Tuesday, November 17, 2009

Third District Overturns Dismissal of Proposed DPA Class Action in Louie v. BFS Retail & Commercial Operations, LLC

On November 9, 2009, the Third District issued an opinion in Louie v. BFS Retail & Commercial Operations, LLC, __ Cal.App.4th __ (2009), reversing dismissal of a proposed California Disabled Persons Act (DPA) class action based on res judicata grounds.

In that case, the trial court granted the defendant’s demurrer on the grounds that an ADA consent decree entered in a prior Florida District Court class action barred the plaintiff’s from subsequently litigating a proposed California class seeking damages under the DPA. The CAP reversed, concluding that because the consent decree in the Florida action included a carve out that expressly reserved any damage claims, the prior action could not bar the plaintiff’s proposed state law damages claim on res judicata grounds.

According to the Court, the exclusion of damages from the prior settlement was material from a due process standpoint, as it enabled the Florida court to provide a lesser standard of notice under Rule 23(b)(2). See Slip Opinion, at 23, 26. Moreover, the Court further reasoned that due process could not be met because the notice did not apprized class members that they were giving up their right to damages, or provide class members an opportunity to opt-out. See id., at 29-30. Based on these facts, the CAP reasoned that res judicata could not apply, but even if it could, the “manifest injustice” exception (to the extent the doctrine is still viable) would preclude such application. See id., at 30-31.

Bottom line, the Court’s decision was one rooted in equity and common sense. This was clearly a case of a defendant seeking to have its cake and eat it too.

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