CALIFORNIA CLASS ACTION LAW

Category: Certification

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

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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 Certification of Wage & Hour Class Action

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The Northern District of California denied class certification of a meal and rest break class action in Washington v. Joe’s Crab Shack, No. C 08-5551 PJH, 2010 WL 5396041 (N.D. Cal Dec. 23, 2010.) (slip op.).  Plaintiff Drew Garrett Washington asserted that defendant Crab Addison, Inc. (“Crab Addison”), a company that operates a number of Joe’s Crab Shack restaurants, failed to provide employees with meal and rest breaks, allowed its restaurant managers to manipulate employee time records to deprive employees of pay for all hours worked (including overtime and missed meal break pay), required employees to perform work “off the clock”; and required employees to pay for their own employer-mandated uniforms.  Id. *1.

Class Definition

Plaintiff moved pursuant to Federal Rule of Civil Procedure 23, to certify a plaintiff class consisting of “all non-exempt restaurant employees employed by Crab Addison at Joe’s Crab Shack restaurants in California from January 1, 2007, through the present.”

Discussion

The court denied the certification motion.  Id. *11.  “Plaintiff’s position is that common questions predominate because the main issue is whether—notwithstanding Crab Addison’s written policies—Joe’s Crab Shack restaurants in California followed a common unwritten policy of denying meal and rest breaks, failing to pay employees who did not take breaks, failing to pay for overtime, requiring employees to purchase their own uniforms, and so forth.” Id. Plaintiff contended that the existence of a policy or practice that in effect contradicts Crab Addison’s written policies can be ascertained by an analysis of the data in Crab Addison’s computer systems.  Id. “But since plaintiff has failed to adequately explain how that analysis works and exactly what the data shows, he has failed to adequately establish the existence of such a policy or practice.” Id. 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 Vacates Denial of Unopposed Class Certification Motion for Failure to Conduct a “Rigorous Analysis”

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The United States Court of Appeals for the Ninth Circuit reversed a denial of an unopposed class certification motion.  Cortez v. Saia Motor Freight Line, Inc., No. 08-56356, 2010 WL 3938273 (9th Cir. Oct. 8, 2010) (slip. op.).  The Ninth Circuit held that the “district court erred in failing to explain its reasons for denying the unopposed class-certification motion of plaintiff Hoany G. Cortez”.   Id. *1.

The district court’s conclusory assertion that this case presents “no common questions” of law or fact under Rule 23(a) falls far short of the “rigorous analysis” required in the class-certification context. See Fed.R.Civ.P. 23(a); Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982). Nor is this a case where the “issues [a]re so plain and the analytical framework so clear that the record,” standing alone, enables effective appellate review. Chamberlan v. Ford Motor Co., 402 F.3d 952, 961 (9th Cir.2005). Contrary to the district court’s conclusion, the record suggests a number of possible common issues, such as whether defendant Saia Motor Freight Line, LLC maintains an official policy of refusing to reimburse workers for required footwear and whether federal OSHA regulations legitimize such a policy.  The district court also omitted any mention of the remaining Rule 23(a) factors and did not discuss any of the prongs of Rule 23(b). See Fed. R. Civ. P. 23(a)-(b). Read the rest of this entry »

Northern District Decertifies FLSA Overtime Class of Loan Officers Because of Lack of Evidence of Centralized Employer Practice re Outside Salespersons Exemption

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The Northern District of California granted defendant’s motion to decertify a conditional FLSA class in Wong v. HSBC Mortgage Corporation (USA), No. C-07-2446 MMC, 2010 WL 3833952 (N.D. Cal. Sept. 29, 2010).  Plaintiff HSBC loan officers allege that HSBC improperly classified them as exempt under the Federal Labor Standards Act (“FLSA”), and, consequently, violated the FLSA by failing to pay them overtime compensation. Id. *1. The Court granted plaintiffs’ motion for an order conditionally certifying, for purposes of the FLSA, a class of persons who, as of May 7, 2004, had been employed by HSBC as loan officers within the United States. Id. Notice of the action was sent to the class, and 120 class members filed consent forms, joining the action as plaintiffs.  Id.

Decertification Motion

HSBC argued that individualized factual determinations will be necessary regarding HSBC’s affirmative defense that plaintiffs are/were properly classified as “outside” salespersons and, consequently, are exempt under the FLSA. Id. *2 (citing 29 U.S.C. § 213(a)(1) (providing “maximum hour requirements” in FLSA do not apply to “any employee employed … in the capacity of outside salesman”)). Read the rest of this entry »

Second District Affirms Denial of Class Certification, Finding Trial Court Appropriately Decided Threshold Legal Issue Re Provision of Meal Breaks

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In a putative meal and rest break class action, the Second District denied class certification, holding that “employers must provide employees with breaks, but need not ensure employees take breaks.”  Hernandez v. Chipotle Mexican Grill, Inc., No. B216004, 2010 WL 3789012 (Cal. Ct. App. 2d Dist. Sept. 30, 2010).  Plaintiff and appellant Rogelio Hernandez (Hernandez) Hernandez filed a class action lawsuit against Chipotle Mexican Grill, Inc. (Chipotle) alleging that Chipotle violated labor laws by denying employees meal and rest breaks. Id. *1. The trial court denied class certification, and plaintiff appealed.  Id. The Court of Appeal affirmed, holding that it would not be “practical” to require “enforcement of meal breaks” since it “would place an undue burden on employers whose employees are numerous or who … do not appear to remain in contact with the employer during the day.”  Id. *7. “It would also create perverse incentives, encouraging employees to violate company meal break policy in order to receive extra compensation under California wage and hour laws.” Id.

The Court of Appeal also held that: (1) It was appropriate for the trial court to decide the threshold legal issue of whether employers must provide meal breaks rather than ensure they be taken as it could not otherwise assess whether class treatment was warranted; (2) a party seeking to introduce sampling of employee testimony to support certification must explain how the procedure will effectively manage the issues in question; and (3) there was substantial conflicts of interest among the putative class members were some employees moved in and out of supervisory roles with the responsibility to provide meal and rest breaks for themselves and other employees on the shift. Read the rest of this entry »

Fourth District Reverses Denial of Class Certification in Mail-In Rebate Case

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The Fourth District Court of Appeal reversed a denial of class certification in Kershenbaum v. Buy.com, Inc.,  No. G042303, 2010 WL 3800339 (Cal. Ct. App. 4th Dist. Sept. 30, 2010).  Plaintiff Richard M. Kershenbaum did not receive an advertised rebate on a product he purchased through Buy.com, Inc.’s Web site. Id. *1. Buy.com contended the rebate was offered by the product manufacturer, and it was therefore not responsible for compensating Kershenbaum. Id.

The Court of Appeal held that the trial court erred in denying the motion for class certification:

The different definitions of the proposed class contained in the memorandum of points and authorities and the proposed order did not warrant denial of the motion for lack of ascertainability. Any confusion caused by the different definitions could and should have been remedied by the trial court, either by correcting the proposed order, or by independently drafting a new order.

We further conclude the trial court erred in denying the motion on the ground that common questions of law did not predominate. The California choice-of-law provision in Buy.com’s terms of use agreement applies to the claims asserted by the class. Even if the choice-of-law provision did not apply, class certification was still appropriate because significant contacts with California have been shown to exist, and Buy.com cannot demonstrate that any foreign law, rather than California law, should apply to the class claims.

We also conclude the trial court erred in determining the claims asserted by the class were vague.

Finally, Kershenbaum had standing to assert a claim for misleading advertising; the trial court erred in determining otherwise. Read the rest of this entry »