Source: http://thecomplexlitigator.com/post-data/category/Class+Actions%3A+Class+Definitions
Timestamp: 2019-04-22 05:10:44+00:00

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Now don't go all wobbly. Sure, in a negligence case, the trial court denied plaintiffs' motion to certify a class, finding that no community of interest existed and that the class action vehicle was not a superior method of resolving the claims of putative class members. But that doesn't mean that California is suddenly a hotbed of negligence class actions. Negligence claims are still notoriously difficult to certify. Despite all that, this decision is worth a read.
In Bomersheim v. Los Angeles Gay And Lesbian Center (May 26, 2010), the Court of Appeal (Second Appellate District, Division One) reviewed a trial court order denying class certification. Concluding that the order was based on improper criteria and was not supported by substantial evidence, the Court reversed and directed the trial court to grant the motion.
Seventh Circuit provides sharply defined view on class member standing in Kohen, et al. v. Pacific Investment Management Company LLC, et al.
I don't follow the Seventh Circuit's decisions closely. It's a bit outside my regular commute. But it has served up an educational opinion about class member standing that is too intriguing to pass up without comment.
Changes in the demand for or the supply of the underlying commodity will make the price of a futures contract change over the period in which the contract is in force. If the price rises, the “long” (the buyer) benefits, as in our example, and if it falls the “short” (the seller) benefits. But a buyer may be able to force up the price by “cornering” the market—in this case by buying so many June contracts for 10-year Treasury notes that sellers can fulfill their contractual obligations only by dealing with that buyer.
Board of Trade v. SEC, supra, 187 F.3d at 725, remarks that since the possibility of manipulation “comes from the potential imbalance between the deliverable supply and investors’ contract rights near the expiration date[,] . . . [f]inancial futures contracts, which are settled in cash, have no ‘deliverable supply’; there can never be a mismatch between demand and supply near the expiration, or at any other time.” But while it is correct that most financial futures contracts are settled in cash, CFTC v. Zelener, 373 F.3d 861, 865 (7th Cir. 2004); Kolb, supra, at 16, and that if a cash option exists there is no market to corner (no one can corner the U.S. money supply!), futures contracts traded on the Chicago Board of Trade for ten-year U.S. Treasury notes are an exception; they are not “cash settled.” Short sellers who make delivery must do so with approved U.S. Treasury notes; otherwise they must execute offsetting futures contracts.
PIMCO argues that before certifying a class the district judge was required to determine which class members had suffered damages. But putting the cart before the horse in that way would vitiate the economies of class action procedure; in effect the trial would precede the certification. It is true that injury is a prerequisite to standing. But as long as one member of a certified class has a plausible claim to have suffered damages, the requirement of standing is satisfied. United States Parole Commission v. Geraghty, 445 U.S. 388, 404 (1980); Wiesmueller v. Kosobucki, 513 F.3d 784, 785-86 (7th Cir. 2008). This is true even if the named plaintiff (the class representative) lacks standing, provided that he can be replaced by a class member who has standing. “The named plaintiff who no longer has a stake may not be a suitable class representative, but that is not a matter of jurisdiction and would not disqualify him from continuing as class representative until a more suitable member of the class was found to replace him.” Id. at 786.
Before a class is certified, it is true, the named plaintiff must have standing, because at that stage no one else has a legally protected interest in maintaining the suit. Id.; Sosna v. Iowa, 419 U.S. 393, 402 (1975); Walters v. Edgar, 163 F.3d 430, 432-33 (7th Cir. 1998); Murray v. Auslander, 244 F.3d 807, 810 (11th Cir. 2001). And while ordinarily an unchallenged allegation of standing suffices, a colorable challenge requires the plaintiff to meet it rather than stand mute. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). PIMCO tried to show in the district court that two of the named plaintiffs could not have been injured by the alleged corner. We need not decide whether it succeeded in doing so, because even if it did, that left one named plaintiff with standing, and one is all that is necessary.
What is true is that a class will often include persons who have not been injured by the defendant’s conduct; indeed this is almost inevitable because at the outset of the case many of the members of the class may be unknown, or if they are known still the facts bearing on their claims may be unknown. Such a possibility or indeed inevitability does not preclude class certification, Carnegie v. Household Int’l, supra, 376 F.3d at 661; 1 Alba Conte & Herbert Newberg, Newberg on Class Actions § 2:4, pp. 73-75 (4th ed. 2002), despite statements in some cases that it must be reasonably clear at the outset that all class members were injured by the defendant’s conduct. Adashunas v. Negley, 626 F.2d 600, 604 (7th Cir. 1980); Denney v. Deutsche Bank AG, 443 F.3d 253, 264 (2d Cir. 2006). Those cases focus on the class definition; if the definition is so broad that it sweeps within it persons who could not have been injured by the defendant’s conduct, it is too broad.
At argument PIMCO’s lawyer told us that he could obtain names of class members. If so, he can, as in Bell v. Farmers Ins. Exchage, 9 Cal. Rptr. 3d 544, 550-51, 568, 571 (Cal. App. 2004), and Long v. Trans World Airlines, Inc., 1988 WL 87051, at *1 (N.D. Ill. Aug. 18, 1988), depose a random sample of class members to determine how many were net gainers from the alleged manipulation and therefore were not injured, and if it turns out to be a high percentage he could urge the district court to revisit its decision to certify the class. Cf. Hilao v. Estate of Marcos, 103 F.3d 767, 782-84 (9th Cir. 1996); Long v. Trans World Airlines, Inc., 761 F. Supp. 1320, 1325-30 (N.D. Ill. 1991); Marisol A. v. Giuliani, 1997 WL 630183, at *1 (S.D.N.Y. Oct. 10, 1997). PIMCO has not done this; should it take the hint and try to do so now, this will be an issue for consideration by the district judge.
Slip op. at 13. The Opinion finishes with a sharp kick to the shins: "PIMCO’s attempt to derail this suit at the outset is ill timed, ill conceived, and must fail. The district court’s class certification is AFFIRMED." Slip op. at 15. Nothing like an educational and blunt opinion to keep legal discourse interesting.
My thanks to Kimberly Kralowec for the mention at UCL Practitioner. And thanks to some guy whose name sounds like "I am - saw the end" for directing me to the case.
On April 13, 2009, the Court of Appeal (Second Appellate District, Division One) ordered the publication of its March 12, 2009 opinion in Tarkington v. California Unemployment Insurance Appeals Board (Albertson’s, Inc.). The appeal followed a somewhat complex effort to obtain unemployment insurance benefits by locked-out employees of Albertsons, Inc. If you are curious about such things as writ petitions following adverse administrative ruling and the disdainful lack of honor by defendants that demand procedural compliance only to throw that compliance in the plaintiffs’ face when they satisfy those demands, then I urge you to read the opinion since I won’t be discussing those niceties here.
“ This is an appeal from the denial of a writ petition, styled as a class action, filed by employees of Albertson’s Inc. (Albertson’s) seeking to reverse an administrative decision denying them unemployment insurance benefits during an 18-week lockout by Albertson’s. On demurrer, the trial court ruled that the employees failed to allege sufficient facts supporting equitable tolling. The trial court also struck the class allegations as overly broad. The employees elected not to amend their petition in order to pursue the present appeal. We reverse and remand for further proceedings.
(Slip op., at pp. 17-20.) This holding is likely to see immediate use in every class action challenged by way of demurrer or motion to strike, and it may deter these procedural wastes of time. At least I hope so. Nothing ruins a perfectly good day like receiving the obligatory demurrer to class allegations.
When does a class action go to trial? That’s not an easy question to answer. The potential recovery is a factor, but not always. Personalities involved in the litigation are a factor, but not always. The jury pool is factor, but not always. However, when the class is seeking to declare unlawful a delivery company’s classification of delivery drivers as “independent contractors,” it looks like a sure bet that the class action will go to trial.
“ Cristler emphasizes throughout its briefing that other cases addressing the proper classification of package delivery drivers have resulted in findings that the drivers were employees, rather than independent contractors. (See Estrada, supra, 154 Cal.4th at pp. 11-12 [reciting litany of factors that provided substantial evidence to support trial court's finding that FedEx drivers were employees, including "FedEx's control over every exquisite detail of the drivers' performance, including the color of their socks and the style of their hair"]; JKH Enterprises, Inc. v. Department of Industrial Relations (2006) 142 Cal.App.4th 1046, 1065 [listing factors that provided substantial evidence for trial court's conclusion that drivers were employees and thus "reject[ing] JKH's contention" that the evidence "dictate[d] but one conclusion here — that the drivers are independent contractors"]; Air Couriers, supra, 150 Cal.App.4th at p. 938 [same].) The simple answer to these references is that these cases concerned different circumstances presented to a different finder of fact. Indeed, even if the facts of this case were identical to those in the cases Cristler cites (and they are not), we would not be authorized to overrule the determination of the jury to achieve conformity with other cases — particularly as Cristler does not even argue that the jury's verdict is unsupported by substantial evidence.
As part of the appeal, plaintiffs contended that the trial court erred by failing to continually review the class definition to ensure that class members were not inappropriately excluded: “In the instant case, regardless of whether the trial court erred in defining the class, Cristler fails to carry its burden of establishing reversible error as there is no showing of prejudice from the trial court's assertedly erroneous rulings.” (Slip op., at p. 11.) Continuing, the Court explained: “In light of the trial court's refusal to expand the class definition, the drivers who remained in the class — those without any employees of their own and who did not deliver even an occasional package for clients other than Express Messenger — were the most likely to be characterized as Express Messenger's employees rather than as independent contractors.” (Ibid.) Losing at trial with a narrow class didn’t do much for the plaintiffs’ arguments.
Court of Appeal reverses denial of certification in Ghazaryan v. Diva Limousine, Ltd.
Continuing a theme, The Complex Litigator has noted on several occasions, including this recent post, that luck of the draw seems to have resulted in a substantial number of class action-related decision issuing from the Second Appellate District, Division Seven. You can add another decision published today to that already substantial list of significant decisions.
“Sarkis Ghazaryan appeals from the trial court’s order denying his motion to certify a class of limousine drivers allegedly undercompensated by Diva Limousine, Ltd. (Diva) in violation of California wage and hour laws. Ghazaryan’s lawsuit contests Diva’s policy of paying its drivers an hourly rate for assigned trips but failing to pay for on-call time between assignments (referred to by Diva employees as “gap time”). Because the trial court incorrectly focused on the potential difficulty of assessing the validity of Diva’s compensation policy in light of variations in how drivers spend their gap time, we reverse the court’s denial of the motion and remand with directions to certify Ghazaryan’s two proposed subclasses.
(Slip op., at p. 2.) The opinion is something of a guidebook on several major areas of contention in certification motions, focusing on the way that a trial court should evaluate evidence and decide certification motions.
Second, the opinion demonstrates application of the rule that a class definition that describes objective characteristics or experiences is sufficient at the certification stage: “As this court explained in Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, a class is properly defined in terms of ‘objective characteristics and common transactional facts,’ not by identifying the ultimate facts that will establish liability.” (Slip op., at 6.) Misunderstandings frequently arise when trial courts attempt to apply the rule that “merits-based” definitions should not be included in a class definition.
Third, the opinion explains the limitations on the “overbreadth” challenge to proposed class definitions, demonstrating application of the “overbreadth” limitation incorporated in the “ascertainability” requisite by comparing application of that requisite in Akkerman v. Mecta Corp., Inc. (2007) 152 Cal.App.4th 1094 with the application in Aguiar v. Cintas Corp. No. 2 (2006) 144 Cal.App.4th 121 and Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715. (Slip op., at 8-9.) The fact that the Court identified outcomes at each end of the “ascertainability” spectrum adds at least some measure of clarity to what is observably a challenging issue.
Fourth, the opinion provides guidance on the community of interest requisite, and, specifically, the difficult standard for determining the predominance of common issues of law or fact. Because this standard is often fact-driven, the opinion is helpful in that it offers an instructive framework explaining by example the difference between the predominance of individualized issues and the mere existence of individual issues: “The distinction is illustrated by Silva v. Block (1996) 49 Cal.App.4th 345 (Silva) and Prince v. CLS Transportation, Inc., supra, 118 Cal.App.4th 1320.” (Slip op., at 9-13.) It is routinely the case that class certification is denied because some individual issues are identified by the trial court, despite the fact that any reasonable assessment of the facts and law supports a finding that common issues of law or fact predominate.
The opinion also touches on a still-evolving area of employment law: the “on-call” wage claim. The published caselaw on the compensability of “on-call” time under California law is almost nonexistent. Although the opinion does not establish a standard, it offers three important observations. First, the opinion recognizes that the Department of Labor Standards Enforcement (“DLSE”) has issued advisory letters on the subject. While the opinion is clear that the DLSE letters are not controlling authority, the opinion correctly notes that they should be given significant weight. Second, the opinion notes that “control” is the common element to all “on-call” factors in the DLSE’s analyses. And third, the opinion notes that the DLSE chose not to defer entirely to the corresponding federal standard under the Fair Labor Standards Act of 1938 or the important Ninth Circuit decision about “on-call” time, Berry v. County of Sonoma (9th Cir. 1994) 30 F.3d 1174.
The decision is a worthwhile read if you are preparing a motion for class certification or just had one denied.
Finally, in the interest of full disclosure (especially important if you consider my views on the opinion to be inaccurate in any way), I authored the Appellant’s briefs in this appeal while employed at another firm.
For an amusing, shorter comment with a slightly different perspective on Ghazaryan v. Diva Limousine, take a look at Storm's California Employment Law.

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