Court of Appeal reverses order decertifying a class in Harper v. 24 Hour Fitness, Inc.

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Greatsealcal100This is proving to be a busy day in the world of class actions.  And once again, Division Seven in the Second Appellate District is in the mix.  Division Seven seems to be one of those lucky divisions that attracts interesting class action issue appeals (I don't know if they consider themselves "lucky" to be the beneficiaries of these questions).  Just the last year was a busy one for them.  Division Seven recently took some of the sting out of Alvarez v. May Dept. Stores Co., 143 Cal.App.4th 1223 (2006) with their decision in Johnson v. Glaxosmithkline, Inc., 166 Cal.App.4th 1497 (September 19, 2008), as modified (October 14, 2008).  In Lee v. Dynamex (2008) 166 Cal.App.4th 1325 (discussed here), Division Seven reversed an Order denying class certification after the trial court refused to allow discovery of class member identity and contact information.  And in Puerto v. Superior Court (2008) 158 Cal.App.4th 1242, Division Seven added to the body of post-Pioneer decisions confirming the right to discovery putative class member (witness) identity.  And that's just the published decisions.

Division Seven also decided Belaire-West Landscape, Inc. v. Superior Court (2007) 149 Cal.App.4th 554, the first post-Pioneer decision confirming the right to discovery putative class member identity.  Other notable, fairly recent opinions include: Aron v. U-Haul Co. of California (2006) 143 Cal.App.4th 796; Aguiar v. Cintas Corp. No. 2 (2006) 144 Cal.App.4th 121; Singh v. Superior Court (2006) 140 Cal.App.4th 387; Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal.App.4th 365; Consumer Cause, Inc. v. Mrs. Gooch's Natural Food Markets, Inc. (2005) 127 Cal.App.4th 387; and, Newell v. State Farm General Ins. Co. (2004) 118 Cal. App. 4th 1094.  There are many substantial class action issues implicated in that list, including fee awards, insurance claims arising out of the Northridge earthquake, PAGA interpretation, and wage & hour law issues.  And the list includes decisions both favorable and unfavorable to positions advocated by the respective class action proponents.  But, uniformly, this Division endeavors to correctly state and apply highly nuanced issues arising in class actions.

Division Seven's latest opinion in the class action arena, Harper v. 24 Hour Fitness, Inc. (October 22, 2008), in a 2-1 opinion, reverses a trial court order decertifying a class action.  The bulk of the opinion examines the trial court's reliance on the pre-Proposition 64 formulation of the UCL.  I will leave discussion of that aspect of the opinion to the UCL Practitioner.  However, the opinion also offers some confirming language as to how the "ascertainability" requisite is measured.  The Court explains that "ascertainability" exists when the class members can tell if they are included, irrespective of whether anyone else knows the constituency of the class:

“With respect to the difficulty in confirming the identity of all class members prior to a determination on the merits, Division One of this court recently affirmed certification of a class consisting of FedEx drivers over FedEx’s objection “the members of this class shifted ‘in and out, sometimes on a day-to-day basis.’” (Estrada v. FedEx Ground Package System, Inc. (2007) 154 Cal.App.4th 1, 14.) The court explained, “The 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 as having a right to recover based on the description. [Citation.] [¶] . . . If FedEx’s claim is that every member of the class had to be identified from the outset, FedEx is simply wrong.” (Ibid.; accord, Lee v. Dynamex, Inc., supra, 166 Cal.App.4th at p. 1335; see also Sav-On Drug Stores, supra, 34 Cal.4th at p. 333 [“‘a class action is not inappropriate simply because each member of the class may at some point be required to make an individual showing as to his or her eligibility for recovery’”]; Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193, 1207 [class of employees ascertainable in spite of absence of specific rest period records; “speculation that goes to the merits of ultimate recovery [is] an inappropriate focus for the ascertainability inquiry”]; Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715, 744 [fact that class may ultimately turn out to be overinclusive not determinative; most class actions contemplate eventual individual proof of damages, including possibility some class members will have none].)

(Slip op., at pp. 11-12.)  This is an important distinction.  Too many trial courts succumb to arguments that the class identity can't be explicitly stated at the time of certification.

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Brinker Petition for Review

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For those visitors curious about all things Brinker, or the Petition process generally, here is that successful Petition for Review:

NOTE: If Flash is not enabled in your browser, you won't see the embedded acrobat.com application that displays the opinion. For those site visitors, you can directly access the Petition for Review here.

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Blog mentions following Brinker coverage

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The Brinker developments are receiving attention outside of California, and this blog has been a fortunate beneficiary of that news coverage:

  • The Wall Street Journal directed readers to this blog for more information about developments in Brinker.
  • In the weekly review of class action blog posts, ClassActionBlawg noted that this blog and Wage Law broke the news on Brinker.  By the way, I have long listed ClassActionBlawg as a site worth visiting and suggested that readers freqently persue that site for interesting news from the world of class actions.  For the casual reader that might not have browsed the blog links here, and for new readers, I direct your attention to the Class Action Blogosphere Weekly Review on ClassActionBlawg.com.  Because the site draws from around the country, it is almost a sure bet that you will find something of interest in the weekly roundups.  And my compliments to ClassActionBlawg for the makeover; the site looks good. 
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More on Brinker under review

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Wage Law also notes that the Supreme Court has GRANTED the Petition for Review in Brinker Restaurant Corporation, et al. v. Superior Court (Hohnbaum).  But Wage Law then asks a very intriguing question:  Will the DLSE update its enforcement manual that was revised immediately to reflect the decision in Brinker?  Wage Law guesses that the current administration will do nothing unless forced to do so by a Court decision.  My initial post on that enforcement decision can be found here.  Perhaps the California Labor Federal Federation will have something to say on a further update to the manual, after their strongly-worded criticism of the initial update.

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BREAKING NEWS: Petition for Review granted in Brinker Restaurant v. Superior Court (Hohmbaum)

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Greatsealcal100The Supreme Court has just GRANTED the Petition for Review in Brinker Restaurant Corporation, et al. v. Superior Court (Hohnbaum).  View the Supreme Court docket here.  Aside from Justice Werdegar, who was absent and did not participate, all other justices voted in favor of the Petition.  As I obliquely suggested in this post, so much for Brinker Restaurant Corporation's prediction that this matter would quietly return to the Superior Court after turning wage & hour class action precedent on its head.

UPDATE:  This post has been marked as "featured" so as to appear first on the home page of this blog while interest in this news remains high.

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CAOC Board of Governors

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I am pleased to announce that I will be a member of the Board of Governors of Consumer Attorneys of California ("CAOC") for 2009.  I am looking forward to the opportunity to meet and work with attorneys from across California.  CAOC provides a mechanism for aggregating the collective voices of plaintiffs and their counsel.  That aggregation provides an opportunity to be heard by the the public and its elected representatives in a way that would be all but impossible otherwise.

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Procedural news in Johnson v. Glaxosmithkline, Inc.

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Greatsealcal100This blog briefly reported on a new opinion in Johnson v. Glaxosmithkline, Inc. (September 19, 2008).  You can read that post here.  To recap, the Court of Appeal (Second Appellate District, Division Seven) examined the validity of the decision in Alvarez v. May Dept. Stores Co. (2006) 143 Cal.App.4th 1223 and whether Alvarez was effectively nullified by the United States Supreme Court decision in Taylor v. Sturgell, supra, __ U.S. __ [128 S.Ct. 2161].

A few things have occured since the September 19, 2008 opinion.  First, a Petition for Rehearing was filed on October 7, 2008.  It was denied the day it was filed.  You can view the docket here.  On October 14, 2008, the Court of Appeal modified its opinion, without changing the judgment.  The modification added a footnote and added some clarifying language about record review.

The logical guess is that the Petition for Rehearing is a prelude to a Petition for Review.

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Governor Schwarzenegger issues veto of e-discovery reform bill, AB 926

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Last week, California Governor Arnold Schwarzenegger issued a veto of the much anticipated e-discovery reform bill, AB 926, despite the passage of the bill without a single "no" vote (I didn't check, but maybe somebody voted "present").  After the Governor issued similar vetoes for over 300 bills, it has been speculated that the vetoes are intended to encourage the legislature to pass a budget that deals with the deficit problem in California (as an aside, if we tied every legilator's ability to run for any state office or receive any pay or benefits to the passage of a [projected] balanced State budget, what are the odds that we'd have a balanced budget every year?).  (Cheryl Miller, Schwarzenegger's Veto: A Raw Deal for E-Discovery? (October 3, 2008) www.law.com.)  The new rules tracked the federal rules and would spell out how and when records from fax machines, computer databases, e-mails and cell phones should be exchanged in litigation. They also set up procedures for settling disputes over data that one party contends are trade secrets or privileged attorney work-product.  Legislators promise to reintroduce the bill when the Governor isn't as cranky.

[Via ElectronicDiscovery]

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e-DISCOVERY: New e-discovery blog offers resources for e-discovery professionals

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I've just learned about a relatively new e-discovery blog, called ... wait for it ... ElectronicDiscovery.  David Jordan, the site creator, has this to say about this online resource:

“Welcome to Electronic Discovery. This e-discovery website is meant to provide free e-discovery resources to people seeking information about ESI (electronically stored information), computer-based evidence, e-discovery technology news, changes in e-discovery law, and more.Electronic Discovery is a little site I put together to keep track of my own ESI knowledge and possibly help visitors (mostly attorneys or corporate counsel) who want to learn E-Discovery 101.

ElectronicDiscovery has already helped me by pointing out a bit of e-discovery news that somehow slipped my attention last week.  I'll add this one to the e-discovery blogroll for ease of reference.

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Interesting brief excerpt persuasively argues that "independent contractors" are equally entitled to indemnity under Labor Code section 2802

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I've been off my game with respect to blogging, but an interesting item that just crossed my electronic desk prodded me to start back in on the pile of items and partially completed posts that I need to finish. A regular reader supplied me with a trial court brief that advances a fascinating proposition:  "independent contractors" are entitled to indemnification (read: reimbursement of necessary expenses) under Labor Code section 2802 because the definition of "employee" that applies to Labor Code section 2802 encompasses what would be "independent contractors."  If accepted by courts, that contention would have significant consequences for the many businesses that attempt to avoid all costs of employment by designing systems that classify groups of workers as "independent contractors" or "franchisees."  Because the analysis is so thorough and so thought-provoking, I include it here (divided so that only a part appears on the front page due to length), with minimal editing:

[BEGINNING OF EXCERPT]

“‘California has a strong public policy that favors the indemnification . . . of employees by their employers for claims and liabilities resulting from the employees’ acts within the course and scope of their employment.’ [Citation.] Labor Code section 2802 codifies this policy . . . .” Edwards v. Arthur Andersen LLP, 44 Cal.4th 937, 81 Cal.Rptr.3d 282, 293, 189 P.3d 285, 295 (2008). Section 2802(a) requires that “[a]n employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties . . . . (Emphasis added.) The “obvious purpose” of section 2802 is “to protect employees from suffering expenses in direct consequence of doing their jobs.” Grissom v. Vons Companies, Inc., 1 Cal.App.4th 52, 59-60, 1 Cal.Rptr.2d 808 (1990). Section 2802 “shows a legislative intent that duty-related losses ultimately fall on the business enterprise, not on the individual employee.” Janken v. GM Hughes Electronics, 46 Cal.App.4th 55, 74, fn. 24, 53 Cal.Rptr.2d 741 (1996). Section 2802 is unwaivable. Cal. Lab. Code § 2804 (“Any contract or agreement, express or implied, made by any employee to waive the benefits of this article or any part thereof, is null and void . . . .”) And “[a]rbitration awards have been reviewed to determine whether the arbitrators complied with statutes conferring unwaivable rights. [Citations.]” Cable Connection, supra, 44 Cal.4th at 1362.

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