Bates v. Rubio's Restaurants, Inc. reminds defendants to be sure the class list is complete before the money starts flowing

While most of this opinion has nothing to do with class actions and everything to do with whether a judge can sua sponte reconsider a prior order and then recuse himself in the same minute order, Bates v. Rubio's Restaurant's Inc. (November 30, 2009) includes an important lesson for the administration of class action.  The Court of Appeal (Fourth Appellate District, Division Three) affirmed an interesting order of the trial court that had a significant effect on the constituency of a class in a settlement.  The concise summary of key events sets the stage for the discussion that follows in the opinion:

The parties in this wage and hour class action litigation entered into a $7.5 million settlement agreement, providing for three payments of $2.5 million to approved class members. After the initial $2.5 million payment was distributed among 529 approved class members, defendant and appellant Rubio‟s Restaurants, Inc. (Rubio‟s) realized it had not provided the names of all potential class members to the settlement administrator. One hundred forty potential class members had not received notification of the settlement.

After postjudgment briefing and status conferences, the court ruled that the 140 late-identified class members should receive notice and be folded into the settlement agreement. Later, the judge reconsidered his ruling sua sponte and vacated it. In the same minute order, the judge, citing Code of Civil Procedure section 170.1, subdivision (a)(6)(A)(i), then recused himself from any further proceedings in the matter, in the interests of justice.

Slip op., at 2.  Rubio's argued that the recusal negated the validity of the portion of the order vacating the prior ruling.  The Court of Appeal said that was nonsense, concluding that the trial court could properly rescing its earlier ruling and later, in the same minute order, recuse itself.

The only reason for all the fuss was the fact that 140 class members can file another class action and state with great certainty that they didn't receive notice of the prior settlement.  There's your class action angle.

It is possible to go too far in litigation, and Nazir v. United Airlines, Inc. provides frightening examples of that excess

Sometimes litigation is complex because the lawyers make it that way.   So often those litigation excesses are tolerated by Courts and achieve their goals, which just encourages the bad behavior.  Then it spreads like mold, getting copied.  However, just as my cynicism reaches that tipping point, a Court of Appeal authors a new opinion to right the ship.  For example, in Clement v. Alegre (September 23, 2009), the Court of Appeal (First Appellate District, Division Two) weighed in on discovery conduct.  See September 24, 2009 blog post.  And I am pleased to report that the First Appellate District, Division Two, is back business setting litigators back on the straight and narrow with their latest opinion, Nazir v. United Airlines, Inc. (October 9, 2009).

Since complex litigation is in the eye of the beholder, I say that monstrous motions for summary adjudication are "complex."  By that standard, Nazir is topical, and I proceed.  Nazir is about the summary judgment procedure.  Nazir begins by describing the terrain into which the opinion will descend:

Our Supreme Court has said that the purpose of the 1992 and 1993 amendments to the California summary judgment statute was “to liberalize the granting of motions for summary judgment.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854.) It is no longer called a “disfavored remedy.” It has been described as having a salutary effect, ridding the system, on an expeditious and efficient basis, of cases lacking any merit. And that it has, as shown by the many cases affirming a summary judgment.

At the same time, the summary judgment procedure has become the target of criticism on a number of fronts. Some particular criticism is directed to the procedure in employment litigation, including that it is being abused, especially by deep pocket defendants to overwhelm less well-funded litigants. More significantly, it has been said that courts are sometimes making determinations properly reserved for the factfinder, sometimes drawing inferences in the employer‟s favor, sometimes requiring the employees to essentially prove their case at the summary judgment stage. Here we confront the poster child for such criticism, in a case involving what may well be the most oppressive motion ever presented to a superior court.

Slip op., at 1.  In a suit for harassment, discrimination and retaliation, Defendants filed motions for summary judgment or summary adjudication, and the court described the ensuing papers as follows:

Defendants filed a motion for summary judgment/summary adjudication, seeking adjudication of 44 issues, most of which were not proper subjects of adjudication. Defendants' separate statement was 196 pages long, setting forth hundreds of facts, many of them not material—as defendants' own papers conceded. And the moving papers concluded with a request for judicial notice of 174 pages. All told, defendants' moving papers were 1056 pages.

Plaintiff's opposition was almost three times as long, including an 1894-page separate statement, papers the trial court would later disparage as "mostly verbiage," a description with which, as will be seen, we disagree. Curiously, no such criticism was leveled at defendants' papers, not even those in reply, papers that defy description.

Defendants' reply included, and properly, their response to plaintiff's additional disputed facts. Defendants' reply also included, not so properly, a 297-page "Reply Separate Statement" and 153 pages of "Exhibits and Evidence in Support of Defendants' Reply." And the reply culminated with 324 pages of evidentiary objections, consisting of 764 specific objections, 325 of which were directed to portions of plaintiff's declaration, many of which objections were frivolous. In all, defendants filed 1150 pages of reply.

Slip op., at 2.  The Court then summarized the task before it:

This, then, is what is before us for de novo review: an order granting summary judgment that purports to sustain without explanation 763 out of 764 objections to evidence, in a record the likes of which we have never seen—not here, not in the combined 11 years of law and motion experience of the members of this panel.

Slip op., at 3.  But wait! This is only the third page of an opinion spanning over 50 pages.  Consider these comments about the record on appeal:

On August 30, 2007, defendants filed a "Motion for Summary Judgment or, in the Alternative, Summary Adjudication," with moving papers totaling 1056 pages. Plaintiff filed his lengthy opposition which, as quoted above, the trial court described as "mostly verbiage, and utterly lacking in the identification and presentation of evidence demonstrating a disputed issue of fact."

Seemingly emboldened by this description, defendants' brief here begins this way: "As in Macbeth's soliloquy, Appellant's Opening Brief (AOB), like his summary judgment opposition below, is full of 'sound and fury, [but ultimately] signifying nothing.' Despite filing an 1894 page(!) opposition separate statement, which the trial court found . . . in a manner deliberately calculated to obfuscate whether any 'purportedly disputed facts were actually controverted by admissible evidence,' the trial court properly granted summary judgment in this case. As with Nazir's opposition statement, his AOB is 'mostly verbiage, and utterly lacking in the identification and presentation of evidence demonstrating a disputed issue of fact.'"

Passing over whether such disparagement is effective advocacy, the "girth" of materials before the trial court began with defendants, whose 1056 pages of moving papers were in great part inappropriate, beginning with the motion itself.

Slip op., at 4.  The Court then spends considerable time summarizing the defects in the Separate Statement:

The deficiencies in the motion pale in comparison to those in the separate statement. "Separate statements are required not to satisfy a sadistic urge to torment lawyers, but rather to afford due process to opposing parties and to permit trial courts to expeditiously review complex motions for [summary adjudication] and summary judgment to determine quickly and efficiently whether material facts are undisputed." (United Community Church v. Garcin (1991) 231 Cal.App.3d 327, 335.) The separate statement "provides a convenient and expeditious vehicle permitting the trial court to hone in on the truly disputed facts." (Collins v. Hertz Corp. (2006) 144 Cal.App.4th 64, 74.) That hardly describes defendants' separate statement here.

The separate statement is, as noted, 196 pages. The exact number of supposedly material facts is impossible to know without actually counting them, as many of the facts are often repeated with the same numbers. But whatever the number, many of the facts are not material, as defendants concede, their separate statement beginning with this quizzical footnote: "The facts are deemed undisputed for purposes of this motion only and do not constitute any admission. For purposes of this motion only, Plaintiff's statements are accepted as true. Not all facts listed herein are necessarily material, as certain facts are asserted for background, foundational, information, or other purposes. Also, by including the facts set forth herein, Defendants are not waiving their right to challenge the admissibility of such facts in connection with this motion or for other purposes in this case."

We offer two observations about this footnote. The first is that it ignores the advice from the leading practice treatise: "PRACTICE POINTER: [¶] . . . [¶] Include only those facts which are truly material to the claims or defenses involved because the separate statement effectively concedes the materiality of whatever facts are included. Thus, if a triable issue is raised as to any of the facts in your separate statement, the motion must be denied!" (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2009) § 10:95.1, p. 10-35.) The second is that there seems to be some disconnect between defendants' concession that "Plaintiff's statements are accepted as true" and defendants' 325 objections to plaintiff's testimony. In short, defendants' separate statement was particularly inappropriate.

The deficiencies carried over to the reply papers, which included a 297-page reply separate statement. There is no provision in the statute for this. The reply also included 153 pages of "Exhibits and Evidence in Support of Reply." No such evidence is generally allowed. (San Diego Watercrafts, Inc. v. Wells Fargo Bank (2002) 102 Cal.App.4th 308, 316.) And, of course, there were the objections, 764 in all, which we discuss below. Suffice to say that there is plenty of blame for the "girth" the trial court criticized, most of which, we conclude, lies at the feet of defendants.

But neither the inappropriateness of defendants' papers nor their excessive volume is the worst aspect of those papers. No, that is the misleading picture those papers presented. An article coauthored by an experienced Superior Court judge has "intended to point out, in ascending order of seriousness, certain fatal errors and other problems [the court has] encountered" in connection with summary judgment motions, at the very top of which are motions "that attempt to 'hide' triable issues of material fact."  (Brenner & March, Use and Abuse of MSJs: A View from the Bench (2007) 49 Orange County Law 34, 37.) The article admonishes that a motion "should never cite evidence out of context in an effort to conceal a clearly triable issue of material fact," going on to cite two recent examples in that judge's court, one in a sexual harassment case, the other in one for wrongful termination. (Id. at p. 37.) Here, in vivid detail, is a third.

Slip op., at 5-7.  The Court was then compelled to spend considerable time discussing the objections to plaintiff's evidence, as the state of admitted evidence governed the Court's de novo review of the Motions themselves.   Without quoting the many pages of discussion about the frivolous nature of the many objections asserted by defendants, the Court, at one point in the opinion writes, "Can this be serious? Can counsel see themselves rising at trial with those objections while plaintiff is testifying before a jury?"  Slip op., at 11.  The Court then offered this advice in a footnote:

We sometimes "hear" that a common practice in cases staffed by multiple levels of lawyers is to assign the most junior lawyer to "do the objections," which was apparently done here. Perhaps a wiser practice would be have the most experienced lawyer, presumably with a better understanding of the law of evidence, deal with the objections.

Slip op. at 11, n. 6.

The balance of the Opinion, once it moves beyond its focus on the form of the filings before the Court, is an excellent example of detailed application of facts to the complex schemes of law governing harassment, continuing violations, discrimination, exhaustion of administrative remedies and the like.  If you don't practice in the area of employment law, the first third of the opinion is still highly relevant, and the balance is a good example of what to consider when bringing or opposing a motion for summary judgment/adjudication.

The Court ends its opinion by reminding trial courts that they possess inherent power to correct abusive summary judgment filings:

The deficiencies in summary judgment papers can appear in a variety of places, and the approaches taken by the courts to address the deficiencies can vary as well, limited only by the inspiration or creativity of the particular law and motion judge—and, of course, due process. There is no universal solution, no panacea, and we do not even attempt to offer suggestions. We write here only to confirm the existence of the inherent power, to remind trial courts of it, and to encourage them to use it when appropriate.

Slip op., at 51.  I think this panel is too modest.  They seem more than up to the challenge of suggesting methods to curtail incidents like the one chronicled in its Opinion.  At any rate, they do yeoman's work and deserve a raise (not that this mismanaged, financially destitute state could provide one).

The UCL Practitioner has already identified some press coverage of this decision in a post from earlier today.

Hernandez v. Vitamin Shoppe (Spencer, Appellant) examines limits on advocacy by class action settlement objector

Unlike single party cases, class actions routinely have more than one plaintiff that purports to represent the same (or similar) class. In Hernandez v. Vitamin Shoppe (Spencer, Appellant) (June 17, 2009), the Court of Appeal (First Appellate District, Division Two) examined the ability of trial courts to set limits on the methods and extent of that advocacy:

After the trial court conditionally certified the class for settlement purposes, appellant Jeffrey Spencer, attorney for appellant Lisa Hernandez, a plaintiff in Perry, sent a letter to various class members urging them to opt out of the settlement, and to retain him as counsel against Vitamin Shoppe in another class action involving the same matters. The court subsequently issued orders and rulings regarding these communications, barring Spencer from certain future communications, and granting monetary sanctions against him, which appellants Hernandez and Spencer challenge on appeal. In the published portion of this opinion, we affirm these rulings and orders, except that we reverse the trial court‘s imposition of monetary sanctions against Spencer.

Slip op., at 1-2. Later, the Court described aspects of the letter to class members:

Spencer, identifying himself as counsel in Thompson, represented in his letters to various members of the conditionally certified class that if the Perry settlement were approved, "substantial compensation will be forfeited," that "you will not be able to recover compensation for all the rest and meal periods you were denied or for all of the overtime compensation or penalties you are owed," and that "[u]nder California law you are entitled to an extra hour of pay for each rest and meal period that you missed during your employment." He advised them to "protect" themselves from the Perry settlement by opting out of the class and joining the Thompson action, which he stated was "in progress," encouraged them to request exclusion from the settlement, and warned that those who did not exclude themselves would be "stuck" with the settlement‘s terms. He solicited them to retain him as counsel, or to contact him for advice or assistance with respect to excluding themselves from the class, and enclosed his retainer agreement.

Slip op., at 4-5. So, to recap, there are acceptable means of objecting to a proposed class action settlement, and there are unacceptable means. This opinion concerns one of those unacceptable means. But I will note that it is a tough position to be in as an attorney for the same putative class if you believe that you can obtain a better result for that class. In the end, class action settlements are approved not on the basis of whether they are the best possible settlement; instead, the proposed settlement need only be good enough.

Ninth Circuit confronts Morton's Fork in Negrete v. Allianz Life Insurance Co.

Ninth Circuit SealIn a decision issued yesterday, the Ninth Circuit struck down an Order by District Court Judge Snyder that would have prohibited the nominal target of the Order, defendant Allianz, from settling similar or identical class actions pending in other state and federal courts without including, or obtaining consent from, plaintiff's co-lead counsel in the certified nationwide class action matter pending before Judge Snyder. (Negrete v. Allianz Life Insurance Co. (9th Cir. Apr. 29, 2008) ___ F.3d ___.)  The Order at issue in Negrete provided:

Any discussions of a settlement that would affect any claims brought in this litigation, other than claims of an individual plaintiff or class member, must be conducted or authorized by plaintiffs’ Co-Lead Counsel. Any proposed settlement that resolves, in whole or in part, the claims brought in this action shall first be subject to review and approval by the Court in this litigation.

(Slip op., at pp. 4579-80.)

Allianz argued that (1) the Order was actually an injunction, (2) the injunction in question was not proper under the All Writs Act, and, (3) even if it was, it was barred by the Anti-Injunction Act.  The Ninth Circuit agreed.  The Ninth Circuit first analyzed the Order and determined that, in effect, it was an injunction affecting the proceedings in other courts.  Turning to the All Writs Act, and theoretical circumstances where an injunction of this ilk might pass muster, the Court said:

Negrete Counsel floated out the specter of a reverse auction, but brought forth no facts to give that eidolon more substance. A reverse auction is said to occur when “the defendant in a series of class actions picks the most ineffectual class lawyers to negotiate a settlement with in the hope that the district court will approve a weak settlement that will preclude other claims against the defendant.” Reynolds v. Beneficial Nat’l Bank, 288 F.3d 277, 282 (7th Cir. 2002). It has an odor of mendacity about it. Even supposing that would be enough to justify an injunction of one district court by another one, there is no evidence of underhanded activity in this case. That being so, if Negrete’s argument were accepted, the “reverse auction argument would lead to the conclusion that no settlement could ever occur in the circumstances of parallel or multiple class actions — none of the competing cases could settle without being accused by another of participating in a collusive reverse auction.” Rutter & Wilbanks Corp. v. Shell Oil Co., 314 F.3d 1180, 1189 (10th Cir. 2002) (internal quotation marks omitted).

(Slip op., at pp. 4587-88.)  Turning to the Anti-Injunction Act, the Court described its restrictive provisions:

The authority conferred upon federal courts by the All Writs Act is restricted by the Anti-Injunction Act, which is designed to preclude unseemly interference with state court proceedings. It declares that: “A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.” 28 U.S.C. § 2283. Therefore, unless one of the exceptions applies, the district court erred when it issued the injunction in question here.

At the outset, it is important to note that the Anti-Injunction Act restriction is based upon considerations of federalism and speaks to a question of high public policy. It is not a minor revetment to be easily overcome; it is a fortress which may only be penetrated through the portals that Congress has made available.

(Slip op., at pp. 4588-89, footnotes omitted.)

In this particular instance, one can sympathize both with the District Court and the Ninth Circuit (which seems to get so little sympathy).  On the one hand, the Ninth Circuit was obligated to respect the notions of federalism and limited jurisdiction granted to the federal courts.  On the other hand, this decision seems to invite the johnny-come-lately filers that simply watch for class action filings and jump the train, rather than investing any energy or resources in developing their own cases.  But is the outcome all bad?  Certainly, if I was prosecuting what I believed to be a bona fide class action, one in which the defendant was coming to the table to talk class settlement, I'd be mightily aggravated if some district court in some far away state told the defendant that they couldn't talk to me about settling my case without including some other counsel from some other case.  On the other hand, if I were stranded by Negrete while a defendant dodged my case to sort out a settlement with other counsel, that woud surely tweak me as well.  In the later instance, I'd have to resort to intervening in settlement approval proceedings in the event that the settlement was demonstrably deficient.  Negrete will generate some troubling outcomes, but I suspect that there is no viable alternative.  We have to assume that preliminary and final settlement approval in class actions won't be handed out where it isn't justified.  Perhaps this blog's recent post about Judge Alsup's denials of preliminary approval offer some comfort that the system works without the need for district court's to engage in jurisdictional wars over cases with other state and federal courts.

And it really is Morton's Fork, and not Hobson's choice or the prisoner's dilemma.  Neither settlement collusion and crashing nor internecine conflict in the court system are desirable alternatives.

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Is there an unintended gap in California’s case coordination statutes?

Most civil litigation practitioners are at least vaguely aware that multiple actions “involving a common question of fact or law” can be coordinated before a single court for unified proceedings (for purposes of this discussion, “coordination” has a very specific meaning and refers to the process set forth in the Civil Code).  However, the coordination procedure varies, depending upon the nature of the actions to be coordinated, and the statutory scheme arguably contains an ambiguity that may cause uncertainty as to which procedure should be invoked.


Coordination is governed by California Code of Civil Procedure sections 403, 404 and 404.1 (all further statutory references are to the California Code of Civil Procedure).  Section 403, discussing the procedure for non-complex cases, provides, in part:

A judge may, on motion, transfer an action or actions from another court to that judge's court for coordination with an action involving a common question of fact or law within the meaning of Section 404. The motion shall be supported by a declaration stating facts showing that the actions meet the standards specified in Section 404.1, are not complex as defined by the Judicial Council and that the moving party has made a good faith effort to obtain agreement to the transfer from all parties to each action.

(Section 403, emphasis added.)  Section 404, setting forth the coordination procedure for complex actions, provides:

When civil actions sharing a common question of fact or law are pending in different courts, a petition for coordination may be submitted to the Chairperson of the Judicial Council, by the presiding judge of any such court, or by any party to one of the actions after obtaining permission from the presiding judge, or by all of the parties plaintiff or defendant in any such action. A petition for coordination, or a motion for permission to submit a petition, shall be supported by a declaration stating facts showing that the actions are complex, as defined by the Judicial Council and that the actions meet the standards specified in Section 404.1. On receipt of a petition for coordination, the Chairperson of the Judicial Council may assign a judge to determine whether the actions are complex, and if so, whether coordination of the actions is appropriate, or the Chairperson of the Judicial Council may authorize the presiding judge of a court to assign the matter to judicial officers of the court to make the determination in the same manner as assignments are made in other civil cases.

(Section 404, emphasis added.)  In short, coordination of complex actions is determined by the Judicial Council, not any trial court to which one of the complex actions is assigned.  As background information only, Section 404.1 describes the factors that are considered in any instance where coordination of actions is sought:

Coordination of civil actions sharing a common question of fact or law is appropriate if one judge hearing all of the actions for all purposes in a selected site or sites will promote the ends of justice taking into account whether the common question of fact or law is predominating and significant to the litigation; the convenience of parties, witnesses, and counsel; the relative development of the actions and the work product of counsel; the efficient utilization of judicial facilities and manpower; the calendar of the courts; the disadvantages of duplicative and inconsistent rulings, orders, or judgments; and, the likelihood of settlement of the actions without further litigation should coordination be denied.

The included emphasis in the sections quoted above highlights the ambiguity in this statutory scheme.  Section 403 specifies the authority of a trial court to coordinate two or more non-complex actions, as “complex” is defined by the Judicial Council in California Rules of Court, rule 3.400.  Section 404 specifies the process for coordinating two or more complex actions.  Omitted from this scheme is the situation where one complex matter and one or more non-complex matters are pending in different courts.  Such a scenario might arise if a class action and multiple individual actions, all asserting the same misconduct, are simultaneously pending in different courts.  Under the literal language of Sections 403 and 404, one cannot assert either that the actions are not complex (Section 403) or that the actions are complex (Section 404).


I am unaware of an answer to this potential ambiguity. It is my belief that a non-complex action can be coordinated into a complex action without petitioning the Judicial Council, so long as the Judicial Council has not already acted on a petition affecting the complex matter.  This interpretation seems consistent with the intent that the coordination of non-complex matters is appropriately supervised by trial court judges but the coordination (and subsequent transfer) of a complex action requires the oversight provided by the Judicial Council Process.  I had hoped in one case to test this proposition, but the matters were transferred before I could do so.  Any takers?


Further resources:  visit Justia.com or California’s Official California Legislative Information site for free access to California’s complete Code of Civil Procedure.

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