Saturday, December 19, 2009

Northern District Certifies Sunday Worker Break Class in Ross v. US Bank Nat'l Ass'n

On November 25, 2009, Judge Susan Illston certified a meal/rest period and off the clock class in Ross v. US Bank Nat'l Ass'n, 2009 U.S. Dist. LEXIS 116875 (N.D. Cal. Nov. 25, 2009), on behalf of hourly employees who worked Sunday shifts. Plaintiffs’ meal and rest period claims were predicated upon a “barrier/pressure” theory arising out of defendant’s alleged policy and practice of scheduling only two employees for Sunday shifts, coupled with a security policy requiring at least two employees to be on duty at all times, and a policy requiring that customers receive prompt service. See id., at 18-19. With regard to Plaintiffs’ off the clock claim, plaintiffs further alleged that statistical evidence established that 94 out of the 99 sampled employees had performed off-the-clock work during their recorded meal periods. See id., at 21-22.

In granting plaintiff’s motion, the Court reasoned that the common issue of whether defendant’s challenged policies created a barrier to taking uninterrupted meal and rest periods predominated notwithstanding the fact the defendant maintained policies actually requiring employees take meal and rest periods in accordance with California law:
Defendant contends that individual questions predominate, but defendant supports this contention primarily by advancing arguments that either address the legal merits of plaintiffs' claims or contest plaintiffs' factual allegations. Defendant argues that its policy is to comply with California law with regard to meal periods and rest breaks and to strictly prohibit off-the-clock work. Defendant argues that any violation of such policies is an individualized case that is not suitable for class treatment. But defendant also admits it has a security policy of having at least two employees on duty at all times, which in turn raises a common question as to whether such security policy effectively prohibited employees from taking meal periods and rest breaks on Sundays when only two employees were scheduled to work, and whether defendant is liable for such practices. Defendant also admits it has a policy of discouraging overtime and a practice of scheduling employees to work eight-hour shifts with a one-hour meal period, which in turn raises a common question as to whether such policy and practice forced employees to work off-the-clock during their meal breaks and whether defendant is liable for such practices. Thus, while defendants are correct that individual analyses are required, these individual questions will arise only after significant common questions of law and fact have been answered, and may not arise in the liability context.
See Ross, 2009 U.S. Dist. LEXIS 116875, at 29-30.

Barrier theory is perhaps one of the most effective theories for obtaining class certification of meal and rest period claims. Meal and rest period violations predicated upon a common barrier are antithetical of the issues presently pending before the California Supreme Court in Brinker Restaurant Corp. v. Superior Court, 80 Cal. Rptr. 3d 781, 800 (2008), review granted and opinion superseded in 85 Cal. Rptr. 3d 688 (Oct. 22, 2008), as this theory involves (1) a common compnay policies/practices ideal for class wide adjudication, (2) a lack of employee choice that effectively negates the “individualized” waiver defense, and (3) the potential for employer liability notwithstanding the existence of a facially lawful meal and/or rest period policy. See e.g. Bufil v. Dollar Financial Group, Inc., 162 Cal. App. 4th 1193, 1206 (2008) (“no one disputes that the wage order was posted or that there were designated areas to take a break – these matter naught if a single-shift sole employee or sole employee working with a trainee is not able to take an off-duty break.”). My firm has obtained certification using this theory in three separate cases this year.

Friday, December 18, 2009

Los Angeles Superior Court Grants Certification of Deceptive Promotion Class in Johnson v. GlaxoSmithKline, Inc.

On December 17, 2009, Los Angeles Superior Court Judge Peter D. Litchman certified a UCL deceptive advertising class in Johnson v. GlaxoSmithKline arising out the promotion of the drug Paxil. This case is one which my firm filed way back in 2003, and has seen many ups and downs, including outright dismissal. See Johnson v. GlaxoSmithKline, Inc., 166 Cal. App. 4th 1497 (2008). As I am a directly involved in this case, I will leave my statements on this matter at that. However, I would like to say that certification of was achieved by a great group of attorneys, not only from my office, but from Milstein, Adelman & Kreger, LLP and Kabateck Brown and Kellner.

Thursday, December 17, 2009

Further Discussion on the Second District’s Decision in In Re Vioxx Class Cases

In the two previous posts I have focused on the Court's analysis regarding predominance (here and here). However, another material component of In Re Vioxx Class Cases, __ Cal. App. 4th __ (2009) was the Court’s finding with regard to the issue of typicality.

On this issue, the trial court “concluded that the named plaintiffs, who were all individuals, did not possess claims typical of prescription drug benefit providers who had paid all or part of the purchase price of Vioxx for their subscribers.” See Slip Opinion, at 2-3. The trial court reasoned that typicality was lacking “on the basis that ‘[Merck] present[ed] persuasive evidence that the decisionmaking that goes into purchasing Vioxx on an individual basis is entirely distinct from the process for putting it into a group formulary.’” See id. at 20.

The plaintiffs claimed the trial court erred by treating third party payors (“TPPs”) as distinct from consumers. See id., at 20. Plaintiffs’ reasoned that the claims of the entire class of TPPs were subsidiary to consumers, and as such, “if an individual patient, acting in reliance on Merck’s misrepresentations, paid too much for Vioxx, the TPP which paid a portion of that purchase price should also be entitled to recover.” See id. The Court disagreed.

As reasoned by the Court, the plaintiffs’ analysis was flawed in that “it treats the TPP as a passive entity which simply pays its share of the cost of any prescription written for any of its members, with no independent say in the matter.” See id., at 20. The Court reasoned that the record reflected that while many TPPs passively pre-approved Vioxx for use in all patients, others established their own guidelines as to when Vioxx was indicated, conducted their own reviews of all published literature, and some even conducted their own research studies. See id., at 20-21. Based on such differences, the Court concluded that TPPs stood on a complete different footing with regard to the materiality of the challenged representations regarding Vioxx:
with respect to the UCL claim, in considering whether the representation was likely to mislead, we consider the audience to whom the misrepresentation was directed. Whether an individual patient or physician was likely to be misled by Merck’s representations is a completely different inquiry from whether a sophisticated P&T committee, with substantial resources and the ability to conduct its own research, was likely to be misled. As such, the trial court did not err in concluding the individual plaintiffs’ claims were not typical of the claims of the TPPs.
Slip Opinion, at 21.

The Court also noted that the class was overly broad, in that it “fail[ed] to exclude individuals who suffered personal injury from taking Vioxx.” See Slip Opinion, at 20 n.16 (citing Akkerman v. Mecta Corp., Inc., 152 Cal.App.4th 1094, 1103-1104 (2007)). Similarly, the Court also concluded that the class “fail[ed] to exclude those with a ‘flat copayment’ pharmaceutical benefit[,]” as such individuals “would pay the same copayment for a generic drug (i.e., naproxen) as they would for a name brand drug (i.e., Vioxx) would have no economic loss under plaintiffs’ theory of the case….” See id. (citing In re Cipro Cases I & II, 121 Cal.App.4th 402, 418 (2004).

While each of these defects may have been resolved by redefining the class [Hicks v. Kaufman & Broad Home Corp., 89 Cal. App. 4th 908, 916 (2001) (“if necessary to preserve the case as a class action, the court itself can and should redefine the class where the evidence before it shows such a redefined class would be ascertainable”)], such action likely would have futile in light of the Court’s findings on the issue predominance.

Wednesday, December 16, 2009

More on the Second District’s Decision in In Re Vioxx Class Cases

Yesterday I reported on the Second District’s Decision in In Re Vioxx Class Cases, __ Cal. App. 4th __ (2009).  Having had some time to digest the opinion, it is apparent that In Re Vioxx provides some significant guidance on numerous issues that have arisen post Tobacco II.

On appeal, plaintiffs challenged the trial court’s ruling as to typicality and predominance:
plaintiffs challenge all aspects of the trial court’s ruling. First, they argue that the trial court erred in finding the individual plaintiffs’ claims are not typical of the claims of the TPPs. Second, they argue that the trial court erred in concluding that individual issues prevailed on the element of reliance, because they could establish reliance on a class-wide basis and, in any event, reliance is unnecessary to their UCL and FAL causes of action. Finally, plaintiffs argue that their method of calculating damages is subject to common proof.
See Slip Opinion, at 13.

Preliminary to the Court’s substantive evaluation of the trial court’s order, however, the Court laid out some important ground rules designed to guide a trial court’s evaluation of a UCL claim.

First, the Court confirmed that the UCL is a single prong statute which imposes liability based on a “likely to deceive” standard:
In order to obtain a remedy for deceptive advertising, a UCL plaintiff need only establish that members of the public were likely to be deceived by the advertising. (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1267; Massachusetts Mutual Life Ins. Co. v. Superior Court, supra, 97 Cal.App.4th at p. 1290.) The question has arisen as to which members of the public need be likely to be deceived. The law focusses on a reasonable consumer who is a member of the target population. (Lavie v. Proctor & Gamble Co. (2003) 105 Cal.App.4th 496, 508.) “Where the advertising or practice is targeted to a particular group or type of consumers, either more sophisticated or less sophisticated than the ordinary consumer, the question whether it is misleading to the public will be viewed from the vantage point of members of the targeted group, not others to whom it is not primarily directed.” (Id. at p. 512.)
See Slip Opinion, at 18.

Second, the Court confirmed that the “may have been acquired” language of Section 17203 permits recovery without proof that the funds were lost as a result of actual reliance on defendant’s deceptive conduct:
As to restitution, the UCL provides that “[t]he court may make such orders or judgments . . . as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition.” (Bus. & Prof. Code, § 17203.) This language, providing restitution of funds which “may have been acquired,” has been interpreted to allow recovery without proof that the funds were lost as a result of actual reliance on defendant’s deceptive conduct. (Tobacco II, supra, 46 Cal.4th at p. 320; Fletcher v. Security Pacific National Bank, supra, 23 Cal.3d at p. 450-451; Prata v. Superior Court (2001) 91 Cal.App.4th 1128, 1144.)
See Slip Opinion, at 19.

However, the Court concluded that while Section 17203 permits recovery without proof of actual reliance, such language does not permit recovery without any evidentiary support:
“While the “may have been acquired” language of Business and Professions Code section 17203 is so broad as to allow restitution without individual proof of injury, it is not so broad as to allow recovery without any evidentiary support. (Colgan v. Leatherman Tool Group, Inc. (2006) 135 Cal.App.4th 663, 697.).
See Slip Opinion, at 19.

As reasoned by the Court, where a plaintiff’s theory of restitution is predicated on a formula involving the value of a product, this evidentiary showing requires evidence of the value received with correlating comparative evidence establishing a basis for restitution:
The difference between what the plaintiff paid and the value of what the plaintiff received is a proper measure of restitution. (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 174.) In order to recover under this measure, there must be evidence of the actual value of what the plaintiff received. When the plaintiff seeks to value the product received by means of the market price of another, comparable product, that measure cannot be awarded without evidence that the proposed comparator is actually a product of comparable value to what was received. (Colgan v. Leatherman Tool Group, Inc., supra, 135 Cal.App.4th at p. 675.)
 See Slip Opinion, at 19.

This latter finding was material to the Court’s analysis regarding predominance, as the Court reasoned that the trial court did not err in finding that the Plaintiff’s comparative evidence using naproxen as a basis for restitution was incapable of establishing a right to restitution as to the class as a whole:
However, in order to obtain class wide restitution under the UCL, plaintiffs need establish not only a misrepresentation that was likely to deceive (Corbett v. Superior Court, supra, 101 Cal.App.4th 649, 670) but the existence of a “measurable amount” of restitution, supported by the evidence. (Colgan v. Leatherman Tool Group, Inc., supra, 135 Cal.App.4th at p. 698.) The failure of naproxen as a viable class-wide comparator thus defeats the claim for class-wide restitution. The trial court concluded that whether any particular plaintiff’s loss can be measured by the difference in price between Vioxx and generic naproxen depends on issues specific to that individual plaintiff. The evidence supports the trial court’s conclusion in this regard. Even if plaintiffs establish, class-wide, that Merck misrepresented the cardiovascular risks of Vioxx in a manner that was likely to deceive plaintiffs and their prescribing physicians, no plaintiff would be able to recover without first identifying a proper comparator drug, the cost of which would provide the actual value to the patient of the Vioxx received. As the trial court concluded, on the evidence, that the issue of a proper comparator was a patient-specific issue, incorporating the patient’s medical history, treatment needs, and drug interactions, the trial court properly concluded that restitution could not be calculated on a class-wide basis.
See Slip Opinion, at 27-28.

However, the Court’s opinion also confirmed that a plaintiff is not required to affirmatively prove the actual amount of restitution available to each individual class member on a common basis:
Although the trial court also mentioned that there was no class-wide evidence of the price paid for Vioxx, we agree with plaintiffs that the actual amounts paid could likely be resolved in a claims process. The trial court’s “[o]verarching[]” concern was that there was no evidence that any particular NSAID would be a proper comparator for each class member.
See Slip Opinion, at 28 n.23.

The Court’s analysis is very dense, and likely will take some time to fully unpack. I will likely provide posts in the coming days examining the Court’s opinion further, including the Court’s analysis concerning the plaintiff’s challenge to typicality.

Tuesday, December 15, 2009

Second District Upholds Denial of Certification in In Re Vioxx Class Cases

On December 15, 2009, the Second District (Division 3) upheld the trial court's denial of class certification in In Re Vioxx Class Cases, __ Cal.App. 4th __ (2009).  In that case, the plaintiffs sought recovery, on behalf of all persons and entities in California who paid for Vioxx, of the difference in price between what they paid for Vioxx and what they would have paid for a safer, equally effective, pain reliever. The plaintiff’s theory alleged that Merck knew about the dangers of Vioxx but engaged in a campaign to hide or explain away those risks, and pursued causes of action under the UCL, the FAL the CLRA, and unjust enrichment.

Plaintiffs appeal asserted that the Supreme Court’s decision in In re Tobacco II Cases, 46 Cal.4th 298 (2009), undermined the trial court’s rationale. The Second District disagreed, concluding that “the trial court’s ultimate decision is consistent with Tobacco II, and is supported by substantial evidence.”

As to Plaintiffs’ claims under the UCL and FAL, one issue on appeal concerned the trial court’s conclusion that the plaintiff’s restitutionary theory was not amenable to class-wide adjudication:
The [trial] court concluded that the monetary value plaintiffs wish to assign to their claim – the difference in price between Vioxx and a generic, non-specific NSAID, implicates a patient-specific inquiry and therefore fails the community of interest test. In short, the trial court rejected the entire premise of plaintiffs’ class action. While the trial court allowed the possibility that plaintiffs could recover for having been exposed to misrepresentations, the trial court concluded that the theory that the entire class was harmed because Vioxx was no more effective, and less safe, than naproxen implicated individual issues of proof.
See Slip Opinion, at 24-25.

Plaintiffs mounted a two-pronged challenge to the trial court’s conclusions – neither were successful.

First, plaintiffs argued that the trial court abused its discretion by rejecting their factual evidence establishing that naproxen was a valid comparator to Vioxx. See id., at 25. The Court disagreed, concluding that the trial court’s findings were sufficiently grounded by evidence in the record:
The trial court did not err in rejecting naproxen as a valid class-wide comparator. Defendants introduced substantial evidence that, after Vioxx was withdrawn from the market, most Vioxx patients switched to another COX-2 inhibitor, not a generic NSAID such as naproxen. As this evidence indicates that Vioxx was worth more than naproxen to a majority of class members, it is more than sufficient to support the trial court’s conclusion that naproxen is not a valid comparator on a class-wide basis.
See Slip Opinion, at 25-26.

Second, plaintiffs asserted that the validity of naproxen as a comparator goes to the merits of the action, and as such, the trial court erred by resolving this issue within the confines of the certification motion. See id., at 26. The plaintiffs reasoned that “since the UCL and FAL allow an award of restitution without individualized proof of deception, reliance and injury, the trial court should not have been considering the validity of naproxen as a comparator.” See id. The Court rejected this argument, reasoning that the trial court acted within its discretion by evaluating whether the plaintiff’s restitutionary theory was capable of commonly impacting the class as a whole:
We do not disagree that a trial court has discretion to order restitution even in the absence of individualized proof of injury. (Fletcher v. Security Pacific National Bank, supra, 23 Cal.3d at p. 452.) However, in order to obtain class wide restitution under the UCL, plaintiffs need establish not only a misrepresentation that was likely to deceive (Corbett v. Superior Court, supra, 101 Cal.App.4th 649, 670) but the existence of a “measurable amount” of restitution, supported by the evidence. (Colgan v. Leatherman Tool Group, Inc., supra, 135 Cal.App.4th at p. 698.) The failure of naproxen as a viable class-wide comparator thus defeats the claim for class-wide restitution. The trial court concluded that whether any particular plaintiff’s loss can be measured by the difference in price between Vioxx and generic naproxen depends on issues specific to that individual plaintiff. The evidence supports the trial court’s conclusion in this regard. Even if plaintiffs establish, class-wide, that Merck misrepresented the cardiovascular risks of Vioxx in a manner that was likely to deceive plaintiffs and their prescribing physicians, no plaintiff would be able to recover without first identifying a proper comparator drug, the cost of which would provide the actual value to the patient of the Vioxx received. As the trial court concluded, on the evidence, that the issue of a proper comparator was a patient-specific issue, incorporating the patient’s medical history, treatment needs, and drug interactions, the trial court properly concluded that restitution could not be calculated on a class-wide basis.
See Slip Opinion, at 27-28.

Monday, December 14, 2009

District Court Grants Plaintiff’s Application to Relinquish Supplemental Jurisdiction By Finding Individual Issues will Predominate on Plaintiff’s State Law Wage Claims: Weltman v. Ortho Mattress

On December 10, 2009, Judge Jeffrey T. Miller of the Southern District of California entered an interesting order in response to the plaintiff’s request to relinquish supplemental jurisdiction over state law wage claims in Weltman v. Ortho Mattress, 2009 U.S. Dist. LEXIS 115178 (S.D. Cal. Dec. 10, 2009).

In that case, the plaintiff filed a federal action that asserted federal question jurisdiction based upon an alleged violation of the FLSA, and supplemental jurisdiction pursuant to 28 U.S.C. § 1367 over seven state law causes of action. See id., at 2. Thereafter, plaintiff filed a motion seeking certification of the seven law state claims on a class-wide basis, leaving the federal FLSA misclassification claim out of the mix to be pursued on an individual basis. See id., at 4. In conjunction with filing a motion for class certification, however, plaintiff also filed an ex parte application to have the court relent its supplemental jurisdiction over the state law class claims so that plaintiff’s state-law claims could be pursued in state court. See id., at 1, 10-11 (“Plaintiff's counsel requested that Plaintiff be permitted to pursue his state claims in state court and that the court decline to exercise jurisdiction over the state claims.”).

In resolving the jurisdictional issue, the Court conducted an analysis of the issues posed by certification of plaintiff’s state-wide claims, concluding that individualized issues would likely predominate. See id., at 7-8 (“With respect to class-wide treatment of Plaintiff's state law claims, the court concludes that individualized issues seriously undermine the viability of the class action procedure.”). The Court thereafter used that determination as a basis to find that adjudication of the pendent state-law claims would predominate over the individual FLSA claim. See id., at 9 (“These individualized proof determinations – all involving state law class claims – would likely predominate over Plaintiff's single federal claim.”). Based this determination, the court concluded that supplemental jurisdiction was lacking:
Here, the court declines to exercise supplemental jurisdiction over the state law class claims because the state law claims substantially predominate over the relatively straight-forward FLSA claim. The anticipated economies and convenience anticipated by the class action device do not apply under the circumstances given the individualized determinations required to assess the state law class claims. See Executive Software, 24 F.3d at 1555-57. Further, the state law claims implicate no federal interest yet California courts have a strong interest in enforcing state law labor claims, like those asserted by Plaintiff herein.
See Weltman, 2009 U.S. Dist. LEXIS 115178, at 10.

Not apparent within the opinion are plaintiff counsel's justifications for initially bringing the combination FLSA/State law action, and subsequent decision to limit the FLSA claim to plaintiff only.  While the Court's preliminary conclusions regarding predominance are likely not binding, a plaintiff confronted by such a scenario may have more efficient methods to resolve this issue – such as dismissing the plaintiff's individual FLSA claim.

Saturday, December 12, 2009

District Court Grants Summary Judgment on Prop 64 Standing Issue in Baghdasarian v. Amazon

On December 9, 2009, Judge Andrew J. Guilford of the Central District of California granted defendant Amazon.com Inc.’s motion for summary judgment on the issue of Proposition 64 standing in Baghdasarian v. Amazon, 2009 U.S. Dist. LEXIS 115265 (C.D. Cal. Dec. 9, 2009). As one may recall, the plaintiff in this action previously obtained certification of his UCL claim, in part, based upon Tobacco II's ruling concerning the inapplicability of the element of reliance to absent class members (see previouse post here).  Here, however, the Court granted dismissal based on another aspect of Tobacco II – the requirement that the named plaintiff establish actual reliance to maintain standing to prosecute a UCL claim.

As a threshold matter, the Court considered plaintiff’s argument that the “law of the case” doctrine precluded the Court from revisiting the Court’s ruling on the issue of plaintiff standing contained in its order granting class certification. The Court rejected this argument, asserting that plaintiff conflated the distinction between class certification, a procedural devise which precludes consideration of the merits, and summary judgment:
Plaintiff's argument ignores the difference between the procedural stages of class certification and summary judgment. Cf. Central Valley Water Agency v. United States of America, 327 F. Supp. 2d 1180, 1212 (E.D. Cal. 2004) (holding that a ruling on a pleading motion was not law of the case establishing that the plaintiffs had suffered actual injury for the purpose of a summary judgment motion). At the class certification stage, Plaintiff must make certain allegations concerning standing. Now, to survive summary judgment, Plaintiff must establish certain facts. So while the Court previously held that Plaintiff had standing for class certification purposes, the earlier holding does not automatically extend to the summary judgment stage.
See Baghdasarian, 2009 U.S. Dist. LEXIS 115265, at 9-10.

The Court thereafter considered the factual merits of the standing issue, concluding that “[p]laintiff's own deposition testimony establishes that Plaintiff cannot show actual reliance.” See id., at 12. As reasoned by the Court, the plaintiff admitted at deposition that he would have purchased items from Amazon notwithstanding the alleged hidden shipping fees – a fact that served to undermine the materiality of the challenged promotions to plaintiff, and with it, the presumption of reliance:
Plaintiff here cannot take advantage of a presumption or inference of reliance. In this case, Plaintiff's own deposition testimony undermines his own claims, showing that he did not actually rely on Defendant's statements. Plaintiff admits that the alleged misrepresentation was not an influential factor in his decision to buy from the marketplace. He testified, "[i]t's not that if they had told me of the fees . . . I would have never bought something from Amazon. But the fact that they hid it . . . kind of turned me off . . . ." (Baghdasarian Depo. 32:12-17.)
See Baghdasarian, 2009 U.S. Dist. LEXIS 115265, at 15.

In addition, the Court further reasoned that the plaintiff had failed to provide evidence sufficient “to establish that Defendant's shipping and handling policy was a substantial factor in influencing Plaintiff's decision to buy products on Amazon Marketplace”:
The full extent of Plaintiff's evidence on the point is found in one paragraph in his Declaration. The Baghdasarian Declaration states that Plaintiff “relied on the fact that the shipping and handling fee would be passed on in full to the marketplace seller in order to offset the seller's cost of shipping and handling,” (Baghdasarian Decl. P 2.) This statement is insufficient to establish that Defendant's shipping and handling policy was a substantial factor in influencing Plaintiff's decision to buy products on Amazon Marketplace.
Plaintiff also points out that he stopped buying items from Amazon Marketplace after he learned about Defendant's shipping policy. But this does not link Defendant's shipping policy with Plaintiff's injury.
See Baghdasarian, 2009 U.S. Dist. LEXIS 115265, 15-16.

Based on such evidence, the Court concluded that standing was lacking because “[p]laintiff does not show that he would have declined to enter into the transactions in the absence of the shipping policy. See id., at 16-17.

The Court’s decision, however, is silent as to what will occur with regard to the certified class. This consideration is an important one, as Rule 23(d) vests a district court with a duty to protect the interests and rights of class members.  See Hanlon v. Chrysler Corp., 150 F.3d 1011, 1025 (9th Cir.,1998).

One option would be to allow class counsel to substitute a new class representative. As held by the California Supreme Court, when “in light of Proposition 64, the named representatives are no longer adequate representatives of the class because they lack standing, the proper procedure would not be to decertify the class but grant leave to amend to redefine the class or add a new class representative.” See In re Tobacco II Cases, 46 Cal. 4th 298, 328 (2009). As held by at least one district Court “these cases demonstrate that leave to substitute a different class representative may be granted when there is a certified class already in place.” See Sanchez v. Wal Mart Stores, Inc., 2009 U.S. Dist. LEXIS 89057, 8-9 (E.D. Cal. Sept. 11, 2009).

However, knocking out the named plaintiff cannot be worked into a scenario where the defendant achieves a judgment that will be res judicata as to the class as a whole. Issues relating to Prop 64 standing only impact the claims of the named plaintiff, as the Court itself acknowledged in its Order certifying the class:
Proposition 64 did not determine whether a plaintiff who has standing under the UCL must also show reliance by each class member. The California Supreme Court recently addressed this issue in the Tobacco II Cases. The California Supreme Court concluded that "standing requirements are applicable only to the class representatives, and not all absent class members." In re Tobacco II Cases, 46 Cal. 4th 298, 306, 93 Cal. Rptr. 3d 559, 207 P.3d 20 (Cal. 2009). Thus, Plaintiff does not need to show affirmative proof that each individual class member relied on Defendant's deceptive conduct.
See Baghdasarian v. Amazon.Com, Inc., 258 F.R.D. 383, 387 (C.D. Cal. 2009).

Moreover, under the present circumstances, decertification cannot be worked into a scenario where a subsequent action, on behalf of the very same class, would be collaterally estopped from availing itself of the class mechanism. See In re Bridgestone/Firestone, Tires Prods. Liab. Litig., 333 F.3d 763, 768 (7th Cir., 2003) (“A decision with respect to the class is conclusive only if the absent members were adequately represented by the named litigants….”).

Thus, considering the advanced stages of the proceedings, and the amount of time and effort invested by the Court, parties and counsel, allowing leave to find a substitute representative would seem to be the most prudent approach.

Friday, December 4, 2009

Second District Upholds Order Decertifying Misclassification Class in Keller v. Tuesday Morning, Inc.

On December 4, 2009, the Second District (Division 6) issued an opinion upholding the trial court’s Order decertifying a manager misclassification class in Keller v. Tuesday Morning, Inc., __ Cal. App. 4th __ (2009). The thrust of the Court’s analysis – which relied heavily on previous decisions in Walsh v. IKON Office Solutions, Inc, 148 Cal. App. 4th 1440 (2007) and Dunbar v. Albertson's Inc., 141 Cal. App. 4th 1422 (2006) – turned on a failure of predominance due to variances in manager's duties from store to store.  The Court concluded that there was no abuse of discretion, as substantial evidence supported the trial court's conclusion that individualized issues of liability and damages would predominate over issues common to the class if the overtime claims were tried as a class action:
Here, the record contained the declarations of four managers, TM's expert, its Vice-president of Store Operations, and five of TM's attorneys. All asserted in detail the wide disparity in store location, size, configuration, management duties and styles. They also established that managers routinely exercise their independent judgment. In his written ruling, Judge Munoz noted the varying characteristics of the stores and identified matters he believed were susceptible to class-wide proof (mandated management policies) and those that were individual inquiries (time spent performing exempt duties and exercising discretion). The court observed that the managers, who filed declarations for the class, were impeached by their deposition testimony. This was a comment on the nature of the evidence, and did not constitute a consideration of the case on the merits, or a determination of witness credibility.
Slip Opinion, at 10-11.

Thursday, December 3, 2009

Trial Court’s Class Certification Order in the Complete ® Cases

I have managed to obtain a copy of Orange County Superior Court Judge David C. Velasquez’s class certification Order in the Complete ® Cases. As previously reported by The National Law Journal, the Court certified a broad UCL restitutionary class consisting of all California consumers who purchased Complete MoisturePlus contact lens solution after 2003 based on alleged deceptive marketing practices.  The Court's order may be found here.

Wednesday, December 2, 2009

Southern District Rules That a Retailer’s Refusal to Cash Out Gift Cards Is Not An Unlawful Business Practice Under California Law: Rudd v. Borders, Inc.

On November 24, 2009, Judge Barry Ted Moskowitz of the Southern District granted defendant Borders’s motion to dismiss a proposed gift card class action in Rudd v. Borders, Inc., 2009 U.S. Dist. LEXIS 110064 (S.D. Cal. Nov. 24, 2009). The plaintiff’s proposed action challenged an express limitation provision contained on Borders’ gift cards stating that the gift card was “not returnable or redeemable for cash.” Plaintiff’s complaint alleged that this provision was unlawful under California Civil Code Section 1749.5(b)(1), which provides that “[a]ny gift certificate sold after January 1, 1997 is redeemable in cash for its cash value, or subject to replacement with a new gift certificate at no cost to the purchaser or holder.” The Court disagreed.

The Court reasoned that Civil Code § 1448 – which states that “[i]f an obligation requires the performance of one of two acts, in the alternative, the party required to perform has the right of selection, unless it is otherwise provided by the terms of the obligation” – requires that Section 1749.5(b)(1) be read as providing retailers “the option of choosing whether to redeem a gift card for cash or provide a new card to the customer.” See id., at 6-7. The Court further reasoned that plaintiff’s construction would render superfluous 2007 amendments to Section 1749.5 (b)(2), providing that “’[n]otwithstanding paragraph (b)(1), any gift certificate with a cash value of less than ten dollars ($ 10) is redeemable in cash for its cash value.’” See id., at 9-10.

Rudd is an important decision to remember in this holiday season, as it confirms once and for all that nothing says I love you more than cash (even Borders agrees, they don’t want the gift card either).