FARMERS INSURANCE EXCHANGE, Petitioner, v. THE SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; AUDREY WILSON et al., Real Parties in Interest.
No. B246901
Second Dist., Div. Three
July 23, 2013
218 Cal.App.4th 96
Seyfarth Shaw, George E. Preonas, Andrew M. Paley, Sheryl L. Skibbe; Gibson, Dunn & Crutcher, Theodore J. Boutrous, Jr., Julian W. Poon, Christopher Chorba, Kirsten R. Galler and Neta Levanon for Petitioner.
No appearance for Respondents.
R. Rex Parris Law Firm, R. Rex Parris, Alexander R. Wheeler, Jacob L. Karczewski, John M. Bickford; Altshuler Berzon, Michael Rubin, Peder J. Thoreen and Matthew J. Murray for Real Parties in Interest.
OPINION
CROSKEY, J.—The trial court in the instant matter granted a motion for class certification based solely on a single appellate court opinion. Shortly after the class certification motion was granted, the Supreme Court depublished the appellate court opinion on which the trial court had relied. By this time, the 10-day period for defendant to seek reconsideration of the trial court‘s order under
Defendant sought review by petition for writ of mandate. We issued an order to show cause and will now grant the petition. The Supreme Court‘s act of depublishing a case on which a prior court order relied can, in fact, constitute a change of law. In this case, where the sole legal basis for the trial court‘s order was the depublished decision, the depublication order necessarily constituted a change of law.
FACTUAL AND PROCEDURAL BACKGROUND
The instant case was brought against Farmers Insurance Exchange (Farmers) by three of its claims adjusters, alleging, on behalf of a class of claims adjusters employed by Farmers, various violations of the Labor Code, including a failure to pay overtime and a failure to provide meal and rest breaks. The operative complaint is the second amended complaint, filed February 20, 2012. A major issue in the case will be if the plaintiff employees are subject to these requirements of the Labor Code, or if, in the alternative, they are exempt administrative employees.
The complaint seeks to define the class as “all persons who, since May 18, 2003, have been employed, or are currently employed, by [Farmers] in California as a Claims Representative who were paid as exempt employees during the Class Period, as the same are defined pursuant to statute and/or California or federal regulatory determination, and were not included as class members in the Bell v. Farmers Insurance Exchange1 judgment.”
On March 26, 2012, plaintiffs moved for certification of the class.2 They argued that class certification was appropriate in this case as all of the putative class members perform (or performed) a finite and uniform grouping of job duties. As such, plaintiffs argued, a court could determine on a class basis whether the class members were exempt administrative employees.
A few days before Farmers filed its opposition, Division One of the Second Appellate District issued its published opinion in Harris v. Superior Court (July 23, 2012, B195121) (Harris), review denied and opinion ordered not published October 24, 2012, S205297.3 That opinion held that a class of claims adjusters was appropriately certified and, furthermore, that the members of the class were not exempt. Farmers recognized that Harris had been filed, and mentioned the opinion briefly in its opposition, seeking permission to further address the case in a surreply.4
On September 28, 2012, plaintiffs filed their reply in support of class certification.5 To say that the reply relied heavily on Harris would be an understatement. Plaintiffs argued that Harris was directly on point and controlled the disposition of the class certification motion. Plaintiffs argued that Harris was “controlling law for this Court both on merits and class certification issues.” Plaintiffs categorized Farmers‘s opposition as simply urging the court “to adopt arguments that the Harris . . . court has already expressly rejected.”
A petition for review was filed in Harris on September 4, 2012. On October 5, 2012, the day of the hearing on the class certification motion, the parties in the instant matter filed a joint statement setting forth their positions on the issue of whether the trial court should resolve the class certification motion immediately or defer ruling until the Supreme Court had ruled on the petition for review in Harris. Farmers, not surprisingly, requested that the court defer ruling. Plaintiffs disagreed, stating, of Harris, “as long as it remains published the Court is required to follow it . . . .” The trial court ultimately chose to resolve the matter before it, without waiting for the Supreme Court to rule on the petition for review in Harris.
At the hearing on the motion, the trial court emphasized that Harris controlled the disposition of the motion. The court stated, “Farmers will have many arguments to make in its appellate attack on my ruling today. It in effect will be an opportunity to weigh in on the July Harris ruling. [¶] So, you‘ve made a complete record here. You can say anything you want now, but I believe my role is severely confined in terms of any kind of legal analysis.” The trial court added that it was aware that Farmers argued that Harris conflicted with other Court of Appeal opinions. The court stated, however, that it would not attempt to resolve that dispute. The court stated, “You know, it‘s an amusing rule really for a trial court to consider that when there‘s an argument that there‘s a conflict between the Court of Appeal and the Court of Appeal, it‘s some lonesome trial judge somewhere who‘s supposed to say: Oh, yes, I‘m appointed [to] the Supreme Court for temporary purposes here and I will make the call on this. [¶] That is [Auto Equity].7 I‘m not persuaded the conflict is so sharp as to require that exercise of supposed authority by me. I‘m going to defer to your ability before the Court of Appeal to make an argument to folks who can look at another Court of Appeal opinion and decide whether [it‘s] impressive or not.”
At one point, the trial court stated, to Farmers‘s counsel, “I just think it would be akin to trial court insubordination for a case such on all fours, factually speaking, to come down from the Court of Appeal in July and for me to reach some other result on some other ground.” The court continued, “one of the great advantages of living in a society governed by the rule of law is the law is predictable. I think if you asked a hundred objective observers what would a trial court do with an insurance company adjuster
Plaintiffs did not disagree with the court‘s tentative opinion. However, plaintiffs’ counsel did note that the tentative opinion stated, “The issue is whether insurance adjusters are exempt,” when, in fact, the issue was whether the insurance adjusters in this case were exempt, not whether insurance adjusters in general were exempt. The court agreed, and added the word “these” before “adjusters,” before adopting its tentative opinion.8
The trial court made its ruling at the October 5, 2012 hearing. On October 24, 2012, the Supreme Court denied the petition for review in Harris, but ordered the opinion not to be officially published. As a result of the depublication order, the Harris opinion could not “be cited or relied on by a court or a party in any other action.” (
The hearing was held on January 22, 2013. Before the hearing, the trial court issued its tentative opinion, which relied on
At the hearing on the motion, Farmers‘s counsel attempted to elicit from the court if the court was denying reconsideration on the basis that it had no jurisdiction to reconsider its order because there had been no change in the law, or if, in the alternative, the court was denying reconsideration because it was adopting the rationale of the depublished Harris opinion as its own. It was clear from the trial court‘s responses that the former was the case; the court simply concluded that depublication of an opinion did not constitute a change in the law. The court stated, “All that‘s before me today is a motion for reconsideration. And it would be proper for me to reconsider only if there‘s been a change in the law. There‘s been no change in the law according to a California Rule of Court laid down before this dispute arose.”
Thereafter, the court stated that when it relied on Harris previously, it had done so both because Harris was controlling precedent and because the logic
The trial court denied the motion and adopted its tentative ruling. The court suggested that Farmers appeal, stating, “[w]e need some appellate guidance here . . . .”
Thereafter, Farmers sought an order from the court under
On February 15, 2013, Farmers filed a petition for writ of mandate, seeking relief from both the trial court‘s denial of reconsideration and from its grant of class certification. After preliminary briefing, we issued an order to show cause. Additional briefing was filed. We now grant the petition.
ISSUES PRESENTED
The main issue raised by this writ petition is whether the depublication of an opinion can constitute a change in the law sufficient to warrant reconsideration. We conclude that it can, and that, in the unusual circumstances presented by this case, it necessarily did. For that reason, we will direct the trial court to vacate its order denying reconsideration and to, instead, grant reconsideration and reconsider the class certification motion in the absence of the now depublished Harris decision. We also address, and reject, plaintiffs’ contentions that a denial of reconsideration under
The parties have also briefed, at great length, the merits of the depublished Harris opinion, on the theory that the trial court may have adopted the rationale of Harris as its own. The predicate for such a discussion is simply untrue. While the trial court noted a certain respect for the analysis in Harris, the court never adopted the rationale as its own. Instead, as we have set forth at length above, the trial court followed Harris as controlling precedent at the class certification hearing, and denied reconsideration on the basis that Harris‘s depublication did not constitute a change in the law. Thus, we do not have before us a trial court opinion adopting as its own the Harris analysis, and there is, therefore, no reason for this court to express an opinion on the analysis in a depublished Court of Appeal opinion.15 Under the circumstances, we also decline the parties’ invitation to independently consider
DISCUSSION
1. Standard of Review
A trial court‘s ruling on a motion for reconsideration is reviewed under the abuse of discretion standard. (Glade v. Glade (1995) 38 Cal.App.4th 1441, 1457 [45 Cal.Rptr.2d 695].) All exercises of discretion must be guided by applicable legal principles, however, which are derived from the statute under which discretion is conferred. (F.T. v. L.J. (2011) 194 Cal.App.4th 1, 15 [123 Cal.Rptr.3d 120]; City of Sacramento v. Drew (1989) 207 Cal.App.3d 1287, 1298 [255 Cal.Rptr. 704].) If the court‘s decision is influenced by an erroneous understanding of applicable law or reflects an unawareness of the full scope of its discretion, the court has not properly exercised its discretion under the law. (F.T. v. L.J., supra, 194 Cal.App.4th at pp. 15-16.) Therefore, a discretionary order based on an application of improper criteria or incorrect legal assumptions is not an exercise of informed discretion and is subject to reversal. (Ibid.)
2. Reconsideration on the Court‘s Own Motion
Under
In Phillips, the trial court denied a motion by Sprint to compel arbitration based on a contract provision it found unenforceable under then controlling law. (Phillips, supra, 209 Cal.App.4th at p. 764.) After the United States Supreme Court abrogated the California Supreme Court opinion on which the trial court had relied, the trial court granted Sprint‘s renewed motion to compel arbitration, and in the alternative, exercised its discretion to reconsider its order based on the change of law occasioned by the new opinion under
In the instant case, the trial court declined to grant reconsideration on the basis that the depublication of the Harris opinion could not constitute a change of law within the meaning of
3. The Denial of Reconsideration Is Reviewable
Before we reach the merits of the issue, however, we first address plaintiffs’ contention that a trial court‘s discretionary determination not to grant reconsideration on its own motion is not subject to review by means of a petition for writ of mandate. We do not doubt that, under usual circumstances, this is the general rule.18 In International Ins. Co. v. Superior Court (1998) 62 Cal.App.4th 784, 786 [72 Cal.Rptr.2d 849], a plaintiff successfully obtained reconsideration of a trial court‘s grant of summary adjudication, based on a request for the court to find a change of law under Code of Civil
The instant case is distinguishable, requiring a different result. In this case, we have the “[something] more” and “other compelling facts” which were missing from International Ins. Co. v. Superior Court, supra, 62 Cal.App.4th at page 788. Specifically, we are presented with a trial court which denied reconsideration, not as an exercise of discretion, but based solely on its interpretation of a court rule. Moreover, the trial court expressed its own concerns regarding its interpretation of the rule of court, recommending that Farmers seek appellate review and certifying the matter under
4. Depublication of Controlling Authority Can Constitute a Change of Law
Under
Nonetheless, though depublication may not be an expression of disapproval by the Supreme Court, depublication orders are not without effect. A depublished opinion “must not be cited or relied on by a court or a party in any other action.” (
Without precedential value, a depublished opinion is no longer part of the law and thus ceases to exist. When a court decision is made on the basis of an opinion that is subsequently depublished, the law justifying that decision has necessarily changed.
The California Supreme Court has addressed this disappearance of authority when discussing the effects of depublication caused by a grant of review. In that context, it is a well-established principle of law that a grant of review by the Supreme Court nullifies the opinion and causes it to no longer exist. (Knouse v. Nimocks (1937) 8 Cal.2d 482, 483-484 [66 P.2d 438]; People v. Ford (1981) 30 Cal.3d 209, 215-216 [178 Cal.Rptr. 196, 635 P.2d 1176].) In Knouse v. Nimocks, the Supreme Court granted review because the record showed that a justice who wrote the opinion in the Court of Appeal had ruled upon the case‘s demurrer in the trial court, and was therefore disqualified from participating in the appeal. (Knouse v. Nimocks, supra, at p. 483.) The Supreme Court stated, “Just what effect this disqualification might have had upon the decision of the District Court of Appeal, had we not granted a transfer of said cause, is now a matter of no consequence. The opinion and decision of the District Court of Appeal, by our order of transfer, have become a nullity and are of no force or effect, either as a judgment or as an authoritative statement of any principle of law therein discussed.” (Id. at pp. 483-484.) Without some further act of approval or adoption by the Supreme Court, the opinion and decision were “of no more effect as a judgment or as a precedent to be followed in the decision of legal questions that may hereafter arise than if they had not been written.” (Id. at p. 484.) Though a depublished opinion, unlike an opinion for which
Because depublication renders the opinion noncitable and removes its precedential value, it nullifies the opinion and renders it nonexistent. (See Heaton v. Marin County Employees Retirement Bd., supra, 63 Cal.App.3d at p. 431; Knouse v. Nimocks, supra, 8 Cal.2d at pp. 483-484.) In this case, Harris existed at the time of the order granting class certification then subsequently was depublished, thereby disappearing from the law and changing the applicable legal context surrounding the decision. Thus, it constitutes a change in the law that had existed at the time of the order. The trial court reasoned that because depublication does not express approval or disapproval by the Supreme Court, it is not a change of law. But a change of law had occurred simply from the fact that the existing body of precedential law had changed, irrespective of the Supreme Court‘s reasons for changing it. Thus,
5. Reconsideration Should Have Been Granted
Rather than remanding for the trial court to exercise its discretion to determine, under the proper standard, whether reconsideration should be granted, we conclude that, under the unique circumstances of this case, it would be an abuse of discretion to deny reconsideration. Each of the factors considered by the Phillips court weighs heavily in favor of reconsideration. These factors are the importance of the change of law, the timing of the motion, and the circumstances of the case.
The importance of the change of law occasioned by the depublication of Harris cannot be understated. Harris provided the sole legal authority for the trial court‘s grant of class certification. The court not only relied exclusively on Harris, but reasoned that because Harris controlled the decision, it was severely confined in terms of any independent legal analysis. When Farmers argued that Harris conflicted with other Court of Appeal opinions, the court did not attempt to resolve that dispute. Instead, the court found that “it would be akin to trial court insubordination” for it “to reach some other result on some other ground,” in light of Harris. As Harris has ceased to exist for precedential purposes, the stated legal basis for the trial court‘s class certification order has disappeared.
The other factors also support reconsideration. The timing of the reconsideration request was prompt. The trial court granted class certification on October 5; the Supreme Court depublished Harris on October 24; and Farmers requested reconsideration two days later. There was no delay. Moreover, there was no prejudice. When the trial court initially granted class certification, the court stayed the resolution of pending discovery issues and class notice for 20 days,20 which stay was later extended by the trial court to allow the instant writ petition to be filed.
In short, the entire legal justification for the trial court‘s certification order disappeared with the depublication of Harris, and nothing had occurred in the case in reliance on the certification order. Reconsideration should have been granted. (Cf. Valdez v. Himmelfarb (2006) 144 Cal.App.4th 1261, 1275 [51
DISPOSITION
The petition for writ of mandate is granted. Let a writ of mandate issue directing the trial court to vacate its order denying reconsideration of the class certification motion, and to issue a new and different order granting reconsideration of the motion in the absence of the Harris opinion. Farmers shall recover its costs in this writ proceeding.
Klein, P. J., and Aldrich, J., concurred.
Notes
Although the federal district court upheld the December Order and denied the motion for reconsideration, its reasoning was not based on the depublication of Clary being insufficient to constitute a change of law. In the December Order, the court had explicitly stated that it was not relying solely on Clary, but “apply[ing] the reasoning of Clary.” (American Economy, supra, 900 F.Supp. at p. 1252.) The court constructed its own reasoning and relied on a number of other authorities in reconsidering the May Order and changing its prior ruling. (Id. at pp. 1251-1255.) Accordingly, in denying reconsideration of the December Order, the court noted that depublication was not an expression of the Supreme Court‘s opinion on Clary, and, in any event, there were grounds for the decision independent of Clary. (Id. at p. 1256.) American Economy is thus distinguishable. It did not involve a court concluding, as a matter of law, that depublication cannot constitute a change in the law; instead, the court acknowledged the depublication of the opinion, considered its effect, and ultimately concluded that the prior order was sufficiently supported even in the absence of the precedential authority of the depublished case.
