Properly Certified

Williams v. U.S. Bankcorp. Investments, Inc., No. A156226 (D1d4 Jun. 8, 2020)

Plaintiff in this wage and hour class action was an absent member of a class in an earlier class action, wherein a class was certified, but later decertified. Defendant says Plaintiff is collaterally estopped from certifying a class here by the force of the decert order in the earlier case.

Under an earlier line of cases, California law ultimately settled on the rule that an absent class member is not precluded by an order denying class certification in an earlier case. That’s because, prior to certification, an absent member of a class isn’t really a party or in any privy or representative relationship with any party. So the mutuality element is absent.

But once a class has been certified, the lead plaintiff takes on a representative role with the rest of the class and is capable of taking action in the litigation that can have a binding effect on the rest of the class. According to the Court of Appeal, however, that still isn’t enough to bind Plaintiff here to the decertification ruling in the prior case.

First, in contrast to federal law, California law has long viewed members of a certified class as non-parties. So, for instance, a class member who objects to the settlement needs to intervene before he or she has standing as a party to appeal.

More importantly, perhaps, is that preclusion generally applies to members of a properly certified class. The whole purpose of the class certification process is make sure the class is structured such that lead plaintiffs and their lawyers can adequately represent the interests of absent class members. But a class that gets de-certified is a class where those features are lacking in some meaningful way. And the fact that flaws in the structure don’t become clear until sometime after a class has been improvidently certified doesn’t mean that the class was properly certified in the interim.

Reversed.

Livermore Lab Retirees Class Can Proceed Against UC on Liability Issues

Moen v. Regents of the Univ. of Cal., No. A153386 (D1d5 Aug 1, 2018)

A class action against the UC brought by some Retirees at the Lawrence Livermore lab. Retirees claim that the UC system either implicitly or explicitly promised them health insurance and that the UC’s failure to honor those promises after the lab was privatized is an unconstitutional impairment of contract. The case has been pending for eight years. A class was ultimately certified, and a part of the case about the UC system’s authority to enter the alleged contracts was tried. Retirees won.

But the UC then moved to decertify the class, arguing that the rest of the case—about whether promises were actually made and relied upon—was too individualized to be addressed class-wide. The trial court agreed and decertified the class. Retirees appeal.

The Court of Appeal reverses, in part. Contract formation is typically an individualized question. But Retirees’ theory is that the UC had a uniform practice of offering the benefits and that the benefits were implicitly accepted by the retirees when they came and/or continued to work for the lab. Under the circumstances, there was enough commonality among the members of the class for the contract formation issues to be tried class-wide. Similarly, the mostly legal issue of whether contracts, if formed, were impaired, could be addressed by a class because it did not require specific proof of economic injury. 

On the other hand, damages could not be decided on a class-wide basis. That would require an assessment of the value of the allegedly promised policy versus the value of what each Retiree ultimately received, which could have a great deal of variety of factors, including each Retiree’s actual use of the heath care benefits provided.

Reversed in part.

Still Goin' . . .

Lubin v. The Wackenhut Corp., No. B244383 (D2d4 Nov. 21, 2016)

This is a really long-pending wage and hour class action. Way back in 2011, while the case was pending trial, the U.S. Supreme Court issued its decision in Dukes v. Walmart, which substantially raised the bar for class certification under the Federal Rules. Relying on Dukes, defendants moved to decertify. The trial court granted the motion back in 2012, and the case has been pending appeal since then. But then the California Supreme Court decided Brinker—which focuses the class cert inquiry in wage and hour claims on whether the employer had an illegal policy—and the U.S. Supremes decided Tyson—which permits the use of statistical proof in class actions, albeit only in certain contexts.

After examining a whole pile of precedent decided after the trial court’s decertification order, the Court of Appeal rules that the trial court erred in decertifying the class. The big issue in the case was whether Plaintiff employees—security guards—could be required to eat on-duty meals under the governing wage order. The resolution of that issue could be addressed, per Brinker, to whether the Employer had a policy that unlawfully required on-duty meals, even when they were not merited by the relevant test. Framed that way, common issues predominate. And other issues—such as whether employees signed agreements necessary to make the eligible for on-duty meals—could be decided broadly by dividing the class into subclasses depending on which of a few versions of the Employer’s employment agreement were signed by each class member. 

The court goes on to apply the same analysis for plaintiffs rest break and wage statement claims.

Reversed.

Uninsured and Unascertainable

Hale v. Sharp Healthcare, No. D064023 (D4d1 Dec. 5, 2014)

In this UCL and CLRA case brought as a putative class action, plaintiff alleges that defendant, a hospital group, charged her and her fellow class members higher fees for medical services because they were uninsured. The trial court initially certified a class based on a common question: whether the defendant represented to uninsured patients that they would be charged “regular rates,” but failed to do so.

But defendant later filed a motion to decertify.  It claimed that the class was not ascertainable, because its members could not be identified without an individualized examination of 120,000 patients’ billing records. Further, it said that class treatment was not a superior method to litigate the case because there was no manageable way to determine class-wide entitlement to damages. The trial court granted the motion and the plaintiff appealed.

The court of appeal affirms on both grounds. Because of the way the class was defined and the hospital’s practice of not obtaining insurance information until after treatment was provided, the class was unascertainable. The evidence showed that in many instances, uninsured patients ultimately paid rates that were far below what the hospital obtained from insurance companies, Medicare, and Medicaid. This could be due to rate reductions, charity payments, undiscovered coverage, or payments by third parties. But the hospital didn’t maintain information on ultimate payment outcomes on an aggregate basis, and, despite their efforts, the parties were unable to come up with a methodology for identifying patients who paid more than insured payments.

Further, there was a lack of predominance of common issues as to whether the class members were entitled to damages. In coming to this result, the court distinguishes a number of wage and hour cases requiring certification where the common issue is whether the employer maintained an unlawful policy. According to the court, these cases might have differed in the amount of damages, but if the plaintiff theory proved correct, the fact of damages could be determined on a classwide basis.  In contrast, in this case, whether or not each plaintiff was damaged at all required a case-by-case assessment, which precluded any liability determination on a classwide basis.

This result seems mostly reasonable. But I don’t know if I’m entirely comfortable with a ruling that denies class certification based largely on the fact that the defendant maintained its business records in a way that makes it tough to ascertain who is in a plaintiff class. Seems like a bad incentive. 

Affirmed.

Be Careful what You Wish for

Kight v. Cashcall, Inc., No. D063363 (D4d1 Nov. 4, 2014)

This case is a class action alleging violations of California’s dual-consent telephone eavesdropping statute, Penal Code § 632. Three years ago, plaintiffs were successful in an appeal wherein the court adopted many if not all of their liability theories. Kight v. CashCall, Inc., 200 Cal. App. 4th 1377 (2011). As pertinent here, the prior appeal determined that § 632 applies whenever a caller has a reasonable expectation that a phone call will not be secretly monitored. The test is objective, but it accounts for the totality of the plaintiff’s circumstances.

On remand, Cashcall moved to decertify the class. It argued that the experiences of the plaintiffs in their calls with Cashcall were so varied in the extent of their expectations of monitoring that individual issues would necessarily predominate such that class treatment would be inappropriate.  The trial court agreed and decertified the class.

The court of appeal first notes that a decertification shouldn’t just be a redo of the original certification. Some circumstances relevant to management of the class must change before the court can consider decertifying. But the intervening appeal’s clarification of the relevant legal standard provided those circumstances here. And when that standard is considered, the trial court did not abuse its discretion in decertifying the class because individual issues did, in fact, predominate. The illustrative experiences of the individual plaintiffs showed such a wide variety of experiences and expectations that there would be no manageable way to afford class treatment.

Affirmed.

Lies, Damn Lies, and Statistics

Duran v. U.S. Bank Nat’l Assoc., No. S200923 (Cal. May 29, 2014)

In this significant case that the wage-and-hour class action bar has been eagerly awaiting, the California Supreme Court reverses a wage-and-hour class action that actually went to trial. That makes it, as the court explains, “an exceedingly rare beast.” But it isn’t just the fact that this case was tried that is unusual. The way it was tried is also outside of the ordinary. The trial court selected twenty-one plaintiffs out of a total class of 260. It then tried those claims and extrapolated their results class-wide. It refused to admit any evidence outside of the sample plaintiffs. This all resulted in a finding that the entire class was erroneously misclassified as exempt, and a $15 million judgment ($57,000 per class member) against the defendant. While the court does not go so far to say that trial by sample can never be appropriate, what happened in this case can’t withstand scrutiny.
 

Four for Four on Class Cert.

Williams v. Superior Court, No. B382577 (D2d8, as modified, Dec. 24, 2013)

For the fourth time in two months, the court of appeal reverses an order denying class certification in a wage and hour case where the plaintiff’s theory of liability was that the defendant maintained an unlawful overtime policy.