The UCL Practitioner

Recent federal decision applies Pioneer Electronics to resolve dispute over discovery of class member contact information: Salazar v. Avis Budget Group, Inc.

In Salazar v. Avis Budget Group, Inc., 2007 WL 2990281 (S.D. Cal. Oct. 10, 2007), a federal district court applied the rules outlined in Pioneer Electronics and ordered the defendant to disclose the class members' contact information after an “opt-out” notice was given. Foreshadowing the Court of Appeal's ruling in CashCall, Inc. v. Superior Court, 159 Cal.App.4th 273 (2008), Magistrate Judge McCurine observed that “the minimal information Plaintiff requests is indeed contemplated under the Federal Rules of Civil Procedure … as basic to the discovery process.” Id. at *2. (See this prior blog post for more on CashCall.) He also expressed skepticism about the employer-defendant's professed solicitude for the class members' privacy rights, observing that its conduct suggested that its "concern about the privacy rights of the potential class members is actually driven more by [its own] self-interest." Id. Finally, he noted the importance of class actions generally (as did the Supreme Court in Pioneer Electronics): "[C]lass action lawsuits can serve a valuable social function in addressing the rights of the public. The voice of a class rings more loudly and garners more attention than a single voice."

Another new class member discovery decision: CashCall, Inc. v. Superior Court

In CashCall, Inc. v. Superior Court, ___ Cal.App.4th ___ (Jan. 24, 2008), the Court of Appeal (Fourth Appellate District, Division One) handed down another significant discovery-related opinion, holding that the trial court appropriately permitted "precertification discovery in a class action for the purpose of identifying class members who may become substitute plaintiffs in place of named plaintiffs who were not members of the class they purported to represent." Slip op at 2.

In so holding, the Court distinguished First American Title Ins. Co v. Superior Court (Sjobring), 146 Cal.App.4th 1564 (2007). In First American, the Court of Appeal (Second Appellate District, Division Three) refused to permit such discovery to "a class action representative plaintiff [who] is not – and never was – a member of the class he purports to represent" because, under the circumstances of that case, "the grant of such discovery would sanction an abuse of the class action procedure." Id. at 1566. In CashCall, the Court of Appeal found First American distinguishable:

Unlike in First American, we conclude the potential for abuse of the class action procedure is not significant in this case. In First American, the plaintiff essentially "appointed himself enforcement officer for the California Department of Insurance settlement agreement" and "piggybacked" his class action onto that settlement agreement (possibly to obtain attorney fees). (First American, supra, 146 Cal.App.4th at p. 1577.) That scenario appears to exemplify the classic type of abusive class action of which CashCall warns. However, those circumstances do not exist in this case. There is no state or other investigation, much less a settlement, involving CashCall's secret call monitoring program. Absent continuation of the instant class action, there likely will be no other investigation of CashCall's conduct or potential relief obtained by class members for its alleged violations of their privacy rights. Furthermore, because only CashCall has knowledge of which customers' calls were monitored, the plaintiffs cannot be faulted for filing a class action based on the suspicion their privacy rights may have been violated and only later learning from CashCall that their calls had not been monitored (and therefore they do not have standing). Accordingly, unlike in First American, the potential for abuse of the class action procedure in this case is minimal. Neither the reasoning nor the result in First American persuades us that the trial court in this case abused its discretion by granting the plaintiffs' motion for precertification discovery of the identities of class members. Rather, we conclude the trial court, in applying the Parris balancing test, did not abuse its discretion.

CashCall, slip op. at 34-35 (citing Parris v. Superior Court, 109 Cal.App.4th 285 (2003)).

The Court described the "Parris balancing test" as follows:

In deciding whether to order precertification discovery of the identities of potential class members, a "trial court must . . . expressly identify any potential abuses of the class action procedure that may be created if the discovery is permitted, and weigh the danger of such abuses against the rights of the parties under the circumstances."

Id. at 11. Whether to permit the discovery is within the trial court's discretion. Id. The Court rejected CashCall's proposed "bright-line rule," under which "a trial court [would be] required to deny a motion for precertification discovery, without applying the Parris balancing test and exercising its discretion to permit precertification discovery." Id. at 12 (footnote omitted). The Court explained:

Although we agree with the general principle that a plaintiff must have standing to assert a cause of action, we are not persuaded by CashCall's assertion in the context of class actions that standing of the original named plaintiff(s) at the beginning of the action is necessarily a requirement for continuation of the action. Rather, we conclude that a trial court, exercising its reasonable discretion in applying the Parris balancing test in the circumstances of a particular case, may order precertification discovery of the identities of class members (i.e., those with standing) who, when contacted, ultimately may elect to be substituted as named plaintiffs to continue prosecution of the class action on behalf of the class.

Id. at 13.

My prior posts on First American are here and here. Another recent discovery-related decision, handed down nine days before CashCall, is also of interest. My post on Puerto v. Superior Court (Wild Oats Markets, Inc.), ___ Cal.App.4th ___ (Jan. 15, 2008) (Second Appellate District, Division Seven) is available at this link.

New class member discovery decision: Puerto v. Superior Court (Wild Oats Markets, Inc.)

In Puerto v. Superior Court (Wild Oats Markets, Inc.), ___ Cal.App.4th ___ (Jan. 15, 2008), the Court of Appeal (Second Appellate District, Division Seven) held that the trial court abused its discretion by requiring an "opt-in" procedure before witness contact information could be released in response to Form Interrogatory 12.1. The tone of the opinion is quite interesting. It suggests that the Court of Appeal considers such discovery routine and that an opt-in procedure would never have been ordered in a smaller (i.e., a non-putative-class-action) case. For example:

Central to the discovery process is the identification of potential witnesses. .... One glance at the form interrogatories approved by the Judicial Council, particularly the interrogatories in the 12.0 series, demonstrates how fundamentally routine the discovery of witness contact information is.

Slip op. at 8. Similarly:

This is basic civil discovery. .... Nothing could be more ordinary in discovery than finding out the location of identified witnesses so that they may be contacted and additional investigation performed. .... Indeed, it is only under unusual circumstances that the courts restrict discovery of nonparty witnesses’ residential contact information.

Id. at 13. As for the impact of the size of the (putative class action) case, the Court had this to say:

To the extent that the privacy invasion appears significant here, we believe that this is an artifact of the number of individuals involved. Consider a hypothetical in which a plaintiff propounds the same form interrogatory used here to a corner grocery store with 10 employees. Counsel for that grocery store takes the same course that [the defendant] did, choosing to list all 10 employees that worked with plaintiff in response to the interrogatory. Plaintiff then seeks the addresses and telephone numbers of the 10 employees as requested in the interrogatory, and the grocery store refuses to disclose their contact information, citing privacy. We cannot imagine that any trial court would have entered a protective order requiring the plaintiff to use a third party administrator to send letters to those 10 employees informing them that they would have to consent in writing before counsel for the plaintiff could contact them. We cannot imagine a trial court entering a protective order at all under those circumstances, absent a finding of discovery abuse. Nothing is analytically different here—only the number of witnesses is changed. It appears that the large number of witnesses identified by [the defendant], rather than the actual significance of the privacy invasion with respect to each witness, may have impacted the court’s analysis. We, however, see no manner in which the mere numerosity of witnesses alters the underlying analysis of the seriousness of the intrusion on the witnesses’ privacy rights.

Id. at 15 (footnote omitted) (emphasis added). Two other points in the opinion are worth mentioning. First, the Court distinguished Pioneer Electronics (USA), Inc. v. Superior Court, 40 Cal.4th 360 (2007) based on the underlying purpose of the discovery in question, noting that percipient witnesses may not choose to decline to participate in a case:

[T]he discovery in Pioneer was precertification discovery designed to identify members of the class rather than to locate percipient witnesses, although the Supreme Court did note that some number of the potential class members would also be witnesses. This procedural distinction explains why the opt-out letter outcome of Pioneer is not necessarily appropriate here: in Pioneer, the plaintiffs were looking for people who would want to participate in the lawsuit. As pursuing litigation is a voluntary activity, an opt-out letter that offered recipients the option of participating or declining to participate was appropriate. In contrast, a percipient witness’s willingness to participate in civil discovery has never been considered relevant—witnesses may be compelled to appear and testify whether they want to or not.

Id. at 10 (emphasis added). The Court also rejected the notion that it consititues a misuse of the discovery process for plaintiffs' counsel to talk to witnesses about the claims they might have against the defendant and potentially to assist them in pursuing those claims:

[Defendant] asserts misuse of discovery because some employees whose names were provided to counsel in this manner in previous wage and hour suits filed against [defendant] have become plaintiffs in later actions. The trial court, however, did not make any express findings of abuse, as it did not issue any statement of decision, nor is discovery misuse an implied finding necessary to the court’s order. Provided that counsel observes ethical rules in interactions with prospective witnesses, “[t]o the extent that plaintiff’s attorney, on request, provides information to other claimants which causes them to ‘recognize legal problems,’ his [or her] behavior is laudable.” (Colonial Life & Accident Ins. Co. v. Superior Court (1982) 31 Cal.3d 785, 795 (Colonial Life).)

Id. at 12-13 (emphasis added). The Court concluded its analysis by approving the entry of an appropriate protective order in the trial court's discretion, but by also observing that "the procedure selected here, an opt-in letter, effectively gave more protection to nonparty witnesses’ contact information than the Discovery Act gives to much more sensitive consumer or employment records. We are aware of no logic or authority that would justify such disproportionate protection of this private but under these circumstances relatively nonsensitive information." Id. at 20. For more discussion of the opinion, see this post by Michael Walsh of Wage Law.