Tuesday, July 6, 2010

Second District Further Clarifies Class Settlement Approval Standards: Munoz v. BCI Coca-Cola Bottling Company Of Los Angeles

On July 2, 2010, the Second District (Division 8) changed the status of its class settlement opinion in Munoz v. BCI Coca-Cola Bottling Company Of Los Angeles, __ Cal.App.4th __ (2010) from unpublished to published. The Munoz appeal was initiated and prosecuted by a class member who objected to the grant of final approval based on a record he argued was insufficient to determine whether the settlement terms were fair, adequate and reasonable.

The Court’s opinion resolves any ambiguity as to whether the decisions in Kullar v. Foot Locker Retail, Inc., 168 Cal.App.4th 116 (2008) and Clark v. American Residential Services LLC, 175 Cal.App.4th 785 (2009) require an affirmative evidentiary showing capable of determining the maximum amount that is placed in controversy by class member claims to substantiate the fairness of a proposed settlement. As held by the Court, they do not, but rather require only a record capable of affording a more lose “understanding” of the amount in controversy sufficient to demonstrate realistic ranges in potential outcomes in the action:
Greenwell misunderstands Kullar, apparently interpreting it to require the record in all cases to contain evidence in the form of an explicit statement of the maximum amount the plaintiff class could recover if it prevailed on all its claims--a number which appears nowhere in the record of this case. But Kullar does not, as Greenwell claims, require any such explicit statement of value; it requires a record which allows “an understanding of the amount that is in controversy and the realistic range of outcomes of the litigation.” (Kullar, supra, 168 Cal.App.4th at p. 120.) That record exists in this case.
Slip Opinion, at 11.

Moreover, the Court rejected the view that class counsel must affirmatively prove that sufficient discovery/investigation was conducted to evaluate the strength of class member claims, concluding that “[t]he salient point is whether the factual record before the court is sufficiently developed to allow the court independently to satisfy itself ‘that the consideration being received for the release of the class members’ claims is reasonable in light of the strengths and weaknesses of the claims and the risks of the particular litigation.’” See id., at 12-13. Importantly, while the Court does not proscribe a set amount of information required for a trial court to fulfill its duties in this regard, or a set form which such information is to be submitted, the Court was clear that the underlying record must be something more than “nothing” that would enable the trial court to evaluate the strengths and weaknesses of the claims at issue:
As a final observation on this topic, we note that the evidentiary records in Kullar and Clark, upon which Greenwell relies so heavily, are significantly different from this case. In Kullar (which did not involve the misclassification of exempt employees), there was no discovery at all on meal period claims that were added in an amended complaint and were the focal point of the objections to the settlement. (Kullar, supra, 168 Cal.App.4th at pp. 121-122.) While Kullar class counsel argued that the relevant information had been exchanged informally and during mediation (id. at p. 126), nothing was presented to the court--no discovery, no declarations, no time records, no payroll data, nothing (id. at pp. 128-129, 132)--to allow the court to evaluate the claim. And in Clark, the problem was that the trial court was not given sufficient information on a core legal issue affecting the strength of the plaintiffs’ case on the merits, and therefore could not assess the reasonableness of the settlement terms. (Clark, supra, 175 Cal.App.4th at p. 798.) The record in this case contains neither of the flaws that doomed the Kullar and Clark settlements.
Slip Opinion, at 13.

In light of the standard articulated by the Court, the showing on both points would not require submission of a fully developed evidentiary record, but rather, could be satisfied in class counsel’s supporting declaration by laying out the foundational facts and issues on which the compromise of class member claims is based.

No comments:

Post a Comment