Governor Jerry Brown today nominated Boalt Hall law professor Gordon Liu to the California Supreme Court to replace retiring Justice Carlos Moreno.

If confirmed, Liu would bring sterling credentials and a classically American story of upward mobility to the California Supreme Court. The son of Taiwanese immigrants, Liu attended public schools growing up in Sacramento, before attending college at Stanford and then Yale Law School, after which he clerked for U.S. Supreme Court Justice Ruth Bader Ginsberg. Liu joined the faculty at UC Berkeley’s Boalt Hall School of Law in 2003 after having worked in private practice in Washington, D.C.

The California Bar’s Commission on Judicial Nominees Evaluation will first consider the Liu nomination, and make a non-binding recommendation to the Commission on Judicial Appointments, which will then schedule at least one public hearing. It is the Commission on Judicial Appointments that must ultimately confirm Liu or not.

Despite having withdrawn his nomination by President Obama to the Ninth Circuit Court of Appeals in response to a successful filibuster by Senate Republicans, Professor Liu is expected to enjoy a relatively easy confirmation to the California Supreme Court.

On June 16, 2011, Central District Judge Gary Allen Feess granted the plaintiffs’ certification motion in McKenzie v. Fed. Express Corp., No. 10-cv-02420, 2011 U.S. Dist. LEXIS 65278 (C.D. Cal. June 16, 2011) (order granting class certification) (available here).  In McKenzie, the plaintiffs alleged violations of three of the nine Section 226(a) requirements: total hours worked (Cal. Lab. Code § 226(a)(2)), the pay period inclusive dates (Cal. Lab. Code § 226(a)(6)), and overtime rates (Cal. Lab. Code § 226(a)(9)).  Such claims are an archetype for class treatment, since wage statements or pay stubs tend to be identically formatted for all employees (and thus contain identical defects).

This ruling rebuffed the commonality defense most frequently offered by wage statement defendants (that Section 226(e)’s injury requirement gives rise to individual questions that destroy commonality and render class treatment inappropriate), situating the injury discussion as part of the damages phase, where it is well established that variation in damages among class members is not an impediment to class certification.  See McKenzie at *2, *25.  Moreover, although the ruling adhered to a California Court of Appeal holding in Price v. Starbucks Corp., 192 Cal. App. 4th 1136 (Ct. App. 2011) (stating that Section 226(e) requires an injury separate from but causally related to the violation of Section 226(a)(1)-(9)), Judge Feess adopted a minimalist approach, whereby the injury requirement is satisfied if the wage statement recipient must “engage ‘in discovery and mathematical computations’” to determine if wages were correctly paid.  McKenzie at *10 (citing Price at 1143).

Judge Feess noted that “even the declarations submitted by FedEx in opposition to McKenzie’s motion for class certification indicate that common issues predominate” because the declarations stated that employees use FedEx’s computer system and consult their own handwritten notes “to determine whether they have been paid correctly every pay period.”  McKenzie at *30-*31. In an apparent declaration–drafting blunder, “one employee even stated in his declaration that he initially found FedEx’s wage statements confusing and had to consult his manager to understand the paystub.”  Id. at *31.  As such, the declarations submitted by FedEx were directly responsive to the “confusion” threshold for satisfying the Section 226(e) injury requirement, and, as with most admissions against interest, were likely fatal to the FedEx certification opposition.

Southern District of New York Judge Jed Rakoff, long recognized as an innovative thinker on matters concerning class actions, has granted certification in a class action brought by investors concerning residential mortgage-backed securities initially valued at $16.5 billion. See Public Employees’ Retirement System of Mississippi v. Merrill Lynch & Co., Inc., No. 08-cv-10841 (S.D.N.Y. June 16, 2011) (order granting certification) (available here). The plaintiffs allege that the $16.5 billion valuation was massively overstated, as it was premised on unrealistic assumptions about the ability of individuals to repay home loans, and that Merrill Lynch knew but failed to disclose that fact to investors. Judge Rakoff’s ruling is the first certification of a class of mortgage-backed securities purchasers, and the case is expected to be closely watched not only as to developments in the still-inchoate substantive law around mortgage-backed securities, but also as to procedural devices proposed or actually employed for the determination of liability and damages.

Although titled with a Mississippi-based public employee pension plan as the first-named plaintiff, this action was brought on behalf of several similar plans in Wyoming, Connecticut, and California, including the massive Los Angeles County Employees Retirement Association. The plaintiffs are represented by the Bernstein Litowitz Berger & Grossmann firm, while Merrill Lynch is represented by Skadden Arps.

In opposing class certification, the Skadden lawyers followed a familiar formula: focusing on a purported lack of commonality and urging Judge Rakoff to follow a colleague’s certification ruling in a similar case. They argued that the plaintiffs failed to establish that common issues will predominate, and frequently pointed Judge Rakoff toward the order denying certification in New Jersey Carpenters Health Fund v. Residential Capital, LLC, No. 08-cv-8781(S.D.N.Y. Jan 18, 2011) (order denying certification).

Judge Rakoff declined to adopt the reasoning of the earlier mortgage-backed securities action, but did not elaborate, opting to save his explanation for “a forthcoming written opinion” which has yet to be issued. Order at 2. Though not expressly stated in the Order, it seems likely that Judge Rakoff was deferring the issuance of a fully-reasoned order until the Supreme Court’s issuance of its Dukes v. Wal-Mart decision (which occurred a mere four days later). It is notable that, while Judge Rakoff implicitly acknowledged that Dukes is likely to alter the terms of certification, the fact of certification is presumed to be unaffected.

In the California Court of Appeal’s first major statement on the reach of the U.S. Supreme Court’s recent decision concerning Federal Arbitration Act (FAA) preemption in Concepcion v. AT&T, 131 S.Ct. 1740 (2011), the Court of Appeal for the Second Appellate District today held that Concepcion does not apply to representative actions brought pursuant to PAGA, the California Labor Code’s Private Attorneys General Act of 2004. In Brown v. Ralph’s Grocery Co. (opinion available here), the Court of Appeal held unequivocally that Concepcion “does not apply to representative actions under the PAGA.” Slip. Op. at 2. Consequently, “the trial court correctly ruled that the waiver of plaintiff’s right to pursue a representative action under the PAGA was not enforceable under California law.” Id.

The Brown v. Ralph’s panel had specifically requested supplemental briefing following the Supreme Court’s issuance of Concepcion, and its decision to designate its opinion as a published decision was likely made in light of this being a ruling with considerable implications for numerous pending and still-to-be filed cases. The panel noted that Concepcion “provided that ‘at least under some circumstances, the law in California is that class action waivers in consumer contracts of adhesion are unenforceable, whether the consumer is being asked to waive the right to class action litigation or the right to classwide arbitration’ and that ‘the FAA [does not preempt] California law in this respect.’” Slip. Op. at 9, quoting Concepcion, 131 S.Ct. at 153. After then undertaking an extensive analysis that identified PAGA’s purpose as a statute that deputizes citizens to assist the State with the collection of civil penalties and not a statute aimed at recovering damages (see Slip. Op. at 10-12), the Brown v. Ralph’s court concluded that “representative actions under the PAGA do not conflict with the purposes of the FAA.” Slip. Op. at 12.

Striking a pragmatic note, the panel also observed that “[i]f the FAA preempted state law as to the unenforceability of the PAGA representative action waivers, the benefits of private attorney general actions to enforce state labor laws would, in large part, be nullified.” Id.

A team of attorneys from Initiative Legal Group, APC represented the plaintiffs both before the trial court and on appeal, and will continue to represent the plaintiffs as the action is remanded to the trial court pursuant to the Court of Appeal’s direction. Apart from its direct application to nearly identical factual circumstances in other PAGA actions, the Brown v. Ralph’s decision is also expected to be influential with federal courts considering motions to remand PAGA actions to state court, as the same concerns would arise about the purposes of PAGA being vitiated if the unique procedural posture of PAGA actions is not heeded.