Posts belonging to Category Caselaw Developments

District Court Judge Christina A. Snyder of the Central District of California has granted certification of two consumer subclasses in an action alleging that L’Oreal failed to warn consumers of the flammability of its Garnier Fructis Sleek & Shine Anti-Frizz Serum.  See Guido v. L’Oreal, USA, No. 2:11-cv-01067 (C.D. Cal. May 7, 2012) (available here).

The ruling is notable in part because the defendants had predicated their opposition to class certification on Dukes v. Wal-Mart, 131 S. Ct. 2541 (2011).  Despite adhering to the “rigorous analysis” mandated by Dukes, Judge Snyder nevertheless found that the plaintiffs had established each of the Rule 23 class certification requirements.  Guido, No. 2:11-cv-01067 at *4, n.4 (citing Ellis v. Costco Wholesale Corp., 657 F.3d 970, 980 (9th Cir. 2011) (citing Dukes, 131 S. Ct. at 2551)).

Although L’Oreal has vowed to challenge the still “tentative” certification ruling, Judge Snyder’s comprehensive order reflects that the parties have already argued the pivotal legal issues.  For instance, Judge Snyder rejected the defendants’ contention that the plaintiffs lacked Article III standing, on grounds that the plaintiffs “would have paid less than [Sleek & Shine’s] retail price or would not have purchased it at all,” had they been forewarned of the product’s flammability.  Guido, No. 2:11-cv-01067 at *8.  As such, the plaintiffs had adequately alleged a cognizable “economic injury.”  Slip op. at 7.

Additionally, the certification ruling adds to the long line of state and federal cases holding that, under California’s Unfair Competition Law, “‘a presumption or at least an inference[] of reliance arises whenever there is a showing that a misrepresentation was material’”  Slip op. at 8-9 (quoting In re Tobacco II Cases, 46 Cal. 4th 298, 326–27 (2009).  Thus, “so long as plaintiffs establish that defendants’ omissions and misrepresentations are ‘material,’ they may bring a UCL claim on behalf of a class without individualized proof of reliance.”  Slip op at 9 (quoting In re Tobacco II, 46 Cal. 4th 326-27).  See also Wolph v. Acer, 272 F.R.D. 477 (N.D. Cal. Mar. 25, 2011) (class-wide reliance presumed from showing that misrepresentation would be material to a reasonable consumer).

In a ruling that reversed a Court of Appeal decision granting attorney’s fees to a defendant employer, the California Supreme Court has held that prevailing parties in rest break actions may not recover attorney’s fees. See Kirby v. Immoos Fire Protect., Inc., No. S185827 (Cal. Apr. 30, 2012) (available here).

The decision concerned the interplay between California Labor Code section 226.7, which provides for the payment of an additional hour of pay as compensation for meal and rest break violations, and section 218.5, which provides that “[i]n any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions, the court shall award reasonable attorney’s fees and costs to the prevailing party if any party to the action requests attorney’s fees and costs upon the initiation of the action. . . . [¶] This section does not apply to any action for which attorney’s fees are recoverable under Section 1194.”

The Supreme Court unanimously held that neither Section 218.5 nor Section 1194 provide for a prevailing party’s recovery of attorney’s fees in connection with a rest break claim under Section 226.7. See Slip op. at 2. In reaching their holding, the justices reasoned that a 226.7 claim is not an action “brought for the nonpayment of wages” within the meaning of Section 218.5, but is instead “brought for the nonprovision of meal and rest periods”; the payment of “wages” as a penalty for missed breaks is merely incidental, not the impetus for the claim itself. See id. at 11-13. As such, the court found that the defendant could not recover attorney’s fees.

Kirby rejected the defendant’s argument that, under Murphy v. Kenneth Cole, because a violation of Section 226.7 allows a remedy of a “wage,” an action under Section 226.7 is an action for “wages” under Section 218.5. See id.; see also Murphy v. Kenneth Cole Productions, Inc., 40 Cal.4th 1094, 1102 (2007) (holding that Section 226.7 payment is “wage”). The decision took a complex path to distinguishing Murphy and reaching its ultimate conclusion:

As a textual matter, we note that section 218.5 uses the phrase “action brought for” to mean something different from what the phrase means when it is coupled with a particular remedy (e.g., “action brought for damages” or “action brought for injunctive relief”). An “action brought for damages” is an action brought to obtain damages. But an “action brought for nonpayment of wages” is not (absurdly) an action to obtain nonpayment of wages. Instead, it is an action brought on account of nonpayment of wages. The words “nonpayment of wages” in section 218.5 refer to an alleged legal violation, not a desired remedy.

Slip op. at 13.

In rejecting the defendant’s attempt to recover its attorney fees incurred in the course of defeating the plaintiff’s rest break claim, the Kirby decision concluded that “the most plausible inference to be drawn from this history is that the Legislature intended section 226.7 claims to be governed by the default American rule that each side must cover its own attorney’s fees.” Id. at 17. The Kirby opinion was authored by the California Supreme Court’s newest member, Justice Goodwin Liu.

The Wal-Mart v. Dukes decision has imparted a negative connotation to the phrase “Trial by Formula.”  See Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2561 (2011).  However, one rising academic star has made the case for procedures that the U.S. Supreme Court has pejoratively dismissed.  See Alexandra D. Lahav, The Case for “Trial by Formula”, 90 Tex. L. Rev. 571 (2012) (available here).  See also Wal-Mart v. Dukes at 2561 (“We disapprove that novel project.”). 

In her article, Professor Lahav pointedly argues that the “formula” (the application of established statistical sampling methods) so derided in Dukes has several benefits, foremost the consistency that is a core principle in Anglo-American common law.  See Lahav at 612-21. What Professor Lahav calls “outcome equality” is the virtually unobjectionable principle that “similar outcomes be reached in similar cases.”  Id. at 596.  Thus, although a call for “equality of outcomes” is frequently associated with disfavored political agendas, in this context it is merely “derivative of the duty to apply the law accurately.”  Id. at 595.

Similar outcomes in similar cases is an objective that is best achieved when the claims of many are aggregated and adjudicated in a single proceeding, typically a class action.  In other words, a single class action, where the parties make substantial investments in expert data analysis, and with judicial assurance that rigorous procedures are used, is intrinsically more likely to yield a legally correct outcome, that by definition will be consistent across the entire plaintiff class.  By contrast, Dukes yields its own (far more inconsistent) formula, with different juries reaching different conclusions, despite applying the same laws to functionally identical facts.  Paradoxically, it is often the same judges and justices who are strong advocates of res judicata — for the stated reason that consistency and finality are achieved — who support the “trial by formula” proscription, seemingly indifferent to the virtual assurance of protracted litigation and inconsistent outcomes that accompany it. 

In addition to her normative argument as to the inherent equity of representative actions, Professor Lahav marshals empirical evidence of federal district courts exhibiting a pragmatic bent and finding ways to use sampling notwithstanding Dukes.  See Lahav at 575.  Particularly in the area of mass tort litigation, courts have focused on “resolving these cases using more efficient procedures, such as sample trials,” though not without some controversy.  Id. at 575-76. Even so, the article, which is framed around the core tension between individual liberty (represented by Dukes) and equality of outcomes, argues that the jurisprudence of equality is ascendant, and that “a victory for equality in this context is good for our civil litigation system.”  Id. at 577.

Alexandra Lahav, a law professor at the University of Connecticut, is a recognized class action expert and co-author of a leading casebook, Civil
Procedure: Doctrine, Practice, and Context (4th ed. 2012). She has most recently been a visiting professor at Columbia Law School and will be a visiting professor at Yale Law School for the Fall 2013 semester.

In what appears to be the first class certification ruling to expressly invoke the California Supreme Court’s recent Brinker decision, Central District judge Anthony J. Battaglia has certified meal period, rest break, expense reimbursement, wage statement, untimely final paycheck, and off-the-clock claims. See Schulz v. QualxServ LLC, No. 09-CV-17-AJB (C.D. Cal. Apr. 26, 2012) (order granting motion for class certification), available here. Thus, although Brinker only addressed meal period, rest break, and off-the clock claims, the decision is also a strong endorsement of class action procedures to adjudicate wage-and-hour claims in general.

As to the often-pivotal commonality requirement, Judge Battaglia found it satisfied, citing the same authorities relied on in Brinker:

The Court finds that there are sufficient common questions under this standard because Plaintiffs’ challenge the Defendants’ common corporate policy of failing to relieve the technicians of all work during the rest and meal breaks. Adoma, 270 F.R.D. at 552-53 (noting unsettled California law but finding class issues predominate on meal periods); Dilts, 267 F.R.D. at 634-39 (certifying class of off-site truck drivers who worked through meal and rest breaks based on company-wide, common practice); Ortega, 258 F.R.D. at 366-70 (common questions predominate because focus on employer’s “compensation system, which applies in the same manner to all potential class members on all work days,” regardless of California Supreme Court’s decision on meaning of duty to “provide” rest and meal breaks); Cervantez, 253 F.R.D. at 576 (certifying class on common corporate policy concerning rest and meal breaks); see Jaimez v. DAIOHS USA, Inc., 181 Cal. App. 4th 1286, 1305 (2010) (certifying class under California rules).

Order at 11-12.

This action alleges that the class of field technicians, whose duties included driving to clients’ homes and businesses to repair and service computers, were paid only a flat rate for making repair calls and were not relieved of duty during meal and rest breaks (which were also not properly recorded). See id. at 2-4, 11-12. Defendants countered that, due to the nature of the job, the technicians were fully in control of their own breaks. See id. at 6. While Brinker struck a note for worker autonomy, Schulz suggests the limits of such autonomy, particularly where an employer cedes virtually all responsibility for supervising and administering breaks to workers.