CALIFORNIA CLASS ACTION LAW

Tag: United States District Court for the Northern District of California

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 »

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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 »

Northern District Denies Discovery of Class Member Identities on Privacy Grounds

[Bob Burman, race car driver] (LOC)
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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 »

Judge Lucy H. Koh Invalidates 38 “Opt-Out” Forms, Grants Curative Notice, and Orders Defendants to Show Cause Why They Should Not be Sanctioned Pursuant to Rule 11

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Issuing a robust opinion in a putative wage and hour class and FLSA collective action, Judge Lucy H. Koh invalidated opt-out forms solicited by defendants, granted plaintiff’s request for a curative notice at defendants’ expense, and ordered defendants to show cause why they should not be sanctioned pursuant to Rule 11.  Li v. A Perfect Day Franchise, Inc., No. 10-CV-01189-LHK, 2010 WL 3835596 (N.D. Cal. Sept. 29, 2010).  The court concluded that based on the record, it appeared likely that “the opt-out forms submitted by Defendants on September 7, 2010 were fraudulently created after the September 2, 2010 hearing on the underlying motions.”  Id. *11.  The court admonished that “Defendants will not be permitted to defraud this Court by submitting false testimony.” Id. *12.

Background

Named plaintiffs are former workers for A Perfect Day Franchise, Inc., which owns and operates spas. Id. *1. Named plaintiffs describe themselves and the majority of the putative class as being native Chinese speakers, with limited English proficiency and little or no formal education. Id. Plaintiffs claim that they paid for a massage training course offered by an entity related to Perfect Day, the Minjian Hand Healing Institute.  Id. Plaintiffs allege they paid for the course based on promises, contained in advertisements for the training program, that they would be employed by Perfect Day and would earn a minimum income once it was completed, but that these promises were not honored by Perfect Day, and that Perfect Day has miscategorized them as independent contractors rather than employees. Id. Read the rest of this entry »

Northern District Rejects Defendant’s Motion to Communicate Ex Parte With Class Members

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The Northern District denied a class defendant’s request to communicate ex parte with class members.  Kirola v. City and County of San Francisco, No. C 07-03685 SBA, 2010 WL 3505041 (N.D. Cal. Sept. 7, 2010). Defendant City and County of San Francisco (“City”) brought an administrative motion, seeking authorization to communicate with eight specific class members.  Id. The City contended that free communication with these individuals is essential to allow the City to prepare adequately for trial.  Id. The City sought to “present their testimony at trial in order to establish its policies and practices regarding physical access, which is the core issue in this case.” Id. Read the rest of this entry »

MDL Panel Transfers Google Street View Litigation to Northern District of California

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The U.S. Judicial Panel on Multidistrict Litigation transferred In re Google, Inc. Street View Electronic Communications Litigation, — F. Supp. 2d —-, 2010 WL 3303204 (U.S. Jud. Pan. Mult. Lit. Aug. 17, 2010) to the Northern District of California, assigned to Hon. James Ware.  The cases involve common factual questions arising out of allegations that Google intentionally intercepted electronic communications sent or received over class members’ open, non-secured wireless networks.

Plaintiffs in one District of District of Columbia action moved for coordinated or consolidated pretrial proceedings of this litigation in the District of District of Columbia. Plaintiffs in the other District of District of Columbia action and a potentially-related action supported the motion. Read the rest of this entry »

Ninth Circuit Holds That Deadline for Objection to Class Action Fee Award Must Be Set for Date After Plaintiff’s Counsel Files Fee Motion

B. B. Law, Attorney, Bozeman, Montana. (1911)
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The Ninth Circuit Court of Appeals yesterday clarified the timing of objections to class counsel’s fee requests under Fed. R. Civ. Proc. Rule 23(h), holding that objectors must be given a deadline to object after plaintiff’s fee application is submitted.  The litigation in In re Mercury Interactive Corp. Securities Litigation, No. 08-17372, — F.3d —-, 2010 WL 3239460 (9th Cir. Aug. 18, 2010), which involved stock option backdating, settled early on, at the motion to dismiss stage.

A settlement class was certified, the settlement of $117.5 million in cash was approved, and attorneys’ fees of 25% ($29.375 million) were awarded pursuant to the settlement agreement.  No objections were made to the settlement itself, but two objections were made to the proposed attorneys’ fees.  Id. *2.  The court described lead counsel’s fee application as follows: Read the rest of this entry »

Northern District Approves $4.5 Million Settlement Against RadioShack, With $1.5 Million in Fees, and $5,000 Incentive Payments to Each Lead Plaintiff

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Magistrate Judge Edward M. Chen (whose confirmation to the Northern District of California bench has unfortunately been stalled for far too long) approved the class settlement and attorney fee application in Stuart v. RadioShack Corp., 2010 WL 3155645, No. C-07-4499 EMC (N.D. Cal. Aug. 9, 2010).

This class action was initiated in state court in June 2007, alleging that RadioShack had improperly failed to reimburse its employees for expenses they incurred in using their personal vehicles to perform inter-company transfers (“ICSTs”). Plaintiffs claimed for reimbursement pursuant to California Labor Code § 2802 and for a violation of California Business & Professions Code.  Subsequently Plaintiffs added a claim for recovery of penalties under the California Labor Code Private Attorneys General Act (“PAGA”).  The case was removed in August 2007. And in February 2009, Judge Chen granted the motion for class certification, certifying a class consisting of “all persons employed by RadioShack within the State of California, at any time from June 3, 2003, to the present, who drove their personal vehicles to and from RadioShack stores to carry out ICSTs and who were not reimbursed for mileage.”  On October 1, 2009–nine days before trial was scheduled to begin–the parties reached a settlement.

Under the Settlement Agreement, RadioShack will pay a total of $4.5 million for the release by the class, as an all-inclusive sum (proceeds to be distributed to the class, attorney’s fees and litigation expenses, costs of claim administration, incentive payments to the class representatives, and the PAGA award to the state), without reversion of any of the $4.5 million to RadioShack.

After attorney’s fees, litigation expenses, costs of claim administration, incentive payments, and the PAGA award to the state have been deducted from the $4.5 million, the remainder for distribution to the class members and/or donation to charity is $2,796,563.31.

Each class member’s award “depends on the number of weeks that the class member worked.”

The Court found that, importantly, “the amount available to the class after deductions for, e.g., fees and costs–i.e., $2,796,563.31–is not far off what the class might be awarded if it were to prevail on the merits after a trial.” Id. *4.

Plaintiffs’ counsel asked for an award of $1.5 million  (i.e., one-third of the total settlement amount), plus litigation expenses which total $78,436.69.

The Court has reviewed the expenses and determined that they are reasonable. The Court notes that the sum is not excessive given that this litigation has been ongoing for more than three years.

Attorneys Fees Application

The attorneys presented a fee application claiming $1.5 million as a lodestar for fees–excluding work performed in preparing for final approval and any post-judgment work that may be needed.  The $1.5 million sum represents 2,116.69 hours of work over a period of more than three years, at hourly rates of the billing attorneys ranging from $600 to $1,000.

After reviewing the billing records submitted by counsel as well as the declarations regarding the hourly rates of counsel, the court found that the number of hours was reasonable given the length of the lawsuit and the vigorous disputes over the course of the litigation (e.g., regarding RadioShack’s defense that it had no duty to reimburse until an employee made a request for reimbursement).

The court did express some “concerns about the $1,000 hourly rate” claimed by one of the attorneys.  “Based on the Court’s experience, this is an inordinately large hourly rate, even if the Court were to assume that [the attorney] has fifty years of experience.”  But the Court concluded that “given the 2,116.69 hours incurred, the average hourly rate for a fee award of $1.5 million total is $708, an amount that the Court deems appropriate, particularly when no multiplier is being sought on top of the lodestar.”

Compared to the percentage of the fund, the court noted that “the total settlement amount to be paid by RadioShack (with no possibility of reversion), the fee award represents one-third of the settlement amount.”  The court found that this was “well within the range of percentages which courts have upheld as reasonable in other class action lawsuits.”

The court also approved an incentive award of $5,000 for each of the two class representatives, for a total of $10,000.  The Court concluded that the incentive payments were appropriate and reasonable.  “Although the class representatives did not enter this litigation until late in the proceedings, due consideration must be given to the fact that they were willing and ready to go to trial.”  The court noted that if the “class representatives had asked for a larger sum, the Court might well have reached a different conclusion, but the $5,000 sought for each representative was viewed as “relatively modest.”

By CHARLES H. JUNG

District Judge William Alsup Issues Order in Gutierrez v. Wells Fargo Bank Class Action After 2 Week Bench Trial

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District Judge William Alsup issued an order in Gutierrez, et al. v. Wells Fargo Bank, N.A., — F.Supp.2d —-, 2010 WL 3155934 (N.D. Cal. Aug. 10, 2010), a certified consumer class action challenging hundreds of millions of dollars in overdraft fees imposed on depositors of Wells Fargo Bank, N.A. through allegedly unfair and fraudulent business practices.

Judge Alsup issued his decision following a two-week bench trial.

The essence of the case is that Wells Fargo has devised a bookkeeping device to turn what would ordinarily be one overdraft into as many as ten overdrafts, thereby dramatically multiplying the number of fees the bank can extract from a single mistake. The draconian impact of this bookkeeping device has then been exacerbated through closely allied practices specifically “engineered”–as the bank put it–to multiply the adverse impact of this bookkeeping device. These neat tricks generated colossal sums per year in additional overdraft fees, just as the internal bank memos had predicted. The bank went to considerable effort to hide these manipulations while constructing a facade of phony disclosure.

Judge Alsup held that these “manipulations were and continue to be unfair and deceptive in violation of Section 17200 of the California Business and Professions Code.”  The Court ordered restitution enjoined the bookkeeping device under Cal. Bus. & Prof. Code section 17203.

By CHARLES H. JUNG

One Year Statute of Limitations Applies to Waiting Time Penalty Claim Where Wages Not Sought

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Hon. Howard R. Lloyd today issued an unpublished opinion today confirming that a one year statute of limitations pursuant to Cal. Code Civ. Proc. § 340(a) applies to a plaintiff’s claim for waiting time penalties.  Pinheiro v. ACXIOM Information Security Services, Inc., 2010 WL 3058081 (N.D. Cal. August 03, 2010) (Slip Op.)

Plaintiff argued that a three year statute of limiations applied, citing Cortez v. Purolator Air Filtration Products Co., 23 Cal.4th 163, 999 P.2d 706, 96 Cal.Rptr.2d 518 (2000), in which the plaintiff sought both unpaid wages and waiting time penalties.  The court rejected this argument and granted defendant’s motion to dismiss this claim without leave to amend.

Plaintiff Carla Pinheiro was an employee of defendant Aerotek, Inc. (Aerotek), an employment agency. She alleges that she was assigned to work as a temporary customer service representative for defendant Quest Diagnostics Clinical Laboratories, Inc. (Quest). The gravamen of Pinheiro’s complaint as to Aerotek is that Aerotek wrongfully terminated her employment (Sixth Claim for Relief) and failed to timely pay her final wages in violation of California Labor Code sections 201-203 (Seventh Claim for Relief). Plaintiff also asserts a claim against Aerotek under California Bus. & Prof.Code section 17200 (Eighth Claim for Relief) based upon the alleged failure to timely pay her final wages.

Aerotek moved to dismiss Pinheiro’s seventh and eighth claims for relief concerning the alleged failure to timely pay her final wages.

The Court found that, based upon the law as it currently stands, plaintiff’s seventh and eighth claims for relief as to Aerotek should be dismissed.

Cal. Labor Code §§ 201-203 COA

At issue was whether Pinheiro’s claim for waiting time penalties is subject to a one-year statute of limitations (Aerotek’s view) or to a three-year limitations period (Pinheiro’s position). The court held that the one-year statute of limitations under Cal.Code Civ. Proc. § 340(a) applies, and plaintiff’s seventh claim for relief therefore is time-barred. See McCoy v.Super. Ct., 157 Cal.App.4th 225, 68 Cal.Rptr.3d 483 (2008) (holding that in action seeking only waiting time penalties, and not wages, the one-year statute of limitations under Cal.Code Civ. Proc. § 340(a) applies). Cf. Ross v. U.S. Bank Nat’l Ass’n, Case No. C07-02951 SI, 2008 WL 4447713 *4 (N.D. Cal., Sept. 30, 2008) (concluding that the three-year statute of limitations period under Cal. Labor Code § 203 applied where plaintiff sought unpaid wages, as well as waiting time penalties). Plaintiff’s cited authority, Cortez v. Purolator Air Filtration Products Co., 23 Cal.4th 163, 999 P.2d 706, 96 Cal.Rptr.2d 518 (2000), in which the plaintiff sought both unpaid wages and waiting time penalties, but the Court held that this “does not compel a contrary conclusion.”

Cal. Bus. & Prof.Code § 17200 COA

The court held that remedies under California Labor Code § 203 are penalties, and not restitution, and therefore cannot be recovered under the UCL. In re Wal-Mart Stores, Inc. Wage & Hour Litig., 505 F.Supp.2d 609, 619 (N.D. Cal.2007); Tomlinson v. Indymac Bank, F.S.B., 359 F.Supp.2d 891, 895 (C.D. Cal.2005).  The court dismissed the 17200 claim as to Aerotek without leave to amend.

Alison Marie Miceli, Michael James Grace, and Graham Stephen Paul Hollis for Plaintiff.

Jonathan Morris Brenner, Caroline McIntyre, and Alison P. Danaceau for Defendants.

By CHARLES H. JUNG