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Consumer Class Actions: 2. Case Law Interpreting Rule 23

a. Source: Reporter’s Notes

[Reprinted from the Reporter’s Notes published with AR Order 07.]

“All parts of the Rule have been revised [by amendments in 2006]. Many of these changes echo recent amendments to Federal Rule of Civil Procedure 23, while others incorporate the holding of recent Arkansas decisions and current Arkansas practice. With a few exceptions, the changes are technical and do not change Arkansas law.

Consumer Class Actions: Introduction

California’s operative general class action statute, Code of Civil Procedure § 382, was enacted in 1872 as part of California’s Field Code and has remained essentially unchanged.15 California’s second class action statute, the Consumer Legal Remedies Act, is found at Civil Code §§ 1750, et seq., and lists 23 prohibited acts, violations of which form the basis for class actions seeking damages and a wide variety of other remedies.

Consumer Class Actions: 1. Statewide Court Rules Governing Class Actions

Effective January 1, 2002, the California Judicial Council adopted a comprehensive system of uniform statewide Management of Class Action Rules (Cal. Rules of Ct., Rules 3.760–3.771.). These Rules supersede a patchwork of disparate local rules from Los Angeles, San Francisco, and San Diego counties. From the form of the complaint to the judgment, the new Rules provide a uniform procedure governing most aspects of class actions in California.

Consumer Class Actions: 2. California’s Class Action Act

California’s primary class action statute, Code of Civil Procedure § 382, is a flexible tool that has been used to litigate and resolve complex cases in many different contexts. Section 382 states:

[W]hen 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.

To obtain certification under Code of Civil Procedure § 382, two primary requirements must be satisfied:

Consumer Class Actions: 3. Cy Pres/Fluid Recovery

California courts have endorsed the principle of cy pres and the mechanism of fluid recovery in class actions, by which settlement or judgment proceeds are dedicated to charitable or nonprofit organizations. (State of California v. Levi Strauss & Co. (1986) 41 Cal. 3d 460 [224 Cal. Rptr. 605].) Cy pres, which means “as near as possible,” has been utilized by courts “where class members are difficult to identify, or where they change constantly, or where there are unclaimed funds.” (Herbert B.

Consumer Class Actions: 4. California’s Consumers Legal Remedies Act

The Consumers Legal Remedies Act, Civil Code §§ 1750 et seq. (CLRA), was enacted in 1970 and “established a nonexclusive statutory remedy for ‘unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer. . . .’” (Reveles v. Toyota by the Bay (1997) 57 Cal. App. 4th 1139, 1154 [67 Cal. Rptr. 2d 543], quoting Gallin v. Superior Court (1991) 230 Cal. App. 3d 541, 545–46 [281 Cal. Rptr.

Consumer Class Actions: 5. California’s Unfair Competition Law

California’s unfair business practices law is found at Business and Professions Code §§ 17200, et seq., and its companion Deceptive, False, and Misleading Advertising Law is codified at §§ 17500, et seq. Although not formally named by the legislature, the statutes are commonly referred to as the Unfair Competition Law (UCL). The roots of the UCL go back to 1933 when the California legislature first rejected the rule of caveat emptor by amending Civil Code § 3369 to prohibit acts of unfair competition.

Consumer Class Actions: 6. Class Action Bans in Arbitration Clauses

In AT&T Mobility, LLC v. Concepcion (2011) 563 U.S. 333, the United States Supreme Court held that California’s “Discover Bank rule” was preempted by the Federal Arbitration Act (FAA). The Discover Bank rule provided that class action bans in arbitration clauses were unenforceable where (1) the ban is in a contract of adhesion; (2) the dispute involves small individual damages; and (3) the plaintiff alleges a deliberate scheme to cheat large numbers of consumers out of small sums of money. (Discover Bank, supra, 36 Cal. 4th at 162–63.)

Consumer Class Actions: 7. Choice of Law

In Washington Mutual Bank v. Superior Court (2001) 24 Cal. 4th 906 [103 Cal. Rptr. 2d 320] (Washington Mutual), the California Supreme Court reversed the judgment of the court of appeal and remanded with directions to the trial court to vacate its nationwide class certification order in a forced placed mortgage-hazard insurance action, pending further analysis of choice-of-law issues and renewed manageability consideration. (Id.

Consumer Class Actions: 8. Class Action Settlements

In Wershba v. Apple Computer, Inc. (2001) 91 Cal. App. 4th 224 [110 Cal. Rptr. 2d 145] (Wershba), a class action settlement followed the plaintiffs’ filing of UCL and CLRA claims on behalf of Apple customers nationwide after the withdrawal of promised levels of free technical support. The appellate court upheld the settlement, approving the trial court’s notice plan and lodestar/multiplier attorneys’ fee analysis and rejected claims of prejudice to absent class members.

Consumer Class Actions: 9. Order Denying Class Certification Is Immediately Appealable

An order denying a class certification motion, unlike one granting certification, is immediately appealable because the order has the death knell effect of making further proceedings in the action impracticable. (Daar, supra, 67 Cal. 2d at 699.) Unless the motion is specifically denied without prejudice to re-asserting it, a plaintiff who fails to appeal from an order denying class certification can lose the right to attack it. (Safaie v. Jacuzzi Whirlpool Bath, Inc. (2011) 192 Cal. App. 4th 1160 [122 Cal. Rptr. 3d 344].)

Consumer Class Actions: 12. Conclusion

California’s class action statute predates the current federal Rule 23. California class action jurisprudence embraces and synthesizes Rule 23 and its jurisprudence, and applies the principles of representative actions to a broad array of consumer contexts. The California Judicial Council has enacted new Rules of Court that meld the provisions of Rule 23, current California practice and jurisprudence, and many of the best aspects of the San Francisco and Los Angeles County Superior Courts’ local class action rules.

Consumer Class Actions: CALIFORNIA CLASS ACTION STATUTES

Cal. Code of Civ. Proc. § 382. Nonconsent to joinder as plaintiff; representative actions23

If the consent of any one who should have been joined as plaintiff cannot be obtained, he may be made a defendant, the reason thereof being stated in the complaint; and 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.

Consumer Class Actions: CALIFORNIA RULES OF COURT

Rule 3.760. Application25

(a) Class actions. The rules in this Chapter apply to each class action brought under Civil Code section 1750 et seq., or Code of Civil Procedure section 382 until the court finds the action is not maintainable as a class action or revokes a prior class certification.

Consumer Class Actions: 1. Comparison with Rule 23 of the Federal Rules of Civil Procedure

Rule 23 of the Colorado Rules of Civil Procedure is “virtually” identical to Rule 23 of the Federal Rules of Civil Procedure.37 As a result, the Colorado courts look to federal decisions for “guidance” in interpreting the Colorado Rule. State v. Buckley Powder Co., 945 P.2d 841, 844 (Colo. 1997); Mountain States Tel. & Tel. Co. v. Dist. Ct., 778 P.2d 667, 671 (Colo. 1989); Higley v. Kidder, Peabody Co., 920 P.2d 884 (Colo. App. 1996); Rosenthal v. Dean Witter Reynolds, Inc., 883 P.2d 522, 531 (Colo. App.

Consumer Class Actions: 2. Case Law Interpreting Rule 23

The threshold requirements for class certification under Colorado Rule 23 are such that a class may be certified “only if all requirements are met.” Borwick v. Bober, 529 P.2d 1351, 1353 (Colo. App. 1974). The proponent of class certification bears the burden of demonstrating that all prerequisites for certification were met. Livingston v. U.S. Bank, 58 P.3d 1088, 1090 (Colo. App. 2002). A sufficient factual basis for class certification may be established by use of the pleadings, affidavits, discovery responses, and other evidence to show that all requirements are met.

Consumer Class Actions: 3. Miscellaneous Comments

a. Cost of Notice to Class Members

Although the named representative must usually bear the cost of notice to class members, the Colorado Supreme Court in unusual circumstances has placed the burden on the defendant. Mountain States Tel. & Tel. Co., 778 P.2d at 673, 676 (“content neutral” notice included with telephone bills).

b. Objections to Settlement by Class Members

Consumer Class Actions: COLORADO RULES OF CIVIL PROCEDURE

Rule 23. Class Actions38

(a) Prerequisites to Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if:

(1) The class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or fact common to the class;

Consumer Class Actions: 3. Appeals

In 2004, the Connecticut Appellate Court held that a judgment on the merits against a person claiming to be a representative of a purported class does not render moot an appeal challenging the denial of class certification or deprive the person of standing to bring the appeal. Robichaud, 82 Conn. App. at 851–52, 848 A.2d at 498.

Consumer Class Actions: 4. Miscellaneous

As a practical matter, class actions should normally qualify for the Connecticut Complex Litigation Docket, a special statewide docket of cases “that have many parties and common questions of law or fact.” Practice Book § 23-13. Other factors considered in an application for case referral to the Complex Litigation Docket are legally intricate issues and the possibility of millions of dollars in damages or a lengthy trial.