Consumer Advocate Legal Update : Class Action Lawyers & Attorneys : Khorrami Pollard & Abir Law Firm : Mass Torts, Products Liability

The plaintiffs in a class action lawsuit filed against Ticketmaster have submitted a proposed a settlement to the Los Angeles Superior Court. The lawsuit,Curt Schlesinger et al. v. Ticketmaster, was filed by Ticketmaster customers who claim Ticketmaster wrongfully charged customers excessive UPS delivery fees and/or order processing fees in connection with ticket sales.
Thecomplaint alleges that Ticketmaster violated the California Business & Professions Code by engaging in unfair and deceptive practices.

The “Ticketmaster Fees” section found on the Ticketmaster FAQ webpage says that the order processing fee “…covers the cost to fulfill your ticket request when you purchase the tickets online or by phone.” The charge also includes “services, such as taking and maintaining your order on our ticketing systems, arranging for shipping and/or coordinating with the box office will call…”

The class plaintiffs claim that the order processing fee was deceptive because it was unrelated to the actual cost of processing tickets. According to the complaint, the fee was a “profit generator designed to maximize Ticketmaster’s overall profit by obtaining bottom-line dollar amount on deals with its clients, and had no known connection to the actual ticket fulfillment costs.”
The class plaintiffs also assert that the UPS delivery fees charged by Ticketmaster were deceptive because Ticketmaster marked up the amount it actually paid to UPS and pocketed the difference.
Ticketmaster and its parent company, Live Nation, deny any wrongdoing and the proposed settlement has yet to be approved by the court.
 

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Last week, Wal-Mart settled a lawsuit with millions of current and former customers of Netflix for illegally colluding with Netflix to stay out of each other’s markets. Wal-Mart agreed to back out of offering DVD rentals by mail, and Netflix agreed to endorse Wal-Mart’s DVD sales. A group of Netflix customers filed suit against Wal-Mart and Netflix over the deal, alleging illegal collusion. Collusion is an agreement to limit competition in a market, which has the effect of guaranteeing larger market shares and keeping prices high in that market. Many, but not all, of these agreements are illegal under U.S. antitrust laws.

Wal-Mart has agreed to settle the lawsuit, but Netflix is continuing to fight. There is a website online for more details of the settlement here: https://onlinedvdclass.com/. Current and former customers of Netflix who paid a subscription between May 19, 2005 and September 2, 2011 can file a claim here: https://onlinedvdclass.com/ClaimForm.aspx.

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An Iowa judge has certified a class action filed on behalf of about 300 current and former residents of two Des Moines apartment buildings who say their landlord failed to combat a growing bedbug infestation.

The suit claimed the buildings for elderly and disabled residents first experienced a bedbug problem in late 2007, the Des Moines Register reports. Residents have complained they had to trash infested furniture and couldn’t move out because landlords and relatives shunned them. “Everybody sleeps on the floor,” one resident said in an interview last year.

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The New York legislature is currently considering a proposal to increase judicial discretion in awarding attorneys’ fees in New York class actions. A bill enacted in 1975 currently only allows judges to award fees to those who represent the entire class, while the new bill would expand that definition to those who benefit the class.

The change would essentially mean that attorneys for those challenging class actions settlements may seek reimbursement. Judge Robert S. Smith’s dissent in a 2010 New York Court of Appeals case provided the catalyst for the drafting of the new law. The case, Fleming v. Barnwell Nursing Home involved an attorney representing one class member’s objection to the original class attorneys’ fees, which amounted to 47% of the total award. The attorney successfully negotiated a decrease of awarded attorneys’ fees to 44%, freeing up a half million dollars for distribution among the 242 plaintiffs, but the 1975 law disallowed the judge to award the objecting lawyer any fees.
Judge Smith argued in his dissent that allowing such awards to objecting attorneys would provide a check on unreasonably high attorneys’ fee awards. He continued by noting that, after this decision, attorneys would have no incentive to object to such specious awards, unless they agree to take the case pro bono or are confident they can collect from the class member they represent.
 

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Sony has had some rough times recently dealing with hackers stealing customer data from them, but with Sony’s new additions to its terms of service, it seems that Sony is more concerned with defending itself from its customers than from hackers.

In April 2011, an online attack targeted the PlayStation Network (PSN), Sony’s online service for its PlayStation 3 and PlayStation Portable game consoles. Sony confirmed that personally identifiable information, including credit card numbers, were stolen from 77 million accounts, making this possibly the largest data security breach in history. The PSN was down for nearly a month, preventing millions of users from accessing online content and playing online games.

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Today, the United States Supreme Court issued its much-anticipated ruling in AT&T Mobility LLC v Conception. The holding is not favorable to consumers as it finds that the California Supreme Court ruling in Discovery Bank, which outlawed class action bans in many consumer contracts, is preempted by the Federal Arbitration Act (“FAA”) because it stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. The 5-4 decision, authored by Justice Scalia, is split along predictable lines, with Justices Roberts, Kennedy, Thomas and Alito joining the majority opinion.

This case was brought in federal court by the Concepcions, who entered into a cell phone agreement with AT&T, and who claimed that AT&T had engaged in false advertising and fraud by charging sales tax on “free” phones. The contract provided for arbitration of all disputes between the parties, but required that claims be brought in the parties’ individual capacity, and not as a plaintiff or class member in any purported class or representative capacity, in other words, a class action ban. AT&T moved to compel the case to arbitration, but the federal trial court and Ninth Circuit Court of Appeals refused, finding the class action ban unconscionable, citing the California Supreme Court decision in Discovery Bank v Superior Court, 36 Cal 4^th 148 (2005).  The Ninth Circuit also found that Discover Bank was not preempted by the FAA because it was a refinement of the unconscionability analysis to contracts generally in California and section 2 of the FAA permits arbitration agreements to be not enforced “upon such grounds as exist at law or in equity for the revocation of any contract.”

The U.S. Supreme Court disagreed finding that section 2’s saving clause preserves generally contract defenses, but does not preserve state law rules that stand as an obstacle to the accomplishment of the FAA’s objectives to enforce arbitration agreements according to their terms to facilitate an informal streamlined procedure proceeding. However, as Justice Breyer pointed out in dissent, “a single class proceeding is surely more efficient than thousands of separate proceedings for identical claims. Thus, if speedy resolution of disputes were all that mattered, then the Discover Bank rule would reinforce, not obstruct, that objective of the Act.”

The opinion is an example of the conservative majority of the court siding with big business against the rights of consumers. The decision’s impact on class action litigation could be far reaching because it is hard to envision any company not wanting to capitalize on the decision by inserting class action bans in the fine print of their boilerplate arbitration contracts. Class actions are one of the few swords that consumers hold against big business and are often the only tool to meaningful recovery and a change to an unlawful corporate practice.

For more information about the underlying case see this previous blog post, this blog post and this article in the firm's Newsletter.

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Apple is facing a class-action lawsuit from parents alleging the company lets minors purchase virtual goods in app games without parental approval.

Though Apple recently changed its policy to require passwords each time an in-app transaction is made, the lawsuit contends that Apple continues to profit unfairly from the sale of in-app goods. These games, downloaded for free, are known as "freemium" games. They often offer the opportunity to purchase virtual currency, that, despite the silly names, cost real money.

"The targeting of children by Apple and inducing them to purchase without the knowledge or authorization of their parents, millions of dollars of Game Currency is unlawful exploitation in the extreme," the complaint says.

Garen Meguerian, who filed the suit, found that his 9-year-old daughter had purchased around $200 in virtual goods from free games including "Zombie Cafe" and "City Story," without his knowledge.

"Such games are designed to induce purchases," the complaint says. "These games are highly addictive, designed deliberately so, and tend to compel children playing them to purchase large quantities of Game Currency, amounting to as much as $100 per purchase or more."

At issue is Apple's complicity in the sale of these goods. The suit alleges that Apple is deliberately exploiting minors to make millions of dollars.

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If you use a credit card, you’ve almost certainly been asked to provide your ZIP code when processing the transaction. Yesterday, the California Supreme Court ruled in Pineda v Williams Sonoma Stores, Inc. 2011 LEXIS 1355 (Feb. 10, 2011) that the collection of a ZIP code violates California Civil Code §1747.08, (Credit Card Act), thereby subjecting the retailer to maximum penalties of $250 for the first violation and $1000 for subsequent violations. The Supreme Court reversed a Court of Appeal finding otherwise.

Justice Moreno, writing for the Court, found that in light of the statute's plain language, protective purpose, and legislative history, a ZIP code constitutes "personal identification information" as that phrase is used in section 1747.08. Thus, requesting and recording a cardholder's ZIP code, without more, violates the Credit Card Act.

Justice Moreno sought to quell concerns of possible financial ruin expressed by the business community by noting that the Supreme Court had already held that section 1747.08, subdivision (e), "does not mandate fixed penalties; rather, it sets maximum penalties and that the amount of such penalties. Linder v. Thrifty Oil Co. 23 Cal.4th 429, 448. (2000). Moreover, many consumer class action settlements do not provide the payment of monetary penalties but rather provide for the award of a gift card to the consumer as compensation.

The Court also noted that Section 1747.08 contains some exceptions permitting the collection of ZIP code information, including when a credit card is being used as a deposit or for cash advances, when the entity accepting the card is contractually required to provide the information to complete the transaction or is obligated to record the information under federal law or regulation, or when the information is required for a purpose incidental to but related to the transaction, such as for shipping, delivery, servicing, or installation.

Finally, and very significantly, the Supreme Court rejected Williams-Sonoma’s request that its decision not be applied retroactively because Williams-Sonoma claimed it was operating under the assumption that its conduct was legal. The Supreme Court held that a single Court of Appeal decision could not provide a basis to depart from rule that opinions apply retrospectively.

Accordingly, this important decision protecting the privacy of California consumers brings life to more than a dozen class actions filed several years ago against various retailers who collected and recorded ZIP codes. It will likely spur more given the prevalence of the practice and the significant penalties for violating the statute.

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 On Tuesday, a D.C. federal judge preliminarily approved a $12 million settlement against National City Bank. Back in February, a class action suit was filed against National City Bank alleging that the bank engaged in unlawful and deceptive practices by improperly charging customers overdraft fees on debit card transactions. The plaintiffs claimed that the bank reordered electronic debit transactions from highest to lowest in order to deplete the account funds quickly while still maximizing the number of overdraft fees collected. 

The $12 million settlement allegedly represents 17% to 24% of what the plaintiffs would expect to get at trial. Settlement class members would receive $36 for each eligible overdraft fee incurred during a two month period. One objector complained that limiting the recovery period to two months would insufficiently compensate class members who released their claims for overdraft fees over a six-year period. Judge John Bates said that restricting the recovery to two months prevents “chronic overdrafters … from being unjustly rewarded for their behavior” and added that the two months need not be consecutive. 

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                 When I was young, I remember watching ads for G.I. Joe action figures. Their plastic guns shot oversized bullets and RPGs, their jeeps rolled over immaculately constructed “battlefields,” and their futuristic technology looked shiny and appealing to my five-year-old eyes. I begged my parents for the action figures, but they refused since the toys were violent. Advertisements for toys on television have changed little over the past few decades, featuring kids having tons of fun with all of their friends while playing with the featured toy. McDonald’s has had great success in enticing children to eat their food by including a toy with Happy Meals, the majority of which feature unhealthy food. Now, a mother of two in Sacramento is suing McDonald’s, claiming that their advertisements for Happy Meals manipulated her children into begging to eat at McDonald’s. So why should we care that McDonald’s incentivizes kids to eat their unhealthy food with the promise of receiving a cheap toy included in a Happy Meal? Shouldn’t parents regulate what their children eat?

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On November 17, 2010, the U.S. Food and Drug Administration issued Warning Letters to four makers of caffeinated alcoholic beverages advising them that, following a scientific review by the Agency, the FDA concludes that there is no support for the claim that the addition of caffeine to the identified alcoholic beverages is “generally recognized as safe”. To the contrary, the FDA found that the combination of alcohol and caffeine in these drinks poses a public health concern because the beverages can mask the effects of alcohol leaving the drinker unaware of how intoxicated they are. CNN Reports that critics of the drinks, nicknamed “blackout in a can”, note that the drink producers target young drinkers who may not be aware of the high alcohol volume with a single 23.5 ounce can of Four Loko containing a potent mix of caffeine equal to three cups of coffee and alcohol equal to three cans of beer.  The caffeine makes “wide awake drunks” but wears off quicker than the alcohol leading to blackouts.

According to the FDA’s press release, the drinks affected are: “Four Loko”, “Joose”, “Max” “Core High Gravity HG”, “Core High Gravity HG Orange”, “Lemon Lime Core Spiked”, and “Moonshot”. The FDA views the November 16 announcement of Fusion Projects, LLC, the maker of Four Loko, of its intent to remove caffeine and other stimulants from its drink as a “positive step”. The Warning Letters request that the recipients inform the FDA, in writing, within 15 days of the specific steps that will be taken to remedy the violation and prevent a recurrence. If the FDA is not appeased, it could seize the products or seek an injunction preventing the firms from continuing to produce the products in their current forms. The FDA has also prepared “Questions and Answers” that provides greater information about its findings and actions.

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On November 9^th the business-friendly Roberts Court heard oral argument on the pivotal issue of whether the Federal Arbitration Act of 1925 preempts a state court’s ability to strike down a contractual class action ban. If the Court ultimately rules in AT&T’s favor, corporations will have the right to contractually prohibit consumers from pursuing class action relief. Meaning that, as confounding as it may sound, the next time you are presented with pages of endless fine print in connection with a purchase or service agreement, you could be unwittingly signing away certain legal rights, and be doing so as part of a perfectly legal transaction.

The case at issue, Concepcion v. AT&T Mobility, LLC was initially brought as a straightforward class action claim by a husband and wife who signed a contract with AT&T for wireless service under the guise that the contract would include two “free” cell phones, which in reality came with a litany of undisclosed service charges amounting to roughly $30. However, the seemingly simple case took on new and far more significant meaning when the U.S. District Court for the Southern District of California declined to dismiss the case on the grounds proffered by AT&T- that the Concepcions, in signing a fine print laden contract for their wireless service, had agreed to pursue arbitration and forego class action litigation in the event of a legal dispute.

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On November 9, 2010, the United States Supreme Court will hear arguments in AT&T Mobility v Conception. The court will decide whether The Federal Arbitration Act preempts state courts from striking down class action bans in arbitration agreements. Large corporations, such as AT&T, frequently insert in their boilerplate customer agreements, often in fine print, provisions requiring that any dispute arising from the agreement be arbitrated and brought on behalf the individual consumer alone and not as a class action on behalf of other similarly impacted consumers. These big companies know that the amount of a single consumer’s dispute is often less than a couple hundred dollars, that consumers have little time and incentive to litigate their single small claim and no attorney would represent them with such a small amount in dispute. For example, the Concepcions sued AT&T claiming that AT&T represented that that their wireless service included free cellphones but the phones actually came with charges.

The only effective way to recoup small amounts of money owed to many consumers by a corporate wrongdoer is by grouping the claims as a class action. Class actions are the only “big stick” consumers have to fight large corporations and the threat of them deters corporate wrongdoing. Not surprisingly, corporations desperately want to halt class actions. California’s Supreme Court has ruled that class action bans in consumer agreements are unconscionable and unenforceable and the trial court and United States Ninth Circuit Court of Appeals in the Conception’s federal court case ruled similarly. Now the issue is before the United States Supreme Court, known to be conservative and pro-business.

An article by David Lazarus in the November 5, 2010 Los Angeles Times summarizes the issues raise by the case in plain English. SCOTUSblog has a link to all of the briefs. Look for future blogs here on this important case affecting consumer rights. 

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According to an article in the New York Times, a recent study indicates the not only has the rate of click fraud risen dramatically over the last year, it is taking on new forms which make it more difficult to detect.

Click fraud is a type if Internet crime that occurs in pay per click online advertising when a person, automated script or computer program imitates a legitimate user of a web browser clicking on an ad, for the purpose of generating a charge per click without having actual interest in the target of the ad's link.  As a result, advertisers end up paying for fraudulent clicks on their ads.

According to summary findings recently released by on-line ad-tracking firm Click Forensics, over the last year, the level of fraudulent clicks on legitimate advertisements reached the highest rate since 2006.  Additionally, according to the firm's chief executive, the firm is starting to see fraudulent clicks routed through mobile devices, like wireless Internet cards.  Such clicks are harder to detect than those coming from wired computers because the wireless card case effectively disguises the origin, lumping them in with legitimate mobile users under a single originating address.

KPA was previously involved in class actions against Google and Yahoo related to click fraud alleging Google and Yahoo did not do enough to prevent click fraud.  These class actions resulted in settlements benefitting advertisers who paid for fraudulent clicks.

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On October 18, 2010, the Wall Street Journal reported the results of their investigation which found that many of the most popular applications or “apps” on Facebook have been transmitting the names of Facebook users and, in some cases, the names of their friends to dozens of internet advertising and tracking companies. Apps are pieces of software that let Facebook users play games or share information.

The Journal reported that at least one data gathering firm, RapLeaf, Inc., linked Facebook user IDs to its own database, which it sells. The apps are extremely important o Facebook as it transforms Facebook into a hub of activity and extends the usefulness of its network. Seventy-percent of Facebook users reportedly use apps and the apps are a source of revenue for Facebook itself, which sells it own virtual currency to pay for games. 

According to the article, the biggest apps allegedly involved are FarmVille, Texas HoldEm Poker and Frontierville. The issue affects tens of millions of Facebook users, including those who set their profile as completely private. It is reportedly unclear how long the breach took place and Facebook claims it is making attempts to “dramatically limit’ the exposure of users’ personal information.

Another article in today’s New York Times  reveals that privacy advocates and technology experts are split on the significance of the breach. Privacy advocate, Peter Eckersley, argues that by transmitting a user’s ID to advertisers, the advertisers could link the ID to information collected about the user anonymously on the Web, thereby giving the advertiser the “magic key to tracking you online”. Others downplay the significance claiming that knowledge of a user’s ID does not enable anyone to access private user information without explicit consent and that credit card companies and magazines have access to far more personal information about customers than any Facebook app.

One thing is certain; this activity will result in litigation. Such breaches likely violate Facebook’s Terms and Conditions and Privacy Policy and well as state computer crime laws, federal Electronic Privacy and Stored Communications Acts and other consumer protections statutes.

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An editorial run online yesterday at nytimes.com as well as in print in today's New York Times, addresses Wal-Mart's pending petition for Supreme Court review of the 9th Circuit's April ruling affirming class certification of the largest employment class in U.S. history. The class is comprised of over 1 million women who have worked for Wal-Mart,  the nation's largest private employer,  throughout the last decade, and allege they have experienced ongoing gender discrimination in relation to equal pay and promotions.

The editorial notes that seeking Supreme Court review is likely a savvy legal move by Wal-Mart given the Supreme Court's tendency to show favor to large corporations, while also opining that a full hearing of Wal-Mart's allegedly discriminatory employment practices is in order. Thus far, the battle between the behemoth corporation and the class has  been strictly limited to whether class treatment is appropriate, and sadly it remains to be seen whether the underlying merits of the plaintiffs' claims will ever be heard on a class-wide basis.

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On June 17, 2010, the California Supreme Court denied the petition for review and request for depublication in Pfizer, Inc. v. Superior Court, 182 Cal. App. 4th 622 (2d Dist., 2010). Accordingly, this important post-Tobacco II appellate opinion remains good authority.  Pfizer provides a cautionary tale of attempting to certify too broad a class. The lesson here is to tailor your proposed class definition to the scope and manner in which the alleged misrepresentations were made. 

In Pfizer, a consumer sued a mouthwash manufacturer pursuant to the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.) and the false advertising law (Bus. & Prof. Code, § 17500 et seq.). The consumer alleged the manufacturer marketed its mouthwash in a misleading manner by representing the use of mouthwash could replace the use of dental floss in reducing plaque and gingivitis.

The trial court certified a class of "all persons who purchased Listerine, in California, from June 2004 through January 7, 2005." The Court of Appeal granted Pfizer's petition for writ of mandate, concluding the trial court's class definition was overbroad. The Supreme Court granted review. On August 19, 2009, the Supreme Court transferred the matter back to the Court of Appeal with directions to vacate the decision and reconsider the matter in light of In re Tobacco II Cases (2009) 46 Cal.4th 298 [93 Cal.Rptr.3d 559, 207 P.3d 20] (Tobacco II). Having done so, The Court of Appeal again concluded the class definition is overbroad and granted Pfizer's petition.  

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Have you purchased any or all of the products from the Lancóme High Resolution- 3x line, including its High Resolution Refill-3x Day Cream, Night Cream and/or Eye Cream and failed to see the advertised results? Specifically, have you found that the products failed to “[r]efill wrinkles in just one hour!”? Or that the product didn’t live up to the claim that “[i]n 4 weeks, wrinkles appear significantly reduced, as though refilled from within”? Did you find that the claim that “skin is saturated with moisture 94% and looks youthfully plumped” was misleading based on the actual results the product produced?

Please contact us here or by calling 213.596.6530 to tell us about your experiences.

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On March 31, 2009, Yamaha Motor Corporation recalled approximately 145,000 off-highway recreational vehicles for repairs due to hundreds of reported injuries and 46 deaths related to several Yamaha Rhino models, including the 450, 660 and 700 model vehicles. According to the Consumer Product Safety Commission, more than two-thirds of the accidents involved rollovers, many of which appear to involve turns at relatively low speeds and on level terrain. Yamaha Rhino ATVs may contain design defects making the vehicle unstable and prone to rollovers.

If you've been involved in an accident involving a Yamaha Rhino ATV, contact us.

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On March 24, Employment Law360 reported on Judge Paul G. Gardephe of the the U.S. District Court for the Southern District of New York and his decision to deny a request for dismissal from Rite Aid in the Naula et al v. Rite Aid of New York Inc. et al case. Rite Aid claimed the suit was duplicative to another suit, thus requesting for dismissal. KPA associate Matt Bailey is one of the lead attorneys representing the plaintiff and is quoted in the article.

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If you think one of the benefits of a plaintiff’s practice is that you don’t have to keep timely and accurate time records, you are badly mistaken if you prosecute class actions. Class action settlements must be presented to a court for approval. Pursuant to recent Court of Appeal decisions in Kullar v Foot Locker Retail, Inc. 168 Cal. App. 4th 116 (2008) and Clark v American Residential Services LLC 175 Cal. App. 4^th 785 (2009), courts are increasingly scrutinizing settlements, including accompanying applications for attorneys’ fees and costs. (Despite any agreement by the parties to the contrary, the court has an “independent duty to evaluate the requested amount [in a class settlement agreement] and award only what is reasonable.” Garabedian v. Los Angeles Cellular Telephone Company 118 Cal.App.4th 123, 128. (2004))  If your fee application seeks a percentage of a common fund created for the settlement, courts will often require that the percentage requested be cross-checked with class counsel’s lodestar (hours billed x reasonable hourly rate). If the lodestar is less than the percentage fee requested, the court will determine what, if any, multiplier to award to arrive at an approved fee. See, PLCM Group, Inc. v. Drexler , 22 Cal.4th 1084, 1095-96 (2000); Ramos v. Countrywide Home Loans, Inc.  82 Cal. App. 4th 615, 625-26 (2000); Ketchum III v. Moses 24 Cal.4th 1122, 1132-36 (2000).

In order to present the court with an accurate lodestar, class counsel must track hours billed by timekeeper (i.e. attorney, paralegal, law clerk). And, courts are increasingly reluctant to take counsel’s word for hours billed via a summary declaration. For example, in a case recently handled by our office, the court issued a tentative ruling approving the settlement as fair and reasonable but deferred its decision on our fee application pending the submission of detailed billing records reflecting hours billed and billing descriptions for each entry. The court wanted to confirm that there was little or no duplication of efforts in the time records. The court also insisted that a detailed cost bill be submitted including copies of invoices reflecting payment.  Because we were diligent in tracking our time and costs, we were able to provide the requested documentation to the court at the final approval hearing held two days later, resulting in prompt approval of the full fee request.

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In a recent decision, California state court Judge Brett Klein ordered attorneys fees be paid to plaintiffs’ counsel in the form of gift cards for defendant’s retail store. What makes this order more unusual than the form of payment? Plaintiffs’ attorney is a male, and defendant is a women’s apparel retailer. 

The class action asserted that Windsor Fashions was committing routine violations of the Song-Beverly Credit Card Act, and sought compensation for “all customers who, between November 29, 2006 and November 18, 2008, purchased merchandise from Defendant’s stores in the State of California, used a credit card to make the purchase(s), and whose address, E mail address or telephone number was requested and recorded by a Winsor Fashions employee.”

At the time of Judge Klein’s decision, preliminary approval of settlement had already been granted by Judge Susan Bryant-Deason, who was presiding over the case at the time. The preliminary approval order called for payment to the class in the form of $10 gift vouchers and $125,000 to class counsel in reasonable attorneys’ fees and costs. 

On the day of the final approval hearing, Judge Bryant-Deason was ill, and Judge Klein took the bench in her absence. Judge Klein not only went against Judge Bryant-Deason’s preliminary approval order and changed the terms of the settlement after the final approval hearing, but according to state Commission on Judicial Performance, he “engaged in a pattern of sarcasm and improper remarks toward the attorneys.”

Judges generally have discretion to determine what is and what is not considered fair and reasonable for attorneys’ fees. However, judges do not have unfettered ability to rule outside the scope of acceptable practice. The state Commission on Judicial Performance ultimately barred Judge Klein from presiding over future court cases and from receiving any state court-referred work.

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On March 2, 2010, the Ninth Circuit reversed, in part, a district court’s grant of summary judgment in Rutti v. Lojack Corp., 2010 U.S. App. LEXIS 4278 (9th Cir. 2010). The case – a proposed class action/FLSA collective action brought on behalf of Lojack alarm installation technicians – challenged Lojack’s failure to pay for time spent commuting to client locations. The district court granted Lojack’s summary judgment, holding that the plaintiff’s commute was not compensable as a matter of law under both California law, as well as under the Portal to Portal Act (a component of the FLSA).

To read the rest of this post, and get the latest information on class action issues in California and nationwide, subscribe to www.baileydaily.com

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When civil actions involving one or more common questions of fact are pending in different districts, the Judicial Panel on Multidistrict Litigation (Panel) may transfer those actions to a single district for coordinated or consolidated pretrial proceedings under the Multidistrict Litigation (MDL) process. 28 U.S.C. § 1407. When this happens, a fundamental inquiry arises: Which circuit’s law will the transferee court apply to the class certification determination? District courts are divided into two camps on this issue: one group following the law of the courts from which they were transferred (transferor courts) while the other group applies its own circuit’s laws. The MDL assignment is technically for pretrial proceedings only, and unless the transferred cases are resolved during pretrial proceedings, the Panel must remand the cases back to the transferor courts. 28 U.S.C. § 1407(a).

The justification for the first approach (district courts following the law of the transferor court) has been that the Panel is obligated to remand any transferred cases back to the transferor courts for trial. In other words, class certification is not only a pre-trial issue: class certification requirements are entangled with trial considerations because the trial court will need to examine the facts and law raised by the class claims. Further, given that Section 1407 requires cases to remand to the transferor courts for trial, the transferee court’s authority ends once the pretrial proceedings are completed.  The case that best embodies this principle is In re Methyl Tertiary Butyl Ether Prods. Liab. Litig., 241 F.R.D. 435 (S.D.N.Y. 2007) wherein the court reasoned, “[i]t would be neither just nor efficient to apply the law of this Circuit in considering class certification, and then force the transferor court to try a class action that it might never have certified.”  Thus, the court applied the law of the transferor court in examining class certification.

The justification for the second approach (district courts applying their own circuit’s laws) is that there is only one body of federal law and there is ultimately a single proper interpretation of federal law. At its core, this approach has considerations of consistency and efficiency in mind. One of the more important current cases exemplifying this concept is the Central District of California’s decision in In re Live Concert Antitrust Litigation, 247 F.R.D. 98 (C.D. Cal. 2007).  The court in Live Concert held that the transferee court’s law applies to class certification determinations in the MDL context. The Live Concert court noted that “circuit and district courts, including the Ninth Circuit, have uniformly applied the law of the transferee circuit in MDL proceedings involving federal law.”

Unfortunately, so long as the current MDL remand procedure exists, both approaches have their inherent problems since the remand procedure leads to two highly flawed approaches to the choice-of-law issue.  Neither approach provides an adequate answer to the choice-of-law question: either the transferee district court abides by its own circuit’s law and faces the risk that the transferor district court or circuit will overturn the decision, or it makes a determination that may be incorrect under its own circuit’s precedent to avoid a problem upon remand.

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On February 10, 2010, the California Supreme Court granted review of the decision rendered by the Court of Appeal (Fourth Appellate District, Division Two), in Zhang v. Superior Court,178 Cal.App.4th 1081 (review granted, ordered depublished February 10, 2010). In Zhang, the Court of Appeal determined that an insured was not precluded from bringing a cause of action under California’s Unfair Competition Law (“UCL”) (Cal.Bus.Prof. §17200, et seq.). This decision directly contradicted insurance companies’ long-standing argument that the California Supreme Court holding in Moradi-Shalal v. Fireman’s Fund Ins. Companies, 46 Cal.3d 287 (1988), precludes all private causes of action against insurers.

In ruling for the insured, the California Court of Appeal determined that Moradi-Shalal did not bar a UCL “fraudulent” prong claim against an insurance company, and on a writ petition, reversed a trial court order holding otherwise. Zhang v. Superior Court, 178 Cal.App.4th 1081 (2009). The Court of Appeal’s decision turned on the allegations of the Plaintiff’s claims that the insured had “made fraudulent misrepresentations and promulgated misleading advertising with respect to its intentions to ‘pay provide coverage in the even the insured suffered a covered loss.’” Id. at 1089.

Should the Supreme Court uphold the Court of Appeal’s decision in Zhang, consumers will celebrate a small victory. Essentially, insurance companies will no longer be protected by such a broad umbrella under Moradi-Shalal, and may be held liable for claims of unfair conduct and false and misleading advertising. 

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After more than two years of litigation, Sonali Kolhatkar et al v. Jane Arellano et al, SACV07-1394-DOC (RNBx), comes to an end, as the Plaintiffs have reached a settlement agreement with the U.S. Citizenship and Immigration Services (USCIS). Filed in August 2007 in the U.S. District Court for the Central District of California, this class action served to be the first of its kind, as it aimed to bring an end to the often prolonged and indeterminate naturalization process of immigrants. Specifically, the Class Complaint alleged that the 2002 institution of FBI name checks to the naturalization process resulted in indefinite delays, with measurable effects on legal permanent residents awaiting adjudication.  As a direct result of such delays, Plaintiffs alleged that the federal government was not only effectuating considerable damage to Plaintiff, but that they were also defying laws which mandate the processing of citizenship applications within six months of submission.   See 8 U.S.C. §1571 (b). 

The terms of the settlement require USCIS to finally adjudicate the hundreds of pending citizenship applications from the greater Los Angeles area. Particularly, USCIS has agreed to ensure the processing of such applications from the Los Angeles, Orange County, and San Bernardino areas within six months. Plaintiffs’ Counsel have essentially secured this process will be timely by mandating access to the relevant data used by the Federal government and auditing their progress.  In doing so, the immigration backlog, which has prevented many legal residents from enjoying the benefits of citizenship, will finally meet its end.

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In re Tobacco II Cases almost one year later:
A boon for California Consumers, or a bust?

Perhaps no opinion has had more impact on class action litigation in the last year than the California Supreme Court’s decision in the Tobacco II Cases. In less than a year, however, several of the Court’s core findings have been diminished by subsequent interpretation. Matt Bailey examines subsequent treatment of Tobacco II by lower courts, providing insight on some of the current pitfalls in pursuing a class action under the deception prong of the UCL.

To read the full article featured in Advocate Magazine on pages 54 - 61, click here.

For the latest updates on California and National Class Action developments, follow Matt Bailey's Blog: Bailey Class Action Daily.

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An often-stated principle in class certification law is that the class certification motion is not a motion on the merits; the merits of the case are distinct from the analysis of the class certification requirements. However, in practice, the line between a class certification and merits is blurred. Two recent California Court of Appeal cases illustrate this point.

In Ghazaryan v. Diva Limousine, Ltd., 169 Cal. App. 4th 1524 (2009), the employee drivers filed a lawsuit challenging Diva’s policy of paying its drivers an hourly rate for assigned trips but failing to pay for on-call time between assignments, referred to as “gap” time. The trial court denied plaintiffs’ motion to certify two overlapping subclasses, one based on Diva’s alleged failure to pay earned overtime and straight time and a second targeting Diva’s failure to provide mandatory rest breaks. The denial focused on the potential difficulty of assessing the validity of Diva’s compensation policy in light of variations in how drivers spend their gap time. Diva had submitted numerous employee declarations stating that drivers typically used unpaid gap time for their own purposes such as working out at a gym, napping or eating at home or running personal errands. The trial court’s order denying certification, however, suggested that if plaintiffs’ claims are valid, class treatment of those claims is appropriate, but stated that the court must first determine if Diva’s practices are improper and, if so, which drivers fit into the appropriate class.

Read the remainder of Robert's article as published in the January KPA Newsletter here.

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A recent decision in Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, (9th Cir. 2009) provides defendants an important tool in the battle for class certification; the ability to set the timeline in class cases and preemptively move to deny class certification. The general scheme in class action lawsuits is well-known: plaintiffs move for class certification, and in doing so, have the right to put the class certification issue before the court. Defendants, in turn, then oppose. The Ninth Circuit in Vinole turned this general practice upside down by deeming a preemptive motion to deny certification proper under Federal Rule of Civil Procedure 23.

Rule 23(c)(1)(A) discusses the time limitations for a court’s determination of class certification. Rule 23 specifically states, “Time to Issue: At an early practicable time after a person sues or is sued as a class representative, the court must determine by order whether to certify the action as a class action.” The Ninth Circuit held that the literal language of Rule 23 does not preclude defendants from seeking resolution of the class certification issue early in the case, and before plaintiffs have the opportunity to confront the issue. In Vinole, the motion to deny class certification was brought ten months after the filing of the lawsuit.

Plaintiffs, in opposing defendant’s tactics, attempted to argue that the preemptive motion to deny class certification was not only per se improper because it preceded the motion for class certification, but also because it was filed prior to discovery and pretrial motion cutoff dates. The court of appeals rejected plaintiffs argument, reasoning that plaintiffs had adequate time to conduct class related discovery and that the district court did not abuse its discretion by considering the issue of certification before the pretrial motion deadline. 

Although the court deemed defendant’s preemptive motion to deny class certification proper in Vinole, there are undoubtedly times when such motions should be denied. For example, and as the Ninth Circuit discusses, had plaintiffs shown the need for additional discovery, defendant’s motion would have been denied as premature. Plaintiffs should not make the mistake of relying on a “per se improper” argument as plaintiffs did in Vinole, and should instead be prepared to make a showing of why additional time is needed when confronting a motion to deny class certification. 

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It has become common practice in class action litigation, particularly in cases concerning consumer fraud, to include a cause of action for violation of California Business & Professions Code § 17200, also known as the Unfair Competition Law (“UCL”). Section 17200 states

As used in this chapter, unfair competition shall mean and include any unlawful,unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code.

In order to successfully assert a cause of action under section 17200, it is important to anticipate the defenses that may be raised against such a claim. One of the most common defense arguments is that the UCL claim is preempted by federal law. Because the preemption issue is so complicated, this issue arises frequently in UCL cases with often unpredictable results. For instance, the California Supreme Court reversed itself on the issue with respect to claims against tobacco companies allegedly targeting minors with their advertising. In 1994, in Mangini v. R.J. Reynolds Tobacco Co., 7 Cal.4th 1057 (1994) the Supreme Court held that such a claim was not preempted by the Federal Cigarette Labeling and Advertising Act. Thirteen years later in In re Tobacco Cases II, 41 Cal.4th 1257 (2007), the court overruled Mangini and held that such claims are preempted by that federal law.

Another defense is that there can be no claim under the UCL if the underlying law specifically bars a claim. For example, in Safeco Ins. Co. v Superior Court, 216 Cal.App.3d 1491 (1990) the court held that an alleged violation of Insurance Code § 790.03(h) cannot be the predicate for a section 17200 claim because that would circumvent the Supreme Court’s holding in Moradi-Shalal v. Fireman’s Fund Insurance. Companies., 46 Cal.3d 287, 250 (1988), which bars direct actions against insurers for such claims.

Additionally, a UCL claim will not succeed if the alleged unlawful conduct is specifically permitted by law. As an example, in Shvarts v. Budget Group, Inc., 81 Cal.App.4th 1153 (2000), the rental car industry’s practice of allegedly charging unfairly high prices for refueling returned cars was held to be expressly permitted by Civil Code § 1936(m)(2) and so a section 17200 claim challenging the practice could not proceed.

Finally, certain types of claims are simply not recognized under the UCL. For example, in People for the Ethical Treatment of Animals, Inc. v. California Milk Producers Advisory Board, 125 Cal.App.4th 871 (2005), PETA alleged that the Board’s “happy cows” campaign constituted false advertising. The court held the Board is not a “person” within the meaning of the UCL and therefore could not be sued under section 17200.

In essence, the UCL is a powerful tool for plaintiffs and in order to succeed under the statute, plaintiffs should anticipate the various defenses that may be asserted.
 

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For years, there has been a split in authority over the definition of “unfair” in consumer actions brought under California’s Unfair Competition Laws (“UCL”). Recently, the Court of Appeal (Second Appellate District, Division Three) discussed this split of authority in detail, and adopted a third formulation for the definition. Davis v. Ford Motor Credit Co., ___ Cal.App.4th ___, 2009 WL 3859327 (Nov. 19, 2009).

The UCL establishes three types of unfair competition – unlawful, fraudulent and unfair. (See Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180 (Cel-Tech). However, the UCL language is in the disjunctive, so that “a practice is prohibited as ‘unfair’ or ‘deceptive’ even if not ‘unlawful’ and vice versa.” (Cel-Tech, supra, 20 Cal.4th at p. 180.)

Defining the definition of the term "unfair” has remained unresolved as applies to consumer suits. While courts have created different balancing tests for unfair competition claims by competitors alleging anticompetitive practices, they have specifically excluded consumer actions from the reach of these tests. Cel-Tech, supra at 187, fn. 12. Until Davis, there were two main tests applicable to the definition of the term “unfair”.

Davis applied a third test to consumer actions that was first established in Camacho v. Automobile Club of Southern California, 142 Cal.App.4th 1394 (2006) (Second Appellate District, Division Eight). The Davis court held that Defendant’s demurrer was properly sustained without leave to amend because, as a matter of law, plaintiff could not satisfy the Camacho test. Slip op. at 19-20. The most significant barrier was the requirement of "an injury that consumers themselves could not reasonably have avoided." Id. at 19 (citing Camacho). The court determined that Davis could have avoided the injury alleged, i.e. the imposition of late fees, by making timely payments to his auto loan despite the fact that plaintiff alleged that defendant’s interpretation of the contracts and method of applying payments to the load allowed defendant to assess multiple late fee charges for a single late payment.

Before Davis, very few courts followed the Camacho analysis. In fact, many have explicitly declined to follow it. See, e.g., Lozano v. AT&T Wireless Services, Inc., 504 F.3d 718 (9th Cir. 2007); Overstock.com v. Gradient Analytics, Inc., 151 Cal.App.4th 688, 715 (2007). The Supreme Court, however denied the petition for rehearing on December 8, 2009, leaving the question unresolved of what “unfair” means under the UCL in consumer cases.
 

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Current and past Rite Aid Pharmacy employees might be owed unpaid wages if they:

• Worked off the clock, or
• Were classified as an exempt manager or assistant manager and performed primarily non-managerial duties.

All employees have enforceable rights and deserve to be paid fairly.

KPA CAN HELP.

If you, members of your family, or friends might have a claim, contact us for a free consultation.

Khorrami Pollard & Abir LLP, one of the largest plaintiff-only firms in the nation, represents individuals in a variety of cases including class actions, pharmaceuticals, product liability, natural disasters, toxic torts, and labor and employment matters.

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Consumers have paid upwards of $100 for cables whose performance is equal to a standard $10 six-foot HDMI cable. Many electronic stores and manufacturers have made claims that these “premium” cables outperform standard cables. However, many well respected third party reviewers, such as cnet.com contend that this isn’t necessarily the case. “Do you really need to spend that much money on a single HDMI cable? Absolutely not – those cables are a rip-off” says CNET. “And despite what salesman and manufacturers might tell you, there’s no meaningful difference between the $10 cable and the $50 cable.”

Cases where consumers have been mislead about the quality of the cables, and extreme up-selling has also been happening more frequently than not. According to engadgethd.com “Upon further inspection, he realized that the difference in picture quality wasn't due to the gold-plating or fancy braiding, but rather the use of composite cables on the non-Monster TV.” And according to gizmodo.com “While Monster cables are of good quality and engineering, when it comes to digital signals, specifically HDMI cables, we know that its a better idea to buy a $5 dollar HDMI cable today, and then when bandwidth requirements go up in future specs of HDMI, just buy another $5 cable then. It's a lot cheaper than $100 HDMI cables from Monster.”

If you have experienced any of these practices, contact us immediately. Practices such as these are misleading to consumers and are leaving them with no choice but to pay premium prices for unnecessary high-end cables.
 

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Taking the deposition of persons who have been designated to testify on behalf of a defendant are a critical component of a class action discovery plan. These “corporate designee” or “Person Most Knowledgeable” depositions under FRCP 30(b)(6) deposition or CCP section 2025.230 can make or break your case for class certification. These witnesses are your opportunity to get testimony that binds the corporate defendant and which, hopefully, proves that the policy, procedure or practice challenged in your class case uniformly affects the class.

Defendants know the importance of these depositions and usually prepare their witnesses well. It sometimes becomes almost comical how often they try to regurgitate the mantra drilled into them by defense attorneys by answering “that depends” or “it varies”. Because these witnesses can be slippery, you must prepare well before the deposition. First, be sure you know the law on how to prove the merits of your cases. This is critical because when moving to certify you need to show how liability can be determined through common proof. Often a corporate representative is unfamiliar with the legal theories permitting you to get good testimony.

You must also be armed with important documents obtained in a thorough document request sent prior to the deposition. If necessary, move to compel production because these key documents frequently are the only way to pin these witnesses down. I organize documents according to the particular subject matter identified in the deposition notice. The goal by the end of the deposition is to have all of the critical documents needed for class certification authenticated and attached as exhibits to the deposition transcript.
 

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The Law360.com employment article “Analyst Wins Conditional Cert. in L-3 FLSA Dispute” reports on the recent conditional collective certification by the U.S. District Court for the Middle District of Pennsylvania in the case of Regelman v. Level 3 Communications LLC. Khorrami Pollard & Abir LLP and Pogust Braslow & Millrood LLC represent plaintiff Rose Regelman in the case, accusing Level 3 Communications LLC of allegedly misclassified analysts as exempt from federal overtime pay regulations.

Read the entire article by visiting Law360.com.

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Between the period of October 16, 2009 and October 19, 2009, four separate publication requests were filed in Cohen v. DirecTV. The requests are contained here, here, here and here.

In Cohen, the Second District upheld denial of certification of a UCL class because the proposed class included persons who had not viewed alleged deceptive promotions by DirecTV. The Court reasoned predominance could not be met under circumstances, and in fact, went so far as to state that “we find Tobacco II to be irrelevant because the issue of ‘standing’ simply is not the same thing as the issue of “commonality.”

As discussed at the Bailey Class Action Daily in this previous post, Cohen's analysis conflicts with the California Supreme Court's decision in In Re Tobacco II Cases.

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In recent years, cellular telephone users have been increasingly subjected to a scheme known as “cramming,” which has been described by the Federal Trade Commission as “the placement of unauthorized charges on telephone bills.” Unscrupulous companies use a variety of methods to “cram” charges, such as deceptive promotions of free ringtones, game downloads, games, contests, jokes and sweepstakes bidding to entice consumers to provide their cell phone number so that monthly service fees may be charged to the consumer’s cellular phone bill.

If your cell phone bill has contained a charge for an unauthorized service, then please contact us to discuss your experience.

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In Zaragoza v. Ibarra (2009) 174 Cal.App.4^th  1012, the Court clarified the issues of homeowner liability to workers hired by non-licensed contractors, and addressed the limitations on worker’s compensation as an exclusive remedy in cases dealing with employees in a residential setting.

Homeowner Maria Ibarra engaged Claudio Quiroz, an unlicensed contractor, to construct four room and two bathrooms on her premises. Quiroz hired Eliazar Zaragoza to assist him. Zaragosa was an employee of Taco Bell. Zaragoza was injured on his second day on the job. Zaragoza slipped off a ladder while trying to pull a nail out of the wall. He fell approximately nine feet and injured his knee. He sued Ibarra. The trial court granted Ibarra’s motion for summary judgment and the appellate court affirmed.

The Court held that Zaragoza’s claim qualified as “incidental to the ownership, maintenance or use” of a residential dwelling, despite the fact that the scope of the work comprised an extensive remodel. Zaragoza was classified as a residential employee under Labor Code Section 3351(d). When the worker has worked less than 52 hours in the 90 days prior to the accident, the law is clear that any claim the worker has against the homeowner for the injury is outside the ambit of the worker’s compensation system. Labor Code Section 3351(d). The worker may bring a claim against the homeowner for negligence.

The Court held that the provisions defining who qualified as a residential employee under Labor Code Section 3351(d) must be reconciled with the provisions of Insurance Code Section 11590, which requires that all personal liability policies provide worker’s compensation coverage. The Court further held that Cal-OSHA regulations did not apply to homeowners. Zaragoza could not rely on the doctrine of negligence per se (a violation of a statute) based on alleged Cal-OSHA violations.

Moreover, the Court concluded that as a matter of law there was no triable issue of fact concerning Ibarra’s negligence, since he positioned, adjusted, and climbed the ladder before he fell. There was nothing Ibarra could have done to prevent the accident. Zaragoza’s injury was entirely his own fault, and Ibarra exercised ordinary care under the circumstances.

Homeowners should be weary of non-licensed and day laborers who carry no worker’s compensation insurance. Whether it is a painter, gardener, landscaper, or handyman, ask yourself the question: Does the gardener carry his own liability and Workers' Compensation insurance? Otherwise anything that happens on your property is your responsibility. An insured gardener may charge a bit more, but is worth the peace of mind. Next time you hire anyone to perform services on your property, make sure that person is insured, something not many homeowners think or contemplate but merely roll the dice. Make the individual working on your home produce a copy of his liability insurance certificate, and make sure it is current.

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On September 30, 2009, the Fourth District Court of Appeal affirmed the trial court's denial of class certification in Kaldenbach v. Mut. of Omaha Life Ins. Co., 2009 Cal. App. Unpub. LEXIS 7907 (Cal. App. 4th Dist. Sept. 30, 2009). The Court’s opinion, which is unpublished, recognized that In re Tobacco II precluded focus on issues relating to class member reliance and injury. The Court's analysis is seem ingly contrary to the Second District's unpublished opinion in Cohen v. Direct TV (discussed previously here). Notwithstanding this finding, however, the Court ultimately concluded that the trial court did not abuse its discretion insofar as the court's findings regarding predominance were supported on other grounds.

A more detailed discussion of the Kaldenbach opinion is addressed at the Bailey Class Action Daily.

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Have you looked at your cable bill and found that you are paying $5, $6, and even $10 a month to rent a cable box from your service provider? Ever wonder why you cannot simply purchase your cable box or rent a cheaper box from another company? Many consumers are limited in subscribing to certain cable companies; however, numerous cable companies take advantage of consumers by charging $60 or more EACH year to rent a set-top box that should cost no more than a DVD player to buy.

Years ago, many people were similarly frustrated and asking these same questions about their telephones because telephone companies only allowed their customers to lease their telephones directly from the company. Eventually this practice was deemed illegal and anti-competitive (read the decision), which is why we are now able to purchase or lease our telephones from a variety of companies, thereby ensuring competition. Currently, however, cable customers throughout the country have been dealing with the same situation and have begun to challenge these unfair practices.

Specifically, Time Warner and Comcast are currently under fire in large multi-district class actions in which their customers are alleging that the practice of requiring cable customers to lease a set-top cable box from them - without providing the option to either purchase the box or rent from another company - violates the antitrust laws of the United States as well as the consumer protection laws of their home states.

While these companies are being challenged, there are many other cable providers who are not. Therefore, if you have been forced to rent a cable box from your cable company, then please contact us so that we can make sure that your rights and those of many other cable subscribers are protected.

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Last week the California Court of Appeal (First Appellate District) issued a warning to attorneys who abuse the discovery process by asserting frivolous objections requiring unnecessary motions to compel. See Clement v. Alegre, 2009 Cal. App., September 23, 2009. In upholding a sanctions award on the offending attorney, the Court of Appeal expressed frustration with “scorched earth” techniques used by some practitioners and reminded attorneys that the central precept of civil discovery is that is to be self-executing, without the need for judicial intervention and that monetary sanctions may be awarded even if the abuse was not willful.

In Clement, Defendant’s interrogatory number 1 asked the Plaintiffs to describe “all economic damages you claim to have sustained” and in a second interrogatory asked Plaintiffs to “state the amount of damages identified in interrogatory number 1” Plaintiffs asserted that interrogatory number 1 was “vague and ambiguous” as to the term “economic damages” yet Plaintiffs cited the Civil Code section that defines “economic damages” in their objections. Plaintiff objected to interrogatory number 2 because it was not full and complete in itself because it required reference to interrogatory number 1. In the meet and confer process, Plaintiffs counsel offered to allow defendant to supply a written definition of economic damages but only on the condition that Plaintiffs be given 30 additional days to respond and then argued that defense counsel failed to meet and confer by not accepting the offer. The trial court granted Defendant’s motion to compel and imposed $6632.50 is discovery sanctions.

The Court of Appeal affirmed finding that, given the circumstances as a whole, Plaintiffs’ counsel clearly was engaged in gamesmanship designed to delay discovery. The Court of Appeal found the “vague and ambiguous” objection “preposterous” considering that Plaintiffs themselves quoted the defining statue in their response. With respect to the argument that the question was not full and complete in itself, the Court of Appeal cited legislative history noting its primary concern of this statue was to prevent wrangling about whether a party evaded the 35 question limit by using prefaces, instructions, definition and subparts. Here, defendant only propounded 23 interrogatories.

The Court of Appeal also noted that defense counsel’s refusal to be bullied into re-writing adequate discovery and extending more time for responses does not constitute a failure to meet and confer. Finally, the Court of Appeal concluded its opinion by reminding attorneys that the meet and confer statute requires a serious efforts at negotiation and informal resolution and that informal resolution means more than “attempting to persuade your discovery opponent of the error of his ways” and that informal resolution entails something more that bickering of opposing counsel.

The teachings of the Court of Appeal in Clement are a stern reminder to trial counsel to remove ego and emotions from discovery disputes and to maintain professionalism and civility at all times.

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On September 28th the Second District Court of Appeal affirmed the trial court's denial of class certification in Cohen v. Direct TV, Inc.  The Court's Opinion, which is unpublished, concluded that the trial court correctly denied class certification of a class action under California’s Unfair Competition Law (“UCL”) because the proposed class included persons who had not viewed alleged deceptive promotions by Direct TV. 

However, this decision conflicts with the California Supreme Court’s analysis in In Re Tobacco II Cases, 46 Cal.4th 298 (2009), which recently rejected the argument that a UCL class action could not be certified absent a showing that all class members relied on an alleged deceptive promotion to their detriment.  Under settled California law, the public is entitled to broad protections under the UCL regardless of whether absent class members sustained a direct injury as the result of alleged deceptive advertising.

A detailed discussion of the issues presented by Cohen is addressed at the Bailey Class Action Daily.

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Subscribe to KPA senior associate Matt Bailey's blog today to get your daily dose of class action legal updates.

Bailey Class Action Daily is the newest source of news and discussion on cutting edge class action issues across the US! 

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A recent study based on workers in Los Angeles, New York, and Chicago found that low-wage workers are routinely denied proper overtime pay and are often paid less than the minimum wage. In addition, at least 68% of workers interviewed had experienced at least one pay-related violation in the previous workweek. This study, the most comprehensive examination of wage-law violations in a decade, demonstrates how important California’s wage and hour laws are.

Of particular note, the study revealed that women were far more likely to suffer minimum wage violations than men, with female illegal immigrants suffering the most. Among American-born workers, African Americans had a violation rate nearly triple that for whites.

According to the study, employees are losing $51 a week, of the average weekly earnings of $339. That is a great deal of money to someone living at or below the poverty level, and demonstrates how important it is that workers know their rights. For example, how many workers know they are entitled to time and a half if they work over 8 hours in one day or 40 hours in one week? And if they work off the clock, do they know they are entitled to pay for that time worked, or do they think it is just another “policy” that they have to endure?

This study demonstrates that workers need advocates to stop hold employers liable for wage and overtime violations.   

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Matt C. Bailey's article, titled The Scope of Class Restitution in the Wake of In Re Tobacco II Cases was published in Mealey's Litigation Report: Class Actions yesterday.  Matt is a senior associate at KPA and serves as co-chair of the firm's Class Action Practice Group. 

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On September 4, 2009, New York District Court Judge, Hon. Roslynn R. Mauskopf, rejected efforts by JPMorgan Chase Bank, N.A. ("Chase") to disavow the existence of the New York State regulation empowering its hourly paid employees to receive overtime compensation.  (Andrade v. JP Morgan Chase Bank, N.A., 2009 U.S. Dist. LEXIS 80836 (E.D.N.Y. Sept. 4, 2009)).  Chase’s argument, which sought to set employee rights back 100 years to the era of Lochner v. New York, 198 U.S. 45 (1905), asserted that hourly employees in New York could claim overtime compensation under New York State law only if the employee had personally negotiated such a right with financial behemoth Chase by way of contract.  The Lochner decision – which invalidated early efforts by the States to regulate sweatshop-like working conditions during the industrial revolution – reduced employee protections solely to the right of contract under a pro-business judicial philosophy that was subsequently abandoned in the post Depression era.  In modern times, however, Chase’s claim insisting that New York does not have a mandatory overtime law is an extreme, if not outrageous, proposition.  This fact was underscored by Judge Mauskopf, who reasoned that “the cases recognizing the validity of New York's overtime regulation are legion.” See Andrade, 2009 U.S. Dist. LEXIS 80836, at 5-7, n.1. Thus, the Andrade decision reflects a victory for New York hourly employees who are entitled by law to receive overtime compensation for going the extra mile to generate profits for their corporate employers.

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Matt Bailey was published on Friday, September 3 in the Los Angeles Daily Journal.  He provided readers with a comprehensive strategy for dealing with the professional class action objector.  As co-head of KPA's class action team, Matt handles all class actions within the firm and has several years of experience, and success, with this type of complex litigation. 

Deborah Gutierrez was published today, September 14, on LawDragon.com.  Her article "Limiting the Preemption Doctrine" provides an update to the 2009 Wyeth v. Levine decision, and it's affect on consumer's over the past few months.  This is one of several articles Deborah has had published on this topic.

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For some time a proposition has been bandied about the California class action community concerning whether counsel in a wage and hour class action litigation should assert PAGA (“Private Attorney General Act of 2004”) penalty claims on behalf of the class as a matter of course. Proponents of this position have maintained that litigation of the underlying wage violation itself bars subsequent litigation of PAGA claims under principles of res judicata, and as such, the named plaintiff in wage and hour class litigation should affirmatively plead and prosecute PAGA penalty claims on behalf of the class to preserve the right to recover penalties.

This view was seemingly gaining traction earlier this year when the Second District Court of Appeal held that PAGA penalty claims may be barred on res judicata grounds, even if not pled in the prior litigation. (Deleon v. Verizon Wireless, 170 Cal. App. 4th 519, 531 (2008), rev. granted by Deleon v. Verizon, 94 Cal.Rptr.3d 322 (Cal., May 13, 2009)). As reasoned by the Deleon Court, a PAGA penalty claim is not an action on behalf of the State, and as such, may be waived by an employee if not affirmatively pled and litigated. 

However, Deleon’s analysis seems to have taken a major hit in light of the California Supreme Court’s recent ruling in Arias v. Superior Court, 46 Cal. 4th 969 (2009). While the Arias Court concluded that actual litigation of a PAGA claim is binding on all interested parties (including both employees and the State), the Arias Court seemingly knocked out the fundamental premise of the Deleon Court’s holding by concluding that “an action to recover civil penalties ‘is fundamentally a law enforcement action designed to protect the public and not to benefit private parties.’” (Arias, 46 Cal. 4th at 986).  This conclusion – which is supported by the fact an employee plaintiff may bring the action only after giving written notice to the Workforce Development Agency – draws into doubt whether a PAGA action and the underlying wage violation involve the same “primary right.” If this is the case, then it logically follows that a PAGA claim would not be subsequently barred if not asserted on behalf of the class in the complaint.

Putting this issue aside, however, the premise that PAGA penalty claims will increase overall recovery to class members is currently a dubious proposition. For example, in the context of a class settlement, the requirement that 75% of PAGA penalties recovered be paid to the State paradoxically places pressure on class counsel to minimize the amounts apportioned to a PAGA claim to fulfill his or her fiduciary duty of maximizing recovery to the class. As no definitive standards currently exist to evaluate the subsequent apportionment of settlement funds between compensation for PAGA penalties and wages paid to the class for the underlying wage violations (Cal. Lab. Code § 2699(l)), counsel in many cases have successfully obtained approval of settlements allocating only a nominal fraction of the overall recovery to a PAGA claim. Were a mechanical pro-rata apportionment between the value of the penalty claims and the value of the underlying wage claims at issue applied, inclusion of a PAGA claim in many cases could stand as a losing proposition for members of the class – especially in settlements where only limited funds are on the table to resolve all claims.  Under such circumstances, it is conceivable that the class may benefit more by not mixing PAGA claims with claims to recover wages.

In sum, even if the Deleon Court’s res judicata analysis can survive Arias – which seems unlikely – the ultimate impact of including a PAGA claim in light of the statue’s vague enabling provisions presents more questions than answers. As such, the issue of whether inclusion of a PAGA claim will ultimately benefit the class in the long run remains an open question.

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In the world of wage and hour class action litigation, employers are increasingly seeking to use the “on-duty” meal break exemption as a waiver defense to the action. Yet, employers who seek to defend a meal break class action by such means not only ensure a basis for class-wide adjudication of meal period claims [See Bufil v. Dollar Financial Group, Inc., 162 Cal. App. 4th 1193 (2008)], they may be unwittingly setting up an argument for class adjudication of rest periods claims as well.

An on-duty meal break is a codified exception to the requirement that “off-duty” meal breaks be given, and may be utilized by the employer “onlywhen the nature of the work prevents an employee from being relieved of all duty ….” See e.g. 8 CCR 11040(11)(A). “The test of whether the nature of the work prevents an employee from being ‘relieved of all duty’ is an objective one” [DLSE Enforcement Manual, at § 45.2.3.1], and is focused on the employer’s business “overall.” See West v. Circle K Stores, Inc., 2006 U.S. Dist. LEXIS 42074, 14 (E.D. Cal., 2006). 

In light of the forgoing standards, an employer who advocates that it was entitled to invoke the on-duty meal break exemption based on the nature of its work by necessity must make an admission that common impediments existed that precluded free access to all breaks – including rest periods.  This admission is material – not only because the on-duty exemption applies only to meal periods, but also because the existence of a common barrier provides a basis for class adjudication of a rest period claim.

Thus, the astute class advocate should use the “on-duty” exemption to the employee’s advantage. An employer cannot have it both ways. An employer who claims the “nature of the work” precludes access to meal periods may not defeat class certification of rest period claims by arguing it is not an insurer of breaks. Under most circumstances, the employer’s effort to avail itself of the “on-duty” exemption all but ensures that rest break claims will be amenable to class adjudication as well.

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When Bank of America announced that it will no longer require customers to settle disputes with the company through arbitration, rather than being able to go to court, many saw it as a victory for consumers.  However, as David Lazarus reported in Sunday's edition of the LA Times, Bank of America's decision to drop the arbitration requirement does not mean that it is ending its prohibition on customers joining class action lawsuits.  Betty Riess, a Bank of America spokesperson, told Lazarus, "We aren't addressing the class-action waivers as part of [the decision regarding arbitration].  We will preserve the class-action waivers in our agreements."

Class action waivers prevent individuals from joining with other individuals with similar complaints to sue a company.  As Lazarus noted, class actions are arguably the best tool many consumers have to address problems involving relatively small amounts of money as, often, individual lawsuits can cost more to resolve than the amount under dispute, effectively precluding consumers from seeking redress.

In California, class action waivers in consumer contracts may be unenforceable, especially where they violate public policy (such as where the waiver is included in a contract's fine print).  See Discover Bank v. Superior Court (Boehr), 36 Cal.4th 148, 158-160 (2005).  However, many states permit class action waivers in consumer contracts.  Thus, Bank of America's decision is just the first step in protecting consumers' rights.

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In its recent opinion in the Tobacco II Cases, the California Supreme Court rejected extension of Proposition 64 standing requirements to putative class members on the grounds that doing so would invalidate the “patently less stringent” remedies afforded under Business & Professions Code Section 17203.  See In re Tobacco II Cases, 46 Cal. 4th 298, 320 (2009).  In practical terms, the Court’s decision requires only the named plaintiff in a UCL action to establish that he or she in fact “has lost money or property as a result of the unfair competition”, whereas putative class members would be entitled to restitution of money or property “which may have been acquired’ [] by means of the unfair practice.” See id. (italics in original). This distinction has been the subject of significant debate – leading some to reject a literal reading of the Court’s analysis based on the perception that it would improperly permit a certified UCL restitution class to include putative class members who may not have actually been injured. Such a criticism is unfounded, as it disregards fundamental tenants of the UCL reaffirmed in the Court’s opinion. 

Unlike other tort remedies, the UCL is intended to uproot burgeoning deceptive business practices before they have an opportunity to bloom. To achieve this objective, the UCL focuses solely on a defendant’s business conduct – imposing liability based on a liberal “likely to deceive” standard without any concern as to whether consumers were actually deceived or sustained an injury by relying on a deceptive practice. Yet, that a UCL class includes persons who did not act in reliance on the challenged practice does not mean that the class includes members who were not injured. Such a conclusion is flawed, as it disregards the fact that the overall impact of a deceptive business practice will generally be distributed evenly among the entire purchaser/client base. For example, even when only a handful of consumers purchase a product based on a deceptive advertising campaign, the cost of the deceptive advertising campaign itself is passed on to all purchasers as a component of the purchase price of that product. Similarly, where a business promotes a deceptive feature of a product to justify a purchase price that is above the price of the competing brand, all purchasers are damaged by having to pay the enhanced price whether they relied on the deceptive representation or not. Permitting restitution in such cases is consistent with the UCL’s objective that “wrongdoers not retain the benefits of their misconduct….” Id.

In short, Tobacco II does not create an issue as to whether a class action may be certified on behalf of a class encompassing persons who never relied on a deceptive business practice – that is the question the Court resolved. Efforts to reframe the issue by claiming the Court’s decision left unsolved the issue of whether a UCL class may include members that are uninjured conflates the clear distinction drawn by the Court between standing requirements imposed on the named plaintiff versus the broad relief afforded to member of the class.

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In a creative attempt to avoid class action litigation, big companies have been including class action waivers in the arbitration clauses of their agreements. These companies include these class action waivers in the multitude of fine print that they send their clients (think of those long agreements you get every time you apply for a new service, loan, or account). 

For years, we have seen arbitration clauses in these contracts – requiring all disputes to be settled in arbitration and not before a court or a jury. Most recently, these contracts have included a “class action waiver” in the arbitration clause which state that consumers may only arbitrate claims individually, not in a representative capacity or on behalf of the general public. Basically, these companies are trying to avoid liability by requiring individual claims, claims that they know are often too small to justify individual arbitration (and the costs associated with it). 

California law states that class action waivers in consumer contracts may be unenforceable, especially where they violate public policy (such as including the waiver in that multitude of fine print). Discover Bank v. Superior Court (Boehr) 36 Cal.4th 148, 158-160 (2005). The Supreme Judicial Court of Massachusetts recently became another state to agree with California’s holding, and held that arbitration clauses precluding class action lawsuits were contrary to the fundamental public policy of Massachusetts favoring consumer class actions. Feeney v. Dell, Inc., 454 Mass. 192, 205 (Mass. 2009) (“Allowing companies that do business in Massachusetts, with its strong commitment to consumer protection legislation, to insulate themselves from small value consumer claims creates the potential for countless customers to be without an effective method to vindicate their statutory rights, a result clearly at odds with our public policy.”)

What does this mean for you? Most significantly, it means a growing number of states are seeing through big businesses’ attempts to escape liability for their wrongs. If these waivers were deemed acceptable, it would effectively get rid of the class action procedure. All companies would include these waivers in their contracts, and the class action mechanism may die out. 

While you may not think that class actions are that helpful, think again. For example, when a credit card company receives a customer’s payment on time, but still charges that customer a late payment penalty, it is unlikely that any one individual would file a lawsuit or an arbitration claim for a late payment penalty of under $50. It’s also unlikely that a company would stop charging their thousands or millions of other customers that fee if only a few individuals filed a claim. The class action mechanism, however, provides an avenue to allow customers to stop the company’s practice of fraudulently charging these fines - not only to themselves but to all of the company’s customers. It’s a matter of principle in many instances, and making sure that the company doesn’t get away with these fraudulent practices. As more states hold that class action waivers are unenforceable, consumers’ rights are protected. 

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When litigating class actions it’s sometimes easy to get distracted and consumed by lofty legal issues and briefing. However, I try to never lose sight of the fact that my case affects real people who have been injured, many of whom want to be apprised of the status of the case and to play an active role in its successful outcome. Moreover, when I talk with class members, I’m energized and become a better advocate for them. Class members help me focus on the right issues, assure me that I’m on the right track and frequently offer words of thanks and encouragement. These conversations reinforce that I’m striving to make a difference in the lives of real people. 

There are many opportunities to keep in touch with class members during the case. When clients are first retained, I ask them whether they know of other people that have been similarly affected and ask that those persons contact me. Then, I know that the case truly impacts more than just my client. One of my first goals as class counsel is to obtain a list of possible class members. In California, the law is now clear that Plaintiff’s counsel is entitled to equal access to the putative class as defense counsel. Better defense counsel no longer waste their client’s money fighting to disclose this information, Rather, they either provide a class list directly to Plaintiff’s counsel or agree to the send out a notice to the class from a third party administrator which gives putative class members the opportunity to opt-out of having their contact information disclosed to Plaintiff’s counsel. Typically, very few people opt-out and virtually the entire class list is produced. Often I’ll get calls directly from some class members upon receipt of this initial notice. I have a questionnaire prepared and begin setting up a database of information for those persons who call. 

Immediately after getting a class list, I send a letter to those persons who may fall within the class to inform them of the allegations being made in the case and claims of recovery requested on their behalves. I also ask them to contact me to discuss their experience with the defendant. My letter tells them who to contact at the firm and provides phone numbers and email addresses. In some cases, a toll-free number and separate email address is established just for that for the case. However, when communicating in writing to class members, I always keep in mind that my written communications will almost certainly fall into the hands of defense counsel because some class members (particularly in cases where the class includes current employees) either are not sympathetic to my efforts or they feel an obligation to disclose the communication to their employer.  Accordingly, I strive to make my communications accurate, neutral and ensure that they do not disclose work product.

Maintaining contact with class members also helps me gather declarations to show to the court why the case should be certified and has merit and how it impacts lives. It also allows me to line up those witnesses who can best tell our case at trial. Once the case certified as a class action, I request that the court issue notice promptly to the class and follow-up with another letter after the opt-out period expires. This strengthens my bond with my new clients. When speaking with class members, I ask for their email addresses to allow me to update them on the case inexpensively via email.  Class members who have taken the effort to contact me about the case tell me they appreciate my efforts to reach them and like to receive updates about the status of their case.

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