Cohelan on California Class Actions

Timothy D. Cohelan
Cohelan & Khoury, San Diego, California

[A] National Importance of California Litigation
The bulk of civil litigation in the United States passes through the state courts. By any such measure as population, gross domestic product, or number of lawyers and general caseload, California plays a significant role in the state court system of civil litigation. California already handles more than its share of complex litigation. With recent Supreme Court rulings giving greater deference to state class action settlements, California class actions will only become more important.

California's court system is the largest in the nation with, according to the Judicial Council, more than 9 million case filings a year not including traffic cases. Recently, the Judicial Council recognized that complex civil cases in such areas as antitrust, securities claims, mass torts and class actions consume a large proportion of trial court resources. California‑venued multi‑ state or national securities cases are now removed to federal court under the Securities Litigation Uniform Standards Act of 1998 (15 U.S.C.A. § 78a).

[B] Applicable Law and Rules
California superior courts have original jurisdiction in all cases not assigned by statute to other courts. (Cal. Const., art. VI, § 10.) The California Supreme Court directed California trial courts to use federal rules for class action procedures whenever state authority proves inadequate. (Richmond v. Dart Industries, Inc., 29 Cal.3d 462, 469, 174 Cal.Rptr. 515, 519, 629 P.2d 23 (1981).) This mandate, however, has not produced a predictable, clear, and understandable set of procedural rules.

California's class action procedures evolved after the state adopted the Field Code in 1872. The Field Code reforms were an attempt to simplify legal principles extracted from centuries of case law. Included in California's code was CCP § 382, which dealt in part with class actions. California case law expanded the application of this statute to new circumstances. In 1971 the California Supreme Court "judicially adopted" Federal Rules of Civil Procedure, Rule 23, which establishes current federal class action procedure, but the state kept the final say on certification. Subsequent case law required that the benefit of class action to the court and the litigants be substantial. (See Daar v. Yellow Cab Co., 67 Cal.2d 695, 698, 63 Cal.Rptr. 724, 727, 433 P.2d 732 (1967); Vasquez v. Superior Court, 4 Cal.3d 800, 94 Cal.Rptr. 796, 484 P.2d 964 (1971).)

In Linder v. Thrifty Oil Co., 23 Cal.4th 429, 97 Cal.Rptr.2d 179, 2 P.3d 27 (2000), the California Supreme Court reiterated the role of the Consumer Legal Remedies Act ("CLRA") (Cal.Civ.Code §§ 1750 et seq.) and rule 23 of the Federal Rules of Civil Procedure as guidance on novel class certification issues.

[C] Differences Between California and Federal Practice
California case law often diverges from federal practice. Instances include procedures for class certification, such as:

• The scope and type of evidentiary hearing. (Carabini v. Superior Court, 26 Cal.App.4th 239, 31 Cal.Rptr.2d 520 (4th Dist.1994).)
• The form of objections to class certification. (Hamwi v. Citinational‑ Buckeye Investment Co., 72 Cal.App.3d 462, 140 Cal.Rptr. 215 (2d Dist.1977).)
• Method and timing of appeal. (Stephen v. Enterprise Rent‑A‑Car, 235 Cal.App.3d 806, 1 Cal.Rptr.2d 130 (1st Dist.1991).)
• The question of whether precertification must be determined. (Home Savings & Loan Ass'n v. Superior Court (Home I), 42 Cal.App.3d 1006, 117 Cal.Rptr. 485 (2d Dist.1974); Home Savings & Loan Ass'n v. Superior Court (Home II), 54 Cal.App.3d 208, 126 Cal.Rptr. 511 (2d Dist.1976).)
• Partial class settlement issues, such as bar orders under CCP § 877.6.
• The scope and method of required notice to the class. (Cartt v. Superior Court of Los Angeles County, 50 Cal.App.3d 960, 124 Cal.Rptr. 376 (2d Dist.1975).)

Only when there is no relevant state precedent do California courts turn to federal law and Rule 23 for guidance. (Bell v. American Title Ins. Co., 226 Cal.App.3d 1589, 1603, 277 Cal.Rptr. 583, 590 (1st Dist.1991).) Indeed, unless a constitutional right is impaired, federal cases interpreting federal rule 23 do not bind state courts. (Rosack v. Volvo of America Corp., 131 Cal.App.3d 741, 750, 182 Cal.Rptr. 800, 806 (1st Dist.1982).) As a result, class action practitioners must be familiar with California case law to determine where California and federal law part company.

Since California CCP § 382, the primary statutory authority for class actions in the state, provides no formal procedures, California lawyers must wend their way through a tangled thicket of complex statutes and rules ranging from statutory yardsticks like the Consumer Legal Remedies Act (Civ. Code §§ 1750 et seq.) to local superior court rules (see, e.g., Super. Ct. L.A. County Rules, Ch. 15, Class Actions; Super. Ct. San Diego County Rules, div. II, sec. three; Super. Ct., S.F. County Manual for Conduct of Pretrial Proc. in Class Actions; Super. Ct. San Mateo County Rules, div. VII, Pretrial Proc. in Class Actions; and Appendix.)

Efforts to standardize state class actions have yet to reach California. The National Conference of Commissioners on Uniform State Laws argues that states strongly need to adopt a uniform class action act, in part because federal restrictions on the availability of class actions send more and more claimants to state court (Uniform Law Commissioners Model Class [Act] [Rule] Prefatory Note). California briefly attempted to adopt a statute similar to federal rule 23 in enacting the Consumer Legal Remedies Act (hereafter CLRA). However, most California appellate courts ignore CLRA in favor of CCP § 382 except when a case falls within CLRA's strict definition of unfair consumer transactions. (See, e.g., Clemons v. Western Photo Camera Hut, 117 Cal.App.3d 392, 172 Cal.Rptr. 782 (2d Dist.1981); Hogya v. Superior Court, 75 Cal.App.3d 122, 142 Cal.Rptr. 325 (4th Dist.1977).) Unless faced squarely with CLRA, recent California class action procedural cases rarely discuss it. (See, e.g., Carabini v. Superior Court, 26 Cal.App.4th 239, 31 Cal.Rptr.2d 520 (4th Dist.1994); Daniels v. Centennial Group, Inc., 16 Cal.App.4th 467, 21 Cal.Rptr.2d 1 (4th Dist.1993); National Solar Equipment Owners' Ass'n, Inc. v. Grumman Corp., 235 Cal.App.3d 1273, 1 Cal.Rptr.2d 325 (4th Dist.1991).)

The Securities Litigation Uniform Standards Act of 1998 (15 U.S.C.A. § 78a) requires securities class actions involving nationally‑traded securities to be brought exclusively in federal court.

[D] Effect of Local Rules
Local rules may further render CLRA and its foundation in Federal Rule 23 moot. Many local jurisdictions provide detailed procedural guidelines for class certification that appellate courts have held applicable at the trial court level. Generally, however, local rules bind only the court that promulgated them. (Hypolite v. Carleson, 52 Cal.App.3d 566, 578, 125 Cal.Rptr. 221, 228 (1st Dist.1975).) Indeed, some appellate districts have sought to expand the use of local rules in class actions. (See, e.g., Union Mutual Life Ins. Co. v. Superior Court (Bobby Ray Scott, Real Party in Interest), 80 Cal.App.3d 1, 13, 145 Cal.Rptr. 316, 323 (5th Dist.1978).)

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