Judge David S. Cunningham, Case Number: JCCP5301, Date: 2023-12-01 Tentative Ruling

Moving Party: Leonel Aceves, et al. (“Plaintiffs”) and Field Asset Services, Inc., et al. (“Defendants” or “FAS”) (collectively “Petitioners”)

Petitioners submitted a petition to the Chairperson of the Judicial Council for pretrial coordination of 68 cases pending in 20 counties throughout California (collectively “Included Actions”).[1]

The Included Actions are individual “wage and hour” cases. According to Petitioners, Defendants operate “a property preservation company for foreclosed and repossessed properties.” (MP&A, p. 2.) They “maintain a network of vendors to perform work at the properties” and classify them as “independent contractors[.]” (Ibid.) They do not pay wages to the vendors “or reimburse them for business expenses.” (Ibid.) Plaintiffs contend Defendants’ conduct violates the Unfair Competition Law (“UCL”) based on violations of the Labor Code.

At first, the Included Actions were filed as a class action in federal court. The district court granted certification, granted summary judgment, finding that Defendants were liable to the class for unpaid wages and unreimbursed expenses, and held a bellwether trial in which the jury returned a verdict in favor of the class representative and 10 class members. (See ibid.)

Following entry of judgment, the Ninth Circuit decertified the class and reversed the summary judgment. (See id. at pp. 2-3.)

Then, numerous former class members filed individual actions, some in federal court and some in California courts.

The Chief Justice and Chair of the Judicial Council issued an order assigning this Court to sit as the coordination motion judge to determine whether the Included Actions – i.e., the California cases – are complex and, if so, whether coordination is appropriate.

Only “complex” cases may be coordinated. (Edmon & Karnow, Cal. Practice Guide: Civ. Procedure Before Trial (The Rutter Group June 2023 Update) ¶ 12:374.5.) A “complex” case requires “exceptional judicial management to avoid placing unnecessary burdens on the court or the litigants and to expedite the case, keep costs reasonable, and promote effective decision making by the court, the parties, and counsel.” (Cal. Rules of Court, rule 3.400(a).)

[T]he Court must consider, among other things, whether the action is likely to involve:

(1) Numerous pretrial motions raising difficult or novel legal issues that will be time-consuming to resolve;

(2) Management of a large number of witnesses or a substantial amount of documentary evidence;

(4) Coordination with related actions pending in one or more courts in other counties, states, or countries, or in a federal court; or

[A]n action is provisionally a complex case if it involves one or more of the following types of claims:

As stated above, the Included Actions are individual actions. They are not provisionally complex.

Even so, Petitioners contend the cases should be deemed complex because it will be necessary to “manag[e] at least 68 related actions pending in courts in other counties[,]” the misclassification issue is “near-identical[,]” and there will be “a large number of witnesses and a substantial amount of documentary evidence.” (MP&A, p. 5.)

The Court disagrees. In the Court’s experience, it is rare to find individual actions complex, particularly individual “wage and hour” cases. The Included Actions do not stand as an exception. Indeed, the main reason why the Ninth Circuit found class certification inappropriate was because individual issues predominated. (See Bowerman v. Field Asset Services, Inc. (9^th Cir. 2023) 60 F.4^th 459, 468-471; see also id. at 471 n.8 [finding the class method inferior].) Misclassification claims have become standard. This plus the predominance of individual issues compels the conclusion that the Included Actions are not complex. Rule 3.400(b) is unsatisfied.[2]

Section 404.1 states that a petition for coordination should be granted if doing so will “promote the ends of justice,” taking into account the following seven factors:

whether the common question of fact or law is predominating and significant to the litigation; the convenience of parties, witnesses and counsel; the relative development of the actions and the work product of counsel; the efficient utilization of judicial facilities and manpower; the calendar of the courts; the disadvantages of duplicative and inconsistent rulings, orders, or judgments; and the likelihood of settlement of the actions without further litigation should coordination be denied.

Petitioners contend common questions predominate because the Included Actions involve the same Defendants, causes of action, allegations, and legal issues. (See MP&A, p. 6.)

The Court disagrees. Again, the Ninth Circuit determined that individual questions predominated over common ones. The opinion highlights several individualized factual and evidentiary issues that arose during the bellwether trial. (See Bowerman, supra, 60 F.4^th at 468-471.) Coupled with the fact that the Included Actions are not complex, the Court similarly finds that individual issues predominate here.

Petitioners assert that the Included Actions are pending in 20 counties, that each case involves the same Plaintiff’s counsel and the same defense counsel, and that there will be similar (perhaps identical) corporate witnesses and business records. (See MP&A, pp. 6-7.)

This factor is neutral or favors denial. Deciding common issues in one forum typically conveniences the parties, witnesses, and counsel, but the situation here is different. Given the noncomplex nature of the cases, the key differences, and the predominating individual issues, and since the individual Plaintiffs appear to live and work in multiple counties, the Court is inclined to find that coordination would be inconvenient.

This factor is neutral or favors denial. It is true that the Included Actions are in the early stages. All of them were filed “during a brief, one-month window in June 2023.” (Id. at p. 7.) None of them has a trial date set. (See ibid.) However, because these are noncomplex cases, and because individual issues predominate, the Court finds that coordinating discovery and motion practice would not facilitate the prosecution and defense of each case. (Cf. McGhan Medical Corp. v. Superior Court (1992) 11 Cal.App.4^th 804, 814 [noting that “preparation for trial in terms of depositions, interrogatories, [and requests for] admissions . . . will be better achieved if done in a coordinated matter”].)

This factor favors denial. The analysis is the same as sections II.A. and II.B. Since key differences exist, and individual issues predominate, the threat of separate courts duplicating case efforts on the same issues and claims is low.

This factor is neutral. Petitioners’ brief fails to address the specific, individual court calendars.

This factor favors denial. The analysis is the same as sections II.A., II.B., and II.D. To repeat, there are key differences, and individual issues predominate, so the likelihood that the courts will make duplicative or inconsistent rulings, orders, or judgments if coordination is denied is reduced.

Petitioner contends “[c]oordination will enhance the opportunity for a global resolution of all actions,” “[a]nd separate proceedings would create disincentives to settling, since the parties in one action will be wary of settling before a significant ruling is reached in one of the other cases due to the overlapping of issues[.]” (Id. at p. 8.)

This factor is neutral or favors denial. The inquiry is not whether coordination will promote settlement; it is whether settlement is expected “without further litigation should coordination be denied.” (Code Civ. Proc. § 404.1.) The cases are in the early stages. None has settled. Nothing in the record suggests that Defendants intend to settle prior to filing discovery motions and, possibly, motions for summary judgment. Some additional litigation seems probable with or without coordination.

On balance, the coordination factors support denial. The Court finds that the petition for coordination should be denied.

The factors considered in making a recommendation for the site of the coordination proceedings include: “[t]he number of included actions in particular locations;” “[w]hether the litigation is at an advanced stage in a particular court;” “[t]he efficient use of court facilities and judicial resources;” “[t]he locations of witnesses and evidence;” “[t]he convenience of the parties and witnesses;” “[t]he parties' principal places of business;” “[t]he office locations of counsel for the parties;” and “[t]he ease of travel to and availability of accommodations in particular locations.” (Cal. Rules of Court, rule 3.530(b).)

Petitioners ask the Court to stay the cases pending coordination. (See id. at p. 9.)

[1] The Included Actions are listed in Attachment A to Petitioners’ memorandum of points and authorities (“MP&A”).

[2] The Ninth Circuit opinion states:

. . . any common question as to misclassification is outweighed by the individual questions going to injury and damages. Of course, as we have emphasized, “the presence of individualized damages cannot, by itself, defeat class certification.” [Citations.] Rule 23(b)(3) “requires only that the district court determine after rigorous analysis whether the common question predominates over any individual questions, including individualized questions about injury or entitlement to damages.” [Citation.] Thus, “a district court is not precluded from certifying a class even if plaintiffs may have to prove individualized damages at trial, a conclusion implicitly based on the determination that such individualized issues do not predominate over common ones.” [Citation.]

Still, class certification is inappropriate when “individualized questions ... will overwhelm common ones.” [Citation.] When the district court initially held that predominance was satisfied and class certification was appropriate, it understood that individualized injury and damages assessments would not be prohibitively cumbersome. But the plaintiffs withdrew their expert after the district court “raised questions about the reliability of his data and opinions concerning an aggregate damages model.” Lacking any sort of representative evidence, the class members were left relying on individual testimony to establish the existence of an injury and the amount of damages. Such an approach would not necessarily have doomed class certification—so long as common questions continued to predominate. They did not.

As the district court recognized in its most recent order denying FAS’s motion for class decertification, “[t]he damages phase of this class action is far messier than promised by plaintiffs' counsel when” the case was certified. The district court explained, “[b]ecause the documentary evidence maintained by the vendors ... [is] scant at best, ... [p]roof by the testimony of [individual] vendors is necessary.”

And the individualized testimony was not a simple matter. Plaintiffs do not dispute FAS's assertions that “[a]ll who testified [during the bellwether jury trial] relied on their unaided memories as the primary or sole evidence of their work schedules,” and that “[n]one offered time-entry data or other contemporaneous records of hours worked,” as confirmed by the trial record. This has resulted in a series of mini-trials concerning the work history and credibility of each individual class member; already, it has taken eight days to determine damages for only eleven of the 156 class members. The “individualized mini-trials” required to establish liability and damages plainly distinguish this case from [Olean Wholesale Grocery Cooperative, Inc. v. Bumble Bee Foods LLC, 31 F.4^th 651 (9^th Cir. 2022)], where the proposal for calculating damages for each class member—though individualized—was “straightforward.” [Citation.]

Nor does this case resemble Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 136 S.Ct. 1036, 194 L.Ed.2d 124 (2016). There, the defendant-employer argued that class certification was improper because the “necessarily person-specific inquiries into individual work time predominate[d] over the common questions.” [Citation.] The Supreme Court rejected this argument because the plaintiffs had offered common evidence—in the form of a “representative sample”—that “each class member could have relied on” as evidence of the hours that he or she worked “if he or she had brought an individual action.” [Citation.] The class members here argue they have common evidence too, pointing to FAS's contracts requiring workers to incur all business expenses and disclaim any right to overtime pay. But unlike the representative evidence in Tyson Foods—which would have been sufficient, on its own, to establish the employer's liability to each employee at trial, [citation]—the common evidence here speaks only to some elements of the class members' claims: namely, whether they were misclassified as independent contractors. It does not bear on whether the class members actually worked overtime or incurred reimbursable business expenses. It therefore carries less weight in the predominance inquiry than the representative evidence in Tyson Foods and the common issue it helps resolve is outweighed by the complexity of the individualized inquiries that remain.

The balance between common and individualized questions in this case is also unlike the wage-and-hour class actions in which our court has held that class certification is appropriate, in both the lack of representative evidence going to liability and the complexity of the remaining individualized questions. For example, in Ridgeway v. Walmart Inc., 946 F.4d 1066 (9^th Cir. 2020), the plaintiffs presented common evidence that Wal-Mart was liable to all class members for failing to pay truck drivers for time spent on layovers, rest breaks, and inspections. [Citation.] The plaintiffs also offered common evidence in support of damages, in the form of representative sampling compiled by an expert and testimony from representative employees. [Citation.] In Senne v. Kansas City Royals Baseball Corp., 934 F.3d 918 (9^th Cir. 2019), too, the plaintiffs offered representative evidence (in the form of an expert survey, team schedules, payroll data, and testimony from the employer and representative class members) in support of liability and damages. [Citation.] This representative evidence tipped the scales in favor of common issues predominating, even though the damages calculations would involve some individualized inquiries. [Citation.]

The plaintiffs' evidence here is more like that offered in Castillo v. Bank of America, NA, 980 F.3d 723 (9^th Cir. 2020), in which we affirmed the district court's denial of class certification. [Citation.] There, the plaintiffs offered common evidence showing that the defendant-employer utilized two unlawful overtime formulas in some circumstances. [Citation.] Nevertheless, the common issues about the lawfulness of those formulas were outweighed by “complicated” individualized questions about “who was ever exposed to one or both policies, and whether those who were exposed were harmed in a way giving rise to liability.” [Citation.]

In light of the complexity of the individualized questions and the absence of any representative evidence introduced to fill the class members' evidentiary gap, the individual issues predominate over the common questions in this case. Class certification was therefore improper.

(Id. at 469-471, underlined case names added, footnotes omitted.)