Los Angeles | CALIFORNIA CLASS ACTION LAW

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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November 15, 2010

Northern District Holds That Failing to Receive Opt-Out Notice Insufficient to Support Excusable Neglect Finding to Allow Late Class Member Opt-Out

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The Northern District of California denied a motion by a member of a federal securities class action to opt out after the deadline. In re Charles Schwab Corporation Securities Litigation, No. C 08-01510 WHA, 2010 WL 4509718 (N.D. Cal. Nov. 1, 2010) (slip op.). The standard for determining whether a class member should be allowed to opt out of a class action after the applicable exclusion deadline has passed is whether the class member’s failure to meet the deadline is the result of “excusable neglect.” Id. *1 (citing Silber v. Mabon, 18 F.3d 1449, 1455 (9th Cir. 1994)).

The court found that the excuse provided by the class member—not receiving the opt-out notice—was insufficient to support a finding of excusable neglect:

Having considered the factors set forth above, this order finds that the facts and circumstances underlying the request of Gary Benson do not support a finding of excusable neglect under Ninth Circuit law. The only excuse provided by Mr. Benson is that he did not receive the opt-out notice sent to federal securities class members on October 12, 2009. While it may be true that he did not learn of his involvement in the instant case until recently, the class action notice was properly sent via first-class mail to the address associated with his Schwab account(s) and was not returned to the claims administrator as “undeliverable” (see Dkt. No. 751-1, listing all class members for whom notices were returned “undeliverable” and where new addresses could not be found). In other words, the notice provided to Mr. Benson was reasonably calculated to give him actual notice of this class action and was constitutionally sufficient. This weighs against a finding of excusable neglect.

Id.

The court noted that “if such excuses were deemed sufficient to warrant exclusion at this time, defendants would be prejudiced, given their commitment to a settlement amount that was negotiated with a stable class membership in mind.” Id. Read the rest of this entry »

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September 30, 2010

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 »

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September 29, 2010

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 »

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September 25, 2010

Central District Denies Motion to Compel Class Arbitration, But Grants Stay Pending Outcome of Supreme Court’s Decision in AT&T Mobility v. Concepcion

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The United States District Court for the Central District of California denied a class action defendant’s motion to compel arbitration, but granted its motion to stay. Lopez v. American Express Bank, FSB, No. CV 09-07335 SJO (MANx), 2010 WL 3637755 (C.D. Cal. Sept. 17, 2010).

Plaintiffs sued Defendants American Express Bank, FSB, and American Express Centurion Bank’s (collectively, “Defendants”) alleging causes of action relating to the terms and conditions of credit cards. Id. *1. Defendants moved to compel arbitration. Id. The Court denied, finding that the class action waiver contained in the Agreement between the parties was unconscionable under California law, and therefore, the Plaintiffs could not be compelled to arbitrate. Id. Defendants brought the present motion to reconsider.

The Court determined that the Supreme Court’s grant of certiorari in AT & T Mobility LLC v. Concepcion, — U.S. —-, 130 S. Ct. 3322, — L. Ed. 2d —-, 2010 WL 303962 (May 24, 2010) constitutes a material difference in fact and law, potential change in controlling law, and justifiable reason to reconsider its prior. Id. *3.

The specific question that the Supreme Court will resolve is: Read the rest of this entry »

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August 31, 2010

Second District Holds That Omission of Source of Base Price From Which Discount Taken Is Harmless

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The Second District Court of Appeal, in an unpublished opinion, affirmed a trial court’s grant of summary judgment in favor a Restoration Hardware, Inc. (RHI) for alleged misrepresentations of the price of RHI’s merchandise at its discount outlet stores. Heller v. Restoration Hardware, Inc., B215218, 2010 WL 3387506 (Cal. Ct. App. 2d Dist. Aug. 30, 2010). Plaintiff alleged that RHI outlet stores engaged in a practice of misrepresenting the actual discounts given on furniture. Id. *1. Plaintiff contended she purchased at an outlet store an advertised “Del Mar” outdoor chair, which had an original retail price of $750 from which a percentage discount was taken, when in fact the price in RHI’s catalog and on the internet at its website was $685. Id. Plaintiff’s complaint stated five causes of action: violations of the UCL, the FAL, the CLRA, negligent misrepresentation, and fraud and deceit.

The court affirmed, holding: Read the rest of this entry »

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August 26, 2010

Second District Holds That Providing Meal Breaks Means Employers Must Provide Breaks “as a Practical Matter”

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While the California Supreme Court will resolve this issue shortly, in Brookler v. Radioshack Corp., B212893, 2010 WL 3341816 (Cal. Ct. App. 2d Dist. Aug. 26, 2010), an unpublished opinion issued today, the Second District Court of Appeal held that “Unless and until our Supreme Court holds otherwise, we agree with the analysis in Cicairos which held an employer’s obligation under the Labor Code and related wage orders is to do more than simply permit meal breaks in theory; it must also provide them as a practical matter.” Read the rest of this entry »

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August 25, 2010

Treble Recovery Under Civil Code § 3345 Not Limited to CLRA; But It Does Not Apply to an Award of Restitution Under the UCL

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In Clark v. Superior Court, 235 P.3d 171, 112 Cal. Rptr. 3d 876 (Cal. Aug. 9, 2010), senior citizens brought an action against an annuity seller for unfair competition pursuant to BPC 17200, seeking treble recovery. The Los Angeles Superior Court granted judgment on the pleadings for the annuity seller’s on the treble recovery claim, without leave to amend. Read the rest of this entry »

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August 10, 2010

California Supreme Court Rejects Private Right of Action for Plaintiffs in Tip Pooling Class Action Under Labor Code Section 351

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The California Supreme Court today issued its opinion in Lu v. Hawaiian Gardens Casino, Inc., an eagerly anticpiated decision where the issue was whether Labor Code section 351 provides a private cause of action for employees to recover any misappropriated tips from employers. The Court concluded that “section 351 does not contain a private right to sue.”

Labor Code section 351 prohibits employers from taking any gratuity patrons leave for their employees, and declares that such gratuity is “the sole property of the employee or employees to whom it was paid, given, or left for.” Several appellate opinions have held that this prohibition, at least in the restaurant context, does not extend to employer-mandated tip pooling, whereby employees must pool and share their tips with other employees. (See Leighton v. Old Heidelberg, Ltd. (1990) 219 Cal. App. 3d 1062, 1067 (Leighton); see also Etheridge v. Reins Internat. California, Inc. (2009) 172 Cal. App. 4th 908, 921-922; Budrow v. Dave & Buster’s of California, Inc. (2009) 171 Cal.App.4th 875, 878-884; Jameson v. Five Feet Restaurant, Inc. (2003) 107 Cal.App.4th 138, 143.)

Plaintiff Louie Hung Kwei Lu (plaintiff) was employed as a card dealer at defendant Hawaiian Gardens Casino, Inc. (the Casino), from 1997 to 2003. The Casino had a written tip pooling policy. Plaintiff brought a class action against the Casino and its general manager. His complaint alleged that the Casino‟s tip pooling policy amounted to a conversion of his tips, and violated the employee protections under sections 221 (prohibiting wage kickbacks by employer), 351 (prohibiting employer from taking, collecting, or receiving employees‟ gratuities), 450 (prohibiting employer from compelling employees to patronize employer), 1197 (prohibiting payment of less than minimum wage), and 2802 (indemnifying employee for necessary expenditures). The complaint also alleged that the Casino‟s conduct giving rise to each statutory violation constituted an unfair business practice under the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.).

The trial court granted the Casino‟s motion for judgment on the pleadings on the causes of action based on sections 351 and 450. It agreed with the Casino that neither section contained a private right to sue. The court also granted the Casino‟s successive motions for summary adjudication on the remaining causes of action. Plaintiff appealed.

The Court of Appeal held, “pursuant to the analysis in Leighton, that tip pooling in the casino industry is not prohibited by Labor Code section 351.” However, it reversed the trial court‟s order granting summary adjudication of the UCL cause of action based on section 351. While section 351 itself contains no private right to sue, the Court of Appeal concluded this provision may nonetheless serve as a predicate for a UCL claim because plaintiff presented triable issues of fact as to whether section 351 prohibited certain employees who participated in the tip pool from doing so because they were “agents” of the Casino.

Less than two months later, another Court of Appeal expressly disagreed with the holding on section 351 of the appellate court below. (See Grodensky v. Artichoke Joe’s Casino (2009) 171 Cal.App.4th 1399, review granted June 24, 2009, S172237.) The Supreme Court granted review to resolve the conflict on this narrow issue.

The Court concluded that the statutory language does not “unmistakabl[y]” reveal a legislative intent to provide wronged employees a private right to sue. Based on a review of section 351‟s legislative history, the Court also concluded that there is no clear indication that the legislative history showed an intent to create a private cause of action under the statute.

Justice Ming W. Chin wrote the opinion for the California Supreme Court, with all other Jusitices concurring. Judge David L. Minning of the Los Angeles Superior Court was the trial judge.

The attorneys for appellant were Spiro Moss, Dennis F. Moss, and Andrew Kopel.

David Arbogast submitted an amicus curiae brief for the Consumer Attorneys of California.

Respondents were represented by Tracey A. Kennedy and Michael St. Denis

Anna Segobia Masters and Jennifer Rappoport submitted an amicus curiae brief for the California Gaming Association on behalf of Defendants and Respondents.

Dennis F. Moss and Tracey A. Kennedy argued in front of the Court.

By CHARLES H. JUNG

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