In Espejo v. The Copley Press, Inc., ___ Cal.App.5th ___ (Jul. 7, 2017), the Court of Appeal (Fourth Appellate District, Division One) considered a series of challenges to a post-trial judgment in a certified class action alleging that the plaintiff newspaper carriers were incorrectly classified as independent contractors, in violation of the Labor Code and thus the UCL. The 81-page opinion affirmed the judgment on liability, but directed that certain adjustments be made to the amount of the restitution and attorneys' fees awards on remand.
Given that trials in UCL class actions are relatively rare, this case is instructive procedurally.
The trial court bifurcated the equitable UCL claim from the remaining claims, and heard the equitable claim first, in a bench trial. Slip op. at 5-9. Because the plaintiffs prevailed in the bench trial and were awarded full monetary restitution, no jury trial went forward. See id. Attorneys' fees were awarded under Code of Civil Procedure section 1021.5, rather than under any applicable Labor Code provision. See id. A portion of the fees were to be paid by the defendant, with the rest payable from the common fund. Id. at 9-10.
In the first section of its opinion, the Court of Appeal affirmed the trial court's holding that the newspaper carriers were the defendant's employees, not independent contractors. Slip op. at 10-25.
In the next section, the court rejected the defendant's argument that the class should have been decertified because the class representatives became inadequate after certification, adhering to the "changed circumstances" rule: "We find no significant change in circumstances between the time the class was certified and the time of trial that would support our decertifying the class or reversing the judgment on the ground of inadequacy of the class representatives." Id. at 28 (citing Kight v. CashCall, Inc., 231 Cal.App.4th 112, 125-26 (2014)). The court also rejected the argument that all but one of the class representatives became inadequate because they did not testify at the trial. Id. at 30.
The third section considered the defendant's argument that the trial court had awarded classwide relief on an uncertified claim. The opinion examined the trial court's class certification order and found it broad enough to encompass that claim. Id. at 32-36.
The next section affirmed the trial court's order allowing post-trial amendment of the complaint to conform to proof, rejecting the defendant's argument that such amendments should not be allowed in a certified class action. Id. at 36-39. "We see no reason why a trial court has any less discretion to allow amendment of a pleading to conform to proof in a class action than in other civil actions." Id. at 37.
Next, the opinion considered the trial court's order bifurcating the equitable UCL claim and trying it first, and held that the defendant had acquiesced in the order and therefore could not challenge it on appeal. Id. at 39-42.
The defendant's next series of arguments challenged various aspects of the $4.95 million in restitution and prejudgment interest awarded to the class, which included several different types of expense reimbursements under Labor Code section 2802, as construed in Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal.4th 554 (2007). Slip op. at 42-67.
Several of the holdings in this section of the opinion are worthy of note:
- The court had no difficulty concluding that unpaid expense reimbursements were recoverable as restitution under the UCL because such reimbursements are considered part of an employee's wages. Id. at 50-51 (citing, inter alia, Cortez v. Purolater Air Filtration Products Co., 23 Cal.4th 163 (2000)).
- The court also held that certain "credits and reversals" should have been subtracted from the restitution award because those sums had been "already paid" to the class. Id. at 51-56.
- A UCL restitution award, like a damages award, need not be calculated with strict "mathematical precision," and the trial court did not err in accepting the plaintiffs' expert's "reasonable estimate" of the amount owed the class in mileage reimbursements. Id. at 57-58 (citing Duran v. U.S. Bank Nat. Assn., 59 Cal.4th 1, 40 (2014)).
- However, the trial court did err in accepting an unreasonable estimate of the amount of another type of reimbursement. Id. at 59-61.
- The trial court properly exercised its discretion to award prejudgment interest on the restitution award. Id. at 62-67. The panel rejected the defendant's argument that prejudgment interest is not recoverable under the UCL, but determined that the amount of interest should be recalculated after the adjustments to the base restitution award, discussed above, were made. See id.
The final sections of the opinion largely affirmed the attorneys' fees award under section 1021.5, but remanded for the trial court to determine, in the first instance, whether the amount of the award should be reduced because the base restitution award would be adjusted downward on remand. Slip op. at 67-76. The opinion also held that the trial court did not abuse its discretion in declining to apply a lodestar multiplier in fixing the amount of the fee award. Id. at 77-80.
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