In last week’s widely discussed reversal of a trial court order certifying “one of he most expansive class actions ever,” (Wal-Mart Stores, Inc. v. Dukes, ___US___(June 20,
2011), the US Supremes seemingly narrowed by a significant amount the grounds for certifying a class under FRCP 23(a) and 23(b). Most notably, the Court held that Rule 23’s commonality requirement could be met only if “claims . . . depend on a common contention, ” which:
must be of such a nature that it is capable of classwide resolution – which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.
California – where we have lots of class action litigation – has no Rule 23. In fact, except for our Consumer Legal Remedies Act, the only statutory guidance for class actions here is the second clause of Code of Civil Procedure section 382,
. . . when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court, one or more may sue or defend for the benefit of all.
Since the 1960s, California courts have allowed class actions when a class can be ascertained and when there is “a well defined community of interest in the questions of law and fact involved affecting the parties to be represented.” Chance v. Superior Court (1962) 58 Cal.2d 275, 286; Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695. More recently, our courts have somewhat conflated the Federal “common issues of law or fact” with the requirement that common issues “predominate.”
The community of interest requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class.
Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470.
While Calfornia courts have often looked to the Rule 23 jurisprudence for guidance (see City of San Jose v. Superior Court (1974) 12 Cal.3d 447; Frazier v. City of Richmond (1986) 184 Cal.App.3d 1491) there is nothing that requires them to do so, and it may be that they decline to follow Dukes altogether. But what will be the impact if they do? CBL sees two areas worth looking at.
First, while Duke provides some pretty solid defense argument on the subject of commonality, there is no real California game changer here. The US Supremes pretty much held that the decision on the common factual or legal issues must be outcome-determinative. And that has been the law in California for a long time. While our courts allow some room for individualized litigation by class members, they have generally held that common issues predominate only when class members, after the class proceedings are over, won’t have to litigate “numerous” or substantial” matters in order to establish liability in their favor. City of San Jose v. Superior Court, supra, 12 Cal.3d 447; Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906. So even if courts follow Dukes, CBL is guessing there's no big change here.
The more interesting question is what happens now that the US Supremes have thrown Eisen v. Carlisle & Jacquelin (1974) 417 U.S. 156, 177 under the bus. That case has been repeatedly cited by California courts (e.g., Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429 ) by plaintiffs and by defendants, depending on who it helps, for the proposition that courts cannot look at a case’s merits in ruling on class certification. To which Justice Scalia and the Supremes respond “booshwah. Eisen says no such thing.” And to the extent it does (as everybody in California thought it did), ‘it is the purest dictum and is contradicted by our other cases.” (Id, fn. 6.)
So in CBL’s view, the biggest impact of Dukes on California courts is the stake it casts through the heart (note the multitude of mixed metaphors) of the “no merits consideration” argument. We're guessing that one is pretty much dead here and everywhere else.
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