Collateral estoppel in class action cases: Bridgeford v. Pacific Health Corp.

I am still catching up on relevant decisions from as far back as December. This one is worth looking at.

In Bridgeford v. Pacific Health Corp., 202 Cal.App.4th 1034 (Jan. 18, 2012), the Court of Appeal (Second Appellate District, Division Three) departed ways from their brethren in Division Four by holding that an order denying class certification is not binding on unnamed class members who might commence future class litigation.

The Bridgeford panel followed the U.S. Supreme Court's lead in Smith v. Bayer Corp., 131 S.Ct. 2368 (2011), handed down in June.  Smith held that "the unnamed putative members of a class that was never certified cannot be bound by collateral estoppel."  Slip op. at 1.  (At least they got something right last year.)

This creates a split in authority with Alvarez v. May Department Stores Co., 143 Cal.App.4th 1223 (2006) (Second Appellate District, Division Four):

California courts have held or suggested that the denial of class certification can establish collateral estoppel against absent putative class members on issues that were actually decided in connection with the denial.  (Alvarez v. May Dept. Stores Co. (2006) 143 Cal.App.4th 1223, 1236; Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193, 1202-1203 (Bufil); see also Johnson v. GlaxoSmithKline, Inc. (2008) 166 Cal.App.4th 1497, 1510-1513 & fn. 8 (Johnson) [assuming the point while expressing reservations].)  Alvarez stated that the principles of collateral estoppel ensure that the absent putative class members’ interests were adequately represented in the prior proceeding.  (Alvarez, supra, at p. 1236.)  We conclude to the contrary that if no class was certified by the court in the prior proceeding, the interests of absent putative class members were not represented in the prior proceeding and the requirements for collateral estoppel cannot be established, as we shall explain.

Bridgeford, slip op. at 11.  (Here is my original blog post on Alvarez and my original post on Johnson.) 

Notwithstanding the split in authority, it appears that no petition for review was filed.  I think the Alvarez rule is unlikely to survive the Bridgeford/Smith duo of cases.  An order denying class certification usually turns on a finding that the unnamed class members did not share common questions with the class representatives and could not be adequately represented by them.  It makes little sense to then conclude that the unnamed class members are nevertheless bound. 

Scott Leviant had an interesting post on Bridgeford on his blog, The Complex Litigator, back in January. 

Comments

[Louis Benowitz]

Page 26 of the Brinker slip opinion also supports the notion that certification denials have no preclusive effect and that Alvarez is dead. Otherwise, there would be effectively no risk of successive class actions on the same issues once a defendant defeats certification. Also, the Fireside Bank rule would be of little consequence because adverse determinations regarding substantive legal standards enmeshed in commonality inquiries at the certification stage would bind absent class members.

[Kimberly A. Kralowec]

That is an excellent point, Louis. I think you're right.