Source: http://www.baileydaily.com/2011/
Timestamp: 2017-10-23 07:49:52
Document Index: 272947738

Matched Legal Cases: ['§ 226', '§ 516', '§ 516', '§ 11', '§ 2283', '§ 4417', '§ 2']

Bailey Class Action Daily: 2011
In Dukes, the Supreme Court discussed but did not explicitly adopt the Fifth Circuit's "incidental test." Dukes, 131 S.Ct. at 2560. In Allison v. Citgo Petroleum Corp., 151 F.3d 402, 415 (5th Cir. 1998), the Fifth Circuit held that a (b)(2) class would permit the certification of monetary relief that is "incidental to requested injunctive or declaratory relief," which it defined as "damages that flow directly from liability to the class as a whole on the claims forming the basis of the injunctive or declaratory relief." According to the Allison court, such "incidental damage should not require additional hearings to resolve the disparate merits of each individual's case; it should neither introduce new substantial legal or factual issues, nor entail complex individualized determinations." Id. Numerous courts within the Ninth Circuit have since adopted the incidental test to determine proper certification under (b)(2). See Delarosa v. Boiron, Inc., 275 F.R.D. 582, 2011 WL 4389919 (C.D.Ca. Aug. 24, 2011) (Tucker, J.); Aho v. AmeriCredit Financial Services, Inc., 2011 U.S. Dist. LEXIS 80407, 2011 WL 3047677 (S.D.Ca. Jul. 25, 2011) (Sabraw, J.) This Court also adopts the incidental test as the appropriate test for Conseco's motion for decertification of the current policyholders.
See In re Conseco Life Ins. Co., 2011 U.S. Dist. LEXIS 146139, 21-22.
Seeking return of wrongfully charged costs and fees of this sort will not require additional hearings to resolve the disparate merits of each individual's case; nor will it introduce "substantial legal or factual issues, nor entail complex individualized determinations." Allison, 151 F.3d at 415. It will simply entail "computation by means of objective standards" based on data in Conseco's records. Id. As a result, the return of the improper deductions would flow directly from the claims forming the basis of the declaratory and injunctive relief. Damages arising from the costs of insurance and expense charges are therefore incidental to the declaratory and injunctive relief sought, and allowed under 23(b)(2).
In re Conseco Life Ins. Co., 2011 U.S. Dist. LEXIS 146139, 25-27.
Posted by Matt C. Bailey at 9:34 AM No comments:
Assuming, without deciding, the waiver of classwide claims in the arbitration provision at issue here is valid and enforceable in light of Concepcion, as El Cajon argues, we nonetheless conclude El Cajon waived arbitration when it waited five months to invoke arbitration.
Indeed, if El Cajon either had promptly moved to compel arbitration at or near the time it answered the complaint or informed Roberts at that time of its intention to compel arbitration (such as in its answer to the complaint), Roberts likely would not have propounded extensive written discovery involving the class action allegations in her complaint. Of course, if Roberts had been given timely notice by El Cajon of its intent to arbitrate and propounded the discovery in any event, it would have been at her peril.
However, because the record shows El Cajon waited months after Roberts propounded extensive written discovery (undoubtedly at great expense) to notify Roberts of its intent to arbitrate and because most, if not all, of this discovery would—under El Cajon's own analysis of Concepcion—be useless in arbitration, we conclude there is ample evidence in the record showing El Cajon's conduct (including in responding to this discovery) was inconsistent with the intent to arbitrate and that Roberts was prejudiced by that conduct. (See St. Agnes Medical Center v. PacifiCare of California, supra, 31 Cal.4th at p. 1196.)
Posted by Matt C. Bailey at 9:49 AM No comments:
First, it would seem to be universally apparent that claims predicated on barriers impeding access to meal and rest periods will be largely unaffected by Brinker. Both the Court and the Parties seemed to agree on the point that whatever the standard ultimately is deemed to be, an employee must at a minimum have the opportunity to access a break. In the words of Justice Baxter when this issue arose in the context of rest breaks, “you cannot waive something that you were not authorized to take.” As my firm only takes cases which implicate this type of theory, this was good news to me.
Second, the Court appears to be seriously leaning in the direction of meal and rest period standards having a temporal component. With regard to meal breaks, the Court appears to believe that an employee is entitled to a new meal break on a “rolling 5 hour basis” (this is discussed in detail below). With regard to rest periods, the Court appears to be at least warm to the proposition that rest breaks must be provided before the employee completes a work period of 4 hours (as opposed to making the employee work 4 hours as the triggering event).
That said, here are my observations of the oral argument, with my own delineation of the various issues in play:
Real Party In Interest (Plaintiffs) (Kralowec)
Issue #1 (Are The Break Statutes A Ceiling or Floor?): Justice Kennard opens questioning by asking whether the Statutes (i.e. Labor Code 226.7 and 512) could be harmonized with the meal and rest period provisions of the Wage Orders, and if not, which would govern? First, Real Parties In Interest maintained that the statutes can be harmonized, asserting as an example the fact that the term “provide” contained in the Section 226.7 expressly incorporates the Wage Order standards by reference. See Cal Lab Code § 226.7(b) (“If an employer fails to provide an employee a meal period or rest period in accordance with an applicable order of the Industrial Welfare Commission….”). Second, Real Parties further contend that if the Court were to find that the Wage Orders provide more protection that the statutes, the Wage Orders should be given effect on the grounds that the statutes provide a baseline “floor” which the IWC would be entitled to go beyond in the Wage Order.
Justice Kennard questioned the premise that both statutes incorporated the Wage Orders by reference to Labor Code § 516, which she asserted overtly contradicts an intention by the Legislature to incorporate the Wage Orders into Section 512. [See Cal Lab. Code § 516 (“Except as provided in Section 512, the Industrial Welfare Commission may adopt or amend working condition orders with respect to break periods, meal periods, and days of rest for any workers in California consistent with the health and welfare of those workers.”)].
Before Real Party was able to complete a response to this issue, Chief Justice Cantil-Sakauye interrupted, inquiring as to the impact of the Court’s previous decision in Industrial Welfare Com. v. Superior Court, 27 Cal. 3d 690, 725 (1980) [which concluded that “[n]either federal nor state labor relation legislation precludes the IWC from establishing minimum wages, maximum hours or standard conditions of employment to protect the health and welfare of California employees”], and whether that decision permitted the IWC to construct wage order imposing more stringent requirements. Real Party acknowledged this seeming softball pitch by noting that to the extent that the current Wage Orders are more protective, this would be entirely permissible under this general principle.
Issue #2 (What Exactly Is the Right At Issue?): Thereafter, Justice Liu raises what he perceives to be a dilemma – namely, as the principle right at issue with regard to meal breaks is suspension of control over the employee, once released of that control, can’t an employee exercise that right by simply choosing to work? Real Party states no, asserting that control is only part of the equation. In addition to relinquishing control, the employer must also prevent an employee from being permitted to work. [Admittedly, this proposition is consistent with the definition of “hours worked” under the Wage orders, which includes both of these components. See e.g. 8 CCR 11050(2)(K) (“‘Hours worked’ means the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so….)]. Real Party asserted that the employer can, and must, ensure that the employee is not performing work for an employee to even enjoy the underlying right.
Issue #3 (Can An Employer Comply With An Ensure Standard?): Real Parties’ statement in this regard immediately invokes questioning by Justice Kennard on the central issue at play – how does an employer implement a standard requiring it to ensure that hundreds (or thousands) of employees are actually not performing work during a meal period? Real Party responded by noting that employers control employee conduct in this regard all the time, such as scheduling standard workdays to avoid incurring overtime.
Issue #2 (What Exactly Is the Right At Issue): Justice Liu returns to his prior line of questioning exploring the nature of the right at issue. Justice Liu asks – based on the interpretative policy of the Court to construe labor provisions in favor of the employee – whether it is true that the most worker friendly construction the Court could provide is a construction that permits the employee to do whatever they chose during the meal period? Real Party disagrees, stating that a construction that also precludes the employee from being suffered or permitted to work is the most the most expansive construction [and technically Real Party is correct considering the dual definitional standards for “hours worked” under the wage orders]. Real party further asserts that a construction that prevents any work from being performed is necessary to protect the average employee, who otherwise would be deprived of any meal period for their entire shift absent such a construction (presumably under the guise that the employer would always claim that the employee simply chose to continue working).
Issue #3 (Can An Employer Comply With An Ensure Standard?): This prompted a question from Justice Baxter – should employees be punished or terminated for working through their break? Real Party asserts yes, eliciting a response from Justice Baxter highlighting the paradox; namely, that an employee who works through a break because he/she loves the job being fired would not serve to protect the employee. Real Party responds that this is no different than an employee being terminated for repeatedly working unauthorized overtime, and that employers can, and in fact do, control employee behavior in this scenario by imposing a system of incremental discipline.
Justice Baxter further questions what should happen when an employee disobeys the employer's order to take a meal break and not work, and the employer is aware of it – does the employer then have to compensate the employee with premium pay? Real Party responds in the affirmative, highlighting that this is analogous to the same scenario in the context of overtime; an employer must compensate the employee with premium pay when it knew or should have know that the employee was working though breaks, even if the employee is ultimately terminated for violating the employer's directive not to work.
[It is important to highlight that the analogy to overtime in this context was not happenstance, as the Court’s holding in Murphy that Section 226.7 proscribed a wage (as opposed to a penalty) rested upon the finding that Section 226.7 was squarely analogous to daily overtime compensation in all material respects, including (1) that Section 226.7 compensation, exactly like daily overtime compensation, represents a statutorily proscribed rate of pay assigned by the Legislature to a situation “[w]here damages are obscure and difficult to prove…” (Murphy, 40 Cal. 4th at 1112-13), (2) that Section 226.7 compensation, exactly like daily overtime compensation, was intended from the outset to create an immediate statutory entitlement to compensation that would be due and payable without filing an enforcement action (Murphy, 40 Cal. 4th at 1108), and (3) that the objective of the premium compensation provided by Section 226.7, exactly like daily overtime compensation, was intended to shape employer behavior regarding the maximum hours an employee should work. (Murphy, 40 Cal. 4th at 1110, 1113-14)]
Issue #4 (Are Rest Period Claims Susceptible to Class Adjudication?): Justice Liu opens up questioning on rest breaks, asking how rest breaks, which do not have a recordation requirement like meal breaks under the wage order, may be susceptible to class treatment? Acknowledging that rest periods operate under the differing “authorize and permit” standard, Real Party contends that class treatment is proper where there is class-wide evidence that an employer “impedes, discourages or dissuades” an employee from taking a rest break. Real Party asserts three grounds, including a practice which deprives the employee of taking tips when they leave for break [later, Justice Liu questions the foundation for the assertion that the employees in this case have a legal entitlement to tip money. In my opinion, this issue would not seem to be material here, as that issue is one relating to the merits of the case which would play out post certification].
Issue #5 (Are Rest Periods Governed by a Timing Requirement?): Justice Werdegar interrupts, questioning on whether Brinker has a uniform rest period policy susceptible to common resolution. At issue is whether Brinker’s policy of not permitting a rest period until the end of the fourth hour violates Wage Order 5 because it only permits a single rest break over the course of an 8 hour shift. Justice Werdegar essentially communicates that she is of the view that this would be a proper issue for class adjudication, as the issue of whether this policy complied with the Wage Order would be resolved as to the class as a whole.
Justice Baxter asks whether the fact that company policy did not permit an employee the option to take this second rest period precludes a claim of waiver (in the words of Justice Baxter, “you cannot waive something that you were not authorized to take.”). Real Party responds in the affirmative, stating an employee can waive a rest period only if there is no pressure from the employer.
[This is where the feed disruption occurred, which cut off the end of questioning of Real Party and approximately 7 minutes of oral argument by Petitioner]
Issue #7 (Does the Wage Order Require Meal Periods on a Rolling 5-Hour Basis?): Justice Baxter thereafter asks whether its Petitioner’s position that the Wage Order does not impose a “rolling 5 hour” requirement (i.e. that the Order requires a meal break every 5 hours, as opposed to before the 5th hour of a shift only), or that the Wage Order does impose this requirement, but that this requirement conflicts with the statutes (Section 226.7 and 512). Petitioner states that it believes both positions are true. Justice Baxter is quick to note, however, that the Wage Order in question has no provision for a section meal period.
[Note: There was some confusion on this point, as Section 11(D) technically refers to a second break, but upon close reading, that section only makes passing reference to waiver of a second meal break by persons employed in the health care field. Thus, it is clear that the point being made here is that if Section 512 constitutes the “floor”, and if Section 512 imposes two meal breaks (one at the 5th and the other at the 10th hour), then the Wage Order necessarily must be interpreted as requiring meal breaks be provided on a “rolling 5 hour” standard. This is so because a contrary construction would force the Wage Order to fall below the “floor.” This becomes more apparent based on Justice Liu’s follow-up questioning below].
Issue #1 (Are The Break Statutes A Ceiling or Floor?): Petitioner thereafter poses his own hypothetical in response to Justice Liu’s. Petitioner’s hypothetical involves an employee scheduled to work 9 hours, who takes a meal break at the 4th hour, and then works another 5 hours. Petitioner contends that under Real Party’s construction, the employer would be required to provide an additional meal period – a proposition which Petitioner believes violates the 10-hour requirement imposed by Section 512. Justice Liu disagreed, stating “it’s not contrary, it’s just more protective.” According to Justice Liu, that the Wage Order would require a second break at the 9th hour "is not inconsistent with the statute, it’s just more protective."
Justice Werdegar poses the question to Petitioner as to whether, assuming the Section 512 only imposes a set number of meal breaks (as opposed to standards relating to timing), whether he would concede that the Wage Orders can properly go beyond the statute to impose meal breaks based on timing? Petitioner dodged the premise of the question, claiming that the language of the Wage Order does not impose a meal break requirement based on timing. Justice Werdegar overtly stated her disagreement this proposition, citing the IWC’s use of the phrase “work period”, which she stated meant a “sub-set of a shift.” Based on this construction, meal breaks must be provided based on “blocks of time” during any given shift.
Issue #8 (Will The Court’s Opinion Have Retroactive Application?): At the close, Justice Baxter inquired whether a decision of the court would have prospective application only, or whether it would have retroactive application. Petitioner conceded that he was not in a position to respond on that point (as this exceeded the scope of issues), but that he believed that under applicable U.S. Supreme Court standards, a decision would have retroactive application.
Real Party In Interest Rebuttal (Kralowec)
On rebuttal, Real Party asserted several points, without much direct questioning by the Court.
First, that without a timing requirement, an employer could require an employee to work an entire 9 hour shift without providing a meal break (presumably, the employer complies in this hypothetical by proving a meal period at the very end of the shift).
Posted by Matt C. Bailey at 4:36 PM No comments:
On October 19, 2011, the Second District Court of Appeal (Division 6) reversed the denial of certification of contract and fraud claims arising out of an alleged scheme designed to secure consent from residents of a rent controlled senior citizen mobilehome park to convert the park to a condominium development. See Marler v. E.M. Johansing LLC, __ Cal.App.4th __ (2011). As stated in the Opinion, plaintiffs allege “that Park owners induced them to convert the Park to a condominium development through false promises about the purchase price they would pay for their lots; after Park residents approved the conversion, Park owners raised the lots prices so high that the majority of Park residents could not afford them.” Slip Opinion, at 1-2. By way of example, the named plaintiffs “lot price increased from $126,500 to $215,000, a price they could not afford. See id., at 4. The trial court denied certification on the grounds that the class was not ascertainable and that there was no community of interest, which the Court of Appeal deemed an abuse of discretion for multiple reasons.
The Court’s Opinion is one that plaintiff attorneys will want to note, as it contains excellent discussion of applicable rules relating to acertainability, including:
Identification of dual tests concerning the evaluation of the class definition [Slip Opinion, at 7-8],
The permissibility of defining the class by facts relating to “ultimate issues” in the action [Id., at 9-10], and
The obligation of the trial court to permit the class to be redefined if doing so would facilitate certification. Id., at 10.
Similarly, the Opinion also contains great discussion on the use of “inferred reliance” in the context of fraud, which in this case was deemed appropriate based on the use of a standardized “pitch” letter sent to park residents, as well as a survey utilized to gauge support of the conversion to condominium tracts. Id., at 13-14.
Posted by Matt C. Bailey at 8:43 AM No comments:
Posted by Matt C. Bailey at 4:18 PM No comments:
It has been a while since I have discussed the impact of the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011) (previously discussed here). As generally occurs after a decision of this magnitude has some time to settle, exceptions begin to percolate to the surface. Below are two recent favorable District Court opinions highlighting separate exceptions Concepcion’s preemption analysis:
First, in Plows v. Rockwell Collins, Inc., 2011 U.S. Dist. LEXIS 88781, 12-14 (C.D. Cal. Aug. 9, 2011), Central District Court Judge David O. Carter concluded that in the employment context, the California Supreme Court’s decision in Gentry v. Superior Court, 42 Cal.4th 443 (2007) remained valid law not withstanding Concepcion. Citing to the recent decision in Brown v. Ralphs Grocery Co., 197 Cal. App. 4th 489, 494 (2011) – previously discussed here – the Court concluded that Gentry remained valid law because the Gentry rule (i.e. the modest size of the potential individual recovery, the potential for retaliation against members of the class, the fact that absent members of the class may be ill informed about their rights, etc) is not predicated upon unconscionability:
Finding this reasoning persuasive, the Court holds that, for the purposes of the present Motion to Compel Arbitration, Gentry is valid law. Plows thus may avoid arbitration if he can demonstrate that his arbitration agreement is unenforceable under Gentry. As in Brown, however, the Court finds that there is insufficient evidence to determine whether the Gentry test is satisfied. This lack of evidence makes sense: the fact that Defendant did not move to compel arbitration until the filing of the instant motion means that there previously was no need to conduct discovery on this issue. Now that this need for information has arisen, however, the parties must be afforded an opportunity to gather the appropriate evidence.
See Plows, 2011 U.S. Dist. LEXIS 88781, at 12-14.
The Court has also reviewed subsequent authority submitted by the parties and the Court is not convinced that Cruz and Broughton are overruled by Concepcion.
Both Cruz and Broughton are more nuanced in their holdings than an "outright" prohibition of certain claims. In Cruz, the court held that arbitration was improper for injunctive claims brought on behalf of the general public but declined to rule on all injunctive claims, such as "UCL injunctive relief actions brought by injured business competitors." Cruz, 30 Cal. 4th at 315. And in Broughton, the court again shied away from a broad holding about all injunctive relief claims. Broughton, 21 Cal. 4th at 1079 ("We need not decide the broad question framed by the Court of Appeal and by plaintiffs as to whether an arbitrator may ever issue a permanent injunction."). Instead, the holding in Broughton is that, when a plaintiff is functioning as a private attorney general, the injunctive claim is not arbitrable. Id. at 1080. Thus, both Cruz and Broughton acknowledge that certain injunctive claims may be arbitrable and instead provide guidelines for determining when injunctive claims are not subject to arbitration. It is not clear that Concepcion intended to overrule the Cruz and Broughton line of cases.
Further, as set forth thoroughly in Broughton, there are compelling reasons why arbitration is not the proper forum for vindicating a broad public right. Broughton notes that "[o]ur path . . . begins by recalling that the purpose of arbitration is to voluntarily resolve private disputes in an expeditious and efficient manner." Id. at 1080. And the court was "cognizant of the evident institutional shortcomings of private arbitration in the field of such public injunctions." Id. at 1081. Broughton goes on to discuss these shortcomings. For example, a superior court retains jurisdiction over a public injunction, but arbitrators are not bound by earlier decisions of arbitrators in the same case, and this could cause inconsistency. Id. at 1081. And arbitration awards don't automatically have effect on non-parties, so even a public injunction could be enforceable only by the parties to the original case. Id. If another consumer plaintiff sought to enforce an injunction, he or she would need to re-arbitrate the same claim. Further, judges are accountable to the public in ways that arbitrators are not, so Broughton stated that judges are more suitable for overseeing injunctive remedies designed for public protection. Id.
See In re Directv, 2011 U.S. Dist. LEXIS 102027, at 37-39.
Posted by Matt C. Bailey at 8:07 AM No comments:
“Defendant's argument that it need only make meal periods available in order to satisfy the law does not answer Plaintiffs' central allegations; it merely begs the question whether those meal periods that were made available complied with applicable law regarding off-duty meal breaks. For example, Defendant emphasizes Plaintiffs' acknowledgments that they have been able to eat during their employment at the refinery. See, e.g., Gutierrez Depo., Docket No. 139, Exh. L, at 67-68; Brunell Decl., Docket No. 142, ¶ 5 (Operators "regularly have much more than 30-minutes of uninterrupted time every five hours during their shifts to eat their meals"). However, that an employee had time to eat during his or her shift does not establish that such a meal satisfied the California requirements for off-duty meal periods. See IWC Wage Order 1-2001 § 11(C) ("Unless the employee is relieved of all duty during a 30 minute meal period, the meal period shall be considered an "on duty" meal period and counted as time worked.").
Delagarza, 2011 U.S. Dist. LEXIS 101127, at 39-40.
Even under the more lenient "available" standard advocated by Defendant, there is still a classwide dispute over whether Plaintiffs' meal periods were "off-duty" given the restrictions on their activities during shifts. This dispute "can be resolved for all members of the class in a single adjudication." Hanlon, 150 F.3d at 1022. That Defendant disputes Plaintiffs' interpretation of its legal duties to the class does not make the resolution of such a dispute "individualized"; quite the opposite.
See Delagarza, 2011 U.S. Dist. LEXIS 101127, at 43.
Posted by Matt C. Bailey at 8:00 AM No comments:
On July 20, 2011, the California Supreme Court granted review of the Second District (Division 8) opinion upholding denial of certification of meal break claims in In Re Lamps Plus Overtime Cases, 195 Cal. App. 4th 389 (2011). This comes on the heels of the Court taking the same action with regard Division 8’s identical opinions in Hernandez v. Chipotle Mexican Grill, Inc., Case No. S188755, and Tien v. Tenet Healthcare, Case No. S191756.
Per the Court's website, briefing in Lamps Plus is stayed pending the Court’s decision in Brinker:
Posted by Matt C. Bailey at 5:03 PM No comments:
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Posted by Matt C. Bailey at 9:29 AM No comments:
On June 20, 2011, the U.S Supreme Court reversed the Ninth Circuit’s certification decision in Wal-Mart Stores, Inc. v. Dukes et al, 564 U. S. ____ (2011), concluding that the Ninth Circuit applied improper criteria with regard to Rule 23(b)(2) (which was expected) and commonality under Rule 23(a)(2), which was somewhat surprising.
The Court’s Rule 23(a)(2) analysis unquestionably elevates the burden required to establish commonality, which up until now “has been construed permissively.” See Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. Cal. 1998). As held by the Majority, this standard was improper, as the element of commonality requires a more demanding showing establishing that the defined class is not simply bound together by the same legal claim or common questions, but rather, is bound by (1) the same theory of liability that (2) is also capable of classwide resolution:
Commonality requires the plaintiff to demonstrate that the class members “have suffered the same injury,” Falcon, supra, at 157. This does not mean merely that they have all suffered a violation of the same provision of law. Title VII, for example, can be violated in many ways—by intentional discrimination, or by hiring and promotion criteria that result in disparate impact, and by the use of these practices on the part of many different superiors in a single company. Quite obviously, the mere claim by employees of the same company that they have suffered a Title VII injury, or even a disparate impact Title VII injury, gives no cause to believe that all their claims can productively be litigated at once. Their claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor. That common contention, moreover, must be 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.
Slip Opinion, at 19.
The dissent misunderstands the nature of the foregoing analysis. It criticizes our focus on the dissimilarities between the putative class members on the ground that we have “blend[ed]” Rule 23(a)(2)’s commonality requirement with Rule 23(b)(3)’s inquiry into whether common questions “predominate” over individual ones. See post, at 8–10 (GINSBURG, J., concurring in part and dissenting in part). That is not so. We quite agree that for purposes of Rule 23(a)(2) “‘[e]ven a single [common] question’” will do, post, at 10, n. 9 (quoting Nagareda, The Preexistence Principle and the Structure of the Class Action, 103 Colum. L. Rev. 149, 176, n. 110 (2003)). We consider dissimilarities not in order to determine (as Rule 23(b)(3)requires) whether common questions predominate, but in order to determine (as Rule 23(a)(2) requires) whether there is “[e]ven a single [common] question.” And there is not here. Because respondents provide no convincing proof of a companywide discriminatory pay and promotion policy, we have concluded that they have not established the existence of any common question.
Slip Opinion, at 19
While it is true that the procedural standard articulated by the Majority does not focus on whether common questions predominate, the Majority’s explanation on this point does not dispute the fact that the substantive effect of this commonality standard will likely limit the requisit issues to only those capable of satisfying predominance (which seemed to be the point articulated by Justice Ginsburg).
While the Court's standard likely will substantially impact certification under Rule 23(b)(1) and (b)(2) moving forward, it is unlikely to have significant impact Rule 23(b)(3) certification. It is generally held that “the commonality element is of less importance in a Rule 23(b)(3) class action … because the class must also meet the more stringent predominance requirement of Rule 23(b)(3).” See In re Educ. Testing Serv. Praxis Principles of Learning & Teaching: Grades 7-12 Litig., 2006 U.S. Dist. LEXIS 9726, 10 (E.D. La. Mar. 13, 2006). “The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.” See Amchem Prods. v. Windsor, 521 U.S. 591, 623 (U.S. 1997). Based on this fact, a court’s Rule 23(b)(3) inquiry generally subsumes Rule 23(a)(2) analysis altogether. See Hanlon v. Chrysler Corp., 150 F.3d 1011, 1022 (9th Cir. Cal. 1998) (a court’s “[Rule 23(b)(3) predominance] analysis presumes that the existence of common issues of fact or law have been established pursuant to Rule 23(a)(2)[.]”); In re Ford Motor Co. Bronco II Prod. Liab. Litig., 177 F.R.D. 360, 366 (E.D. La. 1997) (“courts usually do not spend a great deal of time addressing whether common issues exist, but instead focus on the related issue under Rule 23 (b)(3) of whether common issues predominate over individual ones.”).
Posted by Matt C. Bailey at 9:50 AM No comments:
On June 16, 2011, the U.S. Supreme Court issued an important class action decision in Smith v. Bayer Corp., 564 U. S. ____ (2011) (2011 U.S. LEXIS 4559) relating to the preclusive effect which may be given to a Federal court order denying class certification. This opinion involves an issue I have litigated at length before. See Johnson v. GlaxoSmithKline, Inc., 166 Cal. App. 4th 1497 (2d Dist. 2008). In Smith, the Court considered whether a district court exceeded the bounds of its authority under the “relitigation exception” to the Anti-injunction Act (28 U.S.C. § 2283) by enjoining a State court class action from proceeding based on a prior certification denial in Federal court. The Court resolved this question in the affirmative, finding that two elements of issue preclusion – i.e. the “identity of issues” and “identity of parties” requirements – could not be met.
With regard to the “identity of issues” requirement, the Court focused on whether variations in class action procedure at the State and Federal level could ever produce a finding that the "same issues" had actually been litigated and decided. The Court concluded that while such a finding was possible, this finding could not be predicated upon the mere fact that the State adopted Rule 23 procedural standards, as doing so would infringe upon each State’s right to develop its own class action jurisprudence. According to the Court, this was the starting point in the analysis, and to the extent any uncertainty exists, this requires the issue be left for resolution at the state court level:
The Court of Appeals and Smith offer us two competing ways of deciding whether the West Virginia and Federal Rules differ, but we think the right path lies somewhere in the middle. The Eighth Circuit relied almost exclusively on the near-identity of the two Rules' texts. See 593 F.3d at 723. That was the right place to start, but not to end. Federal and state courts, after all, can and do apply identically worded procedural provisions in widely varying ways. If a State's procedural provision tracks the language of a Federal Rule, but a state court interprets that provision in a manner federal courts have not, then the state court is using a different standard and thus deciding a different issue. See 18 Wright & Miller § 4417, at 454 (stating that preclusion is "inappropriate" when "different legal standards . . . masquerad[e] behind similar legal labels"). At the other extreme, Smith contends that the source of law is all that matters: a different sovereign must in each and every case "have the opportunity, if it chooses, to construe its procedural rule differently." Brief for Petitioners 22 (quoting ALI, Principles of the Law, Aggregate Litigation § 2.11, Reporters' Notes, cmt. b, p. 181 (2010)). But if state courts have made crystal clear that they follow the same approach as the federal court applied, we see no need to ignore that determination; in that event, the issues in the two cases would indeed be the same. So a federal court considering whether the relitigation exception applies should examine whether state law parallels its federal counterpart. But as suggested earlier, see supra, at 6, the federal court must resolve any uncertainty on that score by leaving the question of preclusion to the state courts.
See Smith, 2011 U.S. LEXIS 4559, at 20-21.
With regard to the “identity of parties” requirement, the Court extended its "virtual representation" analysis in in Taylor v. Sturgell, 553 U.S. 880 (2008) to conclude that a prior order denying certification of a class cannot be imposed on a completely different representative plaintiff, even if the subsequent action is otherwise identical in all other respects. As reasoned by the Court, the proposition that a denial of certification can itself be imposed on a class-wide basis rests squarely upon fallacious logic:
Indeed, the very ruling that Bayer argues ought to be given preclusive effect is the District Court's decision that a class could not properly be certified. So Bayer wants to bind Smith as a member of a class action (because it is only as such that a nonparty in Smith's situation can be bound) to a determination that there could not be a class action. And if the logic of that position is not immediately transparent, here is Bayer's attempt to clarify: "[U]ntil the moment when class certi-fication was denied, the McCollins case was a properly conducted class action." Brief for Respondent 37. That is true, according to Bayer, because McCollins' interests were aligned with the members of the class he proposed and he "act[ed] in a representative capacity when he sought class certification." Id., at 36.
See Smith, 2011 U.S. LEXIS 4559, at 29-30.
Posted by Matt C. Bailey at 2:04 PM No comments:
On June 7, 2011, Northern District Judge Jeffrey S. White certified a nationwide UCL/CLRA class based on allegations that the defendant engaged in promotional activities that “‘used express and implied statements about the positive effects of omega-3 fatty acid consumption on health to entice consumers to purchase its’ Shelled Walnut Products.” See Zeisel v. Diamond Foods, Inc., 2011 U.S. Dist. LEXIS 60608, 12-13 (N.D. Cal.). The Court’s opinion contains interesting analysis on issues relating to absent class member standing, as well as the element of ascertainability.
With regard to the first issue, the defendant attempted to re-hatch an issue, raised and rejected in Tobacco II, that absent class members must independently establish Article III standing. The defendant maintained that the California Supreme Court’s ruling in Tobacco II only applies in State court (a line of argumentation that I have been seeing with increasing frequency on various issues). The Court rejected the argument, reasoning that the Tobacco II court relied on Federal authorities interpreting Article II standing under Rule 23 in making its determination:
Diamond also urges the Court to deny class certification because absent class members lack Article III standing. [] Diamond argues that although the California Supreme Court has held that "state courts may permit uninjured individuals to pursue UCL actions in state court, so long as the class representative has established standing," the Supreme Court's decision did not and could not "remove the standing requirements set forth in Article III, including injury-in-fact and causation." (Opp. Br. at 14:8-13 (emphasis in original, citing Tobacco II, 46 Cal. 4th at 324).) The Court does not read Tobacco II to hold that a class may include members who have not been injured by a defendant's conduct. Rather, the Tobacco II court held that Proposition 64 "was not intended to, and does not, impose section 17204's standing requirement on absent class members in a UCL class action where class requirements have otherwise been found to exist." Tobacco II, 46 Cal. 4th at 324. This holding appears to be in accord with federal authority construing Rule 23. Indeed, the Tobacco II court relied heavily on federal cases interpreting the requirements of Rule 23. Thus, it noted that, in general, "standing in a class action is assessed solely with respect to class representatives, not unnamed members of the class." Id., 46 Cal. 4th at 319 (quoting In re General Motors Corp. Dex-Cool Prod. Liab. Litig., 241 F.R.D. 305, 310 (S.D. Ill. 2007)).
See Zeisel, 2011 U.S. Dist. LEXIS 60608, at 13-14.
Diamond argues that it is not administratively feasible to determine if a person is a member of the proposed class because it sells its Shelled Walnut products to retailers and it does not track consumer purchases. Diamond also argues that it sells numerous other nut products and that neither the prospective class members nor the Court would have a means by which they could determine whether they purchased the Shelled Walnut products at issue in this litigation. The Court is not persuaded. [] The proposed class includes (1) all persons (2) who purchased Shelled Walnut Products in 6 ounce, 10 ounce, 16 ounce and/or 3 pound bags (3) which bore labels bearing the Structure Function Claim and Banner (4) from March 22, 2006 through the present. The Court does not find this definition to be subjective or imprecise. Rather, it includes objective characteristics that would permit a consumer to identify themself as a member of the proposed class. See, e.g. Parkinson v. Huyndai Motor America, 258 F.R.D. 580, 594 (C.D. Cal. 2008); cf. Keilholtz, 268 F.R.D at 336 (finding class definition that included persons who lived in the United States who own a home in which the disputed product was installed after a particular date was not subjective or imprecise); Chavez v. Blue Sky Nat. Bev. Co., 268 F.R.D. 365, 377 (N.D. Cal. 2010) (concluding that class of persons who purchased beverage bearing disputed mark or brand, in the United States, during a particular period was ascertainable).
See Zeisel, 2011 U.S. Dist. LEXIS 60608, at 20-21.
Posted by Matt C. Bailey at 12:14 PM No comments: