In 2010, two truck drivers brought an action against their employer, Vitran Express, Inc., alleging that Vitran failed to provide its drivers legally-mandated meal and rest breaks. On November 12, 2015, Judge Klausner granted certification of the drivers’ claims. Campbell v. Vitran Express, Inc., No. CV 11-5029 RGK (SHx) (C.D. Cal. 2015) (slip op. available here). In the interim, the case had been appealed to the Ninth Circuit twice, the latter of which reversed the lower court’s grant of summary judgment in favor of the defendant, remanding the case and holding that the plaintiffs’ claims were not preempted by the Federal Aviation Administration Authorization Act (FAAAA) (previously covered on the ILJ here and here). The drivers pursued class certification on two theories: (1) the defendant implemented an unofficial policy of pressuring its drivers to forego their meal and rest breaks, and (2) the defendant’s written meal and rest break policies were facially invalid. The court granted the plaintiffs’ motion as to both theories.

First, the court found that the drivers could rely on the company’s unofficial policy of pressuring its drivers to forego their breaks, or a “policy-to-violate-the-policy” theory of liability, assuming the drivers supported the theory with enough evidence to demonstrate that such a policy existed and was applied uniformly to all class members. After reviewing the evidence submitted, the court held that the plaintiffs’ declarations, as well as declarations of thirteen fellow drivers and one dispatcher, constituted sufficient evidence that drivers were intimidated and threatened to forego meal and rest breaks for four of the five California locations. Furthermore, the defendant failed to provide any conflicting testimony that the meal and rest break practices differed among locations or supervisors. Thus, all of the evidence in the record supported a finding of a uniform, common policy of denying meal and rest breaks at each of the company’s locations.

Second, the court held that common questions predominated as to the plaintiffs’ claims that the defendant’s written meal and rest break policies were facially invalid. Vitran’s meal break policy provided that employees were entitled to a 30-minute lunch period when working five or more hours a day, but it failed to provide for a second 30-minute meal period for employees who worked 10 or more hours a day. Slip op. at 10. Similarly, Vitran’s rest break policy failed to provide a rest break for every “major fraction” of a four-hour period that drivers worked and failed to provide rest breaks in the middle of the workday “insofar as practicable.” Id. The court noted that California courts and federal courts are split on the issue of whether an allegation of a facially defective policy, without more, subjects an employer to liability—state appellate court decisions impose liability “solely on the basis of a facially defective policy,” whereas federal district courts require the employee to show that the employer “not only maintained a facially defective policy[,] but also implemented unlawful practices pursuant to the policy.” Id. Here, the court applied the recent Ninth Circuit decision, Abdullah v. U.S. Sec. Assocs., Inc., 731 F.3d 952 (9th Cir. 2013), which acknowledged that while liability may flow from a facially defective policy, courts must consider the entire record before determining the predominance question. The Campbell court then assessed all of the evidence in the record as to the allegations of facially defective meal and rest break policies, and found that the plaintiffs presented sufficient evidence to show a uniform policy that failed to comply with California’s meal and rest break requirements.

Holding that an allegation of facially defective policies was supported by substantial evidence of Vitran’s non-compliant meal and rest break practices, the court found that common questions predominated and granted class certification.

Authored By:
Bevin Allen Pike, Senior Counsel
CAPSTONE LAW APC

Last week, the Ninth Circuit Court of Appeals provided consumers another shot at class certification when it reversed a district court’s decision granting summary judgment to Ford. Daniel v. Ford Motor Co., No. 13-16476 (9th Cir. Dec. 2, 2015) (slip op. available here). Daniel, filed in 2011, alleged that 2005-2011 Ford Focus vehicles contain a rear suspension “alignment/geometry” defect that leads to premature tire wear and dangerous driving conditions, including “decreased control in handling, steering, stability, and braking . . . .” Slip op. at 5. In 2013, Judge Shubb of the Eastern District of California granted summary judgment against the plaintiffs’ claims and denied their motion for class certification, holding that the suit raised too many individualized questions to warrant class treatment, such as the fact that the premature tire wear did not occur at the same rate for all plaintiffs.

First, the appeals court found that the district court had erred in holding that the language of Ford’s New Vehicle Limited Warranty did not cover design defects, including the alleged rear suspension defect, and reversed the lower court’s grant of summary judgment as to the plaintiffs’ claims for breach of express warranty. In applying traditional rules of contract construction, the panel stated that due to Ford’s ambiguous wording, the ambiguity “must be resolved against the draftsman, Ford.” Slip op. at 14 (internal citations omitted). Thus, Ford’s express warranty was deemed to cover both manufacturing and design defects, a positive finding for consumers in class actions, provided auto manufacturers do not choose to cure warranty ambiguities regarding defects covered.

Further, regarding the grant of summary judgment as to their Song-Beverly Consumer Warranty Act claims, the plaintiffs argued that it was improper for the district court to decline to follow a California appellate court decision, Mexia v. Rinker Boat Co., 95 Cal. Rptr. 3d 285 (Ct. App. 2009), which held that latent, or hidden, defects may breach the implied warranty under Song-Beverly, even if not discovered within the implied warranty’s duration of one year. Agreeing with the plaintiffs, the panel clarified that a federal district court sitting in diversity “must follow decisions of the intermediate appellate courts of the state unless there is convincing evidence that [California Supreme Court] would decide differently.” Slip op. at 8 (internal citations omitted, emphasis added). In its review, the panel could not find any evidence to suggest the California Supreme Court would decide Mexia’s holding any differently, which, as noted in the opinion, serves to expand consumer protection and remedies in furtherance of the legislative intent behind the Song-Beverly Act.

Lastly, and perhaps most beneficial for consumers, the appellate court held that the lower court incorrectly found no genuine factual dispute as to reliance, an essential element for a fraudulent omission claim under the California Consumers Legal Remedies Act and Unfair Competition Law. Reliance can be shown by proving that had an omission been disclosed, the consumer would have been aware of it and acted differently; that one would have acted differently can be presumed or inferred if the omission is material, or poses an unreasonable safety risk. The panel found that plaintiffs offered sufficient evidence to create a genuine issue of material fact as to whether consumers would have acted differently if Ford had disclosed the alleged defect, stating, “[a] reasonable fact finder could infer that a vehicle that experiences premature and more frequent tire wear would pose an unreasonable safety risk, such that it can be presumed that the nondisclosure of the safety risk impacted Plaintiffs’ purchasing decision.” Slip op. at 16. Additionally, though Ford had shown that the plaintiffs did not view any of Ford’s advertising prior to purchasing their vehicles, the panel stated that the plaintiffs’ interactions with and information received from Ford-authorized sales representatives prior to purchase, at the Ford dealerships, was sufficient to find that the plaintiffs would have been aware of disclosures made by Ford through its sales representatives, ultimately making it easier for consumers to demonstrate reliance.

In light of this ruling, the Ninth Circuit remanded and ordered the district court to reconsider its denial of the plaintiffs’ motion for class certification.

Authored by: 
Trisha Monesi, Associate
CAPSTONE LAW APC

Volkswagen’s (VW) recent admission that its “clean diesel” vehicles are not-so-clean has led to a proliferation of what some characterize as “no-injury” lawsuits, in that proponents of this view allege that the vehicles did not physically or emotionally harm consumers, nor did it cause them economic loss (other than the purchase price of the vehicle). This “no-injury” argument has been closely tied to the Spokeo case currently pending before the United States Supreme Court, in which the defendant has urged the Court to hold that that there is no Article III standing unless the plaintiff has suffered an “actual injury.” Robins v. Spokeo, Inc., 742 F.3d 409 (9th Cir. 2014), cert. granted, 2015 U.S. LEXIS 2947 (U.S. Apr. 27, 2015) (No. 13-1339) (previously covered on the ILJ here). However, Spokeo involves the Fair Credit Reporting Act (FCRA), a consumer law that requires no actual transactions between the parties. While the Spokeo FCRA violations undoubtedly result in injuries, they are a different animal than those presented in the VW scandal.

An injury is defined as “[t]he violation of another’s legal right, for which the law provides a remedy; a wrong or injustice.” INJURY, Black’s Law Dictionary (10th ed. 2014). The Volkswagen debacle unequivocally involves injury. First, each consumer purchased a VW vehicle that was not as they expected. In other words, consumers paid Volkswagen for a vehicle that complied with governmental regulations and legally could be driven on American roadways, but consumers did not receive what they paid for because they are now stuck with vehicles that violate state and federal clean air requirements, including the Clean Air Act. Further, Volkswagen priced its vehicles at the market value of a clean diesel engine vehicle, which is substantially higher than a standard gasoline engine, but it fraudulently advertised and sold a vehicle that did not meet that market definition. Essentially, customers paid for a vehicle of a certain value, but actually received a vehicle that was of lower value. In the process, VW profited from this deception at the consumers’ expense.

However, consumers sustained additional injuries in the VW matter. Until repaired, the vehicles themselves may actually be worthless to many owners. For example, in California, each vehicle must be “smogged,” i.e. comply with stringent emissions standards, in order to be registered and driven on public roads. Volkswagen admits that these vehicles do not meet these standards, which could render the vehicles “un-merchantable” pursuant to California’s Song-Beverly Consumer Warranty Act. Cal. Civ. Code §§ 1791.1 and 1792, et seq. If that is so, the “injury” would be the entire transaction or price of the vehicles. Another potential injury sustained by purchasers of VW’s “clean diesel” cars is to the environment, consumers’ health, and the public as a whole. According to a recent joint study by Harvard and MIT, which was published in the journal Environmental Research Letters, VW’s deception in connection with the existing clean diesel vehicles (model years 2009-2015) is estimated to cause or have caused, by the end of 2015, sixty premature deaths in the U.S. as a result of the emissions. If not fixed, the emissions ultimately could lead to an additional 140 deaths by the end of 2016. See Barrett, et al., Environmental Research Letters, “Impact of the Volkswagen emissions control defeat device on US public health,” available here. The excess emissions are also estimated to contribute directly to 31 cases of chronic bronchitis and 34 hospital admissions involving respiratory and cardiac conditions. Id.

Injuries continue to materialize due to Volkswagen’s deceptive conduct: its violation of the consumers’ right to know what they are getting when they purchase a “clean diesel” vehicle, overvaluation of the vehicles, and health-related harms to the public, including injuries and possibly death, and the environment.

Authored by: 
Tarek Zohdy, Associate
CAPSTONE LAW APC

Earlier this month, on November 10, 2015, the United States Supreme Court heard oral argument in Bouaphakeo v. Tyson Foods, Inc., No. 12-3753 (8th Cir. Aug. 25, 2014) (slip op. available here), cert. granted, 83 U.S.L.W. 3765 (U.S. June 8, 2015) (No. 14-1146). Class action practitioners throughout the country—both plaintiff and defense attorneys—have watched this case closely because of the potentially far-reaching implications of the forthcoming opinion. The Court granted cert. to consider: (1) whether a court can disregard differences among individual class members when the plaintiff will prove liability and damages using certain statistical techniques; and (2) whether a class is certifiable despite containing a substantial number of class members who were not injured.

Originally filed in 2007, the primary issue in the case was whether Tyson properly compensated the class members, hourly employees at a Tyson meat-processing facility, for all work time. Tyson implemented a policy that compensated employees only for so-called “gang time,” when workers were present at their workstations on Tyson’s production line and the line was moving. The plaintiffs argued that this policy was illegal because it failed to compensate them for the time spent “donning and doffing” personal protective equipment before shifts, before and after lunch, and at the end of the shift. The plaintiffs also sought compensation for the time spent carrying items from their lockers to the production floor. Interestingly, Tyson categorized protective equipment items as either “unique” or “non-unique” to the food processing industry. Before February 2007, Tyson added four minutes of time to each employee’s timecard for donning and doffing time for unique items, to compensate those who worked in departments where knives were used. Then, from February 2007 to June 2010, Tyson added several minutes per day to each employee’s paycheck to compensate for pre- and post-shift walking time. The district court certified the case as a class action under Rule 23 and as a collective action under the Fair Labor Standards Act (FLSA) because the substance and basis of the state law claim and the FLSA claim were “virtually indistinguishable” in that the claims involved identical facts and similar legal theories. Slip op. at 4, fn2 (quoting Salazar v. Agriprocessors, Inc., 527 F. Supp. 2d 873, 884). The case went to trial, and the jury returned a verdict in the plaintiffs’ favor for over $2.8 million, with the final judgment exceeding $5.7 million after adding liquidated damages. The Eighth Circuit Court of Appeals affirmed the judgment, and Tyson filed a cert petition in the Supreme Court.

Before the Supreme Court, Tyson argued that the plaintiffs’ use of statistics demonstrating average donning, doffing, and walking times to help prove liability and damages was improper (brief of petitioner Tyson Foods available here). Because employees wore different protective equipment and took varying amounts of time to put it on and take it off, Tyson argued that each class member could not prove that donning and doffing activities resulted in uncompensated overtime. It contended that the usage of statistical inferences was reversible error, violated its due process rights to raise every possible defense, and warranted decertification. Tyson also argued that certification was improper because the class included large numbers of employees who had not been injured. In response, the employees argued that certification was proper, and that the record demonstrated that Tyson could have recorded donning and doffing time, but chose not to (respondent’s brief available here). The plaintiffs also argued that Tyson’s officials admitted that the vast majority of class members routinely worked six-day, 48-hour workweeks and were, therefore, eligible for overtime. Accordingly, the employees were entitled to prove the “approximate” time worked under Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946), because Tyson failed to fulfill its statutory obligation to keep proper time records. The employees also argued that no rule prohibited certifying a class with some uninjured class members.

At oral argument, Justices Kennedy, Ginsburg, Breyer, Sotomayor, and Kagan appeared sympathetic to the employees. The gist of their questioning indicated that the Tyson’s objection to statistical and/or inferential proof of overtime entitlement was largely a self-created problem, and Tyson’s arguments against using the Mt. Clemens rule in this case were not well-taken. In addressing the issue of certifying a class with some uninjured members, several justices, including Justice Breyer, drew a distinction between certifying a class with uninjured members and paying the uninjured members after determining liability. Responding to petitioner Tyson’s argument that it could not determine who to pay and who not to pay because the jury awarded a lump sum judgment, Justice Kagan noted that Tyson had refused to bifurcate trial proceedings and, on remand, the court “is going to do something like the bifurcation that you rejected, which is . . . figure out in this highly ministerial way who worked more than 40 hours, and so who is entitled to share in the judgment.”

Ultimately, only the Court’s forthcoming opinion will end the suspense for class action practitioners. That said, most plaintiffs’ class action attorneys are cautiously optimistic that—after years of dealing with Concepcion, Dukes, and other anti-class action rulings—the Supreme Court finally may deliver a victory for employees and consumers.

Authored By:
Andrew Sokolowski, Senior Counsel
CAPSTONE LAW APC