More Obstacles for Food Labeling Class Actions

Posted on December 17, 2014 04:14 by James D. Smith

The Ninth Circuit is poised to address the implicit “ascertainability” requirement for class actions in Jones v. ConAgra Foods, Inc., No 14-16327 (9th Cir.). Briefing is underway in that matter in which the district court denied class certification when it concluded that the class wasn’t ascertainable and that the plaintiffs’ proposed damages model wasn’t methodologically sound. I wrote about that district court ruling in a post on June 26, 2014.  

The Jones appeal may provide some benefit to other defendants as a basis to stay other food labeling class actions.  In Gustavson v. Mars, Inc., No. 13-cv-04537-LHK (N.D. Cal. Dec. 10, 2014), Judge Lucy Koh stayed proceedings pending a decision in Jones: “The appellant in Jones has briefed issues concerning ascertainability and damages that could be material to the Court’s disposition of any class certification motion in the instant action.”  Judge Koh concluded that any decision in Jones likely will lead to additional briefing and possibly to more discovery regarding class certification in Gustavson. 

By itself, the stay is good news for food labeling defendants hoping for clarity regarding the ascertainability standard in the Ninth Circuit and the types of damages models that will or won’t suffice in food labeling class actions.  Judge Koh’s stay order is also noteworthy because she issued class certification decisions arguably at odds with the Jones district court decision at nearly the same time.  In Werdebaugh v. Blue Diamond Growers, No. 12-cv-2724-LHK (N.D. Cal. May 23, 2014), and Brazil v. Dole Packaged Foods, LLC, No. 12-CV-01831-LHK (N.D. Cal. May 30, 2014),  Judge Koh adopted fairly lenient standards for ascertainability and accepted the regression analysis methodology of the plaintiffs’ economist, Dr. Oral Capps—who is also the plaintiff’s expert in Gustavson.  In Jones, the district court immediately rejected the same Dr. Capps’ methodology.  Even Judge Koh later rejected Dr. Capps’ methodology when she granted summary judgment for the Brazil defendant on December 8, 2014.  And she decertified the class relying on Dr. Capps’ opinions in Werdebaugh on December 15.

It is too soon to conclude that regression analysis is finished as a damages model in food labeling class actions in the Northern District of California, but that methodology is far from proving itself as viable.  While some judges seemed willing to gloss over myriad problems with regression analyses in general—and Dr. Capps’ opinions in particular—in the early stages of food labeling class actions, the problems proved insurmountable as the cases continued to summary judgment or as more discovery of Dr. Capps’ methodology occurred.  We now have a nice body of case law from the Northern District raising questions about the viability of these classes and the plaintiffs’ favored expert witness.  Every defendant will want to move to stay proceedings while Ninth Circuit addresses Jones.  Based on the number of district court judges finding flaws in these classes, it seems like those jurists may welcome the opportunity to put the brakes on expanding the district’s reputation as the “food court.”  

James D. Smith is a partner in the Phoenix office of Bryan Cave LLP.  He is a member of the Class & Derivative Actions Client Service Group and the Food and Beverage Team.             

 

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The U.S. Supreme Court has granted review of Integrity Staffing Solutions v. Busk to determine whether time spent by employees in a security check line constitutes work and is therefore compensable. The case was brought by employees of Integrity Staffing Solutions, a temporary employee provider, who provided employees to Amazon.

In Integrity, temporary workers were assigned to work for Amazon at two of its Nevada warehouses. According to the class action plaintiffs, they regularly spent approximately 20-25 minutes at the end of each day in security checks when leaving work, waiting to be searched, empty their pockets, and pass through metal detectors. They claimed they were not compensated for this time and were due overtime pay. The workers argue that Amazon required them to clear security checks each day, as necessary to reduce employee theft from the warehouses. The plaintiffs went on to note that the Title 29 of the Code of Federal Regulations Part 785 provides, “[t]he workweek ordinarily includes all time during which an employee is necessarily required to be on the employer’s premises, on duty, or at a prescribed workplace.” A workday is further defined as, “[t]he period between the time on any particular day when such employee commences his/her principal activity and the time on that day at which he/she ceases such principal activity or activities. The workday may therefore be longer than the employees scheduled shift hours, tour of duty, or production line time.”

On appeal, the Ninth Circuit noted that the FLSA, as amended by the Portal-to-Portal Act of 1947, “generally precludes compensation for activities that are ‘preliminary’ or ‘postliminary’ to the ‘principal activity or activities’ that the employee ‘is employed to perform.’” However, it also noted that “preliminary and postliminary activities are still compensable” if they are “integral and indispensable” to an employee’s principal activities. For example, in Steiner v. Mitchell, (1956)350 U.S. 247, 332, changing clothes and showering were “integral and indispensable” to the production of batteries. It has been held that to be “integral and indispensable,” an activity must be (1) “necessary to the principal work performed” and (2) “done for the benefit of the employer.” (Alvarez v. IBP, Inc. (2003) 339 Fed.3d 894, 902–03.)

In finding the employees entitled to compensation, the Ninth Circuit held that the security clearances were necessary to the “employee’s primary work as warehouse employees and done for Integrity’s benefit.

The Supreme Court, in issuing a decision on this issue, will clear up much confusion, as the Ninth Circuit’s decision is in direct conflict with other circuit rulings. In Gorman v. Consolidated Edison Corp. (2007) 488 Fed.3d 586, the Second Circuit ruled that time spent in a security screening by employees was not compensable. Furthermore, the Eleventh Circuit issued a similar ruling in Bonilla v. Baker Concrete Construction (2007) 487 Fed.3d 1340.

The outcome of this case has the potential to reach thousands of workers who have worked for Amazon and have been subject to the security checks. Amazon employs approximately 38,000 temporary employees at its warehouses. It is estimated that if the Supreme Court affirms the Ninth Circuit ruling, damages will be in the millions.

Employers should be aware of the standards applied by the courts to determine whether their employees are entitled to compensation for activities required by the employer. Employers requiring their employees to spend time in security checks, change clothes, or otherwise take time to prepare for work should seek advice of counsel to determine whether such time is compensable. If you are an employer unsure about whether your employees must be compensed for time spent in security checks or preparing for work, please contact our attorneys at Jampol Zimet, LLP located at 800 Wilshire Boulevard, Los Angeles, CA 90017, or at (213) 689-8500, for a consultation to ensure your interests are protected before it is too late.

This blog was first posted to Jampol Zimet’s Insurance Defense Blog. Click here to read the original entry. 


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Catastrophic injury cases with expensive life care plans pose significant exposure issues to our clients. The Affordable Care Act guarantees consumers the right to purchase health insurance and caps annual out-of-pocket medical expenditure, thus limiting future medical care costs for plaintiffs. The enactment of the ACA should mean that future medical expenses are limited to the cost of the plan to the plaintiff. But, do the courts view the ACA as collateral source, meaning that the plaintiff can still recover all of the future medical costs, despite being covered by insurance?

Come to the DRI Medical Liability and Health Care Seminar at the Parc 55 Wyndham San Francisco, CA from March 13–15, 2015, and listen to the presentation by Victor A. Matheson, PhD and Jon Karraker, CPA discuss these issues and more. 

Resister today at http://www.dri.org/Event/20150175; don’t forget to book your hotel room at the Parc 55 Wyndham.


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How Do You Keep Your Edge?

Posted on December 4, 2014 08:18 by Christopher A. Bottcher

Juries resolve very few cases these days.  Statistics confirm that fewer civil cases are tried to verdict every year, and that only a small fraction of civil cases ever reach a jury.  With litigation costs rising every year, and corporate budgets remaining flat or declining, that downward trend is likely to continue.

This trend has huge implications for those of us that make our living as litigators.  How do we develop and sharpen our skills?  How do law firms develop the next generation of trial lawyers in an environment that is dominated by settlements and ADR?  In years past, young lawyers learned by observing their partners in trial.  War stories supplemented their education.  However, the paucity of trials has limited these opportunities.  

DRI’s Trial Tactics Committee is dedicated to helping trial lawyers maintain their edge.  We do this by drawing on the experience and creativity of nationally recognized trial lawyers, consultants, experts, and in house counsel who share their knowledge and expertise at seminars, in webinars, and through publications. In 2014, Trial Tactics put on an interactive mock trial, complete with a judge and jury, which allowed attendees to observe and critique the tactics and techniques of dozens of experienced lawyers from around the country as they tried a case from voir dire to verdict.  Attendees gave the program rave reviews.  Many said it was the most informative CLE they had ever attended.

The 2015 Trial Tactics Seminar will continue DRI’s legacy of sponsoring outstanding, skills-based programming. This year, the Trial Tactics Seminar will include an interactive voir dire workshop, a mock Daubert hearing, as well as presentations on creative ways to present complex facts to jurors and to handle surprises at trial. The faculty will include a former US Attorney, a federal judge, in house counsel, and leading trial lawyers from across the country. In addition, this year’s program will include “Learning from Others” modules, which will be presentations by litigation sub-specialists who will teach tactics and techniques that are common in their practices, but which can also be helpful in a broader spectrum of cases.  

The seminar will be held at Caesar’s Palace in Las Vegas, March 18-20 – during March Madness. It promises to be a great program and a unique opportunity to learn, network with potential clients and referral sources, and reconnect with old friends. I hope to see you there. 

 

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Categories: Daubert | Seminar | Toxic Tort

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The Unhappy Client

Posted on December 2, 2014 08:03 by Steve Crislip

The ABA Journal recently reported that an unhappy person filled a pick-up with gas, bales of hay and propane and then drove it into a law office.  They surmise it was intended to be an explosive device that did not detonate and instead killed the driver who apparently was very unhappy with the law firm’s work for his girlfriend.  That was an extreme example of the unhappy legal relationship.  

Well we have all lost potential or existing clients, but hopefully far less dramatically.  I do submit we lawyers do not pay enough attention to the “why” when a typical client’s unhappiness leads to a departure.  A better understanding of the loss might just prevent others.  We need to provide reliable, prompt and efficient service for our clients, who provide most of our return business.  Don’t do that and guess what — former client.  Thank goodness it is rarely as bad as the truck example, but it still is not a good business event when a client leaves because they are dissatisfied.  When you look at the unhappy client, it is amazing how simple some of the reasons can be.  It does not have to be as stupid as sending a Fed Ex package to your client UPS either.

I believe much of the unhappiness results from the really simple human nature things that make you personally angry daily.  Yet, perhaps you and your staff may be doing some of the same things to your own client base.  These common sense good business manners causes can be fixed to prevent client unhappiness.  It just requires a version of quality control.  You may think this is so basic that I should not have to deal with that on a staff level.  That appears to be the problem — the professionals do not realize what is going on with clients before they get to you.

When training staff and young lawyers, I stressed to them the reaction they have to bad service in a fast food restaurant, with airline travel, or with waiting in a doctor’s office. They get angry, they leave, and they quickly lose their loyalty in response to the above.  The same is true with law offices that put clients on hold and then drop their call, treat them badly, keep them waiting, or even worse don’t promptly respond to their calls or e-mails.  Always think how you react and try, try, try to provide professional services as you would expect your grandmother to get if you had referred her to a colleague.  This grandmother approach will keep claims at bay because clients will be far more reluctant to make a claim over a simple, honest mistake when they have been treated courteously, fairly and promptly by you throughout.  But even more importantly, they are less likely to jump ship at a simple slight.

Take time to train your staff, not only the new ones, but periodically the existing staff.  Polite, prompt and professional should be the standard which is reinforced by all.  Stress to them the need for confidentiality and the heightened work environment for professionals in which they are employed.  They will not get sanctioned, but you could lose your ticket for some misrepresentation or bad act by them.  “Hire Slowly and Fire Quickly” is also the human resource mantra when you have staff issues relating to this quality issue. 

All this is pretty simple commentary.  You would think it doesn’t need to be said.  When you depose plaintiffs in a legal malpractice claim, you hear a lot of these very simple things come out, and they are preventable by good business sense and manners.

This blog was originally posted on Lawyering for Lawyers. Click here to read the original entry. 


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On Thursday, the Seventh Circuit held that 42 U.S.C. 1981 does not protect against religious discrimination. In Lubavitch-Chabad of Ill., Inc. v. Nw. Univ., No. 14-1055, 2014 WL 5762937 (7th Cir. Nov. 6, 2014), Northwestern University conducted an investigation into underage alcohol consumption at a religious house that was presided over by a rabbi and was affiliated with the university. Following this investigation, the university (1) terminated its affiliation with the religious house and (2) ended the rabbi’s role as kosher food consultant to the university’s food service provider. The rabbi and his religious organization sued the university and two of its officials, claiming these acts were motivated by anti-Semitism and violated two federal antidiscrimination statutes, 42 U.S.C. 1981 and 42 U.S.C. 2000d.

The district court granted summary judgment in favor of the defendants. On appeal, the plaintiffs dropped their challenge to the dismissal of the Section 2000d claim. As to the Section 1981 claim, the plaintiffs argued that the disaffiliation was motivated by hostility against the plaintiffs’ Jewish sect, not by hostility to ethnic Jews. The Seventh Circuit affirmed.

The Seventh Circuit found that both the university’s affiliation with the religious house and the rabbi’s food consulting were contractual. But it observed that there is no mention of religious discrimination in Section 1981, which provides that all persons “shall have the same right . . . to make and enforce contracts . . . as is enjoyed by white citizens.” The Seventh Circuit wrote that the only difference between 42 U.S.C. 1981 and 1982 is that one deals with contracts and the other with property—neither refers to discrimination on the basis of religious identity, beliefs, or observances. Therefore, it wrote, the Supreme Court’s ruling in Shaare Tefila Congregation v. Cobb, 481 U.S. 615, 617 (1987), that Section 1982 protects only groups defined by “their ancestry or ethnic characteristics” applies equally to Section 1981. Accordingly, the Seventh Circuit held that Section 1981 does not protect against discrimination based on religion.

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Successful business development comes naturally to some.  For those of us who aren’t so lucky, DRI has given us a great resource – the new e-book, “Women Rainmakers: Roadmap to Success.”

I was fortunate enough to co-author one chapter, but I am just as excited to be a reader for the other chapters.

Anne Cruz and I had the privilege of writing a chapter with insights from in-house counsel on how outside counsel can become more successful rainmakers. We talked with several in-house decision makers and received transcripts of interviews other WITL committee members had conducted.  From there, we did our best to let the dynamic in-house counsel interviewed tell the story.

The experience was incredibly insightful, and I hope we have translated what we learned into a digestible packet of information and tips for you. We posed the questions to in-house counsel that you can only really ask when you don’t already have an existing client relationship and aren’t actively trying to create one.  We had candid, thoughtful conversations with women who know exactly what it takes to get business from in-house counsel.

I was particularly impressed with the two women I interviewed, as both of them balanced a career-focused path to success with the wonders of motherhood and a happy home life. (I’m sure the other in-house counsel we featured in our chapter are equally impressive; I just didn’t personally have the good fortune to steal an hour of their time). They are successful in all aspects of their lives, and I walked away from our interviews with a great sense of admiration for them.

When I look back at my personal business development plan in 2014, talking with these women is at the top of my list of accomplishments. Not because I suddenly have work from them (I don’t, and that was never the point), but because they inspired me to want to do more.  Do more to understand the law. Do more to cultivate long-term relationships across the legal industry.  Do more at home.  Do more – just as they have done.

The chapter Anne and I wrote is just one of the many different chapters in the e-book, and each has tales and success stories from women equally inspiring.  I hope you read WITL's new publication and that it motivates you as much as working on it did for me.

Pre-order by November 21, 2014, and receive a complimentary download of the publication along with a CD version. 


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Categories: DRI Committees | Marketing | Women in Law

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The first line of defense in any legal malpractice claim is that the lawyer on the front end, before any work was done, (a) identified who was the client (and who was not the client) and (b) described the work to be done.  Many claims involve lawyers who lost their way as to who they were representing (for example, the company and not the individual officers).  Sometimes it is prudent to actually send the “I am not your lawyer” letter and suggest to the other officers or directors that they need their own counsel.  The important engagement letter specifies what the lawyer was asked to do.  With revisionist history, clients often later claim “no, you were supposed to do X and Y”.  The engagement letter specifies what work was to be done and is “Exhibit A” in any claim against you.  See 5/2/13 “Why the Engagement Letter.” 

Document any changes in the retention after the engagement with even a simple e‑mail that “you have asked us additionally to do this, and otherwise the terms of our engagement letter applies to this work as well.”  The engagement letter also allows you to meet all of the professional obligations you have in your jurisdiction with regard to billing, file retention, file destruction, costs, etc.  Finally, disengage when required with a document that clearly says you are no longer their lawyer.  After the work is over, use the closing letter as a client relations tool for your next matter from them, but clearly put an end to the project at hand with the closing letter saying the described work has ended.  That helps with conflicts later.

The engagement letter is the critical first documentation for your file.  The watch word throughout should be documentation.  In this high speed world, do not forget the old-fashioned letter to the client, even if it is e-mailed.  If they are not following your advice, you had better have proof of that when the wheels end up in the ditch.

My friends at the Buffalo, New York firm of Goldberg Segalla (Neil and Tom’s firm) publish a professional liability column and recently discussed the need to document advice to prevent the dreaded malpractice claim.  They cite a New Jersey case where the documentation by the lawyers on their disagreement with the client’s course of conduct carried the day for the defense.

Pick up any one of the files around your desk and ask yourself how that file would look from the witness stand.  Are your actions and advice suitably noted so you could read and produce them as an exhibit?  When the client’s deal goes sideways, someone other than the client is often thought to be at fault.  If they point at you, be regularly able to show your file which reflects the opposite if appropriate.  Lawyers, protect yourselves.

This blog was originally posted on November 5. Click here to read the original entry. 


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In Humana v. Farmers Texas County Mutual Insurance Company, et al, No. 13-CV-611-LY (W.D. Texas, September 24, 2014) the court denied the defendants’ motion to dismiss and allowed Humana, a Medicare Advantage Organization (“MAO”), to pursue a private cause of action for double damages under the Medicare Secondary Payer Act, 42 U.S.C. § 1395y(b).  In doing so, the court rejected the magistrate judge’s recommendation to grant the defendants’ motion to dismiss Humana’s claims.  The court noted that in In re Avandia Mktg., 685 F.3d 353 (3d Cir. 2012), the Third Circuit addressed the same issue and held that a Medicare Advantage Organization, such as Humana, may bring a private cause of action against a primary plan under the secondary provision of the Act. Acknowledging that the Fifth Circuit had not addressed the issue, the court aligned itself with the reasoning of the Avandia opinion and concluded that the plan text of the Medicare Secondary Payer’s private cause of action provision unambiguously affords Human with a private right of action.  While there continues to be uncertainty about the nature and extent of the recovery rights of MAOs, this decision brings us closer to resolution of the issue in Texas federal courts and ultimately in the Fifth Circuit. 

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Categories: Medicare

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Last week the Centers for Medicare & Medicaid Services (CMS) withdrew the Notice of Proposed Rulemaking (NPRM) it submitted to the Office of Management and Budget back on August 1, 2013 relating to CMS’ intent in addressing future medical costs in workers’ compensation, automobile, liability insurance (including self-insurance) and no-fault claims. 

The NPRM was expected to outline how Medicare’s interest should be protected (per the Medicare Secondary Payer Act [42 U.S.C. § 1395y(b)(2)]) in cases where future medical care is claimed or effectively released in the settlement, judgment, award, or other payment of damages. While CMS has guidelines in place for the handling of future medical expenses in workers’ compensation cases, until final rules are released in the liability context, there are no similar standards for claims involving self-insureds and automobile, liability, and no fault coverage. 

CMS began the process of issuing those regulations in June 2012, when it released an Advanced Notice of Proposed Rulemaking (ANPRM) for these claims. By originally submitting a NPRM for review by the Office of Management and Budget (OMB), CMS revealed that it intends to take the next step in the regulatory approval process. 

In July 2014, the Chair of DRI’s MSP Task Force, John V. Cattie, Jr., met with government officials, as part of the public commentary process. During that meeting, he stressed the importance that any future medicals rule proposed by CMS, which creates requirements for addressing future costs of care in liability settlements, judgments or other payments, must have clarity for all stakeholders; including which stakeholders are responsible to ensure Medicare remains a secondary payer for Medicare covered, injury-related future medical expenses arising from settlements, etc. Absent such clarity, he strongly recommended that the proposed rules be returned to CMS until such clarity could be obtained. 

The withdrawn may be attributed to one of two things happening: 1) CMS no longer believes that is has a statutory right to not pay certain future medicals expenses (i.e., no more MSAs); or 2) CMS heard the call that clarity was needed to the NPRM and is taking appropriate steps in accordance with the Administrative Procedures Act to provide that clarity.  We fully expect CMS to redesign the NPRM and resubmit to OMB at a later date. 

The upcoming guidelines are expected to pinpoint the circumstances in which and the actions settling parties should take to ensure that Medicare remains a secondary payer post-settlement. In the meantime, the withdrawal of the NPRM does not change the analysis in how best to deal with future cost of care questions arising in liability settlements. You should review each fact pattern to determine if an MSA is warranted based on the case specific facts in light of the current statutory, regulatory and administrative guidance from CMS as well as relevant case law. Part of that includes identifying whether a settlement pays dollars for injury-related future costs of care, which would otherwise be Medicare-covered. Documenting the file with those conclusions and their underlying rationale represents best practices for managing that risk in today’s environment.


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