With regard to this first issue, “[t]he trial court [had] concluded it could certify a class without resolving disputes over the scope of Brinker’s duty to provide breaks because common questions would predominate even if Brinker’s legal positions were correct.” See Slip Opinion, at 10. The Court of Appeal deemed this an abuse of discretion, concluding that “the trial court ‘was required to determine the elements of plaintiffs’ claims’ because the court ‘could not determine whether individual or common issues predominate in this case, and thus whether a class action was proper, without first determining this threshold issue.’” See id.
On this issue, the Brinker Court found the Court of Appeal’s absolute position to itself be an abuse of discretion, concluding that “[w]hile … trial courts must resolve any legal or factual issues that are necessary to a determination whether class certification is proper, the Court of Appeal went too far by intimating that a trial court must as a threshold matter always resolve any party disputes over the elements of a claim.” See id. (emphasis in original). As explained by the Court, “[a] class certification motion is not a license for a free-floating inquiry into the validity of the complaint’s allegations” [Id., at 11], and in fact, “[s]uch inquiries are closely circumscribed.” See Id., at 12. Such inquiry, according to the Court, “must ‘be limited to those aspects of the merits that affect the decisions essential ’ to class certification” [See Id., at 12-13 (emphasis added)], and even then, “a court generally should eschew resolution of such issues unless necessary.” See id., at 13 (emphasis added).
At this point, it is important to again highlight (as discussed in my prior post) that the Brinker Court deemed a threshold legal determination of the elements of plaintiffs’ break claims unnecessary to the predominance analysis in the Brinker case, and that it was engaging in review of such issues only because the parties had requested the Court to address the substantive merits. See id., at 2, 15 and 26. Thus, the Brinker opinion not only serves to establish that a trial court is not per se obligated to make threshold merits based determinations at the certification stage when the proper interpretation of the legal elements are in dispute, it also serves as an important instructive tool in delineating the boundaries of when such threshold resolution of the legal merits is permissible.
Although the Brinker Court recognized that the issue of “whether common or individual questions predominate will often depend upon resolution of issues closely tied to the merits” [Slip Opinion, at 12], the Court also reiterated that a court’s analysis in this regard must “hinge on ‘whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment.’” See id., at 8 (emphasis added). This is a critical component of the Brinker Court’s opinion, as the Court of Appeal was deemed to have gone astray by failing to acknowledge the theory of liability put forward by plaintiffs (which significantly was substantiated by a uniform company policy and turned on resolution of a common issue of law):
We observe in closing that, contrary to the Court of Appeal’s conclusion, the certifiability of a rest break subclass in this case is not dependent upon resolution of threshold legal disputes over the scope of the employer’s rest break duties. The theory of liability—that Brinker has a uniform policy, and that that policy, measured against wage order requirements, allegedly violates the law—is by its nature a common question eminently suited for class treatment.Slip Opinion, at 26.
It is important to underscore that disregard of the plaintiff’s theory of liability is a common certification error in the wage and hour context, spurred in many instances by an employer’s strategic practice of using employee declaration testimony to distract the court’s focus away from the uniform employment policies on which the theory of liability is based:
- United Steel, Paper & Forestry, Rubber, Mfg. Energy v. ConocoPhillips Co., 593 F.3d 802, 808 (9th Cir. Cal. 2010) (“the district court treated plaintiffs' actual legal theory as all but beside the point, holding that because ‘there can be no assurances that [plaintiffs] w[ould] prevail on this theory,’  the … predominance inquiry would instead focus on the question whether plaintiffs ‘actually missed meal breaks,’ an admittedly individualized inquiry.”)
- Bufil v. Dollar Financial Group, Inc., 162 Cal. App. 4th 1193, 1203-04 (2008) (“The court made an erroneous assumption that each class member would need to testify as to his or her understanding of the meal period waiver. This … issue ... is irrelevant to Bufil's lawsuit. Bufil’s theory is that the two circumstances – single employee on duty or providing training – do not come within the ‘nature of the work’ exception set forth in Wage Order No. 4-2001, so as to permit an ‘on-duty’ meal period. This is a legal question concerning the liability of Dollar to each putative class member.”)
- Jaimez v. Daiohs USA, Inc., 181 Cal. App. 4th 1286, 1303-1304 (Cal. App. 2d Dist. 2010) (“The First Choice declarations do not constitute substantial evidence that individual inquiries predominate the meal breaks claim” as “First Choice's practices are the predominant common factual issues on the meal and rest break claims.”)
- Ghazaryan v. Diva Limousine, Ltd., 169 Cal. App. 4th 1524, 1531, 1536-37 (2008) (“Although individual testimony may be relevant to determine whether these policies unduly restrict the ability of drivers as a whole to utilize their on-call time for personal purposes, the legal question to be resolved is not an individual one. To the contrary, the common legal question remains the overall impact of Diva’s policies on its drivers, not whether any one driver, through the incidental convenience of having a home or gym nearby to spend his or her gap time, successfully finds a way to utilize that time for his or her own purposes.”)
We summarize the governing principles. Presented with a class certification motion, a trial court must examine the plaintiff’s theory of recovery, assess the nature of the legal and factual disputes likely to be presented, and decide whether individual or common issues predominate. To the extent the propriety of certification depends upon disputed threshold legal or factual questions, a court may, and indeed must, resolve them. Out of respect for the problems arising from one-way intervention, however, a court generally should eschew resolution of such issues unless necessary. (See Fireside Bank v. Superior Court, supra, 40 Cal.4th at p. 1074; Schleicher v. Wendt, supra, 618 F.3d at p. 685.)Slip Opinion, at 12 (emphasis added).
Thus, the Court’s decision provides important guidance on the element of predominance by not only limiting when a merits based determination can occur, it expressly confines that inquiry to the issues raised by the plaintiff’s theory of liability put forward for certification.
In addition to the forgoing, the Brinker opinion also contains a second significant component – bolstered by Justice Werdegar’s concurring opinion – which draws into question the reach of the First District’s recent opinion in Duran v. United States Bank National Assn., 203 Cal. App. 4th 212 (2012) disapproving the use of representative/sampling evidence in establishing class-wide liability (an opinion which I discussed previously, here). This component is found within the clause of the Court’s rule analysis stating that a court “must determine whether the elements necessary to establish liability are susceptible of common proof or, if not, whether there are ways to manage effectively proof of any elements that may require individualized evidence.” See Slip Opinion, at 12 (citing Sav-On Drug Stores, Inc. v. Superior Court, 34 Cal. 4th 319, 334 (2004)). This statement plainly communicates that an inability to establish liability entirely by way of common proof is not the end of a court’s predominance inquiry. Indeed, closer examination of the portion of the Sav-On opinion cited states that “[i]ndividual issues do not render class certification inappropriate so long as such issues may effectively be managed.” See Sav-On, 34 Cal. 4th at 334.
While the Brinker opinion itself does not expand upon this issue further, Justice Werdegar’s concurring opinion does, giving specific instruction to the lower courts (1) reiterating that small value claims are generally dependent on the class action mechanism to secure vindication of substantive rights, and (2) advising that representative testimony, surveys, and statistical analysis all are available as tools to render manageable determinations of the extent of liability:
[W]e have encouraged the use of a variety of methods to enable individual claims that might otherwise go unpursued to be vindicated, and to avoid windfalls to defendants that harm many in small amounts rather than a few in large amounts. (See Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th at pp. 339-340; Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 714-715.) Representative testimony, surveys, and statistical analysis all are available as tools to render manageable determinations of the extent of liability. (See, e.g., Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715, 749-755 [upholding as consistent with due process the use of surveys and statistical analysis to measure a defendant’s aggregate liability under the IWC’s wage orders]; Dilts v. Penske Logistics, LLC (S.D.Cal. 2010) 267 F.R.D. 625, 638 [certifying a meal break subclass because liability could be established through employer records and representative testimony, and class damages could be established through statistical sampling and selective direct evidence]; see generally Sav-On, at p. 333 & fn. 6).) “[S]tatistical inference offers a means of vindicating the policy underlying the Industrial Welfare Commission’s wage orders without clogging the courts or deterring small claimants with the cost of litigation.” (Bell, at p. 751.)
Given these settled principles, Brinker has not shown the defense it raises, waiver, would render a certified class categorically unmanageable.Concurring Opinion (Werdegar, J.), at 4.
While Justice Werdegar’s discussion does not necessarily sanction unbridled use of representative/sampling evidence, it unquestionably does sanction such use as a means of managing “defenses” to a plaintiff’s theory of liability. More importantly, however, Justice Werdegar highlights that a court must distinguish between defenses that “operate not to extinguish the defendant’s liability but only to diminish the amount of a given plaintiff’s recovery” (i.e. a distinction encompassing individualized instances of waiver, which employers typically assert in the meal/rest break context to fragment the issues and defeat certification):
While individual issues arising from an affirmative defense can in some cases support denial of certification, they pose no per se bar (see, e.g., Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 334-338; Weinstat v. Dentsply Internat., Inc. (2010) 180 Cal.App.4th 1213, 1235). Instead, whether in a given case affirmative defenses should lead a court to approve or reject certification will hinge on the manageability of any individual issues. (See Sav-On, at p. 334.)
For purposes of class action manageability, a defense that hinges liability vel non on consideration of numerous intricately detailed factual questions, as is sometimes the case in misclassification suits, is different from a defense that raises only one or a few questions and that operates not to extinguish the defendant’s liability but only to diminish the amount of a given plaintiff’s recovery.Concurring Opinion (Werdegar, J.), at 3.