In the past four years, droves of call recording class actions have been filed in state and federal courts across California. The gist of each is that a company violates the law when its customer service department records calls with its customers without first providing notice that the calls may be recorded. In a recent published decision, the California Court of Appeal may have sounded the death knell for these class actions. The Court of Appeal affirmed the trial court’s denial of a class certification motion, holding that individualized issues predominated.
In Rea v. Michaels Stores, No. 14-55008, 2014 U.S. App. LEXIS 2928 (9th Cir. Feb. 18, 2014), the Ninth Circuit reversed the district court’s order remanding a wage-and-hour class complaint to state court, ruling that the defendant employer’s removal of the case to federal court under the Class Action Fairness Act (CAFA) was proper. The Ninth Circuit held that a defendant’s removal options are not limited to the two 30-day periods specified in the federal removal statutes.
In Concepcion v. Amscan Holdings, Inc. et al., — Cal.Rptr.3d —-, 2014 WL 595822 (Cal.App. 2 Dist. Feb. 18, 2014) the California Court of Appeal rejected class counsel’s fee award where class counsel’s billing records were provided to the trial court for review, but were not provided to the defendant’s counsel.
In Murray v. Sears, Roebuck and Co., No. C 09-5744, 2014 WL 563264 (N.D. Cal. Feb. 12, 2014), the U.S. District Court for the Northern District of California denied a motion for class certification that was practically identical to a motion brought in the U.S. District Court for the Northern District of Illinois that was initially granted, but subsequently reversed by the Seventh Circuit. In doing so, the court considered the relative weight and “comity” of identical class actions filed in other states, finding that they were entitled to “respect” but not “preclusive effect.” Nonetheless, the court denied certification on the same grounds, finding a complete lack of commonality among the proposed class’ claims.
In Berger v. Home Depot USA, Inc., Case No. 11-55592, 2014 U.S. App. LEXIS 2059 (9th Cir. Feb. 3, 2014), the Ninth Circuit Court of Appeals affirmed the denial of class certification based largely on evidence that the defendant’s point-of-sale signs and oral statements supplied allegedly withheld information. A proposed class lacks the requisite cohesion where additional information at the point-of-sale place each member’s exposure to the alleged misstatement in doubt.
In Collado v. Toyota Motor Sales, U.S.A., Inc., Nos. 11-57013, 11-57023, 11-57030 (9th Cir. Dec. 16, 2013), the Ninth Circuit Court of Appeals reversed a district court’s attorneys’ fees award in a class action settlement alleging malfunctioning Toyota Prius headlights. The Ninth Circuit held that the district court incorrectly applied federal law instead of state law to determine the amount of recoverable attorneys’ fees. The district court should have used California’s lodestar method (reasonable hours times reasonable rates) and not the federal percentage of recovery method (25% benchmark).
In Mississippi ex rel. Hood v. AU Optronics Corp., No. 12-1036, 2014 U.S. LEXIS 645 (Jan. 14, 2014) the Supreme Court of the United States addressed the circuit split that arose after the 5th Circuit Court of Appeal’s holding in Louisiana ex rel. Caldwell v. Allstate Ins. Co., 536 F.3d 418 (5th Cir. 2008) that a suit brought by the Louisiana Attorney General qualified as a “mass action” under the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d)(11)(B)(i). The Fourth Circuit, Seventh Circuit, and Ninth Circuit all reached the opposite conclusion. The Supreme Court, resolving the split in favor of the Fourth, Seventh, and Ninth Circuits, held that the mass action provision can only be invoked to remove a case where the case is brought by 100 or more named plaintiffs. Lawsuits brought by state attorneys general in which the state is the only named plaintiff do not qualify as “mass actions.”
It is no secret that some advertisers believe that using the term “natural” is an effective way to advertise a product. Some consumers seem to prefer these “natural” products for a variety of reasons, even while no one (particularly the Food and Drug Administration) has set forth an accepted definition of what “natural” actually means. Not surprisingly, the lack of defined standards for “natural” offers significant litigation opportunities for plaintiffs to file suits (usually class actions) claiming they were misled by the “natural” advertising into purchasing products that are not, in fact, “natural.” The year 2013 saw many of these cases, and defendants tested the lawsuits through motion practice. Defendants often argued: (1) that the FDA has “primary jurisdiction” over the advertising, and (2) no reasonable consumer would be misled by the term “natural.” The mixed success of these arguments suggests that courts are changing their attitudes toward “natural” allegations. In fact, by the end of 2013, the very lack of a “natural” definition that opened the door to this kind of litigation was turned into a defense that successfully dismissed several cases.
How Ben & Jerry’s Defeated an “All Natural” Class Certification Motion
On January 7, 2014, the Northern District of California refused to certify a class of Ben & Jerry’s purchasers who allegedly had purchased ice cream that was falsely advertised as “all natural.” Astiana v. Ben & Jerry’s Homemade, Inc., No. C 10-4387 PJH, 2014 U.S. Dist. LEXIS 1640 (N.D. Cal. Jan. 7, 2014). This opinion shows the continuing viability of arguments based on ascertainability and the Supreme Court’s decision in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013) to defeat consumer class actions. Thus, for many defendants, this opinion will get 2014 off to a delicious start.
The Consumer Financial Protection Bureau (the “CFPB”) is a new federal agency responsible for regulating consumer financial products and services. On December 12, 2013, the CFPB released a report on the use of arbitration clauses with class action waivers contained in credit card, prepaid card, and checking account contracts. The Report is part of a broader study on mandatory arbitration clauses required by the Dodd-Frank Act. The CFPB examined the prevalence of the clause in different markets, the length and complexity of the clause, the frequency and type of arbitration filings, and the incidence of class action waivers in arbitration clauses.