Articles from May 2012

Yeoman v. IKEA: Federal Court Certifies Class Action Alleging Privacy Violations

District Court Judge William Q. Hayes, of California’s Southern District, has certified a class of consumers alleging that the popular retailer, IKEA, violated California’s Song-Beverly Credit Card Act by asking customers to provide their ZIP codes during credit card transactions.  See Yeoman v. IKEA U.S. West, Inc., No. 11-701 (S.D. Cal. May 4, 2012) (order on motion to certify) (available here).  The Song-Beverly Act specifically prohibits asking consumers for “personal information” (which includes ZIP codes) as a condition of consummating a credit card transaction.

In opposing certification, IKEA presented evidence that many customers voluntarily provided their ZIP codes to IKEA outside of credit card transactions, thus removing those individuals from the ambit of a violation of the Song-Beverly Act.  IKEA argued that, since the class would likely include some of these customers, Plaintiffs’ proposed class definition was overbroad.  Judge Hayes rejected this argument, holding the class definition to be “not overbroad.”  Order at 5-6.

As to the often-pivotal class action prerequisite that common questions of law or fact predominate over individual issues, the court concluded that “Plaintiff has shown that common questions of law and fact predominate over other issues in this case on the grounds that IKEA’s uniform policy and practice of requesting personal identification information from customers during credit card transactions can be evaluated to determine if the Song-Beverly Credit Card Act was violated.”  Order at 13.

Finally, though it did not affect the class certification ruling, the court sought supplemental briefing as to the utility of multiple firms functioning as class counsel on behalf of the named plaintiffs and absent class members.  See Order at 15.

Jimenez v. Allstate: Federal Court Interprets Brinker, Certifies Overtime Class

Citing the California Supreme Court’s recent Brinker decision, Judge John A. Kronstadt has certified a class of approximately 1300 insurance adjusters who alleged misclassification and related wage violations by their employer, the insurance company Allstate, including off-the-clock work, unpaid overtime, and untimely final wages. See Jimenez v. Allstate Ins. Co., No. 10-08486 (C.D. Cal. Apr. 18, 2012) (order on motion to certify class action) (available here). Judge Kronstadt employed the Brinker court’s reasoning, which resulted in the denial of certification of the off-the-clock class in that case, to certify the Jimenez off-the-clock class. Order at 10-11. Unlike the situation in Brinker, although Allstate had facially compliant policies, Judge Kronstadt found that there was an informal systematic company policy to pressure or require employees to work off-the-clock. Id.

Jimenez is notable both in its application of substantive state law as articulated in Brinker and its adherence to the (still relatively new) class certification procedural criteria set forth in Wal-Mart v. Dukes, 131 S. Ct. 2541 (2011). In considering the plaintiffs’ allegation that Allstate, notwithstanding its written policies compliant with California overtime laws, “turn[ed] a ‘blind eye’ to unpaid overtime actually worked” (Order at 8-9), the Jimenez court found that whether Allstate had an “unofficial policy” of discouraging the reporting of (and compensation for) overtime work constituted a common question capable of class-wide adjudication (Order at 9). As in Brinker, the existence of facially compliant policies did not suffice to establish compliance with the law: “Although Defendant has presented testimony that its official policies are lawful, this showing does not end the inquiry. Plaintiff’s theory is that Defendant has a common practice of not following its official policy regarding overtime.” Order at 10.

Jimenez thus follows the Brinker holding that employers may not insulate themselves from liability by issuing a compliant written policy but failing to follow either that policy or the applicable law the policy purports to reflect.

Facebook Settles “Sponsored Stories” Class Action; “Friend Finder” Case Still Pending

Virtually coinciding with the much-publicized Facebook IPO, the preeminent social networking company has agreed to a settlement “in principle” with Facebook members who alleged that the site used their endorsements of Facebook’s “Sponsored Stories” feature without their consent and without compensating them. Fraley v. Facebook, No. 11-cv-01726 (N.D. Cal. May 22, 2012) (Notice of Execution of Term Sheet) (available here). The settlement’s terms and scope have not yet been announced. However, as the parties must obtain judicial approval of the class action settlement, the papers submitted in support of both preliminary and final approval will indicate how class members are to be compensated, any injunctive remedies, and the attorneys’ fees sought.

The Fraley plaintiffs contend that, in essence, Facebook used them to create endorsements akin to celebrity endorsements, informing members’ “friends” that they “like” certain companies or products. See Fraley v. Facebook, Second Amended Complaint (June 6, 2011) (available here). According to internal valuations that were part of the Facebook IPO, friend-to-friend referrals are potentially more valuable than endorsements from famous people.

The case’s pivotal moment came in December 2011, when Northern District Judge Lucy Koh denied Facebook’s motion to dismiss, chiefly on the basis of evidence put forth by the Fraley plaintiffs confirming that Facebook attaches significant monetary value to the Sponsored Stories endorsements. See Fraley v. Facebook, Order Granting in Part and Denying in Part Defendant’s Motion to Dismiss (Dec. 16, 2011) (available here). Facebook CEO Mark Zuckerberg has stated that friend-to-friend endorsements are the “Holy Grail” of advertising, and COO Sheryl Sandberg estimates that the value of a Sponsored Stories endorsement is as much as 200 to 300 percent greater than a standard advertisement without a friend-to-friend endorsement. Order at 4.

Facebook also faces allegations of uncompensated endorsements in connection with its “Friend Finder” service. See Cohen v. Facebook, No. 10-cv-05282 (N.D. Cal. Nov. 22, 2010) (Class Action Complaint) (available here). In contrast to Judge Koh’s ruling in Fraley, Northern District Judge Richard Seeborg ruled that the Cohen plaintiffs failed to established how they were injured by Facebook’s failure to either obtain their consent for their Friend Finder endorsements or compensate them, despite the fact that California Civil Code § 3344 — the controlling law in both Fraley and Cohen — was enacted precisely to ensure that non-celebrities be paid for endorsements, just as celebrities customarily are. An appeal of Judge Seeborg’s ruling is currently pending before the Ninth Circuit Court of Appeals, with briefing scheduled to begin next month.

Duran Petition for Review Buoyed by Consumer and Worker Rights Advocates

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.


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.