Posts belonging to Category New Filings

Iskanian v. CLS: Petition for Review Tees Up California Supreme Court Showdown as to Scope of Concepcion

It may soon be up to the California Supreme Court to determine the applicable scope of AT&T Mobility v. Concepcion (131 S. Ct. 1740 (2011)) in California.  Specifically at issue is the Second Appellate District’s ruling in Iskanian, which created multiple conflicts within California courts.  Iskanian v. CLS Transp. Los Angeles, LLC, ___ Cal. App. 4th ___ (2012) (available here).  As expected, the plaintiffs’ attorneys have filed a Petition for Review (available here), arguing the necessity of California Supreme Court intervention to resolve the numerous conflicting decisions.

The Petition for Review casts the Iskanian decision as a distinct outlier in California law, focusing on several new splits of authority within the California courts engendered by the Iskanian decision and requiring Supreme Court review.  Foremost, the Petitioners point out that, in Iskanian, the Second Appellate District, Division Two, rejected Brown v. Ralphs, 197 Cal. App. 4th 489 (2011), which was decided by Division Five of the same court just one year ago.  Whereas Brown held that PAGA waivers are outside the scope of the Supreme Court’s Concepcion decision, Iskanian disagreed, extending the scope of FAA preemption considerably to cover PAGA claims based on violations of employees’ workplace rights.  By ruling as it did, the Petition argues, the Iskanian court has ignored the California legislature, effectively “dismantle[ing] the entire statutory design of PAGA.”  Petition at 4.

The Petitioners also emphasize that the Iskanian decision, by purporting to invalidate the California Supreme Court’s Gentry decision (Gentry v. Super. Ct., 42 Cal. 4th 443 (2007)), upends years of California law that had treated employers’ arbitration agreements essentially as “choice-of-forum” clauses that in no case could force employees to give up their substantive rights.  Petition at 4.  The Petition asserts that Iskanian also disregards United States Supreme Court decisional law on this point, noting that the high Court “has never endorsed the notion that ‘arbitration agreements must be enforced according to their terms’ regardless of whether enforcement would eviscerate a party’s substantive rights, as the Court of Appeal did here.”  Petition at 3.  Moreover, the Petition contends that Iskanian usurps the California Supreme Court’s role by attempting to overrule the Gentry decision, a step that cannot be taken by an intermediate appellate court.  Petition at 5-6.

The Petition vividly evokes the practical considerations at stake: “If this decision takes root, California employers will demand arbitration not because of its traditional benefits of speed, cost-effectiveness and informality, but because it is a means to make any contract enforceable, thereby avoiding any liability for violations of California law.”  Petition at 8.

The Petition is expected to attract considerable amicus interest on both sides.

M.F. Global: New Class Action by Montana Farmers Alleges Client Accounts Raided to Conceal Massive Losses

The approval of a $90 million settlement late last year between investors and the embattled M.F. Global company (see Rubin v. MF Global, No. 1:08-cv-02233 (S.D. N.Y. Nov. 18, 2011) (final order and judgment)) appears to have been only the beginning of litigation aimed at the bankrupt derivatives broker.  Last week, farmers representing as many as 38,000 putative class members filed a lawsuit against MF Global and others, including the brokerage house J.P. Morgan, and auditors PricewaterhouseCoopers.  The plaintiffs allege that their accounts were among those raided by M.F. Global in an effort to conceal its massive losses.  See Complaint, Klinker v. J.P. Morgan Chase & Co., No. 9:12-cv-00005 (D. Mont. Jan. 9, 2012) (available here).

The contracts between the putative class members and M.F. Global provided that customer funds would not be commingled with the firm’s monies.  Id. at ¶¶ 8-13.  However, the plaintiffs allege that MF Global lost huge sums in bad investments on European government bonds, and tried to cover its losses by stealing from segregated customer accounts.  Id. at ¶¶ 80-85.  MF Global then purchased additional, distressed European assets with clients’ money.  Id. at ¶ 53.

The Klinker matter is expected to receive considerable media coverage in part because the plaintiffs named MF Globale’s former CEO, John Corzine, as a defendant.  Id. at ¶¶ 26, 37.  Mr. Corzine served as a United States Senator from New Jersey from 2001 to 2006.

Dukes v. Wal-Mart: Re-filed as California Class Action

The U.S. Supreme Court’s Dukes v. Wal-Mart decision reversed certification of a class of approximately 1.5 million current and former Wal-Mart employees, partly on grounds that litigating the claims of a class so large would be unwieldy.  See Dukes v. Wal-Mart, 131 S. Ct. 2541, 2555-56 (2011) (“Even if [statistical proof] established (as it does not) a pay or promotion pattern that differs from the nationwide figures or the regional figures in all of Wal-Mart’s 3,400 stores, that would still not demonstrate that commonality of issue exists.”).  Now, despite that ruling, the California-based plaintiffs have filed a fourth amended complaint, which alleges sex discrimination against Wal-Mart, but only on behalf of a putative class of California employees.  See Plaintiffs’ Fourth Amended Complaint, Dukes v. Wal-Mart, No. 3:01-cv-02252 (N.D. Cal. October 27, 2011) (available here).  The named plaintiffs seek to represent approximately 90,000 prospective class members.  Id. at ¶¶ 15-17.

Still captioned Dukes v. Wal-Mart, the newly filed action could become a model for additional, regional lawsuits against Wal-Mart.  The plaintiffs’ attorneys in the California action have indicated their intention to file similar class actions in other states.  This suggests a potential new trend in class actions, marked by narrower class definitions more conducive to identifiable and answerable common questions.  This could also pave the way for more targeted “mass actions” that disaggregate class actions into simultaneously pending individual actions.

Unemployed Law Grads Demand Tuition Refunds in Class Actions Seeking $450 Million

Recent graduates of two law schools—Thomas M. Cooley Law School and New York Law School (NYLS)—are collectively seeking $450 million in class actions that allege the schools misrepresented employment and salary statistics in order to attract students.  The Cooley case was filed in the Western District of Michigan and the NYLS case was filed in the Supreme Court of New York County.  In an interesting twist, the New York firm representing the plaintiffs, Kurzon Strauss, is itself being sued by Cooley for defamation, with the school alleging that, in the course of finding named plaintiffs for the misrepresentation class action, Kurzon Strauss damaged the school’s reputation. 

Cooley consistently has among the highest admission rates of the country’s 200 ABA-accredited law schools, and in the twelfth edition of the law school ranking book, Judging the Law Schools, Cooley ranks second, to Harvard, and comfortably ahead of Yale (#10), Stanford (#30), and fellow defendant NYLS (#62).  Some have questioned the objectivity of these rankings, which are authored by a founder of Cooley Law School along with its current President and Dean. 

Both schools (along with Thomas Jefferson law school, defendant in a class action filed earlier this year) are alleged to have inflated their post-graduation employment statistics by hiring their own graduates, excluding from the statistics graduates who did not respond to employment surveys, and classifying graduates with part-time or contract positions as being “fully employed.”

In defending against the misrepresentation claims, the law schools are expected to rely on the American Bar Association’s liberal definition of “employed,” which makes no distinction between law-related jobs and all others, including the barista and telemarketing positions that recent law school graduates appear to land with some frequency.