ROY GATAN et al., Plaintiffs and Appellants, v. ALARM ONE, INC. et al. Defendants and Respondents. CAROL LOPEZ et al., Proposed Intervenors and Appellants, v. MONITRONICS INTERNATIONAL, INC., Defendant and Respondent.
ROY GATAN et al., Plaintiffs and Appellants, v. ALARM ONE, INC. et al. Defendants and Respondents. CAROL LOPEZ et al., Proposed Intervenors and Appellants, v. MONITRONICS INTERNATIONAL, INC., Defendant and Respondent.
COURT OF APPEAL OF CALIFORNIA, FIRST APPELLATE DISTRICT, DIVISION FOUR
2007 Cal. App. Unpub. LEXIS 7095
August 31, 2007, Filed
NOTICE: NOT TO BE PUBLISHED IN OFFICIAL REPORTS. CALIFORNIA RULES OF COURT, RULE 8.1115(a), PROHIBITS COURTS AND PARTIES FROM CITING OR RELYING ON OPINIONS NOT CERTIFIED FOR PUBLICATION OR ORDERED PUBLISHED, EXCEPT AS SPECIFIED BY RULE 8.1115(b). THIS OPINION HAS NOT BEEN CERTIFIED FOR PUBLICATION OR ORDERED PUBLISHED FOR THE PURPOSES OF RULE 8.1115.
Alameda County Super. Ct. No. RG03084325.
CORE TERMS: class representatives, class certification, alarm, adequacy, class action, consumer, uncontradicted, lawsuit, intervene, aggrieved, proposed class, declarations, original parties, substantial evidence, certification, vigorously, intervenors, certify, reconsideration, monitoring, assigned, putative, class members, legal standards, causes of action, trier of fact, tentative ruling, necessary to protect, confidence, subjective
JUDGES: Ruvolo, P.J.; Reardon, J., Sepulveda, J. concurred.
OPINION BY: Ruvolo
Appellants Donna Simpson (Simpson) and Arthur Winkley (Winkley) appeal from an order denying class certification. Appellants Carol Lopez (Lopez), Gloria Ross (Ross), Phyllis L. Williams (Williams), and Artelious Warren (Warren) appeal from an order denying their motion to intervene. We affirm.
PROCEDURAL AND FACTUAL BACKGROUND
Roy Gatan and Jeaneth Boholst were two of the original named plaintiffs in a lawsuit against Alarm One, Inc. (Alarm One) a company that sold burglar alarms and provided alarm monitoring services. Gatan and Boholst alleged that Alarm One violated the Home Solicitation Act 1 by failing to comply with requirements regarding consumers' three-day right of rescission. They also alleged that Alarm One violated the Unruh Act 2 by failing to make certain disclosures and by charging a finance charge in the form of an activation/processing fee. Gatan and Boholst further alleged that Alarm One's contracts with consumers contained numerous unconscionable provisions in violation of the Consumer Legal Remedies Act (CLRA) and the Unfair Competition Law (UCL). 3 The provisions alleged to be unconscionable included automatic renewal of the contract, disclaimer of implied warranties, limitations on damages, waiver of jury trials, and failure to disclose the total cost of the contract.
1 (Civ. Code, Â§Â§ 1689.5 et seq.)
2 (Civ. Code, Â§Â§ 1801 et seq.)
3 (Civ. Code, Â§Â§ 1750 et seq.; Bus. & Prof. Code, Â§Â§ 17200 et seq.)
Gatan and Boholst filed a second amended complaint in November 2004, in which they added causes of action for breach of contract and money had and received. Plaintiffs also added Monitronics International, Inc. (Monitronics) as a defendant, based primarily on the allegation that Alarm One had assigned some of its monitoring contracts to Monitronics.
In November 2004, Gatan, Boholst, and Alarm One agreed to settle the lawsuit as a class action. The class was defined as all California residents who bought home alarm systems from Alarm One between March 2000 and December 2004. Neither Gatan's nor Boholst's monitoring contracts had been assigned to Monitronics. Accordingly, following their settlement with Alarm One, counsel for Gatan and Boholst contacted Alarm One customers whose contracts had been assigned to Monitronics, seeking class representatives. 4 Simpson was added as a plaintiff in a third amended complaint filed in February 2005, and Winkley was added as a plaintiff in the fourth amended complaint filed in June 2005. Both were deposed in the summer of 2005.
4 The court held that counsel did not act improperly in contacting putative class representatives.
In December 2005, Simpson and Winkley filed a motion to certify a class consisting of individuals who entered into contracts with Alarm One for installation of a burglar alarm system and whose monitoring contracts were assigned to Monitronics. In March 2006, the court issued an order tentatively denying the motion. Because the court addressed "issues not briefed directly by the parties," it continued the hearing and ordered additional briefing to specifically address its concerns "regarding the adequacy and typicality of the putative class representatives and the overall suitability of the class procedure under the facts of this case." The court also ordered Simpson and Winkley to "identify any members of the putative class who are unsatisfied with Monitronics and are seeking cancellation of their contracts or other affirmative relief in this action and are committed to vigorously pursue the claims of the putative class" in their opening supplemental brief, which was due by April 7, 2006.
Simpson and Winkley filed a supplemental brief in which they identified Lopez and Ross as potential class representatives. After a second hearing, the court denied the motion for class certification in a lengthy order. The court found that none of the four proposed class representatives would adequately represent the class.
Simpson and Winkley filed a motion for reconsideration of the denial of class certification in which they identified two new proposed class representatives, Williams and Warren. The court denied the motion and indicated the identification of Williams and Warren was "too late" because they were not identified in Simpson and Winkley's supplemental brief in support of the motion for class certification, but were identified after the deadline set by the court.
Lopez, Ross, Williams, and Warren then filed a motion to intervene in this action, which the court denied. The court stated that the "proposed intervenors do not have a direct interest in the lawsuit. [P] The proposed intervention would enlarge the issues raised by the original parties . . . [and intervention] would tread on the rights of the original parties if . . . permitted at this stage."
Timely notices of appeal were filed from the order denying class certification and the order denying intervention. No appeal was taken from the order denying reconsideration.
A. Denial of Class Certification
Simpson and Winkley assert that the trial court erred in denying class certification, for which the court stated three primary reasons. The court indicated that Simpson and Winkley failed to demonstrate they would adequately represent the class, because they testified that "notwithstanding their concerns about the form of their contracts and sales practices of Alarm One, they are otherwise satisfied with their alarm systems and do not seek cancellation of their contracts now held by Monitronics. The court lacks confidence that they will adequately protect the interests of the class." The court also held that they had not demonstrated that class certification was likely to confer any benefit on the absent class members. Finally, the court found there was "no need for deterrence given that defendant Monitronics was merely the assignee of the allegedly unlawful contracts and has stated that it no longer enforces the unlawful contract provisions."
"Because trial courts are ideally situated to evaluate the efficiencies and practicalities of permitting group action, they are afforded great discretion in granting or denying certification." (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435.) A ruling denying class certification " 'supported by substantial evidence generally will not be disturbed "unless (1) improper criteria were used . . . or (2) erroneous legal assumptions were made." . . . "Any valid pertinent reason stated will be sufficient to uphold the order." ' " (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326-327 (Sav-On), citing Linder v. Thrifty Oil Co., supra, 23 Cal.4th.at pp. 435-436.) " 'Our task on appeal is not to determine in the first instance whether the requested class is appropriate but rather whether the trial court has abused its discretion in denying certification.' " (Caro v. Procter & Gamble Co. (1993) 18 Cal.App.4th 644, 655 (Caro), citing Osborne v. Subaru of America, Inc. (1988) 198 Cal.App.3d 646, 654.)
Simpson and Winkley alleged causes of action governed by the CLRA and UCL, as well as other causes of action in which class certification is governed by Code of Civil Procedure section 382. The standards for class certification are somewhat different under the statutory schemes. All, however, require adequacy of the proposed class representatives.
1. Adequacy of Class Representatives in Class Certification of Claims under the CLRA and the UCL
Simpson and Winkley claim that the court applied improper legal standards for adequacy of class representatives in class actions alleging claims under the CLRA and the UCL. They assert that neither statutory scheme requires the class representative to be "aggrieved."
"A class action under the CLRA is governed exclusively by the terms of Civil Code section 1781." (Massachusetts Mutual Life Ins. Co. v. Superior Court (2002) 97 Cal.App.4th 1282, 1287 (Mass. Mutual).) Civil Code section 1781, subdivision (b), sets forth the four factors the trial court must apply in determining whether to certify a class in order to pursue a CLRA claim. (Hogya v. Superior Court (1977) 75 Cal.App.3d 122, 136.) The CLRA factors are whether "(1) It is impracticable to bring all members of the class before the court. [P] (2) The questions of law or fact common to the class are substantially similar and predominate over the questions affecting the individual members. [P] (3) The claims or defenses of the representative plaintiffs are typical of the claims or defenses of the class [and] [P] (4) The representative plaintiffs will fairly and adequately protect the interests of the class." (Civ. Code, Â§ 1781, subd. (b).) In determining whether to certify a class under the CLRA, the trial court is limited to the statutory factors, and may not consider other factors which may be considered in class actions under Code of Civil Procedure section 382. (See Sav-On, supra, 34 Cal.4th at p. 326; Hogya v. Superior Court, supra, 75 Cal.App.3d at p. 134, fn. 10.) "Unlike a plaintiff proceeding under Code of Civil Procedure section 382, a plaintiff moving to certify a class under the CRLA is not required to show that substantial benefit will result to the litigants and the court. . . . [U]nlike Code of Civil Procedure section 382, the CLRA does not require that a plaintiff show a probability that each class member will come forward and prove his separate claim to a portion of the recovery." (Mass. Mutual, supra, 97 Cal.App.4th at p. 1287, fn. 1, citing Hogya v. Superior Court, supra, 75 Cal.App.3d at pp. 134-135.)
The trial court held that one of the reasons the proposed class representatives were not adequate was the fact that they were not "actually aggrieved." Simpson and Winkley assert that in a representative action under the CLRA, 5 whether the proposed class representatives are aggrieved is not one of the factors which may be considered under Civil Code section 1781, subdivision (b).
5 Appellants rely on Kagan v. Gibraltar Sav. & Loan Assn. (1984) 35 Cal.3d 582 for their claim that a "plaintiff can also be totally satisfied and continue to represent the class." That case, however, involved whether defendants could avert a class action by granting individual relief to the named plaintiffs. The court held they could not, noting "the clear legislative intent that prospective defendants under the [CLRA] not avert a class action by exempting or 'picking off' prospective plaintiffs one-by-one through the provision of individual remedies." (Id. at p. 593.)
Simpson and Winkley ignore the language of Civil Code section 1781, subdivision (a), which delineates who may bring a representative action under the CLRA. That section provides in relevant part: "Any consumer entitled to bring an action under Section 1780 may, if the unlawful method, act, or practice has caused damage to other consumers similarly situated, bring an action on behalf of himself and such other consumers." Civil Code section 1780 mandates that only consumers who have suffered damage may bring an action under the CLRA. "Any consumer who suffers any damage as a result of the use . . . of a . . . practice declared to be unlawful by Section 1770 may bring an action . . . ." (Civ. Code, Â§ 1780, subd. (a), italics added.) Contrary to Simpson and Winkley's assertion in this regard, a representative plaintiff under the CLRA must have suffered damage as a result of the alleged unlawful practice. (Mass. Mutual, supra, 97 Cal.App.4th at p. 1292; see Caro, supra, 18 Cal.App.4th at pp. 663-664.)
Simpson and Winkley make the same claim regarding class actions under the UCL, urging that "UCL is designed to protect consumers. . . . There is no dissatisfaction or being aggrieved requirement." They are mistaken. Recent revisions to the UCL mandated by Proposition 64 "delet[ed] the language that had formerly authorized suits by any person 'acting for the interests of itself, its members or the general public,' and . . . replac[ed] it with the phrase, 'who has suffered injury in fact and has lost money or property as a result of unfair competition.' " (Californians for Disability Rights v. Mervyn's, LLC (2006) 39 Cal.4th 223, 228 (CDR); Bus. & Prof. Code, Â§ 17204.) This revised version of Business and Professions Code section 17204 applies to the UCL claims in this case, "because the measure does not change the legal consequences of past conduct by imposing new or different liabilities based on such conduct." (CDR, supra, 39 Cal.4th at p. 232, fn. omitted.) Accordingly, the trial court did not apply improper legal standards in this regard.
2. Class Certification under Code of Civil Procedure section 382
Simpson and Winkley also assert that the court utilized improper legal criteria because the standard it applied regarding adequacy of class representatives was too "high." They claim that once the court finds the proposed class counsel competent, it should not consider whether the proposed class representatives will vigorously pursue the claims or have a perceived lack of subjective interest in the suit.
"Section 382 of the Code of Civil Procedure authorizes class suits in California 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.' The burden is on the party seeking certification to establish the existence of both an ascertainable class and a well-defined community of interest among the class members." (Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1103-1104 (Lockheed), citing Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906, 913.)
To establish the "community of interest" requirement of section 382, the party seeking certification must demonstrate " '(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.' " (Lockheed, supra, 29 Cal.4th at p. 1104, citing Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470.) The proposed class representatives " 'must show substantial benefit will result both to the litigants and to the court.' " (Reese v. Wal-Mart Stores, Inc. (1999) 73 Cal.App.4th 1225, 1234, citing Blue Chip Stamps v. Superior Court (1976) 18 Cal.3d 381, 385.) The trial court's ruling determines whether " 'the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants.' " (Sav-On, supra, 34 Cal.4th at p. 326.)
Simpson and Winkley urge that the trial court utilized improper legal criteria because it applied a "higher" standard regarding adequacy of class representatives than that applied in McGhee v. Bank of America (1976) 60 Cal.App.3d 442, 450-451, (McGhee), which they claim is the "leading California case on adequacy." Appellants claim that, under McGhee, once the trial court finds the attorney for the proposed class "qualified to conduct the proposed litigation," it is error to consider whether the proposed class representatives will vigorously prosecute the case.
Simpson and Winkley rely on the following language in McGhee: "Adequacy of representation depends on whether the plaintiff's attorney is qualified to conduct the proposed litigation and the plaintiff's interests are not antagonistic to the interests of the class." (McGhee, supra, 60 Cal.App.3d. at p. 450.) Nothing in McGhee, however, suggests that the court's inquiry into adequacy of representation by the proposed class representative ends once the court finds that the proposed class counsel is competent. While the determination of a class representative's adequacy "factors in competency and conflicts of class counsel," it is not limited to counsel's adequacy. (Amchem Products, Inc. v. Windsor (1997) 521 U.S. 591, 625-626, fn. 20.) A class action "must be monitored by an informed and independent plaintiff and simply cannot be left for the lawyers to manage." (Apple Computer, Inc. v. Superior Court (2005) 126 Cal.App.4th 1253, 1265.) It is proper to deny class certification where the proposed class representative is simply lending his or her name to a suit controlled entirely by class counsel. (Howard Gunty Profit Sharing Plan v. Superior Court (2001) 88 Cal.App.4th 572, 579-580.)
Appellants also maintain that the trial court erred in not applying the "Kirkpatrick  standard." (Kirkpatrick v. J.C. Bradford & Co. (11th Cir. 1987) 827 F.2d 718 (Kirkpatrick).) The case provides no aid to appellants. First, the Kirkpatrick court expressly declined to establish a general standard of adequacy of class representation, and limited its holding to securities cases. (Id. at p. 728, see London v. Wal-Mart Stores, Inc. (11th Cir. 2003) 340 F.3d 1246, 1254.) Secondly, Kirkpatrick held only that "where the class is represented by competent and zealous counsel, class certification should not be denied simply because of a perceived lack of subjective interest on the part of the named plaintiffs unless their participation is so minimal that they virtually have abdicated to their attorneys the conduct of the case." (Id. at p. 728.) Even applying the Kirkpatrick language, the court here did not rely solely on Simpson's or Winkley's "perceived lack of subjective interest. The court found that "[p]laintiffs have not demonstrated that they will adequately monitor the prosecution of this case . . . . Given that both Plaintiffs were satisfied customers, the Court does not have confidence that they will prosecute the claims diligently . . . . [They] have not demonstrated that they are independent of counsel . . . . [T]he Court has significant concerns that Plaintiffs are not actually aggrieved, will not pursue the claims vigorously, and are merely lending their names to a suit controlled by class counsel."
6 While we may look to federal courts' interpretations of the class certification standards set forth in rule 23 of the Federal Rules of Civil Procedure, " '[i]t is only in the absence of relevant state precedent that courts turn to federal law . . . for guidance.' " (Kennedy v. Baxter Healthcare Corp. (1996) 43 Cal.App.4th 799, 809, fn. 5.)
The trial court did not apply improper legal standards in finding the proposed class representatives would not adequately represent the class. 7
7 Given our holding on this issue, we need not consider the other grounds on which the trial court relied and appellants claim were error.
3. Substantial Evidence
Appellants also assert that no substantial evidence supports the finding "at least [as to] Winkley" 8 that the proposed class representatives were not adequate.
8 Appellants do not assert that no substantial evidence supported the trial court's findings as to Lopez or Ross.
In reviewing a claim of no substantial evidence supporting the trial court's finding, "[o]ur authority begins and ends with a determination as to whether, on the entire record, there is any substantial evidence, contradicted or uncontradicted, in support of the judgment." (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 630-631, second italics added.) "Even in cases where the evidence is undisputed or uncontradicted, if two or more different inferences can reasonably be drawn from the evidence this court is without power to substitute its own inferences or deductions for those of the trier of fact, which must resolve such conflicting inferences in the absence of a rule of law specifying the inference to be drawn. We must accept as true all evidence and all reasonable inferences from the evidence tending to establish the correctness of the trial court's findings and decision, resolving every conflict in favor of the judgment." (Id. at p. 631.) Even uncontradicted testimony in appellant's favor "does not necessarily conclusively establish the pertinent factual matter: The trier of fact is free to reject any witness's uncontradicted testimony; and the Court of Appeal will affirm so long as the rejection was not arbitrary." (Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2007) P 8:54, p. 8-22 (rev. # 1, 2006).) We view all factual matters in the light most favorable to the prevailing party, resolving all conflicts and indulging all reasonable inferences from the evidence to support the judgment. (Bickel v. City of Piedmont (1997) 16 Cal.4th 1040, 1053, abrogated with regard to construction of the Permit Streamlining Act, as noted in DeBerard Properties, Ltd. v. Lim (1999) 20 Cal.4th 659, 668.)
Simpson and Winkley claim that the court erred by "ignor[ing] uncontradicted statements that [they] would monitor class counsel to protect the interests of the class," and wanted to cancel their contracts. These claimed "uncontradicted" statements were made in Simpson and Winkley's declarations filed after the court's tentative order denying the motion class certification. They also assert that the evidence showed that Winkley "meets any reasonable standard to be a class representative."
The court made specific findings regarding the inadequacy of both Simpson and Winkley to serve as class representatives. 9 It stated in its order: "[p]laintiffs have not demonstrated that they will adequately monitor the prosecution of this case. Both [Simpson and Winkley] were satisfied with their burglar alarm service until they were informed of this lawsuit. . . . Winkley's only complaint was that he did not like the way the contract was written. . . . Given that both [Simpson and Winkley] were satisfied customers, the court does not have confidence that they will prosecute the claims diligently." The court also found that Simpson and Winkley "have not demonstrated that they are independent of counsel. [They] had no interest in pursuing claims against Monitronics until they received a notice from Plaintiffs' counsel informing them of this lawsuit. Simpson has no financial interest in this case other than the possibility of an incentive payment. . . . Winkley volunteered to be a class representative because he kept most of his records and thought he might be of service to class counsel. . . . This evidence suggests that Simpson and Winkley are merely lending their names to a suit controlled by class counsel."
9 While Williams and Warren were identified in the motion for reconsideration as new proposed class representatives, this was after the deadline set by the trial court, as indicated in the order denying the motion. Appellants concede that they are not appealing from the denial of the motion for reconsideration.
Even if Simpson's and Winkley's statements in their declarations were "uncontradicted," it would not preclude a determination that substantial evidence supported the court's findings. Their declarations were filed after the court's tentative ruling denying class certification, which cited Simpson and Winkley's deposition testimony in support of its tentative ruling that they were not actually aggrieved and that they were not independent of counsel. "The trier of fact is free to reject any witness' uncontradicted testimony." (Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs, supra, P 8:54, p. 8-22 (rev. # 1, 2006).) Moreover, rather than "ignoring" these statements, the court explained in its order that it was placing greater weight on statements made in Simpson and Winkley's depositions than on statements made in their declarations filed after the tentative ruling. This is in accord with the analogous situation in summary judgment proceedings in which admissions in deposition testimony are "entitled to and should receive a kind of deference not normally accorded evidentiary allegations in affidavits." (D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 22; Benavidez v. San Jose Police Dept. (1999) 71 Cal.App.4th 853, 860-863.)
Simpson and Winkley had the burden of establishing their adequacy to be class representatives. (See Lockheed, supra, 29 Cal.4th at pp. 1103-1104.) Substantial evidence supports the court's finding that they did not meet their burden.
B. Denial of Intervention
Following the court's denial of class certification, Lopez, Ross, Williams and Warren filed a motion to intervene, which the court denied. They argue that their intervention is necessary to protect the interests of the class in this appeal "so that class certification is granted." They also maintain that denying them leave to intervene will force them "to abandon their claims against Monitronics." We review the court's order denying intervention for abuse of discretion. (Noya v. A.W. Coulter Trucking (2006) 143 Cal.App.4th 838, 842.)
The trial court has discretion to allow a non-party to intervene 10, provided "(1) it has a direct interest in the lawsuit; (2) intervention would not enlarge the issues raised by the original parties; and (3) the intervener would not ' "tread on the rights of the original parties to conduct their own lawsuit." ' " (Bame v. City of Del Mar (2001) 86 Cal.App.4th 1346, 1364, citing Lincoln National Life Ins. Co. v. State Bd. of Equalization (1994) 30 Cal.App.4th 1411, 1422.)
10 Code of Civil Procedure section 387, subdivision (a) provides that "[u]pon timely application, any person, who has an interest in the matter in litigation, or in the success of either of the parties, or an interest against both, may intervene in the action or proceeding."
The proposed intervenors urge that their intervention was necessary to protect the interests of the proposed class on appeal. Those interests are already being protected by Simpson and Winkley appealing the order denying class certification. We fail to see how intervention by Lopez, Ross, Williams, and Warren, who are represented by the same counsel as Simpson and Winkley, is necessary to protect the interests of the proposed class.
The proposed intervenors also assert that denial of their motion will force them to abandon their claims against Monitronics. The trial court expressly found, in its order denying class certification, that persons alleging claims against Monitronics could file individual actions in small claims court. While the proposed intervenors filed declarations in the trial court indicating their belief that their claims were too "complex" to bring in small claims court, the jurisdiction of small claims court is circumscribed primarily by the monetary amount of claimed damages, not the complexity of the case. (See Code Civ. Proc., Â§ 116.220.)
We find no abuse of discretion in the trial court's order denying intervention.
The orders denying class certification and denying intervention are affirmed.