New class certification decision: Bennett v. Regents of the University of California

On Wednesday, the Court of Appeal (Second Appellate District, Division Two) ordered publication of Bennett v. Regents of the University of California, ___ Cal.App.4th ___ (Sept. 21, 2005), which affirmed an order denying class certification.

The Court pointed out that "[i]n an exceptional case, where the parties have had notice and an opportunity to brief the issue, class certification may be refused because a claim lacks merit as a matter of law." Slip op. at 7 (citing Linder v. Thrifty Oil Co., 23 Cal.4th 429, 443 (2000)). The Court then determined that the case before it was "exceptional," and an inquiry into the merits proper, because of "[t]he narrowing of plaintiffs' claims, in combination with testimony regarding the nature of [the defendant's challenged program]." Id. (emphasis added). The Court went on to say that "[i]t would be unjust to allow the parties to continue litigating this matter on a legal theory that cannot ultimately be sustained." Id. In effect, the Court held that if a case is not meritorious, then merits questions may be decided at the class certification stage.

This case goes a step beyond Conley v. Pacific Gas & Electric Co., 131 Cal.App.4th 260 (2005), another recent opinion in which the Court of Appeal construed Linder's "exceptional case" language. As I previously explained, in Conley, the Court of Appeal decided to address a merits question in the context of class certification because the plaintiffs had "invited us" to do so and because the "defense has no other reasonable pretrial means to challenge the merits." Conley, 131 Cal.App.4th at 263, 268 n.7 (citing Linder, 23 Cal.4th at 443).

I am concerned that Bennett, more so than Conley, may have the unintended effect of creating an exception that swallows the rule. The rule, as expressed in Linder, is that class certification is "essentially a procedural [question] that does not ask whether an action is legally or factually meritorious." Linder, 23 Cal.4th at 439-40. Under Bennett, however, if the court perceives that "plaintiffs have failed to establish" that their case has merit, then the case is "exceptional" and merits questions may be decided. Bennett, slip op. at 7, 11. Of course, all such merits questions will be decided against the plaintiffs.

What defendant will not argue, at the class certification stage, that "[i]t would be unjust to allow the parties to continue litigating this matter on a legal theory that cannot ultimately be sustained"? And what plaintiff, in an excess of caution, will not feel obligated to present significant merits evidence as part of his or her class certification motion? And how can the plaintiff present such evidence if the trial court has bifurcated merits discovery from class discovery? Bifurcation of discovery cannot, in fairness, be ordered after Bennett.

Linder was very careful to explain that an "exceptional case" exists only "where the defense has no other reasonable pretrial means to challenge the merits of a claim to be asserted by a proposed class" and/or "where both sides jointly request such action." 23 Cal.4th at 443. Nothing in Bennett indicates that either of these factors was present. Bennett, I believe, dramatically broadens Linder's "exceptional case" language.

Comments

[mary]

I agree completely. Basically, Conley and now this case open the door for defendants to bury plaintiffs by compelling them to in effect defend a summary judgment motion in connection with class certification without the procedural safegaurds for a sj motion. I really hope someone seeks depublication.

[mary]

Just read opinion. At bottom it says not for publication. That's good. Also, although I think the decision was wrong to deny class certification, the Court of Appeal laid out facts in detail, which would make it easy to distinguish: ununusal facts: the kind of gruesome details that occassionally make reading opinions like reading the National Enquirer.

[mary]

what a screw up. just reread first senteance of post that says publication ordered. very bad.

[Scott]

Given that the opinion was published two days ago, I think it is safe to say that further appellate activity can be expected in this case. What is not clear from the opinion is the fact that the Court simply ignored a variety of issues, such as (1) the viability of a breach of contract class based upon uncontested evidence that Responsent uniformly breached a contract, and (2) the failure of Respondent to cite, even once, to the record on appeal. This decision was an unfortunate instance of profound over-reaching. The outcome may be explained, to a certain extent, by the fact that the panel also dealt with an earlier appeal in the case, after challenges to the pleadings, where much more sensational factual allegations were in play and were presumed true at the pleading stage. Still, any bias against the case because the facts may be something less sensational at certification is unjustifiable.

[John]

On the issue of bifurcated discovery, I would think that a defendant who requests and obtains bifurcated discovery would or should be estopped from making a merits argument at the class certification stage.

[Kimberly]

I agree with John's comment as well as Scott's. Like Scott, I was also struck by the Court's perception that the plaintiffs' decision to narrow the scope of their claims was a legitimate reason to decide the merits of the remaining claims at the class certification stage. You'd think the Court would want to encourage plaintiffs to carefully re-think their cases as they progress and perhaps to seek certification of a narrower class than originally pleaded. This opinion will have the opposite of its intended effect. If narrowing my claims will be interpreted as an invitation to decide the merits of my remaining, and strongest, claims at the class certification stage, why should I ever do it?