The UCL Practitioner

Ninth Circuit class action discovery opinion: In re Williams-Sonoma, Inc.

In In re Williams-Sonoma, Inc., 947 F.3d 535 (9th Cir. Jan. 13, 2020), the named plaintiff, a Kentucky resident, sued Williams-Sonoma under California law for false advertising.  After the district court determined that Kentucky law applied to his claims, he propounded discovery seeking a list of all California consumers who had purchased the product in question during the relevant time period.  The district court ordered Williams-Sonoma to respond.  Id. at 538-39. 

On a 2-1 vote, the Ninth Circuit issued a writ of mandamus compelling the district court to vacate that order, holding that it represented a "clear error" of law.  Id. at 539-40.  The discovery, "seeking ... the name of a class member (here an unknown person, who could sue Williams-Sonoma)," was not "relevant to the subject matter involved in the action" within the meaning of Federal Rule of Civil Procedure 26(c)(1).  Id. at 539 (citing Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 350-53 (1978)).

In dissent, Judge Paez explained that the majority had misconstrued Oppenheimer, which "did not hold" that plaintiffs may never "seek the identities and contact information of absent class members ... before the class is certified."   Id. at 541.  Moreover, even if Rule 26 did not permit the discovery, Rule 23 was broad enough to authorize the district court's order.  Id.  The dissenting opinion concludes:

The district court thus acted well within its authority by facilitating class counsel’s attempts to communicate with absent class members and to notify them of important developments in the lawsuit. Because the district court’s order was a “matter ... committed to discretion, it cannot be said that [Williams-Sonoma’s] right to a particular result is clear and indisputable.” See Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 36, 101 S.Ct. 188, 66 L.Ed.2d 193 (1980) (per curiam) (quotation marks omitted). I would thus deny the petition for a writ of mandamus. I respectfully dissent.

Id. at 543.

Ninth Circuit on admissibility of evidence at the class certification stage: Sali v. Corona Regional Med. Ctr.

In Sali v. Corona Regional Medical Center, ___ F.3d ___ (9th Cir. May 3, 2018), the district court denied class certification because (among other reasons) the plaintiffs' evidence of adequacy and typicality was not admissible.  The Ninth Circuit reversed, holding that admissible evidence is not required at the class certification stage:

Because a class certification decision “is far from a conclusive judgment on the merits of the case, it is ‘of necessity . . . not accompanied by the traditional rules and procedure applicable to civil trials.’” [In re] Zurn Pex [Plumbing Prod. Liab. Litig.], 644 F.3d [604,] 613 [(8th Cir. 2011)] (quoting Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974)). Notably, the evidence needed to prove a class’s case often lies in a defendant’s possession and may be obtained only through discovery. Limiting class-certification-stage proof to admissible evidence risks terminating actions before a putative class may gather crucial admissible evidence. And transforming a preliminary stage into an evidentiary shooting match inhibits an early determination of the best manner to conduct the action.

It follows that we have found an abuse of discretion where a “district court limited its analysis of whether” class plaintiffs satisfied a Rule 23 requirement “to a determination of whether Plaintiffs’ evidence on that point was admissible.” Ellis v. Costco Wholesale Corp., 657 F.3d 970, 982 (9th Cir. 2011). Although we have not squarely addressed the nature of the “evidentiary proof” a plaintiff must submit in support of class certification, we now hold that such proof need not be admissible evidence.

Inadmissibility alone is not a proper basis to reject evidence submitted in support of class certification. “Neither the possibility that a plaintiff will be unable to prove his allegations, nor the possibility that the later course of the suit might unforeseeably prove the original decision to certify the class wrong, is a basis for declining to certify a class which apparently satisfies” Rule 23. Blackie v. Barrack, 524 F.2d 891, 901 (9th Cir. 1975). Therefore, in evaluating a motion for class certification, a district court need only consider “material sufficient to form a reasonable judgment on each [Rule 23(a)] requirement.” Id. The court’s consideration should not be limited to only admissible evidence.

Slip op. at 13-15 (footnote omitted).

Supreme Court confirms broad scope of Civil Discovery Act: Williams v. Superior Court (Marshalls of CA, LLC)

Yesterday, the Supreme Court held that the trial court abused its discretion by placing unreasonable restrictions on the plaintiff's right to seek discovery of percipient witness names and contact information in an action under the Labor Code Private Attorneys General Act ("PAGA").  Williams v. Superior Court (Marshalls of CA, LLC), ___ Cal.5th ___ (Jul. 13, 2017).

The unanimous opinion by Justice Werdegar (perhaps one of her last opinions before her retirement) confirms principles of civil discovery that will have broad application not only in PAGA cases, but also in class actions and in civil litigation generally.

For example, right off the bat, the opinion begins with this summary of its core holdings:

Our prior decisions and those of the Courts of Appeal firmly establish that in non-PAGA class actions, the contact information of those a plaintiff purports to represent is routinely discoverable as an essential prerequisite to effectively seeking group relief, without any requirement that the plaintiff first show good cause.  Nothing in the characteristics of a PAGA suit, essentially a qui tam action filed on behalf of the state to assist it with labor law enforcement, affords a basis for restricting discovery more narrowly. 

Slip op. at 2.  The opinion subsequently confirms that in any putative class or representative action seeking relief on behalf of others, the "default rule" is that contact information for others whom the defendant may have harmed is discoverable:

On its face, the complaint alleges Marshalls committed Labor Code violations, pursuant to systematic companywide policies, against Williams and others among its nonexempt employees in California, and seeks penalties and declaratory relief on behalf of Williams and any other injured California employees.  The disputed interrogatory seeks to identify Marshalls’s other California employees, inferentially as a first step to identifying other aggrieved employees and obtaining admissible evidence of the violations and policies alleged in the complaint. The Courts of Appeal have, until the decision in this case, uniformly treated such a request as clearly within the scope of discovery permitted under Code of Civil Procedure section 2017.010.  ....  [T]he default position is that such information is within the proper scope of discovery, an essential first step to prosecution of any representative action.

....

In a class action, fellow class members are potential percipient witnesses to alleged illegalities, and it is on that basis their contact information becomes relevant.  (Pioneer Electronics (USA), Inc. v. Superior Court, supra, 40 Cal.4th at p. 374; Crab Addison, Inc. v. Superior Court, supra, 169 Cal.App.4th at p. 969; Puerto v. Superior Court, supra, 158 Cal.App.4th at p. 1254.)  Likewise in a PAGA action, the burden is on the plaintiff to establish any violations of the Labor Code, and a complaint that alleges such violations makes any employee allegedly aggrieved a percipient witness and his or her contact information relevant and discoverable.

....

[O]verlapping policy considerations support extending PAGA discovery as broadly as class action discovery has been extended.  California public policy favors the effective vindication of consumer protections.  (Pioneer Electronics (USA), Inc. v. Superior Court, supra, 40 Cal.4th at p. 374.)  State regulation of employee wages, hours and working conditions is remedial legislation for the benefit of the state’s workforce.  (Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1026–1027.)  Discovery of fellow consumer or employee contact information can be an essential precursor to meaningful classwide enforcement of consumer and worker protection statutes.  (Pioneer Electronics, at p. 374; Crab Addison, Inc. v. Superior Court, supra, 169 Cal.App.4th at p. 968; Puerto v. Superior Court, supra, 158 Cal.App.4th at p. 1256.)  Similar state policies animate PAGA.  Representative PAGA actions “directly enforce the state’s interest in penalizing and deterring employers who violate California’s labor laws.”  (Iskanian v. CLS Transportation Los Angeles, LLC, supra, 59 Cal.4th at p. 387; see Arias v. Superior Court, supra, 46 Cal.4th at pp. 980–981.)  Hurdles that impede the effective prosecution of representative PAGA actions undermine the Legislature’s objectives.  (See Iskanian, at p. 384.)  It follows that in PAGA cases, as in the class action context, state policy favors access to contact information for fellow employees alleged to have been subjected to Labor Code violations.

Id. at 9, 11, 15, 16-17 (footnote omitted).

The Court flatly rejected the argument that the plaintiff should be required to prove his claims on the merits before such discovery is permitted:

California law has long made clear that to require a party to supply proof of any claims or defenses as a condition of discovery in support of those claims or defenses is to place the cart before the horse.  The Legislature was aware that establishing a broad right to discovery might permit parties lacking any valid cause of action to engage in “fishing expedition[s],” to a defendant’s inevitable annoyance.  (Greyhound Corp. v. Superior Court, supra, 56 Cal.2d at p. 385.)  It granted such a right anyway, comfortable in the conclusion that “[m]utual knowledge of all the relevant facts gathered by both parties is essential to proper litigation.”  (Id. at p. 386.)

Id. at 20; see also id. at 31.

What is more, discovery of the identities of other persons whom the defendant may have subjected to similar violations is permitted—even without any class or representative allegations: 

That the eventual proper scope of a putative representative action is as yet uncertain is no obstacle to discovery; a party may proceed with interrogatories and other discovery methods precisely in order to ascertain that scope.  (Union Mut. Life Ins. Co. v. Superior Court (1978) 80 Cal.App.3d 1, 9–12.)  In Union Mut. Life Ins. Co., the plaintiff in an insurance dispute issued interrogatories seeking information about other insureds nationwide.  The defendant objected on the ground no national class action had been alleged and the answers at best would inform the plaintiff as to whether to amend to allege such a class action.  The Court of Appeal explained, “[t]his is the precise reason why the discovery should be permitted.”  (Id. at p. 12.)  “California law permits the use of discovery to get information necessary to plead a cause of action” (id. at p. 11); it also permits the use of discovery to determine whether an individual dispute is only a drop in the pond and a broader representative action is warranted. ....

It follows that a party allegedly subject to an illegal employment policy need not already have direct, personal knowledge of how prevalent that policy is to seek contact information for other employees that may allow the plaintiff to determine the proper extent of any representative action.  Instead, the contact information is reasonably understood as a legitimate “starting point for further investigations” through which a plaintiff may “ ‘educate [himself or herself] concerning [the parties’] claims and defenses.’ ”  (Puerto v. Superior Court, supra, 158 Cal.App.4th at pp. 1250, 1249.)

Id. at 20-21 (emphasis added).

The final section of the opinion discusses the defendant's privacy arguments.  Slip op. at 22-32.  The opinion explains that the plaintiff was "willing to accept as a condition of disclosure, and share the costs of, a Belaire-West notice to employees affording them an opportunity to opt out of having their information shared."  Id. at 26 (citing Belaire-West Landscape, Inc. v. Superior Court, 149 Cal.App.4th 554 (2007)).  Under such circumstances, the trial court's order imposing such a condition was appropriate, even though the trial court should have, but did did not, apply the governing balancing test stated in Hill.  Id. at 24 (citing Hill v. National Collegiate Athletic Assn., 7 Cal.4th 1 (1994)). 

Conducting the Hill balancing test itself, the Court determined that two of the three elements were unmet as to ordinary home contact information.  Slip op. at 24-26.  The Court overruled a series of lower appellate opinions erroneously holding that a "compelling state interest" or a "compelling need" must be shown "whenever discovery of facially private information is sought."  Id. at 27-30 & n.8

New opinion on pre-certification discovery: CVS Pharmacy, Inc. v. Superior Court

In CVS Pharmacy, Inc. v. Superior Court (DeLuca), ___ Cal.App.4th ___ (Sept. 15, 2015; pub. ord. Oct. 15, 2015), the Court of Appeal (Third Appellate District) reversed the trial court's order allowing a proposed class representative who lacked standing to obtain discovery of class member contact information prior to class certification in order to identify a substitute representative. 

Distinguishing one of the leading opinions, CashCall, Inc. v. Superior Court, 159 Cal.App.4th 273 (2008) (discussed here), the panel emphasized that the named plaintiff had never had standing to begin with, and that the putative class members were likely aware of the specific violations, so could assert them individually. 

Supreme Court takes up discovery issue: Williams v. Superior Court (Marshalls)

On August 19, 2015, the Supreme Court granted review in Williams v. Superior Court (Marshalls of CA, LLC), No. S227228.

In this case, the plaintiff moved to compel production of employee names and contact information in a representative action under PAGA.  See Williams v. Superior Court (Marshalls of CA, LLC), 236 Cal.App.4th 1151 (May 15, 2015), review granted (slip op. at 2).  The trial court largely denied the motion, ordering production only as to employees who worked in the same store as the plaintiff, and holding that broader production would be allowed, if at all, only after the plaintiff had been deposed, and only if the plaintiff could prove that the case has factual merit.  Id.  

In its original opinion (which is now uncitable), the Court of Appeal (Second Appellate District, Division One) affirmed, finding no abuse of discretion, and holding that production would be inappropriate even if the Belaire-West notice process were used: 

At this nascent stage of plaintiff’s PAGA action there has as yet been no discovery—plaintiff has not even sat for his own deposition.  The litigation therefore consists solely of the allegations in his complaint.  But plaintiff alleges therein only that at the Costa Mesa store, he and perhaps other employees at that store were subjected to violations of the Labor Code.  Nowhere does he evince any knowledge of the practices of Marshalls at other stores, nor any fact that would lead a reasonable person to believe he knows whether Marshalls has a uniform statewide policy.  That being the case, it was eminently reasonable for the trial judge to proceed with discovery in an incremental fashion, first requiring that plaintiff provide some support for his own, local claims and then perhaps later broadening the inquiry to discover whether some reason exists to suspect Marshalls’ local practices extend statewide.

Further, a trial court must consider the costs of any discovery and take reasonable steps to promote efficiency and economy.  Statewide discovery that includes the mailing of Belaire-West notices and tabulation of responses is costly.  By staging discovery incrementally, the trial court delayed the incursion of potentially unnecessary costs until it becomes clear they are warranted.

Slip op. at 4-5.  The Court also held that the "employees’ privacy interests outweigh plaintiff’s need to discover their identity at this time."  Id. at 7.  First, the Court held, the plaintiff would have to be deposed, and then he would have to "establish [that the defendant's] employment practices are uniform throughout the company ...."  Id. 

Suffice it to say that this reasoning is problematic at best, and inconsistent with the Code of Civil Procedure at worst.  The opinion is no longer citable in light of the order granting review.  Although Williams is a representative PAGA action, not a class action, the Supreme Court's analysis is likely to have ramifications for discovery in class litigation. 

No "picking off" the class representative in the Ninth Circuit: Pitts v. Terrible Herbst, Inc.

The California Supreme Court held many moons ago that a defendant may not defeat a class action by "picking off" the class representatives.  La Sala v. American Sav. & Loan Assn., 5 Cal.3d 864 (1971).

The Ninth Circuit came to the same conclusion, based on essentially the same reasoning, in a decision handed down yesterday.  Pitts v. Terrible Herbst, Inc., ___ F.3d ___ (9th Cir. Aug. 9, 2011). 

The decision also contains some interesting language about the right to conduct discovery before moving for class certification.  See slip op. at 10457-58 & nn. 4, 5.

Decisions of interest from April and May 2011

The Court of Appeal and Ninth Circuit handed down the following decisions in April and May (listed in reverse chronological order by publication date):

Folgelstrom v. Lamps Plus, Inc., 195 Cal.App.4th 986 (Apr. 29, 2011; pub. ord. May 20, 2011; mod. Jun. 7, 2011) (Second Appellate District, Division Five) (affirming dismissal of UCL claim for lack of Prop. 64 standing; reversing dismissal of Song-Beverly Act claim, following Pineda v. Williams-Sonoma)

Knapp v. AT & T Wireless Services, Inc., 195 Cal.App.4th 932 (Apr. 25, 2011; pub. ord. May 20, 2011) (Fourth Appellate District, Division Three) (affirming order denying class certification of UCL, CLRA and fraud claims, which suffered from Kaldenbach problems)

Archer v. United Rentals, Inc., 195 Cal.App.4th 807 (May 19, 2011; mod. Jun. 13, 2011) (Second Appellate District, Division One) (affirming dismissal of UCL claim for injunctive relief for lack of Prop. 64 standing; reversing order denying class certification of Song-Beverly Act claim, following Pineda v. Williams-Sonoma)

People ex rel. Harris v. Pac Anchor Transportation, Inc., 195 Cal.App.4th 765 (May 18, 2011) (Second Appellate District, Division Five) (reversing dismissal of public prosecutor action in which the Attorney General's office employed the UCL's "unlawful" prong to pursue the defendant for wage and hour violations, holding that the FAA Authorization Act did not preempt the claims)

Marlo v. United Parcel Service, Inc., 639 F.3d 942 (9th Cir. Apr. 28, 2011) (affirming order decertifying class in wage & hour misclassification case)

Starbucks Corp. v. Superior Court (Lords), 194 Cal.App.4th 820 (Apr. 25, 2011) (Fourth Appellate District, Division Three) (reversing order permitting discovery of class list by putative class representatives who lacked standing)

Welcome to the 21st century: Electronic Discovery Act signed into law in California

At last year's CAOC convention, I pointed out during my presentation, "Discovery Techniques in Class Action Cases," that the California Judicial Council had painstakingly drafted a set of electronic discovery rules for California, but that Governor Schwarzenegger vetoed the implementing legislation for non-substantive reasons in September 2008. 

The legislation was reintroduced last December, and on Monday, Governor Schwarzenegger signed A.B. 5, the Electronic Discovery Act.  The full text of the Act is here.  It takes effect immediately. 

New class member discovery decision: Safeco Ins. Co. v. Superior Court

In Safeco Ins. Co. v. Superior Court, ___ Cal.App.4th ___ (Apr. 30, 2009), the Court of Appeal (Second Appellate District, Division Three) held that the trial court did not abuse its discretion by allowing precertification discovery of class member contact information.

New class member discovery decision: Crab Addison, Inc. v. Superior Court

The Court of Appeal (Second Appellate District, Division Seven) has handed down another interesting opinion on the right to pre-certification discovery of class member contact information. Crab Addison, Inc. v. Superior Court, ___ Cal.App.4th ___ (Dec. 30, 2008). The case is a putative class action for alleged overtime violations, and the opinion is noteworthy in several respects.

First, the court relied heavily on Puerto v. Superior Court, 158 Cal.App.4th 1242 (2008), applying that decision even though, in the case at bar, the defendant had not served interrogatory responses identifying the class members as percipient witnesses (which is what had happened in Puerto and is a possible way to try to distinguish the case from many in which this issue comes up). Slip op. at 8-13. The court did not think Puerto was distinguishable on that basis:

We attach no great significance to the fact that [the defendant] did not voluntarily disclose the identities of the witnesses whose contact information it sought to protect. As noted in Pioneer Electronics (USA), Inc. v. Superior Court, supra, 40 Cal.4th at page 373, “[c]ontact information regarding the identity of potential class members is generally discoverable, so that the lead plaintiff may learn the names of other persons who might assist in prosecuting the case. [Citations.] Such disclosure involves no revelation of personal or business secrets, intimate activities, or similar private information....” Disclosure of witnesses’ identities involves no greater invasion of privacy or revelation of personal information than the disclosure of their addresses and telephone numbers. Therefore, we can find no rationale for refusing to apply our holding in Puerto to the instant case.

Indeed, since our decision in Puerto, we have upheld the right of an employee to obtain contact information in order to identify potential class members. In Lee v. Dynamex, Inc. (2008) 166 Cal.App.4th 1325, plaintiff sought to bring a class action lawsuit alleging improper reclassification of class members from employees to independent contractors. The trial court denied plaintiff’s motion to compel discovery of the contact information of potential class members. (Id. at pp. 1330-1331.) We held this to be an abuse of discretion relying on Puerto and other recent cases holding that this type of discovery should not be restricted unless the trial court is able to identify privacy concerns or potential discovery abuses which outweigh the plaintiff’s right to discovery. (Id. at p. 1338.)

Slip op. at 13.

Second, the court rejected the defendant's attempt to preemptively obtain the class members' refusals to consent to the release of their contact information. The defendant required each of its employees (and putative class members) to fill out a document entitled "Release of Contact Information," which read:

RELEASE OF CONTACT INFORMATION

From time to time, Joe’s Crab Shack (the “Company”) may be asked to provide your contact information, including your home address and telephone number, to third parties. The Company may be asked to provide such information in the context of legal proceedings, including class action lawsuits.

We understand that many employees may consider this information to be private and may not want it released. Accordingly, please indicate whether you consent to the disclosure of your contact information by marking the appropriate box.

‪___ No, I do not consent to the Company’s disclosure of my contact information to third parties.

___ Yes, I consent to the Company’s disclosure of my contact information to third parties.

___ I would like to be asked on a case-by-case basis whether I consent to the disclosure of my contact information to a particular third party, and my contact information should only be provided if I affirmatively consent in writing.

Slip op. at 4.  The court found this document unenforceable, relying heavily on Gentry v. Superior Court, 42 Cal.4th 443 (2007), as well as on Puerto and Alch v. Superior Court, 165 Cal.App.4th 1412 (2008). Slip op. at 13-19. An excerpt from the court's analysis:

Gentry highlights the importance placed on the rights of employees to bring class action lawsuits to enforce their statutory rights to overtime pay. So high is the importance of these rights that courts may invalidate contractual provisions that infringe upon them.

Gentry also highlights the dangers of placing in the employer’s hands the responsibility for notifying employees of the pending litigation and requiring employees to opt in to the litigation. Current employees may decline to opt in to the litigation for fear of retaliation by their employer. This in turn could immunize the employer from liability for violation of statutory wage and overtime requirements. This would violate the public policy protecting employee rights.

The public policy concerns expressed in Gentry weigh against enforcing a release form that may have the effect of waiving an employee’s right to notice of a pending class action lawsuit concerning the employer’s alleged violations of overtime and wage statutes. Gentry did not stop its analysis with public policy concerns, however.

In addition to examining the class arbitration waiver as it affected unwaivable statutory rights, Gentry also examined the waiver in terms of procedural unconscionability. (Gentry v. Superior Court, supra, 42 Cal.4th at p. 467.) The Supreme Court stated that because the rights at issue were unwaivable, “the minimal requirements imposed on arbitration agreements to ensure their vindication cannot be waived by the employee in a prelitigation agreement.” (Ibid.) Rather, “such waiver could only occur ‘in situations in which an employer and an employee knowingly and voluntarily enter into an arbitration agreement after a dispute has arisen. In those cases, employees are free to determine what trade-offs between arbitral efficiency and formal procedural protections best safeguard their statutory rights. Absent such freely negotiated agreements, it is for the courts to ensure that the arbitration forum imposed on an employee is sufficient to vindicate his or her rights ....’” (Ibid.)

The dates on the release forms here indicate that they were entered into after the litigation was filed. However, there is nothing in the record to suggest that the employees who indicated they did not want their contact information disclosed to third parties, or they wanted to consider disclosure on a case-by-case basis, did so knowingly, that is, with knowledge of the pending litigation and the fact the release form would affect their ability to be included in the class.

The language of the release forms was not sufficient to apprise employees that by checking the “no” box they were declining to have their contact information released to “plaintiffs seeking relief for violations of employment laws in the workplace that they shared.” (Puerto v. Superior Court, supra, 158 Cal.App.4th at p. 1253.) The release forms stated that CAI “may be asked to provide such information in the context of legal proceedings, including class action lawsuits.” We do not believe that a lay employee reading this language would realize that the reference to “class action lawsuits” meant lawsuits intended to vindicate their rights, rather than lawsuits by third parties against CAI that would be of no benefit to the employees.

Thus, we cannot assume that employees opting not to have their contact information released, or opting to have it released on a case-by-case basis, “would not want it disclosed under these circumstances.” (Puerto v. Superior Court, supra, 158 Cal.App.4th at pp. 1252-1253.) While they clearly do not want their contact information broadly disseminated to third parties, this does not mean they would want it withheld “from plaintiffs seeking relief for violations of employment laws in the workplace that they shared.” (Id. at p. 1253.) Rather, they “may reasonably be supposed to want their information disclosed to counsel whose communications in the course of investigating the claims asserted in [the Martinez] lawsuit may alert them to similar claims they may be able to assert.” (Ibid.)

Slip op. at 15-17. The opinion then discusses the language at the bottom of the document saying that, regardless of which box the employees checked, the employer might still be compelled by law to produce their contact information.  The trial court's order compelling production of class member contact information was such an event, so the document created no "heightened expectation of privacy."  Id. at 17-18.  The entire opinion is definitely worth a read.

MCLE presentation: "Discovery Techniques in Class Action Cases"

Thanks to everyone who attended the CAOC convention this month, and especially to those who attended the class action track on November 7.  I really enjoyed hearing the speakers, who included Elizabeth Cabraser, Tim Blood, and Arthur Bryant.   Also many thanks to David Arbogast for his work organizing the class action track. 

Here is a copy of the powerpoint presentation from my segment, "Discovery Techniques in Class Action Cases."  Most of the slides focus on case law on pre-certification discovery of class member contact information. 

New class certification decision: Lee v. Dynamex, Inc.

In Lee v. Dynamex, Inc., ___ Cal.App.4th ___ (Aug. 26, 2008; pub. ord. Sept. 17, 2008), the Court of Appeal (Second Appellate District, Division Seven) reversed an order denying class certification because the trial court had refused to permit discovery of class member contact information under Pioneer Electronics:

The trial court was plainly disturbed by Lee’s failure to produce additional evidence to support a finding of community of interest among potential class members in terms of the predominance of common questions of law or fact, the typicality of Lee’s claims or the adequacy of his representation as the sole named plaintiff. Ordinarily, we would defer to a trial court’s exercise of discretion on these issues; but, in light of the trial court’s discovery order precluding identification of potential class members before certification, we conclude Lee was not provided with an adequate opportunity to meet his burden and, therefore, reverse the denial of the class certification motion with directions to permit discovery to proceed and then to conduct a new class certification hearing.

Slip op. at 11. The opinion also contains an interesting discussion of the "ascertainability" prong of certification. Id. at 7-10.

UPDATE: The Complex Litigator has a more detailed post on Lee.

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.