Class Action Defense Blog

Trial Court Erred in Granting Class Action Treatment to Complaint Alleging Labor Law Violations because Employer need only “Provide” Meal and Rest Periods to Employees but need not “Ensure” that Meal and Rest Breaks are Taken California State Court Holds

Plaintiffs filed a class action in California state court against Brinker Restaurant, Brinker International and Brinker International Payroll alleging labor law violations; specifically, the class action complaint alleged that Brinker failed to provide its employees with meal and rest breaks. Brinker Restaurant Corp. v. Superior Court, ___Cal.App.4th ___ (Cal.App. July 22, 2008) [Slip Opn., at 3]. Plaintiffs moved the trial court to certify the litigation as a class action, and the court granted the motion. Id. The central issue in the class action was whether an employer must ensure that employees take meal and rest breaks in order to comply with California law, or whether it is sufficient to make available meal and rest breaks; the Court of Appeal held that an employer is not responsible for ensuring that employees take meal and rest breaks to which they are entitled. Id., at 3-4. Accordingly, the appellate court granted defendants’ petition for writ of mandate and reversed the trial court’s class action certification order.

Defendants have a written policy, on a form signed by each employee, that sets forth the statutory meal and rest periods and acknowledging that the employee may be disciplined or terminated for failing to take those breaks. Brinker, at 5. Employees also are required to clock in and out so that defendants may maintain accurate records for payroll purposes, id., at 5-6. Plaintiffs’ class action complaint alleged that defendants failed to provide meal and rest breaks, id., at 7-8. The class action alleged further that defendants required employees to take “early lunches” and then required that they work upwards of 9 hours without any additional meal period, id., at 8. Finally, the class action alleged that defendants required employees to work “off the clock,” id., at 8-9. Plaintiffs argued that employers “must ‘ensure’ that the employee takes meal periods,” id., at 9. The trial court an employer must give employees a meal break “before [an] employee’s work period exceeds five hours,” and that the purpose of the statute is “to provide employees with break periods and meal periods toward the middle of an employee[']s work period in order to break up that employee’s ‘shift.’” Id., at 10.

Continue reading "Labor Law Class Action Defense Cases–Brinker v. Superior Court: California Appellate Court Reverses Trial Court Order Certifying Labor Law Class Action Holding Employers Need Not “Ensure” Employees Take Meal And Rest Breaks" »

Posted In: Certification of Class Actions, Employment Law Class Actions, Class Action Court Decisions

Class Action Complaint Adequately Pleaded Claims Against T-Mobile because Claims were not Premised on Fraud, so Rule 9(b) did not Apply, and because Claims Sufficiently Pleaded Breach of Contract, Unjust Enrichment and Violation of Consumer Protection Act Washington Federal Court Holds

Plaintiff filed a class action complaint T-Mobile USA alleging unfair business practices in connection with cellular telephone text messaging; specifically, the class action alleged that “T-Mobile charges customers for the receipt of unsolicited text messages, and does not adequately disclose the practice in its contract with customers.” Zaldivar v. T-Mobile USA, Inc., ___ F.Supp.2d ___ (W.D. Wash. July 15, 2008) [Slip Opn., at 1]. The class action complaint alleged breach of contract, unjust enrichment, and violations of Washington’s Consumer Protection Act. Id., at 2. Defense attorneys moved to dismiss the class action complaint under Rule 9(b) for failure to plead fraud with specificity. Id., at 1-2. They argued that the gravamen of the class action was the allegation that T-Mobile defrauded its customers, and therefore Rule 9(b)’s heightened pleading requirements for fraud should apply, id., at 2. The district court disagreed and denied the motion to dismiss the class action.

The federal court distinguished Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003), which held that a plaintiff who “‘rel[ies] entirely’ on a ‘unified course of fraudulent conduct’ to support a claim in which fraud is not a necessary element must nonetheless satisfy Rule 9(b) in ‘pleading the claim as a whole.’” Zaldivar, at 2 (quoting Vess, at 1103-04). Here, the class action does not “‘rely entirely’ on a uniform course of fraudulent conduct”; on the contrary, even if the court assumed that the allegations against T-Mobile were “grounded in fraud” and stripped them from the complaint, the complaint would still state claims for relief against T-Mobile. Id., at 3. For example, the breach of contract claim relies on the allegation the T-Mobile failed to charges customers only for charges ‘contractually agreed upon,” and the Consumer Protection Act class action claim was premised on T-Mobile’s failure to “properly notify or advise” customers that “they were not contractually liable to pay certain fees for text messaging.” Id. Accordingly, the district court denied T-Mobile’s motion to dismiss the class action complaint, id., at 5.

Posted In: Certification of Class Actions, Class Action Court Decisions

Class Action Complaint Alleging Violations of Federal Fair Standards Labor Act (FLSA) and of Oregon State Labor Laws Conditionally Certified as a Class Action as to FLSA Claims but Denied Without Prejudice as to State Law Claims Oregon Federal Court Holds

Plaintiffs filed a class action complaint against Dell Inc. and other defendants alleging violations of the federal Fair Labor Standards Act (FLSA) and Oregon’s state labor laws; the class action alleged that plaintiffs are “consumer sales representatives” (CSRs) who sell Dell computers via telephone, and that Dell (1) misclassified CSRs as exempt from overtime pay, failed to properly pay incentive compensation, and required CSRs to work “off the clock.” Norman v. Dell Inc., ___ F.R.D.___ (D.Or. July 14, 2008) [Slip Opn., at 1, 3]. Plaintiffs’ lawyer moved the district court to certify the litigation as a class action, id., at 1; specifically, plaintiffs sought an order conditionally certifying the class action complaint’s FLSA claims, and an order certifying under state law a class action of the complaint’s state labor law claims, id., at 2. Defense attorneys opposed any class action treatment. Id., at 1. The district court granted the motion with respect to the FLSA claims, but denied the motion without prejudice as to the state law claims pending expiration of the opt-in period for the federal claims and briefing as to the impact on the opt-in response on certification of the state class action claims. Id., at 2.

The federal court addressed first the request for certification of the FLSA claims. After noting that federal law does not define “similarly situated” under the FLSA, the court utilized the two-tier approach followed by most federal courts. Norman, at 2-3. The first step considers whether, “based on the pleadings and affidavits submitted by the parties,” notice should be given to the putative class, and employs a “fairly lenient standard” that, in the court’s opinion, usually results in class certification. Id., at 2. The second step involves a motion by defense attorneys to decertify the class action following completion of discovery, id., at 3. At the first stage, however, courts look only to whether there are “substantial allegations that the putative class members were subject to a single illegal policy, plan or decision,” but plaintiffs may not rely solely on the allegations in their class action complaint. Id. Under that standard, the district court concluded that plaintiffs adequately established that Dell policies and practices with respect to compensation of the putative class members is essentially uniform, id.

Continue reading "Dell FLSA Class Action Defense Cases–Norman v. Dell: Oregon Federal Court Certifies FLSA Class Action Against Dell But Denies Without Prejudice Request To Certify Class Action Of State Law Claims" »

Posted In: Certification of Class Actions, Employment Law Class Actions, Class Action Court Decisions

Complaint Alleging Labor Law Violations Granted Class Action Status because Overriding Issues Involved Company Policies and Practices and Class Action Treatment was Superior to Other Means of Resolving Disputes California Federal Court Holds

Plaintiffs filed a putative class action complaint in California state court against their former employer, Polo Ralph Lauren, alleging labor law violations; specifically, the class action complaint alleged that in the 28 stores operated by defendants in California, defendants failed to provide rest breaks or pay for off-the-clock time, failed to pay overtime by misclassifying employees as commissions salespeople exempt from such pay, and improperly reduced earnings on future commissions if salespeople failed to meet certain sales requirements. Otsuka v. Polo Ralph Lauren Corp., ___ F.Supp.2d ___ (N.D.Cal. July 8, 2008) [Slip Opn., at 1-2]. The complaint identified not only a main class, but two subclasses – one for misclassification and one for arrearages. The class action alleged further that defendants’ California stores used a single employee handbook, and that “defendants’ policies and practices are standardized throughout California in both retail and outlet stores.” Id., at 2. Defense attorneys removed the class action to federal court, id., at 1-2. Plaintiffs moved the district court to certify the litigation as a class action, id., at 1. Defense attorneys “vigorously” objected to class action treatment, id., at 5. The federal court granted the motion, concluding that “defendants’ arguments primarily dispute the merits of plaintiffs’ claims and raise questions of act that will not be resolved at this juncture,” id.

With respect to numerosity, the main class identified in the class action complaint encompassed more than 5,000 employees; the subclasses, however, consisted of 49 members and 69 members, respectively. Otsuka, at 5. Defendants argued these subclasses failed to satisfy the numerosity requirement, id. The federal court disagreed, noting that under Ninth Circuit authority class actions with “as few as 39 members may be sufficiently numerous under the right circumstances.” Id., at 5-6 (citation omitted). Similarly, the district court found that commonality clearly existed as to the main class identified in the class action complaint, id., at 6, and it rejected defense challenge to the subclasses because it attacked the merits but failed to demonstrate that common questions existed within the subclasses, id., at 6-7. With respect to typicality, defense attorneys argued that the claims on the named plaintiffs were not typical with respect to the misclassification subclass because after the lawsuit had been filed defendants performed a reconciliation and compensated them for overtime not previously paid. Id., at 7-8. The court found that this did not render them unqualified to serve as typical class representatives because (1) they may establish that they are entitled to additional overtime pay, and (2) their claims that defendants acted unlawfully by failing to perform annual reconciliations. Id., at 8. With respect to adequacy of representation, the district court rejected the technical objection made by defendants to one of the named representatives, id., at 8-9. Thus, the federal court found that the Rule 23(a) requirements for class action treatment had been met.

Continue reading "Class Action Defense Cases–Otsuka v. Polo Ralph Lauren: California Federal Court Certifies Class Action Against Polo Ralph Lauren Holding Rule 23 Requirements For Labor Law Class Action Had Been Satisfied" »

Posted In: Certification of Class Actions, Employment Law Class Actions, Class Action Court Decisions

In Connection with Labor Law Class Action Alleging Failure to Pay Managers and Assistant Managers Overtime, Trial Court did not Abuse its Discretion to Manage Class Action Certification when it Granted Defense Motion to Strike Class Action Allegations from Complaint California State Court Holds

Plaintiffs filed a putative class action against AZ3, Inc., doing business as BCBG Maxazria (BCBG), alleging that it had failed to pay its managers and assistant managers for overtime. In re BCBG Overtime Cases, ___ Cal.App.4th ___, 78 Cal.Rptr.3d 257 (Cal.App. June 13, 2008) [Slip Opn., at 2]. A separate class action was filed by a single plaintiff, and then the three plaintiffs filed a coordinated class action complaint against BCBG, id. Defense attorneys moved to strike the class action allegations pursuant to Rule 1857(a)(3) of the California Rules of Court. Id., at 3. The motion was supported by declarations from 25 current or former managers and assistant managers explaining that “managers are not assigned uniform duties and spend more than 50 percent of their time on non-managerial work,” and that each store is different, targeting different customers, and requiring that managers exercise independent judgment in designing and laying out the store. Id. Plaintiffs’ lawyer opposed the motion on the ground that it was improperly sought to circumvent the class action certification process. Id., at 4. At oral argument, after the trial court issued a tentative ruling to grant the motion, plaintiffs asked for leave to depose some of the declarants, and for leave to file an amended class action complaint. The trial court denied plaintiffs’ requests and granted the motion finding that it was “properly before it because ‘class certification issues may be determined at any time during the litigation.’” Id. As the appellate court explained at page 4, “It found that BCBG had met its burden to show that the action is not suitable for class certification by producing ‘substantial evidence which establishes that Plaintiffs cannot prove the elements of typicality or commonality necessary for class certification.’” The Court of Appeal affirmed.

On appeal, plaintiff argued that the trial court should not have considered evidence outside the pleadings in ruling on the defense motion to strike the class action allegations, and that she should have been granted leave to amend. BCBG, at 1-2. In the alternative, plaintiff argued that she should have been allowed to conduct discovery before the court ruled on the motion, id., at 2. With respect to the first issue, the appellate court held that trial courts have considerable “flexibility” in addressing the certification of class actions and, indeed, have been encouraged by the California Supreme Court to be “procedurally innovative” in connection with “determining whether to allow the maintenance of a particular class suit.” Id., at 5 (quoting City of San Jose v. Superior Court, 12 Cal.3d 447, 453 (Cal. 1974)). California law permits either party to file a motion to certify a class action, and provides that “the pleadings be amended to eliminate allegations as to representation of absent persons, and that the action proceed accordingly.” Cal. Rule of Court, Rule 3.767(a)(3).

Continue reading "BCBG Class Action Defense Cases–In re BCBG: California State Court Upholds Court Order Granting Defense Motion To Strike Class Action Allegations In Labor Law Class Action" »

Posted In: Certification of Class Actions, Employment Law Class Actions, Class Action Court Decisions

Trial Court did not Err in Granting Class Action Treatment to Nationwide Product Defect Class Action Against General Motors because Choice-of-Law Analysis Irrelevant to Class Action Certification Determination Arkansas Supreme Court Holds

In September 2006, plaintiff filed a class action against General Motors in Arkansas state court. The first amended class action complaint alleged that GM sold 4,000,000 pickup trucks and SUVs with defectively designed parking brakes; specifically, the class action alleged that GM discovered the defect in 2000, redesigned the defective part in October 2001, but “withheld from dealers admission of responsibility for the defect until January 28, 2003.” General Motors Corp. d/b/a/ Chevrolet, GMC, Cadillac, Buick, and Oldsmobile v. Bryant, ___ S.W.3d ___ (Ark. June 19, 2008) [Slip Opn., at 1-2]. According to the class action, this scheme permitted GM “to avoid paying millions of dollars in warranty claims.” Id., at 2. Plaintiff alleged further that GM’s 2005 recall involved only about 60,000 of the 4 million vehicles affected, id. Plaintiff filed a motion for class action certification; the trial court granted the motion in a 51-page order. Id., at 2-3. GM sought interlocutory review of the class action certification order, challenging predominance, superiority, and the definition of the class, id., at 3. The Arkansas Supreme Court affirmed.

The primary issue on appeal concerned GM’s challenge to the applicable choice of law. Defense attorneys argued that “the significant variations among the fifty-one motor-vehicles product-defect laws defeat predominance,” and that the trial court was required to perform a choice-of-law analysis before granting class action treatment to the lawsuit. Bryant, at 4. Plaintiff argued that Arkansas law does not require such an analysis prior to class action certification, id. The Arkansas Supreme Court agreed with plaintiff: because if found that a “predominating questions” exists – specifically, “[w]hether or not the class vehicles contain a defectively designed parking-brake system and whether or not General Motors concealed that defect,” id., at 6 – it found that the trial court did not err. In the Court’s words, “That various states’ laws may be required in determining the allegations of breach of express warranty, breach of implied warranty, a violation of Magnuson-Moss Warranty Act, unjust enrichment, fraudulent concealment, damages, and restitution does not defeat predominance in the instant case.” Id., at 7. (The author confesses that he finds this reasoning difficult to follow: legal claims do not exist in a vacuum, and it does not seem “judicially efficient” to try a case on a class-wide basis simply to determine one or two common facts, regardless of how important those facts may be, and then decertifying the case for apparently millions of trials to be held on a case-by-case basis focusing on the various claims of individual class members based on the particular state laws governing those claims.) The Arkansas Supreme Court recognized that other courts have held that choice-of-law “is crucial in making a class-certification decision,” id., at 8 (citation omitted), and indeed cited cases from California, New Jersey and Texas to that effect, see id., at 8-9. Nonetheless, it rejected this approach in favor of the “certify now, decertify later” approach followed in Arkansas, id., at 9-10.

Continue reading "GM Class Action Defense Cases–General Motors v. Bryant: Arkansas Supreme Court Affirms Class Action Certification Of Nationwide Class Action Alleging Product Defect Holding Variations In State Laws May Be Addressed By Decertification of Class Action" »

Posted In: Certification of Class Actions, Class Action Court Decisions

Defense Post-Trial Motion to Decertify FLSA Collective Action Granted because Evidence Revealed Lack of Similarity Among Class Members thereby Precluding Defense from Presenting a Uniform Defense to FLSA Claims Louisiana Federal Court Holds

Plaintiffs filed a labor law class action against Big Lots Stores for violations of the federal Fair Labor Standards Act (FLSA); specifically, the class action complaint alleged that Big Lots had misclassified employees and failed to pay them overtime. Johnson v. Big Lots Stores, Inc., ___ F.Supp.2d ___ (E.D. La. June 20, 2008) [Slip Opn., at 1]. The gravamen of the class action was that Big Lots failed to pay its store managers and assistant store managers for overtime, id., at 3. Over defendant’s objection, the district court certified the litigation as an FLSA collective action and approximately 1,000 people elected to opt-in to the lawsuit, id., at 4-5. Following a one-week bench trial, the federal court decertified the nationwide class, dismissed without prejudice the claims of the individuals who had opted in to the action, and held that plaintiffs could proceed with their individual actions. Id., at 1.

Big Lots is a nationwide retailer with approximately 1,400 stores in 46 states. Johnson, at 2. Typically, each store has store manager and at least one assistant store manager, but the physical size, products available for sale, sales volume, sales history and number of employees all affected the number and nature of managers and assistant managers at any given store. Id. “Significant variations” existed as to the duties performed by assistant store managers, but each one was expected to work at least five 9-hour shifts per week. Id., at 3. All managers and assistant managers were salaried employees, but they were classified as “executive employees” under the FLSA and therefore exempt from overtime pay. Id., at 2. The job description of an assistant store manager supported this classification, see id., at 2-3. The class action complaint, however, filed as a collective action under the FLSA, alleged that Big Lots misclassified its assistant store managers as exempt employees because, in the words of one plaintiff, “a Big Lots ASM is nothing more than a ‘glorified stocker.’” Id., at 3-4.

Continue reading "FLSA Class Action Defense Cases–Johnson v. Big Lots: Louisiana Federal Court Decertifies FLSA Collective Action After Week-Long Bench Trial Because Evidence Revealed Class Members Were Not Similarly Situated" »

Posted In: Certification of Class Actions, Employment Law Class Actions, Class Action Court Decisions

Class Action Complaint Challenging as Excessive Fees Charged for Medical Records Properly Certified as Class Action because Defense Challenges to Class Action Treatment Went to Issues of Damages or to the Merits, Neither of Which Defeat Class Action Certification Arkansas Supreme Court Holds

Plaintiff filed a putative class action in Arkansas state court against ChartOne, “a health-information management company that provides copying services of medical records for doctors, hospitals, and other medical-care providers throughout Arkansas,” alleging that the fees it charged for copying medical records exceeded the amount allowed by statute. The class action complaint also alleged that ChartOne charged shipping and postage fees that either were not incurred or were reimbursed by the healthcare provider. ChartOne, Inc. v. Raglon, ___S.W.3d ___ (Ark. April 24, 2008) [Slip Opn., at 1-2]. Plaintiff moved the trial court to certify the litigation as a class action; defense attorneys argued that class action treatment was not appropriate because the proposed definition of the class “was ambiguous and provided no objective criteria by which to ascertain the members of the class,” and because plaintiff failed to satisfy the statutory requirements for class action certification. Id., at 2. A representative of ChartOne testified at the class certification hearing that it was not possible to tell from company records whether a particular individual was charged a notary fee, id., at 2-3. Ultimately, the trial court granted plaintiff’s motion and certified a class action covering those “who requested a copy of medical records from a healthcare provider located in Arkansas and who paid ChartOne (1) base fees, clerical fees, retrieval fees and/or page fees as part of a charge for copying medical records, which resulted in charges being in excess of $5 for the first five pages and 25¢ for each page thereafter; and/or (2) shipping charges.” Id., at 3. The Arkansas Supreme Court affirmed.

The Supreme Court addressed first defense objections to the definition of the class. Defense attorneys argued that membership in the class could not be determined in any “reasonable or feasible manner” because “there is no way of ascertaining the per-page charges without reviewing the actual requests for records that are stored with the patients’ medical files” and that a manual, file-by-file review of more than 120,000 files would be required. ChartOne, at 5. Plaintiff responded that membership in the class was readily determinable from ChartOne’s billing records, and that the objective raised by the defense went to damages rather than whether class action treatment was appropriate, id. The Arkansas Supreme Court agreed that class actions must provide a “precise definition” of the putative class, and explained that such a definition ensures that only “those people who are actually harmed by the defendant’s wrongful conduct will participate in the relief ultimately awarded.” Id., at 6. Nonetheless, it agreed that defendant’s objections went to damages, not the definition of the class itself. Id., at 6-7. In particular, the Court was unimpressed by the argument that ChartOne’s “failure to maintain accurate records” could serve to defeat class certification. Id., at 9.

Continue reading "Class Action Defense Cases–ChartOne v. Raglon: Arkansas Supreme Court Affirms Class Action Certification Of Lawsuit Alleging Fees Charged For Medical Records Exceeded Amounts Allowable By Statute" »

Posted In: Certification of Class Actions, Class Action Court Decisions

Antitrust Class Action by Assignees of Direct Purchasers of Antidepressant Wellbutrin SR Satisfied Rule 23 Class Action Requirements Pennsylvania Federal Court Holds

Plaintiffs filed a class action complaint against SmithKline Beecham Corporation dba GlaxoSmithKline (GSK) alleging antitrust violations arising out of its manufacture and sale of the antidepressant drug Wellbutrin SR. The class action purports to be filed on behalf of “direct purchasers” of the drug, and the class action complaint alleges “(1) Defendant unlawfully extended its monopoly over Wellbutrin SR by making fraudulent assertions to the United States Patent and Trademark Office and by engaging in ‘sham’ litigation against generic drug manufacturers seeking to market less expensive versions of the drug; (2) Because the litigation delayed the market entry of generic versions of Wellbutrin SR, the class members were forced to pay unnecessarily high prices for the drug because no generic alternatives were available for nearly two years after Defendant’s patent monopoly would have expired; and (3) Defendant filed the baseless infringement suits against the generic manufacturers solely to preserve its monopoly during the pendency of the infringement litigation.” In re Wellbutrin SR Direct Purchaser Antitrust Litig., ___ F.Supp.2d ___ (E.D. Pa. May 2, 2008) [Slip Opn., at 1-2 (footnotes omitted)]. In essence, plaintiffs allege defendant violated Section 2 of the Sherman Act by requiring that they pay inflated prices “from the time Defendant’s monopoly was extended until the time the price of [the drug] reached competitive levels.” Id., at 4. Defense attorneys moved to dismiss claims in the various class action complaints, and the district court dismissed the claims alleging fraudulent prosecution of a patent and the antitrust claims seeking injunctive relief. Id., at 2 n.4. Plaintiffs moved the district court to certify the litigation as a class action, id., at 2; defense attorneys opposed class action treatment on the grounds that plaintiffs were not adequate representatives of the class and that the definition of the class is overly broad. The district court rejected the defense arguments and certified the litigation as a class action.

The district court had no difficulty in concluding that Rule 23(a)’s numerosity, commonality and typicality requirements had been satisfied. See In re Wellbutrin, at 4-8. With respect to the adequacy of representation of Rule 23(a)(4), defense attorneys did not challenge the qualifications of plaintiffs’ counsel, who the court found to be qualified to represent the class. See id., at 8. Rather, the defense argued (1) that plaintiffs could not represent the class because they are assignees of the direct purchasers (not direct purchasers themselves), (2) that a unique defense exists as to one of the named plaintiffs, “rendering it inadequate to represent the class”; and (3) that “significant conflicts” exist among the class members. Id., at 8-9. The district court rejected each argument. First, it noted that circuit case authority permits the assignment of antitrust claims, see id., at 9-10. Second, it rejected the claim that a defense challenge to the validity of the assignment to named-plaintiff SAJ Distributors will consume SAJ’s attention, id., at 10; as the issue is not likely to be a “major focus” of the class action litigation, the district court concluded that “it is not an issue that will distract SAJ to the detriment of the class itself,” id., at 11. Finally, the district court refused to follow Valley Drug Co. v. Geneva Pharmaceuticals, Inc., 350 F.3d 1181 (11th Cir. 2003), cited in support of the defense claim of a conflict between national drug wholesalers and downstream retail distributors such that the challenged activity may have been financially beneficial to the national wholesalers, explaining at page 14 that “the controlling question is whether the class members suffered an overcharge: if an overcharge occurred, all class members are entitled to recover, whether or not some plaintiffs experienced a net benefit while others experienced a net loss.”

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Posted In: Certification of Class Actions, Class Action Court Decisions