United States | CALIFORNIA CLASS ACTION LAW

October 6, 2010

Northern District Grants Final Approval of $3.5 Million Class Action Settlement, Reducing Requested Attorneys Fees to 25% From Requested 30%, and Granting $20,000 Enhancement Awards to Each Representative Plaintiff

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The Northern District of California granted final approval of a settlement in a meal and rest break class action in Ross v. US Bank National Association, No. C 07-02951 SI, 2010 WL 3833922 (N.D. Cal. Sept. 29, 2010). The complaint was filed on behalf of all hourly employees who worked at a California U.S. Bank in-store branch. See Memorandum of Points and Authorities in Support of Plaintiff’s Motion for Preliminary Approval of Class Action Settlement (“MPA”) at 1. Plaintiffs alleged that they and other hourly paid employees have not been provided a legally compliant meal and rest period on Sundays and worked off the clock pre and post shift and during their meal breaks. Id. The parties settled the case, and the settlement agreement provides for the payment of compensation to each Participating Class Member based on his or her total workweeks in a Class position during a certain period. Ross, 2010 WL 3833922, *1. The court approved a non-reversionary settlement of $3,500,000 for approximately 3,300 settlement class members. MPA at 2.

Attorneys’ Fees and Costs

Plaintiffs’ counsel sought an award of 30% of the settlement fund, $1,050,000.00, as attorneys’ fees. Ross, 2010 WL 3833922, *1. Plaintiffs estimate that the total time spent litigating this case, including time overseeing claims administration, will be approximately 2647.7 hours. Id. Plaintiffs’ counsel listed hourly rates ranging from $185 an hour to $650 an hour. MPA at 14. The court reduced the award to 25%: Read the rest of this entry »

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October 5, 2010

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 »

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October 5, 2010

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 »

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October 4, 2010

Second District Compels Arbitration of Individual Claims in a Class Action Where Arbitration Agreement Contained an Unenforceable Class Arbitration Waiver

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The Second District compelled a class action plaintiff to arbitrate his individual claims in Maiorano v. Professional Community Management, Inc., No. B220127, 2010 WL 3786721 (Cal. Ct. App. 2d Dist. Sept. 30, 2010). Defendant, Professional Community Management, Inc., appealed from an order denying its petition to compel arbitration of a putative class action filed by plaintiff, Ray A. Maiorano. Id. *1. The Second District held that “based solely on the parties’ agreement, we conclude they cannot be compelled to arbitrate on a class basis”, but it directed the trial court to compel arbitration of plaintiff’s individual claims. Id. The court reasoned that the “presence of a provision limiting arbitration to individual rather than joined or representative claims did not present a basis upon which the trial court could conclude the present arbitration agreement was permeated by an unlawful purpose.” Id. *4.

Background

Plaintiff brought a class action complaint alleging violations of statutory meal and rest breaks, wage reporting and overtime requirements, and unlawful and unfair business practices. Id. *2. Plaintiff also asserted a cause of action for penalties under the Labor Code Private Attorneys General Act of 2004–Labor Code sections 2698 and 2699. Id. Defendant filed a petition to compel arbitration. The trial court denied defendant’s petition, ruling that: 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 29, 2010

Eastern District Denies First to File Transfer of Class Action

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The United States District Court for the Eastern District of California denied defendant employer’s motion to transfer pursuant to the “first-to file” rule. Wilkie v. Gentiva Health Services, Inc., Civ. No. 10-1451 FCD/GGH, 2010 WL 3703060 (E.D. Cal. Sept. 16, 2010) (slip op.). Plaintiff filed a putative nation-and California-wide class action/collective action against plaintiff’s former employer Gentiva for alleged violations of the Federal Labor and Standards Act (“FLSA”) and the California Labor Code § 201 et seq. for: (1) misclassification as exempt from overtime pay and failure to pay overtime; (2) willful failure to pay wages due within the time specified by the Code; (3) violation of California Wage Order No. 4 for knowingly and intentionally failing to provide timely, accurate, itemized wage statements including request for an injunction and damages; (4) failure to give proper rest and meal breaks; and (5) violation of California’s Business & Professions Code § 17200 et seq. Id. *1

A prior FLSA collective action and New York and North Carolina state law class action against Gentiva was filed in the United States District Court for the Eastern District of New York, entitled Rindfleisch, et al. v. Gentiva Health Services, Inc., No. CV10-2111 (E.D.N.Y.) (“Rindfleisch”). Defendant moved to transfer plaintiff’s complaint under the “first-to-file rule,” on the ground plaintiff’s claims are the subject of the Rindfleisch action. Plaintiff opposed the motion, arguing the parties and claims are not substantially similar in the two actions and other equitable factors militate against transfer under the first-to-file rule. Id. The court denied Gentiva’s motion. Id. Read the rest of this entry »

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September 28, 2010

Second District Reverses Judgment in a Class Action of $99,000 and Attorneys Fees of $881,715

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The Second District reversed a trial court’s judgment in favor of employees in a class action trial. Pearline Zalewa v. Tempo Research Corporation, B210429, 2010 WL 3735240 (Cal. Ct. App. 2d Dist. Sept. 27, 2010). Defendant fiber-optic equipment manufacturer was sued in a class action by its former employees who claimed that the manufacturer breached an obligation to pay them annual bonuses, an obligation that allegedly continued for years after they were laid off from work during a business downturn. Id. The court concluded that the employees are not entitled to any recovery: “All but two of the employees relinquished their right to sue when they were laid off, in return for compensation that exceeded their earned severance pay. In any event, there was no promise made to pay bonuses to the employees after they were laid off.” Id.

The Trial Court’s Judgment

The trial court conducted a bench trial in January 2008, finding that plaintiffs were entitled to recover a direct bonus under theories of breach of contract, promissory estoppel, accounting, and unfair business practices. Id. The court deemed the bonus payments to be “wages” under the Labor Code. Id. And because the bonus payments are wages, plaintiffs were awarded prejudgment interest and attorney fees under the Labor Code. Id. The court enumerated the amount of the award for each employee, less offsets for monies already paid by defendants, plus interest. Id. The total amount of the award, including interest, was approximately $99,000, and plaintiffs’ counsel was awarded attorney fees of $881,715. Id. Read the rest of this entry »

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September 27, 2010

Justice Scalia Stays Execution of Judgment in Louisiana Tobacco Case, Setting Up Potentially Important Review of Scope of Due Process Protection in Class Action Litigation

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Setting up a potentially important review by the U.S. Supreme Court of the scope of federal Due Process Clause protection in class actions, Justice Antonin Scalia granted an application for stay on Friday by Philip Morris USA, Inc. in Philip Morris USA Inc. v. Scott, No. 10A273, — S.Ct. —-, 2010 WL 3724564 (U.S. Sept. 24, 2010) (mem.). Plaintiffs brought a class action against several tobacco companies on behalf of all Louisiana smokers, alleging that the companies defrauded the plaintiff class by “distort[ing] the entire body of public knowledge” about the addictive effects of nicotine. Id. *1 (quoting Scott v. American Tobacco Co., 2004-2095, p. 14. (La. App. 2/7/07) 949 So. 2d 1266, 1277). The Fourth Circuit Court of Appeal of Louisiana granted relief on that theory, and entered a judgment requiring applicants to pay $241,540,488 (plus accumulated interest of about $29 million) to fund a 10-year smoking cessation program for the benefit of the members of the plaintiff class. Id. The Supreme Court of Louisiana declined review. Id. Defendants asked Justice Antonin Scalia “in [his] capacity as Circuit Justice for the Fifth Circuit, to stay the judgment until this Court can act on their intended petition for a writ of certiorari.” Id.

Justice Scalia recited the standard for a single Justice to enter such a stay, pursuant to 28 U. S. C. § 2101(f): Read the rest of this entry »

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September 27, 2010

Northern District Denies Motion to Compel Arbitration Where Plaintiffs Sought Only Injunctive Relief Under Unfair Competition Law

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The United States District Court for the Northern District of California denied a motion to compel arbitration where plaintiffs sought only injunctive relief under the California Unfair Competition Law (“UCL”). Cardenas v. Americredit Financial Services Inc., No. C 09-04978 SBA, 2010 WL 3619851 (N.D. Cal. Sept. 13, 2010).

Plaintiffs allege that Defendant AmeriCredit Financial Services, Inc. (“AmeriCredit”), failed to provide Mr. Cardenas with proper notice of his rights in connection with the financing of his car, ostensibly in violation of California’s Unfair Competition Law (“UCL”), California Business and Professions Code § 17200. Id. *1. After plaintiff defaulted on his payments, AmeriCredit repossessed Cardenas’ vehicle. Id. *3. The vehicle was subsequently sold and on thereafter, AmeriCredit informed Cardenas that his car had been sold for $12,000, but that he still owed them a deficiency balance of $12,733.85 (i.e., the amount owed on his loan less the amount recovered from the sale of the car). Id. Mr. Cardenas paid only part of the deficiency balance, and AmeriCredit later reported Cardenas’ deficiency to credit bureaus. Id. Read the rest of this entry »

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