California | CALIFORNIA CLASS ACTION LAW

April 11, 2013

Ninth Circuit Declines to Vitiate Broughton-Cruz Rule

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Declining to issue a broad ruling vitiating the Broughton-Cruz rule, the Ninth Circuit filed its en banc opinion today in Kilgore v. Keybank, National Association, No. 09-16703, __ F.3d __ (9th Cir. Apr. 11, 2013) (en banc). While the court reversed and remanded with instructions to compel arbitration, it took a narrow approach. The appeal involved a putative class action by former students of a failed flight-training school who seek broad injunctive relief against the bank that originated their student loans among others. The court held that the arbitration agreement was not unconscionable under California law and compelled arbitration.

The court concluded that the injunctive relief claim at issue fell outside Broughton-Cruz’s “narrow exception to the rule that the FAA requires state courts to honor arbitration agreements.”

The central premise of Broughton-Cruz is that “the judicial forum has significant institutional advantages over arbitration in administering a public injunctive remedy, which as a consequence will likely lead to the diminution or frustration of the public benefit if the remedy is entrusted to arbitrators.” Broughton, 988 P.2d at 78. That concern is absent here, where Defendants’ alleged statutory violations have, by Plaintiffs’ own admission, already ceased, where the class affected by the alleged practices is small, and where there is no real prospective benefit to the public at large from the relief sought.

You can read more about today’s ruling here.

By CHARLES H. JUNG

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April 2, 2013

In Wage Class Action, Second District Affirms Labor Code Section 203 Penalties and Requires Separate Minimum Wage Pay for Certain Piece Rate Workers

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Today, the Second District Court of Appeal published Gonzalez v. Downtown LA Motors, LP, et al., Case No. B235292, __ Cal. App. 4th __ (2d Dist. Mar. 6, 2013). Gonzalez is a wage class action where the question presented was whether California’s minimum wage law requires an employer that compensates its automotive service technicians on a “piece-rate” basis for repair work must also pay those technicians a separate hourly minimum wage for time spent during their work shifts waiting for vehicles to repair or performing other non-repair tasks directed by the employer. Defendant automobile dealership contended it was not required to pay the technicians a separate hourly minimum wage for such time because it ensured that a technician’s total compensation for a pay period never fell below what the employer refers to as the “minimum wage floor” — the total number of hours the technician was at work during the pay period (including hours spent waiting for repair work or performing non-repair tasks), multiplied by the applicable minimum wage rate. The employer supplemented pay, if necessary, to cover any shortfall.

The Court of Appeal concluded that class members were entitled to separate hourly compensation for time spent waiting for repair work or performing other non-repair tasks directed by the employer during their work shifts, as well as penalties under Labor Code section 203, subdivision (a). You can read more about the Gonzalez opinion here.

By CHARLES H. JUNG

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March 28, 2013

California Court of Appeal Reverses Denial of Arbitration Petition, Despite Presence of Class Waiver

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California’s First District yesterday approved of an arbitration agreement, despite the presence of a class waiver and a requirement to arbitrate public claims. See Vasquez v. Greene Motors, Inc., et al., Case No. A134829, __ Cal.App.4th __ (1st Dist. Mar. 27, 2013).

The Court described the clause as follows:

The reverse side, also dense with text, contains a number of provisions in separate boxes, many dealing with typical ―boilerplate legal matters, such as warranties, applicable law, and buyer and seller remedies. None of the provisions on the back page requires a buyer‘s signature. Toward the bottom of the page is the arbitration clause. The entire text of the clause is outlined in a black border. In all capital letters and bold type at the top is written, ―ARBITRATION CLAUSE [¶] PLEASE REVIEW— IMPORTANT—AFFECTS YOUR LEGAL RIGHTS. Immediately below, three numbered provisions, also in all capital letters, inform the buyer either party may request arbitration, this would prevent a court or class-wide proceeding, and it might limit discovery. Below these, in smaller type, are the actual terms of the clause. Pursuant to these terms, the arbitration may be conducted under the auspices of the National Arbitration Forum or the American Arbitration Association (AAA), at the election of the buyer, or by any other mutually agreeable organization; the initial arbitration will be conducted by a single arbitrator; it will occur in the federal district of the buyer‘s residence; the seller must advance up to $2,500 of the buyer‘s arbitration costs; the award is binding unless it is $0 or more than $100,000 or includes injunctive relief, in which 4 case either party can request a second arbitration before three arbitrators; and the use of self-help remedies and small claims court is exempted.

The Court validated the presence of a class action waiver and requirement to arbitrate public claims, finding the arguments against each “foreclosed” by Concepcion:

Finally, Vasquez argues the waiver of class action rights and the requirement to arbitrate ―public claims, such as the statutory violations alleged here, are impermissible. (See Discover Bank v. Superior Court (2005) 36 Cal.4th 148 (Discover Bank); Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303.) Both arguments have been foreclosed by the United States Supreme Court‘s decision in AT&T Mobility, LLC v. Concepcion (2011) 131 S.Ct. 1740 (Concepcion), which found preemption by the Federal Arbitration Act (9 U.S.C. § 1 et seq.). (See Phillips v. Sprint PCS (2012) 209 Cal.App.4th 758, 769; Nelsen v. Legacy Partners Residential, Inc. (2012) 207 26 Cal.App.4th 1115, 1136–1137.) Although Concepcion expressly considered only Discover Bank‘s judicially created ban on class action waivers as unconscionable, the same rationale would require a finding of preemption of the statutory ban on class action waivers in section 1751, which is similarly based on public policy.

You can read more about this opinion here.

Judges & Attorneys

Justice Margulies wrote the opinion for the court, and Justices Dondero and Banke concurred. The trial court judge was Hon. Robert S. Bowers of Solano County Superior Court

Toschi, Sidran, Collins & Doyle, David R. Sidran and Thomas M. Crowell for Defendants and Appellants.

Rosner, Barry & Babbitt, Hallen D. Rosner, Christopher P. Barry and Angela J. Smith for Plaintiff and Respondent.

By CHARLES H. JUNG

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March 25, 2013

Press Quotes Regarding Analysis of Compton Case

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LexisNexis’s Law360 today published an article quoting the author’s analysis of the Compton v. Superior Court case. Compton v. Superior Court of Los Angeles County, No. B236669, — Cal.Rptr.3d —-, 2013 WL 1120619 (2d Dist. Mar 19, 2013):

“In both cases, the First and Second districts applied Armendariz and invalidated arbitration agreements for lack of mutuality,” said Charles Jung, a Nassiri & Jung LLP attorney. “At least as far as California courts are concerned, Armendariz is alive and well, and it appears that this is going to continue to be the case until the California Supreme Court overrules it.”

In light of the latest ruling, plaintiffs and their attorneys looking to defeat mandatory arbitration agreements will keep an eagle eye out for any type of one-sidedness, according to Jung.

“The Compton ruling creates an avenue for employees to argue that mandatory agreements are unlawfully one-sided and that under Armendariz, they should be stricken,” he said. “For employers, it suggests the way to make arbitration agreements enforceable is by making them simple and even-handed. Employers can’t have their cake and eat it too.”

“The California Supreme Court really has its work cut out for it,” Jung said. “The challenge for the California Supreme Court is to try to preserve what it can of California’s public policy, yet not fall afoul of and directly contradict or simply ignore the U.S. Supreme Court. It’s a very tricky position for the court to be in.”

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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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January 23, 2011

First District Affirms Dismissal of Qui Tam Action for Failure to Identify a “Liquidated and Certain Obligation”

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The First District Court of Appeal affirmed the dismissal of a qui tam action without leave to amend, holding that plaintiffs failed to identify a “liquidated and certain obligation” owed by Bank of America. State of California ex rel. Joseph McCann v. Bank of America, N.A., No. A126494, — Cal.Rptr.3d —-, 2011 WL 72177 (Cal. Ct. App. 1st Dist. Jan. 11, 2011). Joseph McCann and Douglas Valdetero (Plaintiffs or Appellants) brought a qui tam action against Bank of America (BOA) in the name of the State of California under the California False Claims Act (CFCA; Govt. Code, s 12650 et seq.). Id. *1. Plaintiffs alleged that BOA defrauded the State by failing to pay over to the State amounts that they contend should escheat as abandoned or unclaimed property under the California Unclaimed Property Law (UPL; Code of Civ. Proc. s 1500 et seq.). Id. The trial court sustained BOA’s demurrer to Appellants’ first amended complaint (FAC) without leave to amend on the basis that it failed to plead a CFCA claim with the required specificity and failed to establish a violation of the UPL. Id.

Background

Plaintiffs alleged that as a check clearing bank, BOA diligently researched errors which could result in debits (i.e., money due) to BOA, but pursued errors which would result in credits (i.e., money payable) to the presenting banks “much less regularly.” Id. *2. They contended that, as a result of a policy decision by BOA not to research credits due at the end of each processing date to presenting banks, they became “unidentified credits” which could not be traced to their rightful owners. Id. They allege that BOA’s practice was to transfer these monies to a suspense account for a short period of time, and to then appropriate them into income. Id. Plaintiffs contended that these unidentified credits are subject to escheat to the State as unclaimed property subject to the UPL. Read the rest of this entry »

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January 1, 2011

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 »

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November 8, 2010

U.S. Supreme Court Set to Hear Oral Argument in AT&T Mobility v. Concepcion, a Case Which Many Predict Will End Consumer Class Actions

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The U.S. Supreme Court will hear oral argument in AT&T Mobility v. Concepcion tomorrow (Tuesday, Nov. 9, 2010). This is a critical case, in which the Court may effectively end most court-based consumer class actions.

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October 28, 2010

Northern District Denies Discovery of Class Member Identities on Privacy Grounds

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The United States District Court for the Northern District of California denied the production of names, addresses and telephone numbers of non-opt-in members of a FLSA collective and putative Labor Code class action. Hill v. R+L Carriers Shared Services, LLC, No. C 09-1907 CW (MEJ), 2010 WL 4175958 (N.D. Cal. Oct. 20, 2010). Plaintiff Glenn Hill is a former employee of Defendant R+L Carriers Shared Services, LLC, which provides administrative employees to transportation companies all across the United States. Id. *1. Plaintiff worked as a “dispatcher” at Defendant’s San Lorenzo terminal in California, and brought a collective and class action pursuant to the Fair Labor Standards Act (“FLSA”), California’s wage-and-hour laws and California Business & Professions Code section 17200. Id.

Background

Plaintiff sought two sub-classes: those employees in California and those that he refers to as a Nationwide Collective. Id. The California Class is defined as “all persons who worked for any period of time in California who were classified as Dispatchers (including “City Dispatchers” and any other position(s) who are either called, or work(ed) as, dispatchers) in the four years prior to the filing of this Complaint, up through the final disposition of this action.” Id. In Defendant contended that a collective action under the FLSA is improper because the job duties, work schedules, and salary of its employees varies across the United States, as well as in the State of California. Id.

Hon. Claudia Wilken, the presiding judge in this matter, conditionally certified a class of Nationwide Collective Plaintiffs. Judge Wilken also ordered Defendant to “disclose to Plaintiff, subject to a protective order if necessary, the number, location and actual job titles of persons who are classified as dispatchers.” Id. Defendant provided the class members’ contact information to a third-party administrator, who propounded notice to all putative class members. Id. Defendant also disclosed the number, location and actual job titles of putative class members to Plaintiff. Id. Two California putative members subsequently opted into the case. Id. Read the rest of this entry »

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