February | 2012 | CALIFORNIA CLASS ACTION LAW

February 21, 2012

U.S. Supreme Court Applies Concepcion to Strike Down West Virginia Arbitration Rule

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In a per curiam opinion today applying the rule in Concepcion, the U.S. Supreme Court reversed and remanded orders of the Supreme Court of Appeals of West Virginia, which held unenforceable all predispute arbitration agreements that apply to claims alleging personal injury or wrongful death against nursing homes. Marmet Health Care Center, Inc., et al. v. Clayton Brown, et al., Case Nos. 11–391 and 11–394, 565 U. S. ____ (Feb. 21, 2012).

The U.S. Supreme Court held that the “Supreme Court of Appeals of West Virginia, by misreading and disregarding the precedents of this Court interpreting the FAA, did not follow controlling federal law implementing that basic principle.” Id. “When this Court has fulfilled its duty to interpret federal law, a state court may not contradict or fail to implement the rule so established.”

Background

In each of three negligence suits, a family member of a patient requiring extensive nursing care had signed an agreement with a nursing home on behalf of the patient. Id. The agreements included arbitration clauses requiring the parties to arbitrate all disputes, other than claims to collect late payments owed by the patient. Id. In each of the three cases, a family member of a patient who had died sued the nursing home in state court, alleging that negligence caused injuries or harm resulting in death. Id.

In a decision concerning all three cases, the Supreme Court of Appeals of West Virginia held that “as a matter of public policy under West Virginia law, an arbitration clause in a nursing home admission agreement adopted prior to an occurrence of negligence that results in a personal injury or wrongful death, shall not be enforced to compel arbitration of a dispute concerning the negligence.” Id.

The state court considered whether the state public policy was pre-empted by the FAA: Read the rest of this entry »

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February 21, 2012

Broad “Any Disputes” Language in Arbitration Agreement Insufficient to Manifest Clear and Unmistakable Intent to Delegate Threshold Arbitrability Determination to Arbitrators

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Editorial note: The author of California Class Action Law appeared for respondent Ajamian in the opinion summarized below, Ajamian v. CantorCO2e, L.P., et al.

In an opinion certified for publication, the First District Court of Appeal held that a broadly worded arbitration agreement that stated that “[a]ny disputes, differences or controversies arising under” a contract shall be settled by a panel of arbitrators was insufficient to establish “clear and unmistakable” evidence of an intent to delegate issues of enforceability or arbitrability to the arbitration panel. Ajamian v. CantorCO2e, L.P., et al., No. A131025 (1st Dist., Div. 5 Feb. 6, 2012) (available at http://www.courtinfo.ca.gov/opinions/documents/A131025.PDF).

Although the arbitration provision was broadly worded and indicated that arbitration might be conducted under the rules of an arbitration service that gives arbitrators the power to decide the validity of arbitration agreements, it did not provide clear and unmistakable evidence that the parties intended to delegate authority to the arbitrator, rather than to the court, to decide the threshold issue of whether the arbitration provision itself was unconscionable.

Id.

Background

Plaintiff Ajamian filed a complaint against Defendants CantorCO2e and Margolis, asserting claims under the California’s Fair Employment and Housing Act, the California Labor Code, and other theories. Id. Defendants filed a petition to compel arbitration pursuant to the terms of a written employment agreement or, alternatively, an employee handbook. Id.

The arbitration provision of the employment agreement read: Read the rest of this entry »

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February 17, 2012

In a Wage Class Action, Defendants Waived Right to Arbitrate After Engaging in Extensive Discovery and Filing 2 Motions to Compel

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In an unpublished decision, the First District Court of Appeal affirmed the trial court’s denial of a motion to compel arbitration in a wage and hour class action, where defendants conducted voluminous discovery and filed and fully litigating two motions to compel further responses to discovery, a motion for sanctions and a motion for a protective order. Partridge, et al. v. Hott Wings, Inc., et al., No. A130266, 2012 WL 470458 (Feb. 14, 2012).

Discussion

The Court found that Defendants’ delay in filing their petition to compel arbitration “connotes an intent not to arbitrate”. Id. Defendants conducted substantial discovery:

Between March 2010 and the October 2010 hearing on defendants’ motion to compel arbitration, defendants engaged in voluminous written discovery to which plaintiffs responded. In addition, defendants deposed numerous plaintiffs and third party witnesses. Although plaintiffs had begun deposing witnesses, they had not yet obtained basic documents from defendants through discovery. The discovery focused on the liability of individual defendants and the franchise defendants that employ plaintiffs. As a result of defendants’ discovery requests, plaintiffs provided information regarding plaintiffs’ estimated damages, which defendants were responsible for which violations, and the liability of the individual as well as the franchise defendants. A reasonable inference is that the information gained from defendants’ discovery goes to significant issues in plaintiffs’ case.

Id.

In addition, the Court found that Defendants “substantially invoked the litigation machinery” by: Read the rest of this entry »

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February 16, 2012

First District Holds That Stay of PAGA and Class Claims Pending Arbitration of Employee’s Individual Claims Not Appealable

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The Court of Appeal for the First District granted plaintiff’s motion to dismiss an appeal, where the employer appellant sought review of a trial court order that did not compel an employee to arbitrate her PAGA claims. Reyes v. Macy’s, Inc., No. A133411, 202 Cal.App.4th 1119 (1st Dist. Dec. 21, 2011). The court held that the portion of the trial court’s order that failed to compel employee to arbitrate her class claims and PAGA claims was not immediately appealable; and plaintiff’s PAGA claim was not an individual claim and thus was not within the scope of arbitration request. Id. (holding that the order granting Defendant’s own motion to compel arbitration of the individual claims “is not appealable, and the remainder of the order denying the motion to dismiss representative [PAGA] claims is not a final judgment and, therefore, also is not appealable . . . .”).

Background

Plaintiff and respondent Reyes brought action against her employer Macy’s, alleging numerous class action labor code violations and a cause of action under the Labor Code Private Attorneys General Act of 2004 (“PAGA”), as well as individual claims for discrimination, harassment, and retaliation. Id.

In the trial court, Macy’s filed a “motion to compel arbitration on an individual basis, dismiss class allegations, and stay civil action,” asking the court to enforce the parties’ agreement to arbitrate, compel the plaintiff to arbitrate individual claims, dismiss class/representative claims and, if the motion were granted, stay the proceedings until arbitration is completed. Id. San Francisco Superior Court Judge Charlotte Walter Woolard held that:

All of plaintiff’s individual claims are severed and are subject to arbitration. These individual claims are to proceed to arbitration. Plaintiff’s class claims and PAGA claims, and discovery related to those claims, are stayed and shall remain in this court until the individual claims are arbitrated.

Macy’s filed a notice of appeal and plaintiff has moved to dismiss the appeal.

Discussion

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February 16, 2012

No Collateral Estoppel Against Unnamed Putative Class Members, Where Certification Is Denied

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The Court of Appeal for the Second District held that a denial of class certification cannot establish collateral estoppel against unnamed putative class members. Bridgeford v. Pacific Health Corporation, et al., No. B227486, 202 Cal.App.4th 1034 (2d Dist. Jan. 18, 2012).

Background

Plaintiffs Bridgeford and Tarin filed a class action complaint in May 2010 against Pacific Health Corporation and other entities, alleging that defendants committed numerous wage and hour violations, including (1) failure to pay wages due upon discharge or resignation, (2) failure to pay regular and overtime wages due semimonthly, (3) failure to provide meal breaks, (4) failure to provide rest breaks, (5) failure to provide itemized wage statements, (6) failure to pay minimum wages for time worked off-the-clock, (7) failure to pay overtime wages, and (8) unfair competition. Id.

The trial court sustained a demurrer without leave to amend. Id. Plaintiff’s appealed, contending the trial court misapplied the doctrine of collateral estoppel in holding that their class claims are precluded, and there is no basis to dismiss their individual claims or their representative claims under the Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code section 2698, et seq.).

Discussion

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February 15, 2012

Magistrate Judge Elizabeth LaPorte Grants Final Approval For Settlement With Attorneys Fees of 25% of the Common Fund and $5,000 Incentive Award

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Magistrate Judge Elizabeth D. LaPorte granted final approval for a class of individuals who obtained an Option ARM loan originated by U.S. Financial Funding, Inc. with certain characteristics. Lymburner v. U.S. Financial Funding, Inc., No. C0800325, 2012 WL 398816 (N.D. Cal., Feb. 7, 2012) (slip op.). The net settlement amount was approximately $93,750, and the court granted plaintiff’s motion for attorneys’ fees in the amount of $36,250. Id.

Background

Plaintiff Dian C. Lymburner brought a putative class action against Defendant U.S. Financial Funding alleging claims for fraudulent omissions, breach of contract, and breach of the implied covenant of good faith and fair dealing. Id. Plaintiff filed a motion to certify the class, and on January 22, 2010, the Court granted that motion. Id. After extensive negotiation, the parties reached a settlement. Id. After notice was mailed, no class members filed an objection or exclusion request. Id.

Discussion

With respect to the total settlement amount, the court noted that “importantly, the Settlement Agreement is premised on Defendant’s limited asset.” Id. “Defendant has no other source of funding other than an eroding insurance policy, which was valued at $174,000, and which is now valued at $145,000, which is the total settlement amount.” Id. The Court approved the settlement amount, in addition to $36,250 in fees and expenses, which is 25% of the estimated value of the settlement. Id. At this amount, Plaintiff’s attorneys received less than their lodestar. Id.

Judge and Attorneys

United States Magistrate Judge Elizabeth D. LaPorte.

Edward Young Lee, Lee & Fields, A.P.C., Christopher Peter Fields, Los Angeles, CA, Jeffrey K. Berns, Arbogast & Berns LLP, Tarzana, CA, Michael C. Eyerly, Patrick Deblase, Paul R. Kiesel, Kiesel Boucher & Larson LLP, Beverly Hills, CA, for Plaintiff.

Shahram Nassi, Roger Scott Raphael, Lewis Brisbois Bisgaard & Smith, San Francisco, CA, for Defendant.

By CHARLES JUNG

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February 14, 2012

MDL Panel Centralizes Facebook Internet Tracking Litigation

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Plaintiffs in the Northern District of California moved to centralize litigation consisting of eleven actions pending in ten districts in the Northern District of California. In Re Facebook Internet Tracking Litigation, — F.Supp.2d —-, 2012 WL 432607 (U.S. Jud. Pan. Mult. Lit. Feb. 8, 2012). The MDL Panel transferred ten actions to the Northern District of California and, assigned to the Judge Edward J. Davila for coordinated or consolidated pretrial proceedings. Id.

Background

No party opposed centralization. Id. The Panel found that six actions shared factual allegations that “Facebook improperly tracked users’ internet activity after users had logged out of their Facebook accounts.” Id. Plaintiffs in all actions brought claims under the federal Wiretap Act, 18 U.S.C. section 2511. Additional claims include violation of the Stored Electronic Communications Act, 18 U.S.C. section 2701, the Computer Fraud and Abuse Act, 18 U.S.C. section 1030, as well as common law claims for intrusion upon seclusion/invasion of privacy, unjust enrichment, and trespass to chattels. Id.

The Panel concluded that “Centralization will eliminate duplicative discovery; prevent inconsistent pretrial rulings, including with respect to class certification; and conserve the resources of the parties, their counsel, and the judiciary.” Id.

Judges

Before John G. Heyburn II, Chairman, Kathryn H. Vratil, Barbara S. Jones, Paul J. Barbadoro, Marjorie O. Rendell, and Charles R. Breyer.

By CHARLES JUNG

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February 14, 2012

MDL Panel Centralizes Horizon Organic Milk Plus DHA Omega 3 Marketing and Sales Practices Litigation in the Southern District of Florida

Horizon organic milk (Photo credit: Nicole Lee)

Defendants Dean Foods Co. and WhiteWave Foods Co. sought centralization of five actions based in Arkansas, California, Illinois and Florida. Pursuant to 28 U.S.C. s 1407, the U.S. Judicial Panel on Multidistrict Litigation transferred the cases to the Southern District of Florida and assigned them to Hon. Joan A. Lenard for centralized pretrial proceedings. In re Horizon Organic Milk Plus DHA Omega 3 Marketing And Sales Practices Litigation, — F.Supp.2d —-, 2012 WL 432621, MDL No. 2324 (U.S. Jud. Pan. Mult. Lit. Feb. 9, 2012).

Background

No party opposed centralization. Plaintiffs in the Western District of Arkansas, Middle District of Florida and Southern District of Florida actions supported centralization in the Southern District of Florida. Plaintiffs in the Southern District of California and the Northern District of Illinois actions supported centralization in the Northern District of Illinois.

The MDL Panel found that the actions shared factual questions arising out of allegations that defendants’ representations regarding certain milk products fortified with DHA Omega-3 FN1 under the brand name “Horizon Organic Milk” FN2 were misleading insofar as they claimed that the milk supports “brain health” in children and adults.

The Panel decided to order centralization in the Southern District of Florida because several plaintiffs supported centralization there, and that district “is presiding over fewer MDL dockets than other proposed districts.” Id.

Judges

Before John G. Heyburn, II, Chairman, Barbara S. Jones, Paul J. Barbadoro, Marjorie O. Rendell, Charles R. Breyer.

By CHARLES JUNG

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Month: February, 2012