Posted On: October 31, 2011 by Michael J. Hassen Email This Post

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Richard Watts: "Fables of Fortune: What Rich People Have That You Don't Want"

California Attorney Richard Watts Publishes Book Based On His Experience In Representing The "Super-Wealthy"

Richard Watts, a personal friend of the author and a superb lawyer, has published a book based on his 30-year career representing individuals with a net worth in excess of $100 million. The book is entitled, "Fables of Fortune: What Rich People Have That You Don't Want."

The author of the Class Action Defense Blog found Rich's book to be a great read, particularly in its ability to illustrate through real-life examples the proverb that "the grass is always greener." Rich does a great job weaving in experiences with his own family to show that one need not be super wealthy to experience the joy of true friendship or the treasure of a close-knit family.

For more information about Rich Watts, please visit his website here.

Posted On: October 10, 2011 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Ellis v. Costco Wholesale Corp.: Ninth Circuit Vacates And Remands Class Action Certification In Gender Discrimination Labor Law Case

District Court Applied Wrong Legal Criteria in Certifying Gender Discrimination Class Action Requiring Remand for Reconsideration based on Standards Enunciated in Wal-Mart v. Dukes Ninth Circuit Holds

Plaintiffs filed a putative class action against Costco Wholesale alleging that it discriminates in its promotional practices based on gender. Ellis v. Costco Wholesale Corp., ___ F.3d ___, 2011 WL 4336668 (9th Cir. September 16, 2011) [Slip Opn., at 17693, 17697]. The class action complaint was filed after the Equal Employment Opportunity Commission (EEOC) dismissed a charge that Costco engaged in gender discrimination in its practice of promoting employees. The class action complaint alleges violations of Title VII, and sought to be brought on behalf “of a Title VII class of all women employed by Costco in the United States denied promotion to [assistant general managers] and/or [general managers] positions.” Id., at 17702-03. The class action “sought class-wide injunctive relief, lost pay, and compensatory and punitive damages.” Id., at 17703. Plaintiffs moved the district court to certify the lawsuit as a class action based, in part, on the declarations of three experts – a statistician, a labor economist, and a sociologist – who opined that Costco’s female employees were “promoted at a slower rate” and were “underrepresented” in management positions relative to their male peers. Id. Costco opposed class action treatment, based in part on the declarations of 200 employees and the declarations of its own experts. Id. The district court granted class certification, id., at 17703-04. The Ninth Circuit granted Costco’s request for leave to file an interlocutory appeal, and proceeded to affirm in part, vacate in part, and remand the matter for further proceedings. Id., at 17697.

Briefly, Costco operates 350 warehouses, each containing a general manager (GM), two or three assistant general managers (AGM), and three or four senior staff managers (who are themselves divided into four categories consisting of front end managers, administration managers, receiving managers, and merchandise managers). Ellis, at 17699. The company “promotes almost entirely from within its organization” and “[o]nly current Costco AGMs are eligible for GM positions.” Id. No written policy exists explaining the criteria that Costco considers in selecting employees for consideration or in making its promotion decisions. Id., at 17699-700. Among senior staff managers, however, Costco generally rotates managers among the various categories as part of its belief that this exposure trains and develops employees for future positions as AGMs and GMs. Id., at 17700.

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Posted On: October 7, 2011 by Michael J. Hassen Email This Post

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California Supreme Court One Step Closer to Decision in Long-Awaited Meal and Rest Period Case: Decision Expected By Mid-February

The California Supreme Court will hear oral argument in Brinker Restaurant v. Superior Court (Hohnbaum, et al., real parties in interest) on November 8, 2011, according to the Court docket issued recently. The Court generally issues decisions within 90 days after completion of oral argument and submission of post-argument briefs, if any. A decision is expected by mid-February, 2012.

At issue in the case is whether California employers must ensure that their employees actually take their meal and rest periods or merely make them available. Guidance is also anticipated regarding the time in the workday in which meal and rest periods must be taken and whether or not legally-compliant meal and rest period policies can protect an employer against class actions even when these policies are unevenly enforced.

The decision is extremely important to California employers because meal and rest period claims have been the basis of hundreds of class action lawsuits in California. The Court's decision could make it more difficult for plaintiffs to bring these claims as class actions, or, depending on the ruling, could establish rigid guidelines which may foster more class actions. Either way, California employers and Plaintiffs class action lawyers alike have eagerly awaited this decision since the Supreme Court took up the case in October, 2008 and look forward to receiving guidance from the high court.

Under California law, nonexempt employees are entitled to uninterrupted, off-duty meal periods of at least 30 minutes for every five hours worked. While there are certain limited exceptions to this rule (such as a revocable written waiver of the meal period in limited circumstances), employers are required to compensate employees for on-duty meal periods. In addition, California law assesses employers a penalty equal to one hour of pay at the employee's regular rate for every day there is a meal period violation.

The lower court in the Brinker case held that California law requires employers only to "supply or make available" meal periods. This view is consistent with several Federal District Court decisions as well as the California Court of Appeals decision in Brinkley v. Public Storage. The California administrative entity charged with enforcing wage and hour laws, the Division of Labor Standards Enforcement, takes the position that employers have "an affirmative obligation to ensure the workers are actually relieved of all duty" during meal breaks. The California Supreme Court’s decision in Brinker should put this dispute to rest.

For more information about how California wage and hour laws or the Brinker case may affect you, please contact my partner, Scott Brink.

Posted On: October 6, 2011 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Kaltwasser v. AT&T Mobility: Federal Court Grants Motion To Compel Arbitration Under Federal Arbitration Act (FAA) Following Concepcion

Supreme Court Decision in Concepcion Compelled Granting AT&T’s Motion to Compel Arbitration of Individual Claims because FAA Preempts California Laws Barring Class Action Arbitration Waivers

Plaintiff filed a putative class action against cellular telephone service provider, AT&T Mobility, alleging violations of California’s Unfair Competition Law (UCL), False Advertising Law (FAL), Consumer Legal Remedies Act (CLRA) and breach of contract. Kaltwasser v. AT&T Mobility LLC, ___ F.Supp.2d ___, 2011 WL 4381748 (N.D.Cal. September 20, 2011) [Slip Opn., at 1-2]. According to the allegations underlying the class action complaint, plaintiff renewed his cell service with AT&T based on the company’s representations that it had the “fewest dropped calls.” Id., at 2. Because he alleges that this representation was false, plaintiff filed this lawsuit. AT&T moved to compel arbitration and to dismiss the class claims on the grounds that the service contract included an arbitration clause with a class action waiver. Id. In April 2008, the district court denied AT&T’s motion finding the class action waiver unconscionable under Discover Bank v. Superior Court, 36 Cal.4th 148 (Cal. 2005). Id., at 2-3. Plaintiff subsequently filed a motion to have his lawsuit certified as a class action; the district court delayed ruling on the motion pending the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011). Id., at 1. Based on Concepcion, the federal court denied plaintiff’s motion and ordered his claims to be arbitrated on an individual basis. Id., at 1-2.

After providing a general discussion of the FAA and Concepcion, the district court noted Concepcion’s holding that “California’s Discover Bank rule is preempted by the FAA.” Kaltwasser, at 5 (quoting Concepcion, at 1753). Plaintiff, however, argued that Concepcion did not require reconsideration of the district court’s prior order denying AT&T’ s motion to compel arbitration because (1) “Concepcion left intact a vindication-of-rights doctrine under federal common law” permitting him to avoid arbitration “if he can show that the costs involved in proving his claims exceed the damages he can potentially recover”; (2) “Concepcion did not affect public policy principles of contract law” which hold that “‘a law established for a public reason cannot be contravened by a private agreement’”; and (3) AT&T waived its right to arbitration. Id., at 5-6. The district court disagreed.

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Posted On: October 4, 2011 by Michael J. Hassen Email This Post

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Class Action Defense Cases–In re Community Bank: Third Circuit Court Again Reverses Approval Of Class Action Settlement Holding Wrong Legal Standard Applied To Determine Adequacy Of Representation

District Court Applied Wrong Legal Standard in Finding Named Plaintiffs and Their Counsel to be Adequate Representatives of the Proposed Class under Rule 23(a)(4) and thus Abused its Discretion in Certifying Class and Approving Nationwide Class Action Settlement Third Circuit Holds

Several putative class actions were filed against various defendants, including Community Bank of Northern Virginia (CBNV), Guarantee National Bank of Tallahassee (GNBT) and Residential Funding Corporation (RFC), arising out of “the alleged predatory lending scheme of the Shumway/Bapst Organization (‘Shumway’), a residential mortgage loan business involved in facilitating the making of high-interest, mortgage-backed loans to debt-laden homeowners.” In re Community Bank of N. Va. & Guar. Nat’l Bank of Tallahassee Second Mortgage Loan Litig., 622 F.3d 275 (3d Cir. 2010) [Slip Opn., at 10]. According to the allegations underlying the class action complaints, Shumway entered into relationships with CBNV and GNBT in order to circumvent state-law restrictions on fees that it could charge; the alleged scheme permitted Shumway to make it appear as if the fees were paid to depository institutions (which are not subject to the fee restrictions) when in reality they were being funneled to Shumway. Id. RFC allegedly aided this conspiracy by purchasing CBNV and GNBT loans on the secondary market, even though it allegedly knew that these institutions were acting as mere “straw parties” for Shumway. Id., at 11. The class actions were consolidated, see id., at 11-12, and ultimately a proposed nationwide class action settlement was reached, id., at 13. Certain members of the class objected to the proposed class action settlement, and certain class members sought leave to intervene in the consolidated class action lawsuit; the district court denied the motion to intervene and overruled the objections to the class action settlement. Id., at 9. The Third Circuit affirmed the district court’s denial of intervention, but reversed and remanded the approval of the class action settlement. Id. The district court again approved the class action settlement, and again the objectors appealed: “The Objectors contend that the failure [to make claims against the defendants under the Truth in Lending Act (TILA) and the Home Ownership and Equity Protection Act (HOEPA)] renders the named plaintiffs and class counsel inadequate class representatives.” Id. The Circuit Court again reversed.

We do not discuss in detail the Circuit Court’s 100-page opinion. In sum, the Third Circuit concluded that “by approaching the adequacy-of-representation questions on remand as though it were ruling on a motion to amend pursuant to Federal Rule of Civil Procedure 15(c) or a motion to dismiss pursuant to Rule 12(b)6)[,] [the district court] applied the wrong legal standard in ruling on class certification under Rule 23.” In re Community Bank, at 9. Accordingly, the Court “reluctantly” vacated the district court order certifying the class action and approving the class action settlement, and again remanded the matter for further proceedings. Id. The Third Circuit also noted, “we continue to reject (i) the claim that the District Court abused its discretion in denying the Objectors’ renewed motion to intervene, and (ii) their renewed petition for mandamus to recuse the District Judge in this case.” Id.

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