Articles from December 2011

Hamilton v. Whole Foods: PAGA is Constitutional

Los Angeles Superior Court Judge Daniel J. Buckley has ruled that PAGA (the Labor Code Private Attorneys General Act of 2004) is constitutional.  The ruling came in response to a demurrer filed by defendant Whole Foods, in which the company claimed that PAGA is void on separation-of-powers grounds.  See Hamilton v. Whole Foods, No. BC461746 (L.A. Super. Ct. Dec. 22, 2011) (order denying demurrer) at 1 (available here). 

Rejecting Whole Foods’ arguments, the Court ruled that “the PAGA statute does not significantly impair judges’ functions, or contain anything unique to necessitate prosecution only by neutral government lawyers.  The absence of any real interference with the separation of powers knocks out the critical leg of defendant’s arguments.”  Id. at 5-6. 

Judge Buckley also emphasized that courts have consistently approved of private attorneys general enforcing Labor Code provisions under PAGA, most notably in Brown v. Ralphs, 197 Cal. App. 4th 489 (2011).  Id. at 6-7.  Moreover, the role of private attorneys general in enforcement of statutes beyond PAGA has long been recognized.  Id. at 7.  This further underscores the constitutionality finding. 

The Hamilton lawsuit challenges Whole Food’s alleged failure to provide adequate seating to employees pursuant to Labor Code Section 1198.

Sullivan v. De Beers: Certification of Nationwide Class Affirmed

An en banc Court of Appeals panel has affirmed the certification and settlement of a nationwide class action alleging monopolistic conduct by the South African diamond distributor De Beers.  See Sullivan v. DB Investments, Inc., No. 08-2784 (3rd Cir. Dec. 20, 2011) (order affirming class certification).  The decision is notable for its holding that potential recovery under different states’ antitrust laws does not preclude certification.  Additionally, the Third Circuit rejected arguments to the effect that certification requires a showing that each member of a prospective class has a “colorable claim.”

This ruling suggests a moderate approach to the predominance analysis required by Dukes v. Wal-Mart, 131 S. Ct. 2541, 2555-56 (2011).  Sullivan interpreted Dukes to stand for the proposition that “the focus is on whether the defendant’s conduct was common as to all of the class members, not on whether each plaintiff has a ‘colorable’ claim.”  See Sullivan v. DB Investments, Inc., No. 08-2784 (3rd Cir. Dec. 20, 2011) (order affirming class certification) at 42.  The majority found that the plaintiffs satisfied the predominance requirement by establishing that the putative class members shared common legal and factual questions arising from De Beers’ alleged anticompetitive conduct.  Id. at 44.

The Sullivan panel also identified three “guideposts” that direct a trial court’s predominance inquiry.  Id. at 37.  First, the decision holds that “commonality is informed by the defendant’s conduct as to all class members and any resulting injuries common to all class members.”  Id. at 37-38.  Second, “variations in state law do not necessarily defeat predominance.”  Id.  And, third, “concerns regarding variations in state law largely dissipate when a court is considering the certification of a settlement class.”  Id.

Owing to its closely reasoned analysis, Sullivan v. De Beers is likely to figure prominently in class certification briefing in state and federal courts throughout the country. 

Bank Of America Settlement Includes Innovative No-Arbitration Clause

After the Supreme Court’s AT&T v. Concepcion decision, it is hardly surprising to see courts enforcing arbitration clauses between plaintiffs and banks, employers, or retailers.  However, novel methods to avoid arbitration clauses and class action waivers are also emerging.  As part of a recent settlement between the San Francisco City Attorney and a Bank of America subsidiary, the financial institution agreed not to insert mandatory class action waivers into consumer contracts for credit cards.  See Settlement Agreement, People v. Nat’l Arbitration Forum, No. 473-569 (S.F. Super. Ct. Aug. 18, 2011).  Further, FIA Card Services agreed to not arbitrate collections disputes with California consumers for two years, and to stop using the notoriously anti-consumer National Arbitration Forum for five years.  The settlement also secures $5 million for San Francisco city taxpayers.

Schlesinger v. Ticketmaster: $265 Million Consumer Class Action Settlement

A Los Angeles Superior Court judge has granted preliminary approval of a settlement worth up to $265 million between Ticketmaster and customers who alleged that Ticketmaster should have but did not refund order processing fees and UPS shipping costs when customers cancelled ticket orders.  See Schlesinger v. Ticketmaster, No. BC 304565 (L.A. Super. Ct. Nov. 2, 2011) (order granting preliminary approval) (available here).

The settlement provides for discounts on future ticket purchases by class members, defined as those who did not receive a full refund on transactions made through the Ticketmaster website between October 21, 1999 and October 19, 2011.  See Settlement Agreement, Schlesinger v. Ticketmaster, No. BC 304565 (L.A. Super. Ct. Nov. 2, 2011) (available here).  Lead class counsel stand to receive up to $16.5 million in attorneys’ fees and costs.  Id.  The final approval hearing is set for May 29, 2012.