Opinion ID: 844210
Heading Depth: 2
Heading Rank: 2

Heading: Class Certification and Disputes over a Claim's Elements

Text: The trial court concluded it could certify a class without resolving disputes over the scope of Brinker's duty to provide breaks because common questions would predominate even if Brinker's legal positions were correct. According to the Court of Appeal, this was error: the trial court was required to determine the elements of plaintiffs' claims because the court could not determine whether individual or common issues predominate in this case, and thus whether a class action was proper, without first determining this threshold issue. While we agree trial courts must resolve any legal or factual issues that are necessary to a determination whether class certification is proper, the Court of Appeal went too far by intimating that a trial court must as a threshold matter always resolve any party disputes over the elements of a claim. In many instances, whether class certification is appropriate or inappropriate may be determined irrespective of which party is correct. In such circumstances, it is not an abuse of discretion to postpone resolution of the disputed issue. (7) The certification question is `essentially a procedural one that does not ask whether an action is legally or factually meritorious.' ( Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th at p. 326, quoting Linder v. Thrifty Oil Co., supra, 23 Cal.4th at pp. 439-440; see also Eisen v. Carlisle & Jacquelin (1974) 417 U.S. 156, 178 [40 L.Ed.2d 732, 94 S.Ct. 2140] [`In determining the propriety of a class action, the question is not whether the plaintiff or plaintiffs have stated a cause of action or will prevail on the merits, but rather whether the requirements of [class certification] are met.'].) A class certification motion is not a license for a free-floating inquiry into the validity of the complaint's allegations; rather, resolution of disputes over the merits of a case generally must be postponed until after class certification has been decided ( Fireside Bank v. Superior Court, supra, 40 Cal.4th at pp. 1083-1086), with the court assuming for purposes of the certification motion that any claims have merit ( Linder, at p. 443). (8) We have recognized, however, that issues affecting the merits of a case may be enmeshed with class action requirements . . . . ( Linder v. Thrifty Oil Co., supra, 23 Cal.4th at p. 443; see also Wal-Mart Stores, Inc. v. Dukes (2011) 564 U.S. ___, ___ [180 L.Ed.2d 374, 131 S.Ct. 2541, 2551] [Analysis of a class certification's propriety [f]requently . . . will entail some overlap with the merits of the plaintiff's underlying claim. That cannot be helped.]; Coopers & Lybrand v. Livesay (1978) 437 U.S. 463, 469, fn. 12 [57 L.Ed.2d 351, 98 S.Ct. 2454] [`Evaluation of many of the questions entering into determination of class action questions is intimately involved with the merits of the claims.'].) When evidence or legal issues germane to the certification question bear as well on aspects of the merits, a court may properly evaluate them. ( Wal-Mart Stores, 564 U.S. at pp. ___-___ & fn. 6 [131 S.Ct. at pp. 2551-2552 & fn. 6]; Ghazaryan v. Diva Limousine, Ltd. (2008) 169 Cal.App.4th 1524, 1531 [87 Cal.Rptr.3d 518]; Caro v. Proctor & Gamble Co. (1993) 18 Cal.App.4th 644, 656 [22 Cal.Rptr.2d 419].) The rule is that a court may consider[] how various claims and defenses relate and may affect the course of the litigation even though such considerations . . . may overlap the case's merits. ( Fireside Bank v. Superior Court, supra, 40 Cal.4th at p. 1092; see Szabo v. Bridgeport Machines, Inc. (7th Cir. 2001) 249 F.3d 672, 676 [if the considerations necessary to certification overlap the merits. . . then the judge must make a preliminary inquiry into the merits].) (9) In particular, whether common or individual questions predominate will often depend upon resolution of issues closely tied to the merits. ( Coopers & Lybrand v. Livesay, supra, 437 U.S. at p. 469, fn. 12; Linder v. Thrifty Oil Co., supra, 23 Cal.4th at p. 443.) To assess predominance, a court must examine the issues framed by the pleadings and the law applicable to the causes of action alleged. ( Hicks v. Kaufman & Broad Home Corp., supra, 89 Cal.App.4th at p. 916.) It must determine whether the elements necessary to establish liability are susceptible of common proof or, if not, whether there are ways to manage effectively proof of any elements that may require individualized evidence. (See Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th at p. 334.) In turn, whether an element may be established collectively or only individually, plaintiff by plaintiff, can turn on the precise nature of the element and require resolution of disputed legal or factual issues affecting the merits. For example, whether reliance or a breach of duty can be demonstrated collectively or poses insuperable problems of individualized proof may be determinable only after closer inspection of the nature of the reliance required or duty owed and, in some instances, resolution of legal or factual disputes going directly to the merits. (See, e.g., Erica P. John Fund, Inc. v. Halliburton Co. (2011) 563 U.S. ___, ___ [180 L.Ed.2d 24, 131 S.Ct. 2179, 2184-2186]; Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 829-831 [97 Cal.Rptr.2d 226].) (10) Such inquiries are closely circumscribed. As the Seventh Circuit has correctly explained, any peek a court takes into the merits at the certification stage must be limited to those aspects of the merits that affect the decisions essential to class certification. ( Schleicher v. Wendt (7th Cir. 2010) 618 F.3d 679, 685.) While the Schleicher defendants urged that the trial court had erred by failing to resolve disputes over the falsity and materiality of their statements, the Seventh Circuit affirmed class certification without inquiry into such matters, concluding no element of the certification determination hinged on their resolution. ( Ibid. ) Likewise, in Jaimez v. Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286, 1303-1305 [105 Cal.Rptr.3d 443], the Court of Appeal reversed the trial court's refusal to certify a wage and hour class without deciding contested legal issues concerning the defendant's meal break policy because common questions predominated in any event. (See also Medrazo v. Honda of North Hollywood (2008) 166 Cal.App.4th 89, 97-98 [82 Cal.Rptr.3d 1] [trial court erred in resolving the merits of an affirmative defense divorced from consideration of the specific criteria for class certification].) (11) We summarize the governing principles. Presented with a class certification motion, a trial court must examine the plaintiff's theory of recovery, assess the nature of the legal and factual disputes likely to be presented, and decide whether individual or common issues predominate. To the extent the propriety of certification depends upon disputed threshold legal or factual questions, a court may, and indeed must, resolve them. Out of respect for the problems arising from one-way intervention, however, a court generally should eschew resolution of such issues unless necessary. (See Fireside Bank v. Superior Court, supra, 40 Cal.4th at p. 1074; Schleicher v. Wendt, supra, 618 F.3d at p. 685.) Consequently, a trial court does not abuse its discretion if it certifies (or denies certification of) a class without deciding one or more issues affecting the nature of a given element if resolution of such issues would not affect the ultimate certification decision. [6] (12) In support of its conclusion that a trial court must always first decide upon the applicable law and resolve legal issues surrounding each element of a proposed class claim, the Court of Appeal relied principally on our decision in Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906 [103 Cal.Rptr.2d 320, 15 P.3d 1071]. We disagree with the Court of Appeal's reading of our decision. In Washington Mutual, the plaintiffs sought certification of a nationwide class. Although members of the plaintiff class were subject to choice-of-law agreements, the trial court granted certification without first determining whether the agreements were enforceable and would result in the application of different state laws, and whether any applicable state laws varied in ways that would render the class proceeding unmanageable. We reversed, explaining that it was not possible to intelligently assess predominance and the manageability of claims asserted on behalf of nonresidents without those determinations. ( Washington Mutual, at pp. 915, 922, 927-928.) Washington Mutual involves an unexceptional application of the principles we have articulated: if the presence of an element necessary to certification, such as predominance, cannot be determined without resolving a particular legal issue, the trial court must resolve that issue at the certification stage. That the failure to resolve disputed legal issues affecting the elements of a claim is always reversible error does not follow.