CALIFORNIA CLASS ACTION LAW

Chicago Sued Over BlackBerry Overtime

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A  Chicago police sergeant has brought an FLSA collective action against the city for overtime pay related to the off-hours use of his BlackBerry PDA device.  The complaint in Allen v. City of Chicago, No. 10-CV-03183, was filed in U.S. District Court for the Northern District of Illinois.  You can view the complaint here.

The complaint alleges that it is brought by a Chicago Police Sergeant on behalf of himself and other similarly situated members of the Chicago Police Department for purposes of obtaining relief under the federal Fair Labor Standards Act of 1938 as amended, 29 U.S.C. §201, et. seq. (hereinafter “FLSA”) for unpaid overtime compensation, liquidated damages, costs, attorneys’ fees, declaratory and/or injunctive relief, and/or any such other relief the Court may deem appropriate.

Defendant has willfully violated the FLSA by intentionally failing and refusing to pay Plaintiff and other similarly situated employees all compensation due them under the FLSA and its implementing regulations over the course of the last three years. Defendant administered an unlawful compensation system that failed to provide hourly compensation and premium overtime compensation to employees that work overtime hours “off the clock.” Plaintiff and similarly situated employees were issued personal data assistants (“PDA’s”), such as BlackBerry devices, that they are required to use outside their normal working hours without receiving any compensation for such hours. Defendant’s deliberate failure to compensate its Chicago Police Department employees for these hours worked violates federal law as set forth in FSLA.

The plaintiff’s attorneys are MaryAnn Pohl and Paul D. Geiger.

By CHARLES H. JUNG

Northern District Approves 28.9% Fee Award in Wage and Hour Class Action Settlement

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Judge Jeffrey S. White approved a wage and hour class action settlement of a non-reversionary $1.8 million, inclusive of $520,000 in attorneys fees, in Ozga v. U.S. Remodelers, Inc., No. C 09-05112 JSW, 2010 WL 3186971 (N.D. Cal. Aug. 9, 2010).

Plaintiff filed a class action in the Alameda Superior Court on February 17, 2009, alleging that Defendant U.S. Remodelers Inc. violated the California Labor Code and violated California Industrial Welfare Commission Wage Orders by: (1) requiring its Installer employees to work substantial amounts of time without compensation; (2) regularly failing to provide Installers with meal and rest periods; and (3) refusing to reimburse expenses that Installers incurred in the performance of their work duties, including travel expenses and equipment costs.

Defendant removed the action to this Court, and Plaintiff subsequently moved to remand.  But before the hearing on the motion to remand, the parties reached a settlement, which was facilitated, in part, by a mediation that occurred on October 1, 2009, before Michael Loeb.  The parties also engaged in some discovery, and Class Counsel interviewed a number of Settlement Class members.

The Court finds that the terms of the Settlement are fair, adequate and reasonable. As noted, the settlement was reached after the parties engaged in discovery, conducted a meditation, and continued to engage in arms-length negotiations. The parties agreed to a Settlement payment of $1,800,000.00, none of which will revert to the Defendant. The overall reaction to the settlement has been positive. The Claims Administrator has received 156 claim forms from the 270 Class Members. (Id., ¶¶ 20-21.) Neither the Claims Administrator nor the Court received any objections to the Settlement. No Class Member appeared at the final approval hearing to object. According to the Claims Administrator, assuming the Court were to grant in full Plaintiff’s motion for attorneys’ fees and costs and service awards, approximately $1,108,917.72 would be available to distribute Class Members who submitted timely claim forms, for an average award of just over $7,000. (Id. ¶¶ 16-18.)

The Court approved costs to be paid to the Claims Administrator of $10,000.00 from the Settlement Fund.

Attorneys Fees, Costs, and Service Awards

Plaintiff brought an unopposed fee application, seeking $600,000.00 in attorneys’ fees, $11,274.89 in costs, and $10,000.00 in service awards to him and to class member Boris Moskovich.

Plaintiff’s counsel sought an award of attorneys’ fees based on the percentage method, asking for 33 1/3% of the Settlement Fund.  The court agreed to depart from the 25% benchmark.  See Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002) (noting that 25% is benchmark and “usual” range of awards is 20-30%); Hanlon v. Chrysler Corp., 150 F.3d 1011, 1029 (9th Cir. 1998) (stating that 25% is benchmark).  But the court would not vary from the benchmark to the degree requested by counsel.

The Court concludes that counsel did achieve an excellent result for the class, that the reaction to the settlement has been overwhelmingly positive, and that Plaintiff faced significant risk in prosecuting this case given the uncertain state of California law in similar wage and hour cases. The Court also recognizes that other courts have awarded settlement fees of up to 33 1/3% in such cases. However, the parties reached this settlement quickly and did not engage in any motion practice. See, e.g., Navarro v. Servisair, 2010 WL 1729538 (N.D. Cal. Apr. 27, 2010) (finding that proposed award of 30% of settlement fund unjustifiably departed from benchmark based in part on speed with which parties reached a settlement). Moreover, the requested percentage would amount to award that is more than double the fees actually incurred by counsel. Compare Vasquez v. Coast Valley Roofing, Inc., 266 F.R.D. 482, 491 (E.D. Cal. 2010) (awarding 33 1/3% of settlement fund which was “significantly less” than asserted lodestar).

Thus the court found that an award of  $520,000.00 was reasonable.

The court found counsels’ requests for costs in the amount of $11,274.89 reasonable.

The court also approved service awards in the amount of $10,000.00 for the lead plaintiff and for a class member.

By CHARLES H. JUNG

Central District Denies Class Certification in Ink Jet Toner Class Action

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In Shein v. Canon U.S.A., Inc., No. CV 08-7323 CAS (Ex), 2010 WL 3170788 (C.D. Cal. Aug. 10, 2010), Judge Christina Snyder considered and denied a motion for class certification based on a lack of predominance under 23(b)(3).  The court held that “plaintiff fails to demonstrate how he will establish on a class-wide basis that a material amount of ink remained in each class members’ cartridges when the ‘ink out’ messages appeared.”

Plaintiff Steven Shein filed the class action case against defendant Canon U.S.A., Inc. (“Canon”) on November 4, 2008.  On January 2, 2009, plaintiff Shein, joined by plaintiff Jason Insalasco, filed a first amended complaint (“FAC”). In Plaintiffs third amended complaint (“TAC”), Plaintiff alleged three claims: (1) violation of CLRA; (2) violation of UCL; and (3) conversion. On September 22, 2009, the Court denied defendant’s motion to dismiss plaintiff’s CLRA claim.

On April 12, 2010, plaintiff Insalasco filed the instant motion for class certification. At the hearing, the Court tentatively indicated that it would grant certification as to plaintiff’s UCL claim and deny certification as to plaintiff’s CLRA claim. Upon further review of the record and the positions advanced at oral argument, the Court concluded that plaintiff’s motion for class certification should be denied without prejudice.

Class Definition

Plaintiff sought certification of the following class, with regard to his claims for violation of CLRA and for violation of UCL:

All residents of the State of California who purchased a Canon Pixma series inkjet printer on or after November 4, 2004.

The gravamen of the suit is that these Canon-brand Pixma series inkjet printers uniformly misinform users that “ink has run out” and that they must replace the purportedly empty ink cartridge, when in fact, at the time Canon issues its “ink out” messages, these ink cartridges still contain a significant amount of useable ink.  According to plaintiff, Canon earns a substantial profit from the sale of each cartridge, and thus, employs these deceptive messages in order to increase the sale of replacement ink cartridges.

23(a)

Defendant diputed typicality, but not numerosity, commonality, or, to a substantial degree, adequacy.  With regard to typicality, the court found that “[n]otwithstanding the asserted differences between plaintiff and members of the proposed class, plaintiff’s claims are based on an alleged common course of conduct by Canon whereby defendant’s Pixma inkj et printers prematurely indicate that an ink cartridge is out of ink and needs to be replaced. Therefore, plaintiff’s claims arise from the ‘same event or course of conduct’ as those of the various class members, as required under Rule 23(a)(3), and are typical of the claims of the proposed class.”

23(b)

Plaintiff sought certification under Rule 23(b)(3).  In analyzing predominance and commonality, the court found two “crucial questions”:

(1) whether plaintiff has shown that every printer model in the proposed class displays the same, or substantially the same, “ink out” message; and

(2) the existence of a plausible class-wide method for proving that when these “ink out” messages appear there is in fact a material amount of usable ink remaining in each class members’ printer cartridges, and not only a de minimis amount. Accordingly, the question is whether plaintiff can establish on a class-wide basis the materiality of Canon’s misrepresentations regarding the remaining ink level of the printers in question and that these allegedly deceptive statements caused injury to members of the class.

Despite Canon’s argument that different printer users receive a wide array of messages depending on their printer model and the operating system running on their computer, the Court was unpersuaded that these variations are the type of “material variation” in defendant’s representations regarding the ink level that would render fraud-based claims unsuitable for class treatment.  Citing In re First Alliance Mortgage Co., 471 F.3d 977, 990, 992 (9th Cir.2006) (“The class action mechanism would be impotent if a defendant could escape much of his potential liability for fraud by simply altering the wording or format of his misrepresentations across the class of victims.”). The court concluded that “it appears, that all of the printers plaintiff is seeking to certify issue a substantially similar ‘ink out’ message, combined with the ‘hard stop’ of the printer while receiving that message, and that class members allegedly receive this message before the printer cartridges may in fact be entirely empty.”  Id. *7.

The court then considered whether plaintiff had shown a plausible class-wide method for proving that these “ink out” messages appear when there is in fact a material amount of usable ink remaining in each class members’ printer cartridges, and thus constitute actionable conduct common to the entire Class.

Claim Under the UCL

Plaintiff argued that common issues of law and fact predominate as to his claim under the “fraudulent” prong of the UCL.  The court disagreed, finding that plaintiff failed to demonstrate his basis for establishing that a material amount of ink remained in each class members’ cartridges when the “ink out” messages appeared:

Although “relief under the UCL is available without individualized proof of deception, reliance, and injury,” see Tobacco II Cases, 46 Cal. 4th at 312, 320, in this case, plaintiff fails to demonstrate how he will establish on a class-wide basis that a material amount of ink remained in each class members’ cartridges when the “ink out” messages appeared. If only a de minimis amount of ink remained at that point, then no misrepresentation or omission was made, and certainly not one that could be deemed material or “likely to deceive” a “reasonable consumer” under the UCL. Plaintiff’s attempt to rely solely on the deposition testimony of Canon’s employee Yamamoto is unavailing. First, the Court is unpersuaded that his testimony can be construed in the way advanced by plaintiff–namely, that Canon concedes that all of its printers are programmed to “compensate” for a 10% margin of tolerance in determining when an “ink out” messages are displayed. Further, the fact that there is a ten percent variance inherent in the printer technology does not address the critical question of whether there is in fact a material amount of useable ink remaining in each class members’ printer cartridges when the “ink out” message appears. Because plaintiff fails to submit any evidence or expert testimony to the contrary, it appears based on the record that whether a printer receives an “ink out” message before, after, or at the same time that the ink in the cartridge has run out is an individual issue of fact that must be determined for each printer. Accordingly, the Court concludes, as to plaintiff’s UCL claim, that common issues of fact do not predominate over individual ones.

Claim under the CLRA

For the same reasons, the court found that plaintiff filed to satisfy the preodminance requirement for his CLRA claim.

In the instant case, the gravamen of plaintiff’s allegations is that Canon’s “ink out” statements and its concealment of the inaccuracy inherent in its ink level detection methods are material enough to compel a reasonable consumer to believe that the ink cartridge is empty and needs to be replaced. However, as noted previously, plaintiff fails to demonstrate how he will establish on a class-wide basis that a material amount of ink remained in each class members’ cartridges when the “ink out” messages appeared. Without such a showing, plaintiff cannot establish that “material misrepresentations were made to the class members [such that] at least an inference of reliance arises as to the entire class.” Mass. Mut., 97 Cal.App. 4th at 1292-93. Thus, the Court concludes that plaintiff fails to satisfy the predominance requirement as to his CLRA claim.

Thus, the court denied certification.

By CHARLES H. JUNG

Fourth District Invalidates Class-Wide Arbitration Clause

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In this next case, Fisher v. DCH Temecula Imports LLC, — Cal.Rptr.3d —-, 2010 WL 3192912 (Cal. Ct. App. 4th Dist. Aug. 13, 2010), the Court of Appeal for the Fourth District upheld the trial court’s denial of a petition to compel arbitration.

Defendant DCH Temecula Imports LLC (DCH) appealed the denial of its petition to compel arbitration. The trial court found that an arbitration clause in a retail installment sales contract (RISC) for the sale of a car to plaintiff Amberlee Fisher, which included a waiver of the right to bring a class action lawsuit or request classwide arbitration, was unenforceable.  Fisher opposed enforcement of the arbitration clause, arguing that it required her to waive an unwaivable statutory right to bring a class action lawsuit under the California Legal Remedies Act (the CLRA) and that the arbitration agreement was both procedurally and substantively unconscionable.

Claims and Class Definition

Fisher filed her complaint for injunctive relief, restitution, rescission, and damages both on her own behalf and as a class action lawsuit.  The class definition was:

those who purchased a vehicle from DCH from July 28, 2003, to then present, and (1) after signing an RISC, DCH rescinded the original RISC and had the consumer sign a subsequent RISC for the same vehicle, but the new contract was dated the date of the original purchase contract and involved financing at an annual percentage rate greater than 0.00%, and/or (2) who executed an RISC for the purchase of a vehicle for personal use where registration and licensing fees were not properly disclosed on a separate line in the contract as required.

The six causes of action for the class were violation of the CLRA and Civil Code sections 1750 and 1780, subdivision (a)(2) for backdating contracts; violation of the CLRA and Civil Code sections 1750, subdivision (a) and 1770, subdivision (a) for improperly designating license and registration fees; violation of the Automobile Sales Finance Act (the ASFA) and Civil Code section 2981 for backdating the second sales contract; violation of the ASFA and Civil Code section 2981 for improperly designating license and registration fees; commission of unlawful, unfair, and/or fraudulent business practices and violation of Business and Professions Code section 17200 for backdating the second sales contracts; and commission of unlawful, unfair, and/or fraudulent business practices and violation of Business and Professions Code section 17200 for failing to properly designate license and registration fees.

Petition to Compel Arbitration

On December 1, 2008, DCH filed its notice of petition and petition for orders compelling binding contractual arbitration, severing injunctive relief claims if inarbitrable, staying or dismissing proceedings pending arbitration, and staying injunctive relief claims pending arbitration if inarbitrable (petition to compel arbitration). According to the petition to compel arbitration, DCH had demanded that Fisher enter into binding arbitration prior to filing the complaint, but she had refused.

The binding arbitration clause appeared in a box on the back of the agreement in both the first and second RISC that Fisher signed.

The page on which it appeared was neither signed nor initialed. In bold letters it stated, “ARBITRATION CLAUSE PLEASE REVIEW–IMPORTANT–AFFECTS YOUR LEGAL RIGHTS.” It stated: “Either you or we may choose to have any dispute between us decided by arbitration and not in court or by jury trial.” (Capitalization omitted.) It also stated, “If a dispute is arbitrated, you will give up your right to participate as a class representative or class member on any class claim you may have against us including any right to class arbitration or any consolidation of individual arbitrations.” (Capitalization omitted.) It further stated, “You expressly waive any right you may have to arbitrate a class action.” Finally, it included language that, if the waiver of class action lawsuits or classwide arbitration was found unenforceable, the entire arbitration clause was unenforceable.

The court faced the issue of whether the waiver of a state statutory right (CLRA) constitutes a ground that exists at law or in equity for the revocation of any contract.  The court held that the “right to bring a class action lawsuit, an unwaivable statutory right under the CLRA, is ‘a separate, generally available contract defense not preempted by the FAA.'” Id. *11 (quoting Gutierrez v. Autowest, Inc., 114 Cal. App. 4th 77, 95 (2003)).

The manner in which the contract was written in this case gives the appearance that the class action waiver was included in the arbitration agreement in order to force Fisher to waive her statutory rights, and DCH could be protected by arguing that the FAA preempted the CLRA because the waiver was included in the arbitration agreement. This is the type of arbitration agreement criticized in Little v. Auto Stiegler, Inc., supra, 29 Cal.4th at p. 1079 for hiding these types of waivers of unwaivable rights.

Our hands are tied as to ordering arbitration of any of Fisher’s individual claims in the agreement. It was DCH who chose to put the classwide arbitration and class action lawsuit waiver in the arbitration agreement and then included the “poison pill” provision that invalidated the remainder of the arbitration agreement if the classwide arbitration waiver was unenforceable. We cannot sever the offending class action waiver, as we are bound by the language of the contract. We therefore affirm the trial court’s ruling denying DCH’s petition to compel arbitration.

Id. *12.

Judges and Attorneys

Justice Betty Ann Richli wrote the opinion for the court.  Justices Hollenhorts and McKinster concurred.

The appeal was taken from the Superior Court of Riverside County, Hon. Mac R. Fisher.

Defendant and Appellant was represented by Christian J. Scali and Wade R. Kackstetter of Manning, Leaver, Bruder & Berberich.

Jonathan Morrison submitted an amicus brief for California New Car Dealers Association on behalf of Defendant and Appellant.

Plaintiff and Respondent was represented by Hallen D. Rosner and Christopher P. Barry of Rosner, Barry & Babbitt.

The Complex Litigator and The UCL Practioner also discuss this case.

By CHARLES H. JUNG