Class-Action Suit Against Starbucks Grinds to a Halt
Don’t even get me started about class-action lawsuits.
In most (but not all) cases they are nothing but legalized extortion. They do not seek to address or correct a wrong, but rather are directed at hyper-technical violations that are used to create a putative class. In the end, the lawyers make millions in attorney fees and the "solution" to the problem is often comical. There is no shortage of examples, but one of my favorites involved the Jenny Craig diet centers. A class action was brought because Jenny Craig was committing the heinous act of failing to disclose that all the thin people displayed in the print ads did not represent the "typical" results. (Would anyone on the Jenny Craig diet have believed that all who entered would achieve the same results as those highlighted in the ads?) The class-action lawyers were paid huge legal fees, and for settlement the represented members received – are you ready? – a set of Jenny’s diet motivation tapes.
If a business is committing a genuine wrong that is causing real injury, and refuses to correct the situation, then have at them. But my frustration comes from the fact that many of these suits involve no real wrong, and in any event could be corrected with a stern letter from an attorney.
The California Court of Appeal agreed with my opinion of class-action lawsuits in the recent decision, Starbucks v. Superior Court (2008 DJDAR 18131). In the 1970s, California passed an obscure Labor Law that prohibits employers from asking prospective employees about minor marijuana-related convictions that are more than two years old. The two-page employment application form used by Starbucks, designed for nationwide use, asks the applicant to disclose marijuana convictions, which is theoretically a violation since the applicant could choose to disclose a conviction more than two years old if unaware of the law. However, the second page of the form specifically instructs California applicants not to disclose marijuana convictions more than two years old.
Plaintiffs’ counsel claimed that was not good enough, arguing that the question and the disclaimer should be together. (A letter from my office could have corrected that, but perhaps plaintiffs’ counsel is not as persuasive.) Unfortunately for Plaintiffs’ counsel, of the three representative plaintiffs, two testified at their depositions that they understood the disclaimer, and all three testified that they had no marijuana convictions to disclose. Nonetheless, attorneys for the class were seeking the statutorily mandated $200 per offense, which would have resulted in an eight-figure award if successful. Incredibly, Judge David C. Velasquez of the Orange County Superior Court denied Starbuck’s motion for summary judgment and certified the class, allowing the case to go forward.
In reversing Judge Velasquez and ordering the case dismissed, the Court of Appeal stated that "there are better ways to filter out impermissible questions on job applications than allowing ‘lawyer bounty hunter’ lawsuits brought on behalf of tens of thousands of unaffected job applicants." Justice Raymond Ikola added, "the civil justice system is not well served by turning Starbucks into a Daddy Warbucks."
To Pay My Judgment Now or Later? Comment on the Risk of Judgment Debtor Evasion
C.C.P. § 685.0401 provides that when a judgment includes an award of attorney fees pursuant to a contract, then the "[a]ttorney’s fees incurred in enforcing [the] judgment are included as costs collectible." While most would assume that "enforcing" include measures taken to collect on the judgment, on October 28, 2008 the Third Division of the Fourth Appellate District of the California Court’s of Appeal elaborated on just how broadly the term "enforcing" is to be construed.2
Globalist v. Reda3 involved a failed settlement agreement stemming from a separate action,4 negotiated by the parties to the underlying action as well as by the defendants in the separate action. Albert Reda and Internet Business’s International, Inc., ("IBI") recognized that the amount they owed under the terms of the failed settlement ($75,000.00) was far more favorable than the amount due under the final judgment from the underlying case ($444,600.00), and accordingly initiated enforcement proceedings.5 After successfully defending the settlement enforcement action, Globalist requested the inclusion of the attorney fees incurred in that defense as fees incurred in enforcing the final judgment pursuant to C.C.P. § 685.040.6 The trial court denied this request on the grounds that the fees were incurred in a "different" action, however the Appellate Court found otherwise.7
"Neither section 685.040, nor the Enforcement of Judgments Law of which it is a part, ascribe any special meaning to the word "enforcing."8 "The plain meaning of the word necessarily suggests ‘enforcing a judgment’ would include defending the validity of the judgment against challenge in a separately filed attack."9
The Court went onto note that the sole purpose of Reda’s and IBI’s settlement enforcement action was to "significantly decrease their unsatisfied judgment debtor obligations in this action . . . [and had] Globalist not defended against the specific performance action, it would have lost substantial rights under the judgment in this case."10
Considering it was ultimately held that Globalist’s attorney fees incurred in defending the settlement enforcement action were fees incurred in "enforcing" the underlying judgment, Globalist serves as a lighthouse for all judgment debtors considering wading the waters of avoidance: tread carefully. Indeed, as the court in Jaffe v. Pacelli11 made clear, even filing bankruptcy may not help.
1. California Code of Civil Procedure § 685.040.
2. Globalist v. Reda, 2008 DJDAR 16325 (4th Dist. 2008).
3. Id.
4. Id. at 16325-26.
5. Id. at 16326 & 16328.
6. Id. at 16326.
7. Id. at 16326-27.
8. Id. at 16327.
9. Id.
10.Id. at 16328.
Dude, Who's My Plaintiff? -- Courts Allow Anonymous Plaintiffs
On August 12, 2008, the Second District U.S. Court of Appeals reaffirmed the national and local trend toward recognizing a litigant’s right to proceed anonymously through the courts. In order to sue under a pseudonym, plaintiff’s generally must show that the need for confidentiality outweighs the public’s right to know and any prejudice suffered by defendant due to the secretive pleading. While not necessarily a light burden for plaintiffs, the real strain of the increasingly minted right is on defendants.
Depending on the context of the suit, major public out-lashes could be directed at defendants helpless to stop the tide. For instance, defendants sued civilly (publicly) for sexual abuse stand to lose much in the way of reputation, and eventually income, no doubt due in large part to the public’s natural inclination to distance themselves from what might be a perpetrator. While public scrutiny of the would be victim once would serve as a blow-off valve to some extent, now defendants are not only left to deal with an unrelenting public reaction, but will dually reap heightened scrutiny for the same allegations as plaintiffs who have convinced the court of the need for confidentiality will have generally shown that they would face unwarranted injury should their identities be disclosed. In other words, defendants will have no way to call public attention to a plaintiff’s credibility, and the public will be informed, or may very well assume, that defendants or their associates had posed a threat to the plaintiff prior to or during the litigation.
Defendants’ aggressive depiction of all factors assessed by courts of their jurisdiction in deciding whether or not to permit plaintiffs to act incognito is the only recourse afforded to diminish the risk of anonymous lawsuits. Particularly, considering the public has a well established right to know who is using the court system, focusing on the lack of need to preserve a plaintiff’s identity and the severe damage that could be inflicted on a defendant’s personal and/or professional reputations as a result of the anonymous lawsuit would be key. Also, seeking an anonymous designation as a defendant may also assist in preventing unfair prejudice. Ultimately, regardless of a defendant’s choice of tactics the courts have once again increased the need to vigorously litigate cases at the earliest of stages, which requires a heightened state of readiness, and can make litigation all the more daunting.
1. Sealed Plaintiff v. Sealed Defendants, Docket No. 06-1590-cv, (Dist. 2d, 2008)
2. Id. at 7-8.
