Thursday, April 14, 2011

Second District Affirms Mandatory Use of Opt-Out Class in Case Implicating Class Member Medical Privacy Interests: L.A. Gay & Lesbian Center v. Super Ct.

On April 13, 2011, the Second District (Division One), issued an opinion in L.A. Gay & Lesbian Center v. Super Ct., __ Cal. 4th __ (2011), upholding the trial court’s refusal to permit use of an “opt-in” certification notice to ensure protection of privacy interests inherent in the action.  As discussed here, the trial court previously certified negligence claims arising out defendant’s alleged systematic usage of an improper form of penicillin in treating syphilis between 1999 and 2004.  In this appeal, the defendant argued that because the opt-out class mechanism would facilitate disclosure of class members' privileged and private medical information, use of an opt-in was required to protect these interests.  Slip Opinion, at 11.  The Court disagreed, concluding that “that the trial court did not err in establishing an opt-out class, but that it erred in ordering the Center to disclose the class members’ names and addresses to plaintiffs’ counsel.”  See id., at 2.

With regard to the first issue, the Court reasoned that the risk of disclosing the private information at issue here was not a sufficient basis to overcome the rationale for rejecting the use of the “opt-in” class, as explained in Hypertouch Inc. v. Superior Court, 128 Cal.App.4th 1527 (2005).  In particular, the Court concluded that an opt-in mechanism undermined the purpose of class actions, which “was designed for matters where joinder of all parties was impracticable, and was meant to eliminate the need to join absent parties.”  Slip Opinion, at 15.  Moreover, “[a]n opt-in procedure would have the effect of decreasing the number of class members bound by the judgment and increase the likelihood of redundant litigation.”  See id., at 15.  In short, the Court concluded that “[w]ithout the mandatory joinder effect of an opt-out class action, the Center will not obtain res judicata effect of a judgment; small individual class plaintiffs will not obtain the benefit of a settlement; and the cost of administering many small actions will not be avoided.”  See id., at 16-17.

That issue aside, the Court concluded that the trial court did err in ordering production of the class list to plaintiff based solely on the fact such individuals did not opt-out, as medical records implicate a privacy interest that cannot be waived by inference.  As resoned by the Court, “[i]n an opt-out class action, merely by passively consenting to membership in the class, a class member does not expressly place his or her medical condition at issue, therefore the exception of Evidence Code section 996 or Evidence Code section 912, subdivision (a) do not apply.”  Slip Opinion, at 23.  Thus, to give full meaning to the fact that “[t]he physician-patient privilege may only be waived through a clear manifestation of an intent to waive” [Slip Opinion, at 22], the Court reasoned that trial court was required to utilize a court-appointed third party to administer the notice, and disclose to plaintiff only those individuals who both did not opt-out and affirmatively authorized disclosure of their medical information.  See id., at 23-24.

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