Source: http://www.baileydaily.com/2010/04/
Timestamp: 2019-04-22 04:05:47+00:00

Document:
On April 26, 2010, Judge Janis L. Sammartino of the Southern District of California certified a multi-claim wage and hour class in Dilts v. Penske Logistics, LLC, 2010 U.S. Dist. LEXIS 40568, 25-26 (S.D. Cal. Apr. 26, 2010). The certified class encompassed “349 hourly appliance delivery drivers and installers in California who were assigned to its state-wide Whirlpool account”, and included 12 subclasses framed on various practices relating to the company’s alleged failure to provide (1) compensation for all time worked, (2) meal and rest breaks, (3) tool reimbursements, and (4) compliant wage statements.
(1) PENSKE managers overseeing the Whirlpool account throughout the state regularly emphasized that breaks were not be taken until all installations were completed; (2) PENSKE never instituted a policy that either used the dispatch schedule to include a designated meal period nor did the company allow dispatchers to acknowledge, record or document when and if meal periods were actually taken; (3) PENSKE's use of a uniform scheduling algorithm resulted in delivery trucks being filled to capacity and built-in unrealistic installation and traffic estimates so that "driver/installers" were always at risk of maxing-out their regulatory "hours of service limits;" (4) PENSKE engaged in a common uniform policy and practice that required [class members] to be in constant communication with dispatch, management and customers and prevented them from turning off such devices during breaks; (5) PENSKE implemented a uniform policy that shifted the record-keeping requirement for meal periods to the driver/installer, who was told to record meals on the daily dispatch log, rather than be maintained by a central dispatch. The standard log included only one place entry of a single meal period and did not document whether the "installer" took a meal period[;] (6) PENSKE policy was to require a meal period to be recorded on the dispatch log before clerks were permitted to accept the end of day paperwork and allow the [class members] to clock out. This resulted in anecdotal evidence of clerks directing employees to fabricate a meal period entry whether taken or not; and (7) PENSKE managers, who were focused on maximizing productity (sic) and maintaining customer service engaged in a common practice of ridiculing, criticizing and/or reprimanding employees who returned to the yard with uninstalled appliances in a given workday.
See Dilts, 2010 U.S. Dist. LEXIS 40568, at 25-26.
See Dilts, 2010 U.S. Dist. LEXIS 40568, at 31-33.
Ninth Circuit Upholds District Court’s Finding That Quixtar Arbitration Agreement is Unconscionable: Pokorny v. Quixtar, Inc.
On April 20, 2010, the Ninth Circuit issued an opinion in Pokorny v. Quixtar, Inc., 2010 U.S. App. LEXIS 8106 (9th Cir. Cal. Apr. 20, 2010), affirming a district court finding that a multi-tiered arbitration agreement maintained by Amway successor, Quixtar Inc., was unconscionable under California law.
The plaintiffs’ action alleges that the Quixtar business model constitutes an unlawful, two-tiered pyramid scheme, and pursues class wide claims under RICO and the UCL on behalf of lower tiered “independent business owners” (“IBOs”). Quixtar sought to dismiss the action based on an arbitration agreement which would have required plaintiffs to engage in two step “conciliation” process (headed by top-tiered sales people and Quixtar itself) before being permitted to move forward with binding arbitration. The district court denied Quixtar’s motion on the grounds that both the non-binding conciliation and the binding arbitration portions of the arbitration agreement were procedurally and substantively unconscionable under California law. The Ninth Circuit affirmed, finding that substantive and procedural unconscionability were both “present to a high degree.” See Slip Opinion, at 5988.
With regard to procedural unconscionability, the Court found the agreement oppressive, reasoning that Quixtar’s practice of incorporating by reference the terms of the arbitration process in a second, undisclosed document, failed to apprise plaintiffs of the conciliation/arbitration procedures, let alone enable them to negotiate the terms. See id., at 5988-90.
Similarly, the Court upheld the district court’s finding that the agreement was “exceedingly” substantively unconscionable due to (1) the agreement applying only unilaterally to IBOs, and not Quixar itself, (2) provisions foreclosing IBOs from challenging Quixtar rules of conduct, while reserving Quixtar the right to alter such rules within the confines of the proceedings itself, (3) a shortening of the limitations period to 2 years, (4) a gag order which “forever barred [only IBOs] from disclosing to anyone not involved in the resolution of that claim the basis for it, the evidence supporting it, or the outcome of the arbitration” and (5) terms which incentivized the use of arbitration "neutrals" which had undergone training by Quixtar without adequate disclosures of bias to IBo's. See id., at 5991-03.
Admittedly, this opinion is somewhat routine. However, having been repeatedly cornered and subjected to the “plan” in the early 90’s, there is something about it I find uniquely satisfying.
Ninth Circuit Rules that Denial of Class Certification Does Not Impact CAFA Jurisdiction: United Steel v. Shell Oil Co.
On April 21, 2010, the Ninth Circuit ruled that a Federal court’s CAFA jurisdiction is not contingent on certification of a class in United Steel v. Shell Oil Co., 2010 U.S. App. LEXIS 8208 (9th Cir. 2010). The Court’s opinion makes clear that “the subsequent denial of Rule 23 class certification does not divest the district court of jurisdiction” and as such, a case properly removed under CAFA “is not to be remanded to state court.” See Slip Opinion, at 6026.
The Court’s opinion cites with approval to the Eleventh Circuit’s analysis in Vega v. T-Mobile USA, Inc., 564 F.3d 1256 (11th Cir. 2009), which “reasoned that (1) § 1332(d)(5)(B)’s jurisdictional limitation applies to ‘proposed’ classes; (2) ‘jurisdictional facts are assessed at the time of removal’; and (3) ‘post-removal events [(including non- or de-certification)] do not deprive federal courts of subject matter jurisdiction.’” See id., at 6030 (quoting Vega, 564 F.3d at 1279-80).
Had Congress intended that a properly removed class action be remanded if a class is not eventually certified, it could have said so. We think it more likely that Congress intended that the usual and long-standing principles apply -- post-filing developments do not defeat jurisdiction if jurisdiction was properly invoked as of the time of filing.
However, the Court was careful to note that exceptions to this rule may exist. See id., fn. 3 (“We recognize, as the Cunningham court did, exceptions to the general rule of ‘once jurisdiction, always jurisdiction’ -- such as when a case becomes moot in the course of litigation or when there was no jurisdiction to begin with because the jurisdictional allegations were frivolous from the start.”).
Fourth District Rules Longstanding Class Principle Precluding Defendant From “Picking Off” Named Plaintiff Applies to UCL, Post Prop 64: Wallace v. GEICO Gen. Ins. Co.
On April 19, 2010, the Fourth District Court of Appeal concluded that Prop 64 did not render the “pick off” doctrine inapplicable to class action claims brought under the UCL. See Wallace v. GEICO Gen. Ins. Co., __ Cal.App.4th __ (2010). In its ruling striking the class allegations, the trial court rejected the plaintiff’s citation to the principle expressed in La Sala v. American Sav. & Loan Assn., 5 Cal.3d 864 (1971), which precludes a defendant from “picking off” the named plaintiff by unilaterally settling out his or her claims to avoid a class action. See Slip Opinion, at 14. The trial court reasoned that “‘[t]he La Sala case relied on by [Wallace] is not persuasive in this setting, in light of the requirement under section 17200 that the plaintiff must have actually suffered injury.’” See id., at 14-15.
We see no indication in this statement of intent that Proposition 64 was intended to render the pick off cases inapplicable in class actions brought under section 17200 et seq. The voter’s focus was instead on the filing of lawsuits by attorneys who did not have clients impacted by the defendant’s conduct. Here, Wallace’s lawsuit was filed by a client directly impacted by GEICO ’s conduct. Further, as our Supreme Court stated in another case in which it reviewed evidence of the voter’s intent, the ballot materials for Proposition 64 contain no “indication that the purpose of the initiative was to alter the way in which class actions operate in the context of the [unfair competition law]” and there is no “indication that Proposition 64 was intended in any way to alter the rules surrounding class action certification.” (In re Tobacco II Cases (2009) 46 Cal.4th 298, 318 .) Because the doctrine expressed in the pick off cases is an established part of class action procedure, there is no reason to believe that Proposition 64 was intended to alter that doctrine in the context of suits brought under section 17200 et seq.
In the case at hand, the Court concluded that insofar as the defendant voluntarily offered to settle with plaintiff after she filed a class action lawsuit, the trial court erred by granting the motion to strike class allegations on the ground that the lawsuit lacked a representative plaintiff. See id., at 17-19.
Construing the phrase "as a result of" in Business and Professions Code section 17204 in light of Proposition 64's intention to limit private enforcement actions under the UCL, we conclude the reasoning of Tobacco II applies equally to the "unlawful" prong of the UCL, when, as here, the predicate unlawful conduct is misrepresentation. Indeed, the court explained in Tobacco II: "We emphasize that our discussion of causation in this case is limited to such cases where, as here, a UCL action is based on a fraud theory involving false advertising and misrepresentations to consumers. The UCL defines 'unfair competition' as 'includ[ing] any unlawful, unfair or fraudulent business act or practice . . . .' [Citation.] There are doubtless many types of unfair business practices in which the concept of reliance, as discussed here, has no application." (Tobacco II, supra, 46 Cal.4th at p. 325, fn. 17, italics added.) The concept of reliance is unequivocally applicable here.
See Hale, at 13-14; Durrell, at 14.
In fact, the difference between affirmance in Durrell and reversal in Hale turned on the simple allegation that the named plaintiff expected to be charged “regular rates” after reading the defendant hospital’s patient Admission Agreement at the time of being admitted. See Durrell, at 14-15 (“The SAC does not allege Durell relied on either Sharp's Web site representations or on the language in the Agreement for Services in going to Sharp Grossmont Hospital or in seeking or accepting services once he was transported there.”); but see Hale, at 14-15 (concluding that Hale “has reasonably pled reliance” because “[t]he SAC alleges Hale signed the Admission Agreement, and ‘at the time of signing the contract, she was expecting to be charged 'regular rates,' and certainly not the grossly excessive rates that she was subsequently billed.’”).

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