Mass Tort & Class Action Blog

There are a number of cases pending before the California Supreme Court that should be on everyone’s watch list this year. This article summarizes the top seven.

1.  Brinker v. Superior Court, S166350, 165 Cal.App.4th 25. The wait for this opinion will be a little bit longer than previously anticipated, because the Supreme Court accepted further post-argument briefing on whether its forthcoming opinion should apply only prospectively. The Court of Appeal in Brinker reversed an order certifying a class of employees who did not get rest breaks. It concluded that while employers cannot discourage rest or meal periods, they need only provide, and not ensure, rest and meal periods are taken. It also concluded that because rest and meal breaks only need to be “made available,” individual issues predominate and, based on the evidence in that case, were not amenable to class treatment. Finally, the Court of Appeal concluded that employers were liable for employees working off the clock only if the employers knew or should have known that the employees were doing so, and therefore such claims were not amenable to class treatment. Oral argument held November 8, 2011. Supreme Court briefing is available here, and an opinion is expected by April.

2.  Aryeh v. Canon Business Solutions, Inc., S184929, 185 Cal.App.4th 1159. The plaintiff in Aryeh filed a putative class action alleging in a single claim under Business and Professions Code section 17200 that Canon had overcharged him and others under its copier leases for “test” copies that were made during service or maintenance calls. The Court of Appeal found that plaintiff conceded he was “aware” of his claim more than six years before he filed suit. The plaintiff argued that nonetheless the court should apply the “continuing violation” doctrine and find that he filed suit within the four-year statute of limitations. The Court of Appeal in Aryeh held that the “continuing violation” doctrine does not apply to actions under the Unfair Competition Law. The Supreme Court accepted review to decide this issue and two related issues: (1) whether the continuous accrual doctrine, under which each violation of a periodic obligation or duty is deemed to give rise to a separate cause of action that accrues at the time of the individual wrong, may be asserted in an action under the Unfair Competition Law, and (2) whether the delayed discovery rule, under which a cause of action does not accrue until a reasonable person in the plaintiff’s position has actual or constructive knowledge of facts giving rise to a claim, may be asserted in such an action? The case has been fully briefed since February 22, 2011 and the parties are waiting for argument.

3.  Kirby v. Immoos Fire Protection, Inc., S185827, 186 Cal.App.4th 1361. In Kirby, two employees sued their employer for Labor Code violations in a putative class action. The trial court denied class certification and the employees dismissed the suit. The trial court then awarded the employer-defendant $49,846.05 in attorneys’ fees for its defense of certain claims. The plaintiffs appealed, arguing that in claims for failure to pay minimum wages or overtime, Labor Code section 1194 permits the court to award attorneys’ fees only to the employee, not the employer. The Court of Appeal held that the trial court properly awarded the employer its prevailing party attorneys’ fees under Labor Code section 218.5 for those claims that did not relate to failure to pay minimum wages or overtime. The Supreme Court accepted review to decide two questions: (1) Does Labor Code section 1194 apply to a cause of action alleging meal and rest period violations (Lab. Code § 226.7) or may attorney’s fees be awarded under Labor Code section 218.5? (2) Is the analysis affected by whether the claims for meal and rest periods are brought alone or are accompanied by claims for minimum wage and overtime? Fully briefed, May 10, 2011. Waiting for argument.

4.  Parks v. MBNA America Bank, N.A., S183703 184, Cal.App.4th 652. Civil Code section 1748.9 requires credit card issuers engaged in extending credit to cardholders by means of a “preprinted check or draft” (known as “convenience checks” in the industry) to “disclose on the front of an attachment that is affixed by perforation or other means to the preprinted check or draft, in clear and conspicuous language, all of the following information: [¶] (1) That “use of the attached check or draft will constitute a charge against your credit account. “[¶] (2) The annual percentage rate and the calculation of finance charges, as required by Section 226.16 of Regulation Z of the Code of Federal Regulations, associated with the use of the attached check or draft. [¶] (3) Whether the finance charges are triggered immediately upon the use of the check or draft.” Plaintiff filed a class action against MBNA America Bank, N.A. (MBNA) alleging systematic violations of section 1748.9. MBNA is a national banking association, organized under the laws of the United States and regulated by the Office of the Comptroller of the Currency. (See 12 U.S.C. § 1 et seq.) The trial court granted judgment on the pleadings to MBNA and found that section 1748.9 is preempted by federal law applicable to national banks. The Court of Appeal reversed and held that section 1748.9 is not preempted on its face. The Supreme Court accepted review to decide two issues: (1) Is Civil Code section 1748.9, which requires credit card issuers to make certain disclosures on checks issued to cardholders for cash advances from the cardholders' credit card accounts, preempted by the National Bank Act (12 U.S.C. § 21 et seq.)? (2) Is 12 C.F.R. section 7.4008, which was promulgated under the National Bank Act by the Office of the Comptroller of the Currency and which provides that state laws that impair a nationally chartered bank's non real-estate banking powers are not applicable to nationally chartered banks, a valid regulation? Fully briefed, April 5, 2011. Waiting for argument.

5.  Loeffler v. Target Corp., S173972, 173 Cal.App.4th 1229. In California, retailers are obligated to pay sales taxes to the state on their gross receipts, subject to certain exemptions. Retailers may, however, seek sales tax reimbursement from their customers. In this case, plaintiffs contended that defendant Target Corporation was not entitled to collect sales tax reimbursement on purchases of hot coffee “to go” because sales tax was allegedly not due on such purchases. Plaintiffs sought a refund of sales tax reimbursement from Target on their own behalf and on behalf of the class they purported to represent. They also sought an injunction prohibiting Target from collecting sales tax reimbursement on purchases of hot coffee “to go.” The trial court sustained without leave to amend Target’s demurrers to plaintiffs’ pleadings and entered judgment in favor of Target on the ground, among others, that article XIII, section 32 of the California Constitution barred plaintiffs’ action. The Court of Appeal affirmed. The Supreme Court accepted review on the following issue: Does article XIII, section 32 of the California Constitution or Revenue and Taxation Code section 6932 bar a consumer from filing a lawsuit against a retailer under the Unfair Competition Law (Bus. & Prof. Code §§ 17200 et seq.) or the Consumer Legal Remedies Act (Civ. Code, § 1750 et seq.) alleging that the retailer charged sales tax on transactions that were not taxable? Fully briefed, August 8, 2011. Waiting for argument.

6.  People ex rel. Harris v. Pac Anchor Transportation, S194388, 195 Cal.App.4th 765. The State filed a complaint against a trucking company and its owner for alleged violation of the Unfair Competition Law by misclassifying its drivers as independent contractors rather than as employees. The trial court held that the action was preempted by the Federal Aviation Administration Authorization Act of 1994 (49 U.S.C. 14501). The Court of Appeal reversed. The Supreme Court accepted review to decide one issue: Is an action under the Unfair Competition Law (Bus. & Prof. Code § 17200 et seq.) based on a trucking company’s alleged violation of state labor and insurance laws “related to the price, route or service” of the company and thus preempted by the Federal Aviation Administration Authorization Act of 1994 (49 U.S.C. 14501)? In Briefing. Answer Brief due January 27, 2012.

7.  Zhang v. Superior Court, S178542, 178 Cal.App.4th 1081. Although Zhang is not a class action, its outcome might have implications for class action cases against insurers. Plaintiff sued her insurer over a dispute following a fire at plaintiff’s commercial premises. In the third cause of action, based on the Unfair Competition Law, plaintiff alleged that the defendant “engaged in unfair, deceptive, untrue, and/or misleading advertising . . . . [Defendant] promises its insureds that it will timely pay proper coverage in the event the insured suffers a covered loss . . . . However . . . [defendant] in fact has no intention of properly paying the true value of its insureds’ covered claims. [¶] . . . [defendant] had and has no intention of honoring such advertised promises.” The defendant demurred on the basis that the conduct alleged in the third cause of action was prohibited by Insurance Code section 790.03, and plaintiff could not state a private cause of action due to the decision in Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287. The Court of Appeal reversed, finding that Moradi-Shalal does not bar an action for false advertising. The Supreme Court accepted review on two issues: (1) Can an insured bring a cause of action against its insurer under the unfair competition law (Bus. & Prof. Code, § 17200) based on allegations that the insurer misrepresents and falsely advertises that it will promptly and properly pay covered claims when it has no intention of doing so? (2) Does Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287 bar such an action? Fully briefed, June 30, 2010. Waiting for argument.

Women suing for injuries arising from implantation of surgical mesh used for pelvic organ prolapse (POP) and stress urinary incontinence received validation from an FDA advisory panel in September 2011.  After two days of hearings, the panel concluded in part that (a) the safety of vaginal mesh intended for POP repair is not well-established, (b) vaginal mesh for pelvic organ prolapse repair should be reclassified from a Class II to a Class III device, to ensure that proper pre-market proper studies on the mesh can be completed, (c) postmarket studies of currently marketed mesh products for POP repair should be conducted, and (d) the safety and effectiveness of single incision mesh mini-slings for stress urinary incontinence is not well understood, and premarket evaluation of the new mini-slings should be supported by clinical studies.

The FDA warned doctors and patients about possible problems with mesh in July 2011, alerting them that it is not clear that the use of the product is more effective than traditional non-mesh repair in all patients with pelvic organ prolapse, and that it may expose patients to greater risk. The panel's recommendations suggest that the FDA should go further in protecting patients who may be candidates for having the mesh implanted.

Cases are pending against multiple manufacturers of the product. For further information about the transvaginal/pelvic mesh litigation, contact us.

Attorneys for California consumers who purchased the recalled Complete® MoisturePlusTM contact lens solution announced today that they have agreed to settle a Court-certified class action consumer fraud lawsuit against Advanced Medical Optics (now known as Abbott Medical Optics, "AMO") concerning its sale of the solution. The settlement is subject to court approval. The lawsuit is styled Lazar vs. Advanced Medical Optics, Orange County Superior Court Case No. 07CC01296.

In May 2007, AMO recalled Complete® MoisturePlusTM after a report issued by the United States Centers for Disease Control and Prevention noted an increased statistical risk of developing a parasitic eye infection called Acanthamoeba keratitis in contact lens wearers who used the product.

Plaintiffs Nicole Lazar and Cameron Smith filed the lawsuit on behalf of all California consumers who purchased the product. Plaintiffs allege that AMO misled consumers into falsely believing that the product would effectively "disinfect" their contact lenses when in fact the solution did not disinfect against Acanthamoeba and other harmful organisms that are known to contaminate contact lenses. The plaintiffs sought a refund of the money that California consumers paid to purchase the product. AMO denies Plaintiffs' allegations and claims that Complete® MoisturePlusTM met all FDA requirements.

Plaintiffs and AMO reached the settlement after four years of litigation, several mediation sessions, and just days before trial was scheduled to start. The settlement imposes the following obligations on AMO:

• AMO will give a 100% cash refund for every bottle of Complete® MoisturePlusTM that a California consumer bought if the consumer can document the purchase through a receipt or a bottle;
• If a consumer cannot document his purchase of the product through a receipt or a bottle but attests to the purchase, AMO will give the consumer a coupon that is "as good as cash" toward the purchase of certain other AMO products;
• AMO will pay the difference between the total of the cash refunds paid and $650,000 to Guide Dogs of America and Children's Vision First;
• AMO shall not sell Complete® MoisturePlusTM in California;
• If AMO applies to the FDA during the next three years for clearance to market a multi-purpose disinfecting solution that employs a "no-rub" and "no-rinse" regimen, AMO shall request the FDA's permission to include on the product label specific cautionary language concerning the disinfecting ability of the solution.

Eligible consumers can obtain the 100% cash refund or the "good as cash" coupon by making a claim through the Court-supervised claim process.

"We believe that this is a fair settlement for all of the California consumers who purchased Complete® MoisturePlusTM," says Plaintiffs' co-lead attorney James A. Quadra of Calvo Fisher & Jacob, LLP. Plaintiffs' other co-lead attorney, Ronald T. Labriola of The Senators (Ret.) Firm, LLP, also noted that "California law protects consumers from misleading business practices and this settlement provides California consumers with the opportunity to obtain a complete refund of the purchase price of this product."

Complete information about the claim process, a claim form, and the complete terms of the settlement are available online at www.AMOSETTLEMENT.com and from the Court-appointed co-lead counsel for the Class, Messrs. Quadra and Labriola, whose information is below.

Ronald Labriola, The Senators (Ret.) Firm, LLP, 949-209-9820
James Quadra, Calvo Fisher & Jacob, LLP, 415-374-8370

At long last, the California Supreme Court has set Brinker v. Superior Court (Hohnbaum) for oral argument.

The Court of Appeal in Brinker reversed an order certifying a class of employees who did not get rest breaks. It concluded that while employers cannot discourage rest or meal periods, they need only provide, and not ensure, rest and meal periods are taken. It also concluded that because rest and meal breaks only need to be “made available,” individual issues predominate and, based on the evidence in that case, were not amenable to class treatment. Finally, the Court of Appeal concluded that employers were liable for employees working off the clock only if the employers knew or should have known that the employees were doing so, and therefore such claims were not amenable to class treatment.

The oral argument is set for November 8, 2011 at 9:00 a.m. in San Francisco.

This week the San Francisco Superior Court made an important ruling under the Labor Code Private Attorney General Act ("PAGA") in Ruelas v. Top Productions, LLC.

In Ruelas, an employee gave the statutory pre-litigation notice to the Department of Labor and his employer regarding Labor Code violations pursuant to Labor Code §2699.3. The employee became unavailable to litigate the case, and a new employee stepped in to pursue the case. The defendant demurred to the amended complaint, arguing that a new employee cannot be substituted in to take over a PAGA cause of action without first sending his own formal notice to the employer and the Department of Labor.

Noting the case was one of first impression, the Court overruled the demurrer, finding that the new employee is not required to issue a second notice to the Department of Labor or the employer in order to pursue the PAGA claim. Calvo Fisher & Jacob, LLP is counsel for the plaintiff.