CALIFORNIA CLASS ACTION LAW

Category: 23(b)(3) Class

Ninth Circuit Reverses Dismissal of State Law Claims, Holding That FLSA Collective Actions and State Law Class Actions are Not Inherently Incompatible

English: Stanford Memorial Church, Stanford Un...

English: Stanford Memorial Church, Stanford University, Stanford, California. (Photo credit: Wikipedia)

Agreeing with other circuits, the Ninth Circuit held today that FLSA collective actions and state law class actions are not inherently incompatible.  Bush v. Integrity Staffing Solutions, Inc., No. 11-16892, __ F.3d __ (9th Cir. Apr. 12, 2013).  The district court dismissed warehouse workers’ claims for unpaid wages under the Fair Labor Standards Act and Nevada state law.  The Ninth Circuit reversed the dismissal of state law claims on the basis that they would be certified using different class certification procedures than the federal wage-and-hour claims.  Agreeing with other circuits, the panel held that a FLSA collective action and a state law class action are not inherently incompatible as a matter of law even though plaintiffs must opt into a collective action under the FLSA but must opt out of a class action under Federal Rule of Civil Procedure 23.

You can read more about the ruling here.

Judges

Before: Jerome Farris, Sidney R. Thomas, and N. Randy Smith, Circuit Judges. Opinion by Judge Thomas.

The case was argued and submitted at Stanford Law School.

By CHARLES H. JUNG

In an Antitrust Class Action, U.S. Supreme Court Holds That Expert’s Damages Study Must Translate the Legal Theory of Harmful Event to Economic Impact of Event

photograph of the justices, cropped to show Ju...

photograph of the justices, cropped to show Justice Scalia (Photo credit: Wikipedia)

In a 5 to 4 opinion today written by Justice Scalia, the U.S. Supreme Court found that a proposed antitrust class action was improperly certified under Rule 23(b)(3) because plaintiff’s damages model fell short of establishing that damages can be measured classwide.  Comcast Corp., et al. v. Behrend, et al., No. 11-864, 569 U.S. ___ (Mar. 27, 2013).  The District Court and Third Circuit approved certification of a class of more than 2 million current and former Comcast subscribers who sought damages for alleged violations of the federal antitrust laws.

At the trial court level, plaintiffs proposed four theories of antitrust impact, only one of which–the “overbuilder” theory–the trial court accepted.  To establish damages, plaintiffs relied solely on the testimony of Dr. James McClave, who designed a regression model comparing actual cable prices in one area with hypothetical prices that would have prevailed but for defendant’s allegedly anticompetitive practices.  Dr. McClave acknowledged that the model did not isolate damages resulting from any one theory of antitrust impact.  Id. at 4.

The Supreme Court held that the class was improperly certified.

By refusing to entertain arguments against respondents’ damages model that bore on the propriety of class certification, simply because those arguments would also be pertinent to the merits determination, the Court of Appeals ran afoul of our precedents requiring precisely that inquiry. And it is clear that, under the proper standard for evaluating certification, respondents’ model falls far short of establishing that damages are capable of measurement on a classwide basis. Without presenting another methodology, respondents cannot show Rule 23(b)(3) predominance: Questions of individual damage  calculations will inevitably overwhelm questions common to the class.

The Court reasoned that the “model failed to measure damages resulting from the particular antitrust injury on which petitioners’ liability in this action is premised.”  Id. at 8.  Justice Scalia emphasized that “it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question, . . . Such an analysis will frequently entail overlap with the merits of the plaintiff ’s underlying claim.” Id. at 6 (internal quotations omitted).

By CHARLES H. JUNG

Judge Whyte of the Northern District Certifies Class Action Against Dell Related to Alleged Misrepresentation of Discount

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The Northern District granted in part a class certification motion in Brazil v. Dell Inc., No. C-07-01700 RMW, 2010 WL 5387831 (N.D. Cal. Dec. 21, 2010) (slip op.).

Background

On June 15, 2006, plaintiff Steven Seick purchased directly from defendant Dell Inc. (“Dell”) through its online purchasing process a Dell Dimension B 110 desktop computer (“Dimension Desktop”) and some associated peripheral Dell products. Id. *1. Dell allegedly misrepresented to Seick that the base price of the Dimension Desktop reflected a $50 savings from Dell’s regular price for that computer, but during the three months prior to Seick’s purchase, Dell’s average offered sales price for the Dimension Desktop model was allegedly even lower than the amount paid by Seick.  Id. Consequently, rather than having received any discount, Seick asserts that he paid $1.49 in excess of the true regular sales price for the Dimension Desktop. Id. In addition, although Dell represented to Seick that the offer for the $50 savings would expire on June 22, 2006, Dell in fact continued to make the offer until October 12, 2006. Id. Plaintiff Chad Brazil made similar, but not entirely the same allegations.  Id.

Brazil and Seick brought a class action claiming that Dell deceives customers by creating the illusion of discounts and savings through false discounts from false former prices. Id. Former prices purportedly mislead purchasers when products have not been sold at non-marked down or “regular” prices with sufficient regularity. Id.

Plaintiffs in their First Amended Complaint alleged various common law claims, claims under California Bus. & Profs. Code sections 17500 and 17200, et seq., and claims under Cal. Civ.Code section 1750, et seqId. After several motions to dismiss, motions to strike, and amendments to the complaint, plaintiff’ moved to certify the class alleging claims under California law. Id. *2.

Class Definition

Plaintiffs offered the following proposed class definition: “All persons or entities who are citizens of the State of California who on or after March 23, 2003, purchased via Dell’s Web site Dell-branded products advertised with a represented former sales price (i.e., a “Slash-Thru” price or a “Starting Price”) as indicated and set forth [in attached schedules, with limited exclusions].” Id. Read the rest of this entry »

Northern District Grants Certification of Netflix Antitrust Class Action

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The Northern District of California granted plaintiff’s motion for class certification in In Re Online DVD Rental Antitrust Litigation, No. M 09-2029 PJH, 2010 WL 5396064 (N.D. Cal. Dec. 23, 2010) (slip op.).  Plaintiffs are individuals representing a putative class comprised of subscribers to Netflix’s online DVD rental service.

Background

Plaintiffs generally alleged that defendants Netflix, Wal-Mart Stores, and Walmart.com improperly entered into an unlawful market allocation agreement that was publicly announced on May 19, 2005, and which had the effect of illegally dividing the markets for sales and online rentals of DVDs in the United States.  Id. *1.  Specifically, plaintiffs alleged that Netflix and Wal-Mart were competing directly in the online rental DVD market in mid-2004, but that in the face of Blockbuster’s mid-2004 entry into the market place and the ensuing price wars between the three competitors, Netflix began conspiratorial communications with Wal-Mart, with the aim of having Wal-Mart exit the market place and thereby reduce downward pricing pressure in the marketplace.  Id. These efforts were successful, and were memorialized in the May 19 Agreement. Id. Plaintiffs alleged that the purpose of the Agreement was to monopolize and unreasonably restrain trade in the market for online DVD rentals, thereby allowing Netflix to charge supracompetitive prices to its subscribers.  Id.

Plaintiffs asserted four causes of action against Netflix and Wal-Mart: (1) a Sherman Act, section 1 claim for unlawful market allocation of the online DVD rental market (against all defendants); (2) a Sherman Act, section 2 claim for monopolization of the online DVD rental market (against Netflix); (3) a Sherman Act, section 2 claim for attempted monopolization of the online DVD rental market (against Netflix); and (4) a Sherman Act, section 2 claim for conspiracy to monopolize the online DVD rental market (against all defendants). Id. *2.

Class Definition

The putative class was defined as: “Any person or entity in the United States that paid a subscription fee to Netflix on or after May 19, 2005 up to and including the date of class certification.”

Discussion

Stating the policy in favor of certification of antitrust class actions, the court noted that “in antitrust actions such as this one, it has long been recognized that class actions play an important role in the private enforcement of antitrust laws.” Id. *3 (citing Hawaii v. Standard Oil Co., 405 U.S. 251, 262 (1972)). Read the rest of this entry »

Northern District Denies Class Certification, After Sustaining Objections to a Declaration Designed to Evade a Local Rule on Page Limits

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The United States District Court for the Northern District of California denied a motion for class certification for evading the page limit on briefing by relying on 11 pages of argument crammed into a supporting declaration.  Juarez v. Jani-King Of California, Inc., No. 09-3495 SC, 2010 WL 3766649 (N.D. Cal. Sept. 24, 2010).  Plaintiffs brought a putative class action arising out of the sale of franchises by Defendants Jani-King of California, Inc., Jani-King, Inc., and Jani-King International, Inc.  Id. *1.  Plaintiffs petitioned the Court for leave to file a brief exceeding Northern District of California’s Civil Local Rule 7-4(b)’s twenty-five-page limit, but the court denied the request. Id.

Plaintiffs filed their Motion to Certify, as well as sixty exhibits totaling more than four thousand pages in support of the Motion.  Id. Defendants filed objections to an eleven-page section of a declaration that Plaintiffs filed in support of their Motion.  Id.

The Statement of Facts in Plaintiffs’ motion cited almost exclusively to seventy-six paragraphs in this declaration.  Id. And in turn, these paragraphs cited to the evidence supporting the Motion.  The court gave the following example from the motion and declaration: Read the rest of this entry »

Ninth Circuit Affirms in All Respects Trial Court’s Entry of Judgment and Award of Attorneys Fees After Jury and Bench Trial of California Labor Code Class Action and FLSA Collective Action Claims

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On Monday, the U.S. Court of Appeals for the Ninth Circuit affirmed in “all respects” the trial court’s grant of partial summary judgment to plaintiffs, a judgment after jury and bench trials, and an award of attorney’s fees to plaintiffs.  Wang v. Chinese Daily News, Inc., Nos. 08-55483, 08-56740, — F.3d —-, 2010 WL 3733568 (9th Cir. Sept. 27, 2010).  Among other things, the Ninth Circuit held that plaintiff newspaper reporters were non-exempt. (Thank you to Randy Renick for bringing this case to my attention.)

Background

Employees of Chinese Daily News, Inc. (“CDN”), a Chinese-language newspaper, filed suit against CDN on behalf of current, former, and future CDN employees based in CDN’s San Francisco and Monterey Park (Los Angeles), California locations.  Id. *1.  Plaintiffs claimed violations of the FLSA, California’s Labor Code, and California’s Unfair Competition Law, Cal. Bus. & Prof. Code § 17200, alleging that employees were made to work in excess of eight hours per day and forty hours per week. Id. They further alleged that they were wrongfully denied overtime compensation, meal and rest breaks, accurate and itemized wage statements, and penalties for wages due but not promptly paid at termination. Id. The district court certified the FLSA claim as a collective action, and it certified the state-law claims as a class action under Rule 23(b)(2) and, alternatively, under Rule 23(b)(3). Id. Read the rest of this entry »

Ninth Circuit Reverses Denial of Class Certification, Holding that Disproportionality of Actual Harm Suffered, Enormity of the Potential Liability, and Good Faith Compliance Fail to Justify Denial of Certification on Superiority Grounds

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The Court of Appeals for the Ninth Circuit reversed a denial of class certification in a Fair and Accurate Credit Transactions Act (“FACTA”) case, Bateman v. American Multi-Cinema, Inc., No. 09-55108, — F.3d —-, 2010 WL 3733555 (9th Cir. Sept. 27, 2010).  Plaintiff Bateman brought a class action against American Multi-Cinema, Inc. (“AMC”) alleging that AMC violated FACTA by printing more than the last five digits of consumers’ credit or debit card numbers on electronically printed receipts in December 2006 and January 2007.  Id. *1 (citing 15 U.S.C. § 1681c(g) (2005)).  Plaintiff sought to recover statutory damages ranging from $100 to $1,000 for each willful violation of FACTA. Id. The district court denied class certification under Federal Rule of Civil Procedure 23(b)(3), finding that a class action was not the superior method of litigating the case because AMC had made a good faith effort to comply with FACTA after this lawsuit was filed and the magnitude of AMC’s potential liability–$29 million to $290 million–was enormous and out of proportion to any harm suffered by the class.  Id. (citing Bateman v. Am. Multi-Cinema, Inc., 252 F.R.D 647, 648, 650-51 (C.D. Cal. 2008) (order)). The Ninth Circuit reversed, holding that “none of these three grounds–the disproportionality between the potential liability and the actual harm suffered, the enormity of the potential damages, or AMC’s good faith compliance–justified the denial of class certification on superiority grounds and that the district court abused its discretion in relying on them.” Read the rest of this entry »

Southern District Grants Class Certification Granted in Labor Code Class Action

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The Southern District of California granted class certification in a vacation, uniform, paycheck, wage and contract class action.  Lopez v. G.A.T. Airline Ground Support, Inc., No. 09cv2268-IEG(BGS), 2010 WL 3633177 (S.D. Cal. Sept. 13, 2010) (slip op.).

Background

Former employees of Defendant G.A.T. Airline Ground Support, Inc. (“GAT”) sued for systematic wage and hour violations in violation of federal and state law. Id. *1.  GAT provides services to airlines, including ground transportation, aircraft maintenance, and cargo operations management.  Id. The four named Plaintiffs are former ramp agents employed by GAT in California.  Id.

Rule 23(a) Commonality

The court found questions of law or fact common to the class with respect to plaintiffs’ vacation, uniform, paycheck, wage, and contract claims:

Here, as explained in detail below, Plaintiffs present both factual evidence of GAT’s company-wide policies and practices as well as anecdotal evidence in the form of class member declarations regarding the application of those challenged policies and practices. Read the rest of this entry »

Eastern District Holds That Plaintiffs May Rely on a “Few Representative Inquiries” and Extrapolate to the Class

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The court in Adoma v. University of Phoenix, Inc., No. CIV. S-10-0059 LKK/GGH, 2010 WL 3431804 (E.D. Cal. Aug. 31, 2010 (slip op.) held that even where plaintiff’s proposed method of “reconstructing records of hours worked . . . will be imperfect”, plaintiffs may rely on “a few representative inquiries whose results will be extrapolated to the class.” Read the rest of this entry »

Southern District Denies Class Certification on Adequacy of Counsel Grounds

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The Southern District of California in Soto v. Diakon Logistics (Delaware), Inc., Civil No. 08cv33-L(AJB), 2010 WL 3420779 (S.D. Cal. Aug. 30, 2010) denied class certification for, inter alia, failure to include in plaintiffs’ counsel’s declaration a statement that counsel are free from conflicts of interest and failure to address all the issues the court must consider for appointment of class counsel. Read the rest of this entry »