Articles from February 2013

A nationwide class of annuity purchasers, who alleged that National Western Life Insurance Company made false representations about a “premium bonus,” have successfully rebuffed the defendant’s attempt to decertify the nationwide class. In its decertification motion, National Western argued that the U.S. Supreme Court’s opinion in Wal-Mart v. Dukes rendered the previously-issued certification order in this case untenable, since the judge did not perform a “rigorous analysis of commonality,” but instead found a classwide inference of misrepresentation. See In re: Nat’l Western Life Ins. Deferred Annuities Litig., No. 05-1018 (S.D. Cal. Feb. 14, 2013) (order denying motion to decertify).

The federal district court’s denial of the decertification motion underscored a trend in consumer class action jurisprudence whereby absent class members’ reliance on a misrepresentation can be inferred, and need not be affirmatively established, so long as the reliance comports with “common sense.” Order at 6-7.

The plaintiffs contend that National Western represented that annuity purchasers would receive a reduction in their premium payments, but failed to disclose that the savings realized by consumers through the premium bonus would be negated by countervailing reductions in the interest rates associated with the annuities.

The defendant attempted to demonstrate that the class could not establish reliance by common proof by proffering the deposition testimony of 15 class members, not all of whom testified to having relied on the at-issue representations concerning the premium bonus. However, the court held that the defendant’s depositions could not rebut the common sense presumption of reliance, stating, “National Western’s evidence cannot be properly generalized to the whole class.” Order at 8.

The decertification ruling held that the plaintiffs could in fact demonstrate classwide reliance because of the “common sense link” between the National Western’s alleged misrepresentations and the purchase of annuities by class members. Order at 6.

In Noel Canning v. NLRB, No. 12-1115 (D.C. Cir. Jan. 25, 2013), the D.C. Circuit Court ruled that President Obama lacked the authority to make three recess appointments to the five-member National Labor Relations Board (NLRB). The recess appointments were deemed unconstitutional, leaving the NLRB with only one board member — two short of the three required to make a quorum and allow the NLRB to function. At least 30 workplace disputes pending before the NLRB are now in limbo.

Of greater consequence, Noel Canning potentially abrogates every NLRB decision since January of 2012, including: Costco Wholesale Corp., 358 NLRB No. 106 (Sept. 7, 2012) (employer’s “social media policy” prohibiting electronic postings that “damage the Company, defame any individual or damage any person’s reputation” held unlawful); Karl Knauz Motors, Inc., 358 NLRB No. 164 (Sept. 28, 2012) (employer’s rule prohibiting “disrespectful” language or “any other language which injures the image or reputation of” employer held unlawful); and Banner Health System, 358 NLRB No. 93 (July 30, 2012) (asking employee who was subject of an internal investigation to refrain from discussing matter violates the NLRA).  Also in question are D. R. Horton, Inc., 357 NLRB No. 184 (Jan. 3, 2012) and Convergys Corp., 2012 NLRB LEXIS 742 (Oct. 25, 2012), key pro-worker decisions finding class action waivers unconscionable.

Meanwhile, as his NLRB appointments are being assailed, President Obama has made two appointments to the Federal Circuit. Unique among the federal intermediate appellate courts, the Federal Circuit was established in 1982 pursuant to Article III of the Constitution, in order to effectuate the merger of the United States Court of Customs and Patent Appeals and the appellate division of the United States Court of Claims. The Federal Circuit’s jurisdiction covers patents and trademarks, but also takes the appeals of certain administrative agency decisions. Indeed, fully half of the Federal Circuit’s caseload is administrative law.

The president’s two most recent appointments, Raymond Chen and Todd Hughes, are notable in broadening the federal judiciary’s diversity. Hughes would be the first openly gay federal appeals court judge, while Chen would be the first Asian American to serve on the Federal Circuit in over 25 years.

United Airlines has opted to settle rather than risk litigating flight attendants’ allegations of unlawful payroll procedures. See Takagi v. United Airlines, Inc., No. 11-09191 (C.D. Cal. filed Nov. 4, 2011). Under the terms of the settlement, which must receive judicial approval, over 4,000 flight attendants will be eligible for payments from a $925,000 settlement fund. The preliminary approval papers are available here.

The plaintiffs alleged that United violated two distinct California Labor Code statutes, the first concerning the timeliness of payments (Cal. Lab. Code § 204) and the second governing the information that must appear on employees’ pay stubs (Cal. Lab. Code § 226). The parties’ settlement, which resulted from an August 2012 mediation, provides for attorneys’ fees amounting to a standard one-third of the total common fund negotiated by plaintiffs’ counsel.

Though modest, the Takagi settlement gives the plaintiffs’ bar reason to be optimistic. The California wage statement statute, Cal. Lab. Code § 226, was amended effective January 1, 2013, so as to resolve an ambiguity that had precluded the certification of some wage statement cases. As such, United’s willingness to settle is an early indication that the amended statute is functioning as intended, as United would have faced exposure considerably greater than the settlement amount had the plaintiffs successfully moved for class certification. Additionally, despite having been removed to federal court under the Class Action Fairness Act (CAFA), the case nonetheless endured and yielded a settlement, despite the widespread view that both certification and settlement are more difficult in federal court.

Ritz-Carlton Hotels has agreed to pay $2 million to settle a class action lawsuit alleging unpaid overtime as well as meal break and vacation pay violations. See Mot. for Prelim. Approval, Lambson v. The Ritz-Carlton Hotel Co., LLC, No. 11-06669 (N.D. Cal. Feb. 1, 2013). Approximately 1,500 current and former employees of three California Ritz Carlton locations — the Ritz-Carlton Residences in San Francisco, Ritz-Carlton Half Moon Bay and Lake Tahoe Ritz-Carlton — will directly benefit from the settlement, which must be approved by U.S. District Judge Charles Breyer.

The settlement was reached after the parties worked (both formally and informally) with noted wage and hour mediator David Rotman, whose proposal was ultimately accepted by the parties. See Mot. for Prelim. Approval at 2. The preliminary approval papers describe the settlement as a “tremendous recovery” for the class members, and note that none of the $2 million settlement fund will revert to the defendant. Id. at 3. Further, the approval papers contend that the defendant’s total exposure is $6.8 million, and thus the $2 million settlement “represents an approximately 29.4% recovery for the class members.” Id. at 6.

Plaintiffs’ counsel are seeking $635,000 in fees and costs. See id. at 22-23. The settlement also proposes a $15,000 incentive payment to each named plaintiff, as compensation for the distinct risks and demands they undertook relative to other class members.