Mervyn’s Class Action Defense Case-Californians for Disability Rights v. Mervyn’s: California Supreme Court Holds Proposition 64 Applies “Retroactively” To Section 17200 Unfair Competition Law (UCL) Claims

California Supreme Court’s Decision Adds “Standing” to Class Action Defense Arsenal Against UCL Claims Pending at Time of Proposition 64’s Passage

California’s Unfair Competition Law (UCL), California Bus. & Prof. Code, §§ 17200 et seq., was enacted “to protect consumers and competitors” alike from unfair competition in commercial markets for goods and services “by promoting fair competition,” Kasky v. Nike, 27 Cal.4th 939, 949 (Cal. 2002). While government entities may enforce the provisions of the UCL, California law also permits private parties to enforce its terms. Generally, however, the UCL was not intended to provide a means of redressing a personal injury; rather, California’s statutory scheme permits a party on behalf of the public (other consumers or competitors) to enjoin an unlawful or unfair business practice. These so-called “representative actions” are often filed as class actions. The California Supreme Court today resolved the issue of whether Proposition 64, approved in November 2004, applies to cases pending at the time of its passage. Californians for Disability Rights v. Mervyn’s, ___ Cal.4th ___ (Cal. July 24, 2006).

The scope of the UCL is extremely broad. It defines “unfair competition” to “include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code.” The Supreme Court has referred to this as “sweeping language” and declared that it is intended to cover “‘anything that can properly be called a business practice and that at the same time is forbidden by law.'” Bank of the West v. Superior Court, 2 Cal.4th 1254, 1266 (Cal. 1992) (citation omitted). As the court explained, “[i]n essence, an action based on Business and Professions Code section 17200 to redress an unlawful business practice ‘borrows’ violations of other laws and treats these violations, when committed pursuant to business activity, as unlawful practices independently actionable under section 17200 et seq. and subject to the distinct remedies provided thereunder.” Farmers Ins. Exchange v. Superior Court, 2 Cal.4th 377, 383 (Cal. 1992) (citation omitted).

Class Action Court Decisions Class Actions In The News Uncategorized

Federal Court Order Compelling Arbitration And Granting Class Action Defense Motion To Dismiss TILA Case Is Appealable Under FAA And Plaintiff Did Not Meet Burden Of Establishing Prohibitive Cost of Arbitration-Class Action Defense Cases

Green Tree v. Randolph: U.S. Supreme Court Upholds Order Compelling Arbitration Pursuant to Lender’s Arbitration Provision under Federal Arbitration Act (FAA) Because Plaintiff Did Not Establish that Arbitral Forum would be Prohibitively Expensive: Truth in Lending Act (TILA) Class Action Claims Properly Dismissed

In Green Tree Financial Corp. v. Randolph, 531 U.S. 79 (2000), the United States Supreme Court addressed two issues: (1) whether a court order granting a defense motion to compel arbitration and dismissing (rather than staying) the plaintiff’s claims is immediately appealable under the Federal Arbitration Act (FAA), 9 U.S.C. § 16(a)(3) as a “final decision with respect to an arbitration”; and (2) whether an arbitration provision that is silent on the question of allocation and amount of arbitration fees and costs is unenforceable for failure to “affirmatively protect a party from potentially steep arbitration costs.” Id., at 82. The putative class action against Green Tree alleged violations of the federal Truth in Lending Act (TILA), 15 U.S.C. §§ 1601 et seq., and arose from a loan to the putative class action representative for the purchase of a mobile home evidenced by a Manufactured Home Retail Installment Contract and Security Agreement that expressly provided for all disputes to be resolved by finding arbitration under the provisions of the FAA. Id., at 82-83 and n.1. Plaintiff asserted that Green Tree violated TILA by failing to disclose a specific insurance requirement as a finance charge; she later added a claim under the federal Equal Credit Opportunity Act (ECOA), 15 U.S.C. §§ 1691 et seq. based on the requirement that she arbitrate her statutory claims for relief. The district court granted the class action defense team’s motion to compel arbitration and dismissed plaintiff’s claims with prejudice. The court also denied the plaintiff’s request to certify the case as a class action. Id., at 83.

Arbitration Class Action Court Decisions RESPA/TILA Class Actions Uncategorized

Class Action Defense Cases–Hepting v. AT&T Corp.: California Federal Court Rejects Defense Motion to Dismiss Class Action Challenging Warrantless Surveillance Program

San Francisco Federal Court Denies Motion by Class Action Defense and Federal Government to Dismiss Lawsuit on Grounds of “State Secrets” Privilege and Immunity, But Certifies Order for Interlocutory Appeal

After the federal government’s warrantless surveillance program was revealed in the press, and after AT&T and President Bush admitted the existence of the program, a putative class action was filed in San Francisco federal court against AT&T alleging that its participation in the program violated numerous constitutional and federal laws, as well as California’s unfair competition law (UCL), California Bus. & Prof. Code, §§ 17200 et seq. AT&T moved to dismiss the class action complaint on grounds of standing, failure to plead that AT&T did not have a government certification, and immunity; the federal government intervened and moved for dismissal or summary judgment based on the state secrets privilege. Yesterday, the California district court denied the defense motions, but certified its order for immediate appeal. Hepting v. AT&T Corp., ___ F.Supp.2d ___ (N.D. Cal. July 20, 2006). The court’s order is exceptionally detailed; we provide but a brief summary of it below. The entire opinion may be downloaded from the link at the end of this article.

The district court first addressed the federal government’s “state secrets” defense. “‘The state secrets privilege is a common law evidentiary rule that protects information from discovery when disclosure would be inimical to the national security.'” Slip Opn., at 5 (citation omitted). Importantly, an inquiry into the state secrets privilege does not turn on “a balancing of ultimate interests at stake in the litigation,” Halkin v. Helms, 690 F.2d 977, 990 (D.C. Cir. 1982). Rather, the question is whether the harm that may result from the disclosure at issue requires that the information be withheld as a matter of “absolute right,” id. The district court in Hepting applied the standard set forth in the Ninth Circuit’s “definitive opinion on the state secrets privilege,” Kasza v. Browner, 133 F.3d 1159 (9th Cir. 1998). Slip Opn., at 12. The federal government asserted that Kasza required dismissal because “(1) the very subject matter of this case is a state secret, (2) plaintiffs cannot make a prima facie case for their claims without classified evidence and (3) the privilege effectively deprives AT&T of information necessary to raise valid defenses.” Slip Opn., at 15 . The court rejected each of these arguments.

Class Action Court Decisions Class Actions In The News Uncategorized

Newell v. State Farm: California Court Denies Class Certification In Homeowners’ Putative UCL (Unfair Competition Law) Class Action Against Insurer

Class Action Defense Attorneys Prevail on Demurrer Challenging Class Action Allegations – California Court Holds Plaintiffs’ Lawyer Could not Establish “Community of Interest” (Commonality) California homeowners filed a putative class action against their homeowners’ insurance carriers, Farmers Insurance Exchange and Mid-Century Insurance Exchange (collectively “Farmers”) and State Farm General Insurance, asserting claims for declaratory relief, breach of contract, bad faith, and unfair competition (UCL) based on the allegation that they “were wrongfully denied policy benefits for damage caused to their homes by the Northridge earthquake.

Certification of Class Actions Class Action Court Decisions Uncategorized

Overton v. Walt Disney Company: Disney’s Class Action Defense Prevails – Disney Not Required To Compensate Employees For Time Spent Riding Shuttle From Parking Lot To Theme Park California Court Holds

California Court Holds that Disney did not Require Employees to Drive to Work and to Take Shuttle from Parking Lot to Work, So Disney was not Required to Compensate Them for Travel Time Spent Riding Shuttle

A Disney employee filed a putative class action against the company seeking compensation under California state law for travel time based on the theory that certain employees were assigned to a parking lot located one mile from the Disneyland theme park, and Disney provided shuttles to transport them between the parking lot and the park. Overton v. Walt Disney Co., 136 Cal.App.4thh 263 (Cal.App. 2006). The class action defense attorneys argued that the California Supreme Court opinion in Morillion v. Royal Packing Co., 22 Cal.4th 575 (Cal. 2000) – which held that if an employer requires employees to travel in a company vehicle to work then it must compensate the employees for their travel time – did not apply. The defense moved for summary judgment on the grounds that the undisputed evidence established that Disney did not require employees to drive to work (and, in fact, encouraged and offered financial incentives to employees who used alternative means of transportation), and that Disney did not require employees to use the shuttle to travel from the parking lot to the theme park (some employees, for example, would walk or ride a bike). Overton, at 267-68. The trial court granted the defense motion for summary judgment and plaintiff’s lawyer appealed.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Multidistrict Litigation (MDL) Judicial Panel Transfers FCRA Class Action Cases Against H & R Block To Northern District Of Indiana: Class Action Defense Cases

Judicial Panel on Multidistrict Litigation (MDL) Grants Defense Motion To Eliminate Duplicative Discovery, Prevent Inconsistent Rulings, and Conserve Resources of Parties and Court in Pretrial Proceedings of Class Action Cases Three class action lawsuits were filed against H & R Block Mortgage Corp. alleging violations of the FCRA (Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq.) in that defendants purportedly “us[ed] consumer reports for purposes of mailing prescreened offers of credit for home loans to plaintiffs and potential class members.

Class Action Court Decisions FCRA Class Actions Multidistrict Litigation Uncategorized

Class Action Defense and Employment Law Issues–Thorne v. All Restoration: FLSA (Fair Labor Standards Act) Overtime Claim Rejected By Eleventh Circuit

Federal Court Cites Lack of Evidence Employee was Engaged in Interstate Commerce or in Production of Goods for Commerce to Establish Coverage Under Fair Labor Standards Act (FLSA) to Support Overtime Claim

Plaintiff Joseph Thorne appealed a district court order granting All Restoration Service’s defense motion for dismissal under Rule 50 as to Thorne’s overtime pay claims based on alleged violations of FLSA (Fair Labor Standards Act). Thorne v. All Restoration Serv., Inc., 448 F.3d 1264 (11th Cir. 2006). The district court had granted the defense motion on the grounds that “Thorne had not presented evidence at trial that he qualified for either enterprise coverage or individual coverage under the FLSA” because “‘[his] activities were local in nature and really did not affect interstate commerce in general,’” id., at 1265. On appeal Thorne challenged only the finding that he failed to establish individual coverage under FLSA. Individual coverage exists only if an employee “is engaged in commerce or in the production of goods for commerce,” 29 U.S.C. § 207(a)(1) (2005). The Circuit Court affirmed.

First, the Court rejected Thorne’s claim that regular use of his employer’s credit cards in the course and scope of employment means that he “engaged in interstate commerce.” First, the Circuit Court explained that the statute requires an activity that constitutes interstate commerce, not an activity that “merely affect[s]” interstate commerce. Thorne, at 1266 (citing McLeod v. Threlkeld, 319 U.S. 491, 497, 63 S.Ct. 1248 (1968)). All Thorne alleged was that he made purchases with the credit cards; he could not even establish whether the credit card bills came from out of state. Id., at 1266-67.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Issues–In re Natural Gas: Objecting Class Members To Class Action Settlements Not Exempt From Being Declared Vexatious Litigants California Court Holds

California Appellate Court Confirms that One Who, as a Nonrepresentative Class Member, Repeatedly Objects to Class Action Settlements may be Deemed a Vexatious Litigant, But Reverses Court Designation for Lack of Evidence

Based on a request that came not from the class action defense but from the class action plaintiffs’ attorneys, a California trial court declared a lawyer, Ernest M. Thayer, a vexatious litigant, see California Code Civ. Proc., §§ 391-391.7, “based on his history of filing objections to class action settlements . . . in which he was a member of the plaintiff class or represented a member of such a class.” In re Natural Gas Anti-Trust Cases I, II, II & IV, 137 Cal.App.4th 387, 390 (Cal.App. 2006). The Court of Appeal agreed that one who engages in conduct that falls within the scope of California’s vexatious litigant statutes is not insulated from being declared a vexatious litigant by virtue of his or her role in a class action as a nonrepresentative class member. Id.

The Court began its analysis with the definition of a vexatious litigant, and then addressed each subsection of the applicable statute in turn. Under California Code of Civil Procedure section 391(b), “a vexatious litigant is a person who does any of the following:

Class Action Court Decisions Uncategorized

Class Action Defense Issues–Gorman v. Wolpoff & Abramson: Law Firm Again Prevails In Action Alleging Violations of FCRA (Fair Credit Reporting Act) and FDCPA (Fair Debt Collection Practices Act)

California Federal Court Grants Summary Judgment in Favor of Wolpoff & Abramson and Client MBNA, and Issues Order to Show Cause re Rule 11 Sanctions Against Plaintiff

The law firm of Wolpoff & Abramson LLP is no stranger to litigation: it routinely prosecutes debt collection actions on behalf of national retail and banking clients; and it has been named in many individual and class action lawsuits by people upset at the Wolpoff firm’s efforts to collect on delinquent accounts. According to a lawyer at Wolpoff & Abramson, the law firm aggressively defends lawsuits filed against it, and statistically it appears to do a very good job in presenting its defense. The most recent court ruling concerning the firm comes out of a California federal court, which granted the defense motions for summary judgment. Gorman v. Wolpoff & Abramson, ___ F.Supp.2d ___, 2006 WL 1728915 (N.D. Cal. June 23, 2006). The action was filed by a lawyer (John Gorman) against MNBA and its attorneys, the Wolpoff firm, asserting causes of action under the federal Fair Credit Reporting Act (FCRA), the federal Fair Debt Collection Practices Act (FDCPA), and libel. (The claims under California state law that existed in Gorman’s original complaint were dismissed without leave to amend in response to an earlier defense motion. _See Gorman v. Wolpoff & Abramson_, 370 F.Supp.2d 1005, 1010-11 (N.D. Cal. 2005).)

Gorman’s action was precipitated by a contested credit card charge of roughly $760 that MBNA initially removed but then reposted. The federal court found that Gorman stopped making payments to MBNA in May 2003, “but then deliberately charged thousands of dollars more on his MBNA credit card” and then in August 2003 demanded that MBNA write off “the entirety of his balance of over $5000.” Instead, MBNA retained Wolpoff to file a debt collection suit against Gorman.

Class Action Court Decisions FCRA Class Actions FDCPA Class Actions Uncategorized

Tien v. Superior Court (Tenet Healthcare): Class Action Defense Prohibited From Discovering Names Of Putative Class Members in Employment Law Case Who Contacted Plaintiffs’ Lawyer Due To Class Members’ Privacy Rights California Court Holds

Identities of Putative Class Members in Wage and Hour/Overtime Pay Class Action Who Contact Plaintiffs’ Lawyer in Response to Precertification Letter Protected from Disclosure to Class Action Defense Attorneys by Right to Privacy

On May 15, 2006, a California appellate court addressed a discovery issue arising out of a putative class action filed against Tenet Healthcare on behalf of hourly employees alleging failure to provide meal and rest breaks and failure to pay overtime. Tien v. Superior Court, 139 Cal.App.4th 528 (Cal.App. 2006). During the precertification discovery proceedings, plaintiffs’ lawyer asked for the identity and contact information of every class member in the putative class action. In response to obvious privacy concerns, the parties eventually agreed to a procedure whereby a neutral letter was sent to a randomly selected group of approximately 6% of the class members, advising them of the lawsuit and inviting them to contact plaintiffs’ lawyer if they wanted more information. Id., at 532-334. The letter expressly stated, “You are not required to call anyone regarding this lawsuit unless you personally wish to do so. If you do elect to call, please be assured that doing so will not have any negative effect on your employment with any Tenet-related facility.” Id., at 533 (bold in original). Tenet’s class action defense attorneys later sought to discover the names of the people who contacted plaintiffs’ lawyer in response to the letter; plaintiffs sought a protective order on several grounds, including the class members’ right to privacy. The trial court ordered the information provided to defense attorneys concluding that the privacy rights “were outweighed by Tenet’s right to the discovery.” Id., at 534.

Eventually, the matter ended up before the California Court of Appeal on a petition for writ of mandate. The appellate court held that the information sought by Tenet was relevant, Tien, at 535-36, and that it was not protected from disclosure by the attorney work product doctrine, id., at 536, or the attorney-client privilege, id., at 536-38. The Court held, however, that disclosure of the identities of the class members who contacted plaintiffs’ lawyer would violate their right to privacy. Id., at 539.

Class Action Court Decisions Class Actions In The News Uncategorized