CALIFORNIA CLASS ACTION LAW

May 13, 2013

Fourth District Reverses Denial of Meal & Rest Break Class Action

English: Cash transport van with guards in Guangzhou, China Русский: Машина инкассаторов с охраной в Гуанчжоу (Photo credit: Wikipedia)

In a meal and rest break class action, the Fourth District on Friday reversed the denial of certification of a class of security guards. Faulkinbury v. Boyd & Associates, Inc., No. G041702, __ Cal. App. 4th. __ (4th Dist. May 10, 2013). Reconsidering in light of the California Supreme Court decision in Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012), the court concluded that the primary issue was the legality of certain company policies, which could be determined on a class-wide basis, even if the application of the policies varied by individual.

By CHARLES H. JUNG

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May 8, 2013

Challenge to Court Reporter’s Proposed Transcript Cost Cannot Be Raised in Subsequent Action

Court Reporter tests his Stenomask (Photo credit: Wikipedia)

Yesterday, in an appeal from a dismissal of a class action, the Second District held that a non-noticing party in a deposition, who does not move for an order in the pending case for a determination of the “reasonable rate” a court reporter may charge, may not bring a subsequent action to obtain restitution or obtain injunctive relief. The Las Canoas Company, Inc. v. Kramer, No. B238729, __ Cal. App. 4th. __ (2d Dist. May 7, 2013). California Code of Civil Procedure section 2025.510 provides that “any other party or the deponent, at the expense of that party or deponent, may obtain a copy of the [deposition] transcript.” In a prior action, the court reporter quoted a rate of $2 per page, totaling $16,000 for 8,000 pages. Slip Op. at 2. Las Canoas offered to pay a $30 flat rate in exchange for a computer disc containing uncertified copies of the transcripts and exhibits. The court reporter did not agree, but Las Canoas did not challenge the court reporter’s rate until filing a subsequent class action.

The trial court in the subsequent case sustained a demurrer to the putative class action complaint, holding that it lacked “subject matter jurisdiction” since La Canoas failed to bring a motion in the prior case.

The Second District agreed: Read the rest of this entry »

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May 2, 2013

Second District Articulates “Clear and Unmistakable” Waiver Standard for Labor Code Section 227.3

_DSC9576 (Photo credit: treyguinn)

In a wage and hour class action, the Second District articulated today a “clear and unmistakable” standard for waiver of right to immediate payment of vested vacation time under the collective-bargaining exception to Labor Code section 227.3. Choate v. Celite Corporation, No. B239160, __ Cal. App. 4th __ (2d Dist. May 2, 2013). However because Choate was the first case to define this standard, the Court found defendant did not act unreasonably, and reversed waiting time penalties under Labor Code section 203:

Although we agree with the trial court that this is the appropriate standard, this is the first case to define the standard for waiver under section 227.3. Plaintiffs argue that Saustez decided this issue, but it did not. (Saustez, supra, 31 Cal.3d 774.) Celite’s good faith reliance on a different waiver standard was accordingly reasonable, particularly in light of the language in Firestone supporting that standard. [Internal citation omitted.] That Celite’s position did not prevail does not mean that its position was unreasonable. (8 Cal. Code Regs., § 13520.)

You can read more here.

By CHARLES H. JUNG

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April 30, 2013

Amending Attorneys’ Fees Allegation in Midst of Trial Found Prejudicial

Late (Photo credit: Tom Bech)

The Second District held today that it is an abuse of discretion to permit an amendment to a complaint on the fourth day of a five-day trial. Duchrow v. Forrest, __ Cal. App. 4th __, No. B233736 (2d Dist. Apr. 30, 2013). The Court found that there was no reason the amendment could not have been made sooner, and that prejudice existed because, among other things, the amendment “changed the damages sought from $44,082.22, as pleaded in the complaint, to $312,260 in attorney fees and $16,851.95 in costs under the Litigation Agreement, plus an additional $27,777.36 in attorney fees and $8,155.13 in accrued interest under the Administrative Agreement, for a total of $365,044.44.”

You can read more here.

By CHARLES H. JUNG

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April 26, 2013

Second District Publishes Attorney Disqualification Opinion: Khani v. Ford Motor Company

1961 Ford H-Series trucks (Photo credit: Wikipedia)

The Court of Appeal for the Second Appellate District yesterday ordered published Khani v. Ford Motor Company, et al., No. B239611, __ Cal.App.4th __ (2d Dist. Apr. 25, 2013). Plaintiff, represented by attorney Shahian, brought a suit under California’s Song-Beverly Consumer Warranty Act (Civ. Code, § 1790, et seq., popularly known as California‘s Lemon Law) for defects in a 2008 Lincoln Navigator.

Ford moved to disqualify Shahian and his law firm. Ford presented a declaration from Shahian’s former law firm which was Ford’s corporate counsel. The declaration stated that Shahian worked on 150 cases, including California Lemon Law cases and was purportedly privy to confidential client communications and information relating to the defense of such cases. Shahian provided unspecified “input” to Ford‘s Office of General Counsel and Consumer Affairs and communicated regularly with Ford about lemon law cases. The court granted the disqualification motion.

The Court of Appeal reversed:

The evidence in this case does not establish that any information to which Shahian was exposed during his representation of Ford would be material to his representation of Khani in this case. While Ford presented evidence that Shahian represented it in California Lemon Law cases, it did not establish that any confidential information about the defense in those cases would be at issue in this case. Neither the allegedly defective 2008 Lincoln Navigator nor its repair history by Galpin Motors was the subject of any lawsuit in which Shahian represented Ford. Takahashi‘s declaration does not show that Ford had any policies, practices, or procedures generally applicable to the evaluation, settlement or litigation of California Lemon Law cases at the time Shahian represented Ford, or that any such policies, practices, or procedures continued in existence unchanged between 2007 and 2011. Nor does it show that the same decision makers that were involved in cases Shahian handled for Ford are involved in this case.

The trial court abused its discretion in concluding that the prior cases were substantially related to the current case just because they involved claims under the same statute. The substantial relationship test does not subject an attorney to automatic disqualification on this ground alone. (See Banning Ranch Conservancy v. Superior Court (2011) 193 Cal.App.4th 903, 918 [successive representations in cases under 6 California Environmental Quality Act not substantially related].)1 The court also incorrectly assumed that Shahian‘s exposure to playbook information in prior lemon law cases was sufficient to disqualify him in this case without any showing of its materiality. (See Farris, supra, 119 Cal.App.4th at p. 680; see also Elliott v. McFarland Unified School Dist. (1985) 165 Cal.App.3d 562, 572 [conclusory statements insufficient].) Ford‘s bare-bones evidence in this case is insufficient to establish that Shahian‘s previous representation of Ford in California Lemon Law cases exposed him to confidential information that would be material to his current representation of Khani.

Judges & Attorneys

Presiding Justice Norman L. Epstein issued the opinion for the court. Associate Justices Thomas L. Willhite, Jr. and Steven C. Suzukawa concurred.

Appeal from order of the Superior Court of Los Angeles County, Judge Amy D. Hogue.

Strategic Legal Practices, Payam Shahian, Gielegheim & Associates and Neil Gielegheim, for Plaintiffs and Appellants.

Baker & Hostetler, Mary L. Arens, Rosslyn Hummer, and Jack Samet for Defendants and Respondents.

By CHARLES H. JUNG

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April 26, 2013

Ninth Circuit Issues Forum Selection Clause Opinion

English: Kingdom Centre, Riyadh, Saudi Arabia. Taken by BroadArrow in 2007. (Photo credit: Wikipedia)

The Ninth Circuit issued an opinion today in Petersen v. Boeing Company, No. 11-18075, __ F.3d __ (9th Cir. Apr. 26, 2013). The district court dismissed plaintiff’s case on the basis of a Saudi forum selection clause without holding an evidentiary hearing as to whether plaintiff was induced to assent to the forum selection clause through fraud or overreaching. In a per curiam opinion, a Ninth Circuit panel reversed, holding that a triable issue of fact existed as to whether the forum selection clause was enforceable. You can read more here.

By CHARLES H. JUNG

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April 22, 2013

Ninth Circuit Reverses Approval of Class Settlement Where Incentive Awards Were Conditioned on Representatives’ Support for Settlement

Experian in Ruddington Fields (Photo credit: Ruddington Photos)

Today, the Ninth Circuit reversed a district court’s approval of a class action settlement against credit reporting agencies under the Fair Credit Report Act, citing a failure by the class representatives and class counsel to adequately represent the class. Radcliffe, et al v. Experian Information Solutions, Inc., et al., Case No. 11-56376, __ F.3d __ (Apr. 22, 2013). The court took issue with the incentive awards to the class representatives that were conditioned on the class representatives’ support for the settlement. The agreement provided for incentive awards:

On or before October 19, 2009, Proposed 23(b)(3) Settlement Class Counsel shall file an application or applications to the Court for an incentive award, to each of the Named Plaintiffs serving as class representatives in support of the Settlement, and each such award not to exceed $5,000.00.

The court concluded that these conditional awards caused a divergence of interests between the representatives and the class: Read the rest of this entry »

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April 19, 2013

Employer’s Right to Alter Handbook’s Terms Doesn’t Render Illusory Mutual Obligation to Arbitrate

Battle Foods Employee Handbook Cover (Photo credit: johntrainor)

The Second District ordered published today Serpa v. California Surety Investigations, Inc., et al., No. B237363, __ Cal. App. 4th __ (filed Mar. 21, 2013, modified Apr. 19, 2013). In Serpa, the Court of Appeal reversed the denial of a motion to compel arbitration.

At the trial court level, the court denied defendants’ motion to compel arbitration, finding the agreement to arbitrate lacked mutuality. Defendants argued that the requisite mutuality was provided by the bilateral arbitration provisions in the employee handbook, incorporated by reference into the arbitration agreement. The trial court rejected this argument because defendant could change the handbook at its sole discretion and without notice. The Second District reversed.

Because the agreement incorporated the arbitration policy in the employee handbook, the Court concluded that this “salvages the agreement by establishing an unmistakable mutual obligation on the part of [employer and plaintiff] to arbitrate ‘any dispute’ arising out of her employment.” Plaintiff argued that the while the arbitration policy in the handbook establishes a bilateral obligation to arbitrate, she insisted that the mutual obligation is illusory because, the employer is authorized to alter the terms of any policy contained in the handbook at its sole discretion and without notice. The Court disagreed, reasoning that the right to alter the terms was limited by the covenant of good faith and fair dealing implied in every contract.

You can read more here.

By CHARLES H. JUNG

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April 17, 2013

Second District Draws Distinction Between Allegations and Judicial Admissions in Denying Arbitration

Boulder City, Nevada.. cute homes.. (Photo credit: iwona_kellie)In

In a tax day ruling that may have implications for co-defendants seeking to compel arbitration, the Second District affirmed a trial court’s denial of a motion to compel arbitration. Barsegian v. Kessler & Kessler, et al., No. B237044, __ Cal.App.4th __ (2d Dist. Apr. 15, 2013). Some defendants moved to compel arbitration, but the remaining defendants did not. Slip Op. at 2. The trial court denied on the grounds of waiver and the possibility of inconsistent rulings.

Moving defendants sought a reversal, arguing that plaintiff’s complaint alleged that all defendants are agents of one another, and that allegation is a binding judicial admission that gives the non-moving defendants the right to enforce the arbitration agreement. The court disagreed, noting that:

[N]ot every factual allegation in a complaint automatically constitutes a judicial admission. Otherwise, a plaintiff would conclusively establish the facts of the case by merely alleging them, and there would never be any disputed facts to be tried. . . . A judicial admission is therefore conclusive both as to the admitting party and as to that party’s opponent. (4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 454, p. 587.) Thus, if a factual allegation is treated as a judicial admission, then neither party may attempt to contradict it—the admitted fact is effectively conceded by both sides.

Here, the moving defendants sought to reserve the right to argue at arbitration that the allegation of mutual agency was false, and thus it was not conceded by both sides.

Although the Kessler defendants frame their argument using the term “judicial admission” and rely on case law concerning judicial admissions, their counsel confirmed at oral argument that they do not in fact wish to treat Barsegian‟s allegation of mutual agency as a judicial admission, because the Kessler defendants do wish to be able to contest the truth of that allegation, either in court or before an arbitrator. That is, the Kessler defendants wish to hold Barsegian to the mutual agency allegation only for purposes of the motion to compel arbitration, but, should they succeed in compelling arbitration on the basis of that allegation, they wish to retain the right to prove to the arbitrator that the allegation is false. That is not how judicial admissions operate.

You can read more here.

By CHARLES H. JUNG

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April 16, 2013

Supreme Court Holds That Unaccepted, Full-Value Rule 68 Offer of Judgment Deprives Court of Subject Matter Jurisdiction Over FLSA Collective Action

Uni 5s: Pick-off Attempt at 3rd (Photo credit: pj_in_oz)

In an case with broad implications for federal class action practice, the U.S. Supreme Court held today, in a 5-4 opinion, that an FLSA collective action was properly dismissed for lack of subject matter jurisdiction, where the lead plaintiff did not accept the employer’s full-value offer of judgment under Federal Rule of Civil Procedure 68. Genesis Healthcare Corp., et al. v. Symczyk, No. 11-1059, 569 U.S. __ (April 16, 2013).

Justice Thomas, writing for the 5-4 majority, concluded that:

Reaching the question on which we granted certiorari,we conclude that respondent has no personal interest in representing putative, unnamed claimants, nor any other continuing interest that would preserve her suit from mootness. Respondent’s suit was, therefore, appropriately dismissed for lack of subject-matter jurisdiction.

You can read more here.

By CHARLES H. JUNG

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