Source: http://www.impactlitigation.com/2012/12/
Timestamp: 2019-04-19 17:12:45+00:00

Document:
While many predicted that 2012 would be the year in which interpretations of the U.S. Supreme Court’s ruling in Dukes v. Wal-Mart (131 S. Ct. 2541 (2011)) would effectively spell the end of class actions, this year has instead produced numerous pro-class judicial decisions, despite the more rigorous standards imposed by Dukes.
At the year’s outset, the Seventh Circuit affirmed class certification of wage and hour claims in a decision that provided considerable guidance as to the Dukes commonality requirement. In Ross v. Charter One, No. 10-3848 (7th Cir. Jan. 27, 2012), the Seventh Circuit found that Dukes did not require reversal of class certification, because the plaintiffs had shown sufficient evidence of classwide employment policies relating to unpaid overtime. Also in January, in Winfield v. Citibank, No. 10-7304 (S.D.N.Y. Jan. 27, 2012), the court granted conditional certification. In so ruling, New York’s Southern District rejected the application of Dukes v. Wal-Mart to motions for conditional certification under the FLSA. Similarly, in Myles v. Prosperity Mortgage Co., No. 11-01234 (D. Md. May 31, 2012), conditional FLSA certification was granted in an action alleging misclassification, with the express holding that Dukes is inapplicable at the certification stage of an FLSA action.
In addition to finding the post-Dukes defeat of class certification more difficult than expected, defendants also found themselves frequently rebuffed when attempting to decertify a previously certified class in light of Dukes. For instance, in Driver v. AppleIllinois, No. 06-6149 (N.D. Ill. Mar. 2, 2012), although the defendant argued that Dukes required the decertification of a wage and hour class, the court distinguished Dukes because class treatment in Dukes would have required the assessment of numerous subjective employment decisions, whereas class treatment in Driver was found to solely entail “strictly objective” issues of law and fact. Likewise, in Lyons v. Citizens Fin. Grp., No. 11-11187 (D. Mass. Nov. 9, 2012), the trial court responded to the First Circuit’s request that its certification ruling be revisited in light of Dukes by affirming its earlier certification of a class alleging misclassification and non-payment of overtime. And in California’s Northern District, in Ellis v. Costco, No. 04-3341 (N.D. Cal. Sept. 25, 2012), the court certified a class and meticulously distinguished the Title VII claims in that case from the far larger class that had been proposed in Dukes. This broader, plaintiff-friendly trend continued, as California’s Southern District narrowly interpreted Dukes by granting certification in Johns v. Bayer Corp., 09-1935 (S.D. Cal. Feb. 3, 2012).
Even the putatively conservative Seventh Circuit, in the person of Judge Richard Posner, participated in this trend. Early in 2012, in McReynolds v. Merrill Lynch, 672 F.3d 482 (7th Cir. 2012), Posner cautioned trial court judges to apply the same analytical rigor required by Dukes in denying class certification motions as they do to granting them. Later, in Butler v. Sears, Roebuck & Co., Nos. 11-8029, 12-8030 (7th Cir. Nov. 13, 2012), Posner set out to “clarify the concept of ‘predominance’ in class action litigation” in light of Dukes, and in so doing established analysis that, while more rigorous than in the pre-Dukes era, is hardly insurmountable for plaintiffs. And within the influential Second Circuit, in Chen-Oster v. Goldman Sachs, No. 10-6950 (S.D.N.Y. Jul. 17, 2012), the court rebuffed the defendant’s motion to strike class allegations, largely rejecting the defendant’s Dukes-based analysis.
Finally, in the ultimate testament to the post-Dukes vitality of class actions, Dukes itself was re-filed, with a streamlined class definition, in late 2011. Throughout 2012, Wal-Mart pursued a motion to dismiss, which was denied by Judge Charles Breyer in September. Dukes v. Wal-Mart, No. 01-2252, Dkt. No. 812 (N.D. Cal. Sept., 21, 2012) (Order Denying Motion to Dismiss). Thus, Dukes v. Wal-Mart, filed more than a decade ago, remains pending in California’s Northern District, having survived its own landmark U.S. Supreme Court ruling.
The parties have announced a settlement in the Toyota sudden acceleration multi-district litigation pending in a Santa Ana federal court. Under the terms of the settlement, which must now receive judicial approval, Toyota will install a brake-override system in some 3.25 million vehicles in addition to paying cash compensation, which will be measured by the diminution in the value of the cars that were the subject of the lawsuit. As many as 16 million current and former Toyota owners are eligible to participate in the settlement. The proposed settlement agreement is available here.
The agreement reached in the sudden acceleration litigation is estimated to be worth $1.3 billion. While exceeded in size by the $2 billion payout in In re American International Group (No. 10–4401, 2d Cir.), the Toyota settlement is still one of the year’s largest, and may be the largest automobile-related settlement of all time.
This settlement is also notable due to the involvement of a relatively rare public/private partnership. One of the cases within the multi-district litigation was brought by the Orange County District Attorney, which contracted with the Robinson Calcagnie Robinson firm to augment the limited public resources devoted to the case. While some were critical of the arrangement, both the substantial result for consumers and the relatively swift resolution of the litigation should weigh in favor of California’s District Attorneys and City Attorneys exercising their authority to contract with private firms.
A unanimous panel of California’s intermediate appellate court has upheld a trial court ruling that denied the defendant’s petition to compel arbitration. See Franco v. Arakelian Enterprises, Inc., __ Cal. App. 4th __ (Nov. 26, 2012). The decision from the Second Appellate District’s Division One took up whether the U.S. Supreme Court’s AT&T v. Concepcion ruling abrogated Gentry v. Superior Court (42 Cal. 4th 443 (2007)). In contrast to a decision out of Division Two of the Second District from earlier this year, Iskanian v. CLS Transportation (206 Cal. App. 4th 949 (2012)), Franco II holds that it does not.
Franco II involves a class action suit brought by a truck driver for meal and overtime violations, where the defendant employer attempted to compel individual arbitration pursuant to an arbitration clause with a class action waiver in plaintiff’s employment contract. Franco I (Franco v. Athens Disposal Co., Inc., 171 Cal. App. 4th 1277 (2009)) is a pre-Concepcion ruling in the same case, with essentially the same holding as Franco II, notwithstanding the intervening Concepcion decision.
In Gentry, the California Supreme Court held that, in arbitration agreements governing employment, class action waivers may be unenforceable in “some circumstances [where they] . . . would lead to a de facto waiver [of employees’ statutory rights] and would impermissibly interfere with employees’ ability to vindicate [those] rights.” Gentry at 457. In Franco II, the Second District held that Concepcion leaves room for California courts to make individual findings on the validity of waivers, thus limiting the preemption analysis of Concepcion to state rules that would categorically exempt a certain type of contract from arbitration. “We conclude that Gentry remains good law because, as required by Concepcion, it does not establish a categorical rule against class action waivers but, instead, sets forth several factors to be applied on a case-by-case basis to determine whether a class action waiver precludes employees from vindicating their statutory rights.” Franco II, slip op. at 3.
In reaching this holding, the Franco II panel credited the attestations of the plaintiff’s counsel that there was little chance of an attorney taking on the plaintiff’s case as an individual matter, owing to the maximum recovery of just over $10,000 being vastly exceeded by the legal resources necessary to prosecute the individual action. “The United States Supreme Court has recognized the necessity of a class action in cases where, as here, the potential recovery exceeds the cost of litigating a plaintiff‘s claims on an individual basis.” Slip op. at 63.
The Franco II court conducted what might be the California Court of Appeal’s most thorough history of U.S. Supreme Court case law on arbitration, cataloging decisions from 1953 to the present. This history included post-Concepcion developments in courts across the country. Additionally, this court outlined the history of the Vindication of Statutory Rights doctrine, central to the California Supreme Court case Armendariz v. Foundation Health Psychcare Services, Inc. (24 Cal. 4th 83 (2000)) and the U.S. Supreme Court case Green Tree Financial Corp.-Ala. v. Randolph (531 U.S. 79 (2000)). This doctrine permits the invalidation of arbitration agreements where an individual would be unable to effectively vindicate his or her statutory rights in the particular arbitral forum outlined in the arbitration agreement. This doctrine was a central component of the Franco II court’s finding that Gentry had not been overruled, as “Concepcion did not address or question prior Supreme Court cases recognizing that an arbitration agreement may be unenforceable if it prevents a plaintiff from vindicating his or her statutory rights.” Slip op. at 14.
The split between divisions of the Court of Appeal’s Second District will be resolved pursuant to the California Supreme Court’s grant of review of Iskanian on September 19, 2012. While it is probable that the Supreme Court will grant and hold review of Franco II pending its decision in Iskanian, the Court may instead consider Franco II alongside Iskanian. Additionally, the Vindication of Statutory Rights doctrine, as well as other issues addressed in Franco II, will likely be addressed by the U.S. Supreme Court when it reviews the Second Circuit case In re Am. Express Merchants’ Litig. (“Amex III”) later this term.

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