Posts belonging to Category Certification Rulings



2nd Cir. Rejects Extreme Interpretation of Comcast

Courts have long held that individual and varying damages calculations for putative class members does not necessarily preclude class certification. However, a shadow of doubt was cast over this well-settled principle by the United States Supreme Court’s decision in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013). In Comcast, the Supreme Court reversed the district court and Third Circuit Court of Appeals’ certification orders because it found that the plaintiff’s expert testimony was insufficient to establish classwide damages. Predictably, defense counsel have cited Comcast to argue that individual damages issues preclude certification. If adopted, this rationale would effectively end class actions as we know them, given that most class actions involve varying individual damages.

Recently, the influential Court of Appeals for the Second Circuit weighed in on the scope of Comcast and whether it overruled the law of its Circuit, holding that class certification cannot be denied merely because damages have to be ascertained on an individual basis. Roach v. T.L. Cannon Corp., No. 13-3070-cv (2d Cir. Feb. 10, 2015) (slip op. available here). In Roach, the plaintiff alleged that T.L. Cannon, an Applebee’s restaurant franchisee, had a policy of not paying hourly employees an extra hour of pay when working a ten-hour work day as was required at the time by New York law (the “spread-of-hours” claim) and that the defendant required its managers to subtract pay for required rest breaks that the employees did not take (the rest break claim). The magistrate judge recommended that the spread-of-hours claim be certified, finding the common question of whether the company had a policy of depriving employees of an extra hour of pay predominated over individual issues, but ultimately denied certification of the rest break claim because the class representatives were inadequate. The district court, without considering whether common issues existed, denied certification of both claims on the sole basis that the presence of individualized damages precluded certification under Comcast. Slip op. at 9.

The Second Circuit disagreed with the lower court, holding that the court had misinterpreted Comcast. Id. at 26. According to the Second Circuit, Comcast did not hold that a class cannot be certified under Rule 23(b)(3) simply because damages cannot be measured on a classwide basis. Id. at 19. Rather, Comcast’s more narrow ruling was “that a model for determining classwide damages relied upon to certify a class under Rule 23(b)(3) must actually measure damages that result from the class’s asserted theory of injury.” Id. at 20. Although Comcast reiterated that the damages question should be considered at the certification stage, the fact that damages may have to be ascertained on an individual basis is only a factor to consider when determining whether common issues outweigh individual issues. Id at 22. The Roach court noted that its ruling was consistent with the five other Circuits that had applied Comcast, including the Ninth Circuit’s decision in Leyva v. Medline Indus. Inc., 716 F.3d 510 (9th Cir. 2013). The court then vacated the order denying class certification and remanded the case.

Authored by:
Robert Drexler, Senior Counsel
CAPSTONE LAW APC

CA Ct. of Appeal Reverses Denial of Class Cert in Song-Beverly ZIP Code Case

In an unpublished opinion issued last week, the California Court of Appeal found that a lower court incorrectly denied class certification in a proposed class action involving the collection of consumers’ ZIP codes at Party America retail stores. Aguirre v. Amscan Holdings, Inc., No. C073059 (Cal. Ct. App. Feb. 11, 2015) (slip op. available here). The plaintiff alleged that Amscan, d/b/a Party America, collected and recorded customers’ ZIP codes at the point of sale, in violation of the Song-Beverly Credit Card Act.

The trial court examined the criteria for class certification and denied the plaintiff’s motion based on lack of ascertainability, because the plaintiff could not “clearly identify, locate and notify class members through a reasonable expenditure of time and money.” Slip op. at 13. However, this is a much stricter definition of ascertainability than is generally imposed on class action plaintiffs, and the appellate court categorically rejected the trial court’s conclusion, stating that “the representative plaintiff need not identify, much less locate, individual class members to establish the existence of an ascertainable class.” Slip op. at 11-12 (relying on Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 706).

The Amscan court found that an ascertainable class exists, since the class definition “describes a set of common characteristics sufficient to allow a member of that group to identify himself or herself as having a right to recover based on the description.” Slip op. at 19 (citing Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 828). The case was remanded back to the trial court with instructions to reevaluate their class certification determination in light of the appellate court’s finding of an ascertainable class.

Jamba Juice Plaintiffs Seek Injunctive Relief, Forgo Monetary Damages in Proposed Settlement

In a proposed settlement of a consumer class action regarding false advertising claims against Jamba Juice’s smoothie kits, the plaintiffs avoided the process of identifying class members by not seeking monetary damages for the class. See Plaintiffs’ Motion for Preliminary Approval of Class Action Settlement, Lilly, et al. v. Jamba Juice Company, et al., No. 13-cv-02998 JST (N.D. Cal.) (available here). The plaintiffs’ initial complaint, filed in June 2013 in the U.S. District Court for the Northern District of California, alleged defendants Jamba Juice and Inventure Foods, Inc. misled buyers by marketing a line of at-home frozen smoothie kits as “all natural.” The smoothie kits were available in various flavors and contained ascorbic acid, xanthan gum, and other unnatural-sounding ingredients. The complaint brought causes of action under California law, including the Consumer Legal Remedies Act, Cal. Civ. Code §§ 1750 et seq., False Advertising Law, Cal. Bus. & Prof. Code §§ 17500 et seq., Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200 et seq., and for breach of warranty pursuant to Cal. Comm. Code § 2313, on behalf of a class of California consumers who purchased the smoothie kit products.

The defendants had previously sought to defeat the case on ascertainability grounds at the certification stage, arguing in their opposition that it would be too difficult to identify and locate buyers of such a low-priced grocery item. In a September order granting in part and denying in part the plaintiffs’ motion for class certification, Judge Jon Tigar rejected the defendants’ ascertainability arguments and certified the class solely for purposes of determining liability, rejecting the Carrera approach from the Third Circuit. See Order Granting in Part and Denying in Part Motion for Class Certification, Lilly, et al. v. Jamba Juice Company, et al., No. 13-cv-02998 JST (N.D. Cal. Sept. 18, 2014) (citing Carrera v. Bayer Corp., 727 F.3d 300, 308 (3d Cir. 2013), where class certification was denied, even though the criteria for class membership was objective, because plaintiffs were unable to show at the certification stage that they will be able to identify absent class members) (slip op. available here). The court stated, “Few people retain receipts for low-priced goods . . . . Yet it is precisely in circumstances like these, where the injury to any individual consumer is small, but the cumulative injury to consumers as a group is substantial, that the class action mechanism provides one of its most important social benefits.” Slip op. at 7. However, the court stopped short of certifying the class for the purpose of damages.

In a motion for preliminary approval filed on December 1, 2014, the parties agreed, for purposes of settlement only, to certify a nationwide injunctive relief-only class, which would require Jamba Juice to cease labeling and marketing its smoothie kits as “all natural” so long as the challenged products contain the challenged ingredients, and to compensate the named plaintiffs with up to $5,000 each in incentive awards. See Plaintiffs’ Motion for Preliminary Approval of Class Action Settlement, at 3-5. The defendants have agreed to pay a total of $425,000 for attorney’s fees and costs, subject to court approval. Id. at 5. Because class members would not be awarded any monetary damages nor would they release any monetary claims, no notices or opt-out rights to potential members would need to be sent out. Id. at 8-10. Developments in this proposed settlement will be closely watched by plaintiffs’ and defense counsel alike.

Cal Ct. of Appeal Reverses Denial of Cert in Joe’s Crab Shack Managers’ Case

Earlier in November, the California Court of Appeal revived a proposed overtime class action brought by Joe’s Crab Shack managers against their employer, reversing the trial court’s denial of class certification. Martinez v. Joe’s Crab Shack Holdings, No. B242807 (Second Dist. Div. 7 Nov. 10, 2014) (slip op. available here). The court initially had remanded the case back to the lower court to reconsider issues regarding the commonality of the managers. Martinez v. Joe’s Crab Shack Holdings, No. B242807 (Second Dist. Div. 7 Nov. 12, 2013). The prior decision was issued while Duran v. U.S. Bank National Assn. (59 Cal.4th 1 (2014)) was pending before the California Supreme Court; following the Duran decision, the Martinez matter was transferred back to the court of appeal for reconsideration in light of the case.

The court of appeal again remanded because it found the trial court had erred in denying certification because it had failed to adequately analyze the adequacy and typicality of the plaintiffs, as well as the commonality and predominance prongs under Brinker Rest. Corp. v. Superior Court (273 P.3d 513 (2012)), Duran, and Ayala v. Antelope Valley Newspapers, Inc. (59 Cal. 4th 522 (2014)). It reaffirmed that classwide relief remains “the preferred method” for resolving wage-and-hour claims, even in cases with difficult issues of proof, such as misclassification. Slip op. at 23. The court concluded, “[b]y refocusing its analysis on the policies and practices of the employer and the effect those policies and practices have on the putative class, as well as narrowing the class if appropriate, the trial court may in fact find class analysis a more efficient and effective means of resolving plaintiffs’ overtime claim.” Id.

The employees alleged that they worked overtime, were denied uninterrupted meal and rest breaks, and were misclassified as exempt despite having spent a majority of their time performing non-exempt “utility” tasks. The trial court had denied class certification, holding that, because the employees were unable to accurately estimate how much time they had spent doing exempt versus non-exempt tasks, individual inquiries were necessary. This finding meant that common issues did not “predominate” over individual issues, and that class treatment would not be the superior method for resolving the claims. Slip op. at 2.

The court of appeal’s second opinion in this case followed the California Supreme Court’s decision in Duran, a class action filed by former bank salespersons who alleged they had been misclassified. The Duran opinion addressed issues of class action manageability, ruling that individual issues do not necessarily overwhelm common issues when a case involves overtime exemptions premised on how employees spend the workday. Citing Duran, the Martinez court found that “courts in overtime exemption cases must proceed through analysis of the employer’s realistic expectations and classification of tasks rather than asking the employee to identify in retrospect whether, at a particular time, he or she was engaged in an exempt or nonexempt task.” Slip op. at 21.