Northern District Certifies Prisoner Transport Class in Schilling v. Transcor Am.

On February 16, 2010, Judge Susan Illston of the Northern District certified a prisoner transport class against Transcor America, LLC, in Schilling v. Transcor Am., 2010 U.S. Dist. LEXIS 20786 (N.D. Cal. Feb. 16, 2010). Plaintiffs’ action alleges that defendant, whose business entails the transportation of pretrial detainees and prisoners, subjected prisoners in tow for more than 24 hours to inhumane conditions during the journey, including being shackled and kept in a cage, and deprived of access to regular food, water, and bathrooms. The Court certified a rule 23(b)(3) damages class based on its finding that plaintiffs’ constitutional claims arose from defendant’s systematic transport practices, including a wholesale failure to enact policies ensuring that minimal constitutional treatment was provided:

Plaintiffs challenge the conditions to which they were subjected during 24 hour transports, and it is undisputed that all inmates are restrained during such transports and not provided with a "rest over night." As in Baca and Dunn, plaintiffs challenge the failure to enact policies to ensure adequate access to food, water, and bathroom facilities, and they allege that as a result of such failures, they have been subject to the whim of TransCor employees responsible for each transport. In order to establish liability, plaintiffs must objectively show that they were deprived of something "sufficiently serious." Foster v. Runnels, 554 F.3d 807, 812 (9th Cir. 2009). Whether inmates who have been transported for more than 24 hours and who are not allowed to sleep overnight have been deprived of something "sufficiently serious" can be determined on a classwide basis. While there is also a subjective component to the analysis in that inmates must also show that a deprivation occurred with deliberate indifference the inmates' needs, id., that inquiry does not mean that the legality of policies and practices applied to all inmates cannot be litigated on a class basis.

Schilling, 2010 U.S. Dist. LEXIS 20786, at 31-33.

The Court also certified plaintiff’s claim under Cal. Civil Code § 52.1 – an enabling statute providing a private right of action for intentional deprivation of constitutional rights – despite acknowledging a split in authority on whether such a cause of action could be maintained on a representative basis.  See Schilling, 2010 U.S. Dist. LEXIS 20786, at 34-37.

Depublication Request filed in Jaimez v. Daiohs USA, Inc.

On March 5, 2010, a request was filed with the California Supreme Court to depublish the Second District’s opinion in Jaimez v. Daiohs USA, Inc., 181 Cal. App. 4th 1286 (2010). The request may be found here. This case was previously ordered to be published by the Second District, Division One, pursuant to several requests, including a request filed by myself.  Prior discussion of the opinion may be found here, here, and here.

Ninth Circuit Reverses Dismissal of State-Law Commute Time Claim in Rutti v. Lojack Corp.

On March 2, 2010, the Ninth Circuit reversed, in part, a district court’s grant of summary judgment in Rutti v. Lojack Corp., 2010 U.S. App. LEXIS 4278 (9th Cir. 2010). The case – a proposed class action/FLSA collective action brought on behalf of Lojack alarm installation technicians – challenged Lojack’s failure to pay for time spent commuting to client locations. The district court granted Lojack’s summary judgment, holding that the plaintiff’s commute was not compensable as a matter of law under both California law, as well as under the Portal to Portal Act (a component of the FLSA).

With regard to FLSA claim, the Court upheld the district court’s order, reasoning that a 1996 amendment to the Portal to Portal Act permitted an employer and an employee to informally agree that commute time and preliminary/postliminary activities are non-compensable where the employee uses a company vehicle. See Rutti, 2010 U.S. App. LEXIS 4278, at 11-14.

However, the exact opposite finding occurred with regard to the plaintiff’s state-law claim. As reasoned by the Court, “California law requires that employees be compensated for all time ‘during which an employee is subject to the control of an employer’” and based on Lojac’s policies, “[t]here is simply no denying that Rutti was under Lojack's control while driving the Lojack vehicle en route to the first Lojack job of the day and on his way home at the end of the day.” See Rutti, 2010 U.S. App. LEXIS 4278, at 40-44 (citing Morillion v. Royal Packing Co., 22 Cal. 4th 575, 578 (2000)).

Another point of particular significance -- the Court noted that the Ninth Circuit has not adopted a hard and fast rule that preliminary/postliminary activities which are only 10 to 15 minutes in duration are not per se de minimis under the FLSA:

Furthermore, we have not adopted a ten or fifteen minute de minimis rule. Although we noted in Lindow, that "most courts have found daily periods of approximately 10 minutes de minimis even though otherwise compensable," we went on to hold that "[t]here is no precise amount of time that may be denied compensation as de minimis" and that "[n]o rigid rule can be applied with mathematical certainty." 738 F.2d at 1062. The panel went on to set forth a three-prong standard, which would have been unnecessary if the panel had intended to adopt a ten or fifteen minute rule.

See Rutti, 2010 U.S. App. LEXIS 4278, at 31-32.

Second District Publishes Opinion Reversing Certification of Listerine False Advertisement Class: Pfizer Inc., v. Superior Court

On March 2, 2010, the Second District (Division 3) published its opinion, issued last week, in Pfizer Inc., v. Superior Court, __ Cal.App.4th __ (2010). The Court’s opinion reconsiders a 2006 decision that was subsequently taken up by the California Supreme Court and transferred back subsequent to the decision in Tobacco II. The Court’s new opinion, like its previous decision, concludes that the trial court abused its discretion by certifying a broad restitutionary class comprised of “all persons who purchased Listerine in California" during a six-month period.

The heart of the Court’s analysis turned largely on the short duration of the challenged promotional campaign coupled with the fact that there were a multitude of different Listerine bottles used during the time that did not contain the challenged misleading representation:

Here, the class certified by the trial court, i.e., all purchasers of Listerine in California during a six-month period, is grossly overbroad because many class members, if not most, clearly are not entitled to restitutionary disgorgement. The record reflects that of 34 different Listerine mouthwash bottles, 19 never included any label that made any statement comparing Listerine mouthwash to floss. Further, even as to those flavors and sizes of Listerine mouthwash bottles to which Pfizer did affix the labels which are at issue herein, not every bottle shipped between June 2004 and January 2005 bore such a label. Also, although Pfizer ran four different television commercials with the "as effective as floss" campaign, the commercials did not run continuously and there is no evidence that a majority of Listerine consumers viewed any of those commercials. Thus, perhaps the majority of class members who purchased Listerine during the pertinent six-month period did so not because of any exposure to Pfizer's allegedly deceptive conduct, but rather, because they were brand-loyal customers or for other reasons.

The circumstances herein stand in stark contrast to those in Tobacco II, where the tobacco industry defendants allegedly violated the UCL "by conducting a decades-long campaign of deceptive and misleading statements about the addictive nature of nicotine and the relationship between tobacco use and disease." (Tobacco II, supra, 46 Cal.4th at p. 306.) Tobacco II allows a class representative who actually relied on the defendants' misleading advertising campaign to represent other class members who may have lost money by means of the unfair practice. Tobacco II does not stand for the proposition that a consumer who was never exposed to an alleged false or misleading advertising or promotional campaign is entitled to restitution.

As Pfizer argues, it is one thing to say that restitution can be awarded to purchasers of cigarettes where the cigarettes were marketed as part of a massive, sustained, decades-long fraudulent advertising campaign on the grounds the tobacco industry defendants "may have . . . acquired" (§ 17203) the purchase price as a result of such a pervasive fraudulent campaign. It is entirely another to say that restitution [*18] can be awarded to all purchasers of Listerine in California over a six-month period where the undisputed evidence shows many, if not most, class members were not exposed to the "as effective as floss" campaign and therefore did not purchase Listerine because of it.

In sum, the certified class, consisting of all purchasers of Listerine in California over a six-month period, is overbroad because it presumes there was a class-wide injury. However, large numbers of class members were never exposed to the "as effective as floss" labels or television commercials. As to such consumers, there is absolutely no likelihood they were deceived by the alleged false or misleading advertising or promotional campaign. Such persons cannot meet the standard of section 17203 of having money restored to them because it "may have been acquired by means of" the unfair practice. In the language of section 17203, with respect to perhaps a majority of class members, there is no doubt Pfizer did not obtain any money by means of the alleged UCL violation.

See Slip Opinion, at 11-12.

Third District Issues New Certification Opinion in McAdams v. Monier

On February 24, 2010, the Third District issued a new opinion reversing a trial court’s denial of certification in McAdams v. Monier, __ Cal.App.4th __ (2010). The opinion comes on the heels of its previous opinion in McAdams v. Monier, Inc., 151 Cal. App. 4th 667 (2007), which was depublished subsequent to the California Supreme Court’s grant and hold of the matter pending review in Tobacco II.

The Court’s opinion dealt with the trial court’s refusal to certify claims under the CLRA and UCL predicated upon the defendant’s alleged failure to disclose that the color composition of its roofing tiles would erode away well before the end of the tiles' represented 50-year life, leaving plain (noncolored) concrete. The trial court denied certification, in large part, based on its conclusion that individualized issues relating to class member reliance and damage would predominate. The CAP held that this was an error, as the trial court misperceived the nature of the plaintiff’s CLRA and UCL causes of action, which, in the CAP’s view, was “based on a single, specific, alleged material misrepresentation: Monier knew but failed to disclose that its color roof tiles would erode to bare concrete long before the life span of the tiles was up.” See Slip Opinion, at 9 and 25.

With regard to the CLRA claim, the Court reasoned that the singular nature of the representation permitted reliance to be inferred with regard to the class as a whole:

The record here permits an inference of common reliance among the CLRA class. Plaintiff alleges that Monier made a single, material misrepresentation to class members that consisted of a failure to disclose a particular fact regarding its roof tiles. Plaintiff has tendered evidence that Monier knew but failed to disclose to class members that the color composition of its roof tiles would erode to bare concrete well before the end of the tiles' represented 50-year life; and that this failure to disclose would have been material to any reasonable person who purchased tiles in light of the 50-year/lifetime representation, or the permanent color representation, or the maintenance-free representation. If plaintiff is successful in proving these facts, the purchases common to each class member—that is, purchases pursuant to this alleged failure to disclose in light of the 50-year life, permanent color, or maintenance-free representations—would be sufficient to permit an inference of common reliance among the class on the material misrepresentation comprising the alleged failure to disclose. This is also why the CLRA class definition is subject to the proviso specified at the end of this opinion's introduction. (See p. ___, ante.)

See Slip Opinion, at 13.

With regard to the UCL claim, the Court similarly concluded that the singular nature of the challenged representation/omission, plus the fact that reliance is not a component of absent class member’s UCL claims, rendered the class ideally suited for class adjudication. See Slip Opinion, at 25-28.

However, notwithstanding the forgoing analysis, the CAP concluded that the class would have to be limited to persons exposed to the challenged statement.  See Slip Opinion, at 3, 28 (“[t]he definition of the CLRA and UCL classes is subject to the following proviso: The members of these classes, prior to purchasing or obtaining their Monier roof tile product, had to have been exposed to a statement along the lines that the roof tile would last 50 years, or would have a permanent color, or would be maintenance-free.”). 

Ninth Circuit Upholds Employer Tip Pooling Policy in Cumbie v. Woody Woo

On February 23, 2010, the Ninth Circuit issued an opinion interpreting the scope of tip pooling restrictions imposed by 29 U.S.C. § 203(m) in Cumbie v. Woody Woo, 2010 U.S. App. LEXIS 3686 (9th Cir. 2010). The case was brought by a server at an Oregon restaurant who received an hourly wage at a rate exceeding the federal minimum wage, but was required by her employer to contribute her tips to a “tip pool” which were distributed primarily to kitchen staff. Plaintiff filed a FLSA collective action, alleging that the employer’s tip pool policy was “invalid” under 29 U.S.C. § 203(m) because it included employees who were not “customarily and regularly tipped employees.” The Ninth Circuit disagreed.

As reasoned by the Court, plaintiff’s theory of recovery conflicted with the U.S. Supreme Court’s decision in Williams v. Jacksonville Terminal Co., 315 U.S. 386, 397 (1942), which established a presumption that an arrangement to redistribute tips is valid, as well as the plain language of Section 203(m), which precluded the use of a pool including non-customary tipped employees only where the employer claimed a “tip credit” (i.e. a provision of Section 203(m) which enables an employer to pay tipped employees an hourly wage of $2.13 so long as the employer makes up the difference at any time the tip wages are incapable of meeting Federal minimum wage):

Cumbie argues that under section 203(m), an employee must be allowed to retain all of her tips--except in the case of a "valid" tip pool involving only customarily tipped employees--regardless of whether her employer claims a tip credit. Essentially, she argues that section 203(m) has overruled Williams, rendering tip-redistribution agreements presumptively invalid. However, we cannot reconcile this interpretation with the plain text of the third sentence, which imposes conditions on taking a tip credit and does not state freestanding requirements pertaining to all tipped employees. A statute that provides that a person must do X in order to achieve Y does not mandate that a person must do X, period.

If Congress wanted to articulate a general principle that tips are the property of the employee absent a "valid" tip pool, it could have done so without reference to the tip credit. "It is our duty to give effect, if possible, to every clause and word of a statute." United States v. Menasche, 348 U.S. 528, 538-39 (1955) (internal quotation marks omitted). Therefore, we decline to read the third sentence in such a way as to render its reference to the tip credit, as well as its conditional language and structure, superfluous.

Slip Opinion, at 2893-94.

The Court concluded that plaintiff could not state a legally viable claim under Section 203(m), as her employer did not take a tip credit:

Here, there is no question that Woo's tip pool included non-customarily tipped employees, and that Cumbie did not retain all of her tips because of her participation in the pool. Accordingly, Woo was not entitled to take a tip credit, nor did it. See Richard v. Marriott Corp., 549 F.2d 303, 305 (4th Cir. 1977) ("[I]f the employer does not follow the command of the statute, he gets no [tip] credit."). Since Woo did not take a tip credit, we perceive no basis for concluding that Woo's tippooling arrangement violated section 203(m).

Slip Opinion, at 2894.

Northern District Certifies Deceptive Promotion Class on Behalf of Superior/Lennox Brand Fireplace Owners in Keilholtz v. Lennox Hearth Prods.

On February 16, 2010, Northern District Judge Claudia Wilken certified a National and California class of approximately 556,639 owners of Superior or Lennox brand single-pane sealed glass front fireplaces in Keilholtz v. Lennox Hearth Prods., 2010 U.S. Dist. LEXIS 14553 (N.D. Cal. Feb. 16, 2010). The Court’s order certified claims brought under the UCL, CLRA and unjust enrichment based on defendants’ alleged concealment/failure to disclose “the fact that the fireplaces are dangerous and unsafe given that the unguarded single pane glass-sealed front may reach temperatures in excess of 475 degrees Fahrenheit, which may cause third degree burns to skin contacting the glass.” See Keilholtz, 2010 U.S. Dist. LEXIS 14553, at 1-3.

In holding that common issues predominated, the Court concluded that California law could be applied nationwide in light of the fact that the bulk of defendants’ fireplaces were manufactured, in part, in California:

Defendants manufacture, assemble and package their fireplaces in Lynwood, California; Union City, Tennessee; Toronto, Canada; and Auburn, Washington. Dischner Decl. P 5. Since February 1, 2004, 117,016 fireplaces (twenty-one percent) were exclusively manufactured, assembled and packaged outside of California and 17,628 (three percent) were exclusively manufactured, assembled and packaged inside of California. The remaining 421,725 (seventy-six percent) were partly manufactured, assembled or packaged at plants in California and partly in at least one other state. Although many fireplaces were produced exclusively outside of California, the fact that seventy-six percent maintained a production connection to California weighs in favor of finding that applying California law to the class claims would not be arbitrary or unfair. Plaintiffs have shown that a significant portion of Defendants' alleged harmful conduct emanated from California. Overall, this class action involves a sufficient degree of contact between Defendants' alleged conduct, the claims asserted and California to satisfy due process concerns. See Parkinson v. Hyundai Motor America, 258 F.R.D. 580, 597-98 (C.D. Cal. 2008); Mazza v. American Honda Motor Co., 254 F.R.D. 610, 620-21 (C.D. Cal. 2008).

See Keilholtz, 2010 U.S. Dist. LEXIS 14553, 23-24.

The Court rejected defendants’ argument that individualized “inquiry into the specific warnings each putative class member received” would be required under the UCL, as “[r]elief under the UCL is available without individualized proof of deception, reliance and injury." See id., at 31-32 (citing In re Tobacco II Cases, 46 Cal. 4th 298, 320 (2009)). With regard to plaintiffs’ CLRA claim, the Court similarly concluded that common issues would predominate notwithstanding the fact the CLRA, unlike the UCL, imposes a causation component. As reasoned by the Court, a common inference of class member reliance was permitted in light of the materiality of defendants’ uniform “alleged failure adequately to disclose to consumers that Defendants' fireplaces could reach temperatures of 475 degrees and cause third-degree burns on contact.” See id., at 34-35 (citing Mass. Mut. Life Ins. Co. v. Superior Court, 97 Cal. App. 4th 1282, 1294 (2002). However, the Court acknowledged that this issue could be revisited in the event it is subsequently determined that “a single determination of materiality is not possible.” See id.