What is a class action?
A class action lawsuit is essentially an action brought on behalf of a group of people. For example: if a company sold a defective product and 5,000 people were harmed by it, a class action is a case brought on behalf of all 5,000 people. This means one person can bring the case and have it affect the 5,000 rather than every one suing or filing their own small claims court case. A class action is often much more efficient than individual lawsuits, as one large case will often result in a settlement much faster than a smaller number of cases .
California class action suits are typically efficient and less costly and burdensome to the court than traditional litigation in which each of the class members must pursue his or her own action. However, due to the increased cost to the defendant, the burden on the courts, and the effect they have in favor of plaintiffs, the California class action lawsuits are seen as a significant burden that can cause the defendant to settle even when there is no other liability. Yet, courts have recognized that class action suits are beneficial to the efficient administration of justice and/or the prevention of substantial injustice.
Requirements for a Class Action in California
To proceed as a class action in California, plaintiffs must meet certain legal requirements. First, the court must be able to determine from the allegations in the complaint that the plaintiffs have alleged an identifiable and ascertainable class. A plaintiff’s complaint must contain a definition of the class – in gist, who is included and who is excluded – along with an allegation that the plaintiff is a member of the specific class, and that they are appropriately representative of that class.
Numerosity. The class must be so numerous that joining all members would be impractical. While the exact number varies on a case-by-case basis, a court should consider the size of the class, as well as the relative inconvenience or expense of trying the case separately.
Commonality. The class’ claims must be common to all members of the class. In general, common claims will involve a situation where all class members suffered the same harm or injury. If there are common questions of law or fact, a class may be appropriate.
Typicality. The claims of the class representative must be typical of those of the rest of the class. A class representative will not qualify if their situation is so different that it is not representative of the claims of other class members.
Adequacy of Representation. The class representative(s) must represent the interests of the entire class fairly and adequately. In other words, the class representative must have no conflicts of interest with the class. As class action litigation has evolved, this requirement has also come to additionally include adequate and effective advocacy by counsel, both the adequacy of the proposed class counsel and the availability of sufficient resolution for class members claims.
Common California Class Action Types
Some of the most common types of class actions involve alleged consumer rights violations, employment disputes, and product liability cases. Among the many types of consumer rights class actions in California, class actions alleging unfair business practices have been frequently litigated over the last few years. For example, after California’s high-speed rail project was first announced, a group of small business owners claimed that the California High-Speed Rail Authority’s failure to certify an environmental impact report as required by the California Environmental Quality Act (CEQA) constituted unfair business practices under California’s Unfair Competition Law, and sought damages for lost business as well as injunctive and declaratory relief. The Court of Appeal held that while CEQA does not expressly provide private civil remedies, plaintiffs may seek injunctive or declaratory relief for any harm caused by an agency’s noncompliance with CEQA, and therefore allowed the plaintiff’s claims to proceed.
In an employment-related class action, employees accused CVS Pharmacy, Inc. of requiring hourly store managers to perform required job duties off the clock, the result of which was unpaid compensation and meal and rest break violations. In support of the certification motion, the plaintiffs submitted "hundreds of pages of time and payroll records" which provided a basis for inferring that "a significant percentage of store managers and store associates worked off-the-clock." The Court of Appeal upheld a lower court’s order certifying a proposed class of CVS employees. While the Court upheld the certification order, it found that the lower court incorrectly determined that CVS had a uniform policy requiring class members to work off-the-clock hours and emit rest and meal periods, when in fact the plaintiffs had claimed only that CVS "encouraged" employees to do so through its written policies and incentives. For this reason, the court remanded the case to the trial court for further proceedings to determine whether the class members were performing work off the clock pursuant to company policy. Additionally, the court directed the trial court to reconsider whether the plaintiffs had shown "predominance of common issues," which the court described primarily in terms of CVS’s policy which it assumed "encouraged" class members to work off the clock.
Another recent case held that St. Joseph Health violated California’s Unfair Competition Law when it falsely advertised free or discounted medical services in its charity care program. Through the program, St. Joseph would waive some or all of the fees and charges that it otherwise would have charged for emergency services, outpatient services, and inpatient care for uninsured and underinsured people. However, the Court of Appeal found the program to be deceptive because the terms free or discounted were "misleading in that the amounts charged may be based on overly inflated and excessive rates charged" for those medical services. Accordingly, the Court of Appeal found that plaintiffs met their burden of demonstrating that the certification requirements had been satisfied. In particular, the Court found that plaintiffs established that injunctive relief would be adequate since the "[t]he citizens of California have a strong interest in receiving truthful advertising, and should not have to consult in-patient charges before believing that a hospital has advertised that emergency services may be accessed for free," and that the trial court did not abuse its discretion in denying St. Joseph’s petition to de-certify the class.
The Process of Certification
The Certification Process is essentially the process whereby a Plaintiff asks the Court to allow her or him to represent other people in a class action, and to allow the other people to be included as a part of the class (or sometimes to opt-out of the suit). Plaintiff’s counsel typically files a motion for certification of the class, and again it is up to the Court to decide, based on declarations and briefing, and possibly an evidentiary hearing, whether or not a class should be certified.
The law surrounding the Certification Process is still evolving. California courts are contemplating several issues: Are the class members too numerous to make identification practical? Are there common questions of fact that predominately apply to the class? Is the amount of money at stake so small that individual hearings at trial will be needed? Are the representatives’s claims typical and adequate enough to meet the requirements of a class action?
There are many many variables that can affect a certification order, and not always does the ruling go the way the parties anticipated. But it is a fundamental step in the class action process in California.
Pro’s and Con’s of a Class Action
Class actions can be costly and time-consuming for both plaintiffs and defendants. But in many cases, a plaintiff has a strong incentive to join a class action, and, in some cases, a defendant might prefer the class action forum.
Benefits to Plaintiffs. For many plaintiffs, joining a class action is obtained at little to no cost. In the right case, joining a class action can be beneficial in terms of cost and value. Plaintiff’s counsel typically advances all costs in a case. When reasonably qualified and with the right facts, counsel will advance the costs of pursuing the class claims and trial of the class action as long as the attorney fee agreement and class action fee award provide for appropriate compensation that allows the statute of limitations to be extended for the class claims. This can be an attractive inducement to plaintiff clients to join class actions as a plaintiff or as an opt-in class action member.
Benefits to Defendants. A defendant might prefer a class action because it attempts to weed out the small, frivolous or nuisance claims by requiring the plaintiff to meet the additional class certification requirements under Rule 23(a) and (b) . A defendant might also benefit from a representative plaintiff continuing to prosecute its individual claim and allowing any settlement class action payment to go toward the defendant’s individual liability.
Drawbacks to Plaintiffs. Because class action settlements often require the receipt of limited payment to class action members or a settlement benefits plan, not all class members will claim their benefits. For example, a typical wage-and-hour class action can result in a settlement to the class of hundreds of thousands or millions of dollars. If the claims are small, there may be only a few class members who actually claim their benefits, in some cases as few as 10%. And since most class action settlements in the employment context require either injunctive relief or a claims administration process, the total recovery is typically much lower.
Drawbacks to Defendants. Class actions are generally more expensive for defendants than other forms of litigation, regardless of class certification status. But absent certification, the case could go through years of litigation before class certification is denied. This is seen by some as a "nuisance factor" to encourage settlement on terms that might not otherwise be possible.
Key Case Law in California
California’s Approach to Class Actions
These decisions are considered landmark cases in California and may impact the manner in which California Class Action Requirements are analyzed in other legal matters. Of course, with a state as vast as California, there are many other cases of import. The selections below are a good start for becoming familiar with some of the most important California cases.
One of the most important cases in regard to California Class Action Requirements is Blue Chip Stamps v. Superior Court (1976) 18 Cal. 3d 509, 134 Cal. Rptr. 393, 557 P. 2d 1114. This case was the first to subject class certification motions to such a stringent analysis. As a result, the Blue Chip decision was viewed as narrowing eligibility requirements for plaintiffs seeking class certification.
Another critical case is Vasquez v. Superior Court (1971) 4 Cal. 3d 800, 474 P. 2d 827, 94 Cal. Rptr. 596, 50 Cal. Comp. 297. This case addressed the broader issue of procedural requirements for class action lawsuits, including notice and time for objections. As a result, it secured certain rights for California class action plaintiffs, which still exists today.
Another case that impacts California Class Action Requirements is Cummings v. Bahr (1966) 64 Cal. 2d 246, 49 Cal. Rptr. 911, 411 P. 2d 593, 28 Cal. Comp. 664. This case determined that defendants could have a variety of defenses for class actions. It established that defendants have a right to object to the class action on the grounds of insufficiency of proof as to the claims of the class, the non-appropriateness of a class action for those claims, and the existence of a statutory bar to bringing those claims.
How to start a class action in California
The first step to initiating a class action lawsuit in California is to determine whether you have standing to bring the suit individually. Those who have standing to bring a class action lawsuit in California are individuals who have suffered an injury resulting from the defendant’s actions that are also part of a wider injury to a group of similarly situated individuals. In class action lawsuits, the California courts have traditionally looked to the "community of interest" factor to assess whether this element exists and therefore, whether an individual has standing. The community of interest factor is broken down into three elements: numerosity, commonality and typicality. The next step in determining whether to pursue a California class action lawsuit is to assess whether you have a viable cause of action. For class action cases , the cause of action will have to be based on a legal theory that is generally applicable to all members of the class. The next step is to determine whether you have legal representation. This is often done by contacting class action attorneys. Class action attorneys may work on a contingency basis, meaning that they will receive a portion of any settlement or damage award if you win your case. If you are unable to find a class action attorney on this basis, many attorneys will take a class action case for a reduced hourly fee. Once a class action attorney has agreed to the case, they will file an initial complaint or petition with the court containing all of the allegations against the defendant(s). Following the filing of the initial complaint, the next step will be to obtain court approval of the class and/or subclasses. This is typically done by filing a motion for class certification and providing evidence of standing, a viable cause of action, and commonality. If the court approves this motion the class will be certified and the next steps in pursuing the class action lawsuit can begin.