Court of Appeal reverses denial of certification in Ghazaryan v. Diva Limousine, Ltd.

Greatsealcal100Continuing a theme, The Complex Litigator has noted on several occasions, including this recent post, that luck of the draw seems to have resulted in a substantial number of class action-related decision issuing from the Second Appellate District, Division Seven. You can add another decision published today to that already substantial list of significant decisions.

In Ghazaryan v. Diva Limousine, Ltd. (January 12, 2009), the Court of Appeal reversed a trial court’s order denying plaintiff’s motion for class certification and directed the trial court to enter an order certifying the proposed subclasses:

Sarkis Ghazaryan appeals from the trial court’s order denying his motion to certify a class of limousine drivers allegedly undercompensated by Diva Limousine, Ltd. (Diva) in violation of California wage and hour laws. Ghazaryan’s lawsuit contests Diva’s policy of paying its drivers an hourly rate for assigned trips but failing to pay for on-call time between assignments (referred to by Diva employees as “gap time”). Because the trial court incorrectly focused on the potential difficulty of assessing the validity of Diva’s compensation policy in light of variations in how drivers spend their gap time, we reverse the court’s denial of the motion and remand with directions to certify Ghazaryan’s two proposed subclasses.

(Slip op., at p. 2.) The opinion is something of a guidebook on several major areas of contention in certification motions, focusing on the way that a trial court should evaluate evidence and decide certification motions.

First, the opinion reinforces and explains the operation of the rule that precludes evaluation of the merits to determine whether certification is appropriate: “Rather than denying certification because it cannot reach the merits, as the court did here, the trial court must evaluate whether the theory of recovery advanced by the plaintiff is likely to prove amenable to class treatment . . . .” (Slip op., at 6.)

Second, the opinion demonstrates application of the rule that a class definition that describes objective characteristics or experiences is sufficient at the certification stage: “As this court explained in Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, a class is properly defined in terms of ‘objective characteristics and common transactional facts,’ not by identifying the ultimate facts that will establish liability.” (Slip op., at 6.) Misunderstandings frequently arise when trial courts attempt to apply the rule that “merits-based” definitions should not be included in a class definition.

Third, the opinion explains the limitations on the “overbreadth” challenge to proposed class definitions, demonstrating application of the “overbreadth” limitation incorporated in the “ascertainability” requisite by comparing application of that requisite in Akkerman v. Mecta Corp., Inc. (2007) 152 Cal.App.4th 1094 with the application in Aguiar v. Cintas Corp. No. 2 (2006) 144 Cal.App.4th 121 and Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715. (Slip op., at 8-9.) The fact that the Court identified outcomes at each end of the “ascertainability” spectrum adds at least some measure of clarity to what is observably a challenging issue.

The opinion also restates the fundamental purpose of the “ascertainability” requisite. The opinion notes that the ascertainability requirement is to ensure notice to potential class members who experienced the injury alleged in the action: “Because the purpose of the ascertainability requirement is to ensure notice to potential class members who at some time during their employment by Diva accumulated gap time, the proposed subclass consisting of all Diva drivers would simply and effectively accomplish this purpose.” (Slip op., at 9.)

Fourth, the opinion provides guidance on the community of interest requisite, and, specifically, the difficult standard for determining the predominance of common issues of law or fact. Because this standard is often fact-driven, the opinion is helpful in that it offers an instructive framework explaining by example the difference between the predominance of individualized issues and the mere existence of individual issues: “The distinction is illustrated by Silva v. Block (1996) 49 Cal.App.4th 345 (Silva) and Prince v. CLS Transportation, Inc., supra, 118 Cal.App.4th 1320.” (Slip op., at 9-13.) It is routinely the case that class certification is denied because some individual issues are identified by the trial court, despite the fact that any reasonable assessment of the facts and law supports a finding that common issues of law or fact predominate.

The opinion also touches on a still-evolving area of employment law: the “on-call” wage claim. The published caselaw on the compensability of “on-call” time under California law is almost nonexistent. Although the opinion does not establish a standard, it offers three important observations. First, the opinion recognizes that the Department of Labor Standards Enforcement (“DLSE”) has issued advisory letters on the subject. While the opinion is clear that the DLSE letters are not controlling authority, the opinion correctly notes that they should be given significant weight. Second, the opinion notes that “control” is the common element to all “on-call” factors in the DLSE’s analyses. And third, the opinion notes that the DLSE chose not to defer entirely to the corresponding federal standard under the Fair Labor Standards Act of 1938 or the important Ninth Circuit decision about “on-call” time, Berry v. County of Sonoma (9th Cir. 1994) 30 F.3d 1174.

The decision is a worthwhile read if you are preparing a motion for class certification or just had one denied.

Finally, in the interest of full disclosure (especially important if you consider my views on the opinion to be inaccurate in any way), I authored the Appellant’s briefs in this appeal while employed at another firm.

For an amusing, shorter comment with a slightly different perspective on Ghazaryan v. Diva Limousine, take a look at Storm's California Employment Law.