A quick note on Gonzalez v. San Gabriel Transit, Inc.

In Gonzalez v. San Gabriel Transit, Inc. (October 10, 2019), the Court of Appeal (Second Appellate District, Division Four) reversed and remanded on an appeal from the denial of class certification. Most of the opinion is about the impact of Dynamex, which adopted the “ABC test” after the trial court denied certification. There is some important analysis about what claims are encompassed by the “ABC test,” and the retroactive application. But I’m posting now just to draw attention to a sliver of discussion at the end of the opinion regarding typicality:

Also, SGT maintains that Gonzales’ claims are atypical because, “unlike other class members, [he] never leased a taxi during the class period.” But the class allegations are not premised on having “leased” a vehicle. Rather, Gonzales seeks more generally to certify a class of plaintiffs who “were engaged by [SGT] to drive passengers for hire,” and who “drove” for SGT during the class period, i.e., all “drivers employed by, or formerly employed by [SGT] . . . [during the class period], who were or are classified as independent contractors.” The common allegations of harm suffered by Gonzales and other drivers is that all were misclassified as independent contractors. As such, they were required at their own expense to install equipment and provide tools to access SGT’s dispatch system, and to obtain insurance and perform maintenance, all expenses Gonzales contends should properly be borne by their employer and were denied the benefits of wage order protections.

On remand, SGT must show that the variations in class members’ factual situations are sufficiently wide to defeat class certification. For instance, regardless of a driver’s status as lessee or owner/operator, drivers were charged weekly “lease” fees to perform services under the SGT umbrella. If and to the extent it is important that a driver owned rather than leased a vehicle—which may cause a variation in weekly “lease” rates, insurance, equipment installation fees, or some other business expense—such a difference would likely be a function of the damages to which an individual driver was entitled. That a calculation of individual damages will, at some point, be required does not foreclose the possibility of taking common evidence on the issue of misclassification questions. (Collins v. Rocha (1972) 7 Cal.3d 232, 238.) The overarching inquiry is whether class members were misclassified during the class period. If so, as discussed in the overlapping analysis of commonality above, the class members are entitled to a determination as to whether SGT misclassified them as independent contractors. The fact that individual members of the class have different damages does not preclude class certification. (Sav–On, supra, 34 Cal.4th at pp. 329–330.)

The trial court also alluded to the fact that Gonzales could not demonstrate typicality for the entire class because he never drove LAX or school runs. However, as we have noted, typicality does not require that a class representative have suffered injuries identical to those of other class members. (Martinez v. Joe’s Crab Shack Holdings, supra, 231 Cal.App.4th at p. 375.) Accordingly, the trial court must reevaluate whether the requirements for typicality are satisfied, and whether, given time limitations, the complaint may be amended to add an additional representative plaintiff.

Slip op., at 37-38. This discussion pushes back against a common argument used to try and “thin” a class action down to a subset of the members alleged to be a part of the class. The argument is frequently along the lines of “the plaintiff didn’t work in all of the job positions,” or “the plaintiff didn’t work at all of the locations.” This discussion doesn’t entirely reject such arguments, but it certainly undermines them substantially with a fact pattern that is not particularly unique in wage and hour class actions.

In Mora, et al., v. Big Lots Stores, Court affirms denial of certification in manager misclassification case

I've comment previously that misclassification cases (especially in the retail and restaurant sectors) appear to be an increasingly difficult sell.  See post regarding Arenas v. El Torito Restaurants, Inc., 183 Cal. App. 4th 723 (2010).  Since then, I haven't seen anything to change my opinion that the tide has shifted from the Sav-on high water mark.  Yesterday, in Mora, et al. v. Big Lots Stores (April 18, 2011), the Court of Appeal (Second Appellate District, Division Seven) affirmed a trial court order denying certification of a class of Big Lots store managers alleged to have been misclassified as exempt from overtime pay and other labor code obligations.

The Court summarized the two ends of the legal spectrum defining the legal criteria applied to certification:

As the Supreme Court held in Sav-On, supra, 34 Cal.4th at page 326, the central issue in a class certification motion is whether the questions that will arise in the action are common or individual, not the plaintiffs' likelihood of success on the merits of their claims. (Accord, Ghazaryan v. Diva Limousine, Ltd. (2008) 169 Cal.App.4th 1524, 1531 ["trial court must evaluate whether the theory of recovery advanced by the plaintiff is likely to prove amenable to class treatment"].) The putative class representatives contend the trial court disregarded this standard, improperly focusing on the potential conflicting issues of fact that may arise on an individual basis rather than the common questions presented by their theory of recovery. To the contrary, the court employed the correct analysis and concluded the theory of recovery advanced—operational standardization imposed by Big Lots—was not supported by substantial evidence and thus not amenable to class treatment. No legal error was committed: "[A] class action will not be permitted if each member is required to 'litigate substantial and numerous factually unique questions' before a recovery may be allowed. . . . '[I]f a class action "will splinter into individual trials," common questions do not predominate and litigation of the action in the class format is inappropriate.'" (Arenas v. El Torito Restaurants, Inc. (2010) 183 Cal.App.4th 723, 732 [affirming order denying certification on misclassification allegations where trial court found tasks performed by restaurant managers and time devoted to each task varied widely from restaurant to restaurant].)

Slip op., at 12.  The Court noted that the outcome was much like Arenas and Dunbar v. Albertson’s, Inc., 141 Cal. App. 4th 1422 (2006).

The outcome was driven by the standard of review.  The Court emphasized on several occasions that it couldn't second guess the trial court's decision to credit Big Lots' evidence over the plaintiffs' evidence:

In essentially rejecting the putative class representatives' evidentiary submission, the court observed that for more than half of the declarants the percentage of time estimated to have been spent on non-managerial, non-exempt duties was different from the estimates given in deposition testimony or statements to third party prospective employers.

Slip op., at 14, n. 10.  The trial court also credited the very individualized manager declarations submitted by Big Lots over the declarations from the plaintiffs.  The Court of Appeal found that that trial court did not abuse its discretion because substantial evidence supported the trial court's conclusion.  This is the anti-Sav-on.

District Court Magistrate Judge grants motion to compel deposition of withdrawing named plaintiff who was not a putative class member

United States Magistrate Judge Suzanne H. Segal (Central District of California) granted defedants' motion to compel the deposition of a named plaintiff that had filed a motion for voluntary dismissal and was not a putative class member.  Dysthe, et al. v. Basic Research, L.L.C., et al., ___ F.R.D. ___, 2011 WL 1350409 (C.D. Cal. Apr. 8, 2011).  The named plaintiffs Shalena Dysthe, Eric Hall and Chaunte Weiss filed a class action complaint alleging that various defendants made purportedly false claims concerning the efficacy of Relacore weight-loss products.  [I am shocked, shocked to hear of false claims related to the efficacy of a weight-loss product.]  When the defendants sought to schedule depositions, they were notified that Hall intended to dismiss his claims with prejudice.  The defendants responded that they would stipulate to the dismissal after the deposition.  Motions ensued.  Defendants argued that Hall's testimony was still relevant to certification.  Plaintiffs argued that Hall wouldn't even be a class member when his claims were dismissed with prejudice.

The Court explained, "Generally, to depose putative or absent class members, a party must show that 'discovery is both necessary and for a purpose other than taking undue advantage of class members.'"  Slip op., at 3.  Then the Court observed that, because Hall had not been dismissed, the showing required for discovery from putative class members was not applicable; Hall was still a party.  Even when dismissed, the Court found that Hall's testimony regarding his experience with Relacore would be highly relevant.

District Court grants motion to deny class certification where plaintiff not a victim of the alleged FDCPA violation

United States District Court Judge M. James Lorenz (Southern District of California) granted a defense motion to deny class certification.  Mansfield v. Midland Funding, LLC, 2011 WL 1212939 (S.D. Cal. Mar. 30, 2011).  Plaintiff, on behalf of a putative class, alleged that defendants were routinely filing and assisting in the litigation of lawsuits to collect time-barred consumer credit card debt incurred primarily for personal, family or household purposes, in violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq.  If true, that is very shady conduct.  But wait!  We have a problem:

Midland's claim against Mansfield was timely as determined by the Arizona state court. That judgment as not been challenged. Because Midland's claim against Mansfield was found to be timely, the action was not filed on a time-barred debt and plaintiff has not suffered an injury in fact or an injury based on defendants' filing of their action against him in the Arizona court. Without a claim, Mansfield may not represent others who could have such a claim.

Slip op., at 3.  The Court looked no further at certification requisites, given that the threshold issue of standing could not be satisfied.

District Court (N.D. Cal.) certifies class of consumers claiming Dell, Inc. misrepresented savings by stating false former prices

United States District Court Judge Ronald M. Whyte (Northern District of California) granted in part a motion to certify a class of citizens of California who on or after March 23, 2003, purchased via Dell's web site Dell-branded products advertised with a represented former sales price.  Brazil v. Dell, Inc., 2010 WL 5387831 (N.D. Cal. Dec. 21, 2010) [not to be confused with the Court's Order on a motion for judgment on the pleadings filed the same day].  The Court offered this interesting discussion concerning reliance:

In California, “a presumption, or at least an inference, of reliance arises wherever there is a showing that a misrepresentation was material,” In re Tobacco II Cases, 466 Cal.4th 298, 397 (2009). Materiality is an objective standard, see U.S. v. Watkins, 278 F.3d 961, 967-68 (9th Cir.2002), and is susceptible to common proof in this case. There is no dispute that the alleged misrepresentations were communicated to all class members, because the representations were made at the point of sale as part of a standardized online purchasing process.

Plaintiffs point to common evidence sufficient to show that the representations were material to plaintiffs. Although Dell points to some testimony from plaintiffs that it says “fails to establish legally sufficient reliance for even their individual claims,” the court finds that testimony read in context sufficiently indicated that the plaintiffs relied. There is evidence that Dell considered the representations material, and that external reference prices and semantic clues impact customers' perceptions of value and purchase decisions. Dell's marketing expert contends that while some purchasers may attach importance to a discount off Dell's list price, others will base their decision on wholly unrelated factors. But under California law, plaintiffs need not establish that each and every class member based his or her decision on the represented discounts. Plaintiffs' common evidence that the representations were material satisfies California's reliance presumption and Rule 23(b) (3)'s predominance requirement.

Slip op., at 5.

A similar practice by Dell almost caught me about a year ago.  I ordered a computer on the basis of a claim that I was receiving a special, limited-time discount.  I then discovered through another source that the prevailing price at the time was lower.  I cancelled the order before it shipped and re-ordered at a significantly lower price.  I'm pretty happy with Dell computers from a hardware standpoint, but their sales tactics have some room for improvement.

Mileage reimbursement class certified in part; class definition corrected by Court

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.

District Court denies certification in suit challenging property intrusions by telecommunications company Qwest Communications

United States District Court Judge William B. Schubb (Eastern District of California) denied, for the second time in the suit, a motion for class certification in a suit contesting the use of railroad right-of-ways by Qwest Communications International, Inc. (and other companies) to install fiber optic lines.   Regan v. Qwest Communications Intern., Inc., 2010 WL 3941471 (E.D.Cal. Oct. 5, 2010). The Court found that typicality issues of individual land ownership and the commonality problems relating to the many statutes conveying land in different ways were insurmountable problems.  For example, the Court said the following:

With regard to the miles of right-of-way subject to private conveyances, plaintiffs argue the individual deeds can be placed in groups based on common conveyance language and the court can decide motions for partial summary judgment with respect to each group on the fee versus easement issue. While plaintiffs have submitted a handful of such conveyances from the same railroad route in Kings County, California in order to show that these conveyances can use identical or similar language, (Ex. to Supp. Millea Aff. (Docket No. 193) Ex. B), the court has no evidence that there is a limited range of granting language or that there will be a limited number of potential deed “groups.” See Kirkman v. N.C. R. Co., 220 F.R.D. 40 (M.D.N.C.2004). When the private conveyances number somewhere between five hundred and two thousand, spanning hundreds of miles and multiple railroad routes, plaintiffs' offering is no assurance that interpretation of private deeds is a “common” issue at all.

Slip op., at 7.

Widespread manifestation of a defect is not essential to class certification

The Ninth Circuit giveth and it taketh away.  On the one hand, the Fourth Amendment is better described as the Fourth Suggestion around these parts.  But consumer class actions received a booster shot last week.  In Wolin v. Jaguar Land Rover (9th Cir. Aug. 17, 2010), the Ninth Circuit reversed a denial of class certification in a consumer class action alleging a defective design in an automobile.  Plaintiffs Gable and Wolin each brought a class action lawsuit against Jaguar Land Rover North America, LLC (“Land Rover”) alleging that Land Rover’s LR3 vehicles suffer from an alignment geometry defect that causes tires to wear prematurely. The district court declined to certify a class because Gable and Wolin were unable to prove that a majority of potential class members suffered from the consequences of the alleged alignment defect.  The Ninth Circuit reversed.

The Court first examined commonality:

Federal Rule of Civil Procedure 23(a)(2) provides that “questions of law or fact common to the class” are a prerequisite to class certification. Commonality exists where class members’ “situations share a common issue of law or fact, and are sufficiently parallel to insure a vigorous and full presentation of all claims for relief.” Cal. Rural Legal Assistance, Inc. v. Legal Servs. Corp., 917 F.2d 1171, 1175 (9th Cir. 1990) (internal quotation marks and citation omitted). “The existence of shared legal issues with divergent factual predicates is sufficient, as is a common core of salient facts coupled with disparate legal remedies within the class.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998). [2]

Appellants easily satisfy the commonality requirement. The claims of all prospective class members involve the same alleged defect, covered by the same warranty, and found in vehicles of the same make and model. Appellants’ complaints set forth more than one issue that is common to the class, including: 1) whether the LR3’s alignment geometry was defective; 2) whether Land Rover was aware of this defect; 3) whether Land Rover concealed the nature of the defect; 4) whether Land Rover’s conduct violated the Michigan Consumer Protection Act or the Florida Deceptive and Unfair Trade Practices Act; and 5) whether Land Rover was obligated to pay for or repair the alleged defect pursuant to the express or implied terms of its warranties. These common core questions are sufficient to satisfy the commonality test. See Hanlon, 150 F.3d at 1019-20.

Slip op., at 11991.  The Court then rejected the argument that individualized factors would affect tire wear:  "What Land Rover argues is whether class members can win on the merits. For appellants’ claims regarding the existence of the defect and the defendant’s alleged violation of consumer protection laws, this inquiry does not overlap with the predominance test."  Slip op., at 11993.

Then, discussing typicality, the Court made what is probably the most striking pronouncement of the opinion:

Whether they experienced premature tire wear at six months, nine months, or later goes to the extent of their damages and not whether named appellants “possess the same interest and suffer[ed] the same injury as the class members.” E. Tex. Motor Freight Sys. Inc. v. Rodriguez, 431 U.S. 395, 403 (1977) (internal quotation marks omitted). Typicality can be satisfied despite different factual circumstances surrounding the manifestation of the defect. See Daffin, 458 F.3d at 553. Gable and Wolin, like the rest of the class, may have a viable claim regardless of the manifestation of the defect. The fact that Gable and Wolin already received discounts and some free services also does not defeat typicality. See Lymburner v. U.S. Fin. Funds, Inc., 263 F.R.D. 534, 540 (N.D. Cal. 2010) (finding named plaintiff typical of class despite availability of plaintiff-specific remedy and finding “no authority for the argument that typicality is defeated because the remedies may be different for class members or that the availability of rescission as a remedy will monopolize this case”). Gable’s and Wolin’s claims are typical of the class.

Slip op., at 11996.  Finally, the Court concluded that superiority is closely connected to commonality:

Appellants aver that no other prospective class members have filed other related actions, and Land Rover does not dispute this point. The amount of damages suffered by each class member is not large. Forcing individual vehicle owners to litigate their cases, particularly where common issues predominate for the proposed class, is an inferior method of adjudication.

Slip op., at 11997.

Fun fact:  This same panel also heard the Mazza, et al. v. American Honda Motor Company case.

District Court certifies class of borrowers allegedly subjected to discrimination based on race

United States District Court Judge Thelton E. Henderson (Northern District of California) certified a class of African-American and Hispanic borrowers allegedly charged higher rates on mortgage loans compared to whites as a result of Defendant GreenPoint Mortgage Funding, Inc.'s practice of allowing its brokers to mark up the price of wholesale loans.  Ramirez v. Greenpoint Mortg. Funding, Inc., ___ F.R.D. ___, 2010 WL 2867068 (July 20, 2010).  The suit alleges violation of federal fair lending and housing laws.  The alleged conduct presents an interesting theory:

The pricing of GreenPoint's mortgage loans consisted of an objective and a subjective component. GreenPoint relied on objective risk factors-such as FICO score, property value, and loan-to-value ratio-to determine credit parameters and set prices for its loan products. This information was communicated to brokers on a rate sheet listing GreenPoint's “par” interest rate, which did not result in any broker compensation. That objective component of loan pricing is not at issue here.

Plaintiffs' allegations relate to GreenPoint's discretionary pricing policy, which governed brokers' compensation for their services. GreenPoint paid brokers a “yield spread premium” or “rebate” when they set the interest rate higher than par; brokers were also permitted to charge loan origination and processing fees. GreenPoint did not set any objective criteria for the imposition of these higher rates and fees, which were set by the brokers according to their discretion. Brokers were paid more for loans that cost more to the borrower, but their compensation was capped at 5 percent of the loan amount. GreenPoint monitored the fees charged by its brokers to ensure they complied with its policies.

Slip op., at 1-2.

More on the Vioxx decision

In December, I promised more detailed comments about In re Vioxx Class Cases (December 15, 2009), decided by the Second Appellate District, Division Three.  As promised, I provide more pithy commentary (or blather, as you see fit to classify it).  The Court's discussion began with a reminder that is worth repeating.  The standard of review on a appeal challenging a trial court's decision to grant or deny certification is reviewed for an abuse of discretion, absent certain specific errors:

“ ‘Because trial courts are ideally situated to evaluate the efficiencies and practicalities of permitting group action, they are afforded great discretion in granting or denying certification. . . . "[I]n the absence of other error, a trial court ruling supprted by substantial evidence generally will not be disturbed “unless (1) improper criteria were used [citation]; or (2) erroneous legal assumptions were made [citation].” ’ ”

Slip op., at 14, citing Tobacco II.  Next, the Court stated the requisites for class certification.  The discussion was the usual stuff, but for one statement regarding predominance of common issues of law or fact:  "To determine whether the questions of fact and law at issue in the litigation are common or individual, it is necessary to consider the individual causes of action pleaded, and the issues raised thereby."  Slip op., at 15.  It is difficult to find any guidance about how to assess predominance.  Here, the Court indicates that the analysis proceeds on a cause-of-action by cause-of-action basis.

Turning to the various casues of action, the Court first addressed the claim arising under the CLRA.  The Court followed decisions that permit an inference of reliance when a misrepresentation is material:

The language of the CLRA allows recovery when a consumer “suffers damage as a result of” the unlawful practice. This provision “requires that plaintiffs in a CLRA action show not only that a defendant’s conduct was deceptive but that the deception caused them harm.” (Massachusetts Mutual Life Ins. Co. v. Superior Court, supra, 97 Cal.App.4th at p. 1292.) Causation, on a class-wide basis, may be established by materiality. If the trial court finds that material misrepresentations have been made to the entire class, an inference of reliance arises as to the class. (Id. at p. 1292.) This is so because a representation is considered material if it induced the consumer to alter his position to his detriment. (Caro v. Proctor & Gamble Co., supra, 18 Cal.App.4th at p. 668.) That the defendant can establish a lack of causation as to a handful of class members does not necessarily render the issue of causation an individual, rather than a common, one. “ ‘[P]laintiffs [may] satisfy their burden of showing causation as to each by showing materiality as to all.’ ” (Massachusetts Mutual Life Ins. Co. v. Superior Court, supra, 97 Cal.App.4th at p. 1292.) In contrast, however, if the issue of materiality or reliance is a matter that would vary from consumer to consumer, the issue is not subject to common proof, and the action is properly not certified as a class action. (Caro v. Proctor & Gamble Co., supra, 18 Cal.App.4th at p. 668.)

Slip op., at 16.

The Court then discussed claims arising under the UCL. The authority cited by the Court was described in a manner that was fairly favorable to consumers.  For example, the Court said, "Consumer class actions under the UCL serve an important role in the enforcement of consumers’ rights."  And, as to remedies, the Court observed, "The UCL balances relaxed liability standards with limits on liability."  Slip op., at 18.  The fraudulent prong of the UCL received a similarly broad construction through the authority noted by the Court:

In order to obtain a remedy for deceptive advertising, a UCL plaintiff need only establish that members of the public were likely to be deceived by the advertising.  (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1267; Massachusetts Mutual Life Ins. Co. v. Superior Court, supra, 97 Cal.App.4th at p. 1290.) The question has arisen as to which members of the public need be likely to be deceived. The law focusses on a reasonable consumer who is a member of the target population. (Lavie v. Proctor & Gamble Co. (2003) 105 Cal.App.4th 496, 508.) “Where the advertising or practice is targeted to a particular group or type of consumers, either more sophisticated or less sophisticated than the ordinary consumer, the question whether it is misleading to the public will be viewed from the vantage point of members of the targeted group, not others to whom it is not primarily directed.”

Slip op., at 18.  The Court then discussed the countours of the restitution remedy under the UCL.  Here, Tobacco was cited, but the Court's summary of the extent of restitution foreshadowed the Court's determination that a means for proving a restitutionary value were lacking:

As to restitution, the UCL provides that “[t]he court may make such orders or judgments . . . as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition.”15 (Bus. & Prof. Code, § 17203.) This language, providing restitution of funds which “may have been acquired,” has been interpreted to allow recovery without proof that the funds were lost as a result of actual reliance on defendant’s deceptive conduct. (Tobacco II, supra, 46 Cal.4th at p. 320; Fletcher v. Security Pacific National Bank, supra, 23 Cal.3d at p. 450-451; Prata v. Superior Court (2001) 91 Cal.App.4th 1128, 1144.) While the “may have been acquired” language of Business and Professions Code section 17203 is so broad as to allow restitution without individual proof of injury, it is not so broad as to allow recovery without any evidentiary support. (Colgan v. Leatherman Tool Group, Inc. (2006) 135 Cal.App.4th 663, 697.) The difference between what the plaintiff paid and the value of what the plaintiff received is a proper measure of restitution. (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 174.) In order to recover under this measure, there must be evidence of the actual value of what the plaintiff received. When the plaintiff seeks to value the product received by means of the market price of another, comparable product, that measure cannot be awarded without evidence that the proposed comparator is actually a product of comparable value to what was received. (Colgan v. Leatherman Tool Group, Inc., supra, 135 Cal.App.4th at p. 675.)

Slip op., at 19.

Having discussed what must be established for CLRA and UCL claims, the Court then analyzed predominance as to each cause of action.  For the CLRA, the Court agreed that reliance/materiality issues could not be resolved on a classwide basis:

The trial court found that the decision to prescribe Vioxx is an individual decision made by a physician in reliance on many different factors, which vary from patient to patient. The trial court quoted from Dr. Silver’s declaration, indicating eight individual factors which a physician must assess in determining whether and what to prescribe for pain.

Slip op., at 22.  In reality, this decision is an example of why tort-type issues frequently undermine attempts to certify classes.  The Court noted some of the complicated reliance variables:

On appeal, plaintiffs draw this court’s attention to Merck’s alleged common campaign of hiding the cardiovascular risks of Vioxx, arguing that such common misrepresentations support a common inference of reliance. Plaintiffs suggest that Merck hid “an increased risk of death,” associated with Vioxx, and argue, “there can be nothing more material than an increased risk of death.” Plaintiffs’ argument is a vast oversimplification of the matter, and one which overlooks all of the evidence to the contrary on which the trial court relied.

First, evidence indicated that Vioxx did not present “an increased risk of death” compared to traditional NSAIDs for all patients. Traditional NSAIDs killed 16,500 people per year due to gastrointestinal bleeds. For patients with stomach ulcers or other gastrointestinal risk factors, traditional NSAIDs presented a higher risk of death than the risk of cardiovascular death posed by Vioxx. Second, evidence indicated that the cardiovascular risks of Vioxx were not material for all patients. Some patients would still take Vioxx today if it were on the market; some physicians would still prescribe it regardless of risks. Indeed, it cannot be disputed that other drugs pose similar, or even greater, risks of death than Vioxx, but are still in use – because, for some patients, the benefits outweigh the risks. Third, Merck introduced substantial evidence that all physicians are different and obtain their information about prescriptions from myriad sources. For those physicians with a distrust of statements made by the pharmaceutical industry, Merck’s statements could not have been material. For those patients whose TPPs required pre-approval of Vioxx (or would only pay for Vioxx under certain circumstances), the TPP’s decision likely would override any patient or physician reliance on Merck’s statements. Fourth, physicians consider many patient-specific factors in determining which drug to prescribe, including the patient’s history and drug allergies, the condition being treated, and the potential for adverse reactions with the patient’s other medications – in addition to the risks and benefits associated with the drug. When all of these patient-specific factors are a part of the prescribing decision, the materiality of any statements made by Merck to any particular prescribing decision cannot be presumed. All of this evidence supports the trial court’s conclusion that whether Merck’s misrepresentations were material, and therefore induced reliance, is a matter on which individual issues prevailed over common issues, justifying denial of class certification with respect to the CLRA claim.

Slip op., at 23-24.

Similar problems with the UCL were then discussed by the Court:

[T]he court specifically found that class damages are not subject to common proof. The court concluded that the monetary value plaintiffs wish to assign to their claim – the difference in price between Vioxx and a generic, non-specific NSAID, implicates a patient-specific inquiry and therefore fails the community of interest test. In short, the trial court rejected the entire premise of plaintiffs’ class action. While the trial court allowed the possibility that plaintiffs could recover for having been exposed to misrepresentations, the trial court concluded that the theory that the entire class was harmed because Vioxx was no more effective, and less safe, than naproxen implicated individual issues of proof.

On appeal, plaintiffs mount a two-pronged challenge to the trial court’s conclusions. First, they argue that they offered sufficient factual evidence that naproxen is a valid comparator to Vioxx. Specifically, they rely on the declaration of their medical expert to the effect that, based on the VIGOR study, Vioxx was, overall, no more effective, and less safe, than generic naproxen. The trial court did not err in rejecting naproxen as a valid class-wide comparator. Defendants introduced substantial evidence that, after Vioxx was withdrawn from the market, most Vioxx patients switched to another COX-2 inhibitor, not a generic NSAID such as naproxen. As this evidence indicates that Vioxx was worth more than naproxen to a majority of class members, it is more than sufficient to support the trial court’s conclusion that naproxen is not a valid comparator on a class-wide basis.

Plaintiffs’ second argument is that the validity of naproxen as a comparator goes to the merits of the action, and should not be addressed on a motion for class certification. Plaintiffs argue that since the UCL and FAL allow an award of restitution without individualized proof of deception, reliance and injury, the trial court should not have been considering the validity of naproxen as a comparator. We do not disagree that a trial court has discretion to order restitution even in the absence of individualized proof of injury. (Fletcher v. Security Pacific National Bank, supra, 23 Cal.3d at p. 452.) However, in order to obtain class wide restitution under the UCL, plaintiffs need establish not only a misrepresentation that was likely to deceive (Corbett v. Superior Court, supra, 101 Cal.App.4th 649, 670) but the existence of a “measurable amount” of restitution, supported by the evidence. (Colgan v. Leatherman Tool Group, Inc., supra, 135 Cal.App.4th at p. 698.) The failure of naproxen as a viable class-wide comparator thus defeats the claim for class-wide restitution.

Slip op., 26-27.  With accepted reasons for denying certification as to each cause of action, the trial court was affirmed.  I skipped one other basis for the Court's decision that a denial of certification was appropriate.  The Court found that a typicality problem was created by the interaction with third-party payors.  Some TPPs would only pay for Vioxx when other NSAIDs did not work for the patient.  Some co-pay situations with flat rate copays rendered the economic comparison argument moot.  Generally, the Court noted that the defined class was overbroad, creating a number of problems for itself that could not be reconciled.  See, Slip op, at 20-22.  Here is yet another example why tort-type issues routinely sink class actions.