In Concepcion v. Amscan Holdings, Inc., the Second District Court of Appeal reversed an award of attorneys' fees to plaintiffs' counsel where the Court based its ruling in part on detailed billing records reviewed in camera, but that defendant was not permitted to review.
In Amscan, plaintiffs in multiple coordinated actions alleged that defendants had violated California's Song-Beverly Credit Card Act, Civil Code section 1747.08, by requiring customers using credit cards to provide "personal identification information," specifically ZIP codes. The case settled after a mediation. The settlement agreement provided that plaintiffs' counsel were entitled to an award of attorney's fees, but it did not specify any agreed amount, instead providing that plaintiffs' counsel could submit a fee request and that defendants could oppose it.
Plaintiffs' counsel submitted multiple fee and cost petitions, which defendants opposed as duplicative and unnecessary. The Court requested and received supplemental evidence from plaintiffs' counsel, which it reviewed in camera but did not permit defendants to review. Based in part on this supplemental evidence, the Court entered an order awarding plaintiffs' counsel $350,000 in fees and $20,766.35 in costs. Defendants appealed.Continue Reading...
In Robins v. Spokeo, Inc., the 9th Circuit held that an individual has Article III standing to sue a website under the Fair Credit Reporting Act for publishing allegedly inaccurate information about him.
In Robins, plaintiff sued defendant Spokeo, a website operator that aggregates and provides personal details about individuals, for willful violations of the FCRA, alleging that the site contained false information about him. Defendant moved to dismiss, asserting that plaintiff lacked Article III standing because he had no alleged "any actual or imminent harm" and therefore had failed to allege an injury. Plaintiff amended his complaint, and Spokeo again moved to dismiss based on Article III standing. The district court denied the motion to dismiss and defendant moved to certify an interlocutory appeal. The district court then reversed itself, holding that plaintiff had failed to plead injury in fact. Plaintiff appealed.Continue Reading...
9th Circuit Affirms that Disproportionate Credit Card Overage and Late Fees Do Not Violate Consumers' Substantive Due Process
In In Re: Late Fee and Over-Limit Fee Litigation, a three judge panel for the 9th Circuit Court of Appeals reviewed whether credit card overage and late fees violate consumers' substantive due process rights. The 9th Circuit affirmed the district court's ruling, holding that constitutional due process does not extend to the prevention of excessive penalty clauses in credit card contracts and that the fees are permitted under the National Bank Act ("NBA") and the Depository Institutions Deregulation and Monetary Control Act ("DIDMCA").
Plaintiffs/Appellants were a class of consumer credit cardholders who had been subject to credit overage fees and/or late payment fees. Appellants alleged that Defendant/Appellee credit card issuers, including Bank of America, Capital One Financial, Chase Bank, and Citibank, should be subject to the same substantive due process limitations on punitive damages outlined by the Supreme Court in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996). The Appellees moved pursuant to Rule 12(b)(6) to dismiss the complaint, which the district court granted.Continue Reading...
9th Circuit Concludes that Participation in Pretrial Litigation Does Not Waive the Right to Contractual Arbitration
In Richards v. Ernst & Young, LLP, the 9th Circuit Court of Appeals concluded that a party’s pretrial participation in litigation does not constitute a waiver of its right to contractual arbitration. The 9th Circuit reversed the district court’s ruling denying defendant Ernst & Young’s motion to compel arbitration, holding that plaintiff had not established any prejudice as a result of defendant’s alleged delay in compelling arbitration.
Plaintiff Michelle Richards brought the underlying class-action complaint against her former employer, defendant Ernst and Young, based on wage and hour claims. The Court relied on its analysis from Fisher v. A.G. Becker Paribas Inc. in determining whether defendant waived its right to compel arbitration. 791 F.2d 691, 694 (9th Cir. 1986). In Fisher, the Court laid out a three-prong test necessary for a party to prove waiver of the right to arbitration: “(1) knowledge of an existing right to compel arbitration; (2) acts inconsistent with that existing right; and (3) prejudice to the party opposing arbitration resulting from such inconsistent acts.” Id. Plaintiff was unable to satisfy the third prong, failing to establish prejudice.Continue Reading...
With the publication of its decision in Chavarria v. Ralphs Grocery Co., the Ninth Circuit shed further light on the state of California unconscionability law as it applies to arbitration agreements. In Chavarria, the court invalidated Ralphs' employee arbitration agreement under what it deemed a traditional unconscionability analysis. The court found that this application of the unconscionability doctrine did not disproportionately affect arbitration agreements, and thus was not preempted by the FAA under the U.S. Supreme Court's decision in AT&T Mobility LLC v. Concepcion.
First, the Ninth Circuit concluded that the district court's unconscionability determination had been correct. The court agreed with the lower court that Ralphs' employee arbitration agreement was both procedurally and substantively unconscionable. It found that the agreement was procedurally unconscionable primarily because it was provided to Chavarria on a "take it or leave it" basis, and was not given to her until three weeks after her employment began. The court found that it was substantively unconscionable because it (1) provided for an arbitrator selection process that, in practice, meant Ralphs almost always would choose the arbitrator, (2) precluded the use of institutional arbitrators such as the AAA or JAMS, which had rules in place to ensure the selection of a neutral arbitrator, and (3) required the arbitrator to apportion the arbitrator's fees evenly between Ralphs and the employee at the outset of the arbitration, before any determination of the merits of the claim.
California Supreme Court: Unconscionability Rule Is Valid If It Does Not Interfere with "Fundamental Attributes of Arbitration"
Though the case arose in the context of an employment contract, Sonic-Calabasas A, Inc. v. Moreno (Sonic II), issued on October 17, 2013, potentially has implications for all arbitration agreements. In its lengthy decision, discussed in more detail below, the California Supreme Court took the opportunity to explicate the state of California's unconscionability doctrine in light of the Supreme Court's 2011 decision in AT&T Mobility LLC v. Concepcion (more on Concepcion here) and its more recent 2013 decision in American Express Co. v. Italian Colors Restaurant (more on Italian Colors here). The California high court reiterated that the unconscionability doctrine is viable under the Federal Arbitration Act's savings clause, and determined that Concepcion only requires that it not "interfere with fundamental attributes of arbitration" or be applied in any way that discriminates against arbitration. The fact that even-handed application of an unconscionability rule would have a disproportionate impact on arbitration agreements is not enough to implicate the limits of the FAA, according to the Court's opinion.
Specifically, the Court held that an arbitration agreement's requirement to waive statutorily-afforded Berman protections, while not per se unconscionable, is one factor that a court may consider in determining whether the arbitration agreement as a whole is unconscionable. It is reasonable to presume that courts will soon be entertaining arguments that Sonic II's logic should be extended.Continue Reading...
In Bushell v. JPMorgan Chase Bank, the Third District Court of Appeal reversed a Placer County Superior Court’s order sustaining defendant’s demurrer, and expanded on the courts’ rulings regarding the application of the Home Affordable Modification Program (HAMP) obligating lenders to permanently modify mortgage loans following the successful completion of trial modification periods.
In Bushell, plaintiffs alleged the following causes of action against defendant Chase arising from their home foreclosure: breach of contract; promissory estoppel; and fraud based on false promise. Plaintiffs alleged that defendant was required to offer plaintiffs a permanent loan modification following plaintiffs’ successful completion of a trial loan modification plan. Defendant demurred to plaintiffs’ original complaint, and plaintiffs filed a First Amended Complaint. Defendants demurred again and the trial court sustained the demurrer without leave to amend, holding that the trial modification plan was not, on its face, a binding contract for loan modification, and that plaintiffs did not allege that they qualified under HAMP. Plaintiff appealed.
In Visendi v. Bank of America, the 9th Circuit Court of Appeals clarified removal jurisdiction under the Class Action Fairness Act ("CAFA") for "mass actions."
In Visendi, 137 named plaintiffs sued 25 financial institutions in California state court alleging state law causes of action related to mortgages on financed properties. Defendant Bank of America removed the case to federal court under CAFA, as a "mass action" pursuant to 28 U.S.C. 1332(d)(11)(B)(1). Plaintiffs filed a First Amended Complaint after removal, adding additional plaintiffs and amending their state law causes of action. Defendants moved to dismiss the FAC, asserting misjoinder under FRCP 20(a) and failure to state a claim. The district court remanded the case to state court, holding that defendants had conceded that the action was not removable under CAFA when they asserted in their motion to dismiss that it did not present common questions of law or fact under FRCP 20(a). Defendants petitioned for permission to appeal pursuant to 28 U.S.C. 1453(c).
In Chapman v. Skype, Inc., the 2nd District California Court of Appeal revived a false advertising claim previously dismissed on demurrer, and defined the limited scope of demurrer for false advertising claims brought under California's Unfair Competition Law (Bus. & Prof. Code §§ 17200 and 17500, et seq., “UCL”) as well as California's Consumer Legal Remedies Act ("CLRA") (Civ. Code §1750 et seq.).
In Chapman, plaintiff alleged that defendant Skype falsely advertised "Unlimited Calling" plans that were actually limited, by terms linked through a footnote. Plaintiff filed a putative class action complaint, alleging six causes of action: (1) unjust enrichment; (2) negligent misrepresentation; (3) intentional misrepresentation; (4) violation of the UCL; (5) violation of the false advertising law; and (6) violation of the CLRA. Defendant demurred to the complaint, and the trial court sustained the demurrer with leave to amend, holding that the term “Unlimited” was qualified by the footnote on the same Internet page and that Chapman had failed to allege justifiable reliance. Plaintiff filed an amended complaint, defendant again demurred, and the trial court sustained the demurrer, dismissing plaintiff's claims. Plaintiff appealed.
In Rose v. Bank of America, the California Supreme Court revived plaintiff's claims of unlawful business practices under California's Unfair Competition Law (Bus. & Prof. Code §§ 17200, et seq., “UCL”) premised on alleged violations of the Truth in Savings Act (12 U.S.C. §§ 4301, et seq., “TISA”), even though Congress repealed the private right of action for TISA claims in 2001.
The Rose plaintiffs alleged that Bank of America failed to properly notify them of increased fees on their deposit accounts, in violation of TISA. They brought a single cause of action under the UCL, alleging unlawful and unfair business practices arising out of the alleged TISA violations. The trial court sustained Bank of America’s demurrer to the complaint, holding that Congress intended to bar a TISA private action and that the UCL cannot be used to plead around an absolute bar to relief. Plaintiff appealed. The Court of Appeal affirmed the trial court, stating that Congress’ express repeal of a private right of action to enforce TISA precludes an indirect suit through the UCL.Continue Reading...