Ninth Circuit Holds Order Compelling Arbitration is Not Appealable

Multiple plaintiffs filed purported class action lawsuits against defendant, Inc., alleging violations of California's consumer protection laws.  Each plaintiff had purchased a credit report monitoring program from the defendant.  The terms and conditions of the purchase included an arbitration clause.  The district court stayed the actions, ordered individual arbitration of each plaintiff's claims, and denied 28 U.S.C. § 1292(b) certification for interlocutory appeal.  The plaintiffs timely appealed.

In Johnson v., The Ninth Circuit dismissed the appeals, finding that the Judicial Improvements and Access to Justice Act, codified as 9 U.S.C. § 16, bars appeals of all orders compelling arbitration, including collateral ones.  Plaintiffs "creative[ly]" argued that because section 16(b) expressly bars appeals of "interlocutory" orders compelling arbitration, orders compelling arbitration that might be considered "final" under the collateral order doctrine are appealable.  But, after examining the statutory language of the Act, as well as its overall design, objectives, and legislative history, the court disagreed.

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Second District Upholds Arbitration Agreement That Gives Employer Unilateral Power to Modify

The Second Appellate District has held that an arbitration agreement is not illusory simply because only the drafting party may modify or terminate the agreement. In Casas v. CarMax Auto Superstores California LLC, the appellate court reversed the lower court's order denying CarMax's motion to compel arbitration of a former employee's claims stemming from the termination of his employment.

The lower court found that the arbitration agreement was illusory because only CarMax could unilaterally modify or terminate the agreement, and it could notify employees of any such changes indirectly, simply by posting notification at all CarMax locations. In reversing the lower court's order, the appellate court first distinguished the primary case that order relied upon, Sparks v. Vista Del Mar Child & Family Services. The appellate court distinguished Sparks on the grounds that it involved an agreement that permitted the employer to change the arbitration agreement with no notice at all to employees, and that the brief agreement was hidden in a handbook that the employee simply acknowledged receiving.

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Court of Appeal Affirms Denial of Plaintiff's Request for Voluntary Dismissal Without Prejudice During Demurrer Hearing

In Pielstick v. Midfirst Bank et al., the Second District Court of Appeal affirmed a trial court's denial of plaintiff's request for voluntary dismissal without prejudice pursuant to Code of Civil Procedure § 581.  The Court of Appeal held that the trial court did not commit error in denying plaintiff's oral request for dismissal without prejudice after the commencement of a demurrer hearing.  

The underlying action arises out of a nonjudicial foreclosure sale of real property previously owned by Plaintiff.  Plaintiff filed his original verified complaint in Los Angeles Superior Court alleging multiple causes of action against Defendants Midfirst Bank and Midland Financial Company.  Plaintiff filed a First Amended Complaint ("FAC") adding Defendant Quality Loan Service Corporation as well as two causes of action.  

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Ninth Circuit: A National Bank is Only a Citizen of the State in Which its Main Office is Located for Purposes of Diversity Jurisdiction

In Rouse v. Wachovia Mortgage, the Ninth Circuit held that, for purposes of diversity jurisdiction, a national banking association is a citizen only of the state in which its main office is located.  

In Rouse, the plaintiffs filed suit in the Superior Court of the State of California against Wells Fargo Bank, N.A., its Wachovia Mortgage division, and NDeX West, LLC, alleging multiple causes of action under state and federal law arising out of plaintiffs' home loan and deed of trust.  Wells Fargo removed the case to federal court based on diversity and federal question jurisdiction. Defendants filed a motion to dismiss for failure to state a claim.  The district court granted the motion and dismissed the complaint with leave to amend.

Plaintiffs filed an amended complaint containing only state law claims.  On an order to show cause why the case should not be remanded to state court for lack of diversity jurisdiction, the district court held that national banks are citizens of the state where their principal place of business is located as well as the state in which their main office is located as designated by their articles of association. The district court remanded the case to California Superior Court for lack of jurisdiction, finding that because Wells Fargo's main office is in South Dakota and its principal place of business is in California, and the plaintiffs are citizens of California, there was no diversity of citizenship.

On appeal, the Ninth Circuit disagreed.  The Court held that under 28 U.S.C. Section 1348, a national bank is a citizen only of the state in which its main office is located; accordingly, Wells Fargo is a citizen only of South Dakota because that is where its main office is located.  The Ninth Circuit held that the district court had diversity jurisdiction because there was complete diversity between the plaintiffs, who were citizens of California, and Wells Fargo, a citizen of South Dakota.

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9th Circuit Requires Specific Explanation on Attorneys' Fee Reduction

In Carter v. Caleb Brett LLC, a three judge panel for the 9th Circuit Court of Appeals vacated the district court's order awarding reduced attorneys' fees to appellant.  The panel reiterated and confirmed prior 9th Circuit holdings requiring a sufficiently specific explanation in order to determine the reasonableness of a fee award.  District courts must explain the reason for a fee award with sufficient specificity so that the appellate court can review the lower court's analysis for an abuse of discretion.  The greater the reduction, the more specificity required in the explanation. 

Appellant Rick Carter appealed the district court's order awarding him $14,268.50 in attorneys' fees and costs where his fee petition was sought $22,585.  Carter appealed, arguing that the district court's failure to sufficiently explain its rationale for the fee reduction constituted error as a matter of law.  The 9th Circuit agreed.  

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9th Circuit Holds Private Attorney General Action is Not a CAFA Class Action

In Baumann v. Chase Investment Services, Inc., the 9th Circuit held that a Private Attorney General action under California law is not a "class action" for purposes of removal jurisdiction under the Class Action Fairness Act (CAFA).  In Baumann, plaintiff filed a complaint in California state court under the California Labor Code Private Attorneys General Act of 2004 (PAGA), Labor Code sections 2698-2699.5, on behalf of himself and other "aggrieved parties," alleging unpaid overtime wages, among other things.  

Defendant removed the case to federal court based on diversity jurisdiction and CAFA.  Plaintiff moved to remand, arguing that the claims could not be aggregated to meet the minimum amount in controversy.  The district court denied the motion to remand but did not reach the CAFA issue.  Plaintiff appealed.

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Court of Appeal Affirms Denial of Class Certification for Lack of Community of Interest

In Hataishi v. First American Home Buyers Protection Corporation, the Second District Court of Appeal affirmed a trial court's denial of plaintiff's motion for class certification for customers alleging their telephone conversations had been recorded without warning, an alleged violation of Penal Code § 632. The Court of Appeal upheld the denial on the grounds that the proposed class lacked the requisite community of interest necessary for class certification.

Plaintiff Dina Hataishi brought the putative class-action complaint against her home warranty provider, First American, alleging one cause of action for statutory invasion of privacy in violation of Penal Code § 632.  Plaintiff moved for class certification on behalf of all persons in California who had received telephone calls from First American whose conversations were also recorded without warning, between 2006 and 2009.

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Court of Appeal Reverses Attorney Fee Award Based on Information Not Provided to Defendant

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.

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9th Circuit Details Article III Standing Under FCRA

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.

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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.   

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