San Francisco’s Paid Sick Leave Ordinance To Take Effect On February 5, 2007

On February 5, 2007, San Francisco’s sweeping Paid Sick Leave Ordinance (“PSL”) will take effect. The PSL Ordinance (Chapter 12W) was approved by 60% of San Francisco voters in the November election. San Francisco employers who do not comply with the PSL Ordinance will face stiff penalties and possible civil lawsuits with attorneys’ fees recoverable.

All employers in San Francisco will be required to provide paid sick leave to all full-time, part-time and even temporary employees who work in San Francisco. Under the PSL Ordinance, employees accrue one hour of paid sick leave for every 30 hours worked (about 9 days per year for a full-time, non-exempt employee). Those employed as of February 5, 2007 will begin accruing paid sick leave as of that date. Those employed after February 5, 2007 will begin accruing paid sick leave 90 days into their employment. Employers may cap maximum accruals at 40 hours if they employ fewer than 10 employees and at 72 hours if they employ 10 or more employees. Unlike vacation benefits, paid sick leave does not need to be paid out when employees leave their employers.

Beginning February 5, 2007, employers must post the City’s official notice of the PSL Ordinance in a conspicuous location in English, Spanish, Chinese and any other languages spoken by at least 5% of an employer’s workforce in San Francisco. Under the PSL Ordinance, paid sick leave may be used to care for family members (“kin care”), which is more broadly defined than California’s Labor Code and includes relatives such as siblings and grandparents. In addition, employees who do not have a spouse or registered domestic partner may once a year designate a person for whom the employee may use paid sick leave. Further, unlike current California law, an employee may use the entire amount of their sick leave for kin care.

Class Actions In The News Employment Law Class Actions Uncategorized

Deloitte & Touche Class Action Defense Case-Lattanzio v. Deloitte: Second Circuit Affirms Dismissal of Securities Class Action Against Outside Accountant

Second Circuit Holds that District Court Properly Granted Defense Motion to Dismiss Securities Class Action Against Outside Accountant Because (1) Claims fell Outside Class Period, (2) Accountant is under no Duty to Correct Financial Statement for which it Provided no Public Opinion, and (3) Plaintiffs’ Failed to Adequately Allege Loss Causation

Plaintiffs filed a putative securities class action against Deloitte & Touche in its capacity as outside accountant for Warnaco Group for violations of Section 10(b) of the Securities Exchange Act of 1924 and Rule 10b-5 alleging that Deloitte misstated Warnaco’s financial condition and breached its duty to correct previous misstatements once it learned that they were inaccurate. Lattanzio v. Deloitte & Touche LLP, 476 F.3d 147, 2007 WL 259877, *1 (2d Cir. January 31, 2007). Defense attorneys moved to dismiss the class action under Rule 12(b)(6). The district court granted the motion finding that “[i] Deloitte was not liable for Warnaco’s quarterly statements, which it did not audit; [ii] Deloitte had no duty during the class period to correct statements or misstatements made by Deloitte prior to the class period; and [iii] Plaintiffs inadequately alleged loss causation in connection with the statements that Deloitte made during the class period.” Id. On appeal, the Second Circuit affirmed the “thorough and well-reasoned opinion” of the district court. Id.

Deloitte began serving as Warnaco’s outside accountant in November 1999. Plaintiffs filed this class action after Warnaco declared bankruptcy in June 11, 2001 seeking to represent those who purchased Warnaco’s common stock from August 15, 2000 through June 8, 2001 (defined as “the Class Period”). Lattanzio, at *1. The class action complaint alleged that Warnaco’s 1999 Form 10-K (filed in March 2000) overstated total shareholder equity by $30 million, and that in February 2000 Deloitte learned of $26 million of this sum but did not correct Warnaco’s financial statements until March 2001. Id. Deloitte allegedly learned of the additional $4 million mistake “sometime in fall 2000” but did not correct the financial statements until August 2001 (by which time Warnaco was in bankruptcy). Id., at *2. The complaint also complained that the three quarterly statements Warnaco filed during the Class Period contained material misstatements; Deloitte did not audit these statements but “reviewed” them as required by federal law and, allegedly, learned of the errors but failed to correct them. Id. Finally, the complaint alleged that Warnaco’s 2000 Form 10-K contained material misstatements Id., at *3. However, Deloitte’s audit opinion expressed a “going concern” that the company “was not in compliance with certain covenants of its long-term debt agreements” and that the company “was a working capital deficiency as of December 30, 2000” which “raise substantial doubt about its ability to continue as a going concern.” Id. As noted above, the district court granted the defense Rule 12(b)(6) motion and dismissed the class action complaint.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

12 U.S.C. § 2616—Impact Of The Real Estate Settlement Procedures Act (RESPA) On State Laws And Affect Of Inconsistent Federal And State Laws

For class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we make the text of RESPA available here. Congress clarified the affect of RESPA on state laws and provided for determining whether state laws were inconsistent with federal laws in 12 U.S.C. § 2616, which provides as follows: § 2616. State laws unaffected; inconsistent Federal and State provisions This chapter does not annul, alter, or affect, or exempt any person subject to the provisions of this chapter from complying with, the laws of any State with respect to settlement practices, except to the extent that those laws are inconsistent with any provision of this chapter, and then only to the extent of the inconsistency.

Statutes & Rules Uncategorized

12 U.S.C. § 2615—Validity Of Contracts And Liens Under The Real Estate Settlement Procedures Act (RESPA)

As a resource for the class action defense lawyer who defends against RESPA (Real Estate Settlement Procedures Act) class actions, we make the text of the statute available here. Congress clarified that RESPA does not affect the validity or enforceability of contracts for the sale of real property or of federally-related mortgage loans in 12 U.S.C. § 2615, which states: § 2615. Contracts and liens; validity Nothing in this chapter shall affect the validity or enforceability of any sale or contract for the sale of real property or any loan, loan agreement, mortgage, or lien made or arising in connection with a federally related mortgage loan.

Statutes & Rules Uncategorized

Class Action Defense Cases-In re Banc of America: Judicial Panel On Multidistrict Litigation (MDL) Rejects Defense Opposition To Centralization Of Class Action Litigation And Selects Central District Of California As Transferee Court

Over Defense Objection Judicial Panel Grants Request for Pretrial Coordination Pursuant to 28 U.S.C. § 1407 and Transfers Class Action Lawsuits to Central District of California Despite Settlement of Action Pending in that District Three class action lawsuits were filed naming Banc of America Investment Services, Quick & Reilly, Fleet National Bank and/or Fleet Investment Services for alleged violations of the federal Fair Labor Standards Act (FLSA) and/or state labor laws alleging the failure to pay overtime to individuals who worked as securities brokers or broker trainees.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Labor Law Class Action Lawsuits Again Hold Top Spot In Weekly Class Action Filings In California State And Federal Courts With Public Accommodation/ADA Class Action Claims A Distant Second

Yet again California class action defense attorneys will face more new employment class action claims than any other category. In an effort to assist class action defense attorneys in anticipating the claims against which they may have to defend, we provide weekly, unofficial summaries of the legal categories for new class actions filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas.

Class Actions In The News Uncategorized

Class Action Defense Cases-In re LLRice: Judicial Panel On Multidistrict Litigation (MDL) Grants Unopposed Motion To Centralize Class Action Litigation And Agrees With Defense That Eastern District Of Missouri Is Appropriate Transferee Court

Judicial Panel Grants Unopposed Request for Pretrial Coordination Pursuant to 28 U.S.C. § 1407 and Agrees with Defense that Eastern District of Missouri is Appropriate Transferee Court Several class actions were filed against Bayer CropScience and others on behalf of rice farmers asserting various causes or action arising out of “the contamination of commercial rice stocks with LLRice 601, a variety of genetically modified rice.” In re LLRice 601Contamination Litig., 466 F.

Class Action Court Decisions Multidistrict Litigation Uncategorized

First American Title Class Action Defense Case-California Court Bars Plaintiff’s Attorney From Conducting “Fishing Expedition” Discovery To Find Prospective Client

California Court Holds that if Class Representative Plaintiff is not and Never was Member of Class then Trial Court Abuses it Discretion if it Permits Precertification Discovery for the Purpose of Identifying Class Member Willing to Serve as Plaintiff

Plaintiff filed a putative class action against his title insurer (First American Title Insurance) and his lender (Wilmington Finance) alleging that “title insurers in the State of California are paying money for referral business from lenders,” that “[the] payments to lenders are rewards for channeling business to them,” and that “[t]hese kickbacks may be disguised as payments for bogus reinsurance which is purchased from captive insurers operated by the firms sending business to the title insurers.” First American Title Ins. Co. v. Superior Court, 146 Cal.App.4th 1564 (Cal.App. 2007) [Slip Opn., at 4]. Plaintiff brought the class action on behalf of those persons who “paid in whole or in part for a title insurance policy [from First American] which provided coverage for property located in the State of California . . . [f]or whom part of the premium paid for the title insurance policy was received by Wilmington Finance,” id., at 5. As it turned out, plaintiff was not a member of the class he proposed to represent, and no such scheme existed involving Wilmington Finance; accordingly, he propounded discovery on First American for the purpose of identifying someone willing to serve as class representative so the class action could proceed. Id., at 8. Defense attorneys objected on the ground that “[plaintiff] was never a member of the class alleged in his complaint, and therefore lacked standing to obtain discovery to locate a proper class representative.” Id., at 11. The trial court ultimately rejected the arguments of defense attorneys and granted plaintiff’s motion. The Court of Appeal granted First American’s petition for writ of mandate and directed the trial court to disallow the precertification discovery requested. Id., at 13.

Plaintiff purchased a home in February 2004. He claims the seller’s agent and the escrow company insisted that First American issue title insurance on the property, and he suspected that the escrow company or First American paid a kickback to the seller’s agent. Slip Opn., at 2. In November 2004, Colorado’s Division of Insurance “uncovered a reinsurance kickback scheme” under which “certain homebuilders, lenders and realtors formed their own reinsurance companies, known as ‘captive insurers'” and then referred business to title companies that agreed to “reinsure” the policies through the captive insurer. Id., at 3. In essence, “the reinsurance agreement was simply a way for the title insurer to transfer funds to the captive insurer as a payment for the referral of customers.” Id. California’s Department of Insurance initiated its own investigation in January 2005, one month before Colorado reached a settlement with First American. Id. A few days after the announcement that Colorado and First American had reached a settlement, plaintiff filed suit. Id.

Certification of Class Actions Class Action Court Decisions Uncategorized

Rent-A-Center Class Action Defense Case-Karraker v. Rent-A-Center: Illinois Federal Court Denies Plaintiff Lawyer’s Request For Attorney Fees Finding Relief Obtained In ADA Class Action To Be De Minimis

Injunctive Relief Obtained Against Defense in ADA Class Action Inadequate to Support Attorney Fee Award Illinois Court Holds

Plaintiffs filed a class action against their employer, Rent-A-Center, alleging violations of the federal Americans with Disabilities Act (ADA) arising out of the employer’s requirement that applicants take a psychological test in order to obtain management positions. Karraker v. Rent-A-Center, Inc., 431 F.Supp.2d 883, 885 (C.D. Ill. 2006). Specifically, the class action complaint alleged, “[Rent-A-Center] required all employees or outside applicants seeking management positions to submit to a battery of nine separate written tests. This battery of tests was commonly referred to as the Management Test. One of the individual exams included in the Management Test was the Minnesota Multiphasic Personality Inventory (MMPI). The MMPI is a psychological test used by psychologists to diagnose and treat individuals with abnormal psychological symptoms and personality traits.” Id. The district court ultimately certified a class defined as “All past and present employees of Defendant RAC in Illinois who took the APT Management Test.” Id. Defense attorneys prevailed on a motion for summary judgment as to all but a single wrongful termination claim. Id., at 886. On appeal, the Seventh Circuit generally affirmed the judgment in favor of the defense, but remanded the matter “so summary judgment could be entered in favor of Plaintiffs on their claim that the MMPI is a medical examination under the ADA.” Karraker, at 886. The district court entered that order and, pursuant to plaintiffs’ request, the defense agreed to destroy all test results obtained through the APT Management Test. Id. Defense attorneys then moved for summary judgment on the wrongful termination claim. The district court granted the defense motion, thereby resolving the balance of the class action lawsuit. Id.

Plaintiffs’ lawyer then filed a petition seeking an award of $267,000 in attorney fees. Karraker, at 886. The district court recognized that the ADA permits a court to award reasonable attorney fees to the prevailing party, see 42 U.S.C. § 12205, but held that plaintiffs did not qualify as the prevailing party under the following definition set forth at page 886:

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Class Action Court Decisions Uncategorized

Costco Class Action Defense Case-Ellis v. Costco: California Federal Court Rejects Defense Arguments And Certifies Class Action Alleging Sex Discrimination

California Federal Court Holds that Plaintiffs Satisfied Rule 23 Requirements for Certification of Class Action Alleging Gender Discrimination in Promotion and Management Practices by Costco

Plaintiff filed a class action against their employer for violations of Title VII of the Civil Rights Act of 1964 and California’s Fair Employment and Housing Act alleging “that Costco’s promotion system has a disparate impact on female employees, that Costco’s management discriminates against women in promotions, and that defendant has retaliated against persons seeking redress for discrimination.” Ellis v. Costco Wholesale Corp., ___ F.Supp.2d ___, 2007 WL 127800-, *1 (N.D. Cal. January 11, 2007). Plaintiffs’ lawyer moved the federal court to certify a nationwide class action on behalf of at least 700 women; defense attorneys opposed the motion and moved to strike the declarations of plaintiffs’ experts in support of the motion. _Id._, at *4, *7. The defense also argued against class action treatment on the grounds that plaintiffs failed to exhaust administrative remedies, _id._, at *5, and lacked standing, _id._, at *6. The district court rejected defense arguments and certified a nationwide class action as requested by plaintiffs.

Plaintiffs sought certification of a nationwide class action on behalf of “current and former female employees who have been denied promotion to GM [General Manager] or AGM [Assistant General Manager] or denied Senior Staff jobs important to AGM promotion since January 3, 2002.” Ellis, at *5. The district court first addressed the procedural objections raised by defense attorneys . The administrative remedies defense was premised on the argument that plaintiffs’ EEOC claim was limited to discriminatory practices in promotion to general manager positions. Id.. Plaintiffs disagreed, and argued that even if it had been limited to GM claims that their other claims were “reasonably related to the allegations in the EEOC charge.” Id. The district court agreed, noting that Ninth Circuit case law instructs courts “to construe the EEOC charge ‘with utmost liberality.'” Id. (citation omitted). Plaintiffs’ EEOC claim provided adequate notice to Costco of the claims asserted in the class action complaint. Id. With respect to Costco’s standing arguments, the district court held (1) that former employees may seek injunctive relief on behalf of current employees, because “[t]o hold that employees must continue to work in jobs where they face discrimination in order to challenge discrimination would pervert Article III’s injury-in-fact requirement,” Ellis, at *6, and (2) that a current AGM may seek injunctive relief on behalf of women denied promotion to AGM and that it would not “delve into the merits” of the discrimination claims at the class certification stage, id.

Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized