On Thursday, April 12, 2012, the California Supreme Court issued its much anticipated decision in Brinker Restaurant Corp. v. Superior Court. In addition to providing needed clarity regarding the law of meal and rest periods (which we separately analyze here), the decision also contains several defense-friendly statements regarding class action law more generally.
First, the Court agreed with the dominant line of precedent by holding that a trial court may reach questions regarding the merits of the plaintiff’s claims where the answer to those questions will “affect” the class certification decision. Indeed, where “the propriety of class certification depends upon disputed threshold legal or factual questions,” the trial court “must resolve” those disputed threshold questions first. (Emphasis added.) For example, the Court recognized that “whether common or individual questions predominate will often depend upon resolution of issues closely tied to the merits.” Implicit in the Court’s ruling is that a trial court commits error if it fails to first resolve such “necessary” issues prior to reaching the class certification question.
Second, the Court confirmed what a trial court should focus on in reaching the class certification decision. In particular, “[a] court must examine the allegations of the complaint and supporting declarations and consider whether the legal and factual issues they present are such that their resolution in a single class proceeding would be both desirable and feasible.” (Emphasis added.) Citing Professor Richard Nagareda’s NYU Law Review commentary on class actions – importantly, the same authority relied on by the United States Supreme Court in its recent, defense-friendly decision in Wal-Mart Stores, Inc. v. Dukes – the Court reasoned that “‘what really matters to class certification’ is ‘not similarity at some unspecified level of generality but, rather, dissimilarity that has the capacity to undercut the prospects for joint resolution of class members’ claims through a unified proceeding.’” This is important because it sets forth a standard whereby a defendant can defeat class certification by presenting declarations or other individualized evidence which reveals that disputed questions about essential elements of liability can be resolved only through individualized testimony.
Lastly, in rejecting the plaintiffs’ request for class certification as to their claim that they worked off the clock, the Court further embraced the narrow view of class certification advanced by the United States Supreme Court in Dukes. The Court reasoned that “where no substantial evidence points to a uniform, companywide policy” in violation of the law, “proof of off-the-clock liability would have had to continue in an employee-by-employee fashion, demonstrating who worked off the clock, how long they worked, and whether Brinker knew or should have known of their work.” For this reason, class certification was improper. Implicit in this ruling is a determination that the case could not have been tried using a “Trial by Formula” approach. Under the “Trial by Formula” approach, a sample set of the class is chosen, the trial court then determines how much the members of the sample set worked without pay, and the results are then applied against the class as a whole. This aspect of the decision represents another win for defendants in class actions, in that it is consistent with the United States Supreme Court’s holding that the “Trial by Formula” approach violates the defendant’s due process right to present evidence and challenge liability as to each member of the proposed class.
If you have further questions, please do not hesitate to contact a Sheppard Mullin attorney for guidance.