Posts belonging to Category Motion Practice

On a day of surprises at the U.S. Supreme Court, it was a terse ruling on Article III standing — the gateway that determines which plaintiffs may and may not be in federal court — that could have greater consequences than the widely-covered healthcare ruling.  Because many class actions that were formerly resolved in state courts are now channeled into federal courts by the Class Action Fairness Act, advocates for consumers and workers feared that the Court took up Edwards v. First American Corp. in order to craft an onerous Article III “actual injury” standard that would lead to a rash of dismissals in these cases, without further recourse for the plaintiffs.  A 5-4 majority opinion imposing such a rule would be consistent with recent decisions increasing the burden on plaintiffs in federal court.

The at-issue statute in Edwards was the Real Estate Settlement Procedures Act (RESPA), which prohibits “kickbacks” and other quid pro quo arrangements between title companies and other entities in connection with real estate closings.  See Edwards v. First Am. Corp., 610 F.3d 514 (9th Cir. 2010) (available here).  Under RESPA, a party to a real estate transaction is entitled to relief when such an arrangement occurs, even if the party suffers no financial loss or diminution of services as a result of the RESPA violation.  Denise Edwards did not allege financial or other loss from the kickback arrangement that First American, her title company, engaged in, but she nonetheless sued First American under RESPA, on behalf of herself and all others similarly situated.  See id. at 516-17.  The defendant argued that Edwards lacked standing to pursue a claim because she did not suffer any injury.  Id.  The Ninth Circuit rejected this argument, holding that Edwards had standing to sue First American because RESPA provided her a statutory right to do so.  Id. at 518.

What followed was a two-year legal odyssey: the granting of defendant’s writ of certiorari, months of anticipation, oral arguments, copious briefing as to a Ninth Circuit decision that many believed would be reversed, all culminating in the Supreme Court’s issuance of a two-sentence opinion, “The writ of certiorari is dismissed as improvidently granted.  It is so ordered.”  First Amer. v. Edwards, 567 U. S. ____ (2012) (available here).  With that, the appeal in Edwards was over, with a swiftness and simplicity that belied the concern the case had engendered.

The U.S. Supreme Court has decided to review a Third Circuit decision bearing on a key element of class certification jurisprudence. See Behrend v. Comcast Corp., 655 F.3d 182 (3d Cir. 2011), cert. granted, 80 U.S.L.W. 3442 (U.S. June 25, 2012) (No. 11-864) (available here).

In its petition, Comcast asked the Court to address “whether a district court may certify a class action without resolving ‘merits arguments’ that bear on Rule 23’s prerequisites for certification, including whether purportedly common issues predominate over individual ones under Rule 23(b)(3).” Petition for Writ of Certiorari at i, Comcast Corp. v. Behrend, __ S. Ct. __ (2012) (No. 11-864), 2012 WL 105558 (available here). This seemed a ripe issue for the Court to take up, given the tension between the traditional doctrinal separation between class certification and “merits” analysis and recent decisions mandating “rigorous analysis” that seemingly implicates a merits-based inquiry. Compare, e.g., Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974) (“In determining whether to certify a class action, ‘the question is not whether the plaintiff or plaintiffs have stated a cause of action or will prevail on the merits, but rather whether the requirements of Rule 23 are met.’”) with Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011) (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982) (district courts must engage in “rigorous analysis” to ensure that the “party seeking class certification [can] affirmatively demonstrate his compliance” with Rule 23)).

However, in agreeing to review the case, the Supreme Court took the unusual step of reframing the core issue, narrowing the scope of its review to: “Whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a class-wide basis.” (emphasis added). This is likely a signal that the Court plans to resolve the debate sparked by its dicta in Dukes, where, in response to the conclusion of California Northern District Court Judge Jenkens that a full Daubert analysis is not appropriate at the certification stage, the Court stated: “We doubt that is so.” 131 S. Ct. 2541, 2554.

In an unusual procedural turn and exemplar of the virtue of persistence, this appeal was “relisted” seven times. Thus, on six prior occasions, the certiorari petition was scheduled for a vote, and each time, the vote was deferred and listed for a subsequent conference. The repeated delays likely resulted from proponents’ difficulty in securing the four votes necessary to grant a certiorari petition, which in turn could suggest that those proponents will have a similarly difficult time finding the five-vote majority necessary to promulgate their favored doctrine as to the proper expert analysis to be undertaken by courts attendant to Rule 23 class certification analysis.

Just as a conflict emerged within the California Court of Appeal as to the validity of California’s unconscionability doctrine following the U.S. Supreme Court’s AT&T Mobility v. Concepcion decision, a similar clash may be developing among California’s federal courts.  Northern District Judge Claudia Wilken has denied a defendant’s attempt to compel arbitration, chiefly on the ground that the at-issue arbitration agreement is unconscionable under California law.  See Trompeter v. Ally Financial Inc., No. 12-00392 (N.D. Cal. June 1, 2012) (order denying defendant’s motion to compel arbitration and motion for stay) (available here).

In Trompeter, Judge Wilken rejected the argument that the Federal Arbitration Act (FAA) preempted plaintiffs’ unconscionability claims and that the court therefore had no discretion to deny enforcement of the at-issue arbitration agreement.  Judge Wilken instead determined that “[m]ultiple elements render the agreement procedurally and substantively unconscionable,” and found the agreement to be void under California law.  Order at 17.  Judge Wilken specifically distinguished Kilgore v. KeyBank, National Ass’n, 673 F.3d 947 (9th Cir. 2012), in which the Ninth Circuit dismissed state public policy interests prohibiting the arbitration of particular types of claims and held that the FAA trumped such rationales.

Looking ahead to the probable review of this issue by the California Supreme Court, the Trompeter ruling gives encouragement to those who have advocated a narrow application of Concepcion, embodied most prominently in Brown v. Ralphs Grocery Co., 197 Cal. App. 4th 489 (2011).  By contrast, the recent Iskanian decision (expected to be taken up by the California Supreme Court) embraced an expansive reading of Concepcion. See Iskanian v. CLS Transp. Los Angeles, LLC, ___ Cal. App. 4th ___ (2012).

In the wake of the filing of the Petition for Review in Duran v. U.S. Bank National Ass’n, No. S200823 (Cal. March 19, 2012), dozens of law firms and pro-worker and consumer organizations have filed amicus curiae briefs with the court in support of review (available below).  Duran has been widely criticized for going too far in demonizing all survey methods used to establish class action prerequisites.  The Order Granting Petition for Review was issued on May 16, 2012, and is considered a victory for employees in the post-Dukes era.  The recent Brinker decision foreshadowed the grant of review by endorsing sampling and statistical methods as a means for showing commonality.  With the grant of review, Duran is rendered depublished.

AMICUS CURIAE LETTERS:

Arias Ozzello & Gignac LLP
Consumer Attorneys of California
California Employment Lawyers Association
California Labor Federation, AFL-CIO
Chavez & Gertler LLP
Daniels, Fine, Israel, Schonbuch & Lebovits LLP
Desai Law Firm, P.C.  
Goldstein, Demchak, Baller, Borgen & Dardarian, A Professional Corporation
Harris & Kaufman, Attorneys at Law  
Initiative Legal Group APC
Impact Fund
Keller Grover LLP
Kershaw Cutter & Ratinoff LLP 
Kingsley & Kingsley, A Professional Corporation  
Law Offices of John M. Kelson   
Law Offices of Kevin T. Barnes
Leonard Carder, LLP
Markun Zusman Compton LLP
National Consumers League
National Employment Law Project
Pope, Berger & Williams, LLP
Ram, Olson, Cereghino & Kopczynski LLP
Righetti Glugoski, P.C.
Rudy, Exelrod, Zieff & Lowe, L.L.P.