Thursday, January 21, 2016

U.S. Supreme Court Rules against Defendants’ Attempts to Shut Down Employment and Consumer Class Action Suits by Paying Off Named Plaintiffs

On Wednesday the U.S. Supreme Court handed a rare 6-3 victory to consumers and employees seeking to bring class claims in Campbell-Edwald Co. v. Gomez. The Court was tasked with deciding whether a defendant can properly dispose of a class case by offering full relief to the named plaintiffs in an effort to render moot their individual claims and thus get rid of the entire case. Such efforts by defendants to dispose of class cases by paying off the named plaintiffs have become commonplace in consumer and employee class actions.

The case involved a consumer class action under the Telephone Consumer Protection Act (TCPA) against a Navy contractor hired to send recruiting text messages to young people. The TCPA prohibits sending such marketing text messages without the cellular phone user’s prior consent. Jose Gomez, who had not provided consent and nonetheless received the Navy’s recruiting text message, filed suit on behalf of a putative consumer class seeking treble statutory damages for Cambell-Edwald’s knowing and willful violation of the TCPA, as well as an injunction against further unsolicited text messages by Campbell-Edwald.

Before Mr. Gomez’s deadline to file a motion for class certification, Campbell-Edwald filed an offer of judgment to Mr. Gomez under Federal Rule of Civil Procedure 68. Mr. Gomez did not accept that offer. However, Campbell-Edwald contended that by providing Mr. Gomez with an offer of complete relief, his claim became moot. Because his claim was mooted before he moved for class certification, Campbell-Edwald argued, the putative class claims also became moot. The district court rejected those arguments and ruled in favor of Mr. Gomez on that issue. The Ninth Circuit Court of Appeals agreed.

At the Supreme Court, Justice Ginsberg wrote for the majority, joined by Justices Kennedy, Breyer, Sotomayor, and Kagan. (Justice Thomas concurred in the judgment but did not sign Justice Ginsberg’s majority opinion.) Ultimately, Justice Ginsberg resolved the mootness question according to fundamental principles of contract law, stating that “an unaccepted settlement offer has no force. Like other unaccepted contract offers, it creates no lasting right or obligation. With the offer off the table, and the defendant’s continuing denial of liability, adversity between the parties persists.”

In reaching that conclusion, Justice Ginsberg addressed a 2013 decision of the Court, Genesis HealthCare Corp. v. Symczyk, 133 S.Ct. 1523 (2013), a collective action brought by employees under the Fair Labor Standards Act. In that case, the named plaintiff had conceded in the lower courts that her individual claim was rendered moot when she did not accept her employer’s Rule 68 offer to settle her individual claim. Based on that early concession, a five-justice majority held that without a named plaintiff’s live individual case, a class suit could not be maintained. The four dissenting Justices, led by Justice Kagan, argued that the employee’s unaccepted offer of judgment could not properly moot a case.

Justice Ginsberg thus adopted the reasoning of Justice Kagan’s dissent in Genesis HealthCare and secured a majority with the votes of Justices Kennedy and Thomas. The decision was a rare victory for employees and consumers before a Supreme Court that has often been hostile toward class action lawsuits. See previous blog posts here, here, and here. Justice Kennedy’s decision to join the majority in deciding not to dispense with class actions as a means to vindicate vital statutory rights – including job protections--should delight employee and consumer advocates.

The argument advanced by Chief Justice Roberts and the dissenters is a cynical one in its claim that a lawsuit brought on behalf of a class is rendered moot if the defendant offers to pay off the named plaintiffs, even if those named plaintiffs refuse the payment. The Chief’s contention that no live case or controversy exists because a defendant offers to resolve one of potentially thousands of putative class members’ claims cannot be taken at face value.

Practically speaking, what company would not pay a few thousand dollars to the named plaintiffs to escape the possibility of multi-million dollar exposure? Simply put, a seemingly small point of procedural law could have spelled the end of vigorous enforcement for numerous employee and consumer protections enacted by Congress.

Although Justice Ginsberg confined her majority opinion to a relatively narrow set of facts—suggesting the outcome could be different if Mr. Gomez had in fact accepted full payment—employees, consumers, and those who advocate on their behalf can breathe a collective sigh of relief that class actions will live to fight another day.

U.S. District Court Finalizes Approval for Distribution of $36 Million in Landmark Bank of America Wage Settlement

“Your lawyering has just been excellent….I think the results were exceptional; and by that, I mean, there were tremendous risks for the plaintiff….So you have nothing but the Court's praise and compliment. I think you're excellent counsel. You worked very hard. Your briefing was just extraordinary.”

--Hon. David O. Carter, United States District Court, Central District of California (addressing Bryan Schwartz and other counsel, approving their $36 million settlement of wage claims, Jan. 19, 2016)

On January 19, 2016, Bryan Schwartz Law’s principal announced court approval of a $36 million settlement between Landsafe Appraisal Services, Inc., a subsidiary of Bank of America (NYSE: BAC) and 369 current and former employees working as residential real estate staff appraisers. At the hearing where final approval was granted, the federal court in Orange County, Judge David O. Carter, remarked on the exceptional result and the excellent representation provided throughout the lawsuit, which alleged wage violations. Plaintiffs and the other class members should receive average gross payments of nearly $100,000 within the next month.

The lawsuit was first filed in April 2013 in federal court in Orange County. It alleged that Bank of America erroneously applied the "administrative" and "professional" exemptions to residential staff appraisers. Plaintiffs maintained that they typically worked from early in the morning until late at night, churning out reports that are a required part of every mortgage loan. The job required no special academic degree - just a state license. 

In approving the settlement, at the hearing, the court noted favorably that, as a result of the lawsuit, the new owner of Landsafe – CoreLogic – has begun paying all appraisers overtime.

One of the named plaintiffs, Ethel Joann Parks of Manteca, California worked for Bank of America’s Landsafe until 2012. For years, she regularly toiled from 6 a.m. to 10 p.m. completing appraisal reports and, in the process, missing out on daily life and major family events. Rarely did she have time throughout the day to take a break to eat or rest because the artificially short deadlines set by Bank of America forced her to constantly keep working.

Ms. Parks decided to step forward because she felt that bank failed to treat her, and other staff appraisers, “as human beings” with “family and personal needs that should be acknowledged.” She added, “I am vindicated by this lawsuit and the exceptional relief obtained on behalf of the class.  I hope it will force banks and appraisal management companies throughout the country to reconsider pressuring their staff appraisers to work long hours without paying overtime.”

“We are delighted by the court’s recognition of this outstanding result, which not only provides meaningful compensation to hundreds of people, but, we hope, will lead to industry change for many thousands more,” said Bryan Schwartz, founder of Bryan Schwartz Law, lead counsel for the 369 class members, along with the Los Angeles-based firm of Schonbrun Seplow Harris & Hoffman. 

Witnesses supporting the settlement, including an appraiser and industry expert, testified that, as Schwartz hopes, the settlement will send waves and affect change throughout the real estate appraisal industry.

Judge Carter certified a nationwide class action in December 2013 under the federal Fair Labor Standards Act, and certified a class action in California in June 2014 under the California Labor Code. In May 2015, the Court granted plaintiffs summary judgment as to the major defenses Bank of America was asserting, and rejected the bank’s effort to kick the suit out of court.  This resulted in a ruling under which Bank of America would likely owe the workers considerable back wages for overtime and missed meal and rest periods.

The bank then asked the Court for permission to appeal the summary judgment decision immediately, denying any wrongdoing. The case was set to go to trial in August 2015, but the parties reached the $36 million settlement finally approved this week.

For Attorney Schwartz, this is just one of many recent settlements in service of employees who were denied lawful compensation for their efforts.  In 2014, Schwartz and his co-counsel settled another part of the same case against Bank of America (as to review appraisers) for $5.8 million. This makes nearly $42 million for workers in the suit as a whole.  Schwartz has also achieved numerous other multi-million dollar settlements on behalf of thousands of misclassified workers nationwide.

“Employers take grave risks by cutting corners, and not fairly compensating their employees in tune with state and federal law.  My firm and many others, including my co-counsel, are working to end wage theft in the economy…quickly,” added Schwartz.

The case is Terry P. Boyd et al. v. Bank of America Corp. et al., case number 8:13-cv-00561, in the U.S. District Court for the Central District of California.

# # #
Bryan Schwartz Law is dedicated to continuing the struggle for civil rights and equality of employment opportunity and helping Americans from every background to achieve their highest career potential. The firm has recovered tens of millions of dollars in individual, class, and collective actions involving discrimination and retaliation, harassment, denied disability accommodations, whistleblower reprisal, wage and hour violations, Federal employees' rights, and severance negotiations.  

Wednesday, January 13, 2016

Court Sanctions Defense Attorney for His Sexist Remarks to Opposing Counsel

In a clarion call for civility among attorneys, Magistrate Judge Paul Grewal granted plaintiffs’ motion for sanctions in a civil rights case,[1] and excoriated defendants’ attorney for “repeatedly and unapologetically flout[ing]” the Northern District of California’s Guidelines for Professional Conduct[2], the Federal Rules of Civil Procedure (FRCP), the court’s prior order, and – in this firm’s opinion – offending standards of basic civility most of us learned on the playground, as children.[3] The order is available here.

            Defendants’ attorney produced documents relevant to a deposition in a “physically cracked and unusable disc” on the day of said deposition, delayed correcting this abjectly deficient production for over a month after being repeatedly asked to do so by plaintiffs’ counsel (only to produce documents defendants’ attorney already knew to be in plaintiffs’ possession), made “extremely long speaking objections” in corrective depositions ordered by the court, and many more violations.[4] Tellingly, defendants’ attorney made “no attempt to defend any of this conduct.”[5]

            Escalating his disgraceful misconduct from unprofessionalism to sexism, defendants’ attorney told one of the plaintiffs’ female attorneys, at a deposition she was taking, “[D]on’t raise your voice at me. It’s not becoming of a woman ….”[6] In briefing his opposition to plaintiffs' sanctions request, defendants’ attorney doubled down on his statement with a sorry-not-sorry apology.[7]

As M.J. Grewal explains in his order, defendants’ attorney’s attack “endorsed the stereotype that women are subject to a different standard of behavior than their fellow attorneys.” M.J. Grewal further elaborates that such gender-based vitriol “reflects not only on the attorney’s lack of professionalism, but also tarnishes the image of the entire legal profession and disgraces our system of justice.” The Court found that such statements – in addition to harming the many female attorneys that regularly endure similar treatment – degrades the legitimacy of the legal system itself.

Gendered attacks “reflect and reinforce the male-dominated attitude of our profession.”[8] At a time when the opportunity for female attorneys to advance to leadership roles in law firms remains stymied,[9] our profession should, at the very minimum, not tolerate such Mad-Men-styled sexism from its members.

Fortunately, M.J. Grewal suffers no fools. Because of defendants’ attorney’s egregious misconduct, M.J. Grewal awarded plaintiffs their fees and costs in bringing the motion for sanctions, as well as attorneys’ fees for depositions, including the deposition during which the sexist comment was made. Recognizing that monetary compensation for plaintiffs’ attorneys' fees and legal costs falls short of a just result, M.J. Grewal ordered the “specific and appropriate sanction” of compelling defendants’ attorney to “donate $250 to the Women Lawyers Association of Los Angeles Foundation … and submit a declaration to the court confirming his compliance with this order.”[10]

Courts should emulate Magistrate Judge Paul Grewal, enforcing both women’s equality and basic civility in the legal profession.

[1] Claypole v. Cnty. of Monterey, No. 14-cv-02730-BLF (filed June 12, 2014). More information regarding the case can be found here.
[2] The Northern District of California’s Professional Guidelines are available here:
[3] Claypole, No. 14-cv-02730-BLF, slip op. at 1 (N.D. Cal. January 12, 2016).
[4] Id. at 2-3, 5.
[5] Id. at 6.
[6] Id. at 8.
[7] Id. (Defendants’ attorney “offered only a halfhearted politician’s apology ‘if [he] offended’ Plaintiff’s counsel, and he nevertheless tried to justify the comment because it ‘was made in the context of [Plaintiff’s counsel] literally yelling at [his] client and creating a hostile environment during the deposition’ … Other than his own characterization, [Defendants’ attorney] offers no deposition excerpts or other evidence that suggests this.")
[8] Id.
[9] Stephanie A. Scharf & Roberta A. Liebenberg, Am. Bar Ass’n, First Chairs at Trial: More Women Need Seats at the Table 14-15 (2015), available at
[10] Claypole, at 10.