Source: http://www.baileydaily.com/2011/04/
Timestamp: 2019-04-22 04:11:23+00:00

Document:
Because it “stands as an obstacle to the accomplishmentand execution of the full purposes and objectives of Congress,” Hines v. Davidowitz, 312 U. S. 52, 67 (1941), California’s Discover Bank rule is preempted by the FAA. The judgment of the Ninth Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.
See Slip Opinion, at 18.
Thus, to understand what the Court’s opinion means, it would seem that one must look beyond the majority’s holding that the Discovery Bank rule is preempted and examine the more complex issue of the applicable standard that must be applied by the courts below moving forward. There may not be a simple answer to this question, however. As Justice Thomas only joined the five member majority in its holding, parting ways with regard to the underlying rationale, an issue exists as to whose analysis will deemed to prevail.
As a general rule, “[w]hen a fragmented Court decides a case and no single rationale explaining the result enjoys the assent of five Justices, ‘the holding of the Court may be viewed as that position taken by those Members who concurred in the judgments on the narrowest grounds….’” See Marks v. United States, 430 U.S. 188, 193 (1977). However, applying the Marks rule may not be as simple as one may think. See United States v. Kratt, 579 F.3d 558, 562 (6th Cir., 2009) (“That is easier said than done. Sometimes it is possible to identify the concurring opinion that ‘is a logical subset’ of the other opinion (or opinions).  And sometimes it is not, making Marks an exercise in chasing the wind.”). “When … a concurrence that provides the fifth vote necessary to reach a majority does not provide a ‘common denominator’ for the judgment, the Marks rule does not help to resolve the ultimate question.” See United States v. Heron, 564 F.3d 879, 884 (7th Cir., 2009). Rather, “[w]hen it is not possible to discover a single standard that legitimately constitutes the narrowest ground for a decision on that issue, there is then no law of the land because no one standard commands the support of a majority of the Supreme Court.” See United States v. Alcan Aluminum Corp., 315 F.3d 179, 189 (2d Cir. N.Y. 2003); Anker Energy Corp. v. Consolidation Coal Co., 177 F.3d 161, 170 (3d Cir. 1999) (“[I]n cases where approaches differ, no particular standard is binding on an inferior court because none has received the support of a majority of the Supreme Court.”).
I write separately to explain how I would find that limit in the FAA’s text. As I would read it, the FAA requires that an agreement to arbitrate be enforced unless a party successfully challenges the formation of the arbitration agreement, such as by proving fraud or duress. 9 U. S. C. §§2, 4. Under this reading, I would reverse the Court of Appeals because a district court cannot follow both the FAA and the Discover Bank rule, which does not relate to defects in the making of an agreement.
This reading of the text, however, has not been fully developed by any party, cf. Brief for Petitioner 41, n. 12, and could benefit from briefing and argument in an appropriate case. Moreover, I think that the Court’s test will often lead to the same outcome as my textual interpretation and that, when possible, it is important in interpreting statutes to give lower courts guidance from a majority of the Court. See US Airways, Inc. v. Barnett, 535 U. S. 391, 411 (2002) (O’Connor, J., concurring). Therefore, although I adhere to my views on purposes-and-objectives pre-emption, see Wyeth v. Levine, 555 U. S. 555, ___ (2009) (opinion concurring in judgment), I reluctantly join the Court’s opinion.
See Slip Opinion (Concurrence), at 1-2.
Indeed, the language highlighted above indicates that Justice Thomas himself believed his test to be completely distinct than that of the majority, but that he "reluctantly" joined the majority based on his belief that the “outcomes” of both tests would sometimes overlap. To the extent there is no common overlap in "standards," there would be no controlling rule of law (at least, that is the conclusion of the various Courts of Appeal above). Accordingly, this issue would seem to be one needed to be resolved to even determine exactly what Concepcion means moving forward (aside from the preemption of the Discover Bank rule, of course).
That being said, I’d like to welcome everyone to my new blog: The Bailey "Bilateral Arbitration" Daily. And to my friends on the other side (which I know read this Blog) – I will see you in arbitration!! All 100 of them, substantively identical, but litigated and billed separately.
But seriously, there can be no denying Court’s decision is both significant and impactful. Does it signify the end of employment and consumer class action litigation? That may be a different story. For the sake of the little guy, let’s hope not. I am going to spend a few posts exploring that question, beginning with what the Court’s decision actually means. Once that is determined, I will examine the question of “if, where and how” we can move forward.
Northern District Certifies Meal Period Class on Behalf of Refinery Plant Operators: Gardner v. Shell Oil Co.
Operators are paid hourly, work rotating twelve-hour shifts, and are required by refinery policies to remain in communication at all times, and to remain on the premises. They must refrain from sleeping, reading non-work related materials, using headphones, and using the internet for personal purposes for more than fifteen minutes per shift. There are no set times for meal breaks. Operators work as Board Operators and Outside Operators and are assigned to one of six departments: Operations Central, Delayed Coker, Distillation and Hydroprocessing, Cracked Products, Utilities, and Logistics. Board Operators work at a console in a control center, tracking on various screens how a particular unit is running. Outside Operators work outside of the control centers, and are responsible for maintaining, monitoring and inspecting equipment, as well as responding to directions from Board Operators. In contrast to Operators, employees on a "day schedule" generally work between eight and ten hours per day, and receive an unpaid thirty-minute meal period free from any work responsibilities. Communication between and among Board and Outside Operators is required to run the Martinez refinery properly.
See Gardner, 2011 U.S. Dist. LEXIS 44851, at 2-3.
Under California's meal period provisions, "[i]t is an employer's obligation to ensure that its employees are free from its control for thirty minutes, not to ensure that employees do any particular thing during that time." Brown v. Federal Express Corp., 249 F.R.D. 580, 585 (C.D. Cal. 2008) (applying Murphy v. Kenneth Cole Productions., Inc., 40 Cal. 4th 1094, 1104 (2007)). Employers are obliged "not to force employees to work through breaks." Id. at 585 (citing Murphy, 40 Cal. 4th at 1104). Accordingly, Plaintiffs claim that Defendants' refinery-wide policies, requiring all Operators to remain on the premises, close to their work stations, to respond to radio calls and alarms throughout their shifts, to remain responsible for assigned units at all times, and to refrain from engaging in common break-time activities, deprived Operators of off-duty thirty-minute meal periods. Essentially, Plaintiffs claim that Defendants have not relinquished sufficient control over Operators during their meal breaks so as to make available an off-duty meal break and, thus, the Operators are entitled to payment of an hour's premium wage for each on-duty meal break. In this respect, the common issues presented by Plaintiffs' claims plainly predominate over any individual issues.
Defendants assert that, as a matter of law, the policies and practices that are the focus of this suit do not deprive Plaintiffs of an off-duty meal break. The Court need not resolve the merits of Plaintiffs' claims based on the present motions. However, for purposes of class certification, Plaintiffs' claims are adequately supported by law. In the USW case, on August 27, 2010, Judge Klausner granted summary judgment in favor of the plaintiffs on their meal break claims, which were based on the same restrictions and requirements attacked in this action. After analyzing Labor Code §§ 226.7 and 512(a), IWC Wage Order 1-2001 § 11, and related case law, the court found that the plaintiffs had established that they were not relieved of all duty during their meal breaks.
See Gardner, 2011 U.S. Dist. LEXIS 44851, at 22-24.
On April 14, 2011, the First District (Division Three) reversed an order granting an employer summary judgment on employee “seventh day premium pay” overtime claims in Seymore v. Metson Marine, __ Cal.App.4th __ (2011). According to the Court, such relief was foreclosed by a factual dispute as to whether the employer’s workweek definition was actually an “artifice” designed to evade payment of overtime.
At issue, the employer’s definition of workweek (which ran from Monday through Sunday) conflicted with the actual workweek structure used – which was comprised of a 14-day employment "hitch" that began and ended every two weeks on a Tuesday at noon. The net result of this pay-structure was that employees would be deprived of one day of “seventh day” double-time compensation required by Labor Code ¶510(a). According to the Court, summary judgment based on these facts was improper, as “an employer may designate a workweek used to calculate compensation that differs from the work schedule of its employees only if there is a bona fide business reason for doing so, which does not include the primary objective of avoiding the obligation to pay overtime.” Slip Opinion, at 9. According to the Court, the employer's burden under this standard was clearly not met. See id., at 8-11 (“the undisputed evidence raises a reasonable inference that Metson designated its workweek in a manner primarily designed to evade its overtime obligations and Metson failed to rebut that inference.”).
Second District Affirms Mandatory Use of Opt-Out Class in Case Implicating Class Member Medical Privacy Interests: L.A. Gay & Lesbian Center v. Super Ct.
On April 13, 2011, the Second District (Division One), issued an opinion in L.A. Gay & Lesbian Center v. Super Ct., __ Cal. 4th __ (2011), upholding the trial court’s refusal to permit use of an “opt-in” certification notice to ensure protection of privacy interests inherent in the action. As discussed here, the trial court previously certified negligence claims arising out defendant’s alleged systematic usage of an improper form of penicillin in treating syphilis between 1999 and 2004. In this appeal, the defendant argued that because the opt-out class mechanism would facilitate disclosure of class members' privileged and private medical information, use of an opt-in was required to protect these interests. Slip Opinion, at 11. The Court disagreed, concluding that “that the trial court did not err in establishing an opt-out class, but that it erred in ordering the Center to disclose the class members’ names and addresses to plaintiffs’ counsel.” See id., at 2.
With regard to the first issue, the Court reasoned that the risk of disclosing the private information at issue here was not a sufficient basis to overcome the rationale for rejecting the use of the “opt-in” class, as explained in Hypertouch Inc. v. Superior Court, 128 Cal.App.4th 1527 (2005). In particular, the Court concluded that an opt-in mechanism undermined the purpose of class actions, which “was designed for matters where joinder of all parties was impracticable, and was meant to eliminate the need to join absent parties.” Slip Opinion, at 15. Moreover, “[a]n opt-in procedure would have the effect of decreasing the number of class members bound by the judgment and increase the likelihood of redundant litigation.” See id., at 15. In short, the Court concluded that “[w]ithout the mandatory joinder effect of an opt-out class action, the Center will not obtain res judicata effect of a judgment; small individual class plaintiffs will not obtain the benefit of a settlement; and the cost of administering many small actions will not be avoided.” See id., at 16-17.
That issue aside, the Court concluded that the trial court did err in ordering production of the class list to plaintiff based solely on the fact such individuals did not opt-out, as medical records implicate a privacy interest that cannot be waived by inference. As resoned by the Court, “[i]n an opt-out class action, merely by passively consenting to membership in the class, a class member does not expressly place his or her medical condition at issue, therefore the exception of Evidence Code section 996 or Evidence Code section 912, subdivision (a) do not apply.” Slip Opinion, at 23. Thus, to give full meaning to the fact that “[t]he physician-patient privilege may only be waived through a clear manifestation of an intent to waive” [Slip Opinion, at 22], the Court reasoned that trial court was required to utilize a court-appointed third party to administer the notice, and disclose to plaintiff only those individuals who both did not opt-out and affirmatively authorized disclosure of their medical information. See id., at 23-24.
On March 31, 2011, Northern District Judge, William Alsup, certified a TILA/UCL class action against Chase “involving lender-imposed flood-insurance requirements for property securing home-equity lines of credit.” See Hofstetter v. Chase Home Fin., LLC, 2011 U.S. Dist. LEXIS 38124, 1-2 (N.D. Cal. Mar. 31, 2011). The plaintiffs’ action is based on a 2009 unilateral change of policy which had the impact of increasing the minimum amounts of flood insurance required for customers having existing home-equity line of credit. According to plaintiffs, this change in policy in many instances (1) imposed a level of coverage exceeding that required by law and (2) resulted in “forced” purchase of insurance at inflated rates. The plaintiffs claim that this practice violated TILA and the UCL, in part, because the alteration in policy materially altered existing agreements without adequate disclosures.
Defendants argue that individual questions would predominate over the common ones, but defendants' reasoning on this point is not persuasive. First, defendants emphasize that in order to determine whether the December 2009 policy change adversely altered the terms of a borrower's credit agreement, a trier of fact must consider the language of the agreement the borrower originally signed when opening his or her credit line (Opp. 21-22). Even assuming defendants will be allowed to rely on evidence of variation among the underlying deeds at trial, this issue would not frustrate class proof. Defendants have produced a relatively small random sample of these agreements, and they are not all identical forms. The variations among these agreements, however, are manageable, can be kept straight, and will not overwhelm the main themes of the case. After Chase produces all credit agreements for all class members, counsel could review the relevant language and divide the agreements into several corresponding categories, just as defendants did in their own brief (id. at 16). The jury then would be presented with representative language from each group of credit agreements, not the overwhelming volume of individual agreements themselves.
See Hofstetter, 2011 U.S. Dist. LEXIS 38124, at 29-30.
With respect to the members of the Section 17200 class seeking restitution, plaintiffs have carried their burden of showing that common questions would predominate the analysis, and that the class action mechanism is preferable for adjudicating their claims — most of which are of too little value to justify bringing individual suits. The alleged unfairness and unlawfulness of defendants' challenged practices stems from requiring borrowers to carry an amount of flood-insurance coverage larger than the maximum limits on their home-equity lines of credit. The comparison between a borrower's credit limit and the amount of flood-insurance coverage the borrower was required to carry is a matter of mathematical computation to be performed on defendants' records.
See Hofstetter, 2011 U.S. Dist. LEXIS 38124, at 41.
Northern District Certifies Product Defect/False Ad Action Against Acer America Corporation: Wolph v. Acer Am. Corp.
On March 25, 2011, Northern District Court Judge Jeffrey S. White granted plaintiff’s motion to certify a nationwide product defect/false advertising action against defendant Acer America Corporation in Wolph v. Acer Am. Corp., 2011 U.S. Dist. LEXIS 35003 (N.D. Cal. Mar. 25, 2011). Plaintiff’s action alleges that defendant marketed and sold certain notebook computers with insufficient memory to properly run Vista Premium, which came in the notebook computers pre-installed. See Wolph, 2011 U.S. Dist. LEXIS 35003, at 2. Plaintiff alleged claims under the CLRA, UCL, FAL and breach of express warranty.
Plaintiffs also rely on Acer's benchmarking results, retailer return rates, consumer return surveys, customer inquiry databases and third party recommendations regarding Vista. (Pizzirusso Decl., Exs. 10-16 (filed under seal).) The Court concludes that Plaintiffs have presented a plausible class-wide method of proof. Thus, Plaintiffs have met their burden to show that common questions predominate.
See Wolph, 2011 U.S. Dist. LEXIS 35003, at 27-28.

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