a California-centric collection of comments and resources about complex litigation and class action practice
Back so soon?!?! Yes we are, with Episode 21 of the Class Re-Action podcast. We discuss Noel v. Thrifty Payless (July 29, 2019), an objective show topic that is easy to ascertain. See what I did there?
I’m testing out opening sentences. The first candidate is: “The objective import of Noel v. Thrifty Payless, Inc. (July 29, 2019) is easy to ascertain.” You can see how that’s an option. It includes “objective,” as in the class definition must state the class with objective characteristics. And it drops in “ascertain,” as in this is a decision about the ascertainability requisite for certification. I like it. No second option for you.
Noel is a putative class action brought on behalf of retail purchasers of an inflatable outdoor pool sold in packaging that was allegedly misleading about the pool’s characteristics. The trial court denied the representative plaintiff’s motion for class certification on the basis that the plaintiff did not supply evidence showing how class members might be individually identified when the time came to do so. The Court of Appeal upheld the trial court, reasoning that such evidence was necessary to ensure that proper notice would be given to the class. The Supreme Court said, “Nah, brah.”
The Supreme Court reviewed the history of the “ascertainability” requisite. The first view of the requisite focuses on the nature of the definition of the class:
One view of ascertainability concentrates on the proposed class definition itself. This viewwas applied in Bartold v. Glendale Federal Bank (2000) 81Cal.App.4th 816 (Bartold), superseded by statute on another point as stated in Markowitz v. Fidelity Nat. Title Co. (2006) 142Cal.App.4th 508, 524. The Bartold court explained that “[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.” (81 Cal.App.4th at p.828.) This basic view of ascertainability has been reiterated by numerous other Courts of Appeal, including the courts in Estrada, supra, 154 Cal.App.4th at page 14 and Aguirre, supra, 234 Cal.App.4th at pages 1299 to 1300. (See also Aguirre, at p. 1300 [listing cases].) A similar formulation regards a class as ascertainable when it is defined “in terms of objective characteristics and common transactional facts” that make “the ultimate identification of class members possible when that identification becomes necessary.” (Hicks, supra, 89Cal.App.4that p.915.)
Slip op., at 21. The second formulation of the requisite was summarized as follows:
The second basic view of ascertainability entails a more exacting inquiry. One such articulationregards the ascertainabilityrequirementas calling for an examination into“(1) the class definition, (2) the size of the class and (3) the means of identifying class members.” (Miller v. Woods (1983) 148 Cal.App.3d 862, 873 (Miller); see also Noel, supra, 17 Cal.App.5th at p. 1324, Sotelo, supra, 207 Cal.App.4th at p. 648; Reyes v. Board of Supervisors (1987) 196 Cal.App.3d 1263, 1274.) Consistent with this view, it has been 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 (Rose).) On its face, the quoted language from Rose could be understood as specifying a sufficient, as opposed to a necessary, basis for finding an ascertainable class within the Miller framework. But some courts, drawing from Rose’s focus on the mechanics of identifying class members, have gone further and required a class plaintiff to make a specific factual or evidentiary showing in order to show an ascertainable class.
Slip op., at 21-22. The Court then looked at the similar divide in the federal system, focusing extensively on the Seventh Circuit’s analysis of the requisite in Mullins v. Direct Digital, LLC, 795 F.3d 654 (7th Cir. 2015). After that extensive review of competing approaches, the Supreme Court concluded that the process protection provided by an objective and clear class definition was more significant to the ascertainability requirement than the goal of notice to each class member. From that conclusion a clear rule followed:
As a rule, a representative plaintiff in a class action need not introduce evidence establishing how notice of the action will be communicated to individual class members in order to show an ascertainable class.
Slip op., at 38. The Court expressly disapproved of strict reliance upon Rose as stating the requirement for an ascertainability showing. Slip op., at 41, n. 15.
The Court observed that a trial court could consider how notice will be provided to a class as a separate inquiry into, e.g., manageability. Slip op., at 42. It emphasized, however, that notice was not an aspect of the ascertainability showing. The decision of the Court was unanimous.
Christopher Wimmer and Peter Roldan of Emergent Legal and Leslie Brueckner and Karla Gilbride of Public Justice represented the successful Plaintiff and Appellant.
In what might be a significant decision, Noel v. Thrifty Payless, Inc. was argued to the California Supreme Court on May 8, 2019. The issue presented for review is as follows: “Must a plaintiff seeking class certification under Code of Civil Procedure section 382 or the Consumer Legal Remedies Act demonstrate that records exist permitting the identification of class members?” While California appeared to have settled this question decisively many decades ago, the question arose when the First Appellate District (Division Four) opined that such identification was required. A decision may issue any time in the next couple of weeks. This is not likely to be an issue for wage and hour cases — where employer records are basically always available as a source of identification information — but is may be an issue in consumer class actions, where specific class members identification may not be possible.
When it comes to certification, you can fix almost any problem other than commonality (community of interest). Inadequate representative? Get a new one. Problem with inexperienced class counsel? Co-counsel. Numerosity is not really amenable to correction, but most of the time firms just pass on the tiny classes. But commonality, there's where the rubber meets the road. In Hendelman
v. Los Altos Apartments, L.P. (Jul. 22, 2013; pub. ord.
Aug. 20, 2013), the Court of Appeal (Second Appellate District, Division Three) affirmed a trial court order denying plaintiffs' motion for class certificaiton for lack of ascertainability, community of interest, and superiority. The bulk of the Court of Appeal opinion addresses the commonality-related failings.
The Court first held that the warranty of habitability claim was not suitable for resolution through common proof:
[T]he mere “existence of a prohibited (uninhabitable) condition or other noncompliance with applicable code standards does not necessarily constitute a breach of the warranty of habitability.” (Friedman et al., Cal. Practice Guide: Landlord-Tenant (The Rutter Group 2012) § 3:39, p. 3-13, citing Green v. Superior Court, supra, 10 Cal.3d at pp. 637-638.) “Whether the defect or code noncompliance is ‘substantial’ (and thus a cognizable breach) or ‘de minimis’ (no actionable breach) is determined on a case-by-case basis.” (Friedman et al., supra, § 3:40, p. 3-13.) “In considering the materiality of an alleged breach, both the seriousness of the claimed defect and the length of time for which it persists are relevant factors. Minor housing code violations standing alone which do not affect habitability must be considered de minimis and will not entitle the tenant to reduction in rent; and likewise, the violation must be relevant and affect the . . . common areas which [the tenant] uses.” (Hinson v. Delis (1972) 26 Cal.App.3d 62, 70, disapproved on other grounds by Knight v. Hallsthammar (1981) 29 Cal.3d 46, 55, fn. 7.) Stated otherwise, whether a particular defect or violation of a housing code constitutes a breach of the implied warranty of habitability depends on the severity and duration of the defect or violation. Breach is a rebuttable presumption affecting the burden of producing evidence. (Friedman et al., supra, §§ 3:46 to 3:47, pp. 3-14 to 3-15.)
Slip op., at 11. The
trial court concluded that even the code violations impacting all tenants did
so differently and to different degrees, and the Court of Appeal, giving
deference to the trial court, agreed.
One question raised by this decision is whether variation in entitlement
to damage tainted the analysis as to whether liability could be shown through
common proof, especially where strict liability is imposed on the landlord. At times the Court seems to conflate proof of liability with nominal damages.
The Court then found that the claim for increased rent injected the same individualized questions about whether services to each tenant were reduced in any substantial manner that amounted to an implied increase in rent.
As to the retaliation claim, the Court found that no representative could state that claim, either due to statute of limitations problems or a failure to have been a tenant during the relevant time period. And as with the habitability claim, the Court agreed that a nuisance action depended heavily on facts unique to each tenant, defeating commonality.
The Court declined to consider the many proposed adjustments or amendments to claims or the class definition on Appeal, finding that such arguments are, in the first instance, matters for the trial court.
Still playing catch-up. Today's edition of blog from the past concerns the Automobile Club of Southern California, an organization that inspires mixed feelings in me. On the one hand, they do provide what I consider to be excellent insurance services. But I can't help but feel that there is a dark underbelly at AAA of SoCal. Some of that underbelly was challenged but escaped unscathed in Thompson
v. Automobile Club of Southern California (pub. Ord. June 27, 2013), in which the Court of Appeal (Fourth Appellate District, Division Three) affirmed the trial court's denial of class certification in a case alleging claims based on the backdating of the membership renewals when the renewal is late.
The plaintiff specifically challenged the practice of “backdating” late renewals to the member’s original expiration date if the renewal occurs within 95 days. The plaintiff contended that this practice resulted in late-renewing members receiving less than a full year of services. The Auto Club argued that the 95-day period is a “grace period” and that members are generally permitted to continue receiving services, particularly during the first 31 days, and saves members the $20 fee to start a new membership. The plaintiff moved for class certification. The trial court denied the motion, finding that the class members could not be ascertained and that individual questions predominated.
With respect to the factual issues surrounding class certification, we afford the trial court “ ‘great discretion in granting or denying certification.’ ” (In re Tobacco II Cases (2009) 46 Cal.4th 298, 311.) The trial court’s ruling will be reversed only if a “ ‘manifest abuse of discretion’ ” is present. (Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1022.) “ ‘A certification order generally will not be disturbed unless (1) it is unsupported by substantial evidence, (2) it rests on improper criteria, or (3) it rests on erroneous legal assumptions. [Citations.]’ [Citations.]” (Ibid.)
Slip op., at 6. The Court said, “ ‘We may not reverse, however, simply because some of the court’s reasoning was faulty, so long as any of the stated reasons are sufficient to justify the order. [Citation.]’ (Kaldenbach v. Mutual of Omaha Life Ins. Co. (2009) 178 Cal.App.4th 830, 843-844.)” Slip op., at 6-7.
The Court then examined the bases of the trial court’s decision. Looking first at the trial court’s ascertainability finding, the Court concluded that the class definition was significantly overbroad, and thus not ascertainable from the available records:
If putative class members either received benefits during the delinquency period, were not damaged as a result of the renewal policy, or renewed after the Auto Club’s membership policy was disclosed, their ability to recover is called into serious question. If class members received benefits during the delinquency period or they were told about the Auto Club’s renewal practices, they cannot maintain a cause of action under the UCL. If they were not economically damaged, they cannot recover on a breach of contract, under the CLRA, or through an unjust enrichment claim. (See Civ. Code., § 1780, subd. (a); Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388; Lectrodryer v. SeoulBank (2000) 77 Cal.App.4th 723, 726.)
Slip op., at 11. As it so happens, I disagree that the ability to identify the class from available records is the touchstone of ascertainability. Certainly that is one very useful way, but the purpose of a class definition is to allow a potential class member to determine when reading the definition whether they are a member of the class. Consider consumer class actions involving retail transactions. Often, there is no way to know the identity of purchasers of a product; but the purchasers know. The notion that the class can only be ascertained if they are identified in available records is simply an invitation to maintain shoddy records and a strangely narrow view of what it means to have an ascertainable class. This portion of the opinion is horse hockey.
Anyhow, the Court of Appeal then agreed that the same issues impacting the ability to identify the class (under the Court's narrow view of ascertainability) presented individualized issues that predominated over common questions:
The trial court found that individual issues predominate: “(A) Individual issues predominate regarding whether a putative class member is entitled to recover on any of Plaintiff’s causes of action. This is because, as stated above, there were members who suffered no injury because they (i) received services during their delinquency, (ii) had the Auto Club’s renewal policy explicitly disclosed to them, and/or (iii) were economically better off under the Auto Club’s system of renewal than they would have been if they had begun new memberships on the date of payment and paid the $20 new enrollment fee. Determining whether a member falls into any of these categories and would therefore not be entitled to recover from the Auto Club on any of Plaintiff's theories of liability, can only be done on a case-by-case basis.” The court went on to explain that essentially the same reasons applied to each cause of action.
Slip op., at 13-14. The Court concluded by finding that the arguments concerning typicality and superiority were not significant because of the substantial problems with ascertainability and commonality. The decision presents an example of the potential for a serious entanglement of merits questions with certification issues when the Court considered the viability of the plaintiff’s theory.
Pineda v. Williams-Sonoma Stores, Inc., 51 Cal. 4th 524 (2011) added some clarity to the types of personal identification information protected from collection by merchants. As it turns out, section 1747.08 of the Song-Beverly Credit Card Act of 1971 (SBCCA) (Civ. Code, § 1747 et seq.) even precludes collection of zipcodes. But Pineda didn't answer every unresolved question related to SBCCA-based claims. In Archer v. United Rentals, Inc. (May 19, 2011), the Court of Appeal considered several issues surrounding the SBCCA, described as follows:
This appeal presents these significant issues: (1) Have plaintiffs established standing to pursue a UCL claim by demonstrating they "suffered injury in fact and . . . lost money or property as a result of the unfair competition" (Bus. & Prof. Code, § 17204); (2) does the privacy protection of Civil Code section 1747.08 cover the use of a business credit card; (3) does such protection extend to a cardholder who uses a personal credit card regardless of whether such use is "primarily" or "occasionally" for business purposes; and (4) is class certification foreclosed by the unreasonableness of ascertaining class membership?
Slip op., at 2. The Court of Appeal answered "no" to the first two questions, but reversed the trial court on the third when the Court concluded that a personal credit card was protected under the SBCCA, regardless of how often it was used for business purposes. Having ruled as it did on the third issue, the Court then remanded for reconsideration of the ascertainability question, since the trial court's orginal ruling turned on the need to evaluate the frequency with which a credit card was used for business purposes.
The Court relied upon Kwikset Corp. v. Superior Court, 51 Cal. 4th 310 (2011) when it concluded that violation of SBCCA, alone, was insufficient to establish the requisite injury under the UCL.
Today, June 13, 2011, the Court issued a modification to its Order. The modification adds a paragraph on the issue of standing to appeal:
Defendants contend plaintiffs lack standing to appeal the order denying class certification because they are not aggrieved by the trial court’s rulings in that they each were awarded $250 and “they should have moved for the substitution of new class representatives who do, in fact, have standing to appeal.” We disagree because plaintiffs were denied certification of their class claims. Issues regarding proper class representatives are for the trial court to address on remand. (Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th 1305, 1351, fn. 35.)
June 13, 2011 slip op., at 1.
United States District Court Judge Susan Illston (Northern District of California) certified in part a class action alleging the failure to reimburse work-related mileage expenses. Wilson v. Kiewit Pacific Co. (N.D. Cal. December 6, 2010). As an initial matter, the Court refused to certify a class of "all" employees, noting that it was overbroad:
As an initial matter, plaintiff cannot seek to certify a class of “all current and former” California employees of defendant from July 6, 2006 to present. Motion at 3; Reply at 3-4. On its face, that definition is impermissibly overbroad as it includes employees who never incurred unreimbursed business mileage expenses under California law.
Slip op., at 3. Next, the Court observed that the plaintiff did not submit evidence demonstrating that the Northern California district was operated under the same policies as the Southern California District. The Court found the plaintiff inadequate to represent the Northern California District employees on the basis of thin evidence of any uniform policy that was actionable.
With respect to the Southern California District, the Court agreed with the defendant that the plaintiff's proposed class definition was problematic, but not for the reason argued:
The Court agrees that there is a problem with the way plaintiff has proposed to define this particular subclass, but not the ascertainability problem defendant asserts. Instead, plaintiff's proposed definition-all Southern California district employees who drove their non-company owned vehicles “over” 25/35 miles-would seem to include only those who received some reimbursement under defendant's policy and not those employees who drove under 25/35 miles but were nonetheless owed reimbursement for non-commute time under plaintiff's theories. The Court doubts plaintiff intended to exclude those employees from the proposed class.
Slip op., at 7. The Court then revised the class definition, declaring it ascertainable and better defined:
All of defendant's past and present non-union employees working in the Southern California district at any time from July 6, 2005 to present who were not reimbursed for non-commute mileage expenses incurred in using personal vehicles to travel to off-site meetings or trainings.
Slip op., at 7. This, in particular is very helpful to litigants. It demonstrates an engaged Court that has provided a concrete example of how to refine and improve a class definition.
The Court found unpersuasive the defendant's argument that some class members had individual deals in place to get company cars. The Court finished by offering some comments about the obligation to supplement witness lists provided with initial disclosures, finding that those concerns were not at issue due to the rapidly shifting nature of the plaintiff's claims.
The purpose of the ascertainability requirement in class actions is to ensure that it is possible to give adequate notice to class members and to determine after the litigation has concluded who is barred from relitigating the resolved issues. The ascertainability requirement can be satisfied either by defining a class in objective terms such that a review of the defendant's records or if the class definition would "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, 81 Cal. App. 4th 816, 828 (2000); and see Ghazaryan v. Diva Limousine, Ltd., 169 Cal. App. 4th 1524, 1533 (2008). In Sevidal v. Target Corporation (October 29, 2010), the Court of Appeal (Fourth Appellate District, Division One) affirmed a trial court order denying certification on the ground that the class was hopelessly unascertainable.
Sevidal sued Target after he purchased through Target's website some clothing items misidentified as made in the United States. Sevidal specifically argued that, under the California Supreme Court's recent opinion, In re Tobacco II Cases, 46 Cal. 4th 298 (2009) (Tobacco II), "the class could be certified on his unfair competition claim even if most of the proposed class members never relied on the 'Made in USA' designation in deciding to make their online purchases." Slip op., at 2. The trial court did not take issue with this contention. Instead, the trial court found the class definition to be significantly overbroad and the class itself to be unascertainable.
Sevidal's difficulties in defining the class arose because a website coding error caused the Target website to misidentify the county of origin on some clothes on some occasions, but not on others. This computer bug made it impossible to ascertain class membership:
In the proceedings below, Sevidal made clear that only those who purchased an item when the country of origin was misidentified are part of the proposed class. But he also defined the proposed class to include consumers who purchased an item from Target.com without selecting the " 'Additional Info' " icon, and thus who were never exposed to the country-of-origin information. These consumers would, by definition, have no way of knowing whether he or she purchased an item when it was misidentified, and thus would have no way of knowing whether he or she is a member of the class. And these individuals (those who would have no way of knowing he or she was a class member) represent a significant portion of the overall proposed class. Target's statistical evidence shows that approximately 80 percent of the proposed class falls within this category — individuals who purchased an item without viewing the country-of-origin information.
Slip op., at 19-20. The Court found this degree of overbreadth sufficient to support the trial court's ruling:
Although class certification should not be denied on overbreadth grounds when the class definition is only slightly overinclusive (ibid.; see Aguiar, supra, 144 Cal.App.4th at p. 136), in this case the overbreadth is significant. The unrefuted evidence showed that approximately 80 percent of the online purchasers did not select the " 'Additional Info' " icon and were never exposed to the alleged misrepresentation.
Slip op., at 20. A useful observation for both plaintiffs and defendants; slight overbreadth will not defeat certification, but overbreadth of this magnitude will support a denial of certification.
The Court went on to reject Sevidal's attempt to extend by analogy the evidentiary presumptions that can be imposed for failure to follow Labor Code record-keeping requirements. The Court observed that Target had no statutory or contractual obligations to maintain records about who selected which links on its site.
Finally, the Court discussed the overbreadth issue under the UCL, separate from the ascertainability problem created by the class definition and the lack of records to identify class membership. Treading gingerly into the minefield of Tobacco II, the Court said:
But the Tobacco II court did not state or suggest there are no substantive limits on absent class members seeking restitution when a defendant has engaged in an alleged unlawful or unfair business practice. Instead, the court recognized that under the UCL's statutory language, a person is entitled to restitution for money or property "which may have been acquired" by means of the unfair or unlawful practice. (§ 17203, italics added; see Tobacco II, supra, 46 Cal.4th at p. 320.) Although this standard focuses on the defendant's conduct and is substantially less stringent than a reliance or "but for" causation test, it is not meaningless. To conclude otherwise would violate the statutory interpretation principle that every word in a statute must be given operative effect. Even after the Tobacco II decision, the UCL and FAL still require some connection between the defendant's alleged improper conduct and the unnamed class members who seek restitutionary relief.
Slip op., 25. Analyzing the post-Tobacco II cases, the Court concluded that undisputed evidence showed that most of the defined class never viewed the country-of-origin information. Unlike Weinstat v. Dentsply Internat., Inc., 180 Cal. App. 4th 1213 (2010), there were no direct communications to every class member. Unlike In re Steroid Hormone Product Cases, 181 Cal. App. 4th 145 (2010), there was no illegal conduct (inclusion of undisclosed controlled substances) to supply the means for unlawful acquisition of money from the class. In essence, the Court concluded that, as to the majority of the defined class, Target didn't do anything wrong (again, the key issue being that, at many times, the Target website may was displaying the correct information - but most people didn't look at it in either case).
While the Court appears to favor the "conservative" line of post-Tobacco II cases (or, as some might say, the reactionary revolt line), the Court doesn't embroil itself too deeply into the post-Tobacco II cases, attempting as much as possible to harmonize the two lines of cases with each other and the record before it. In this case, the Court's task is much easier as a result of the unique factual record.
After weeks in the doldrums, a California Court of Appeal finally got around to issuing an opinion related to class actions. Unfortunately, it isn't very exciting. In Faulkinbury v. Boyd & Associates, Inc. (June 24, 2010), the Court of Appeal (Fourth Appellate District, Division Three) reviewed an order denying class certification of meal period, rest break and overtime (regular rate calculation) claims.
The Court confirmed what is, by now, a fairly well-established set of standards for appellate review of certification rulings:
Trial courts have discretion in granting or denying motions for class certification because they are well situated to evaluate the efficiencies and practicalities of permitting a class action. (Sav-On, supra, 34 Cal.4th at p. 326.) Despite this grant of discretion, appellate review of orders denying class certification differs from ordinary appellate review. Under ordinary appellate review, we do not address the trial court's reasoning and consider only whether the result was correct. (Kaldenbach v. Mutual of Omaha Life Ins. Co. (2009) 178 Cal.App.4th 830, 843.) But when denying class certification, the trial court must state its reasons, and we must review those reasons for correctness. (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435-436 (Linder).) We may only consider the reasons stated by the trial court and must ignore any unexpressed reason that might support the ruling. (Id.; see also Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193, 1204-1205 (Bufil).)
Slip op., at 7. The majority of the opinion simply confirms that, in the face of evidence apparently in conflict, the determination of which evidence to credit is left to the trial court.
The Court did reverse the trial court as to the overtime claim. The Court found that the issue of whether certain payments should be included in the calculation of the regular rate is an issue well-suited to class-wide determination.
Get back to work.
United States District Court Judge Jeremy Fogel (Northern District of California) granted, with leave to amend, a motion to strike class allegations in a suit alleging a defect in Whirlpool-manufactured top-loading Kenmore Elite Oasis automatic washing machines (“the Machines”) that Sears marketed, advertised, distributed, warranted, and offered to repair. Tietsworth v. Sears Roebuck and Co., et al., 2010 WL 1268093 (N.D. Cal. Mar. 31, 2010). The alleged defect in an electronic control board causes machines to stop mid-cycle.
The Court concluded that the class was not ascertainable as defined:
[T]he putative classes alleged in paragraph 98 cannot be ascertained because they include members who have not experienced any problems with their Machines' Electronic Control Boards-or for that matter with any other part of the Machine. “Such members have no injury and no standing to sue.” Hovsepian v. Apple, Inc., No. 08-5788 JF (PVT), 2009 WL 5069144, at *6 (N.D.Cal.2009); see also Bishop, 1996 WL 33150020, at *5 (“courts have refused to certify class actions based on similar ‘tendency to fail’ theories because the purported class includes members who have suffered no injury and therefore lack standing to sue.”).
Order, at 19.
The opinion also includes an extensive discussion of pleading standards applicable to many different claims for relief predicated on failure to disclose or concealment allegations.
The Complex Litigator reports on developments in related areas of class action and complex litigation. It is a resource for legal professionals to use as a tool for examining different viewpoints related to changing legal precedent. H. Scott Leviant is the editor-in-chief and primary author of The Complex Litigator.
