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

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: