Latest News

6/11/2018 The U.S. Supreme Court on June 11, 2018 resolved a circuit split over whether American Pipe tolling applied to plaintiffs who filed successive class actions. In a detailed opinion by Justice Ginsburg, the majority in China Agritech, Inc. v. Resh, Case No. 17-432, 584 U.S. ___ (2018), held that the tolling provisions established in American Pipe and Construction Co. v. Utah, 414 U.S. 538 (1974), do not extend to individual class members wanting to file a new proposed class action on behalf of others after the statutory limitations deadline has passed. The Supreme Court rejected arguments that its holding would force plaintiffs to file protective class actions within the applicable limitations period in order to preserve their rights, rather than rely on similar, pending class actions of which they would be a member if certified. The Court noted that its announced rule had been previously adopted by the Second and Fifth Circuits (which the Court noted were no strangers to class actions) and that there had not been a noticeable increase in protective class actions filed in those jurisdictions. Justice Sotomayor wrote a concurrence agreeing with the result, but arguing that the announced rule should be limited to federal securities class actions because of the unique federal rules that apply to them. Click here to see the opinion.

 

5/1/2018 California Supreme Court Overhauls Decades of Precedent, Establishes New Employee-
Friendly Classification Test

On April 30, 2018, the California Supreme Court created a new standard to determine whether workers are considered independent contractors or employees, shedding light on the status of workers in the growing “gig economy.” In Dynamex Operations West, Inc. v. Super. Ct., Case No. S222732, a delivery driver for a nation-wide courier service sought certification of a class of drivers claiming that the service had misclassified them as indepenent contractors. The driver urged the court to adopt a more rigid, worker-friendly test for classifying workers over the former, looser standard, which focused on whether the employer could control the way in which the worker performed the work.

The California Supreme Court agreed with the driver and held that there is a presumption that individuals are employees for the purposes of wage orders adopted by the California Industrial Welfare Commission. The court further held that it is the employer’s burden to prove that the worker is an independent contractor and that wage orders imposing obligations such as minimum wage, maximum hours, and other work place conditions do not apply.

The court followed a New Jersey Supreme Court decision in adopting a three-factor test for employers to meet this new burden known as the “ABC test.” Under that test, an employer must show all three factors to establish that the worker is an independent contractor: (A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

Dynamex will force California employers who rely on independent contractors to evaluate their process for worker classification. Following the decision, employers will want to review their relationships with such workers and apply the “ABC test” to determine whether those relationships need to be reclassified. To view the court’s opinion in Dynamex, click here.

 

4/11/2018 Ninth Circuit Finds Employers Cannot Use Prior Salary History to Determine Wages

On April 9, 2018, the Ninth Circuit issued a decision in Rizo v. Yovino, — F.3d — (9th Cir. 2018), which overturned longstanding case law that permitted employers to use a job applicant’s prior salary to determine his or her wages.  In the case, a math consultant for the Fresno County Office of Education alleged that the County had violated the Equal Pay Act (“EPA”) by relying on her prior salary to justify paying her a lower wage than her male counterparts.

Pointing to the court’s prior case law, the County argued that its policy of using an employee’s salary history to set his or her wages was lawful under the EPA because it was based on the catchall exception to the statute: “a factor other than sex.”  A three-judge panel of the Ninth Circuit, relying on precedent in Kouba v. Allstate Insurance Co., 691 F.2d 873 (9th Cir. 1982), sided with the County, finding that salary history alone could constitute a “factor other than sex.”  But the Ninth Circuit, in an en banc review, disagreed.  It held that an employee’s prior salary does not constitute a “factor other than sex” because women’s prior salaries are a product of a historically discriminatory job market that tended to pay them less.  The court concluded that a legitimate “factor other than sex” under the EPA must be job-related and that prior salary cannot justify paying one gender less if equal work is performed.

The Ninth Circuit’s decision in Rizo is reminiscent of a recent change to the California Labor Code, which now bars employers from seeking any salary history information, including compensation and benefits, from job applicants.  To view the court’s Rizo opinion, click here.

 

3/26/2018 Crone Hawxhurst Secures Important Texas Citizens Participation Act Victory

The Firm recently obtained a significant victory in the Texas Court of Appeals, Third District, on the scope of the Texas Citizens Participation Act (TCPA), also known as an Anti-SLAPP statute. The case, Hawxhurst v. Austin’s Boat Tours, et al., No. 03-17-00288-CV, concerned a breach of contract and tort case brought against Austin’s Boat Tours, the largest party boat tour operator in Central Texas. The issue before the court was the scope and application of the TCPA.

After the Firm announced ready for trial, Austin’s Boat Tours filed an amended answer and counterclaim seeking sanctions under Chapter 9 of the Texas Civil Practices and Remedies Code, alleging that the claims against it were “frivolous.” The counterclaim sought sanctions and attorneys’ fees against the Firm and its client.

In response, the Firm filed a TCPA motion, seeking to have the counterclaim dismissed because it was “based on” and “in response to” our client’s “exercise of the right to petition” and therefore barred by the TCPA. The trial court denied the TCPA motion, finding that the TCPA did not apply to the counterclaim because the counterclaim, supposedly, was essentially a mislabeled motion for sanctions, which the trial court held was not subject to TCPA motions to dismiss. Orders denying TCPA motions are appealable, and that’s what the Firm did.

In a 21-page decision, the Texas Court of Appeals, Third District, reversed the trial court, siding with the Firm on every major appellate point. The court of appeals first held that even if the counterclaim was a mislabeled motion for sanctions, the TCPA applied. The court of appeals also held that Austin’s Boat Tours could not moot the TCPA motion or appeal by amending its counterclaim, and further found that the Firm had demonstrated the claims against Austin’s Boat Tours were not frivolous and Austin’s Boat Tours had no evidence showing otherwise.

The court of appeals remanded the case with instructions for the trial court to determine the amount of attorneys’ fees and costs to be awarded to the Firm’s client, emphasizing that a fee and cost award are mandatory.

The decision has a detailed explanation of the scope of the TCPA and how its burden-shifting rules are to be applied when determining TCPA motions. The opinion has already been the subject of several CLE seminars in Texas. To read the opinion, please click here.

 

2/1/2018 Plaintiffs (Still) Cannot Reach Appeal of Their Motion for Class Certification by Dismissing Claims On February 1, 2018, the Ninth Circuit held—consistent with the Supreme Court’s recent ruling in Microsoft Corp. v. Baker, 137 S. Ct. 1702 (2017)—that federal law does not permit an appeal of claims where the plaintiffs stipulate to dismissal with prejudice in order to obtain “final judgment.”  Following the district court’s denial of class certification, the plaintiffs in Bobbitt v. Milberg LLP, No. 13-15812, stipulated to dismiss their claims with prejudice solely so they could appeal the denial of class certification.  In light of the Supreme Court’s decision in Microsoft, the Ninth Circuit ruled that it lacked jurisdiction over the case because it was not a final judgment under 28 U.S.C. § 1291.  The court distinguished its very recent decision in Brown v. Cinemark USA, Inc., 876 F.3d 1199 (9th Cir. 2017)—where it allowed plaintiffs to pursue an appeal of the denial of class certification following a stipulated dismissal—because the plaintiffs there had litigated their claims to summary judgment and entered into a settlement that expressly reserved the right to appeal.  In other words, the plaintiffs’ case in Brown did not implicate the same concerns of gamesmanship to reach an appeal as they did in Microsoft.  The Ninth Circuit’s Bobbitt decision offers guidance on the procedure for parties to appeal a denial of class certification where some claims are still at issue.  To view the court’s opinion in Bobbitt, click here.  To view the court’s opinion in Brown, click here.

 

1/5/2018 Crone Hawxhurst Secures Ninth Circuit’s Affirmation of Class Action Defeat

The Ninth Circuit on December 22, 2017 affirmed the denial of class certification in favor of the Firm’s client in a years-long proposed class action. Plaintiffs sued the Firm’s client for allegedly misrepresenting the benefits of its product. Crone Hawxhurst attorneys put together a plan to discredit Plaintiffs’ theory by showing that Plaintiffs could not prove the alleged deception was important to all class members. Ultimately, the Firm convinced the district court that Plaintiffs’ class action claims were meritless. In a set of well-reasoned opinions, the court denied Plaintiffs’ motion for class certification and their subsequent motion for reconsideration. Plaintiffs did everything in their power to obtain class certification, including filing an interlocutory appeal with the Ninth Circuit. Without hearing any oral argument, the Ninth Circuit denied Plaintiffs’ appeal. The decision is the latest in a series of victories for the Firm’s client in the case.

 

7/10/2017 Crone Hawxhurst Scores Another Ninth Circuit Victory

The Ninth Circuit, in a case of first impression, agreed with the Firm’s argument that when determining a motion for forum non conveniens, the district court should compare the alternative foreign forum with plaintiff’s specific chosen forum in the United States, and not with the entire United States as a whole. Crone Hawxhurst obtained dismissal of the case in the Central District of California based on forum non conveniens, in favor of a court in Mexico. Plaintiff, a Florida company, appealed. The Ninth Circuit rejected the appeal and affirmed the district court’s dismissal, siding with Crone Hawxhurst on every issue. Click here to read the opinion

 

5/18/16 U.S. SUPREME COURT AND OVERTIME UPDATE: The U.S. Department of Labor Increases Minimum Salary Requirement for Employees Exempt from Overtime

The U.S. Department of Labor has issued the final version of a much anticipated overtime exemption rule that focuses primarily on updating the salary and compensation levels needed for workers to be “exempt” from the overtime rules. An “exempt” employee must generally meet the minimum salary requirement, which the employer pays the employee regardless of the quality or quantity of work, and the employee’s primary duties must meet certain criteria. Effective December 1, 2016, the minimum salary requirement to qualify for the executive, administrative or professional exemptions from overtime rises from $23,660 to $47,476 per year, and the total annual compensation requirement for the highly compensated employee exemption (employees whose primary duties include performing office or non-manual work and who customarily and regularly perform at least one of the exempt duties or responsibilities of an exempt executive, administrative or professional employee) rises from $100,000 to $134,004 per year. The final overtime rule also establishes a mechanism for automatically updating the salary and compensation levels every three years, starting on January 1, 2020. Additionally, the final overtime rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new minimum salary requirement. According to the DOL, this rule will affect over 4 million workers within the first year of implementation.

While employers may raise employee salaries in order to comply with this new overtime rule, many exempt workers will be reclassified to hourly employees and their hours will be cut to avoid overtime. Employers will need to monitor overtime closely to reduce the risk of being targeted in what will inevitably be a slew of new wage and hour lawsuits. Among other things, many more employees will have to track their hourly time worked, which, again, will expose employers to additional civil liability.

If you would like to discuss the new overtime regulations or your employees’ classifications, please contact info@cronehawxhurst.com.

 

5/18/16 The U.S. Supreme Court Rules Federal Securities Laws Don’t Limit Certain State Suits

The U.S. Supreme Court on May 16, 2016, held unanimously that federal securities laws don’t preempt certain claims from being brought in state court. The Court’s decision in Merrill Lynch Pierce Fenner & Smith, Inc. v. Manning, No. 14-1132, 578 U. S. ___ (2016), allows a shareholder suit against a Merrill Lynch unit and other Wall Street firms to proceed in New Jersey state court based on state-law claims seeking to establish liability based, in part, on duties established by the Securities Exchange Act. In a unanimous opinion, the justices held that the Securities Exchange Act does not block shareholders in Escala Group Inc. from bringing their claims in a New Jersey court where the claims sought relief under state law and none necessarily raised a federal issue. Specifically, the Supreme Court held that the jurisdictional test established by section 27 of the Securities Exchange Act is the same as the one used to decide if a case “arises under” a federal law pursuant to 28 U.S.C. section 1331. The justices explained that section 27 confers federal jurisdiction when an action is commenced in order to give effect to an Exchange Act requirement. The language of section 27 stops short of embracing any complaint that happens to mention a duty established by the Exchange Act. Merrill Lynch did not dispute that Manning’s claims were “brought under state law” and none “necessarily raised” a federal issue under 28 U.S.C. section 1331. Accordingly, based on the above rule, federal court was not the exclusive forum under section 27 of the Act. To view the Court’s opinion, click here

 

5/18/16 Credit Reporting Companies Dodge Bullet (For Now)

The U.S. Supreme Court on May 16, 2016, in a highly anticipated ruling, reversed the Ninth Circuit’s decision finding that the named class plaintiff had standing to pursue a so-called “no injury” class action. The case is Spokeo Inc. v. Robins, No. 13-1339, 578 U. S. ___ (2016). The decision is a narrow—if temporary—win for Spokeo and other companies facing “no-injury” class actions.

Spokeo concerned a proposed class action filed by the named plaintiff, Robins, who alleged that Spokeo, an online search engine, had willfully violated the Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) by publishing false information about him on its website; viz., that he was in his 50s, wealthy and had a post-graduate degree. Robins, who was unemployed at the time, alleged that Spokeo’s false information prevented him from obtaining employment. The district court dismissed Robins’ lawsuit for lack of Article III standing; the Ninth Circuit disagreed, and reversed. The Supreme Court granted certiorari.

Writing for the majority, Justice Alito emphasized that the Court had “made it clear time and time again that an injury in fact must be both concrete and particularized,” before going on to find that the Ninth Circuit had failed to analyze whether Robins had suffered “concrete” harm. Justice Alito explained that “concrete” injury must be a real harm that actually exists, and that “Robins cannot satisfy the demands of Article III by alleging a bare procedural violation.” After giving an example of a non-injury (an erroneous zip code), the Court returned the matter to the Ninth Circuit for further analysis. The majority expressly avoided deciding whether Robins had alleged “concrete injury”; in her dissent, Justice Ginsburg stated that Robins’ allegation that he had lost job opportunities sufficed to show a concrete injury.

The Spokeo decision leaves open the issue of what injury is required to show Article III standing in FCRA actions in particular, and in “no injury” class actions generally. To view the Court’s opinion, click here.

 

10/14/15 Firm Obtains Complete Victory in Long-Running Malicious Prosecution Case

Three weeks before trial, three attorney-defendants surrendered and agreed to judgment against them for malicious prosecution. The Firm’s client in 2012 sued four so-called consumer protection lawyers for malicious prosecution arising from a proposed class action the attorneys filed against the Firm’s client the prior year. In the malicious prosecution action, the Firm established (as it had in the prior action) that the named plaintiff’s testimony disavowed almost every material allegation of the class action complaint and contradicted the discovery responses that her prior lawyers wrote for her. The defendants in the malicious prosecution action did everything in their power to delay trial, including an application to the California Supreme Court. Furthermore, the lawyers’ former client and another of their associates asserted their Fifth Amendment rights against self-incrimination rather than respond to substantive questions about their conduct in the prior action. The case, styled Innovation Ventures LLC v. Rubinstein, et al., has been the subject of several news articles.

 

09/14/15  Crone Hawxhurst LLP Obtains Another Major Ninth Circuit Victory

The Firm recently secured its third significant Ninth Circuit victory in as many years. The Firm’s client, Intamin, Ltd., is the market leader in the design and construction of high-performance “mega-coasters” and other cutting edge amusement park rides. Plaintiff-appellant Magnetar Technologies had sought reversal of the district court’s order granting Intamin’s motion for summary judgment on all of Magnetar’s claims (the Firm also represented Intamin in the trial court). Magnetar sought nearly twenty million dollars in damages based on allegations that Intamin was an illegal monopolist that had unlawfully obtained and enforced a patent for a magnetic braking system, and had engaged in malicious prosecution in pursuing a prior suit against Magnetar.

In 2010, Intamin hired the Firm to replace its prior counsel after Intamin suffered major losses in the district court, including an order determining that Intamin had engaged in improper conduct when obtaining assignment of the magnetic brake patent that it attempted to enforce against Magnetar. The Firm’s attorneys executed a strategy aimed at developing an accurate, complete factual record of the amusement ride industry, and Magnetar’s and Intamin’s businesses. The strategy worked. The evidence the Firm presented to the district court demonstrated that Magnetar’s alleged antitrust market was ill-defined, that Intamin was not a monopolist, and that Magnetar’s supposed lost sales were fictional or otherwise caused by its own poor business acumen. The Firm’s summary judgment presentation also demonstrated that the prior action had not been maliciously prosecuted as a matter of law.

The Ninth Circuit’s unanimous opinion finally puts to rest this longstanding but meritless case. The case is Magnetar Technologies Corp. v. Intamin, Ltd., Case Nos. 13-56119, 13-56333 (9th Cir. Sept. 14, 2015). To view the opinion, click here.

 

07/21/15  The Department of Labor Issues “Clarification” and Concludes that Most Workers are Employees

On July 15, 2015, the Department of Labor (“DOL”) issued new guidance “clarifying” the standards used to determine whether a worker is an employee or independent contractor. The guidance follows several recent high-profile employee misclassification lawsuits and court decisions. The DOL issued the guidance out of concern that workers wrongly classified as contractors “may not receive important workplace protections such as the minimum wage, overtime compensation, unemployment insurance, and workers’ compensation” provided to employees. The DOL asserts that “some employees may be intentionally misclassified as a means to cut costs and avoid compliance with labor laws.” Administrator’s Interpretation No. 2015-1 clarifies that companies and courts must evaluate all the economic realities factors when determining whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (“FLSA”). Classification “must not be evaluated based on the control factor alone.” Thus, a worker who is “economically dependent” on the employer should be treated as an employee. By contrast, a worker must “really” be in business for himself or herself (i.e., operate a business on his or her own) to be an independent contractor. In light of the “clarified” standards, the DOL concludes that given the “very broad definition of employment under the FLSA as ‘to suffer or permit to work’ and the Act’s intended expansive coverage for workers,” “most workers are employees under the FLSA’s broad definitions.” Employers should reassess their classification decisions as to all contract employees. To review the entire text of Interpretation No. 2015-1, click here.

 

07/21/15  Ninth Circuit Holds that All Class Members Must See Alleged Misrepresentation to Satisfy Predominance Factor in a Proposed False Advertising Class Action

In a short, unpublished opinion, the Ninth Circuit’s recently held in Cabral v. Supple LLC, No. 13-55943 (9th Cir. June 23, 2015) (opinion here ) that, when seeking class certification in cases “based upon alleged misrepresentations in advertising and the like, it is critical that the misrepresentation in question be made to all of the class members.” Id. At 3. The district court granted certification of claims based on the allegation that the defendant had misrepresented that its products were “clinically proven in treating joint pain.” Id. at 2-3. The Ninth Circuit reversed because the plaintiffs failed to show that a common issue predominated; namely, that all class members had not seen the alleged misrepresentation. The Ninth Circuit noted that “[w]hile some deviations from precise wording in the language of advertisements or representations might not be fatal to class certification,” advertisements that are “a far cry” from the alleged misrepresentations at issue cannot be the basis for certifying a class. Id. at 4. While unpublished, this opinion is another example of the increased scrutiny applied to certification motions.

 

07/21/15  The Department of Labor Issues “Clarification” and Concludes that Most Workers are Employees

On July 15, 2015, the Department of Labor (“DOL”) issued new guidance “clarifying” the standards used to determine whether a worker is an employee or independent contractor. The guidance follows several recent high-profile employee misclassification lawsuits and court decisions. The DOL issued the guidance out of concern that workers wrongly classified as contractors “may not receive important workplace protections such as the minimum wage, overtime compensation, unemployment insurance, and workers’ compensation” provided to employees. The DOL asserts that “some employees may be intentionally misclassified as a means to cut costs and avoid compliance with labor laws.” Administrator’s Interpretation No. 2015-1 clarifies that companies and courts must evaluate all the economic realities factors when determining whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (“FLSA”). Classification “must not be evaluated based on the control factor alone.” Thus, a worker who is “economically dependent” on the employer should be treated as an employee. By contrast, a worker must “really” be in business for himself or herself (i.e., operate a business on his or her own) to be an independent contractor. In light of the “clarified” standards, the DOL concludes that given the “very broad definition of employment under the FLSA as ‘to suffer or permit to work’ and the Act’s intended expansive coverage for workers,” “most workers are employees under the FLSA’s broad definitions.” Employers should reassess their classification decisions as to all contract employees. To review the entire text of Interpretation No. 2015-1, click here.

 

07/08/15  Firm Giving Big Law A Run for Its Money

Law360 lists Crone Hawxhurst LLP as one of ten “top boutiques” nationwide that “continue to encroach on big firms’ territory by blending the same high level of skill and expertise with a lower rate structure and greater client accessibility.” Law360 concludes that Crone Hawxhurst (and the nine other firms) are “capable of competing with – and beating – the best big firms at the highest level” and “have established brands on par with the biggest firms.” The full article can be found here.