CALIFORNIA CLASS ACTION LAW

Tag: United States

August 18, 2010

Third District Finds Class Action Waiver Enforceable

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In an important case regarding the enforceability of class action waivers, the Court of Appeal upheld the enforceability of such a waiver.  In Walnut Producers of California et al. v. Diamond Foods, Inc., No. C060346, — Cal. Rptr.3d —-, 2010 WL 3213613 (Cal. Ct. App. 3d Dist. Aug. 16, 2010), plaintiff Walnut Producers of California (“Producers”) appealed the trial court’s order striking all class action allegations from their complaint. Plaintiffs claimed that a class action waiver in their arbitration agreements with Defendant Diamond Foods, Inc. (“Diamond Foods”), was unconscionable. The trial court disagreed.  The Court of Appeal, affirmed. Read the rest of this entry »

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August 17, 2010

Transitions Lenses Antitrust Litigation Transferred to Middle District of Florida

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The U.S. Judicial Panel on Multidistrict Litigation ordered, pursuant to 28 U.S.C. § 1407, the Transitions Optical, Inc. actions transferred to the Middle District of Florida and assigned to the Honorable James D. Whittemore for coordinated or consolidated pretrial proceedings.  In re Transitions Lenses Antitrust Litigation, MDL No. 2173, — F.Supp.2d —-, 2010 WL 3153211 U.S. Jud. Pan. Mult. Lit. Aug. 6, 2010).

Writing for the Panel, Chairman John G. Heyburn II concluded that:

On the basis of the papers filed and hearing session held, we find that these actions involve common questions of fact, and that centralization under Section 1407 in the Middle District of Florida will serve the convenience of the parties and witnesses and promote the just and efficient conduct of this antitrust litigation. These actions share factual questions relating to alleged anticompetitive conduct in the photochromic lens industry. Centralization will eliminate duplicative discovery; prevent inconsistent pretrial rulings, including with respect to class certification; and conserve the resources of the parties, their counsel, and the judiciary. Read the rest of this entry »

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August 14, 2010

Northern District Approves 28.9% Fee Award in Wage and Hour Class Action Settlement

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Judge Jeffrey S. White approved a wage and hour class action settlement of a non-reversionary $1.8 million, inclusive of $520,000 in attorneys fees, in Ozga v. U.S. Remodelers, Inc., No. C 09-05112 JSW, 2010 WL 3186971 (N.D. Cal. Aug. 9, 2010).

Plaintiff filed a class action in the Alameda Superior Court on February 17, 2009, alleging that Defendant U.S. Remodelers Inc. violated the California Labor Code and violated California Industrial Welfare Commission Wage Orders by: (1) requiring its Installer employees to work substantial amounts of time without compensation; (2) regularly failing to provide Installers with meal and rest periods; and (3) refusing to reimburse expenses that Installers incurred in the performance of their work duties, including travel expenses and equipment costs.

Defendant removed the action to this Court, and Plaintiff subsequently moved to remand.  But before the hearing on the motion to remand, the parties reached a settlement, which was facilitated, in part, by a mediation that occurred on October 1, 2009, before Michael Loeb.  The parties also engaged in some discovery, and Class Counsel interviewed a number of Settlement Class members.

The Court finds that the terms of the Settlement are fair, adequate and reasonable. As noted, the settlement was reached after the parties engaged in discovery, conducted a meditation, and continued to engage in arms-length negotiations. The parties agreed to a Settlement payment of $1,800,000.00, none of which will revert to the Defendant. The overall reaction to the settlement has been positive. The Claims Administrator has received 156 claim forms from the 270 Class Members. (Id., ¶¶ 20-21.) Neither the Claims Administrator nor the Court received any objections to the Settlement. No Class Member appeared at the final approval hearing to object. According to the Claims Administrator, assuming the Court were to grant in full Plaintiff’s motion for attorneys’ fees and costs and service awards, approximately $1,108,917.72 would be available to distribute Class Members who submitted timely claim forms, for an average award of just over $7,000. (Id. ¶¶ 16-18.)

The Court approved costs to be paid to the Claims Administrator of $10,000.00 from the Settlement Fund.

Attorneys Fees, Costs, and Service Awards

Plaintiff brought an unopposed fee application, seeking $600,000.00 in attorneys’ fees, $11,274.89 in costs, and $10,000.00 in service awards to him and to class member Boris Moskovich.

Plaintiff’s counsel sought an award of attorneys’ fees based on the percentage method, asking for 33 1/3% of the Settlement Fund.  The court agreed to depart from the 25% benchmark.  See Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002) (noting that 25% is benchmark and “usual” range of awards is 20-30%); Hanlon v. Chrysler Corp., 150 F.3d 1011, 1029 (9th Cir. 1998) (stating that 25% is benchmark).  But the court would not vary from the benchmark to the degree requested by counsel.

The Court concludes that counsel did achieve an excellent result for the class, that the reaction to the settlement has been overwhelmingly positive, and that Plaintiff faced significant risk in prosecuting this case given the uncertain state of California law in similar wage and hour cases. The Court also recognizes that other courts have awarded settlement fees of up to 33 1/3% in such cases. However, the parties reached this settlement quickly and did not engage in any motion practice. See, e.g., Navarro v. Servisair, 2010 WL 1729538 (N.D. Cal. Apr. 27, 2010) (finding that proposed award of 30% of settlement fund unjustifiably departed from benchmark based in part on speed with which parties reached a settlement). Moreover, the requested percentage would amount to award that is more than double the fees actually incurred by counsel. Compare Vasquez v. Coast Valley Roofing, Inc., 266 F.R.D. 482, 491 (E.D. Cal. 2010) (awarding 33 1/3% of settlement fund which was “significantly less” than asserted lodestar).

Thus the court found that an award of  $520,000.00 was reasonable.

The court found counsels’ requests for costs in the amount of $11,274.89 reasonable.

The court also approved service awards in the amount of $10,000.00 for the lead plaintiff and for a class member.

By CHARLES H. JUNG

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August 14, 2010

Central District Denies Class Certification in Ink Jet Toner Class Action

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In Shein v. Canon U.S.A., Inc., No. CV 08-7323 CAS (Ex), 2010 WL 3170788 (C.D. Cal. Aug. 10, 2010), Judge Christina Snyder considered and denied a motion for class certification based on a lack of predominance under 23(b)(3).  The court held that “plaintiff fails to demonstrate how he will establish on a class-wide basis that a material amount of ink remained in each class members’ cartridges when the ‘ink out’ messages appeared.”

Plaintiff Steven Shein filed the class action case against defendant Canon U.S.A., Inc. (“Canon”) on November 4, 2008.  On January 2, 2009, plaintiff Shein, joined by plaintiff Jason Insalasco, filed a first amended complaint (“FAC”). In Plaintiffs third amended complaint (“TAC”), Plaintiff alleged three claims: (1) violation of CLRA; (2) violation of UCL; and (3) conversion. On September 22, 2009, the Court denied defendant’s motion to dismiss plaintiff’s CLRA claim.

On April 12, 2010, plaintiff Insalasco filed the instant motion for class certification. At the hearing, the Court tentatively indicated that it would grant certification as to plaintiff’s UCL claim and deny certification as to plaintiff’s CLRA claim. Upon further review of the record and the positions advanced at oral argument, the Court concluded that plaintiff’s motion for class certification should be denied without prejudice.

Class Definition

Plaintiff sought certification of the following class, with regard to his claims for violation of CLRA and for violation of UCL:

All residents of the State of California who purchased a Canon Pixma series inkjet printer on or after November 4, 2004.

The gravamen of the suit is that these Canon-brand Pixma series inkjet printers uniformly misinform users that “ink has run out” and that they must replace the purportedly empty ink cartridge, when in fact, at the time Canon issues its “ink out” messages, these ink cartridges still contain a significant amount of useable ink.  According to plaintiff, Canon earns a substantial profit from the sale of each cartridge, and thus, employs these deceptive messages in order to increase the sale of replacement ink cartridges.

23(a)

Defendant diputed typicality, but not numerosity, commonality, or, to a substantial degree, adequacy.  With regard to typicality, the court found that “[n]otwithstanding the asserted differences between plaintiff and members of the proposed class, plaintiff’s claims are based on an alleged common course of conduct by Canon whereby defendant’s Pixma inkj et printers prematurely indicate that an ink cartridge is out of ink and needs to be replaced. Therefore, plaintiff’s claims arise from the ‘same event or course of conduct’ as those of the various class members, as required under Rule 23(a)(3), and are typical of the claims of the proposed class.”

23(b)

Plaintiff sought certification under Rule 23(b)(3).  In analyzing predominance and commonality, the court found two “crucial questions”:

(1) whether plaintiff has shown that every printer model in the proposed class displays the same, or substantially the same, “ink out” message; and

(2) the existence of a plausible class-wide method for proving that when these “ink out” messages appear there is in fact a material amount of usable ink remaining in each class members’ printer cartridges, and not only a de minimis amount. Accordingly, the question is whether plaintiff can establish on a class-wide basis the materiality of Canon’s misrepresentations regarding the remaining ink level of the printers in question and that these allegedly deceptive statements caused injury to members of the class.

Despite Canon’s argument that different printer users receive a wide array of messages depending on their printer model and the operating system running on their computer, the Court was unpersuaded that these variations are the type of “material variation” in defendant’s representations regarding the ink level that would render fraud-based claims unsuitable for class treatment.  Citing In re First Alliance Mortgage Co., 471 F.3d 977, 990, 992 (9th Cir.2006) (“The class action mechanism would be impotent if a defendant could escape much of his potential liability for fraud by simply altering the wording or format of his misrepresentations across the class of victims.”). The court concluded that “it appears, that all of the printers plaintiff is seeking to certify issue a substantially similar ‘ink out’ message, combined with the ‘hard stop’ of the printer while receiving that message, and that class members allegedly receive this message before the printer cartridges may in fact be entirely empty.”  Id. *7.

The court then considered whether plaintiff had shown a plausible class-wide method for proving that these “ink out” messages appear when there is in fact a material amount of usable ink remaining in each class members’ printer cartridges, and thus constitute actionable conduct common to the entire Class.

Claim Under the UCL

Plaintiff argued that common issues of law and fact predominate as to his claim under the “fraudulent” prong of the UCL.  The court disagreed, finding that plaintiff failed to demonstrate his basis for establishing that a material amount of ink remained in each class members’ cartridges when the “ink out” messages appeared:

Although “relief under the UCL is available without individualized proof of deception, reliance, and injury,” see Tobacco II Cases, 46 Cal. 4th at 312, 320, in this case, plaintiff fails to demonstrate how he will establish on a class-wide basis that a material amount of ink remained in each class members’ cartridges when the “ink out” messages appeared. If only a de minimis amount of ink remained at that point, then no misrepresentation or omission was made, and certainly not one that could be deemed material or “likely to deceive” a “reasonable consumer” under the UCL. Plaintiff’s attempt to rely solely on the deposition testimony of Canon’s employee Yamamoto is unavailing. First, the Court is unpersuaded that his testimony can be construed in the way advanced by plaintiff–namely, that Canon concedes that all of its printers are programmed to “compensate” for a 10% margin of tolerance in determining when an “ink out” messages are displayed. Further, the fact that there is a ten percent variance inherent in the printer technology does not address the critical question of whether there is in fact a material amount of useable ink remaining in each class members’ printer cartridges when the “ink out” message appears. Because plaintiff fails to submit any evidence or expert testimony to the contrary, it appears based on the record that whether a printer receives an “ink out” message before, after, or at the same time that the ink in the cartridge has run out is an individual issue of fact that must be determined for each printer. Accordingly, the Court concludes, as to plaintiff’s UCL claim, that common issues of fact do not predominate over individual ones.

Claim under the CLRA

For the same reasons, the court found that plaintiff filed to satisfy the preodminance requirement for his CLRA claim.

In the instant case, the gravamen of plaintiff’s allegations is that Canon’s “ink out” statements and its concealment of the inaccuracy inherent in its ink level detection methods are material enough to compel a reasonable consumer to believe that the ink cartridge is empty and needs to be replaced. However, as noted previously, plaintiff fails to demonstrate how he will establish on a class-wide basis that a material amount of ink remained in each class members’ cartridges when the “ink out” messages appeared. Without such a showing, plaintiff cannot establish that “material misrepresentations were made to the class members [such that] at least an inference of reliance arises as to the entire class.” Mass. Mut., 97 Cal.App. 4th at 1292-93. Thus, the Court concludes that plaintiff fails to satisfy the predominance requirement as to his CLRA claim.

Thus, the court denied certification.

By CHARLES H. JUNG

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August 14, 2010

Fourth District Invalidates Class-Wide Arbitration Clause

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In this next case, Fisher v. DCH Temecula Imports LLC, — Cal.Rptr.3d —-, 2010 WL 3192912 (Cal. Ct. App. 4th Dist. Aug. 13, 2010), the Court of Appeal for the Fourth District upheld the trial court’s denial of a petition to compel arbitration.

Defendant DCH Temecula Imports LLC (DCH) appealed the denial of its petition to compel arbitration. The trial court found that an arbitration clause in a retail installment sales contract (RISC) for the sale of a car to plaintiff Amberlee Fisher, which included a waiver of the right to bring a class action lawsuit or request classwide arbitration, was unenforceable.  Fisher opposed enforcement of the arbitration clause, arguing that it required her to waive an unwaivable statutory right to bring a class action lawsuit under the California Legal Remedies Act (the CLRA) and that the arbitration agreement was both procedurally and substantively unconscionable.

Claims and Class Definition

Fisher filed her complaint for injunctive relief, restitution, rescission, and damages both on her own behalf and as a class action lawsuit.  The class definition was:

those who purchased a vehicle from DCH from July 28, 2003, to then present, and (1) after signing an RISC, DCH rescinded the original RISC and had the consumer sign a subsequent RISC for the same vehicle, but the new contract was dated the date of the original purchase contract and involved financing at an annual percentage rate greater than 0.00%, and/or (2) who executed an RISC for the purchase of a vehicle for personal use where registration and licensing fees were not properly disclosed on a separate line in the contract as required.

The six causes of action for the class were violation of the CLRA and Civil Code sections 1750 and 1780, subdivision (a)(2) for backdating contracts; violation of the CLRA and Civil Code sections 1750, subdivision (a) and 1770, subdivision (a) for improperly designating license and registration fees; violation of the Automobile Sales Finance Act (the ASFA) and Civil Code section 2981 for backdating the second sales contract; violation of the ASFA and Civil Code section 2981 for improperly designating license and registration fees; commission of unlawful, unfair, and/or fraudulent business practices and violation of Business and Professions Code section 17200 for backdating the second sales contracts; and commission of unlawful, unfair, and/or fraudulent business practices and violation of Business and Professions Code section 17200 for failing to properly designate license and registration fees.

Petition to Compel Arbitration

On December 1, 2008, DCH filed its notice of petition and petition for orders compelling binding contractual arbitration, severing injunctive relief claims if inarbitrable, staying or dismissing proceedings pending arbitration, and staying injunctive relief claims pending arbitration if inarbitrable (petition to compel arbitration). According to the petition to compel arbitration, DCH had demanded that Fisher enter into binding arbitration prior to filing the complaint, but she had refused.

The binding arbitration clause appeared in a box on the back of the agreement in both the first and second RISC that Fisher signed.

The page on which it appeared was neither signed nor initialed. In bold letters it stated, “ARBITRATION CLAUSE PLEASE REVIEW–IMPORTANT–AFFECTS YOUR LEGAL RIGHTS.” It stated: “Either you or we may choose to have any dispute between us decided by arbitration and not in court or by jury trial.” (Capitalization omitted.) It also stated, “If a dispute is arbitrated, you will give up your right to participate as a class representative or class member on any class claim you may have against us including any right to class arbitration or any consolidation of individual arbitrations.” (Capitalization omitted.) It further stated, “You expressly waive any right you may have to arbitrate a class action.” Finally, it included language that, if the waiver of class action lawsuits or classwide arbitration was found unenforceable, the entire arbitration clause was unenforceable.

The court faced the issue of whether the waiver of a state statutory right (CLRA) constitutes a ground that exists at law or in equity for the revocation of any contract.  The court held that the “right to bring a class action lawsuit, an unwaivable statutory right under the CLRA, is ‘a separate, generally available contract defense not preempted by the FAA.'” Id. *11 (quoting Gutierrez v. Autowest, Inc., 114 Cal. App. 4th 77, 95 (2003)).

The manner in which the contract was written in this case gives the appearance that the class action waiver was included in the arbitration agreement in order to force Fisher to waive her statutory rights, and DCH could be protected by arguing that the FAA preempted the CLRA because the waiver was included in the arbitration agreement. This is the type of arbitration agreement criticized in Little v. Auto Stiegler, Inc., supra, 29 Cal.4th at p. 1079 for hiding these types of waivers of unwaivable rights.

Our hands are tied as to ordering arbitration of any of Fisher’s individual claims in the agreement. It was DCH who chose to put the classwide arbitration and class action lawsuit waiver in the arbitration agreement and then included the “poison pill” provision that invalidated the remainder of the arbitration agreement if the classwide arbitration waiver was unenforceable. We cannot sever the offending class action waiver, as we are bound by the language of the contract. We therefore affirm the trial court’s ruling denying DCH’s petition to compel arbitration.

Id. *12.

Judges and Attorneys

Justice Betty Ann Richli wrote the opinion for the court.  Justices Hollenhorts and McKinster concurred.

The appeal was taken from the Superior Court of Riverside County, Hon. Mac R. Fisher.

Defendant and Appellant was represented by Christian J. Scali and Wade R. Kackstetter of Manning, Leaver, Bruder & Berberich.

Jonathan Morrison submitted an amicus brief for California New Car Dealers Association on behalf of Defendant and Appellant.

Plaintiff and Respondent was represented by Hallen D. Rosner and Christopher P. Barry of Rosner, Barry & Babbitt.

The Complex Litigator and The UCL Practioner also discuss this case.

By CHARLES H. JUNG

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August 13, 2010

Central District Remands Wage and Hour Class Action Based on Local Controversy Exception to CAFA

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In Coleman v. Estes Express Lines, Inc., No. CV 10-2242 ABC (AJWx), — F. Supp. 2d —-, 2010 WL 3156850 (C.D. Cal. July 19, 2010) a wage and hour plaintiff brought a motion to remand, after the case was removed pursuant to CAFA.  The Court granted Plaintiff’s remand motion.

While Defendants have demonstrated that more than $5,000,000 is in controversy under CAFA, Plaintiff has demonstrated that CAFA’s Local Controversy exception applies in this case. Therefore, the Court must decline to exercise jurisdiction. See Serrano, 478 F .3d at 1022. Plaintiff’s motion is GRANTED and this case is REMANDED to Los Angeles Superior Court.

Judges and Attorneys

The judge is Hon. Audrey B. Collins.

Plaintiffs were represented by Mark P. Estrella, Miriam L. Schimmel, Robert E. Byrnes, Sue Jin Kim of Initiative Legal Group APC and Payam Shahian of Strategic Legal Practices APC.

Defendants were represented by David L. Terry, David L. Woodard of Poyner Spruill LLP and Sarah N. Drechsler and Timothy M. Freudenberger of Carlton Disante & Freudenberger LLP.

By CHARLES H. JUNG

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August 13, 2010

Deepwater Horizon Litigation Ordered Transferred to Eastern District of Louisiana by MDL Panel

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The Judicial Panel on Multidistrict Litigation issued its transfer order in In re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico on April 20, 1010, 2010 WL 3166434 (U.S. Jud. Pan. Mult. Lit. Aug. 10, 2010) (slip op.)

The Panel faced four motions that collectively encompass 77 actions: 31 actions in the Eastern District of Louisiana, 23 actions in the Southern District of Alabama, ten actions in the Northern District of Florida, eight actions in the Southern District of Mississippi, two actions in the Western District of Louisiana, two actions in the Southern District of Texas, and one action in the Northern District of Alabama.

The Panel ordered that, pursuant to 28 U.S.C. § 1407, the actions transferred to the U.S. District Court for the Eastern District of Louisiana and assigned to the Honorable Carl J. Barbier for coordinated or consolidated pretrial proceedings with the actions pending in that district.

Upon careful consideration, however, we have settled upon the Eastern District of Louisiana as the most appropriate district for this litigation. Without discounting the spill’s effects on other states, if there is a geographic and psychological “center of gravity” in this docket, then the Eastern District of Louisiana is closest to it. Considering all of the applicable factors, we have asked Judge Carl J. Barbier to serve as transferee judge. He has had a distinguished career as an attorney and now as a jurist. Moreover, during his twelve years on the bench, Judge Barbier has gained considerable MDL experience, and has been already actively managing dozens of cases in this docket. We have every confidence that he is well prepared to handle a litigation of this magnitude.

Some parties have expressed concern that recusals among Eastern District of Louisiana judges unduly limit our choices, and that even Judge Barbier may be subject to recusal. Notwithstanding these concerns, the Panel is quite comfortable with its choice. Judge Barbier is an exceptional jurist, who would be a wise selection for this assignment even had those other judges in the district been available. Moreover, the Fifth Circuit recently denied the petition of certain defendants for a writ of mandamus directing Judge Barbier to recuse himself.

Chairman John G. Heyburn, II wrote for the Panel.

By CHARLES H. JUNG

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August 13, 2010

Ninth Circuit Holds That No Private Right of Action Exists to Enforce the Provisions of § 13(a) of the Investment Company Act of 1940

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In a shareholder class action, Northstar Financial Advisors, Inc. v. Schwab Investments, et al., 2010 WL 3169400 (9th Cir. Aug. 12, 2010), the Ninth Circuit Court of Appeals addressed whether there is a private cause of action to enforce the provisions of § 13(a) of the Investment Company Act of 1940 (“ICA” or “1940 Act”), 15 U.S.C. § 80a-13(a).  That section generally requires an investment company to obtain shareholder approval before deviating from the investment policies contained in the company’s registration statement filed with the Securities and Exchange Commission (“SEC”).

The Court held that “nothing in § 13(a) as originally enacted or as subsequently amended either creates a private cause of action or recognizes one exists with the clarity and specificity required under Supreme Court precedent.”

Marc J. Gross argued for plaintiff-appellee Northstar Financial Advisors, Inc.

Darryl P. Rains argued for defendants-appellants Schwab Investments, et al.

The case was argued before Circuit Judges Mary M. Schroeder N. Randy Smith and Hon. James Maxwell Moody, the Senior United States District Judge for the District of Arkansas, who was sitting by designation.  Circuit Judge Schroeder wrote the opinion of the Court.

By CHARLES H. JUNG

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August 11, 2010

Northern District of Illinois Denies Class Certification to Proposed Class of African American Financial Advisors at Merrill Lynch

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Judge Robert W. Gettleman denied class certification this week in McReynolds et al. v. Merrill Lynch, Pierce,  Fenner & Smith Inc., (N.D. Ill. Aug. 9, 2010), No. 05-06583, a case brought by 17 African American financial advisors who accused Bank of America Corp’s Merrill Lynch & Co. unit of racial discrimination in violation of Title VII of the Civil Rights Act of 1964 as amended, 42 U.S.C. § 2000(e) et seq. (Count I), and 42 U.S.C. § 1981 (Count II). Plaintiffs moved pursuant to Fed. R. Civ. P. 23 to certify a class, defined as:

African-American financial advisors (“FAs”) and FA Trainees (“Trainees”) who are or were employed in the retail brokerage unit, referred to as Global Private Client (“GPC”) of defendant Merrill Lynch, Pierce, Fenner & Smith, Inc., from January 2001 to the present.   cannot have their cases tried together.

The Court found a lack of commonality because the “individuals worked in different offices, had different supervisors, and allegedly experienced vastly different forms of discrimination.”  The Court found also found a lack of typicality becuase the claims of the named plaintiffs and the declarations of putative class members showed variations which would “necessitate individual inquires to determine whether the individual suffered racial discrimination.”  Additionally, the Court found that that defendant would be able to present varying defenses to the plaintiffs’ claims.

Plaintiffs sought certification under a hybrid of Rule 23(b)(2) and 23(b)(3), but the Court concluded that the proposed class failed under both Rules.  With respect to 23(b)(2), the Court found that “the individual putative class members’ financial interests are too high to be considered incidental to the requested equitable relief. Consequently, opt out rights must be extended to the members, and certification under Rule 23(b)(2) is inappropriate.”

With respect to certification under Rule 23(b)(3), the court found predominance lacking “[b]ecause plaintiffs’ statistical evidence alone is insufficient to establish company-wide discrimination in a manner that affects each class member in the same way, each individual putative class members’ claim for liability and damages will have to be tried to a jury. These inquiries would involve different witnesses and proofs for each member to determine, among other things, the motivation of each supervisor who made the individual allegedly discriminatory decision.”

The Court also found inappropriate a “divided certification, with certification of a 23(b)(2) class for the equitable issues and certification of a 23(b)(3) class for the damages issues . . . .”  “There is no predominance of common issues to certify a 23(b)(3) class for any issue, and even if there were, because of the right to a jury trial the damages cases would all have to be tried first, eliminating any advantage to certifying the instant case as a class action.”

Finally, the Court rejected “certification under Rule 23(b)(2) for all issues, combined with notice and an opportunity to opt out as though certified under Rule 23(b)(3) . . . .”  The Court noted that “certification under this approach is advantageous to plaintiffs, because it avoids Rule 23(b)(3)’s requirement that common issues predominate and that a class action be the superior method of resolving the dispute.”  “This court agrees with Judge Kennelly, however, that the Seventh Circuit’s suggestion of this approach in Lemon and Jefferson was not intended to permit plaintiffs in a case involving significant damage claims to avoid consideration of whether a class action would be a manageable way to resolve the case.”  Citing Adams v. R.R. Donnelley & Sons, 2001 WL 336830 at *16 (N.D. Ill. 2001).

The court distinguished this case from one where individual issues were limited to damages.  In such a case, “there likely would be a proper way to structure a trial or trials with a minimum of inefficiency without doing violence to the parties’ Seventh Amendment rights.”

Here, however, the court concluded that there were “several separate layers of individual issues, including the variation in personnel practices among the various branch offices, and how various office managers and complex managers handle individualized personnel decisions. These extra layers of individualized issues lead the court to conclude that common issues do not predominate over individual issues, and that trial of the claims as a class action would be unmanageable.”  Accordingly, the court denied plaintiffs’ motion for class certification is denied.

Defendants were represented by Jared R. Friedman of Weil, Gotshal & Manges LLP,

Jeffrey Scott Piell of Lupel Weininger LLP and Stephen Michael Shapiro and Timothy Simon Bishop of Mayer Brown LLP.

By CHARLES H. JUNG

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August 10, 2010

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

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