Harper v. 24 Hour Fitness, Inc.

WOODS, J., Dissenting.

I respectfully dissent.

It is true the trial court, in concluding class treatment was no longer the superior method to the resolve the claims, made several observations about the availability of relief and remedies in representative actions that do not reflect the current state of the UCL (unfair competition law) in the post-Proposition-64 world. I am not convinced, however, that the trial court’s comments concerning the UCL warrant reversal of the decertification order in view of the arguments on appeal and history of this case. Likewise, as I shall explain, I agree with the trial court’s view that after five years of class status discovery it no longer appears that the individual class members share a community of interests. Accordingly, I would affirm the trial court’s decertification order.

1. Superiority of Class Treatment

The majority characterizes as a “significant factor” that “fundamentally undermines the trial court’s superiority analysis” (in the decertification order) the trial court’s belief that in a representative action the relief granted under the UCL, Business and Professions Code sections 17200 and 17500, may extend beyond the named parties and may include restitution and attorney’s fees. In my view, the majority’s characterizations of the trial court’s comments as significant or fundamental factors in the court’s conclusion are not borne out in the record. Instead, as reflected at the order to show cause hearing on the decertification order, the trial court’s chief concerns lay elsewhere, namely, that given the class plaintiff’s seemingly endless efforts to increase the size of the class, the class action proceeding was no longer superior because it was no longer efficient, manageable or expedient.

The motivation behind the court’s original class certification order was to provide the parties an avenue to reach the merits of the claims expeditiously. However, the record shows class certification had the opposite effect and failed to confer any substantial benefit to the court or to the parties themselves. This lack of effectiveness is reflected throughout the record as the trial court openly critiqued the delay in reaching the merits of the claims. During *979the August 2005 hearing on a production request, the court granted appellants’ motion for production to expedite the discovery process and reach the merits of the claim. The court reasoned, “What I am doing is observing that it has taken us a heck of a long time to get where we are, A, and, B, as I understand it, there is little prospect of an end in sight. There is no light at the end of the tunnel.” (Italics added.)

Part of what prompted the court to certify the class in the first place in such a limited manner was the belief that superiority of the class action would encourage judicial expedience.

The fact that appellants filed a fourth motion for leave to modify the class definition after five years of class certification undermines appellants’ own arguments regarding the superiority of the original class certification order. Each motion for class modification gave the court reason to question the class action as a superior method of adjudication. Contrary to appellants’ claims that the trial court “simply folded under the respondent’s repeated fractious attacks on the class,” appellants have demonstrated the lack of superiority of their own class status by continually filing motions for leave to modify the class definition. Appellants’ last request to expand the class to include members who did not even sign the same contract form, as the original class members had done, triggered the trial court’s concerns about the superiority of the class action.

Accordingly, the court extended to appellants a final opportunity to show the court the substantial benefit provided by class treatment by issuing its order to show cause. As a purported rationale for the trial court’s decertification order, appellants suggest, “the court did not want to be bothered,” rather than the court’s concern with the class action not coming from the parties’ failure to attend to the proceedings. Rather, the court’s focus on the number of those proceedings was an observation as to the lack of effectiveness of the class action itself. The court makes this point evident in the decertification order: “Indeed, to hear plaintiffs, we are today farther from giving class notice than we were on March 3, 2003 \the date of the original class certification order], because we still need to revisit the issue of class definition. ... As this chronology makes clear, the issues of class definition and identification of the members of the class have taken on a life independent of the merits of the litigation, and indeed have apparently become the driving force.” (Italics added.)

In view of the history of the case and specifically the record on appeal in the decertification proceedings, it appears that the court’s comments about UCL remedies in representative actions, albeit legally unsound, were but one *980component of the court’s analysis of the “superiority” issues1 and in my opinion do not otherwise undermine the court’s primary, sound reasons for decertifying the class.

2. Community of Interest

As the majority aptly observes, the “community of interest” is defined by, among other issues, whether common issues of law or fact predominate over issues unique to individual class members and whether the class representatives have claims typical of the class. (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326 [17 Cal.Rptr.3d 906, 96 P.3d 194].) Indeed, the burden for the party moving for class certification is not that some common issues exist, but that substantial evidence in the record shows common issues predominate. (Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1108 [131 Cal.Rptr.2d 1, 63 P.3d 913].) Here by considering whether common questions of law and fact predominated, the trial court used the proper criterion for decertifying the class. (Walsh v. IKON Office Solutions, Inc. (2007) 148 Cal.App.4th 1440, 1451 [56 Cal.Rptr.3d 534], citing Grogan-Beall v. Ferdinand Roten Galleries, Inc. (1982) 133 Cal.App.3d 969, 975-977 [184 Cal.Rptr. 411] [decertification of class was based on proper criterion where the court determined there was a lack of commonality].)

A review of the court’s prior rulings through the various stages of the case shows that the community of interest had always remained an essential criterion in the court’s consideration of whether class treatment was justified. Moreover, in determining whether a class action was a superior method of adjudicating the claims, the trial court implicitly concluded that a lack of commonality posed a significant obstacle. A class action cannot be maintained where the existence of or entitlement to damages has to be determined on a case-by-case basis, even if there are some common questions. (Basurco v. 21st Century Ins. Co. (2003) 108 Cal.App.4th 110, 120 [133 Cal.Rptr.2d 367] citing Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th, 906, 913 [103 Cal.Rptr.2d 320, 15 P.3d 1071].) This principle tracks the language used throughout the court’s proceedings below and explains the court’s concern with the inclusion of extrinsic evidence. Specifically, the court’s rationales for the class certification and decertification display the court’s awareness of the commonality issue and how it would be affected by individualized inquiry of entitlement to damages:

“If the extrinsic evidence with respect to the named plaintiffs demonstrates that they signed up under a particular plan’s terms, that may affect the viability of their individual claims.

*981“The fundamental premise of the Court’s March 3, 2003 Certification Order was that, ‘[l]imiting the claims to this proposed class satisfies commonality of the issues of fact and law, and avoids individualized inquiry into either qualification for inclusion into the class or entitlement to damages.’ The facts discussed above reveal that this premise has not only been called into question, but actually has been refuted by plaintiffs’ own arguments.”

Thus, in the original certification order, the court acted with the view that questions of fact predominated on the face of the contract. However, appellants’ subsequent actions proved that no such commonality existed. For example, appellants’ last motion for leave to modify the class definition was based on an entirely separate contract—the V.7.99 form—not signed by any member of the original class. If the two groups had signed different form contracts, then appellants’ argument that the commonality of issues exists on the “face” of the V9.96 form contract strains credulity.2 To compound the confusion in appellants’ argument, appellants claim each member’s contract constitutionally requires individual review along with parol evidence, yet also contend that the contract itself is fully integrated. I do not understand how common questions of fact could be found to predominate when parol evidence is needed to substantiate the terms of each claimant’s assertion for individual recovery purposes.

Furthermore, appellants’ individual contract review demonstrates the exact burden the court wished to avoid through its restrictions on the class in the original order. In defining the “typicality” needed for a community of interest, the trial court must first determine that members of the class have sustained the same or similar damage. (Caro v. Procter & Gamble Co. (1993) 18 Cal.App.4th 644, 664 [22 Cal.Rptr.2d 419].) The court’s original order only certified class claims for one of appellants’ several causes of action, and did so in a limited fashion restricting the class to certain consumers and refusing to permit any individualized parol evidence to prove the existence of class claims. The court denied class treatment on appellants’ contract and fraud claims because the parol evidence or extrinsic evidence needed to prove the claims would be an obstacle to adjudication. Instead, the court authorized class treatment for the UCL claims in such a way so as to preserve the commonality of issues and to “avoid” individualized inquiry into either qualification for inclusion in the class or entitlement to damages. The issuance of the original certification order indicated the court’s hesitance regarding the use of individualized extrinsic evidence for proof of class claims.

*982In short, having been dissatisfied with the court’s original certification order from the start, appellants have exercised every opportunity to seek the expansion, and redefinition of the class. Thus, the class certification stage has taken on a life of its own separate from the merits. The majority believes, however, that because these efforts to expand the class have all been unsuccessful, the commonality of interest and facts in the class remains. In contrast, I believe these efforts demonstrate the claims against respondent are complicated and factually diverse requiring an individualized assessment which makes class treatment simply unworkable.

In view of the foregoing, I would affirm.

A petition for a rehearing was denied November 14, 2008, and respondent’s petition for review by the Supreme Court was denied February 11, 2009, S168727. Werdegar, J., did not participate therein.

note that, in this court, appellants’ arguments on the Proposition 64 issue are minimal and relegated to the reply brief.

In its original March 2003 certification order, the trial court briefly discussed the inclusion of members who signed the V.7.99 form instead of the V.9.96 form, “The evidence appears to indicate that the next form used by 24-Hour Fitness (‘V.7.99’) changed the wording which gives rise to this suit, and persons who signed a different form of contract do not appear to be appropriate for inclusion in a class challenging the renewal terms in V.9.96.”