plumbers and electricians, who could not reasonably have been intended by the wage order to be treated as employees of the hiring business." Id. at 54; see also id. at 7 ("individual workers, like independent plumbers or electricians, who have traditionally been viewed as genuine independent contracts who are working only in their own independent business" (emphasis in original)).
Turning to class certification, the Court concluded that "the trial court's view of the suffer or permit to work standard was too broad." Id. at 78-79. Nevertheless, class certification was properly granted, because "under a proper interpretation of the suffer or permit to work standard, the trial court’s ultimate determination that there is a sufficient commonality of interest to support certification of the proposed class is correct and should be upheld." Id. at 79.
For the foregoing reasons, we conclude that under a proper understanding of the suffer or permit to work standard there is, as a matter of law, a sufficient commonality of interest within the certified class to permit the question whether such drivers are employees or independent contractors for purposes of the wage order to be litigated on a class basis. Accordingly, we conclude that with respect to the causes of action that are based on alleged violations of the obligations imposed by the wage order, the trial court did not abuse its discretion in certifying the class and in denying Dynamex’s motion to decertify the class.
Id. at 46-47 (emphasis added).
Today, the U.S. Supreme Court granted the objectors' cert. petition in Frank v. Gaos, No. 17-961. The underlying Ninth Circuit opinion is In re Google Referrer Header Privacy Litigation, 869 F.3d 767 (2017), which is discussed in this blog post.
In Google Referrer, Ninth Circuit affirmed the district court's order approving a class action settlement in which all monetary proceeds were distributed to cy pres recipients, reasoning that distributions to individual class members were not economically feasible. 869 F.3d at 741-42.
The cert. petition contended that the case presented an opportunity for the Court to reach the "fundamental concerns surrounding the use of such remedies in class action litigation" identified by Chief Justice Roberts in his 2013 "statement respecting the denial of certiorari" in Marek v. Lane, no. 13-136. (See these blog posts.) It looks like at least four justices agreed.
The SCOTUSblog case page has links to all the briefs filed to date. The U.S. Supreme Court's docket page has additional links.
The U.S. Supreme Court granted the defendant's cert. petition on the appellate jurisdiction question only, and this month, reversed. The Court held that a judgment resulting from a voluntary dismissal does not qualify as a "final" decision within the meaning of 28 U.S.C. section 1291, settlement or no. Microsoft Corp. v. Baker, ___ U.S. ___ (Jun. 12, 2017).
The opinion (by Justice Ginsburg) includes an interesting discussion of the "death knell" doctrine as it exists under federal law. Slip op. at 2-4. Of course, California law on appealability of class-certification-related orders is quite different from federal law. See, e.g., In re Baycol Cases I & II, 51 Cal.4th 751 (2011).
The good news (for plaintiffs) is that the Ninth Circuit's substantive discussion of the class certification ruling has not been disturbed. As to those holdings, the opinion remains a citable precedent, albeit one that has been "vacated on other grounds."
An opinion on fees to consider in view of Laffitte: Roos v. Honeywell International, Inc.
In November 2015—well after the merits briefing in Laffitte was complete—the Court of Appeal (First Appellate District, Division One) handed down its opinion in Roos v. Honeywell International, Inc., 241 Cal.App.4th 1472 (2015). Roos is another case involving an objector's challenge to the fees awarded to class counsel, and I remember thinking at the time that it was a good candidate for a "grant and hold" pending resolution of Laffitte. However, no review petition was filed.
Roos addresses many of the same topics considered in Laffitte. The opinion's discussion of the history of the lodestar-multiplier method and the percentage method under federal and California law (Roos, 241 Cal.App.4th at 1490-94) is ground thoroughly covered by Justice Werdegar in Laffitte (slip op. at 8-27). To the extent there may be any inconsistencies between the two opinions, Laffitte, of course, governs. The Roos analysis is informed by the no-longer-accurate assumption that "[t]he extent to which the percentage-of-recovery method should be relied upon in common-fund cases litigated in California courts remains unresolved." Roos, 241 Cal.App.4th at 1492. In Laffitte, the Supreme Court resolved that question (to the extent there was ever any doubt) by holding that the percentage method is alive and well in common fund cases.
Relying on Serrano, the Roos opinion also describes the lodestar method as "the primary means of calculating the reasonableness of attorney fees in California." Id. at 1495 (citing Serrano v. Priest, 20 Cal.3d 25, 48 n.23 (1977)). This sentence from Roos can no longer be considered good law. In Laffitte, the Supreme Court rejected the argument that the cited Serrano footnote means that the lodestar method should be accorded primacy in common fund cases. Laffitte, slip op. at 20-21.
I do think that the outcome in Roos would have been the same under Laffitte. The Court of Appeal affirmed an order granting class counsel's motion for a fee award amounting to 37.5% of the settlement fund, which represented a fractional lodestar multiplier of 0.20. Roos, 241 Cal.App.4th at 1480. Laffitte makes clear that such an exercise of discretion is unlikely to be disturbed.
The Roos opinion also has interesting discussions of class member standing to object (241 Cal.App.4th at 1483-86) and the propriety of distributing residual settlement funds to cy pres recipients (id. at 1487-88). The opinion is well worth a re-read after Laffitte.
SCOCAblog analysis of Laffitte v. Robert Half International Inc.
Professors David Levine and Scott Dodson of U.C. Hastings, writing for SCOCAblog, have this detailed analysis of the Supreme Court's opinion in Laffitte v. Robert Half International Inc., ___ Cal.4th ___ (Aug. 11, 2016). My own analysis of the opinion is here.
Over at The Complex Litigator, Scott Leviant also has a post on the opinion. His comments begin, "I take this opportunity to say I told you so."
Supreme Court confirms percentage method is alive and well in common fund cases: Laffitte v. Robert Half Int'l Inc.
We therefore agree with the Court of Appeal below that “[t]he percentage of fund method survives in California class action cases, and the trial court did not abuse its discretion in using it, in part, to approve the fee request in this class action.” We hold further that trial courts have discretion to conduct a lodestar cross-check on a percentage fee, as the court did here; they also retain the discretion to forgo a lodestar cross-check and use other means to evaluate the reasonableness of a requested percentage fee.
Slip op. at 31. And, if the trial court does choose to conduct a lodestar cross-check, it may rely on "counsel declarations summarizing overall time spent," and need not "demand and scrutiniz[e] daily time sheets in which the work performed [is] broken down by individual task." Id. at 30.
Justice Werdegar's carefully drafted opinion catalogs the history of the percentage method and the lodestar-multiplier method, both nationally (id. at 8-18) and in California (id. at 18-27). Notably, the opinion did not adopt any "benchmark" for percentage awards, even after observing that the Ninth Circuit had "approved" a 25% benchmark. Id. at 15 (citing Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002)). Instead, the Court affirmed an award of one third (33.33%) of the common fund. See id. at 2-5.
In fact, given that the Supreme Court declined to adopt a 25% benchmark, it would seem that such a benchmark should no longer apply in federal court, either, in cases in which California law governs the fee motion. In Vizcaino, the lead Ninth Circuit decision adopting the 25% benchmark, both the claims and the fee motion were governed by Washington law, and the Ninth Circuit relied on a Washington Supreme Court decision in which a 25% benchmark was adopted. Vizcaino, 290 F.3d at 1047 (citing Bowles v. Dep't of Ret. Sys., 847 P.2d 440, 451 (Wash. 1993)). After Laffitte, there is no reason for the Ninth Circuit to continue to apply this benchmark in cases governed by California law.
For his claim that Serrano III mandates primary use of the lodestar method in every case, the objector relies on ... our allusions to “ ‘the court’s role in equity’ ” in awarding fees, a role that includes awards in common fund cases, and to the lodestar as the “ ‘starting point of every fee award.’ ” (Serrano III, supra, 20 Cal.3d at p. 48, fn. 23, italics added.) The quoted text and footnote, however, concern calculation of a fee awarded under the private attorney general theory. In Serrano III, this court simply did not address the question of what methods of calculating a fee award may or should be used when the fee is to be drawn from a common fund created or preserved by the litigation. For this reason, the passages quoted cannot fairly be taken as prohibiting the percentage method’s use in a common fund case.
.... Had we meant, in our later discussion of the lodestar calculation of a private attorney general fee, to disapprove the percentage method of calculation used in these common fund cases, we would have said so.
I think Laffitte will, as a practical matter, change little about the way percentage fees are calculated and awarded in state court cases. It may end up having a broader impact in federal cases governed by California law, so many of which land in federal court due to CAFA. An argument might be made that we (the plaintiffs' bar) dodged a bullet with this opinion, but I don't think the Supreme Court ever planned to fire one when it decided to take up this case. I believe it wished to forestall misreadings of Serrano III and to prevent erosion of the law confirming the vitality of the percentage method in common fund cases in California.
Does Serrano v. Priest (1977) 20 Cal.3d 25 permit a trial court to anchor its calculation of a reasonable attorney's fees award in a class action on a percentage of the common fund recovered?
(Hyperlink added.) The Court of Appeal said yes. Laffitte v. Robert Half Int'l Inc., 231 Cal.App.4th 860 (2014), review granted. For more on the case, see these blog posts.
In Campbell-Ewald Co. v. Gomez, ___ S.Ct. ___ (2016), the U.S. Supreme Court held that the defendant may not "pick off" the class representative by offering full individual relief under Rule 68. If the plaintiff rejects the offer, the case is not moot. Slip op. at 6-8.
In so holding, the Court adopted the analysis of Justice Kagan's dissent in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013) (discussed in this blog post).
In California, this rule was established more than forty years ago. See La Sala v. American Sav. & Loan Assn., 5 Cal.3d 864 (1971). The Ninth Circuit reached the same conclusion back in 2011, and reiterated it in 2013, after Genesis Healthcare. See Diaz v. First American Home Buyers Protection Corp., 732 F.3d 948 (9th Cir. 2013) (discussed here); Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th Cir. 2011) (discussed here).
The Ninth Circuit, bound by the two latter decisions, rejected the pick-off attempt in Campbell Ewald itself. See Gomez v. Campbell-Ewald Co., 768 F.3d 871, 874-75 (9th Cir. 2014) (discussed here).
The U.S. Supreme Court recently granted cert. in two cases of interest. And today, the Court is conferencing two others worth following because of the certification-related issues they present.
The SCOTUSblog case page, with links to the cert. petition and other documents, is here.
Gomez's individual claim is not moot. Campbell-Ewald argues that “whether or not the class action here is moot,” the individual claim was mooted by Gomez's rejection of the offer. The company is mistaken. Although this issue was unsettled until recently, we have now expressly resolved the question. “[A]n unaccepted Rule 68 offer that would fully satisfy a plaintiff's claim is insufficient to render the claim moot.” Diaz v. First Am. Home Buyers Prot. Corp., 732 F.3d 948, 950 (9th Cir.2013). Because the unaccepted offer alone is “insufficient” to moot Gomez's claim, and as Campbell-Ewald identifies no alternate or additional basis for mootness, the claim is still a live controversy.
Similarly, the putative class claims are not moot. We have already explained that “an unaccepted Rule 68 offer of judgment—for the full amount of the named plaintiff's individual claim and made before the named plaintiff files a motion for class certification—does not moot a class action.” Pitts v. Terrible Herbst, Inc., 653 F.3d 1081, 1091-92 (9th Cir.2011). Like the Pitts plaintiff, Gomez rejected the offer before he moved for class certification. Gomez's rejection therefore does not affect any class claims.
Gomez v. Campbell-Ewald Co., 768 F.3d 871, 874-75 (9th Cir. 2014) (hyperlinks added). The panel also held that these conclusions were fully consistent with the U.S. Supreme Court's post-Pitts opinion, Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523 (2013).
1. Whether a case becomes moot, and thus beyond the judicial power of Article III, when the plaintiff receives an offer of complete relief on his claim.
2. Whether the answer to the first question is any different when the plaintiff has asserted a class claim under Federal Rule of Civil Procedure 23, but receives an offer of complete relief before any class is certified.
Finally, today the Court is conferencing two other cases of interest: Allstate Insurance Co. v. Jimenez, No. 14-910, and Dow Chemical Co. v. Industrial Polymers, Inc., No. 14-1091. If cert. is granted or denied, it would normally be announced by Monday, or alternatively, either or both cases may be relisted and considered again at a later conference.

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