Opinion ID: 2585839
Heading Depth: 2
Heading Rank: 2

Heading: Certification considerations where laws of multiple states found applicable in action

Text: As indicated, choice-of-law and conflict of laws issues are significant when certification of a nationwide class is sought. In the event a trial court determines that class claims will require adjudication under the laws of multiple states, the court must then ascertain whether variations exist among the applicable laws. Although the involvement of more than one state's law does not make a class action per se unmanageable, any variances among state laws must be examined to determine whether common questions will predominate over individual issues and whether litigation of a nationwide class may be managed fairly and efficiently. In California it is settled that the class action proponent bears the burden of establishing the propriety of class certification, ( hinder v. Thrifty Oil Co., supra, 23 Cal.4th at p. 435, 97 Cal.Rptr.2d 179, 2 P.3d 27; Richmond v. Dart Industries, Inc., supra, 29 Cal.3d at p. 470, 174 Cal. Rptr. 515, 629 P.2d 23.) Although such burden clearly contemplates a demonstration of predominance and manageability ( Clothesrigger, supra, 191 Cal.App.3d at p. 619, 236 Cal.Rptr. 605; Canon U.S.A., supra, 68 Cal.App.4th at pp. 7-8, 79 Cal. Rptr.2d 897; Osborne v. Subaru of America, Inc., supra, 198 Cal.App.3d at pp. 655-658, 243 Cal.Rptr. 815; Rose v. Medtronics, Inc., supra, 107 Cal.App.3d at p. 157, 166 Cal.Rptr. 16), there are few California decisions specifically addressing how the proponent may meet this burden. The procedures articulated in the Consumer Legal Remedies Act (Civ.Code, § 1750 et seq.) provide no aid on this particular issue. Therefore, we may look to the procedures governing federal class actions under rule 23 of the Federal Rules of Civil Procedure (28 U.S.C.) (Rule 23) for guidance, ( hinder v. Thrifty Oil Co., supra, 23 Cal.4th at p. 437, 97 Cal.Rptr.2d 179, 2 P.3d 27; Civil Seyvice Employees Ins. Co. v. Superior Court (1978) 22 Cal.3d 362, 376 & fn. 7, 149 Cal.Rptr. 360, 584 P.2d 497.) Our survey of the relevant federal decisions, i.e., those involving multistate class actions under Rule 23(b)(3), [9] discloses that, as in California, it is incumbent upon the class action proponent to prove each required element for class certification, including predominance of common issues and manageability. ( In re American Medical Systems, Inc. (6th Cir.1996) 75 F.3d 1069, 1085-1086; see Castano v. American Tobacco Co. (5th Cir.1996) 84 F.3d 734, 741-742; Commander Properties Corp. v. Beech Aircraft Corp. (D.Kan.1995) 164 F.R.D. 529, 541; but see Maywalt v. Parker & Parsley Petroleum Co. (S.D.N.Y. 1993) 147 F.R.D. 51, 58 [manageability concerns regarding pendent state law claims found speculative since court declined to select applicable law at time of certification].) For a significant number of federal courts, this means the proponent must creditably demonstrate, through an `extensive analysis' of state law variances, `that class certification does not present insuperable obstacles.' ( Walsh v. Ford Motor Co. (D.C. Cir.1986) 257 App.D.C. 85, 807 F.2d 1000, 1017, relying upon In re School Asbestos Litigation (3d Cir.1986) 789 F.2d 996, 1010; Weikel v. Tower Semiconductor Ltd. (D.N.J.1998) 183 F.R.D. 377, 401-403; In re Jackson National Life Insurance Co. Premium, Litigation (W.D.Mich.1998) 183 F.R.D. 217, 223; In re Ford Motor Co. Bronco II Product Liability Litigation (E.D.La.1997) 177 F.R.D. 360, 368-369; see Valentino v. Carter-Wallace, Inc. (9th Cir.1996) 97 F.3d 1227, 1234-1235; Castano v. American Tobacco Co., supra, 84 F.3d at p. 741; In re American Medical Systems, Inc., supra, 75 F.3d at p. 1085; Priest v. Zayre Corp. (D.Mass. 1988) 118 F.R.D. 552, 558; but see Barker v. FSC Securities Corp. (W.D.Ark.1989) 133 F.R.D. 548, 554-555 [pendent state claims certified where defendants failed to establish material state law differences]; Longden v. Sunderman (N.D.Tex.1988) 123 F.R.D. 547, 555-556 [noting defendant's failure to show substantive variations in state fraud laws]; Dekro v. Stern Brothers & Co. (W.D.Mo.1982) 540 F.Supp. 406, 418 [same].) On this score, the presentation must be sufficient to permit the district court, at the time of certification, to make a detailed assessment of how the difficulties posed by the variations in state law will be managed at trial. ( Castano v. American Tobacco Co., supra, 84 F.3d at pp. 741-742; In re Jackson National Life Insurance Co. Premium Litigation, supra, 183 F.R.D. at p. 223; Chin v. Chrysler Corp. (D.N.J.1998) 182 F.R.D. 448, 458; Tylka v. Gerber Products Co. (N.D.Ill.1998) 178 F.R.D. 493, 498; In re Stucco Litigation (E.D.N.C.1997) 175 F.R.D. 210, 216-217.) For example, certification may be appropriate if the class action proponent shows that state law variations can be effectively managed through the creation of a small number of subclasses grouping the states that have similar legal doctrines. (See Walsh v. Ford Motor Co., supra, 807 F.2d at p. 1017; Tylka v. Gerber Products Co., supra, 178 F.R.D. at p. 498; In re Telectronics Pacing Systems, Inc. (S.D.Ohio 1996) 168 F.R.D. 203, 221.) A number of federal courts also caution that if more than a few of the laws of the 50 states differ, the district court may face an impossible task of instructing a jury on the relevant law. ( In re American Medical Systems, Inc., supra, 75 F.3d at p. 1085; Chin v. Chrysler Corp., supra, 182 F.R.D. at p. 458.) To meet such concerns, the district court possesses discretion to require the class action proponent to submit sample jury instructions and special verdict forms demonstrating how class causes of action could be presented to a jury for resolution `in a way that fairly represents the law of the 50 states while not overwhelming jurors with hundreds of interrogatories and a verdict form as large as an almanac' ( Chin v. Chrysler Corp., supra, 182 F.R.D. at p. 458; see In re Stucco Litigation, supra, 175 F.R.D. at p. 216.) This call for a manageable set of jury instructions presupposes that even slight variations and nuances in applicable state laws may affect predominance and manageability. ( In re Stucco Litigation, supra, 175 F.R.D. at p. 216; see also Matter of Rhone-Poulenc Rorer Inc. (7th Cir. 1995) 51 F.3d 1293, 1300; Fisher v. Bristol-Myers Squibb Co. (N.D.Ill.1998) 181 F.R.D. 365, 368; Tylka v. Gerber Products Co., supra, 178 F.R.D. at p. 498 [concluding that plaintiffs failed to meet their burden of demonstrating that the nuances of 50 consumer fraud statutes and 50 common laws are manageable]; cf. In re Telectronics Pacing Systems, Inc. (S.D.Ohio 1997) 172 F.R.D. 271, 291-294 [while even slight variations may be significant and relevant with respect to manageability issues, those that are insignificant or unimportant to the issues at stake should not preclude class action certification]. [10] ) The foregoing decisions stress that a district court considering certification of a nationwide class cannot simply rely on counsel's assurances of manageability. ( Castano v. American Tobacco Co., supra, 84 F.3d at p. 742; In re Jackson National Life Insurance Co. Premium Litigation, supra, 183 F.R.D. at p. 223; Chin v. Chrysler Corp., supra, 182 F.R.D. at p. 459; In re Telectronics Pacing Systems, Inc., supra, 168 F.R.D. at p. 221.) Put another way, the court cannot accept on faith an assertion that variations in state laws relevant to the case do not exist or are insignificant; rather, the party seeking certification must affirmatively demonstrate the accuracy of the assertion. ( Castano v. American Tobacco Co., supra, 84 F.3d at pp. 741-742; Walsh v. Ford Motor Co., supra, 807 F.2d at p. 1016.) Moreover, it is insufficient to merely refer the district court to densely worded articles, graphs, and charts pertaining to each state's laws. As one court explained, class action proponents should not expect the court to ferret through, disseminate, and craft manageable schemes from such materials when that burden clearly rests with the proponents. ( Tylka v. Gerber Products Co., supra, 178 F.R.D. at p. 498, fn. 3.) The courts in several of our sister states are in accord. (E.g., Ex parte Green Tree Financial Corp. (Ala. 1998) 723 So.2d 6, 10-11 [borrowers failed to establish that state law variations would not swamp common issues and defeat predominance in action for breach of contract, breach of duty, civil conspiracy, negligence, and wantonness against lender for allegedly improper use of force-placed insurance]; Carroll v. Cellco Partnership (1998) 313 N.J.Super. 488, 713 A.2d 509, 518 [criticizing trial court for glossing over potential state law differences and speculating on a hypothetical system to deal with factual differences]; Duvall v. TRW, Inc. (1991) 63 Ohio App.3d 271, 578 N.E.2d 556, 559-560 [plaintiff failed to sustain burden where he presented no analysis on state law variations regarding strict liability, negligence, breach of warranty, and punitive damages].) In Canon U.S.A., supra, 68 Cal.App.4th 1, 79 Cal.Rptr.2d 897, the Court of Appeal held that a trial court may, at the pleading stage, consider whether certification of a nationwide class would require application of numerous different state rules of law and whether California has a `special obligation' to undertake the massive burden of such litigation. [11] (Id. at p. 8, 79 Cal. Rptr.2d 897.) Relying on two federal authorities, the court indicated that a party seeking certification bears the burden of demonstrating how subclasses could be formed to alleviate problems presented by state law variances. (Ibid., relying upon Walsh v. Ford Motor Co., supra, 807 F.2d at pp. 1016-1017 and In re Ford Motor Co. Ignition Switch Products (D.N.J.1997) 174 F.R.D. 332, 350.) The court issued a writ of mandate directing the trial court to vacate its order denying the defendants' motion to strike from the complaint all references to a nationwide class. The trial court was instructed to reconsider the motion after giving the class action proponents an opportunity to present a more thorough analysis of the conflicting laws of the various states, and to show how subclasses can be created, or if they would be feasible, to maintain a class action. ( Canon U.S.A., supra, 68 Cal.App.4th at pp. 8-9 & fn. 6, 79 Cal.Rptr.2d 897; see Norwest Mortgage, Inc. v. Superior Court, supra, 72 Cal.App.4th at p. 229, 85 Cal.Rptr.2d 18 [remanding with directions to undertake Canon U.S.A. 's analysis in the event plaintiffs sought certification of class with nonresident members and laws of other states were found controlling].) Like Canon U.S.A., we favor adoption of the type of burdens articulated in the federal decisions above. Accordingly, we hold that a class action proponent must credibly demonstrate, through a thorough analysis of the applicable state laws, that state law variations will not swamp common issues and defeat predominance. Additionally, the proponent's presentation must be sufficient to permit the trial court, at the time of certification, to make a detailed assessment of how any state law differences could be managed fairly and efficiently at trial, for example, through the creation of a manageable number of subclasses. [12] Trial courts, in assessing the propriety of nationwide class certification, must consider these factors, as well as all the other factors relevant to certification, including the potential recovery of each individual claimant and whether the proposed class suit is the only effective way to redress the alleged wrongdoing or to prevent unjust advantage to the defendant. (See Under v. Thrifty Oil Co., supra, 23 Cal.4th at p. 446, 97 Cal.Rptr.2d 179, 2 P.3d 27; Blue Chip Stamps v. Superior Court (1976) 18 Cal.3d 381, 385, 134 Cal. Rptr. 393, 556 P.2d 755.) Adherence to these procedures should ensure that nationwide class actions are certified only where they will result in substantial benefits both to the litigants and the courts. (See City of San Jose v. Superior Court, supra, 12 Cal.3d at p. 459, 115 Cal.Rptr. 797, 525 P.2d 701.) Briseno argues that a defendant should not be able to defeat nationwide class certification without affirmatively showing the existence of outcome-determinative differences among applicable state laws as contemplated by Hurtado, supra, 11 Cal.3d at pages 580-581, 114 Cal.Rptr. 106, 522 P.2d 666. We reject this argument for three reasons. First, the showing required in Hurtado, supra, 11 Cal.3d 574, 114 Cal.Rptr. 106, 522 P.2d 666, is relevant to the issue of which state's law is more appropriately applied to the claims of nonresident class members; it would serve no useful purpose after a trial court has decided to apply the laws of other states. Such a rule would, in effect, impermissibly relieve the class action proponent of the burden of establishing predominance and manageability. Second, we are not convinced by those of Briseno's authorities in which courts certified multistate class actions without determining the applicable law or delving into manageability issues. (E.g., Longden v. Sunderman, supra, 123 F.R.D. at pp. 555-556; In re LILCO Securities Litigation (E.D.N.Y.1986) 111 F.R.D. 663, 670 [even if 50 states' laws must be applied to pendent state claims, decertification is an option if material variations render their adjudication unmanageable].) As discussed ante, in part A, a trial court cannot reach an informed decision on predominance and manageability without first determining whether class claims will require adjudication under the laws of other jurisdictions and then evaluating the resulting complexity where those laws must be applied. ( Clothesrigger, supra, 191 Cal. App.3d at p. 619, 236 Cal.Rptr. 605; see Canon U.S.A., supra, 68 Cal.App.4th at pp. 7-8, 79 Cal.Rptr.2d 897; Osborne v. Subaru of America, Inc., supra, 198 Cal. App.3d at pp. 654-659, 243 Cal.Rptr. 815; cf. Rose v. Medtronics, Inc., supra, 107 Cal.App.3d at p. 157, 166 Cal.Rptr. 16.) That a trial court retains the power to consider decertification when a class action later proves to be unmanageable (see Vasquez v. Superior Court (1971) 4 Cal.3d 800, 821, 94 Cal.Rptr. 796, 484 P.2d 964) should not serve to lessen the court's initial responsibility to grant certification only where all of the requirements for certification have been met. Third, several of Briseno's authorities do not apply the burden she proposes, but actually support the rule we adopt. (E.g., In re Prudential Insurance Co. Sales Practices Litigation (3d Cir. 1998) 148 F.3d 283, 315-316 & fn. 57 [agreeing with district court's conclusion that state law variations fell into a limited number of predictable patterns and did not render action unmanageable, but noting the manageability requirement may no longer be necessary where, as there, certification of a settlement-only class action was sought]; In re School Asbestos Litigation, supra, 789 F.2d at p. 1010 [expressing doubts, but deferring to district court's wide discretion regarding manageability of litigation].) In one case, a federal district court agreed that the application of various states' laws raises a very real concern regarding manageability of a class action at trial. ( In re Copley Pharmaceutical, Inc. (D.Wyo.1995) 161 F.R.D. 456, 465.) There, however, the court concluded that many of the state law nuances might be irrelevant in light of the particular defendant's admissions regarding product contamination and liability. (Ibid.) These authorities, like the ones we rely upon, hew to the principle that certification of a nationwide class is not a matter of right but is contingent upon a showing that all prerequisites for a class action are met.