Wednesday, February 24, 2010

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.

Tuesday, February 23, 2010

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.

Monday, February 22, 2010

California Supreme Court Limits Reach of Labor Code Section 233 in McCarther v. Pacific Telesis Group

On February 18, 2010, the California Supreme Court concluded in McCarther v. Pacific Telesis Group, __ Cal. 4th __ (2010), that Labor Code section 233 does not apply to paid sick leave policies that provide for an uncapped number of compensated days off.

Section 233 provides, in relevant part, that an employee may use up to ½ of the employee’s accrued compensated sick leave to care for a family member:
Any employer who provides sick leave for employees shall permit an employee to use in any calendar year the employee's accrued and available sick leave entitlement, in an amount not less than the sick leave that would be accrued during six months at the employee's then current rate of entitlement, to attend to an illness of a child, parent, spouse, or domestic partner of the employee.
See Cal. Lab. Code § 233.

As reasoned by the Court, permitting Section 233 to be applied in instances where an employer utilizes a policy affording an unlimited number of compensated sick-days would lead to absurd results, especially where the employer seeks to regulate uncapped sick leave by way of an attendance policy (as this would be prohibited in the family leave context by Section 234):
Our conclusion that the Legislature did not intend section 233 to apply to a sickness absence policy like defendants’ is supported by the Legislature’s addition to the Labor Code of section 234, which prohibits employers from using an absence control policy to “count[] sick leave taken pursuant to Section 233 as an absence that may lead to or result in discipline, discharge, demotion, or suspension … .” As noted above, the only limitation on the amount of compensated time off an ill employee may claim under defendants’ sickness absence policy is defendants’ attendance management policy, which provides a schedule of progressive discipline if an employee is absent eight days or more in a year. Without this limitation, an ill employee could claim an unlimited number of compensated sick days, provided the employee returned to work for at least part of a day every week.
If section 233 required defendants to permit an employee to use a portion of this compensated time for kin care, section 234, by its terms, would prohibit defendants from using its attendance management policy to limit the amount of kin care that an employee could claim. Thus, rather than being entitled to use for kin care half of the amount of compensated time the employee could use as sick time, sections 233 and 234 together would permit an employee to claim as kin care far more compensated time off than the employee would be entitled to claim if personally ill. Such a result would be contrary to the plain intent of section 233, which requires only those employers who provide sick leave in accrued increments to permit employees to use half of that annually accrued amount for kin care.
See Slip Opinion, at 9-10.

Wednesday, February 17, 2010

Northern District Denies Motion to Decertify in Otsuka v. Polo Ralph Lauren Corp.

On January 25, 2010, Northern District Judge Susan Illston denied a motion to decertify waiting time claims of approximately 6000 former California employees of Polo brand stores in Otsuka v. Polo Ralph Lauren Corp., 2010 U.S. Dist. LEXIS 12867 (N.D. Cal. Jan. 25, 2010). The certified claim arose from Polo’s policy requiring cashiers and sales employees undergo an on-camera bag inspection after clocking out at the end of their shift. Defendant Polo sought decertification on two grounds – both unsuccessful.

First, Polo claimed that predominance was defeated based on class member responses to a survey which reflected wait times of anywhere between zero and sixty minutes. See id., at 14. Polo claimed that such evidence demonstrated adjudication of claims would require individualized inquiry, not only with regard to each individual class member’s experience, but in the application of Polo's inspection policy at any given store. See id., at 14-15. The Court disagreed, reasoning that Polo’s arguments in this regard had already been considered and deemed insufficient to overcome a finding of predominance:
In the Court's view, neither of these facts justifies decertification of the waiting time class. The Court has already rejected Polo's contention that variations in the specific amounts of class members' wait times defeats commonality. The Court observed that, regardless of differences in amounts of time, "the most significant questions [are] . . . whether plaintiffs were made to wait for inspections without compensation and whether this off-the-clock time is compensable, questions that are common to all class members." July 8, 2008 Order at *11. Moreover, as the Court has likewise already observed, to the extent that "application of the de minimis rule might require inquiries into the individual experiences of class members, these individual questions will arise only after significant common questions of law and fact have been answered, and may not arise at all in the liability context." Id.
The Court also rejects Polo's contention that variations among Polo stores warrant decertification of the waiting time claims. Polo does not dispute that it maintains a uniform policy requiring employees to submit to bag searches, or that it does not compensate employees for time spent waiting for these searches. Differences in the size and layout of each store, or the timing of class members' shifts, will only affect damages, rather than Polo's liability. Accordingly, the Court DENIES Polo's motion to decertify the waiting time claims on the basis of new facts.
See Otsuka, 2010 U.S. Dist. LEXIS 12867, at 15-17.

Second, Polo claimed that decertification was warranted because many of the class members reported waiting times of ten minutes or less, and as a result, would not be entitled to recover in light of the Ninth Circuit’s decision in Rutti v. Lojack Corp., 578 F.3d 1084 (9th Cir. 2009), establishing that periods of ten minutes or less are de minimis. The Court rejected this argument as well, reasoning that Polo failed to appreciate the common nature which such issues posed:
Under federal law, "employees cannot recover for otherwise compensable time if it is de minimis." Lindow v. United States, 738 F.2d 1057, 1062 (9th Cir. 1984). According to Polo, the most recent case dealing with the de minimis exception, Rutti v. Lojack Corp., 578 F.3d 1084 (9th Cir. 2009), establishes that, in general, periods of ten minutes or less are de minimis and therefore cannot give rise to recovery. Polo asserts that because many of the class members surveyed reported waiting times of ten minutes or less, the Court should decertify the claim. Once again, however, Polo has failed to persuasively rebut the conclusions reached in the Court's certification order. As the Court noted in that order, even if defendants are correct that federal de minimis standards apply to plaintiffs' California claims, application of those standards will still require resolution of a number of significant common legal questions, including "(1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work." Lindow, 738 F.2d at 1063. Therefore, Rutti does not justify decertification of the waiting time claims.
Otsuka, 2010 U.S. Dist. LEXIS 12867, at 17-18.

Friday, February 12, 2010

Ninth Circuit Rules Against Class in Constitutional Challenge to County Strip Search Policy: Bull v. City & County of San Francisco

On January 26, 2010, I reported on a district court opinion in Jaegel v. County of Alameda, 2010 U.S. Dist. LEXIS 5125 (N.D. Cal. Jan. 22, 2010), wherein the plaintiffs sought certification of claims arising out of a strip search policy maintained as part of booking procedures at the Alameda County Jail (prior post located here). In that case, the district court certified plaintiff’s Section 1983 claim, but declined to certify statutory claims predicated upon California Penal Code § 4030. On February 9, 2010, the Ninth Circuit considered the merits of a similar class-wide challenge to San Francisco County's strip search policy in Bull v. City & County of San Francisco, 2010 U.S. App. LEXIS 2684, 47-48 (9th Cir. Cal. Feb. 9, 2010).  In that case, the Ninth Circuit reversed the district court’s summary judgment ruling which found the policy unconstitutional.

In reaching its decision, the Bull Court overruled prior panel decisions, developing a new standard for evaluating the reasonableness of a strip search policy:
We agree with the reasoning of the Eleventh Circuit that the rights of arrestees placed in custodial housing with the general jail population "are not violated by a policy or practice of strip searching each one of them as part of the booking process, provided that the searches are no more intrusive on privacy interests than those upheld in the Bell case," and the searches are "not conducted in an abusive manner." Powell, 541 F.3d at 1314; cf. Archuleta v. Wagner, 523 F.3d 1278, 1284 (10th Cir. 2008) (upholding searches of arrestees intermingled with general population of a corrections facility, but not those awaiting bail, and stating that when an arrestee is kept in a holding cell the "obvious security concerns inherent in a situation where the detainee will be placed in the general prison population are simply not apparent"). We therefore overrule our own panel opinions in Thompson and Giles.
Bull, 2010 U.S. App. LEXIS 2684, at 47-48.

Based on this new standard, the Court found the San Francisco policy facially reasonable under the Fourth Amendment:
In light of governing Supreme Court precedent, and given the circumstances presented here, we conclude that San Francisco's policy requiring strip searches of all arrestees classified for custodial housing in the general population was facially reasonable under the Fourth Amendment, notwithstanding the lack of individualized reasonable suspicion as to the individuals searched. Because the policy did not violate plaintiffs' Fourth Amendment rights, we reverse the district court's denial of Sheriff Hennessey's motion for summary judgment based on qualified immunity, and in doing so necessarily reverse the district court's grant of plaintiffs' motion for partial summary judgment as to Fourth Amendment liability.
Bull, 2010 U.S. App. LEXIS 2684, at 52-53.

Importantly, the Court’s decision does not impact whether such policy violated California Penal Code § 4030, which the Court noted was not before the Court. Id., at12, n.5

Wednesday, February 10, 2010

California Supreme Court Denies Petition for Review/Request to Depublish Cohen v. DIRECTV

On February 10, 2010, the California Supreme Court issued a ruling denying review and depublication of the decision in Cohen v. DIRECTV, 178 Cal.App.4th 966 (2009). The Court’s ruling comes on the heels of a modification of the opinion in Steroid Hormone Product Cases (previously discussed here) in which the Second District, Division Four, overtly stated disagreement with Cohen's conclusion that a trial court may properly consider absent class member reliance when evaluating whether to certify a UCL claim under the fraudulent prong.

A Few More Points on the Second District’s Opinion in Jaimez v. DAIOHS USA, Inc.

In a previous post (here) I focused on the Court's overarching analysis regarding predominance and the propriety of focusing individualized merits-based declaration testimony rather than plaintiff’s theory of recovery. However, there are a few other aspects of the Jaimez opinion worth noting.

In holding that the trial court applied improper criteria with regard to plaintiff’s rest period claims, the Court concluded that plaintiff’s theory of liability – which alleged that common policies and practices created a “barrier” to employees’ ability to access breaks – created a predominate issue supporting certification notwithstanding declaration evidence that employees sometimes received their breaks. See Slip Opinion, at 20 (concluding that “the predominant common factual issue is whether RSR’s missed meal [sic] breaks because First Choice’s policy and practice of designating delivery schedules and routes precluded RSR’s from timely completing their routes and taking the legally required rest breaks.”) (emphasis added). As the Court’s opinion highlights, a rest period claim based on the theory of a common barrier is distinct from the issue presently pending before the California Supreme Court in Brinker Restaurant Corp. v. Superior Court and Brinkley v. Public Storage, Inc. – both of which concern whether an employer's obligation ends with making meal/rest periods available. Slip Opinion, at 18-19.

With regard to paystub claims, the Court rejected the trial court’s conclusion that individual issues arising from Labor Code § 226(e)’s “injury” requirement defeated a finding of predominance. As explained by the Court, “an employee has a statutory right to an accurate paystub” [See id., at 21], and “[w]hile there must be some injury in order to recover damages, a very modest showing will suffice.” See id., at 22. As reasoned by the Court, injury could be predicated on difficulties reconstructing employee time or pay in the context of the lawsuit itself, but in any event, this was a damages issue that would not overcome a finding of predominance:
As in Wang, supra, 435 F.Supp.2d at p. 1050 “this lawsuit, and the difficulty and expense [Jaimez has] encountered in attempting to reconstruct time and pay records,” may well be “further evidence of the injury” he has suffered. First Choice is correct that, at this point, there does not appear to be any evidence in the record of Jaimez’s injury resulting from inaccurate paystubs. The fact that individualized proof of damages may ultimately be necessary does not mean, however, that Jaimez’s theory of recovery is not amenable to class treatment. A common legal issue predominates the claim, and it makes no sense to resolve it in a piecemeal fashion.
Slip Opinion, at 22-23.

Monday, February 8, 2010

Second District Grants Requests for Publication in Jaimez v. DAIOHS USA, Inc.

On February 8, 2010, the Second District (Division One) granted numerous requests (including one filed by yours truly) to publish its decision in Jaimez v. DAIOHS USA, Inc., __ Cal.App.4th __ (2010). Jaimez is now citeable authority.  Some general discussion of Jaimez may be found at my previous post contained here. I will likely provide some further discussion of the Court’s opinion later.

Second District, Division Four, Disagrees With Division Eight’s Opinion in Cohen v. DIRECTV

On February 8, 2010, the Second District, Division Four, issued a modification of its opinion in Steroid Hormone Product Cases (previously discussed here), to include discussion distinguishing its opinion from prior opinions Cohen v. DIRECTV, Inc., 178 Cal.App.4th 966 (2009) and In re Vioxx Class Cases, 180 Cal.App.4th 116 (2009). Significantly, as reflected by the highlighted discussion below, the Court overtly stated disagreement with the conclusion in Cohen that a trial court may consider absent class member reliance when certifying UCL claim under the fraudulent prong:
In discussing the UCL claim, the appellate court [in Cohen] noted that Tobacco II, supra, 46 Cal.4th 298, was irrelevant to class certification because it addressed only the issue of standing, and did not instruct “our state’s trial courts to dispatch with an examination of commonality when addressing a motion for class certification.” (Cohen, supra, 178 Cal.App.4th at p. 981.) The court then concluded that the trial court’s concern that the plaintiff’s UCL and CLRA claims would involve individual factual issues regarding class members’ reliance on the alleged misrepresentations “was a proper criterion for the court’s consideration when examining ‘commonality’ in the context of the subscribers’ motion for class certification, even after Tobacco II.” (Ibid.)
We agree that Tobacco II did not dispense with the commonality requirement for class certification. But to the extent the appellate court’s opinion might be understood to hold that plaintiffs must show class members’ reliance on the alleged misrepresentations under the UCL, we disagree. As Tobacco II made clear, Proposition 64 did not change the substantive law governing UCL claims, other than the standing requirements for the named plaintiffs, and “before Proposition 64, ‘California courts have repeatedly held that relief under the UCL is available without individualized proof of deception, reliance and injury.’ [Citation.]” (Tobacco II, supra, 46 Cal.4th at p. 326.).
Slip Opinion, at 2.

Ninth Circuit Finds Dell Class Action Waiver Unconscionable in Omstead v. Dell, Inc.

On February 5, 2010, the Ninth Circuit issued an opinion disapproving of the use of class action waivers in Omstead v. Dell, Inc. – a proposed class case alleging that Dell designed, manufactured, and sold defective notebook computers.  The Court’s opinion comes on the heels of a similar opinion in Laster v. AT&T Mobility LLC, discussed here, concluding a class action waiver used by AT&T in connection with a “free phone” sales promotion was unconscionable under California law.

Friday, February 5, 2010

Fourth District Upholds Summary Judgment Against Employer on Administrative Exemption in Pellegrino v. Robert Half International

On January 28, 2010, the Fourth District issued an opinion in Pellegrino V. Robert Half International, Inc., __ Cal.App. 4th __ (2010), upholding a trial court order granting summary judgment in favor of plaintiffs on the administrative exemption. The Court’s opinion contains two noteworthy components.

First, the court held that the trial court did not abuse its discretion in finding that a “limitation on claims” provision contained in plaintiffs’ employment agreements – which shortened the statute of limitations for employment claims to six months – was unenforceable under California law. As reasoned by the Court, “the trial court did not err because plaintiffs’ claims were based on unwaivable and fundamental statutory rights, and the provision drastically shortening to six months the time in which an employee might vindicate such rights violates [Labor Code] section 219 and public policy, and is thus unenforceable.” See Slip Opinion, at 11-27. Such non-waivable rights, in the view of the Court, included the right to overtime compensation [id., at 13-15], Meal and Rest periods [id., at 15-16], itemized wage statements [id., at 16-18], and the right to be paid commissions as wages. Id., at 18-19.

With regard to plaintiffs’ substantive claim, the Court concluded that defendant failed to establish plaintiffs performed work “directly related to the management polices or general business operations” of RHI or its customers – the 3rd element of the administrative exemption:
Here, substantial evidence showed plaintiffs' duties as account executives for RHI were not directly related to management policies because they instead constituted sales work. The evidence presented at trial included the following: (1) at RHI, a direct sale occurred when a candidate was placed with a client; (2) account executives were trained in sales and evaluated on how well they met or exceeded minimum sales production numbers; (3) account executives were primarily responsible for selling the services of RHI's temporary employees to clients; (4) when the account executives were not either soliciting potential clients for sales or placing orders for clients, they were recruiting more candidates for RHI's “inventory,” an activity which consumed about 30 percent of their time; (5) account executives had no role in supervising the temporary employees after they were placed and no responsibility for the administrative support staff in the account executives' offices; (6) account executives did not form policy but followed the “recipe,” including the three-week rotation system in performing their duties as required by headquarters; and (7) corporate headquarters included a human resources department, marketing department, and legal department designed to support the account executives' function—to focus on making sales.
See Slip Opinion, at 42-43

Thursday, February 4, 2010

California Supreme Court Denies Petition for Review in Princess Cruise Lines

On February 3, 2010, the California Supreme Court denied plaintiffs’ petition for review in Princess Cruise Lines, Ltd. v. Superior Court, 179 Cal. App. 4th 36 (2d Dist., 2009).  Princess was one of the first CAP opinions to address Prop 64 standing, and specifically the element of named plaintiff reliance, subsequent to Tobacco II, 46 Cal. 4th 298 (2009).

Princess turned on Tobacco II’s findings that (1) “a presumption, or at least an inference, of reliance arises wherever there is a showing that a misrepresentation was material” [See id., at 327], and (2) that the named plaintiff “is not required to necessarily plead and prove individualized reliance on specific misrepresentations or false statements where … those misrepresentations and false statements were part of an extensive and long-term advertising campaign.” See id., at 327-28. The Princess Court found Tobacco II distinguishable, reasoning that the named plaintiffs could not claim that misrepresentations relating to a sur-charge imposed on certain travel were “material” when they admitted at deposition that they would have booked the subject travel “whatever it cost.” See Princess, 179 Cal. App. 4th at 43-44. Moreover, the CAP concluded that plaintiffs were foreclosed from claiming to have been subject to an “extensive and long-term advertising campaign” by Princess when they admitted at deposition that they had no contact of any kind with Princess prior to embarking on the cruise, and that all representations in question were made, not by Princess, but the travel agent through which they booked the travel. See id., at 44.

Wednesday, February 3, 2010

Los Angeles Superior Court Judge Censured for Order Directing Payment of Class Counsel’s Fees by Way of “Gift Cards”

On February 2, 2010, the California Commission on Judicial Performance issued a decision imposing censure on Judge Brett C. Klein, retired, arising out of Judge Klein’s sua sponte modification of a proposed final order to provide for the payment of $125,000 in attorney's fees in $10 gift cards, and by his action in transmitting the order to the press. A copy of the Commission’s Order is posted here. The Order imposes the strictest of penalties – barring Judge Klein from holding judicial office in the state of California and from receiving an assignment, appointment, or reference of work from any California state court.

Monday, February 1, 2010

Advocate Magazine Dedicates February Edition to Articles on Class Actions and Mass Torts

This month’s edition of Advocate dedicates its entire edition to the subject of class actions and mass torts. There are numerous great articles, including one authored by myself entitled In re Tobacco II Cases almost one year later: A boon for California consumers, or a bust? An electronic edition is available online at the CAALA website here.  My article is contained on pages 52-59.