High Court Hands CA Truckers Second Win in 2015

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In a victory for truck drivers throughout California, the U.S. Supreme Court recently declined to review a Ninth Circuit ruling finding that California’s meal and rest break laws are not preempted by the Federal Aviation Administration Authorization Act (“FAAAA”). Dilts v. Penske Logistics, LLC, 769 F.3d 637 (9th Cir. Cal. 2014) (cert. denied by Penske Logistics LLC v. Dilts, 2015 U.S. LEXIS 2990 (U.S. May 5, 2015)).

This news should come as no surprise to transportation companies operating in California. While Penske insists in its petition for certiorari that the Dilts ruling is “rogue” and not in keeping with precedent, it is fully consistent with recent Ninth Circuit and California Supreme Court opinions on this issue—including Campbell v. Vitran Express Inc., No. 12-56250 (9th Cir. July 9, 2014), which was related to Dilts, and People ex rel. Harris v. Pac Anchor Transportation, Inc., 59 Cal. 4th 772 (Cal. 2014) (previously covered by the ILJ here and here).

Earlier this year, the U.S. Supreme Court also declined to review Harris v. Pac Anchor (see 2015 U.S. LEXIS 1326 (U.S., Feb. 23, 2015)), which held that California’s Unfair Competition Law (“UCL”) is not preempted by the FAAAA, and that motors carriers are therefore subject to injunctive relief under the UCL. Harris and Dilts share a similar fact pattern and reasoning, and, in both cases, the respective courts held that California labor and employment laws are not significantly related to and/or do not significantly affect motor carrier price rates, routes, or services, and therefore are not the types of state laws Congress set out to preempt when enacting the FAAAA. See Harris at 785, Dilts at 650.

Now that the U.S. Supreme Court, Ninth Circuit Court of Appeals, and California Supreme Court have all definitively ruled on this issue, perhaps employers will cease their fruitless attempts to circumvent state labor law in this manner.

Ascertaining Ascertainability in the Third Circuit

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A recent opinion issued by the Third Circuit Court of Appeals is a must-read for any class action practitioner who has been flummoxed by the Court’s approach to ascertainability under Rule 23. Byrd, et al. v. Aaron’s Inc., et al., No. 14-3050 (3d Cir. April 16, 2015) (slip op. available here). The Third Circuit sought to “dispel any confusion” regarding the ascertainability requirement. Slip op. at 20. This confusion was self-inflicted by a quartet of Third Circuit opinions that courts interpreted to mean that retail records and class member affidavits are not sufficient to establish that a class is ascertainable. As one court noted, in commenting on a key Third Circuit case, “[i]t appears that pursuant to [Carrera v. Bayer Corp., 727 F.3d 300, 306 (3d Cir. 2013)] in any case where the consumer does not have a verifiable record of its purchase, such as a receipt, and the manufacturer or seller does not keep a record of buyers, Carerra [sic] prohibits certification of the class.” McCrary v. Elations Co., LLC, No. 13-cv-242, 2014 U.S. Dist. LEXIS 8443, at * 24 (C.D. Cal. Jan. 13, 2014).

In Byrd, the Third Circuit attempted to clarify the ascertainability standard, which the court acknowledged had been invoked by defendants in class actions “with increasing frequency in order to defeat class certification.” Slip op. at 20. The court stated that ascertainability “only requires the plaintiff to show that class members can be identified. Accordingly, there is no records requirement.” Id. at 25. However, a plaintiff still has to propose a method of ascertaining a class that has some evidentiary support that the method will be successful. Id. The court cautioned against conflating ascertainability with other class action requirements, such as numerosity and predominance, stressing that certain inquiries regarding certification are more properly analyzed under those specific Rule 23 requirements and not under the ascertainability inquiry.

The refreshingly candid concurring opinion by Judge Rendell calls out the Third Circuit for further muddling the issue and is much more interesting from a plaintiff/consumer perspective. Judge Rendell begins by noting that “[the Third Circuit’s] heightened ascertainability requirement defies clarification,” and “the lengths to which the majority goes in its attempt to clarify what our requirement of ascertainability means, and to explain how this implicit requirement fits in the class certification calculus, indicate that the time has come to do away with this newly created aspect of Rule 23 in the Third Circuit.” Slip op., Rendell concurring op. at 1.

In Judge Rendell’s view, the Third Circuit still has “precluded class certification unless there can be objective proof—beyond mere affidavits—that someone is actually a class member.” Id. at 4. That approach is wrong, according to Judge Rendell, and for compelling reasons:

In most low-value consumer class actions, prospective class members are unlikely to have documentary proof of purchase, because very few people keep receipts from drug stores or grocery stores. This should not be the reason to deny certification of a class. . . . We have effectively thwarted small-value consumer class actions by defining ascertainability in such a way that consumers will necessarily fail to satisfy for lack of adequate substantiation. Consumers now need to keep a receipt or can, bottle, tube, or wrapper of the offending consumer items in order to succeed in bringing a class action.

Id. at 5-7.  He notes that in other Circuits, such as the Seventh and Ninth Circuits, some courts have certified small-value consumer cases and have not imposed the Third Circuit’s heightened proof requirement for ascertainability. Id.

The concurrence also rejects the notion that defendants’ due process rights will be abrogated by a standard that seeks to compensate at least some of the injured class members, stating that the odds that someone would sign a false affidavit, under penalty of perjury, that he or she purchased aspirin for the sake of receiving a “windfall” of $1.59 are “far-fetched at best.” Id. at 10. Further, Judge Rendell opines that the Third Circuit emphasized the wrong policy goal with this “clarified” standard, noting that “by focusing on making absolutely certain that compensation is distributed only to those individuals who were actually harmed, [the ascertainability doctrine] has ignored an equally important policy objective of class actions: deterring and punishing corporate wrongdoing. . . . In small-claims class actions like Carrera, the real choice for courts is between compensating a few of the injured, on the one hand, versus compensating none while allowing corporate malfeasance to go unchecked, on the other.” Id. at 10-12. Judge Rendell is adamant that rigorously applying the ascertainability requirement “translates into impunity for corporate defendants who have harmed large numbers of consumers in relatively modest increments. Without the class action mechanism, corporations selling small-value items for which it is unlikely that consumers would keep receipts are free to engage in false advertising, overcharging, and a variety of other wrongs without consequence.” Id. at 10-11.

He concludes that the Third Circuit’s approach to ascertainability “disserves the public,” writing,“[w]hile a rigorous insistence on a proof-of-purchase requirement . . . keeps damages from the uninjured, it does an equally effective job of keeping damages from the truly injured as well, and ‘it does so with brutal efficiency.’. . . [I]t is time to retreat from our heightened ascertainability requirement . . . .” Id. at 12-13. Judge Rendell’s conclusion is worth contemplating and should inform every court that is inclined to invoke ascertainability in order to deny class certification.

Authored by: 
Jordan Lurie, Of Counsel
CAPSTONE LAW APC

U.S. Supreme Court Grants Cert. in Robins v. Spokeo

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On April 27, 2015, the U.S. Supreme Court agreed to grant review of a Ninth Circuit decision addressing what constitutes “actual injury” for purposes of Article III standing. See 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) (available here).

In Robins, the Ninth Circuit Court of Appeals ruled that a statutory violation alone is sufficient to confer Article III standing on a plaintiff in a case brought under the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq. The Robins plaintiff had filed a class action lawsuit against Spokeo—a “people search engine” website that aggregates personal information from public sources—alleging that the site willfully violated the FCRA by posting inaccurate information about him. In its petition to the Supreme Court, Spokeo broadly framed the question presented as whether Congress can confer Article III standing “in the absence of any allegation of concrete and particularized injury.” But Robins contends that he sufficiently alleged actual injuries caused by the dissemination of incorrect personal information, including financial and emotional injuries. Deepak Gupta of Gupta Beck PLLC, who is representing Robins, analogized FCRA violations to defamation in a recent interview with Law360: “If I say something false about you and put it in the world, you have a claim against me, and that’s a particularized claim you have, and there’s always been standing under those circumstances.”

The Office of the Solicitor General strongly opposes Spokeo’s position, and filed a brief in March at the request of the Court, arguing that Spokeo’s petition should be denied because “public dissemination of inaccurate personal information about the plaintiff is a form of ‘concrete harm’ that courts have traditionally acted to redress, whether or not the plaintiff can prove some further consequential injury.”

While both the plaintiff and defense bars anxiously await the resolution of this case, the Court still might choose to punt on this issue, as it has twice in the recent past. In First American Financial Corp. v. Edwards, 132 S. Ct. 2536 (2012), and First Nat’l Bank of Wahoo v. Charvat, 134 S. Ct. 1515 (2014), the Court avoided deciding similar issues that would limit the right of consumers to seek redress for statutory violations by corporations. Cert. was denied in Charvat, but in Edwards, the Court initially granted cert. then dismissed it as improvidently granted. It remains to be seen whether Robins will meet a similar fate.

Cy Pres Settlement Approved in Google Privacy Action

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Last month, a Northern District of California judge finally approved an $8.5 million settlement of a class action challenging Google Inc.’s privacy policies. The plaintiffs alleged that Google invaded their and class members’ privacy rights by sharing personal information with third parties without authorization. Specifically, the plaintiffs alleged that Google improperly shared search terms—including credit card numbers, medical information, and other private data—with advertisers and other third parties. See Order Granting Motion for Final Approval, In re Google Referrer Header Privacy Litig., No. 10-4809 (N.D. Cal. March 31, 2015) (available here).

The settlement is notable in that Google is not required to compensate the class members directly. Rather, the company will distribute proceeds to the AARP Foundation, the World Privacy forum, and to four university-based, Internet-related foundations. The court justified its decision by noting that it would be impractical to distribute the settlement fund to the nearly 130 million class members affected by the challenged practices. Under these circumstances, the Court found that the proper approach would be to put the funds to the next best use (i.e., donating them to public interest organizations focusing on privacy issues) under the cy pres doctrine.

The cy pres doctrine provides a solution for cases where the class members are difficult to identify and/or where the individual class member damages are minimal. These cases include consumer class actions, because few class members maintain records of purchases of inexpensive goods, as well as cases where the costs of class settlement administration would exceed class members’ individual recoveries. In such instances, the obvious alternative to the defendant keeping its ill-gotten gains is for the court to award the settlement funds or judgment to non-profit organizations that promote the policies underlying the laws that the defendant violated. With a growing number of class actions brought on behalf of millions of affected class members, such as data breach cases, we expect cy pres awards to become increasingly common.

Authored by: 
Stan Karas, Senior Counsel
CAPSTONE LAW APC