Wage Law

On November 22, 2006, the L.A. City Council adopted Ordinance No. 178082, entitled “Hotel Worker Living Wage Ordinance”, which set minimum wage standards for certain hotel workers employed within a particular Business Improvement District near LAX. Under the ordinance, hotels within the District that contained 50 or more guest rooms were obliged to pay at least $9.39 per hour to workers who received health benefits, and at least $10.64 per hour to workers who did not receive health benefits.

Six weeks later, opponents of the ordinance submitted a referendum petition with 103,000 signatures, which, once certified, obligated the City Council to submit the Wage Ordinance to a popular vote or repeal it. In January 2007, the City Council repealed the Wage Ordinance. However, less than a month later, they enacted a new Ordinance entitled “Airport Hospitality Enhancement Zone Ordinance,” which incorporated similar provisions to those challenged by the referendum petition, but with changes that included: implementation in phases, with delayed full implementation until January 1, 2008; exemptions for business that could show the new regulations to be significantly burdensome; and exemptions for workers who had agreed in a collective bargaining agreement to waive the requirements.

Business interests filed a petition seeking mandamus and injunctive relief against the L.A. City Council and other parties, contending that the City Council improperly approved an ordinance essentially similar to one that the City Council had repealed following respondents’ successful campaign to institute a referendum on it. The trial court granted respondents’ petition. Real party in interest Unite Here Local 11 appealed. The Court of Appeal reversed.

We conclude that the provisions of the Zone Ordinance, taken as a whole, place it squarely within the Stratham court’s characterization of a proper second ordinance: the provisions of the Zone Ordinance, on their face, are substantial, relate to items of importance, and aim at “avoiding, perhaps, the objections made to the first ordinance.” (Stratham, supra, 45 Cal.App. at p. 440.) The provisions of the Zone Ordinance directly address the objections to the Wage Ordinance by providing guaranteed tangible economic benefits to the hotels that mitigate the financial burden of the wage requirements, while limiting imposition of such requirements in other areas of the City. Accordingly, the trial court erred in granting the writ petition.

The judgment is reversed. The matter is remanded to the trial court with directions to vacate the orders enjoining appellant [city clerk] Frank Martinez from publishing the zone ordinance and granting the petition for writ of mandate, and to enter a new order denying the petition for writ of mandate. Appellants are awarded their costs on appeal.

The case is Rubalcava v. Martinez (2007) __ Cal.App.4th __. You can download the full text with exhibits in pdf or word format.

A previously unpublished class certification opinion involving truck drivers with overtime, off-the-clock, meal/rest period and vacation pay claims has been ordered published in Bell v. Superior Court (H.F. Cox, Inc.) (2007) __ Cal.App.4th __.

Four employees of a petroleum transportation company sought to bring a wage and hour class action against their employer, alleging: (1) the failure to pay overtime; (2) the requirement of off-the-clock work; (3) the failure to provide meal and rest breaks; (4) the incorrect calculation of vacation pay; and (5) the failure to pay pro rata vacation pay upon termination of employment. The plaintiffs filed a motion for class certification. The trial court granted the motion in part, certifying only a class with respect to the claim for failure to pay vacation pay upon termination of employment. In all other respects, the motion was denied. Plaintiffs sought review by means of a petition for writ of mandate. We issued an order to show cause why relief should not be granted and stayed further proceedings. We now conclude the trial court erred in failing to certify a class with respect to the overtime pay and vacation pay claims. We therefore grant the writ petition and direct the trial court to vacate its order, and enter a new and different order granting certification of a class with respect to those claims.

In Bell, it was undisputed that the drivers worked over 8/40, without overtime pay. The overtime dispute centered upon whether drivers were engaged in interstate commerce and therefore exempt. In addition to discussing certification standards in the course of holding that the overtime claims should have been certified, the opinion discusses the "4 month rule" and the broad inclusive definition of "interstate commerce." With respect to off-the-clock claims, the court found that the particular facts and evidence in this case left the court with ample discretion to deny certification.

The trial court denied the motion for class certification with respect to the claim for off-the-clock work on the basis that there was no way to determine which members of the proposed class had actually worked off the clock. Given that plaintiffs themselves disagreed on when or if they had worked off the clock, the court found no common issues with respect to this claim.

On the meal/rest period claims, the trial court was within its discretion to deny certification in light of evidence that drivers were scheduled for 10 hours of work within a 12-hour period to allow for breaks; that  all terminals have break areas; that drivers testified that they took breaks, were permitted to take breaks, and saw others taking breaks; that the employer stressed to its workers the importance of breaks and allowed meal and rest breaks at the discretion of its drivers; and that drivers had seen two of the named plaintiffs taking breaks; such that there was no way of determining which drivers were permitted to take breaks and which were not, and there was no evidence of a companywide policy denying breaks.

Finally, the opinion holds that the trial court abused its discretion in denying class certification on the vacation pay claims because a common legal question predominated over any individual issues. The opinion includes some nice language about how improper it is for the trial court to conclude that class certification is not a superior means of adjudicating disputes regarding overtime pay and vacation pay simply because of the amount of money recoverable in individual actions and the availability of Berman hearings with the DLSE.

You can download the full text of Bell v. Superior Court here in pdf or word format.

We may or may not post anything of substance between now and the New Year. We hope you all have a joyful holiday season.

Riverside County Superior Court will be closed December 31.

from the spector of wage and hour lawsuits, that is. Law.com reported last month that one of California's most successful wage and hour firms is being sued for claims arising out of an alleged profit-sharing bonus plan. The plaintiff, attorney Carolyn Burton, alleges that her former employer, The Furth Firm LLP, which tried and won a $172 million case against Wal-Mart in 2005, induced her to accept a below-market salary in exchange for profit-sharing bonuses amounting to 3 to 5 percent of the firm's annual profits, then failed to pay the bonuses. Burton now works for Glynn & Finley, LLP, a PMS spinoff, where she confirmed her compensation deal in writing, we hope. We know of several plaintiff-side firms that use such a business model. We've never heard of one giving a guaranteed profit level, however.

Senator Feinstein on the wonderful world of arbitration:

I value arbitration as an alternative to litigation. Earlier this year, I supported an arbitration bill, the "Fair Contracts for Growers Act," when it was considered by the Senate Judiciary Committee. That bill does not mandate arbitration, but allows it to be used to resolve livestock or poultry contract disputes only if both parties consent in writing after the dispute arises.

It would break the company, it would give the class a windfall, and the judge doesn't like the law.

Perhaps we oversimplify, but the heart of the order denying class certification in Spikings v. Cost Plus, Inc. (C.D. Cal. May 25, 2007) 2007 U.S. Dist. LEXIS 44214, a case we saw in a year-end class action roundup, seems to come down to those three factors. In Spikings, the plaintiff filed a motion for certification under Rule 23, and the court found the superiority element required under Rule 23(b)(3) lacking.

The case was filed under the FACTA (Fair and Accurate Credit Transactions Act), alleging a violation of the rule that requires that no more than the last 5 digits of a credit card number be shown on customer receipts, and that the expiration date of the credit card not be disclosed on the receipt. 15 U.S.C. § 1681c(g). Spikings bought an item at Cost Plus on December 19, 2006, and filed her putative class action just a few hours later. Apparently, the judge thought those facts didn't pass the smell test. "[T]he superiority requirement allows the Court to exercise its considerable discretion in deciding whether or not to certify a class for a category of cases for which a class action may not be the best method.”

[C]ourts may refuse to certify class action treatment where the defendant’s liability ‘would be enormous and completely out of proportion to any harm suffered by the plaintiff.’

In these cases, certification is not denied solely because of the possible financial impact that it would have on a defendant, but based on the disproportionality of a damage award that has little relation to the harm actually suffered by the class, and on the due process concerns attendant upon such an impact. (Citations omitted.) Put simply, class action treatment may be denied where the damages would be ‘ad absurdum.’
...
Plaintiff’s class action sought to represent an estimated 3.4 million people nationwide, at $100-$1000 per violation; thus, “statutory damages alone would range from a minimum of $340 million to a maximum of $3.4 billion,” Defendant’s net worth, however, is only $316 million, Id. “Thus, an award of even the minimum statutory damages of $340 million would put Defendant out of business,” Id. Such an outcome is particularly absurd in light of plaintiff’s admission that “she did not suffer any actual damage, such as identity theft, as a result of her expiration date appearing on her credit card receipt from Defendant’s store, and there is no evidence that any customer making a purchase from Defendant’s store...suffered any actual harm due to the inclusion of the expiration date on credit card and debit card receipts.”

Since then, several other cases involving identical violations of FACTA's truncation requirement have been denied class treatment on the same ground. Serna v. Big A Drug Stores, Inc., 2007 U.S. Dist. LEXIS 82023, (C.D. California, October 9, 2007); Lopez v. KB Toys Retail, Inc. 2007 U.S. Dist. LEXIS 82025 (C.D. Cal. July 17, 2007); Najarian v. Avis Rent A Car Sys. LLC, 2007 U.S. Dist. LEXIS 59932 (C.D. Cal. June 13, 2007); Torossian v. Vitamin Shoppe Indus. 2007 U.S. Dist. LEXIS 81961 (C.D. Cal. Aug. 9, 2007); Soualian v. Int'l Coffee & Tea LLC, 2007 U.S. Dist. LEXIS 44208 (C.D. Cal. June 11, 2007).

This ground would not likely be a basis for denial of class certification in a wage and hour case, but we can envision some jurists applying it to PAGA claims.

All state and federal courts will be closed on Christmas and New Year's Day. In federal court, Christmas Eve and New Year's Eve schedules vary from district to district:

• The Northern District will be closed on Christmas Eve and New Year's Eve, except for the Santa Rosa Division.
• The Eastern District will be closed on Christmas Eve and New Year's Eve.
• The Central District will be closed on Christmas Eve and New Year's Eve, except for emergency filings.
• The Southern District will be open on Christmas Eve and New Year's Eve, but will close at noon each day.

We don't know of any easy way to check the holiday schedules of each Superior Court. Los Angeles looks like they plan to work.

The U.S. District Court has granted a partial summary judgment motion filed by a group of police officers seeking compensation under the FLSA for time spent donning and doffing uniforms and equipment. Lemmon v. City of San Leandro, 2007 U.S. Dist. LEXIS 902.

The Portal-to-Portal Act of 1947 relieves employers from compensating employees for "activities which are preliminary or postliminary to [the] principal activity or activities." 29 U.S.C. § 254(a). The Supreme Court ruled that "activities performed either before or after the regular work shift" are compensable "if those activities are an integral and indispensable part of the principal activities for which [the] workmen are employed." Steiner v. Mitchell (1956) 350 U.S. 247, 256. In Steiner, production employees at a battery plant were required to don protective work clothes before commencing work and to shower and change back at the end of the work day. The Court held that employees should be compensated for the time spent donning and doffing their protective work clothes because the process was "integral and indispensable" to allay the dangers inherent in the principal activity of battery production. The Ninth Circuit has held that donning and doffing of both unique and non-unique protective gear are integral and indispensable to the employee's principal activities if they are: (i) necessary to the principal work performed; and (ii) done for the benefit of the employer. The standard has been applied to, among other situations, liquid-repelling sleeves, aprons and leggings used by meat workers, and "bunny suits" worns by employees working in so-called "clean rooms."

In Lemmon, the court applied the same standard to the donning and doffing of police uniforms, and found the time compensable. The decision is particularly interesting because it reaches a different conclusion than others decided earlier this year, including Judge Breyer's decision in Martin v. City of Richmond, No (N.D. Cal. Aug. 10, 2007) 2007 WL 2317590 ("police officer's uniform, in and of itself, does not assist the officer in performing his duties.") and Judge Sabraw's decision in Abbe v. City of San Diego (S.D. Cal. Nov. 9, 2007) 2007 WL 4146696 ("the relevant inquiry is not whether the uniform itself or the safety gear itself is indispensable to the job - they most certainly are - but rather, the relevant inquiry is whether the nature of the work requires the donning and doffing process to be done on the employer's premises.")

Telling employees that they will be required to sign an arbitration agreement as a condition to employment is not enough to establish such an agreement, and the failure to produce the signed agreement is fatal to a petition to compel arbitration, according to a holding published by the Fourth District Court of Appeal in Mitri v. Arnel Management (2007) __ Cal.App.4th __. In Mitri, the plaintiffs sued their former employer and others for sexual discrimination and harassment, among other things. The defendants filed a motion to compel arbitration, asserting that the plaintiffs had each entered into a binding arbitration agreement. The trial court denied the motion based on the defendants’ failure to prove the existence of any such agreement to arbitrate. The Court of Appeal affirmed.

Arnel’s employee handbook states, “[a]s a condition of employment, all employees are required to sign an arbitration agreement” and further states, “[e]mployees will be provided a copy of their signed arbitration agreement.” Defendants have not produced evidence of signed arbitration agreements. Defendants nevertheless contend the handbook’s reference to arbitration is sufficient to force plaintiffs to arbitrate their claims. [This] argument is wholly without factual or legal merit.

The employer's evidence was an employee handbook that stated: “Any dispute arising out of employment with the Company, as allowed by law, will be settled by binding arbitration. As a condition of employment, all employees are required to sign an arbitration agreement. [¶] To ensure the expeditious and economical resolution to any controversy or dispute arising from, or in any way relating to an offer of employment or the position, work, payment or relationship, or the termination of such employment, will be on the written request by any party, be submitted to and resolved by binding arbitration. Said arbitration will be conducted by the American Arbitration Association in Orange County, California. The Company will share equitably such expenses associated with the arbitration process. The prevailing party in the arbitration shall be awarded its attorney’s fees incurred in the arbitration process and the decision of the arbitrator shall be final, 4 binding and non-appealable. [¶] Further, nothing in this policy is intended to prevent either you or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. You, as the employee and the Company each have the right to resolve any issue or dispute involving company trade secrets, invention rights, non-competition and non-solicitation by court action in lieu of arbitration. [¶] Employees will be provided a copy of their signed arbitration agreement.”

There was no “signed arbitration agreement” presented to the court.

The employees' evidence consisted of declarations in which they denied entering into an arbitration agreement or ever being asked to do so. Both admitted “signing a receipt for the Arnel Management Company’s Policy Handbook,” but each stated, “I was not asked to read, nor was I given time to read, the Arnel Management Company’s Policy Handbook and I did not know its contents.”

The court found that the parties clearly did not intend that the handbook constitute a binding agreement, and that there was no evidence that the agreement ever came to fruition.

The arbitration agreement provision [in the handbook] also states that pursuant to Arnel’s policy, “[a]s a condition of employment, all employees are required to sign an arbitration agreement.” This provision completely undermines any argument by defendants the provision in the handbook itself was intended to constitute an arbitration agreement between Arnel and its employees. ... The provision further states, “[e]mployees will be provided a copy of their signed arbitration agreement”—thus reinforcing an intent to have employees sign a separate arbitration agreement to effectuate Arnel’s policy of arbitrating employment claims. Defendants have not produced any evidence of the existence of such an arbitration agreement signed by either plaintiff.

On these facts, the court distinguished several cases finding an agreement to arbitration, including Asmus v. Pacific Bell (2000) 23 Cal.4th 1, DiGiacinto v. Ameriko-Omserv Corp. (1997) 59 Cal.App.4th 629 and Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416.

You can download the full text of Mitri v. Arnel Management here in pdf or word format.

The Supreme Court has denied a petition for review of a published opinion regarding the salary basis test. We previously discussed Sumuel v. ADVO, Inc. (2007) 155 Cal.App.4th 1099 in a post in October.

Prevailing wages and attorney's fees have been awarded to plumbers working on a project to improve a building to be leased by a public entity. Perhaps more interestingly, after having unsuccessfully attempted to defeat the plumbers' claims, the Department of Industrial Relations joins the real party in interest as a liable party, on the hook for the plumbers' attorney's fees. In Plumbers and Steamfitters Local 290 v. Duncan (2007) __ Cal.App.4th __ (formerly Plumbers and Steamfitters Local 290 v. Rea), the workers petitioned the superior court for a writ of mandate seeking to vacate a decision by John Rea, then the Acting Director of the Department of Industrial Relations, finding that a renovation performed on a building owned by a private landowner, but to be leased in part to Humboldt County, was not a public works project under California’s prevailing wage law (Labor Code § 1720 et seq.). The trial court found that the project qualified as public work under section 1720.2 and awarded attorney fees under Code of Civil Procedure § 1021.5 against the real parties in interest and the DIR. The Court of Appeal affirmed the entire judgment.

The court rejected the DIR's argument that section 1720.2 applies only to new construction and not to the renovation of an existing building. "The plain meaning of the term 'construction' includes not only the erection of a new structure but also the renovation of an existing one."

Likewise, it rejected the DIR's assertion that the prevailing wage law only applies to the portion of the construction being done on the area being leased to the public entity.

"This argument too ignores the unambiguous language of the statute and the Legislature’s clear directive that a project be considered a public work if a public entity leases 'more than 50 percent of the assignable square feet of the property.' (§ 1720.2, subd. (b).) The 'property' to which this subparagraph refers is the entire structure, not simply the space that is subject to the lease. This is clear from the first requirement of subdivision (b), that '[t]he property subject to the construction contract is privately owned,' which clearly refers to ownership of the entire building. The department’s interpretation would render the 'more than 50 percent requirement meaningless, since an agency necessarily leases 100 percent of the space that it leases."

Finally, the court rejected the DIR's various arguments opposing an award of attorney's fees against the department. The department argued that it was not an opposing party, but "a neutral public agency required by law to issue and defend its public works coverage decision." Moreover, the department argued, the case was not suitable for any award under section 1021.5 because the award did not promote strong public policies that benefit a broad class of persons. Each argument was rejected.

In the present action, the department issued a policy determination that has been set aside. The fact that the department was charged by law with settling the coverage dispute between Local 290 and the real parties does not render section 1021.5 inapplicable. ...

this action involved enforcement of an important right affecting the public interest and ... it conferred a significant benefit upon a large class of persons or the general public. The department argues that the potential recovery of $18,000 by seven plumbers is not significant and that the precedential value of its determination is limited by “its unique set of facts and a narrow legal issue.” We agree with the trial court, however, that while “[t]he fact that [the department] designated its decision as precedential is not dispositive, [it] is one of the factors tending to show an important right extending a significant benefit to a large class [of persons] ....” In addition, Local 290 submitted declarations from three people with experience in prevailing wage enforcement who agreed that the decision involved in this case “established an important precedent benefitting a large number of employers in the State ... , dozens of local unions representing their workforce, and many thousands of workers in the construction industry.”

One other interesting tidbit: the court approved the plaintiffs' recovery of charges incurred for computerized legal research, finding support for such awards in California Common Cause v. Duffy (1987) 200 Cal.App.3d 730, 753-754 [upholding attorney fee award under Code of Civil Procedure section 1021.5 that included compensation for “109 minutes of computer research and 309.7 hours of work by three attorneys”]; and Trustees of Const. v. Redland Ins. Co. (9th Cir. 2006) 460 F.3d 1253, 1258-1259 [“growing circuit consensus” that “reasonable charges for computerized research may be recovered as ‘attorney’s fees’ ” under federal law].

You can download the full text of Plumbers and Steamfitters Local 290 v. Duncan here in pdf or word format.

The Supreme Court has listed its issues on review in Harris v. Superior Court (Liberty Mutual Insurance) (2007) 154 Cal.App.4th 164:

Petition for review after the Court of Appeal granted and denied petitions for peremptory writ of mandate. This case presents the following issue: Do claims adjusters employed by insurance companies fall within the administrative exemption (Cal. Code Regs, tit. 8, § 11040) to the requirement that employees are entitled to overtime compensation?

There were several issues addressed in the opinion, but it appears that the exemption is going to be the only topic that matters nowOur prior post can be read here.

Welcome to anyone who is here for the first time after Mike's presentation at the Bridgeport seminar on Wage & Hour litigation. As you may recall, we mentioned that it is rare that a week goes by without some wage and hour opinion being published, and this week was no exception. Yesterday, an interesting opinion was handed down by the Fourth District Court of Appeal in Perez v. Uline, Inc., a wrongful termination case involving claims under the Uniformed Services Employment and Reemployment Rights Act of 1994 (38 U.S.C. § 4301 et seq.) and various contract and Labor Code-based claims, one of which was a claim for overtime pay.

The defense relied upon a short Severance Agreement and Release that provided that it would pay plaintiff six weeks’ salary in exchange for a release from all claims, which were set out in a comprehensive but nonexclusive laundry list of named federal and state laws, and “any other federal or state law, statute, decision, order, policy or regulation establishing or relating to claims or rights of employees . . ., and any and all claims in tort or contract, based upon public policy, and any and all claims alleging . . . defamation, . . . or wrongful discharge.”  The court determined that, "because USERRA directs that its provisions may not be eliminated by a contract, the release of rights in the severance agreement may not be enforced to the extent it deals with the claims of termination based on plaintiff’s membership in the military or his military service. As to plaintiff’s other claims for defamation and overtime payments, there is no basis to invalidate the release and we affirm."

Curiously, the opinion makes no mention of Labor Code § 206.5, presumably because the parties did not raise it. Labor Code § 206.5 provides:

No employer shall require the execution of any release of any claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of such wages has been made. Any release required or executed in violation of the provisions of this section shall be null and void as between the employer and the employee and the violation of the provisions of this section shall be a misdemeanor.

We think there will be several important opinions next year involving Labor Code § 206.5, and this fact pattern would have made for a good one if the issues had included whether the severance pay actually compensated Perez for his overtime claims, or would be deemed to have done so for the purposes of compliance with section 206.5. Absent a discussion of section 206.5, we wonder why the part of the opinion that deals with the overtime waiver merits publication, but for now, at least, it's out there.

Back in July, we discussed a case called Ticconi v. Blue Shield of California Life & Health (2007) 153 Cal.App.4th 1123 (Diverse Facts and Legal Arguments Concerning Equitable Defenses in UCL Claims Do Not Bar Class Certification). It held that unclean hands and other equitable defenses cannot be used to defeat class certification in an unfair competition lawsuit based upon violations of statute, even if the defenses might be taken into account when fashioning a remedy, and even if they involve the determination of facts and legal issues that vary greatly among class members. In August, on the Court granted rehearing on its own motion, to make non-substantive changes to the opinion. The opinion on rehearing was issued on Tuesday. The holding remains undisturbed.

In July, we discussed a landlord-tenant case with a very novel class certification twist (Justices: Are You Serious?). In Ortiz v. Lyon Management Group, Inc., the defendant won a summary judgment motion, before hearing any class certification motion was heard. Hoping to apply res judicata to any similar future claims by any putative class members, the defendant moved for certification, seeking to force the vanquished plaintiff to serve as an unwilling class representative on a doomed claim, and to serve a notice to class members informing them that: (i) there was a class action pending; (ii) they already lost; and (iii) they were not going to be permitted to opt out of it. The tenant appealed the summary judgment, and the landlord appealed the post-MSJ denial of the defense's motion for class certification. How novel was the theory?

"Despite 50-plus pages of exhaustively researched briefing covering 30 years of federal and California class action jurisprudence, defendant cannot cite a single case in which a defendant obtained class certification after first obtaining summary judgment against the named plaintiff’s individual claim."

As most observers expected, the post-MSJ class certification denial was upheld.

We hold defendant could not obtain class certification after the court decided the merits of plaintiff’s individual claim. As a general procedural rule, class certification should be determined before the merits are adjudicated. And as a general substantive rule, a precertification decision on the merits against a named plaintiff does not bind absent class members. The court did not abuse its discretion by holding defendant to these general rules.

It's a curious opinion, which begins its discussion with a comparison of certain California statutes with monotremes (e.g., the duck-billed platypus or the spiny anteater), and pivots, seven and a half pages into its analysis, with a transitional paragraph the reads, simply: "Enter the platypus." The part of the opinion that matters to wage and hour lawyers who defend or prosecute class actions begins on page 15 of the slip opinion.

"May a defendant obtain certification of a plaintiff’s class after it has obtained a favorable ruling on the merits of the named plaintiff’s individual claim? The parties cite no case in which a defendant has even tried this tactic. Lacking direct guidance, we turn to the general rule governing the timing of class certification and apply it to this unprecedented context."

Defendant's tactic conflicted with the general “Home Savings” rule requiring courts to determine class certification before adjudicating the merits, for both procedural and substantive reasons.

First, the procedure allows so-called ‘one-way intervention,’ a procedure under which potential members of the class can reserve their decision to become part of the class until the validity of the cause asserted by the named plaintiffs on behalf of the class has been determined. The California Supreme Court adopted the Home Savings rule in Green v. Obledo (1981) 29 Cal.3d 126, expanding it to protect plaintiffs against postmerits class decertification. It noted, “Although this rule has thus far been applied only for the benefit of defendants, no reason appears why plaintiffs should not also enjoy its benefits . . . .” Thus, it required class certification be decided before the merits “whether the motion to certify or decertify be made by the plaintiff or the defendant.” It left only a narrow exception to postmerits decertification where a party could show “changed circumstances making continued class action treatment improper.” Here, like in Fireside Bank v. Superior Court (2007) 40 Cal.4th 1069, "[t]he record suggests no practical reason why defendant could not have moved for class certification sooner, other than to maximize its strategic advantage."

Lyon argued that this rule shouldn't apply because this case presented issues that could make this a “mandatory” class action posing no risk of one-way intervention because absent class members cannot opt out of a "mandatory" class action. Without determining whether the case was a "mandatory" class action, the court affirmed the denial.

[E]ven if the Home Savings rule does not necessarily apply here as a matter of law, the court still could choose to apply it to maximize efficiency without abusing its broad discretion to structure this case. Either way, we affirm.

Substantively, the denial was appropriate because “failure to require notification of the class before a decision on the merits prevents a binding adjudication against the class because members of the class who were not notified are not barred by the determination in the defendant’s favor since they were not parties.” As the court noted, this consistent judicial warning to defendants seeking precertification summary judgment must mean something. After all, it would be meaningless to warn defendants that winning summary judgment before class certification will not bind class members, if defendants could simply move for class certification after obtaining summary judgment.

They can't.

You can download the full opinion in Ortiz v. Lyon Management Group, Inc. here in pdf or word format.

Starting January 1, 2008, every attorney who files a new civil case in the Central District of California, or who is counsel of record on existing civil cases in the Central District of California, will be required to register for and use the new e-filing system under the court's CM/ECF program. The system is quite similar to the CM/ECF systems already in use in the Northern District, Eastern District and Southern District, but training is mandatory even if you understand the other systems. Sanctions will be issued for counsel who delay training and registration (some departments will probably be more likely than others to issue sanctions).

There are two ways to train: (i) online computer-based training, which isn't recommended for attorneys who are unfamiliar with CM/ECF filing; and (ii) live training at the courthouse. The live training will explain the process in painstaking detail (including how to right-click on files, how to sort folders by file size and other simple computer tasks), which is great for the tech have-nots, but if you understand computers and use technology on a regular basis, you might find it a bit tedious, as we did. On the bright side, the live training also gives you three MCLE hours, and it's free, so if you are in the upcoming MCLE compliance group and you need a few hours, give it a go.

As the live date approaches, the training sessions will fill up, but even if the session you want to attend is full, show up and see if you can take one of the many no-show seats. They will usually be able to accommodate several walk-ups.

For further details, check out the court's CM/ECF home page at
http://support.cacd.uscourts.gov/

The Supreme Court will be reviewing an opinion regarding attorney's fees in a case brought under Prison Inmate Labor Initiative of 1990 (Penal Code § 2717.1), Vasquez v. State of California (2007) 154 Cal.App.4th 406.

The petition for review is GRANTED. Further action in this matter is deferred pending consideration and disposition of a related issue in Vasquez v. State of California, S143710 (see Cal. Rules of Court, rule 8.512(d)(2)), or pending further order of the court. Submission of additional briefing, pursuant to California Rules of Court, rule 8.520, is deferred pending further order of the court.

The petition for review pertains to an order affirming the award of attorneys’ fees. At issue was whether additional fees were due under the CCP § 1021.5, the private attorney general statute.