Judge: William D. Claster, Case: 22-01248489, Date: 2022-09-22 Tentative Ruling

Defendant Better Mortgage Corporation's Notice of Demurrer and Demurrer to Plaintiff Amber Niece's First Amended Complaint   #102

Defendant Better Mortgage Corporation demurs to the class allegations in the first amended complaint (FAC) of plaintiff Amber Niece.  (Niece is the sole remaining plaintiff, even though the case is captioned Ghazanfari v. Better Mortgage Corporation.)  For the reasons set forth below, the demurrer is SUSTAINED WITH LEAVE TO AMEND.  Plaintiff shall have until October 7, 2022 to file a second amended complaint.

A status conference will be held on October 4, 2022 at 8:30 a.m. in conjunction with the related case of Luangphonh v. Better Mortgage Corporation 21-1190771. A joint status conference statement should be filed on or before September 27, 2022.

Both sides cite unpublished California Superior Court decisions in their papers.  “Even assuming for the sake of argument that [these cases] involve[] the same issue as the case before [the Court] . . . a written trial court ruling has no precedential value.”  (Santa Ana Hospital Medical Center v. Belshe (1997) 56 Cal.App.4th 819, 831.)  The Court has not considered these decisions.

In addition, both sides use Lexis citations for unpublished cases.  The Court does not have a Lexis subscription.  Parties who wish to rely on unpublished, citable decisions (e.g., federal decisions) should either provide Westlaw citations or file a compendium of authorities.

Finally, while Defendant objects to Plaintiff’s untimely opposition, it also has replied to the opposition on the merits.  The Court therefore finds no prejudice will result from considering the opposition.

I.            Factual Background

As alleged in the FAC, Plaintiff worked for Defendant as a “Closing Expert” in Defendant’s Irvine office from February 4 to August 5, 2020.  (FAC ¶ 3.)  She seeks to bring wage and hour claims on behalf of the following putative class:

All individuals (a) who are currently or formerly employed by Defendant in the State of California at any given time during the four years prior to the filing of this Complaint (the “Class Period”) and who during such time were classified and paid as nonexempt and/or as nonexempt classified salaried employees performing work as a senior underwriter, processing expert, processing expert manager, loan consultant associate and associate home advisor, customer experience associate, loan consultant associate, closing expert and similar job positions, job titles, job codes, job classifications, job duties or job descriptions, and (b) who were subject to Defendant’s illegal policies and practices as alleged herein during the Class Period.  (FAC ¶ 49.)

II.          Standard of Review

Defendant demurs to the class allegations in Plaintiff’s FAC, arguing she has failed to state facts sufficient to constitute a class action.

In reviewing the sufficiency of a complaint against a demurrer for failure to state facts sufficient to state a cause of action, the Court is guided by long-settled rules.  The Court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.”  (Serrano v. Priest (1971) 5 Cal.3d 584, 591.)  “The complaint must be construed liberally by drawing reasonable inferences from the facts pleaded.”  (Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517.)  “Further, [the Court] gives the complaint a reasonable interpretation, reading it as a whole and its parts in their context.”  (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)  “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.”  (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) 

In the class context, “trial courts properly and routinely decide the issue of class certification on demurrer.”  (Silva v. Block (1996) 49 Cal.App.4th 345, 349 [quotation omitted].)  In evaluating Plaintiff’s allegations, however, the Court is mindful that “a demurrer only lies for defects appearing on the face of the pleading.”  (Verizon California Inc. v. Board of Equalization (2014) 230 Cal.App.4th 666, 681.)  As a result, arguments about the insufficiency of class allegations are not well-taken if based on material outside the four corners of the complaint.

III.       Discussion

A plaintiff seeking class certification is required to “demonstrate the existence of an ascertainable and sufficiently numerous class, a well-defined community of interest, and substantial benefits from certification that render proceeding as a class superior to the alternatives.  In turn, 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.” (Brinker Restaurant Corporation v. Superior Court (2012) 53 Cal.4th 1004, 1021 [internal quotes and citations omitted].) These elements are typically referred to as (1) ascertainability; (2) numerosity; (3) commonality; (4) typicality; (5) adequacy; and (6) superiority.

Defendant argues Plaintiff has failed adequately to plead ascertainability, commonality, and typicality.  Defendant also argues policy considerations require dismissal of the class allegations at the demurrer stage.

A.           Ascertainability

As set forth above, the putative class includes non-exempt employees “performing work as a senior underwriter, processing expert, processing expert manager, loan consultant associate and associate home advisor, customer experience associate, loan consultant associate, closing expert and similar job positions, job titles, job codes, job classifications, job duties or job descriptions.” 

Citing Noel v. Thrifty Payless (2019) 7 Cal.5th 955, Defendant argues this definition is not “sufficient to allow a member of the class to identify himself or herself as having a right to recover based on the class description,” rendering the class unascertainable.  (Id., at p. 980.)  In particular, Defendant argues that the reference to “similar” job titles will leave non-exempt employees who don’t hold a listed job title wondering whether they are part of the class.

Defendant overreaches in its reading of Noel.  That case holds “a class [is] ascertainable when it is defined ‘in terms of objective characteristics and common transactional facts’ that make ‘the ultimate identification of class members possible when that identification becomes necessary.’ [Citation.]  We regard this standard as including class definitions that are ‘sufficient to allow a member of [the class] to identify himself or herself as having a right to recover based on the [class] description.’  [Citation].”  (Ibid.)  That is, a class definition that lets a class member know if he is part of the class is included in the ascertainability standard.  It is not, however, the exclusive means of defining an ascertainable class.  The overarching standard remains objective characteristics that make identification of class members possible when the time comes.

At the demurrer stage, the Court cannot say the class as defined is unascertainable.  Plaintiff defines it in terms of specific job titles, followed by a catchall for persons who perform similar work.  This is sufficient at this time.  Discovery can be used to determine which other positions, if any, performed similar work. 

Defendant also complains that even if it could determine which job positions are included in the class, the class as defined fails to distinguish between persons who suffered Labor Code violations and those who did not.  The Court is confused by this argument, because it appears Defendant demands that Plaintiff define a fail-safe class consisting only of persons who suffered the Labor Code violations complained of.  But as the principal federal authority relied upon by Noel explains, “classes that are defined in terms of success on the merits—so-called fail-safe classes”—are unascertainable.  (Mullins v. Direct Digital, LLC (7th Cir. 2015) 795 F.3d 654, 660 [quoted in Noel, supra, 7 Cal.5th at p. 977].)

Furthermore, in reply, Defendant complains that the class “includes potentially all non-exempt employees throughout California.”  (Opp. at p. 5.)  A class defined as “all non-exempt employees in the State of California” would be perfectly ascertainable.  Defendant apparently seeks to dismiss the class allegations because Plaintiff pled a narrower class than she could have.

In short, the class is sufficiently ascertainable at the pleading stage to withstand demurrer.

B.           Commonality

Defendant argues Plaintiff fails to adequately allege common questions of fact and law.  The Court agrees.

From the Court’s reading of the FAC, there are two main sets of allegations.  First, Plaintiff contends she and other class members were routinely required to work through meal and rest breaks.  This not only caused meal and rest break violations, but also downstream violations for failure to pay all hours worked/overtime (in that employees worked while clocked out for meal breaks) and derivative wage statement, waiting time, etc. violations.  Second, Plaintiff contends she and other class members were required to use personal cell phones, computers, internet access, etc. for work purposes without reimbursement.

But as Defendant points out, Plaintiff fails to allege common policies or practices applicable to all employees that caused these violations.  The alleged requirement to work through breaks to focus on pressing work applied to “Plaintiff and certain Class Members.”  (FAC ¶¶ 28, 30 [emphasis added].)  The alleged requirement to use personal cell phones and computers on the job applied to “Plaintiff and a substantial number [of] Class Members.”  (FAC ¶ 44.)  And the alleged requirement to use personal internet access on the job applied to “Plaintiff and certain Class Members.”  (FAC ¶ 45.)

Plaintiff affirmatively alleges policies and/or practices that are not uniform: only “certain” or a “substantial number” of class members are subject to them.  Therefore, commonality is lacking as pled.  As currently alleged, Plaintiff would have to prove, for each putative class member, the policies or practices applicable to him or her.  Individualized questions would predominate over common ones.  The demurrer to the class allegations is therefore sustained on this ground.

That being said, the Court is not persuaded by Defendant’s remaining arguments about commonality.  Defendant relies on a federal case that held class allegations insufficient for failing to provide more details on the policies/practices at issue, but federal pleading standards are inapplicable in state court.  The content of the alleged policies/practices is adequately pled at the demurrer stage.  Nor is it clear from the face of the FAC that policies/practices applicable to putative class members in Defendant’s Irvine office are inapplicable to class members in other offices.  (This is a separate issue from whether Plaintiff has alleged a uniform policy/practice in the first place.)  In short, the demurrer is sustained only for the reasons set forth above.

C.            Typicality

Defendant argues Plaintiff has not pled she is typical of the class she seeks to represent.  The Court disagrees.  At the demurrer stage, Defendant bears the burden of showing from the face of the FAC that Plaintiff has not pled typicality.  It notes that the alleged policies/practices at issue are “specific to her job classification and functions,” which Defendant contends is a customer-facing and subject to “the Company’s quick customer service objective.”  (Memo. at pp. 11-12.)  Missing from Defendant’s argument is any how this description doesn’t apply at the demurrer stage to the other positions listed in the class definition.  Presumably a “customer experience associate” has a customer-facing role and is expected to serve customers quickly.  Perhaps a “senior underwriter” never interacts with customers, but this is hardly apparent from the face of the complaint.  This is the sort of fine-tuning of the class definition that happens in discovery.

Defendant’s sole demurrer stage case on typicality, Payne v. United California Bank (1972) 23 Cal.App.3d 850, is inapposite.  In that case, the plaintiffs purchased vacuum cleaners from Filter Queen on installment contracts.  They alleged Filter Queen defrauded them, and that the defendant bank, through the Master Charge credit system, collected on contracts by means of Filter Queen’s misrepresentations.  They sought to represent a class of persons who had purchased vacuums from Filter Queen whose payments were collected by the bank.  (Id., at p. 853.)  But there was “an admitted defect that appear[ed] on the face of the complaint against the bank, namely, although plaintiffs purchased vacuum cleaners from Filter Queen on retail installment contracts, all of their contracts were signed at least 4 1/2 months before November 1968, when Filter Queen entered into the Master Charge agreement with the bank.”  (Id., at pp. 854-855.)  Because the plaintiffs were not members of the class they sought to represent, the trial court was correct to sustain the bank’s demurrer to the class claims.  (Id., at p. 852.)

No such defects are present on the face of the FAC here.  Discovery may show that Plaintiff is atypical, but the FAC itself discloses no atypicality.

D.           Policy Concerns

Finally, Defendant argues that judicial economy would best be served by disposing of the class allegations at the demurrer stage.  Defendant cites no authority for the proposition that policy considerations should inform the demurrer analysis itself.  Brown v. Regents of University of California (1984) 151 Cal.App.3d 982 simply holds that if class allegations are insufficient to withstand demurrer, then “all of the policy considerations which justify class actions equally compel the dismissal of such inappropriate actions at the pleading stage.”  (Id., at p. 984.)  For the reasons set forth above, the FAC withstands demurrer in most respects, but not in one.  The Court sustains the demurrer because the FAC does not meet the demurrer standard, not because of judicial economy concerns.

Similarly, TJX Companies v. Superior Court (2001) 87 Cal.App.4th 747 simply held it was error for the trial court to deny oral argument on the defendant’s demurrer to class allegations, particularly when there was a “real and genuine dispute” about the sufficiency of class allegations.  (Id., at pp. 753-754.)  This Court will, of course, hear oral argument on Defendant’s demurrer.

IV.         Leave to Amend

The Court sustains the demurrer on the ground that commonality is lacking because Plaintiff alleges policies/practices that apply to “certain” class members or a “substantial number” of class members.  It appears to the Court that this defect could be cured by amendment.  Plaintiff is therefore granted leave to amend to address this issue.