Johnson v. Glaxosmithkline, Inc. analyzes parts of Alvarez-type class action preclusion

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Greatsealcal100It's a bit dicey commenting on an appellate decision that isn't truly final.  By "comment," I mean something more than the soundbites one hears in the media when a high-profile decision is redered ("We're very pleased with this outcome and feel that justice was served...").  And while I'm not going to offer any detailed analysis of this new opinion, Johnson v. Glaxosmithkline, Inc. (September 19, 2008) is news that merits coverage, despite the fact that I contributed in a small way to that appeal.

Readers may know that I was counsel in Alvarez v. May Dept. Stores Co. (2006) 143 Cal.App.4th 1223.  I expressed some of my disappointment with the Alvarez decision in this post.  Since Alvarez, I have watched for signs that would indicate whether the opinion would receive further reinforcement or be limited into irrelevance.  Early signs suggested the later.  Last Friday, the Court of Appeal (Second Appellate District, Division Seven) had an opportunity to take a second look at Alvarez.  In doing so, the Court of Appeal noted the shadow cast over Alvarez by a recent U.S. Supreme Court decision:

“. . . Taylor v. Sturgell, supra, __ U.S. __ [128 S.Ct. 2161] would appear to preclude the use of collateral estoppel to bar absent putative class members from seeking class certification following the denial of a certification motion in an earlier lawsuit at least to the extent Taylor is understood as resting on due process considerations, and not simply federal common law. Because we reverse the trial court’s application of collateral estoppel on different grounds, however, we leave resolution of these important issues to another day.

(Slip op., at p. 15, n. 8.)  The Court noted the possibility that Taylor overruled Alvarez, but didn't go through that door because it found an alternative basis for reversing the trial court.  What the Court did conclude was something akin to, but more detailed in its analysis, than Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193.  Specifically, the Court held that, because a prior attempt to certify a nationwide class action was not identical to the class at issue, collateral estoppel did not apply and the Alvarez approach of using a primary rights analysis for assessing the preclusive effect of the denial of class certification was not supportable:

“Moreover, the procedural right to prosecute a claim as a class action, “a means to enforce substantive law” by collectively litigating substantive claims (Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906, 918; see Alch v. Superior Court (2004) 122 Cal.App.4th 339, 388), shares none of the characteristics of a “cause of action” as defined by the primary rights theory. (See Crowley v. Katleman, supra, 8 Cal.4th at p. 681 [primary rights theory “provides that a ‘cause of action’ is comprised of a ‘primary right’ of the plaintiff, a corresponding ‘primary duty’ of the defendant, and a wrongful act by the defendant constituting a breach of that duty”].) A primary right in its simplest form is the plaintiff’s right to be free from the particular injury suffered. (Slater v. Blackwood, supra, 15 Cal.3d at p. 795.) The procedural means for protecting that right cannot be confused with the right itself.

(Slip op., at p. 22; see also, p. 16.)  Aside from noting these two points in the opinion, I will leave further analysis and commentary to others . . . at least for now.

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The Pioneer ripples continue to expand in Lee, et al. v. Dynamex, Inc., et al.

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Greatsealcal100Back on August 14th, I commented on yet another decision giving a further boost to the Supreme Court's decision in Pioneer Electronics (USA), Inc. v. Superior Court (Olmstead), 40 Cal.4th 360 (2007), in which the California Supreme Court confirmed the right of plaintiffs to discover the identity and contact information of putative class members.  Discussing Alch v. Superior Court (August 14, 2008) in this post, I commented that it furthered the trend of Belaire-West Landscape, Inc. v. Superior Court, 149 Cal.App.4th 554 (2007) and Puerto v. Superior Court, 158 Cal.App.4th 1242 (2008).  It turns out that appellate courts aren't done reminding parties about the fundamental right to engage in discovery in class actions.

On August September 17, 2008, the Second Appellate District (Division Seven) added to the discussion regarding the substantial right to basic discovery of information about putative class members.  In Lee, et al. v. Dynamex, Inc., et al., the Court of Appeal tied all of the threads emanating from Pioneer together and concluded that the failure to permit discovery about class member identity was grounds for reversing the trial court's order denying class certification:

“After first denying Lee’s motion to compel Dynamex to identify and provide contact information for potential putative class members, the trial court denied Lee’s motion for class certification. Because the trial court’s discovery ruling directly conflicts with the Supreme Court’s subsequent decision in Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360 (Pioneer), as well as our decisions in Belaire-West Landscape, Inc. v. Superior Court (2007) 149 Cal.App.4th 554 and Puerto v. Superior Court (2008) 158 Cal.App.4th 1242 (Puerto), and that ruling improperly interfered with Lee’s ability to establish the necessary elements for class certification, we reverse both orders and remand for further proceedings regarding class certification.

(Slip op., at p. 2.)  In light of Dynamex, defendants must carefully weigh whether to offer any opposition to plaintiffs seeking discovery of the identity and contact information for class members.  A successful opposition to such discovery may lead to a second chance at certification if the trial court denies certification.  In order to control costs and avoid such a result, we may see defendants electing to stipulate to an order to produce such discovery (as the expedient means of satisfying the defendant's obligation to maintain some degree of control over class member contact information).  As an aside, Dynamex had the misfortune of drawing the last panel they would have wanted to review this appeal.  I'd guess that Appellate Justices don't take kindly to trial court decisions that essentially ignore that panel's prior, controlling decisions on the issues confronting the trial court.

The opinion also includes an educational discussion about the "ascertainability" requisite for certification.  In short, the Court of Appeal again reminds us that all class members need not be identified or identifiable at the certification stage.

I'm still trying to catch up after two weeks of depositions out of state.  This has been a busy week for class-related decisions (and the week's not over yet); I'm working through the decisions and other news as fast as I can get to them.

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Media coverage of Martinez, et al. v. Regents of t...

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Martinez, et al. v. Regents of the University of California, et al. (September 15, 2008, Third Appellate District) is starting to generate a fair bit of press/media coverage:

This is just a sample of the dialog and reporting that are developing right now; more commentary will surely follow.

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Reversing trial court, Martinez, et al. v. Regents of the University of California, et al. holds that California's authorization of in-state tuition for "illegal immigrants" violates federal law

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Greatsealcal100The law waits for no one, not even The Complex Litigator (who has just finished a long deposition excursion, interspersed with efforts to encrust his face with powdered sugar as he jams beignets in his pie-hole). In that regard (the law, not the beignets), the Court of Appeal, in Martinez, et al. v. Regents of the University of California, et al. (September 15, 2008, Third Appellate District), essentially held that California Education Code § 68130.5 violates is preempted by United States Code (U.S.C.) section 1623 by allowing certain "illegal immigrants" to pay lower (roughly $17,000 lower) resident tuition rates.

The case was filed as a class action by "United States citizens who pay nonresident tuition for enrollment at California’s public universities/colleges . . . ." (Slip op., at pp. 2-3.)  But this case is interesting because it runs squarely into a socio-political minefield that is probably even more contentious a topic than the recent same-sex marriage decision from the California Supreme Court.  You know a case is going to be worth a read when a footnote is probably enough to incite public protests:

“Defendants prefer the term “undocumented immigrants.” However, defendants do not cite any authoritative definition of the term and do not support their assertion that the terms “undocumented mmigrant” and “illegal alien” are interchangeable. We consider the term “illegal alien” less ambiguous. Thus, under federal law, an “alien” is “any person not a citizen or national of the United States.” (8 U.S.C. § 1101(a)(3).) A “national of the United States” means a U.S. citizen or a noncitizen who owes permanent allegiance to the United States. (8 U.S.C. § 1101(a)(22).) Under federal law, “immigrant” means every alien except those classified by federal law as nonimmigrant aliens. (8 U.S.C. § 1101(a)(15).) “Nonimmigrant aliens” are, in general, temporary visitors to the United States, such as diplomats and students who have no intention of abandoning their residence in a foreign country. (8 U.S.C. § 1101(a)(15)(F), (G); Elkins v. Moreno (1978) 435 U.S. 647, 664-665 [55 L.Ed.2d 614, 627-628] [under pre-1996 law, held the question whether nonimmigrant aliens could become domiciliaries of Maryland for purposes of in-state college tuition was a matter of state law].) The federal statutes at issue in this appeal refer to “alien[s] who [are] not lawfully present in the United States.” (8 U.S.C. §§ 1621(d), 1623.) In place of the cumbersome phrase “alien[s] who [are] not lawfully present,” we shall use the term “illegal aliens.”

(Slip op., at p. 3.)  Having settled on "illegal alien" as the operative nomenclature, the Court moved on to the actual questions at issue.  First, the Court of Appeal addressed a number of procedural issue after the defendants argued that plaintiffs had waived or forfeited certain arguments by not raising them in the trial court:

“We reject defendants’ position that plaintiffs cannot raise
new theories on appeal that they did not allege in their
complaint or present in the trial court. When a demurrer is
sustained without leave to amend, the plaintiff may advance on
appeal new legal theories as to why the complaint’s allegations
state, or can be amended to state, a cause of action.

(Slip op., at p. 17.)  However, the Court of Appeal concluded that plaintiffs failed to adequate raise an issue in their Opening Brief regarding whether a private right of action exists for violation of title 8 U.S.C. section 1623.  (Slip op., at pp. 17-23.)  The Court of Appeal then spends almost nine pages addressing arguments about the trial court's failure to grant judicial notice to various materials.  In some other post I will comment on what I believe to be the pandemic misuse of requests for judicial notice, but with respect to this opinion, one has the sense that this Court is painfully aware of the potential for much higher levels of scrutiny of this opinion.  They seem to be dotting i's and crossing t's that would normally be relegated to footnote commentary, if that.

Finally turning to the merits, the Court of Appeal quickly dismissed an argument by plaintiffs that they could "amend the complaint to allege a viable claim that section 68130.5 constitutes discrimination in violation of section 68062."  (Slip op., at p. 33.)  The Court noted that any conflict between section 68062 and 68130.5 would not be resolved in plaintiffs' favor, given that section 68130.5 was enacted after 68062, triggering application of the doctrine of implied repeal.

The Court then turned to the question of federal preemption.  First, the Court identified De Canas v. Bica (1976) 424 U.S. 351 [47 L.Ed.2d 43] as authority identifying three tests to be used in determining whether a state statute related to immigration is preempted.  (Slip op., at p. 35.)  "First, the court must determine whether the state statute is a 'regulation of immigration' (i.e., a determination of who should or should not be admitted into the country and the conditions under which a legal entrant may remain)."  (Slip op., at p. 35.)  "Second, even if the state statute does not regulate immigration, it is preempted if Congress manifested a clear purpose to effect a complete ouster of state power, including state power to promulgate laws not in conflict with federal laws, with respect to the subject matter which the statute attempts to regulate."  (Slip op., at pp. 35-36.)  "Third, a state law is preempted if it 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'"  (Slip op., at p. 36.)  Applying this test, the Court concluded that plaintiffs stated a cause of action for federal preemption.

In its analysis, the Court determined that in-state tuition is, in fact, a benefit to the recipients of that lower tuition rate:

“Defendants argue the term “benefit” in title 8 U.S.C.
section 1623 is limited, because the federal statute refers to
“amount,” which means monetary payments, and in-state tuition
does not involve the payment of any money to students. However,
defendants cite no authority supporting their illogical
assumption that “amount” must mean monetary payment to the
beneficiary.

(Slip op., at p. 38.)  The Court then spends nearly 20 pages of its opinion considering whether section 68130.5 constitutes a de facto residency surrogate.  (Slip op., at pp. 42-61.)  The Court ultimately concludes that section 68130.5 was intended to benefit illegal aliens on the basis of residency in California.

The Court then determined that section 68130.5 was preempted by federal law.  In part, the Court determined that section 68130.5 interferes with an important federal policy: "It is a compelling government interest to remove the incentive for illegal immigration provided by the availability of public benefits."  (Slip op., at p. 65, citing title 8 U.S.C. section 1601.)  Using much of the same analysis, the Court held that "plaintiffs have stated a cause of action that section 68130.5 is preempted by title 8 U.S.C. section 1621," which generally precludes certain public education benefits to illegal aliens.

Several other claims were found insufficient by the Court of Appeal, but because several claims were found to have legal sufficiency, the Court reversed and remanded to the trial court.

I will be curious to see whether this case is reviewed by the California Supreme Court or the United States Supreme Court.

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Certification decision Medrazo v. Honda of North Hollywood discusses commonality, ascertainability requisites and the prohibition on merits-based denials

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Greatsealcal100With all the class certification decisions over the years, one might think that there isn't much left to say on the topic that hasn't been said before.  While there is a kernel of truth to that sentiment, many of the governing principles of class action law aren't put into practice by trial courts in a consistent manner.  Reviewing courts occasionally take such opportunities to emphasize what should be well-settled principles.  In Medrazo v. Honda of North Hollywood, the Court of Appeal (Second Appellate District, Division Four) used just such an opportunity to reinforce the appropriate analyses that apply to the "commonality" and "ascertainability" requisites of class certification.  In addition, the Court of Appeal emphasized the prohibtion on merits-based denials by trial courts.

In Medrazo, the Plaintiff alleged that Honda of North Hollywood violated Vehicle Code sections 11712.5 and 24014 by failing to attach a suggested retail price and costs label to motorcycles.  The trial court denied a motion for class certification and an appeal followed.  Starting with the standard for evaluating motions for certification, the Court said:

““As the focus in a certification dispute is on what type of questions -- common or individual -- are likely to arise in the action, rather than on the merits of the case [citations], in determining whether there is substantial evidence to support a trial court’s certification order, we consider whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment.” (Sav-On Drug, supra, 34 Cal.4th at p. 327.)

(Slip op., at pp. 7-8.)  After articulating the standard, the Court held that the trial court erred when it considered the merits of an affirmative defense as a basis for denying certification.

Next, Medrazo addressed the trial court's determination that common issues of fact or law did not predominate.  Explaining predominance, Medrazo reminded courts and litigants that predominance is not requirement that demands an absence of individualized issues:

““Predominance is a comparative concept, and ‘the necessity for class members to individually establish eligibility and damages does not mean individual fact questions predominate.’ [Citations.] Individual issues do not render class certification inappropriate so long as such issues may effectively be managed. [Citations.] [] Nor is it a bar to certification that individual class members may ultimately need to itemize their damages.” (Sav-On Drug, supra, 34 Cal.4th at p. 334.)

It is true that in this case, each Honda purchaser will be required to establish that there was no hanger tag attached to the motorcycle he or she purchased and/or that the dealer-added costs were not disclosed on the hanger tag [footnote omitted], and all purchasers will be required to establish the suggested retail price of their motorcycles and the amount of dealer-added costs included in their purchases (if it is determined that the class is entitled to a monetary recovery measured by those items). But those individual issues must be compared to the issues that are subject to classwide (or sub-classwide) treatment. Those issues include: (1) whether HNH violated section 11712.5 and section 24014 by selling motorcycles without hanger tags; (2) whether a purchaser who buys a motorcycle sold in violation of section 11712.5 and section 24014 is entitled to restitution, disgorgement, and/or damages, and if so, what is the proper measure of restitution, disgorgement, and/or damages; (3) whether the alleged injury to the purchaser is mitigated by the disclosure of dealer-added costs in a sales agreement; and (4) whether HNH is excused from the requirements of section 11712.5 and section 24014 if the manufacturer does not supply a hanger tag that complies with section 24014.

There is nothing in the record to suggest that the individual issues cannot be effectively managed. Indeed, the record suggests that the resolution of the individual issues will involve mostly undisputed evidence -- presumably, the class members will attest that there were no hanger tags on the motorcycles they purchased, and HNH has admitted it did not attach hanger tags on any Suzuki or Yamaha motorcycles, did not attach them to some of the Honda motorcycles, and has no evidence to show there were hanger tags on any specific motorcycles. That HNH may be hampered in its ability to challenge the class members’ evidence due to its failure to keep records of its casual approach to affixing hanger tags is not a valid reason to deny class certification on the ground that individual issues predominate. In short, the substance and scope of the individual issues pale in comparison to the substance and scope of the common issues.

(Slip op., at pp. 12-13.)  Significantly for plaintiffs, this analysis provides a very concrete roadmap for presenting certification motion for claims based on statutory violations.

Finally, Medrazo explains yet again the fact that ascertainability does not require the Plaintiff to identify the class members at the time certification is determined:

““A class is ascertainable if it identifies a group of unnamed plaintiffs by describing a set of common characteristics sufficient to allow a member of that group to identify himself or herself as having a right to recover based on the description.” (Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 828.) While often it is said that “[c]lass members are ‘ascertainable’ where they may be readily identified without unreasonable expense or time by reference to official records” (Rose v. City of Hayward (1981) 126 Cal.App.3d 926, 932; accord, Aguiar v. Cintas Corp. No. 2, supra, 144 Cal.App.4th at p. 135), that statement must be considered in light of the purpose of the ascertainability requirement.

“Ascertainability is required in order to give notice to putative class members as to whom the judgment in the action will be res judicata.” (Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, 914; accord, Aguiar v. Cintas Corp. No. 2, supra, 144 Cal.App.4th at p. 135.) The representative plaintiff need not identify the individual members of the class at the class certification stage in order for the class members to be bound by the judgment. (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 706.) As long as the potential class members may be identified without unreasonable expense or time and given notice of the litigation, and the proposed class definition offers an objective means of identifying those persons who will be bound by the results of the litigation, the ascertainability requirement is met.

(Slip op., at pp. 13-14.)  This, too, is an important point.  It has been my observation that the ascertainability requirement is often twisted beyond recognition, until a trial court concludes that no class definition is workable.  As Bartold notes, what is important at the outset is that the definition be sufficiently specific that a class member viewing the definition knows whether he or she falls within the class definition.  Nobody else needs to know the answer to that question at the point of certification.  Thanks to Medrazo, the context added to the Rose decision may help resolve disingenuos challenges to ascertainability.

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DLSE will immediately enforce Brinker decision, despite risk

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Greatsealcal100Multiple sources are now reporting that the DLSE has already updated its materials to require hearing officers to follow Brinker Restaurant Corporation, et al. v. Hohnbaum, et al (July 22, 2008).  Reporting sources include California Labor & Employment Law Blog, What's New In Employment Law, and Wage Law.  Adding to the general coverage, Storm's California Employment Law blog has a brief but insightful obsevation about the fact that the DLSE's rush to implement pro-employer policies may ultimately harm them. 

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Even more on Brinker Restaurant Corporation, et al. v. Hohnbaum, et al.

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Greatsealcal100One measure of a decision's significance is the amount of commentary it generates. By that standard, Brinker Restaurant Corporation, et al. v. Hohnbaum, et al (July 22, 2008) is moving rapidly towards the rarefied air set aside for events like the passage of Proposition 64.  The Complex Litigator has already run several posts on this decision, noting its issuance and summarizing coverage here and here.  To help readers stay on top of the coverage and the dialog, I'm adding to the coverage collection:

I will continue to follow the commentary about Brinker, collecting new articles in further posts as appropriate.  Stay tuned.

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More on Brinker Restaurant Corporation, et al. v. Hohnbaum, et al.

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Greatsealcal100Brinker Restaurant Corporation, et al. v. Hohnbaum, et al. (July 22, 2008) dropped a bit of a bombshell in the busy field of wage & hour class actions, at least judging by the early and numerous reactions.  The Complex Litigator noted the issuance of the opinion shortly after it was posted to the California Courts website.  Other blogs and media outlets followed with commentary and analysis, some of it extensive.  Defense-oriented firms proclaimed it a much-needed victory, while plaintiff-side commentators lamented the irrationality of the decision and the need for speedy review by the California Supreme Court.  To keep up with the dialog, a round-up of coverage, in no particular order, is in order:

  • Wage Law has two posts on the decision.  The first post hits the highlights of the decision.  The second post comments on the Governor's statement in support of the decision, noting that the fact of the Governor's comment, in and of itself, demonstrates that Supreme Court review is needed to "settle an important question of law."
  • Storm's California Employment Law blog offers its own collection of comments from the blawgosphere and internet.
  • California Workforce Resource Blog also has two posts on the Brinker.  The first post is an extensive discussion of the decision, offered from the vantage point of a firm that represents employers.  The second post provides a collection of comments about the decision.
  • What's New In Employment Law offers a decidedly partisan cheer for the Brinker decision, but notes that it is premature to celebrate.
  • The UCL Practitioner, one of the many counsel in Brinker, judiciously limits her comments to a refutation of quotes attributed to her about the decision in the Recorder.  Importantly, Ms. Kralowec takes exception with the attributed statement that the decision "creates an appellate split that likely will ensure Supreme Court review."  Ms. Kralowec notes that she would never be so presumptuous as to declare what the Supreme Court will, in the exercise of its discretion, decide to do about Brinker.
  • California Labor And Employment Law Blog also offers two posts on Brinker.  The first post describes the "favorable" outcome in Brinker.  The second mentions the Governor's pro-Brinker statement.
  • In its customarily business-like fashion, Class Action Defense Blog just explains Brinker in a detailed post.
  • The Recorder article to which UCL Practitioner reacted can be found at Law.com.
  • Market Watch declares that the Brinker decision "reverberates" through workplaces.
  • The Sacramento Bee describes the decision as one backing "flexible" rules on meal breaks.
  • And, finally, Brinker thinks that the case will just proceed back to the trial court with no further interruptions.  Uh huh.

You can now mark your calendars.  The Petition for Review should be on file anywhere between August 22nd and the end of August.

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O'Brien v. Camisasca Automotive Mfg., Inc. put on hold

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The UCL Practitioner was on a brief hiatus, but she returns none too soon with an interesting post, containing information that slipped by me.  The Supreme Court has just issued a "grant and hold" order in O'Brien v. Camisasca Automotive Mfg., no. S163207.  In O'Brien, the Court of Appeal held that the plaintiff lacked standing under the UCL and CLRA because he failed to allege reliance.  The opinion overlooks the distinction been causation and reliance, resulting in a very strict reading of the "injury in fact" element added to the UCL via Proposition 64.  It appears that the Supreme Court will try to issue something comprehensive as to the changes incorporated into the UCL by Proposition 64.

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Court of Appeal affirms order striking class allegations after defendant moved to bar certification

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Greatsealcal100I clearly recall reading a Daily Journal news article about Judge Sundvold's decision to "strike" class allegations on the defendant's motion, before plaintiffs in the case had filed their motion for class certification.  In fact, in preparing this post, I found a copy of that March 12, 2007 article in a clippings file.  (Don J. DeBenedictis, Precertification, Stores' Lawyers Crush Class, Daily Journal (March 12, 2007).)  The article mentioned that the defendant had been contacting its store managers and obtained "several hundred" declarations from them.  However, the article noted that the plaintiffs were not permitted by the court to contact those managers.  I found the reported discussion very peculiar; it seemed that something had to be missing.  I found it implausible that the Court would "not allow plaintiff to contact those current and former store employees or to see more than 5 percent of the declarations. . . ."  It turns out that the reports were fairly accurate.

In re BCBG OVERTIME CASES (June 13, 2008) ___ Cal.Rptr.3d ___ is the published opinion of the Court of Appeal (Fourth Appellate District, Division Three) that followed from the Judge Sundvold's Order finding that the matter was unsuitable for class treatment.  The Court of Appeal affirmed the Trial Court's decision.

First, some nomenclature in the underlying case was discussed by the Court of Appeal.  In the Trial Court, the defendant apparently referred to its motion as a "Motion to Strike Class Allegations."  The Court of Appeal discussed the misleading nature of this document title:

“BCBG’s “motion to strike” was not a motion to strike as used during the pleading stage of a lawsuit in both California and federal procedure. (Code Civ. Proc., § 435; Federal Rules Civ. Proc., rule 12(f).) It was a motion seeking to have the class allegations stricken from the complaint by asking the trial court to hold an evidentiary hearing and determine whether Plaintiffs’ proposed class should be certified.  “A motion to strike class allegations is governed by Rule 23, not Rule 12(f). Rule 23 requires that the Court decide the certification issue at the earliest time possible.” (Bennett v. Nucor Corp. (E.D. Ark., July 6, 2005, No. 3:04CV002915WW) [2005 WL 1773948] slip opn., p. 2, fn. 1.)

(Slip op., at p. 6.)

Next, the Court of Appeal examined the procedure utilized by the defendant.  Although defense-initiated motions to deny certification are uncommon, the Court of Appeal concluded that they are permitted:

“Under both California and federal law, either party may initiate the class certification process. In Carabini v. Superior Court (1994) 26 Cal.App.4th 239, a state appellate panel explained the California class certification process: “‘As soon as practical after commencement of a lawsuit that purports to be a class action, a hearing must be held on whether it will be allowed to proceed as such. The hearing may be held either on the motion of the representative to certify the case as a class action; or, on motion by the party opposing the class to dismiss the class action allegations; or, by the court on its own motion . . . .’ [Citations.]” (Carabini v. Superior Court, supra, 26 Cal.App.4th at p. 242.)

(Slip op., at p. 6.)  In upholding the procedure permitted by the Trial Court, the Court of Appeal also cited California Rules of Court, rule 3.767 (formerly Rule 1857, before the excellent idea of rules with decimal points).

In reading the opinion, the Court of Appeal suggests, but does not say, that the plaintiffs may have made a tactical error in the issues raised on appeal.  In particular, the plaintiffs did not appeal the trial court's rulings that prohibited the plaintiffs from discovering the contact information of store managers.  In the text of the opinion, the Court said:

“BCBG’s motion to strike the class allegations was not made before the Plaintiffs had a chance to conduct discovery on class certification issues. Such discovery had been going on for some time, although some of the plaintiffs’ efforts had apparently been thwarted by adverse rulings from the court. The propriety of these rulings is not before us.

(Slip op., at p. 9.)  Then, in a footnote immediately following the text, the Court said:

“We do not know why Plaintiffs have been unable to obtain the contact information for BCBG’s former and current managers. “Contact information regarding the identity of potential class members is generally discoverable, so that the lead plaintiff may learn the names of other persons who might assist in prosecuting the case. (E.g., Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 820-821, 836, Budget Finance Plan v. Superior Court (1973) 34 Cal.App.3d 794, 799-800; see Code Civ. Proc., § 2017.010.)” (Pioneer Electronics (USA) Inc. v. Superior Court (2007) 40 Cal.4th 360, 373.) BCBG’s opposition to the request for a precertification notice seems to be based on its assertion that there is nothing improper about its precertification contact with the putative class members.

(Slip op., at p. 9, fn. 4.)  Reading these passages, it sounds very much like the Court of Appeal would have welcomed the opportunity to reverse for further discovery that would include depositions of any declarant offered by defendant.  Looking at the Court of Appeal docket, it doesn't appear that any attempt was made to address the Pioneer decision during the appeal, although, given that discovery rulings were apparently not raised in the appeal as discretionarily included issues, any attempt to do so may have been rejected.

While the procedure used here is uncommon, it isn't novel.  The real lesson from this case is to be sure you make your record in the trial court in the unfortunate event that you have to appeal a trial court order - and then be sure you raise the issues on appeal.  I'm not sure that the Court of Appeal would, in good conscience, tolerate a trial court ruling that allowed a defendant to put forth declarations of its own managers to defeat certification while refusing to submit those declarants to cross-examination at deposition.

Class Action Defense Blog has its customary thorough coverage of the decision, as does California Labor and Employment Law Blog.

For flash-enabled visitors, here is the opinion in a form viewable in your browser on this page:

 

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