Cal Biz Lit

Proposition 65 Primer: Three Views

I’ve been wanting to write an extensive post about California’s Proposition 65 ever since starting this blog, and so far have not been able to sufficiently check my cynicism at the door or find the time. But I’m going to give it a try now. Please remember, this blog is designed for businesses, and their lawyers, who aren’t so fortunate as to be involved in California litigation every day—i.e., readers for whom our mysterious litigation ways are a rare and strange adventure. So if you’re located in this state, or practice law here, your reaction to what comes next may be “so what?” or, if you favor the consumer side of things “so what’s wrong with that?”  If you’re part of the Proposition 65 Bar, on either side, you’ll not hear or learn anything new here.

For the rest of you, come with me for a tour on one of the strangest environmental protection schemes ever devised.

More after the jump

Fishing for Class Representatives -- Maybe Not a Good Idea

Today's Wall Street Journal Law Blog reports things went badly for Southern California's Westrup Klick when it tried to get a class certified against Oreck Direct, the vacuum cleaner folks.  Judge Marilyn Patel of the Northern District denied certification under Rule 23, and had some choice words for the Westrup Klick office:

“In short, the conduct in this action does not look good, does not sound good, and does not smell good. In fact, it reeks. The court will not participate in this scheme by certifying a class.”

But wait, there's more:

"Furthermore, the Westrup Klick firm has had trouble regarding its choice of plaintiffs in the past. See Apple Computer, Inc. v. Superior Court, 126 Cal.App. 4th 1253 (2005) (disqualifying the Westrup Klick firm from a class action case where it was established that, “from 2003 to 2005, Westrup Klick and [another firm] had jointly filed 10 class actions under [California’s Unfair Competition Law] in which an attorney from Westrup Klick or a relative of one of the attorneys was the named plaintiff”). The latest filing is just one more example of plaintiff’s counsel’s improper approach to consumer litigation."

And then, there's this:

"Indeed, counsel himself admitted at the hearing that he or his firm had the research performed on the product at issue and had a theory about the product’s deficiencies. Then, armed with that information they went in search of a plaintiff, never mind the lack of a fitting plaintiff or the lack of ethical scruples. The instant action is nothing more than Westrup, Klick bringing its show to the Northern District and continuing its practice of selecting stand-in plaintiffs, even ones who are inappropriate.. To grant class certification in such circumstances would be to place this court’s imprimatur on litigation practices which it finds abhorrent and inconsistent with the standards of federal class action suits."

Ah come on, Judge Patel.  Why don't you tell us what you really think?  The entire opinion is here.

What Does American Business Think About the Golden State?

The US Chamber of Commerce's Institute for Legal Reform is out with its annual state-by-state rankings of "state liability systems."  I'm not sure this is the right name for it -- it's more a combination of rankings of systems, the players (i.e., judges and juries) and outcomes.  Nonetheless, it will come as no surprise that California doesn't fair well in the eyes of in-house counsel.  Overall, California ranked sixth worst (or 45th best, depending on your level of optimism), ahead of only Illinois, Alabama, Louisiana, Mississippi and West Virginia. 

More after the jump.

Legislative Response to Murphy v. Kenneth Cole?

Four days after the Cal Supremes' decision in Murphy v. Kenneth Cole Productions, Inc., Storm's California Employment Law suggests that something may be afoot in the legislature on the meal and rest break front -- even a change in the statute of limitations.

Another Win For The Defense On Discovery For Substitute Class Representatives

    This is kind of inside class action baseball, but it is potentially very important for companies still defending UCL (Business and Professions Code sections 17200, et seq.)  cases in this post-Proposition 64  world.  In January, I blogged about First American Title Insurance Company v. Superior Court (2007) 146 Cal.App.4th 1564, 53 Cal.Rptr.3d 734. This was a class action where the plaintiff turned out not to be a member of the class he wanted to represent.  He sought an order allowing precertification discovery so he (or his lawyers, actually) could find a better class representative.  Say, for example, omeone who could meet the requirements of class membership, let alone typicality.  And the Court of Appeal said “no” – that would be an abuse of the class action process.  Not surprisingly, there has been a petition for review by the Cal Supremes, and a couple of requests for depublication (which would, if granted, make the decision non-binding except as to the parties).  So we still don’t know what the disposition of this will be.

    But in the meantime, another Court of Appeal has issued an even broader discovery decision, this time in a UCL case.  The case is Cryoport Systems v. CNA Insurance Companies, G037056.  The case was decided in mid-March, but the Court decided to publish it on April 10.  Although the facts and procedural history are odd, the defense has a pretty good argument from this case that a UCL plaintiff who lost standing as a result of Proposition 64 can’t conduct discovery to find a plaintiff who sustained injury in fact or lost money or property, as the UCL now requires.

More after the jump

Fireside Bank And Class Certification – The Other Half Of The Story

    There’s been some on-line analysis of the Cal Supremes decision Tuesday in Fireside Bank v. Superior Court, S139171 (see:  Wage Law, Legal Pad).  The case stands for the proposition that in the absence of special circumstances, defendants are entitled to have a hearing on class certification (and plaintiffs to decertification proceedings) before any merits based determinations.  This makes sense;  otherwise,  for example, defendants can win a case on the merits as to one proposed class representative only to have another file the same case.  This is called “one way intervention,” or “being pecked to death by ducks.”  Premier Electrical Construction Co. v. National Electrical Contractors Assn., Inc. (7th Cir. 1987) 814 F.2d 358, 362.

     The Cal Supremes are supposed to grant petitions for hearing in civil cases only in limited instances, most commonly to “secure uniformity of decision or to settle an important question of law,” (CRC 8.500(b)(1)), and not to correct error (for that, it depublishes Court of Appeal decisions).  So I was a little surprised they took this up.  The same thing was essentially decided by the same court in Green v. Obledo (1981) 29 Cal.3d 126, and before that by the Court of Appeal in Home Savings and Loan Association v. Superior Court (1974) 42 Cal.App.3d 1006 and Home Savings and Loan Association v. Superior Court (1976) 54 Cal.App.3d 208.

    But buried deep in the opinion is another hit to typical defense positions on the role of the merits in deciding class matters.  Traditionally, defendants will argue that a class is not certifiable if its membership can only be determined by looking at the merits.  This was the holding in the Court of Appeals decision in Sony Electronics v. Superior Court, which, unfortunately, the Supreme Court depublished (meaning it loses its precedential value) last month. 

    On page 26 of the slip opinion of Fireside Bank, the Court held “’whether the claims or defenses of the representative plaintiffs are typical of class claims or defenses’ was an issue that might necessarily be intertwined with the merits of the case, but which a court considering certification necessarily could and should consider.”  (Citing Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429.)

And Now, to Go Completely Off Topic. . . . . .

I read the Wall Street Journal's Law Blog every day, and it occasionally features "Today's YouTube Viewing," just about always completely off topic.  So, what the heck, why not at CalBizLit as well.  Saw Willie Nelson last night.  Absolutely the best.  So for your Thursday, here's Poncho and Lefty.

How to Get in Lots and Lots of Hot Water as an Employer in California

I’m not going to do an in depth analysis of yesterday’s Cal Supremes decision in Murphy v. Kenneth Cole Productions, Inc., S140308.  There’s plenty of other bloggers covering that territory in depth, including The UCL Practitioner and the often  excellent Wage Law , which has a very insightful  list of all the ways this is a win for employees and a loss for employers.  Non-exempt California employees are generally entitled to a thirty minute lunch break (which need not be paid)  and two ten minute rest breaks during a typical work day.  If the employer fails to provide either of these, then under Labor Code section 226.7 it owes the employee “one additional hour of pay” each time a lunch or rest break is missed.

The Murphy decision holds, in a nutshell, that there is a three year statute of limitations (the employer argued for a one year) for the “one additional hour of pay” that a California employer must shell out every time it fails to provide a lunch break or rest period. This means that an employee who sues for the additional hour of pay can recover three-years’ worth, not one. 

What’s interesting for out-of-state companies doing business in the Golden State is how the defendant Kenneth Cole Productions managed to do just about everything an employer can do wrong if it wants  a great big wage and hour case target on its back:

• Made sales people into “managers” to try to avoid overtime laws (although this “manager” sold product, was the receiving clerk;  processed markdowns and cleaned up the store);

• Had the “manager work through lunch nine days out of ten;

• Had him work from 8:30 or 9:00 a.m. to after 6:00 p.m., with no overtime, of course;

• Had the poor guy working without rest brakes, and sometimes with nobody to cover for him so he could go to the rest room;

• Failed to include the statutorily required pay stub information about hours worked, amounts paid, etc.;  and

• As icing on the cake, saw fit to appeal an adverse Labor Commissioner’s decision, whereupon the plaintiff got the Hastings Law School Civil Justice Clinic   to take on his case, and things got much, much worse.

Court Allows Discovery of Names and Addresses of Class Members in Wage and Hour Cases

The Second District Court of Appeal in Los Angeles has applied the Supreme Court’s Pioneer Electronics decision to wage and hour cases, seemingly eliminating any possibility that this opportunity for class counsel to go client-fishing would be limited to consumer cases.  I blogged on Pioneer Electronics here, and there was a good deal of other commentary on it in January.  Essentially, the Cal Supremes held in Pioneer Electronics that the trial court did not abuse its discretion by ordering the defendant to provide customer contact information to class counsel as to all customers who failed to respond to an “opt-out notice.” 

Now, in Belaire-West Landscape, Inc. v. Superior Court, No. B194844,  the Court of Appeal has held that there is even more reason to allow this disclosure in a wage and hour case, that the disclosure did not involve a “serious invasion of privacy,” and that even if it did, the balancing of interests would favor disclosure.  “Disclosure of the contact information with an opt-out notice would not appear to unduly compromise either informational privacy or autonomy privacy . . . .”  UCL Practitioner comments from the plaintiff perspective here.