Litigating California Wage & Hour and Labor Code Class Actions

Initially, the decisions were split on this issue among the various California district courts.
In In re HP Inkjet Printer Litigation, a court in the Northern District extended the Red Cab
rule to apply to CAFA jurisdiction. The court held that it continued to have subject matter
jurisdiction even after the denial of the motion to certify a nationwide class. 336 But in
Arabian v. Sony Electronics, a Southern District court held otherwise, dismissing the case
for lack of subject matter jurisdiction because a class could not be certified, nor was
certification likely in the foreseeable future. 337 And in Darneal v. Allied Waste Transp., Inc.,
a defendant employer attempted to obtain remand to state court because it realized it had
erroneously calculated the number of potential class members when it originally removed
the case. 338 The court refused to remand, holding that the question of the number of
potential class members is a factual inquiry that is likely to be resolved through continued
litigation.
The Ninth Circuit Court of Appeal resolved this split in United Steel, Paper & Forestry,
Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union v.
Shell Oil Co., 602 F. 3d 1087, 1091-2 (9th Cir. 2010). In that case, the defendant,
represented by Seyfarth Shaw, defeated plaintiffs’ motion for class certification, and
plaintiffs thereafter obtained remand to state court on the grounds that there was “no
reasonably foreseeable possibility” that a class would be certified, and that therefore
CAFA’s jurisdictional requirements could not be satisfied. 339 The Ninth Circuit disagreed,
and held that, in the context of CAFA jurisdiction, the Red Cab rule “is applicable . . .
because no one suggests that a class action must be certified before it can be removed to
federal court under the Act. . ..” 340
G. Settlement Process
The enactment of CAFA has also brought changes to class action settlement
procedures. 341 In contingency fee cases, if a proposed settlement of a class action
provides for provision of coupons to class members, the portion of any attorney’s fee award
that is attributable to the coupons is based on the value to class members of the coupons
that are actually redeemed. 342 Alternatively, the fee award may be based on the lodestar
336
337
338
339
340
341
342
Corp., 2007 U.S. Dist. LEXIS 48392, at *7-8 (N.D. Cal. June 26, 2007) (holding that jurisdiction was not necessarily
divested upon post-removal action and that supplemental jurisdiction provided the basis for retaining subject matter
jurisdiction of the claim at hand).
In re HP Inkjet Printer Litig., 2009 U.S. Dist. LEXIS 12271, at *7.
Arabian v. Sony Elecs. Inc., 2007 WL 2701340 (S.D. Cal. 2007).
Darneal v. Allied Waste Transp., Inc., 2010 WL 5292341 (E.D. Cal. 2010).
Id. at 1090.
Id. at 1091.
28 U.S.C. § 1711.
See id. § 1712(a).
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