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.

Bad Facts Open up a Split on Whether Indemnification Claims are SLAPPs

Long Beach Unified Sch. Dist. v Williams, No. B290069 (D2d4, as modified Dec. 31, 2019)

Wong v. Wong, No. A154286 (D1d1 Dec. 13, 2019)

C.W. Howe Partners v. Moordian, No. B290665 (D2d7 Dec. 19, 2019)

Within the course of a few weeks, the Court of Appeal (a panel of the First District, and two Different panels of the Second) decided three cases addressed to whether the anti-SLAPP statute applies to a claim demanding a litigation based indemnity. That is, an equitable or contractual right to obtain compensation for defense costs or judgements from another party, sometimes even a counterparty in the underlying litigation. 

Despite coming up different factual contexts, Wong and C.W. Howe basically come out the same door. Of course an indemnity requires something to indemnify against and a litigation indemnity requires a litigation. So, in a very superficial way, a litigation indemnity claim would not exist “but for” a litigation. That, however, does not mean the claim arises from the litigation. (The are some cases, including a case called Lennar Homes, that suggest otherwise, but the Court in C.W. Howe refers to the logic applied in those cases as “facile.”) Applying the framework in the Supreme Court’s decision in Park, the arising from test is met only when protected conduct forms an essential element of the claim. If that’s not the case, other protected-type conduct can show up in the case as evidence, without the arising from test being satisfied. 

Looking at the elements, Wong and C.W. Howe say this is an evidence, not an elements, situation. A contractual indemnity is just based on a contract and a refusal to pay. And an equitable indemnity claim arises from being a co-tortfeasor in partial proportionate fault. Neither of those elements requires a litigation, so the fact that the costs or results of litigation are the subject of the  compensation for is just evidence and not a fundamental element. 

Williams comes out the other door. Mind you, the facts of Williams are pretty bad. She’s a contract environmental consultant for the Long Beach School District, helping with the development and environmental compliance with a school construction site, in which she discovered a contractor was dumping materials contaminated with arsenic. After Williams came down with arsenic poisoning, the District cut off her contract. Williams and her company sued for retaliation and for causing the poisoning. The District counterclaimed, arguing that Williams had an obligation to cover both defense costs and any judgment under an indemnification provision in her contract. Williams moved to strike the claim under the anti-SLAPP statute.

Unlike C.W. Howe and Wong, however, the Williams court found the analysis in Lennar to be persuasive, because without her underlying claim, the indemnification claim would have “no basis.” But the court hedges a little and also finds that even if the case did not arise from Williams’ lawsuit, it arose from Williams’ unwillingness to fund the District’s lawsuit. According to the Court, a “refusal to fund the defense of ones own litigation—and the defense of a co-plaintiff’s claims arising from the same facts—is conduct in furtherance of the litigation” under Code of Civil Procedure § 425.16(e)(4). And since the litigation is about arsenic contamination at a school site, the Court finds that it was a matter of public interest.

Moreover, since the indemnification agreement—requiring Williams to pay for the defense and any judgment arising from her own lawsuit—was unconscionable, the district had no probability of prevailing.

* * *

This feels like another one where bad facts make bad law. C.W. Howe and Wong pretty clearly have the better side of the Lannar argument. If an indemnity
“arises from” the litigation to be indemnified, every insurance coverage dispute is a SLAPP. 

So far as the (e)(4) issue goes, the cases are clear that funding litigation can be “in furtherance.” But refusing to advance or indemnify under a commercial indemnification contract doesn’t seem very expressive. Do corporations really have a first amendment right not to advance litigation expenses in D&O claims? The public interest analysis here also seems a little short shrift and inconsistent with the structure set up in the Supreme Court's FilmOn analysis. Is the expression at issue about arsenic contamination in public schools? Or about whether Williams needed to fund the District’s defense in such a litigation? 

Mind you, the Court is certainly right that the indemnification provision in Williams’ contract is unenforceable, for any number of reasons—unconscionability, public policy, illegality, etc. But that doesn’t necessarily make the District’s cross-claim a SLAPP.

Not a Prior Agreement

Williams v. Las Posas, No. B282513 (D2d6 Jun. 27, 2018)

Oh good. Another nursing home arbitration case. 

The Patient—who suffered a traumatic brain injury in a bike accident—had signed both an admittance agreement and a separate arb agreement. The arb agreement contained a broad clause that required any disputes arising from or related to the admittance agreement or any care provided by the nursing home go to arbitration. 

A Good Day for Fans of Ever More Discovery

Williams v. Superior Court, No. S227228 (Cal. Jul. 13, 2017)

This Supreme Court case is a Rorschach test. If you’re a plaintiff-side lawyer, it seems perfectly reasonable. But if you’re on the defense side, it feels like the Court is stepping in to squelch a rare effort by a trial court to use its discretion to keep discovery reasonable. 

SJ Affirmed, but Likely No Costs

Roman v. BRE Properties, No. B246841 (D2d7 Jun. 17, 2015)

It’s probably not too surprising that in order to bring a claim for disability discrimination, Plaintiff needs to establish that he is disabled within the meaning of the statute. When, in this case, Defendant served discovery asking for evidence of Plaintiffs’ disability, Plaintiff didn’t respond. That nonresponse was sufficient to meet Defendant’s burden when moving for summary judgment. And then when Plaintiff’s opposition offered nothing but his wife’s conclusory statement that she had previously told Defendant he “was disabled,” that wasn’t enough to create a disputed fact issue. So SJ was properly granted.

But the trial court erroneously awarded costs to defendants because it didn’t apply the heightened Christiansburg standard that the Supreme Court’s recent decision in Williams held applies to cost awards in FEHA cases. So the award was reversed and remanded for the trial court to decide whether the Christiansburg standard was met, and if not, what costs could be allocated entirely to claims other than those brought under the FEHA, for which costs could be awarded under the ordinary prevailing party standard under Code of Civil Procedure § 1032.

Reversed and remanded in part.

PAGA Takes Down Another Arbitration Clause

Williams v. Superior Court, No. B261007 (D2d4 Jun. 9, 2015)

Plaintiff in this case filed a single count action over the Labor Code Private Attorney General Act, seeking damages for Labor Code violations in both an individual and representative capacity. Defendant moved to compel arbitration, arguing that plaintiff had contractually waived the right to bring PAGA claims, and that, in any event the Labor Code violations that were the factual predicates to his PAGA claims we subject to an arbitration clause in his employment agreement. The trial court held the claims were unwaivable, but agreed that the underlying violations, when applied to the plaintiff individually, could be severed out and sent to arbitration, with the rest of the case stayed until that gets resolved.

A Rare Firm Hand on Discovery

Williams v. Superior Court, No. B259967 (D2d1 May 15, 2015)

Plaintiff brought a statewide PAGA representative action on behalf of Marshalls employees, alleging various predicate wage & hour violations. He served a set of interrogatories that asked for the contact information of all nonexempt Marshalls employees in California during the relevant time. The company objected, even after plaintiff offered to pay for a pre-disclosure notice that would permit employees to opt out of having their information disclosed. Plaintiff moved to compel, which the trial court largely denied. The court ordered Marshalls to produce information for only the store in which plaintiff worked. It further ordered that plaintiff could renew his motion, but only after he had been deposed for six hours, and subject to the defendants right to show the lack of merit to his claims. Plaintiff took a writ, which the court of appeal agreed to hear.

Three-and-a-Half Years of Appellate Litigation over a $5,368.88 Cost Award

Williams v. Chino Valley Ind. Fire Dist., No S213100 (Cal. May 4, 2015)

Appellate litigation in California can be a long game. The complaint in this case was filed in February 2008. The trial court order at issue—an award of $5,368.88 in costs to a prevailing defendant in a FEHA case—was entered on November 19, 2011. I wrote about this case in the third post on this blog, way back in the summer of 2013. The Supreme Court granted review that fall. And now nineteen months and 350-ish posts later, the court reverses the court of appeal.

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.

A Cost, Is a Cost, Is a Cost ...

Williams v. Chino Valley Independent Fire District, No E055755 (D4d2 July 23, 2012) 

Plaintiff lost a Fair Employment and Housing Act case and the trial court awarded costs under Code of Civil Procedure § 1032(b). On appeal, Plaintiff argued that costs could be awarded to a prevailing FEHA defendant only if the defendant satisfied the standard necessary to recover its attorneys fees under FEHA, i.e., that plaintiffs’ case was “frivolous, unreasonable, or without foundation.” The court of appeal rejected the argument and upheld the fee award.