California’s Second Appellate District has affirmed a trial court’s order which interpreted AT&T Mobility v. Concepcion, compelled arbitration, and dismissed the claims of a certified class. This ruling has created a split that the California Supreme Court might ultimately have to resolve. See Iskanian v. CLS Transp. Los Angeles, LLC, ___ Cal. App. 4th ___ (2012), available here.

The Court of Appeal held that “the Concepcion decision conclusively invalidates the Gentry test [promulgated in Gentry v. Super. Ct., 42 Cal. 4th 443 (2007)].” Slip op at 8. In Concepcion, the U.S. Supreme Court expressly overruled the California Supreme Court decision in Discover Bank v. Super. Ct., a consumer class action in which the at-issue arbitration agreement had been stricken as unconscionable. Whether Concepcion also pertained to wage and hour class actions remained unclear, as it was Gentry that had articulated the unconscionability test applicable in the context of wage and hour claims. In holding Gentry overruled, Iskanian is in conflict with at least two other Court of Appeal decisions.

First, Brown v. Ralphs Grocery Co. (197 Cal. App. 4th 489 (2011)) held that claims for civil penalties brought pursuant to PAGA, the California Labor Code’s Private Attorneys General Act, are outside the ambit of Concepcion, and the California Supreme Court subsequently declined to review Brown, rendering the decision final. Yet the Iskanian court rejected this decision, the three-judge panel noting, “we disagree with the majority’s holding in Brown. We recognize that the PAGA serves to benefit the public and that private attorney general laws may be severely undercut by application of the FAA. But we believe that United States Supreme Court has spoken on the issue, and we are required to follow its binding authority.” Slip op. at 15.

Second, although the Second Appellate District held in Kinecta Alternative Financial Solutions, Inc. v. Super. Ct. (___ Cal. App. 4th ___ (2012)) that Gentry “appears to remain the binding law in California,” the Iskanian panel unequivocally states in its holding that Gentry was overruled by Concepcion. See slip op. at 8.

The Iskanian court also rejected the National Labor Relations Board’s decision in D.R. Horton (357 NLRB No. 184 (2012)), which held that a mandatory waiver of class claims imposed by an employer, requiring that individual arbitration be the sole means of resolving employment-related disputes, violated the National Labor Relations Act. See slip op. at 11-12.

A petition for review and spirited exchange of amicus briefs are expected.

Securities Class Action Services has released its annual list of the top 50 securities firms (the “SCAS 50”).  The top 10 firms for 2011 are as follows: 

1. Bernstein Litowitz Berger & Grossmann
2. Robbins Geller Rudman & Dowd
3. Labaton Sucharow
4. Kessler Topaz Meltzer & Check
5. Hagens Berman Sobol Shapiro
6. Grant & Eisenhofer
7. Cohen Milstein Sellers & Toll
8. Lovell Stewart Halebian Jacobson
9. Milberg
10. Wolf Haldenstein Adler Freeman & Herz

The full list is available here. The Bernstein Litowitz firm claimed the top spot with over $1.3 billion in total settlement proceeds from 13 settlements (the third-highest number overall), including a $208.5 million settlement with Washington Mutual. The firm’s average of nearly $106 million per settlement was one of only three per-settlement averages of $100 million or more, and is second only to Lovell Stewart’s nearly $119 million average (based on a single settlement with PIMCO). The three firms topping the SCAS 50 — Bernstein Litowitz, Robbins Geller and Labaton Sucharow — accounted for more than half of all securities settlements in 2011.

District Court Judge William Q. Hayes, of California’s Southern District, has certified a class of consumers alleging that the popular retailer, IKEA, violated California’s Song-Beverly Credit Card Act by asking customers to provide their ZIP codes during credit card transactions.  See Yeoman v. IKEA U.S. West, Inc., No. 11-701 (S.D. Cal. May 4, 2012) (order on motion to certify) (available here).  The Song-Beverly Act specifically prohibits asking consumers for “personal information” (which includes ZIP codes) as a condition of consummating a credit card transaction.

In opposing certification, IKEA presented evidence that many customers voluntarily provided their ZIP codes to IKEA outside of credit card transactions, thus removing those individuals from the ambit of a violation of the Song-Beverly Act.  IKEA argued that, since the class would likely include some of these customers, Plaintiffs’ proposed class definition was overbroad.  Judge Hayes rejected this argument, holding the class definition to be “not overbroad.”  Order at 5-6.

As to the often-pivotal class action prerequisite that common questions of law or fact predominate over individual issues, the court concluded that “Plaintiff has shown that common questions of law and fact predominate over other issues in this case on the grounds that IKEA’s uniform policy and practice of requesting personal identification information from customers during credit card transactions can be evaluated to determine if the Song-Beverly Credit Card Act was violated.”  Order at 13.

Finally, though it did not affect the class certification ruling, the court sought supplemental briefing as to the utility of multiple firms functioning as class counsel on behalf of the named plaintiffs and absent class members.  See Order at 15.

Citing the California Supreme Court’s recent Brinker decision, Judge John A. Kronstadt has certified a class of approximately 1300 insurance adjusters who alleged misclassification and related wage violations by their employer, the insurance company Allstate, including off-the-clock work, unpaid overtime, and untimely final wages. See Jimenez v. Allstate Ins. Co., No. 10-08486 (C.D. Cal. Apr. 18, 2012) (order on motion to certify class action) (available here). Judge Kronstadt employed the Brinker court’s reasoning, which resulted in the denial of certification of the off-the-clock class in that case, to certify the Jimenez off-the-clock class. Order at 10-11. Unlike the situation in Brinker, although Allstate had facially compliant policies, Judge Kronstadt found that there was an informal systematic company policy to pressure or require employees to work off-the-clock. Id.

Jimenez is notable both in its application of substantive state law as articulated in Brinker and its adherence to the (still relatively new) class certification procedural criteria set forth in Wal-Mart v. Dukes, 131 S. Ct. 2541 (2011). In considering the plaintiffs’ allegation that Allstate, notwithstanding its written policies compliant with California overtime laws, “turn[ed] a ‘blind eye’ to unpaid overtime actually worked” (Order at 8-9), the Jimenez court found that whether Allstate had an “unofficial policy” of discouraging the reporting of (and compensation for) overtime work constituted a common question capable of class-wide adjudication (Order at 9). As in Brinker, the existence of facially compliant policies did not suffice to establish compliance with the law: “Although Defendant has presented testimony that its official policies are lawful, this showing does not end the inquiry. Plaintiff’s theory is that Defendant has a common practice of not following its official policy regarding overtime.” Order at 10.

Jimenez thus follows the Brinker holding that employers may not insulate themselves from liability by issuing a compliant written policy but failing to follow either that policy or the applicable law the policy purports to reflect.