Posts belonging to Category Certification Rulings

California’s Court of Appeal continues to articulate a measured, well-reasoned class action jurisprudence, most recently by taking a second look at its own order affirming a trial court’s denial of class certification. See Faulkinbury v. Boyd & Assocs., Inc., ___ Cal. Rptr. 3d ___ (Cal. Ct. App. 2013) (slip opinion available here).

In the underlying action, the plaintiffs sued on behalf of some 4,000 fellow security guards, alleging nonpayment of overtime as well as meal and rest break violations. The trial court denied certification across the board, and on appeal the certification as to the overtime claims was granted. However, pre-Brinker, the Court of Appeal affirmed the denial of certification for the meal and rest break claims. See Faulkinbury v. Boyd & Assocs., Inc., 185 Cal. App. 4th 1363 (2010).

The California Supreme Court later granted review and held pending further decision in its landmark Brinker decision (53 Cal. 4th 1004). Upon review in light of Brinker, the Court of Appeal has now ordered that the same meal and rest break claims be certified. Increasingly, despite having been assessed as something of a draw when it was issued, Brinker is looking like a net benefit to workers seeking to enforce California’s meal and rest break statutes, with Faulkinbury vividly illustrating what workers faced both before and after Brinker.

While the court’s pre-Brinker analysis was barely indistinguishable from a rough finding on the merits (“the trial court reasonably could conclude there was insufficient evidence of classwide denial of off-duty meal breaks” (185 Cal. App. 4th at 1383)), the post-Brinker analysis focused on the plaintiff’s theory of liability, consistent with Brinker and other similarly-reasoned authority. The court found persuasive evidence that the defendant’s meal break policy “was uniformly and consistently applied to all security guard employees.” As such, citing Brinker, the court held that “‘[c]laims alleging that a uniform policy consistently applied to a group of employees is in violation of the wage and hour laws are of the sort routinely, and properly, found suitable for class treatment.’” Slip op. at 13 (internal citation omitted).

This most recent Faulkinbury decision is notable in making direct reference to and relying on Justice Werdegar’s Brinker concurrence, noting that “if an employer’s records show no meal period for a given shift, a rebuttable presumption arises that the employee was not relieved of duty and no meal period was provided, shifting the burden to the employer to show the meal period was waived.” Slip op. at 10, citing Brinker, 53 Cal. 4th at 1052 (Werdegar, J, concurring). Thus, rather than giving rise to individual questions that destroy the predominance necessary for certification because such records speak to the “why” behind missed breaks, the Werdegar concurrence, and now Faulkinbury, sensibly regards such evidence as tending to validate a plaintiff’s theory of meal break liability.

The Faulkinbury panel included Acting Presiding Justice William F. Rylaarsdam, Associate Justice Richard D. Fybel, and Associate Justice Eileen Moore. Justice Fybel wrote the unanimous opinion.

In a win for employees seeking to remedy broad, systematic employer violations of workplace protections, California’s intermediate appellate court has reversed a trial court judge’s denial of class certification. Bluford v. Safeway Stores, Inc., No. C066074 (Cal. Ct. App. May 8, 2013) (slip opinion available here). Focusing on the often-decisive predominance requirement for class certification, the unanimous three-judge panel took issue with the trial court’s findings that individual issues predominated over common issues as to the plaintiff’s meal and rest break claims and that the plaintiff failed to allege a common injury resulting from the inadequate wage statements. Holding that “[i]nsufficient evidence supports the trial court’s ruling,” the Court of Appeal found that common issues predominated as to the meal, rest and wage statement claims, and directed the trial court to certify each claim. Slip op. at 2.

The issues around certification of the meal break claim were familiar, with the plaintiff presenting evidence of a systematic, de facto policy of the defendant not providing second meal breaks after the tenth hour of a shift. Slip op. at 11-12. The Court of Appeal deemed inadequate the defendant’s proffering of three declarations from supervisors, attesting to having provided the workers under them sufficient opportunity to take second meal breaks, notwithstanding the company’s lack of any written second meal policy comparable to its written policy governing first meal breaks. Slip op. at 12-13.

As to the rest break claim, the Court of Appeal extensively considered the defendant’s proffered defense, which seemingly entailed extensive individual questions. Slip op. at 7-9. However, the Court of Appeal ruled that determining whether Safeway’s rest break policy and purported practice of including payment for rest breaks in mileage reimbursements complied with California law could be accomplished in a single, common adjudication. Slip op. at 9-10.

Safeway offered a familiar defense to certification of a wage statement class by focusing on the California Labor Code requirement (under Cal. Lab. Code § 226(e)) that there must be an “injury” coincident with a wage statement violation. However, consistent with the California Legislature’s recent clarification of the wage statement statute, the Court of Appeal reversed the trial court’s denial of certification as to the wage statement claim, noting that “‘a very modest showing will suffice.’” Slip op. at 15, citing Jaimez v. DAIOHS USA, Inc., 181 Cal. App. 4th 1286, 1306 (2010).

While this case is not currently designated as published, the Third Appellate District’s rigorously reasoned and detailed ruling as to some of the most frequently pleaded classwide claims would likely find considerable utility as a published case.

The Sixth Circuit has issued a counterweight to the recent spate of anti-class-action decisions coming from federal courts. In In re: Vertrue Inc., a three-judge panel held that the statute of limitations for the claims of putative class members may be tolled in a subsequent class action when there was no ruling on class certification in a prior class action. See In re: Vertrue Inc. Marketing and Sales Practices Litig., No. 10-3928 (6th Cir. Apr. 16, 2013) (slip opinion available here).

This case and numerous related cases had a long, meandering decade-plus procedural history before arriving in the Sixth Circuit, which has appellate jurisdiction over federal trial-level courts in Kentucky, Michigan, Ohio, and Tennessee. The plaintiff first filed the action in the Southern District of California in 2002, seeking to represent a national class who bought membership programs purporting to provide discounts on purchases, but that in fact functioned to lure consumers with “bait” products. Slip op. at 2-4. The plaintiff alleged that when customers called the company to buy the bait product, they were deceived into believing that free materials would be sent to them in the mail. Id. Vertrue would then mail a membership card and place a recurring annual charge of $60-$170 on the customer’s credit card, which would only be removed if the customer navigated hard-to-follow procedures for cancellation. Id.

The California district court dismissed the action without having ruled on class certification. Slip op. at 3-4. In response, plaintiffs filed 13 state court actions across multiple jurisdictions, which were consolidated in the Northern District of Ohio. Slip op. at 4-5. The Ohio federal court held that the claims were tolled as a result of the Southern District of California proceeding and that the state court claims therefore were timely filed, which occasioned the appeal to the Sixth Circuit. Slip op. at 5. The Sixth Circuit affirmed the tolling, relying on Supreme Court authority allowing for unnamed plaintiffs to preserve their individual claims while class action lawsuits are pending. The court explained that refusing to recognize the claims of unnamed class members would lead to inefficiency because the class members would then be forced to file individual actions to preserve any state law claims whose statutes of limitations might otherwise expire while a federal class action is pending. See slip op. at 11-12.

The unanimous three-judge panel affirmed the district court’s holding that both the plaintiffs’ federal and state law claims were timely asserted, and that the plaintiffs’ claims were tolled under American Pipe & Constr. Co. v. Utah, 414 U.S. 538, (1974). Circuit Judge Julia Smith Gibbons reasoned that “Vertrue has failed to explain how the efficiencies sought by American Pipe tolling would be advanced if putative class members were forced to file individual state law actions to preserve any state law claims whose statutes of limitations might run during the course of class proceedings.” Slip op. at 11.

In sensibly preserving the rights of consumers whose claims have never been adjudicated or denied class certification, the decision marks a clear victory for consumers, and, in contrast to some recent decisions affecting class actions, one grounded in Supreme Court precedent.

The First Circuit has issued a critical decision both in its ultimate ruling and its reasoning. See In re: Neurontin Marketing & Sales Practices Litig., No. 11-1806 (1st Cir. Apr. 3, 2013) (slip opinion available here). In a decision written by Chief Judge Sandra Lynch, the unanimous three-judge panel reversed the district court’s grant of summary judgment and denial of class certification. See slip op. at 24-25.

In the underlying case, plaintiffs alleged that doctors prescribing the anti-seizure drug Neurontin were deceived by the defendant, pharmaceutical giant Pfizer, with respect to “off-label” uses for which Neurontin is not formally approved. The district court repeatedly rejected the plaintiffs’ use of widely-accepted statistical methods, including multiple regression, to prove causation. The First Circuit panel rejected the defendants’ argument that the plaintiffs’ use of aggregate evidence precluded class treatment. See slip op. at 20-22.

The plaintiffs’ expert had shown by regression analysis that essentially all Neurontin prescriptions for bipolar disorder were the result of Pfizer’s off-label marketing. In denying the plaintiffs’ second class certification motion, the district court adopted reasoning typically invoked by class action defendants, holding that the plaintiffs’ expert could not offer class-wide causation evidence because the regression analysis did not take account of doctors’ individual prescribing decisions, and only focused on Pfizer’s off-label marketing. See slip op. at 8.

While the second class certification motion was pending, Pfizer filed a summary judgment motion premised on the same causation argument, arguing that the doctor-by-doctor inquiry purportedly required to augment the regression analysis would be “unmanageable.” Slip op. at 13. The district court denied the second class certification motion and granted Pfizer’s summary judgment motion.

The First Circuit reversed both the district court’s entry of summary judgment and denial of class certification, with the centerpiece of the appellate ruling being the panel’s endorsement of the rigorous statistical methods that the district court had rejected. Recognizing that regression analysis is capable of distinguishing the relative causation effects among multiple independent variables, Judge Lynch’s decision noted that the plaintiffs had not relied exclusively on the regression analysis: “[I]n addition to the aggregate statistical evidence, . . . plaintiffs also presented circumstantial evidence that supported an inference of causation”, such as “documents showing that psychiatrists had almost never prescribed Neurontin for bipolar disorder until after Pfizer began its marketing campaign, at which point prescriptions jumped by 1700% in two years.” Slip op. at 20.

The first Circuit’s decision serves as essential guidance for plaintiffs’ counsel in complex litigation requiring sophisticated and rigorous scientific methods in order to confront facile arguments like those advanced by Pfizer, and adopted, repeatedly and emphatically, by the trial court.