CALIFORNIA CLASS ACTION LAW

Commissioned Employees: Cal. Sup. Ct. Holds Commissions Are Counted in the Pay Period Actually Paid

The California Supreme Court today issued its ruling in Peabody v. Time Warner Cable, Inc., Case No. S204804, __ Cal. 4th __ (July 14, 2014).  Plaintiff Peabody filed a class action suit alleging failure to pay overtime and other wage and hour claims.  As to overtime, Time Warner argued that Peabody fell within California’s “commissioned employee” exemption and was not entitled to overtime pay.  

At the request of the Ninth Circuit, the Court considered whether an employer may attribute commission wages paid in one pay period to other pay periods in order to satisfy the requirements of California’s commissioned sales exemption.  

The court concluded that it may not:

[A]n employer satisfies the minimum earnings prong of the commissioned employee exemption only in those pay periods in which it actually pays the required minimum earnings. An employer may not satisfy the prong by reassigning wages from a different pay period.

Id. at *9.  You can read more about the court’s reasoning here

By CHARLES H. JUNG

 

U.S. Supreme Court Issues Another Pro-Arbitration Decision, Upholding a Class Waiver

American Express?

American Express? (Photo credit: the justified sinner)

Today the U.S. Supreme Court issued its opinion in American Express Co. v. Italian Colors Restaurant, No. 12-133, 570 U.S. __ (June 20, 2013).  The Court considered  whether a contractual waiver of class arbitration is enforceable under the Federal Arbitration Act (“FAA”) when the plaintiff’s cost of individually arbitrating a federal statutory claim exceeds the potential recovery.  The Court held that it was.

“Respondents argue that requiring them to litigate their claims individually—as they contracted to do—would contravene the policies of the antitrust laws. But the antitrust laws do not guarantee an affordable procedural path to the vindication of every claim.”  Slip Op. at 4.

You can read more here.

By CHARLES JUNG

“Good, Bad, or Ugly”: U.S. Supreme Court Upholds Arbitrator’s Interpretation of Contract as Providing for Class Arbitration

The Good, the Bad and the Ugly (soundtrack)

The Good, the Bad and the Ugly (soundtrack) (Photo credit: Wikipedia)

A unanimous U.S. Supreme Court today affirmed an arbitrator’s interpretation of an arbitration clause to permit class proceedings.  Oxford Health Plans LLC v. Sutter, No. 12-135, 569 U.S. __ (June 10, 2013).  The question presented was whether an arbitrator, who found that the parties’ contract provided for class arbitration, “exceeded [his] powers” under §10(a)(4) of the Federal Arbitration Act, 9 U. S. C. §1 et seq.  Delivering the opinion of the Court and citing Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S. 662, 684 (2010), Justice Kagan concluded that the arbitrator’s decision survives the limited judicial review §10(a)(4) allows.

The arbitration clause at issue provided as follows:

No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration in New Jersey, pursuant to the rules of the American Arbitration Association with one arbitrator.

Slip Op. at 2.

The state court granted Oxford’s motion to compel arbitration, and the parties agreed that the arbitrator should decide whether their contract authorized class arbitration.  Id.  The arbitrator determined that it did. Id.  Oxford filed a motion in federal court to vacate the arbitrator’s decision on the ground that he had exceeded his powers under §10(a)(4), but the District Court denied the motion, and the Third Circuit affirmed.  Id.

While the arbitration proceeded, the Supreme Court Court held in Stolt-Nielsen that “a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.” 559 U. S. at 684. The parties in Stolt-Nielsen had stipulated that they had never reached an agreement on class arbitration.

The Supreme Court in Oxford Health Plans LLC distinguished Stolt-Nielsen: Read the rest of this entry »

Sixth District Reverses Arbitration Order as to PAGA Claims

Exception!

Exception! (Photo credit: shaymus22)

In a putative class action, the Sixth District held that an arbitration agreement cannot be enforced against PAGA claims.   Brown v. Superior Court (Morgan Tire & Auto, LLC), No. H037271, __ Cal. App. 4th __ (6th Dist. June 4, 2013).

The question presented in this case is whether the Federal Arbitration Act (9 U.S.C. §§ 1-16) (FAA) permits arbitration agreements to override the statutory right to bring representative claims under the Labor Code Private Attorneys General Act of 2004 (PAGA). (Lab. Code, § 2698 et seq.) We conclude that the FAA does not demand enforcement of such an agreement. A plaintiff suing for PAGA civil penalties is suing as a proxy for the State. A PAGA claim is necessarily a representative action intended to advance a predominately public purpose. When applied to the PAGA, a private agreement purporting to waive the right to take representative action is unenforceable because it wholly precludes the exercise of this unwaivable statutory right. AT&T Mobility LLC v. Concepcion (2011) 131 S.Ct. 1740 (Concepcion) does not require otherwise.

Slip Op. at 1-2.

By CHARLES H. JUNG

Arbitration Clause on Back of Pre-Printed Auto Purchase Contract Is Unconscionable

Mini Maint Page 1

Mini Maint Page 1 (Photo credit: Flyinace2000)

Yesterday, in Vargas v. SAI Monrovia B, Inc., No. B237257, __ Cal. App. 4th __ (2d Dist. June 4, 2013), a putative class action, the Second District revisited its holding in Sanchez v. Valencia Holding Co., LLC, 201 Cal.App.4th 74 (2012), review granted March 21, 2012, S199119.  In Sanchez the court held that a “Retail Installment Sale Contract” used to purchase an automobile is unconscionable and unenforceable.  In Vargas, the court again concluded that the identical sale contract does not require the arbitration of disputes between a purchaser and a car dealer because it is permeated by unconscionability.

The arbitration provision, entitled, “ARBITRATION CLAUSE,” was on the back at the bottom of the page, outlined by a black box; the arbitration provision was the last provision in the Sale Contract concerning the purchase of the vehicle; a provision related to the assignment of the contract appeared below it. The buyers’ final signatures appeared near the bottom of the front side. The only signature line on the back was at the very bottom of the page; it required the seller’s signature to assign the contract to a third party.

Slip Op. at 3.

The court found that the arbitration provision satisfies the two elements of procedural unconscionability: oppression and surprise. Read the rest of this entry »

Fourth District Reverses Denial of Meal & Rest Break Class Action

English: Cash transport van with guards in Gua...

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

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

Court Reporter tests his Stenomask

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 »

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

_DSC9576

_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

Amending Attorneys’ Fees Allegation in Midst of Trial Found Prejudicial

Late

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

 

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

1961 Ford H-Series trucks

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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