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More Notes on Reversing Certification Orders

We meant to discuss this a while back. At a recent class action seminar, we opined that the recurring theme of class action certification appeals was this: you win or lose at the trial court, and appeals stand a poor chance once that war has been lost in Superior Court.

Since then, there have been two opinions reversing orders denying class certification. In Aguiar v. Cintas Corporation No. 2 (B182477) the Court of Appeal reversed and remanded a Los Angeles County Superior Court order denying class certification of a claim for violations of the Los Angeles Living Wage Ordinance (LWO) (Los Angeles Admin. Code, § 10.37 et seq.) and related claims. We discussed Aguiar last fall. It was originally unpublished, but a petition to order the opinion published was granted, and the case is now citeable as Aguiar v. Cintas Corp. No. 2 (2006) 144 Cal.App.4th 121.

Then there was this one: Barboza v. West Coast Digital GSM, Inc. (2nd District Court of Appeal, No. B188151, November 15, 2006) fka Ahrns v. West Coast Digital GSM, Inc., another reversal of an order denying class certification. A request for publication has been denied.

In Barboza, Los Angeles County Superior Court Judge William F. Fahey, Judge denied plaintiffs' motion for class certification, and plaintiffs appealed from that order. On appeal from the order denying class certification, plaintiffs contend (1) the trial court made erroneous evidentiary rulings; (2) the court applied improper legal criteria when denying their certification motion; and (3) the court's ruling was not supported by substantial evidence. The Court of Appeal found that substantial evidence did not support the trial court's denial of the certification motion, and reversed the order denying class certification.

In November 2004, nine employees filed a class action complaint alleging wage and hour claims against WCD and its agent. The complaint alleged that WCD had a practices of (1) making unlawful deductions from its retail employees' paychecks in violation of Labor Code sections 221, 400 through 410, and 2802; (2) failing to pay overtime in violation of Labor Code section 1194; (3) failing to provide required meal periods and rest periods in violation of Labor Code sections 512 and 226.7; (4) failing to pay the deducted amounts and the withheld overtime payments upon the employee's termination in violation of Labor Code section 201; and (5) improperly classifying its salaried retail employees as exempt from provisions of the Labor Code governing overtime and meal and rest periods. Plaintiffs moved for class certification in August 2005.

WCD opposed certification, arguing that there was no need for a class judgment because WCD conceded liability on the wrongful deductions issue, and therefore the only issue remaining was what deductions were suffered by each plaintiff. Because a separate calculation would be required for each plaintiff, WCD argued that individual, rather than common, issues predominated. WCD also contended that each plaintiff had different contracts and "signed attestations," although it did not explain how those contracts or documents related to the issues raised in the complaint. WCD contended that the named plaintiffs did not adequately represent the proposed class because four of the nine original plaintiffs had already settled with WCD, and thus disregarded their fiduciary duty to the class. It contended that inadequate responses to its discovery requests demonstrated that the named plaintiffs have little information about their claims or motivation to pursue them. Finally, WCD argued that plaintiffs' counsel was not qualified to represent the class because the attorneys did not specifically identify any case in which a court approved either of them to serve as class counsel, and because counsel refused to settle on behalf of the named plaintiffs. The only evidence WCD offered in support of any of these arguments was the declaration of former attorney, who by then had been disqualified for improper indirect contact with the named plaintiffs, in violation of California Rules of Professional Conduct, rule 2-100.

The trial court denied certification for three reasons. First, the court found that the proposed class and subclass definitions were "overbroad and do not state ascertainable classes. Second, the court found that common questions of fact did not appear to predominate in this case. Third, the court found there was no competent evidence that plaintiffs' attorneys met the standards required of class counsel, i.e., counsel with the professional qualifications, skill, experience, and resources to represent plaintiffs in a class action. In reaching this conclusion, the court found that one of the attorneys had no class action experience.

The Court of Appeal reversed, finding that substantial evidence did not support the trial court's reasons for denying certification. The opinion includes the usual discussion of certification standards that is of interest mostly because it discusses a rarely mentioned standard regarding the adequacy of class counsel.

Part of the determination of adequacy of representation rests on whether the attorney representing the class is qualified to conduct the litigation. (See, e.g., McGhee v. Bank of America (1976) 60 Cal.App.3d 442, 450, 131 Cal. Rptr. 482.) And, as one federal court explained, the court looks "to the professional qualifications, skills, experience and resources of the lawyers" to determine if the attorney representing the class is qualified. (Haley v. Medtronic, Inc. (C.D.Cal. 1996) 169 F.R.D. 643, 650.) In the present case, the trial court concluded "[t]here is no competent evidence before this Court that proposed class counsel meet these standards." The court apparently based this conclusion on its finding that plaintiffs' counsel had no class action experience. However, both Smith and Barritt submitted competent evidence -- their own declarations -- in which they stated, under penalty of perjury, that they represented plaintiffs in this action and that they currently were representing plaintiffs in other wage and hour class actions. In addition, Barritt stated that he had been appointed class counsel in prior wage and hour litigation. Although neither Smith nor Barritt provided the case names or numbers of these other class actions, there was no evidence submitted to suggest that their statements were false. [fn] Further, the relevant inquiry is whether the attorneys have sufficient skill and experience in the subject matter of the lawsuit, and the diligence and resources necessary to adequately prosecute the case. The ultimate issue is whether counsel is capable of adequately representing all interests, including those of absent class members. (See Cal Pak Delivery, Inc. v. United Parcel Service, Inc. (1997) 52 Cal.App.4th 1, 12.) In this case, Smith and Barritt submitted evidence that they had substantial experience litigating employment matters, including wage and hour issues, on behalf of plaintiffs and defendants. WCD produced no evidence to suggest that they lacked the skill, diligence, or resources necessary to prosecute this case. Indeed, the motion for class certification itself demonstrated the attorneys' understanding of both the substantive and procedural issues presented by this case, their diligence in prosecuting it, and their willingness and ability to devote the resources necessary to prosecute it. We conclude that the trial court's determination that counsel did not meet the standards necessary to represent the class, based solely on their purported lack of experience in class actions, was not supported by substantial evidence.

No petition for review was filed, and a request for publication was denied. There is already another related appeal. We do not know the issues in the new appeal, but we suspect they arise from the judgment in the post-appeal trial that went forward on the individual plaintiff's claims. Over the plaintiffs' objection, and following a denial of plaintiffs' petition for writ of supersedeas, the case proceeded to trial as to the individual plaintiffs, resulting in a judgment in their favor. WCD settled with several of the named plaintiffs shortly after the motion for class certification was filed, and those plaintiffs were never parties to this appeal. Two other plaintiffs, Sandra Ahrns and Constance Smith, were parties at the time the notice of appeal was filed, but subsequently settled with WCD. They were no longer parties to the appeal. As to the suitability of the remaining plaintiffs/judgment creditors, the court wrote: "On remand, the trial court may determine they no longer are suitable representatives of the class. But if that determination is made, plaintiffs must be given an opportunity to substitute new plaintiffs to represent the class."

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