HYPERTOUCH, INC., Petitioner, v. THE SUPERIOR COURT OF SAN MATEO COUNTY, Respondent; PERRY JOHNSON, INC., Real Party in Interest.
No. A108321
First Dist., Div. Two
May 5, 2005
128 Cal. App. 4th 1527
COUNSEL
No appearance for Respondent.
OPINION
KLINE, P. J.—This writ proceeding arises out of a class action alleging the sending of unsolicited advertisements to a telephone facsimile machine in violation of the Telephone Consumer Protection Act of 1991 (TCPA) (
Petitioner Hypertouch, Inc., a California corporation based in Redwood City, is the named plaintiff, and real party in interest Perry Johnson, Inc., a consulting company that does business in California, is the defendant. In addition to actual and punitive damages, and injunctive relief, plaintiff seeks statutory damages of $500 for each violation of the TCPA, and treble that amount for each willful violation. (
Plaintiff seeks writ relief from the trial court order approving notice to the class insofar as it provides that, in order to participate in this civil action, individual members of the certified class “must opt-in to same and not opt-out,” and the judgment “will only bind those class members that opt-in.” Plaintiff maintains the “opt-in” requirement is constitutionally unnecessary and “eviscerates the class action device.” We agree and shall therefore grant a peremptory writ.
FACTS AND PROCEEDINGS BELOW
On September 11, 2000, the Federal Communications Commission (FCC) cited defendant for violating the TCPA by sending an unsolicited advertisement to a telephone facsimile machine, and by failing to comply with provisions of the TCPA and FCC rules requiring any person or entity sending a message via a telephone facsimile machine to clearly include in the message “an identification of the business, other entity, or individual sending the message and the telephone number of the sending machine or of such business, other entity, or individual.” (
Shortly after the complaint was filed on October 9, 2001, plaintiff commenced discovery to obtain, among other things, the database containing the telephone numbers to which defendant sent unsolicited advertisements by telephone facsimile machines (the fax database). Defendant objected on the ground the database was a customer list containing confidential information and therefore privileged as a “trade secret.” (
Plaintiff moved for an order approving notice to the certified class on December 24, 2003. The motion papers asserted that defendant had destroyed relevant evidence revealing the identity of thousands of class members but that, by subpoenas to defendant‘s telecommunication service providers, plaintiff discovered the telephone numbers from which approximately 142,049 prospective members of the class called defendant‘s toll-free number asking to be removed from its facsimile database. Plaintiff proposed that—due to defendant‘s destruction of its do not fax database, its use of a trade secret privilege to refuse to disclose the database of numbers to which unsolicited facsimiles were sent, and its greater financial resources—the cost of identifying and noticing class members should be borne by defendant. Plaintiff also submitted the declaration of Dan Rosenthal, the owner of Rosenthal & Company, a claims administrator, who estimated he would be able to obtain the names and addresses of 40 to 60 percent of the 142,049 persons who called defendant‘s toll-free number asking to be removed from the list that defendant used to send unsolicited facsimile messages. Estimating that 20 percent of the 142,049 calls were duplicate, Rosenthal believed his company could obtain approximately 45,500 to 68,200 different names and addresses. Plaintiff proposed that the class members Rosenthal was able to identify receive personal notice by first-class mail and that additional notice be published one time in USA Today, the largest national daily newspaper. Rosenthal would provide a toll-free automated telephone response system and a Web site to provide prospective class members access to information, and process the requests of persons who wished to be excluded from the class. The estimated cost of Rosenthal & Company‘s proposed services was between $107,400 and $122,900.
Plaintiff‘s motion for an order approving notice to the class was considered by Judge Carol Mittelsteadt. In an order dated October 13, 2004, Judge Mittelsteadt found that “[t]he stake of individual members is substantial and personal notification is necessary, and the plaintiff‘s proposed manner of giving notice does not satisfy due process requirements.” This finding created a problem, however, because members of the class previously certified by Judge Pfeiffer could not be identified and personal notification was therefore impossible. Judge Mittelsteadt sought to resolve this problem by ordering that notice be given by publication and class members who wish to be included in the action must “opt-in.” The court appears to have reasoned that the affirmative act of “opting in” confirms receipt of the “actual notice” the court believed was constitutionally necessary.
The court appointed Rosenthal & Company class administrator, ordered plaintiff
On November 15, 2004, plaintiff petitioned this court for a writ of mandate or an alternate writ directing respondent court to vacate its order requiring class members to “opt-in” rather than “opt-out” of the certified class. The petition maintains that requiring prospective class members to act affirmatively in order to participate in this action “defeats the purpose of the class action device and the goal of judicial economy,” and is not required by the due process clause of the Fourteenth Amendment.
We issued an order to show cause why a peremptory writ of mandate should not issue as prayed for in the petition and stayed the trial court‘s order of October 13, 2004.
As we shall explain, the “opt-in” requirement is not necessitated by due process, conflicts with the applicable rules of court, and undermines the purpose of class actions.
DISCUSSION
I.
Standard of Review
A trial court has broad discretion to determine the manner of notice in class actions. (
The purely legal questions presented for our independent review are whether, as the trial court found, the “opt-in” requirement was mandated by the due process clause of the Fourteenth Amendment and whether the requirement is authorized by or consistent with the California Rules of Court relating to the management of class actions. (
II.
The “Opt-in” Requirement Is Not Mandated by Due Process
The trial court imposed the “opt-in” requirement on the theory that members of the class holding a substantial stake could not constitutionally be bound by the judgment unless they had affirmatively agreed to be bound. The court acknowledged that “opt out is one of the things that the courts recognize as satisfying due process and being a very important factor in order to give res judicata effect to the [judgment];” but believed the right to “opt-out” satisfied
The trial court found that, unlike most large class actions, individual members of the class certified in this case did not all have an insubstantial stake. Due to the statutory damages provided for by the TCPA—$500 for each violation and up to three times that amount for each willful violation (
The court‘s conclusion that the ordinary rule—that due process does not require actual notice to parties who cannot reasonably be identified (7B Wright et al., Federal Practice and Procedure (2d ed. 1986) § 1786, pp. 188-209; 2 Weinberger on Class Actions (3d ed.) §§ 4.46, 8.01-8.04; Fed. Jud. Center, Manual for Complex Litigation (3d ed. 1995) § 30.211, pp. 224-227)—does not apply in this case was based on its reading of Phillips Petroleum Co. v. Shutts (1985) 472 U.S. 797 (Shutts) and Cooper v. American Sav. & Loan Assn. (1976) 55 Cal.App.3d 274.
In Shutts, a Kansas trial court certified a class consisting of 33,000 persons each of whom received notice by first class mail describing the action and informing each member that he or she could appear in person or by counsel, that otherwise class members would be represented by plaintiffs, and that members would be included in the class and bound by the judgment unless they “opted-out” of the action by returning a “request for exclusion.” The final class consisted of approximately 28,000 members, who resided in all 50 states and the District of Columbia, and several foreign countries. The defendant and petitioner contended that unless out-of-state plaintiffs affirmatively consented, Kansas courts lacked jurisdiction over their claims. According to the petitioner, the failure to execute a ” ‘request for exclusion’ ” could not constitute consent of the out-of-state plaintiffs, who lacked sufficient ” ‘minimum contacts’ ” with Kansas. Emphasizing that Kansas had no prelitigation contact with many of the plaintiffs and leases involved, the petitioner argued that Kansas exceeded its jurisdictional reach and thereby violated the due process rights of the absent plaintiffs. (Shutts, supra, 472 U.S. at p. 806.) These arguments were rejected.
The Supreme Court explained at some length the ways in which the burdens a state places upon an absent defendant in a normal civil suit far exceed those it places upon an absent class action plaintiff. Because the burdens placed on an absent defendant in a normal suit are so great, the minimum contacts requirement of the due process clause prevents the state from unfairly imposing them on the defendant. (Shutts, supra, 472 U.S. at p. 808.) However, the court went on to explain, a class action plaintiff is in a very different posture, which is why a class action is not subject to the rule that one cannot be bound by an in personam judgment unless one is made fully a party in the traditional sense. As stated in Shutts, unlike a defendant in an ordinary civil suit, “an absent class-action plaintiff is
Shutts explicitly rejects the contention “that the Due Process Clause of the Fourteenth Amendment requires that absent plaintiffs affirmatively ‘opt in’ to the class, rather than be deemed members of the class if they do not ‘opt out,’ ” observing that “such a contention is supported by little, if any precedent.” (Shutts, supra, 472 U.S. at p. 812.) Reaffirming the due process requirements set forth in Hansberry v. Lee (1940) 311 U.S. 32—that notice “must be the best practicable, ‘reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections’ ” (Shutts, at p. 812, quoting Mullane v. Central Hanover Bank & Trust Co. (1950) 339 U.S. 306, 314-315; cf. Eisen v. Carlisle & Jacquelin (1974) 417 U.S. 156, 174–175),2—the Shutts court established the constitutionality of the “opt-out” procedure prescribed by the 1966 amendments to rule 23 of the Federal Rules of Civil Procedure (hereinafter, federal rule 23) for class actions predominantly for money damages, which replaced a regime in which the defendant‘s exposure could be limited to individuals who had actively pushed their own claims. (Kaplan, Continuing Work of the Civil Committee: 1966 Amendments of the Federal Rules of Civil Procedure (I) (1967) 81 Harv. L.Rev. 356, 397–398.)
The trial court‘s reliance on Shutts is puzzling. Nothing in the opinion suggests that the due process rights of absent parties vary with the size of their stake, such that a class member with an insubstantial stake may be bound by a judgment he or she did not affirmatively agree to be bound by, but a member with a substantial stake cannot. On the contrary, Shutts repudiates the view that class members with a substantial stake have such a greater due process right. As stated in Shutts, “[r]equiring a plaintiff to affirmatively request inclusion would probably impede the prosecution of those class actions involving an aggregation of small individual claims, where a large
number of claims are required to make it economical to bring suit. [Citation.] The plaintiff‘s claim may be so small, or the plaintiff so unfamiliar with the law, that he would not file suit individually, nor would he affirmatively request inclusion in the class if such a request were required by the Constitution. If, on the other hand, the plaintiff‘s claim is sufficiently large or important that he wishes to litigate it on his own, he will likely have retained an attorney or have thought about filing suit, and should be fully capable of exercising his right to ‘opt out.’ ” (Shutts, supra, 472 U.S. at pp. 812-813, fn. omitted, italics
The Kansas rule at issue in Shutts, like California rule 1856(e), follows federal rule 23, which mandates the provision of individual notice only “to all members who can be notified through reasonable effort” (federal rule 23(c)(2), italics added), and entitles all other class members only to “the best notice practicable under the circumstances” (ibid.) or, in the language of California rule 1856(e), “a means of notice reasonably calculated to apprise the class members of the pendency of the action.” As Shutts notes, judicial adoption of the “opt-in” procedure urged by the petitioner in that case would invalidate federal rule 23(c)(2). (Shutts, supra, 472 U.S. at pp. 813-814.) The Shutts court saw no need to do that because, as explained in Eisen v. Carlisle & Jacquelin, supra, 417 U.S. at page 173, federal rule 23 was ” ‘designed to fulfill requirements of due process to which the class action procedure is of course subject’ ” and the rule adequately incorporates the due process standards explicated in Mullane v. Central Hanover Bank & Trust Co., supra, 339 U.S. 306, and like cases.
Shutts is consistent with a large body of case law reflecting the view that “the whole concept of a large class-action might easily be stultified by insistence upon perfection in actual notice to class-members; and . . . courts should not be deterred from Rule 23 economies in litigation by exaggerating the presumed requirements of due process, or by the specter of an occasional successful collateral attack on the basis of due-process.” (Philadelphia Electric Co. v. Anaconda American Brass Co. (E.D.Pa. 1968) 43 F.R.D. 452, 459, citing Frankel, Some Preliminary Observations Concerning Civil Rule 23 (1967) 43 F.R.D. 39, 46–47.)
Cooper v. American Sav. & Loan Assn., supra, 55 Cal.App.3d 274, the other case the trial court relied upon, also provides no support for an “opt-in” requirement. To begin with, the issue before the Cooper court was not the content or manner of giving notice, but the propriety of a class action. (Id. at p. 278.) The plaintiffs’ motion to certify the class was denied, and the class action dismissed, because “the plaintiffs had failed to meet their burden of establishing an ‘ascertained class’ for both the plaintiffs and defendants.” (Id. at p. 279.) The very different question in this case is the manner of notice to be given a class already certified, in part on the basis of an explicit finding that, unlike the class in Cooper, it was “ascertainable.”3 The Cooper court discussed the manner of giving notice in response to the plaintiffs’ contention that their failure to identify individual class members could be cured by the giving of published notice. The court rejected this argument because accepting it “would place our stamp of approval on notice by publication in almost every situation, and would reward the plaintiff who seeks to avoid the work of identifying members entitled to individual notice (and the cost involved), or the dilatory plaintiff.” (Id. at p. 286.) Cooper indicates that the difficulty of notifying individual members of a putative class may be reason to deny class certification, but it
Cooper is distinguishable in another important way. As the court repeatedly emphasized, over a period of years the plaintiffs in that case made only meager and belated efforts to identify individual class members. That is not true here. The record indicates plaintiff promptly commenced aggressive discovery designed to identify the class, and that its failure was not one of effort but largely due to the fact that the do not fax database was no longer available, and defendant‘s resistance to discovery of the fax database on the basis of the trade secret privilege.4
Cooper appears to have been relied on by the trial court because language in the opinion indicates that personal notice is particularly important in cases in which some or all members of the class have a substantial stake. We have misgivings whether it has been shown in this case that a significant number of individual members of the certified class have such a substantial stake that they would likely want to litigate on their own. But even if they do, an “opt-in” requirement is not necessary to protect their interests. As Shutts explains, a class member with a substantial stake “should be fully capable of exercising his right to ‘opt out’ ” (Shutts, supra, 472 U.S. at p. 813), and class members cannot be given better notice of the duty to “opt-in” than of the right to “opt-out.”
It is not clear that anyone‘s interests are protected by imposition of the duty to “opt-in” prior to the establishment of liability.5 Requiring plaintiffs to affirmatively “opt-in” will inevitably—and sometimes significantly—reduce the size of the class, and may therefore be seen as simply “another device by which a defendant could ‘chip away at the size of the class through exclusion of unnamed plaintiffs.’ ” (Carlson v. Superior Court (1973) 33 Cal.App.3d 640, 649, citing Southern California Edison Co. v. Superior Court (1972) 7 Cal.3d 832, 842.) At the same time, reducing the class to those who acknowledge receipt of actual notice by “opting in” is not necessarily in the interest of defendants, because it reduces the res judicata effect of a judgment for the defendant,
In sum, as then Presiding Justice Kaus explained in Cartt v. Superior Court (1975) 50 Cal.App.3d 960, the federal Constitution, as defined by the United States Supreme Court, does not say “that a state may not permit a class action to go forward unless the defendant can be assured in advance that in the event of a defense victory all members of the class will be foreclosed from further proceedings.” (Id. at p. 968.) Justice Kaus noted that “[e]ven the draftsmen of Rule 23, in spite of their ‘preoccupation with res judicata’ [citation] recognized that ‘the court conducting the
[class] action cannot predetermine the res judicata effect of the judgment; this can be tested only in a subsequent action.’ [Citation.] [[] Judge [Marvin E.] Frankel, in a widely quoted article on Rule 23 (43 F.R.D. 39), observed that whatever may have been the intent of the framers of Rule 23 ‘omniscience’ with respect to the res judicata effect of the class action notice is neither ‘expected or necessary,’ because absent ‘parties have a clear right in some later litigation to attack the judgment which purports to bind them.’ [Citation.]” (Cartt v. Superior Court, at p. 968, fn. 12.)
The trial court‘s attempt to strictly define the res judicata effect of the future judgment was misguided also because the rights of class members to the benefit of the judgment are “not before the class action court, nor can they be vicariously asserted by the class action defendant, who in the class action can assert no rights but its own.” (Cartt v. Superior Court, supra, 50 Cal.App.3d at p. 969, fn. omitted.) In this case, defendant never asserted any such rights; it acceded to the “opt-in” requirement only after the trial judge made clear her determination to impose it. As in Cartt, the best the trial court could have done in this case was “to give itself reasonable assurance that under all of the circumstances that may prevail in the future—the improbability that anyone else who is only minimally damaged will undertake and underwrite new litigation, the statute of limitations, the doctrine of res judicata and, above all, the impact of stare decisis—renewed harassment is nothing but a remote theoretical possibility.” (Ibid., fn. omitted) Also as in Cartt, the trial court “focused solely on what, as a practical matter, may be the least important of the factors which will discourage future litigation: the res judicata effect of the pending action on particular class members surfacing after this case is history.” (Id. at p. 970, fn. omitted.)
The trial court erred in concluding that, in the circumstances of this case, due process required limitation of the res judicata effect of the judgment to members of the class who acknowledged personal notification by “opting in.”
An “Opt-in” Procedure Is Not Authorized By and Conflicts with California Class Action Rules
The only California case addressing the question whether our rules of procedure permit the judicial imposition of an “opt-in” requirement is Previte v. Lincolnwood, Inc. (1975) 48 Cal.App.3d 976 (Previte),8 decided by this court, but that case was decided at a time at which our rules of court did not speak specifically to the management of class actions. The trial court in Previte “ordered that notices be sent to all members of the class of plaintiffs by the attorney for plaintiffs, and ruled that only those who responded that they wished to be included
(Previte, at p. 983.) Relying on federal interpretation of federal rule 23, and looking to
California rule 1856, which relates to class notice, was modeled on federal rule 23 and
It is clearer today than it was 30 years ago, when we decided Previte, supra, 48 Cal.App.3d 976, that the use of an “opt-in” procedure “contravenes the express language of Rule 23 as well as judicial authority.” (7 Newberg on Class Actions (4th ed. 2002) § 22:90, pp. 385-386.) Thirty years ago there was uncertainty among the federal trial courts whether an individual could be required to act affirmatively in some manner in order to participate in a class action, as by the filing of a claim form or some other “inclusionary request.” (See, e.g., Unicorn Field, Inc v. Cannon Group, Inc. (S.D.N.Y. 1973) 60 F.R.D. 217, 227-228.) Initially, a few courts took the position that the requirement of a claim form at the class notification stage did not offend federal rule 23 (State of Iowa v. Union Asphalt & Roadoils, Inc. (S.D. Iowa 1968) 281 F.Supp. 391, 403-404; Minnesota v. United States Steel Corp. (D.Minn. 1968) 44 F.R.D. 559, 577-578; Harris v. Jones (D.Utah 1966) 41 F.R.D. 70, 73-75), but this view was quickly rejected by other federal district courts (see, e.g., Abulan v. R.W. Pressprich & Co. (S.D.N.Y. 1971) 51 F.R.D. 496; Ostroff v. Hemisphere Hotels Corp. (S.D.N.Y. 1973) 60 F.R.D. 459, 462; B and B Investment Club v. Kleinert‘s (E.D.Pa. 1974) 62 F.R.D. 140, 148-149; Unicorn Field, Inc. v. Cannon Group, Inc., supra, 60 F.R.D. 217, 227-228; Enterprise Wallpaper Mfg. Co. v. Bodman (S.D.N.Y. 1980) 85 F.R.D. 325; In re Crazy Eddie Securities Litigation (E.D.N.Y. 1991) 135 F.R.D. 39, 42 [“An important principle underlying Rule 23 is that class members should not be required to request inclusion into a class action“].) The latter view was adopted by federal appellate courts. It is now settled that under federal rule 23, prior to the determination of liability, members of a plaintiff class may not be advised that unless they affirmatively request inclusion in class or perform some other act they will be excluded. (Kern v. Siemens Corp. (2d Cir. 2004) 393 F.3d 120; Robinson v. Union Carbide (5th Cir. 1977) 544 F.2d 1258; Clark v. Universal Builders, Inc. (7th Cir. 1974) 501 F.2d 324.)
The rationale of the federal cases was most recently explained by the Second Circuit in Kern v. Siemens Corp., supra, 393 F.3d 120. There, “[d]espite substantial authority indicating that Rule 23 precludes certification of ‘opt in’ classes, the District Court relied on a handful of cases to announce a new rule of civil procedure, namely that ‘opt in’ classes are not only permissible, but may in fact ‘be necessary in certain circumstances.’ [Citations.] The District Court reasoned that an ‘opt in’ class is ‘necessary’ in this case because plaintiffs sought to certify a class whose prospective members are defined by their willingness ‘to take [the] affirmative action’ of ‘consent[ing] to be bound by the judgment.’ [Citation.] The District Court elaborated that ‘[a]n “opt in” class is necessary here because it would be unfair to presumptively include members in a class for which membership depends on a waiver of a right. . . .’ [Citation.]” (Id. at p. 126.)
The Second Circuit found that certification of an “opt-in” class was error. After explaining why the two cases the trial court had relied upon were inapplicable,9 the court concluded that “[i]n short, we cannot envisage any
circumstances when
The Kern court also rejected the district court‘s stated view that it was “immaterial” that
According to the Kern court, the policy basis of the prevailing view that “by adding the ‘opt out’ requirement to
“Opt-in” requirements seem to us as offensive to the reasonable notice provision of
The fact that
Under
“The principal purpose of notice to the class is the protection of the integrity of the class action process, one of the functions of which is to prevent burdening the courts with multiple claims where one will do.” (Cartt v. Superior Court, supra, 50 Cal.App.3d at p. 970.) An “opt-in” procedure does not protect the integrity of the class action process either by increasing the likelihood members of the class will actually receive notice or in any other way. On the contrary, as we have seen, because it invariably decreases the number of class members bound by the judgment and thereby increases the likelihood of redundant litigation, the “opt-in” approach undermines the integrity of that process. Daar and Vasquez and their progeny persuade us that, like
For the foregoing reasons, we hold that the trial court‘s imposition of the “opt-in” requirement conflicts with the
IV.
Further Judicial Inquiry Is Required as to the Best Notice Practicable Under the Circumstances
As we shall vacate the order approving class notice, the court will on remand have the opportunity to revisit the issue. This is, we fully appreciate, a difficult responsibility, as “[u]nfortunately, no single set of rules or factors has yet emerged, and courts continue to revisit and refine the illusive issue of reasonable notice.” (2 Newberg on Class Actions, supra, § 8.03, pp. 8-5 to 8-6.)
The alternative forms of notice
Though it is the responsibility of the trial court, not this court, to initially determine the manner in which class notice should be given, we think it appropriate to identify some considerations that appear relevant.
Ordinarily it is the plaintiff‘s responsibility to provide notice and bear the expense of doing so (see Eisen v. Carlisle & Jacquelin, supra, 417 U.S. 156, 178), but there are circumstances in which courts have required the defendant to assist in identifying class members and/or to bear or share the expense of providing them notice. (Oppenheimer Fund v. Sanders (1978) 437 U.S. 340, 355 [57 L.Ed.2d 253, 98 S.Ct. 2380];13 State of California ex rel. Dept. of Motor Vehicles v. Superior Court (1998) 66 Cal.App.4th 421 [78 Cal.Rptr.2d 88]; see also In re Nissan Motor Corp. Antitrust Litigation (5th Cir. 1977) 552 F.2d 1088, 1101-1102 [collecting cases in which defendants were ordered to help identify members of the plaintiff class]; Macarz v. Transworld Sys., Inc. (D.Conn. 2001) 201 F.R.D. 54; Six Mexican Workers v. Arizona Citrus Growers (D.Ariz. 1986) 641 F.Supp. 259 [imposing on defendants the cost of class notice].)
In State of California ex rel. Dept. of Motor Vehicles v. Superior Court, supra, 66 Cal.App.4th 421, the defendant was required to share in the cost of identifying and notifying the class because the difficulty of identifying class members was the result of its conduct. The case involved an action for taxpayer refunds of excessive vehicle license fees collected by the Department of Motor Vehicles (DMV). The California Supreme Court had held that the class, to be determined on remand, could properly include only persons who timely filed valid claims for refund. (Woosley v. State of California (1992) 3 Cal.4th 758, 795 [13 Cal.Rptr.2d 30, 838 P.2d 758].) After remand, the trial court entered an order certifying a class consisting of all persons entitled to refund of excessive vehicle license fees on vehicles originally sold outside California. The Court of Appeal held that the class must be limited to persons whose timely claims were rejected within the three years preceding the filing of each of the three individual cases that had been consolidated. Such persons could not easily be identified and notified, however, because the DMV failed to retain claims made prior to the 1992 decision in Woosley. (State of California ex rel. Dept. of Motor Vehicles v. Superior Court, supra, 66 Cal.App.4th at pp. 437-438.) In part for that reason, the Court of Appeal declared that fairness might require the DMV to bear a part of the cost of class notification. “Ordinarily, it would be the plaintiff‘s burden to identify class members and establish their numerosity. However, because of the particular circumstances presented here, we find
The approach adopted in State of California ex rel. Dept. of Motor Vehicles v. Superior Court, is hardly novel. For example, in Appleton Electric Co. v. Advance-United Expressways (7th Cir. 1974) 494 F.2d 126, responsibility to notify the class was imposed on the defendants because they failed to retain information that would have made it easy to identify the class. The defendant carriers in that case had been ordered by the Interstate Commerce Commission (ICC) to refund shipping charges not found to have been just and reasonable. After the case was certified as a class action and plaintiffs granted summary judgment on the issue of liability, the court ordered that notice be sent to members of the class by first-class mail. The court determined that each defendant possessed or controlled records identifying those shippers who paid the rates disapproved by the ICC, and directed the defendants to file with the court “the names and most complete last-known addresses” of such shippers. Rejecting the defendants’ objection that this was not feasible, the Seventh Circuit pointed out that “[t]he difficulties defendants complain of are of their own making. They knew at the beginning of the rate-increase period that they might have to refund the increase. Yet they apparently set aside no funds, took no steps to keep adequate records for easy identification of their refund customers, and did no earmarking of the necessary documents. Some have even destroyed their records. Defendants who had early notice of their possible liability cannot avoid a class suit merely because their own actions have made the class more difficult to identify.” (Id. at p. 135.) The court observed that “if the costs are higher than they might have been if defendants had kept better records, that is even more clearly defendants’ burden to bear.” (Id. at pp. 136-137.) “Class actions cannot be defeated by destroying records.” (Id. at p. 139.)
In Mountain States v. District Court (Colo. 1989) 778 P.2d 667, the defendant was obliged to help notify the class not because it contributed to the problem but because it possessed a means of providing notice easily and at little expense. The Colorado Supreme Court affirmed an order directing the defendant public utility to provide class representatives access to its monthly billing envelopes as a means of providing notice of the pendency of the class action to 1.5 million members of the certified class. According to the court, the means of notice ordered “does no more than provide Mountain Bell customers with factually accurate information with respect to their right to join in or be excluded from pending litigation over inside wire maintenance service—a matter directly bearing on the commercial relationship between Mountain Bell and its customers—and is reasonably related to the substantial governmental interest of providing a fair and cost-effective method for resolving a multitude of claims involving common issues of fact or law in one lawsuit, thereby preventing the unnecessary waste of judicial resources in repetitious litigation. [¶] . . . There is nothing about the nature or content of the notice in this case . . . that is violative of Mountain Bell‘s right to free speech. The notice involved here is a message from the court, calculated to inform Mountain Bell customers of the nature of the pending litigation in which the customers might have some interest. Mountain Bell may protest and
The record suggests that defendant‘s conduct may have unnecessarily complicated the problems of identifying and notifying the class (as in State of California ex rel. Dept. of Motor Vehicles v. Superior Court, supra, 66 Cal.App.4th 421 and Appleton Electric Co. v. Advance-United Expressways, supra, 494 F.2d 126), and that in any case, defendant may possess the ability to provide class notice easily and at relatively little cost (as in Mountain States v. District Court, supra, 778 P.2d 667).15 Either factor would justify shifting the responsibility to notify the class to defendant.
After this action was filed, and apparently in the ordinary course of business, defendant destroyed information identifying the individuals and entities that had asked defendant to stop sending them unsolicited advertisements by telephone facsimile (the do not fax database), and also information identifying the number of unsolicited advertisements defendant sent.
As a result of its destruction of the do not fax database and other records, defendant may no longer know the names and phone numbers of those who asked to be removed from its fax database and the number of facsimiles it sent. However, defendant still possesses the fax database, which presumably identifies all or many of those to whom defendant sent unsolicited advertisement by telephone facsimiles, in violation of the
If the court feels it necessary to maintain the secrecy of the fax database, and there are no means by which it can be disclosed to plaintiff without violating its secrecy,16 the court should consider whether to order defendant to provide notice by telephone facsimile to the persons whose numbers are in the fax database if that can be done without disclosure of the database to plaintiff, and would be relatively easy and less expensive than alternative forms of notice.17 If so, defendant can be ordered to provide notice in this manner even if the court does not believe defendant contributed to the difficulty in identifying the class and should not bear any portion of the cost of notice.
If the court concludes it would be unfair or infeasible to order defendant to notify the class, and personal notification cannot otherwise be provided, the court will then need to devise some other means of notice reasonably calculated to apprise the class members of the pendency of the action, such as that proposed by plaintiff.18
The portions of the challenged order approving notice to the class providing that, in order to participate in this action, individual members of the certified class “must opt-in to same and not opt-out,” and that the judgment “will only bind those class members that opt-in,” were not, as the trial court believed, required by the due process clause of the
Let a peremptory writ of mandate issue directing the superior court to vacate its order of October 13, 2004, approving notice to the certified class, and to enter a new and different order requiring notice to the class that conforms with the requirements of
Lambden, J., concurred.
HAERLE, J., Concurring and dissenting.—I concur with the result reached in the majority opinion, but not at all in the route by which it is reached. That route, I suggest, utilizes a quite inappropriate vehicle—a case ineffectively handled below—to render an opinion on not one but two issues (is “opt-in” permitted as a form of class notification under
In contrast to the majority, I would grant the writ and return this matter to the trial court with express directions to assign this case to a single judge for all purposes, after which that judge should (1) direct counsel for the respective parties to propose their recommended methods for further1 notifying potential class members of the pendency of this action, then (2) carefully review who did what to whom concerning discovery regarding the identities of the recipients of the improper faxes in question, and then (c) in light of the parties’ respective class-notification proposals and the court‘s findings on the discovery issue, reconsider its ruling regarding the methodology of class notification.
Let me start by noting, first, some facts and then a few legal premises that I believe are critical to an uncomplicated resolution of this dispute. Some of these are noted in the majority opinion, but many are not.
First of all, some relevant facts regarding how this case was handled, or mishandled, below:
1. The majority downplays the significant fact, conceded by petitioner‘s counsel at oral argument, that he never moved the court for assignment of the case to a single judge. In its footnote 15, the majority criticizes mainly the San Mateo County Superior Court for not seeing to it that
2. Plaintiff‘s counsel also conceded at oral argument (a concession similarly not noted by the majority) that he could have requested the trial court to order the defendant to send out its notice to the names listed on defendant‘s “fax database,” but did not do so.
3. Neither party proposed an “opt-in” method of class notification but, at different times, both sides seemed amenable to it. The real party in interest supports that method, albeit not particularly enthusiastically, via its opposition to the petition for the writ of mandamus addressed to us, and the attorney for the petitioner did so on March 19, 2004, when this technique was first suggested by the trial court. Then, this dialogue took place:
“Mr. Fallat [Petitioner‘s Counsel]: Well, Your Honor . . . if that is the way the court eventually rules, we can live with that and, quite frankly, what we will end up doing is probably giving notice to everybody on that 800 list ourselves and giving them an opportunity to opt in—
“The Court: Okay.
“Mr. Fallat:—But I don‘t want to preclude the various options we have now.”
4. The writ before us does not raise an issue of class definition or class certification, the issue that was involved in almost all of the class action cases cited by the majority, especially the one relied on most heavily by it, Kern v. Siemens Corp. (2d Cir. 2004) 393 F.3d 120 (Kern).2 The class was certified in this case—by, as the majority notes, another judge—in February 2003. The issue here is how to identify who is and who is not a member of that class and notify them; that and only that is what this case is all about.
Now to some legal premises that bear on how we ought to deal with this case:
1. First and foremost is the rule that appellate courts should decide cases on the easiest and simplest bases presented and not “overreach” to issues that are not necessary to decide. (See, e.g., Santa Clara County Local Transportation Authority v. Guardino (1995) 11 Cal.4th 220, 230-231 [45 Cal.Rptr.2d 207, 902 P.2d 225]; Hi-Voltage Wire Works, Inc. v. City of San Jose (2000) 24 Cal.4th 537, 577–578 [101 Cal.Rptr.2d 653, 12 P.3d 1068] (conc. and dis. opn. of George, C. J.).) What is called for here—and usually—is a “judicial minimalism.” That concept has been defined by University of Chicago Professor Cass R. Sunstein as “the phenomenon of saying no more than necessary to justify an outcome, and leaving as much as possible undecided . . . .” (Sunstein, One Case at a Time: Judicial Minimalism on the Supreme Court (1999) p. 3.) The typical minimalist opinion “justifie[s] its decision by reference to a set of factors, not by a broadly applicable rule . . . .” (Id. at p. 16.) In contrast, a “maximalist” opinion decides the case “in a way that sets broad rules for the future and that also gives ambitious theoretical justifications for outcomes.” (Id. at pp. 9-10.) Minimalism, Sunstein continues, facilitates the difficult search for consensus by “making agreement possible when agreement is necessary, and making
By its far-reaching opinion, the majority indulges in “judicial maximalism” via an extensive discussion of “opt-in” classes under
2. California law is clear that “[b]ecause trial courts are ideally situated to evaluate the efficiencies and practicalities of permitting group action, they are afforded great discretion in granting or denying certification.” (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435 [97 Cal.Rptr.2d 179, 2 P.3d 27]; see also, to the same effect, Block v. Major League Baseball (1998) 65 Cal.App.4th 538, 543 [76 Cal.Rptr.2d 567]; Reese v. Wal-Mart Stores, Inc. (1999) 73 Cal.App.4th 1225, 1233 [87 Cal.Rptr.2d 346].) And, as the majority points out (but then largely ignores), that standard has, most logically, also been applied to disputes concerning providing notice to class members. (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 251 [110 Cal.Rptr.2d 145].)3
3. Under California class action law “[i]t is the plaintiff‘s burden to identify class members.” (State of California ex rel. Dept. of Motor Vehicles v. Superior Court (1998) 66 Cal.App.4th 421, 434 [78 Cal.Rptr.2d 88] (DMV); see also Cooper v. American Sav. & Loan Assn. (1976) 55 Cal.App.3d 274, 286 [127 Cal.Rptr. 579].)
4. “Opt-in,” even as a method of class identification, is not as disreputable as the majority suggests. The technique was specifically mentioned by Justice Croskey in Earley v. Superior Court (2000) 79 Cal.App.4th 1420, 1436 [95 Cal.Rptr.2d 57]. And, as the Second Circuit noted in the course of Kern, the technique is specifically mandated in numerous federal statutes and has been used—albeit admittedly rarely—in other, nonstatutory, federal cases. (See Kern, supra, 393 F.3d at pp. 126-129.)
5. No case at all pertinent to this issue has apparently been decided under
The record of the two hearings before Judge Mittlesteadt on the issue of class
A trial court wrestling with the issue of class notification clearly has the right, and possibly even the duty, to consider which party is mainly at fault when difficulties arise in the notification process. This was made clear by DMV, supra, 66 Cal.App.4th at pages 436-438. There, the Department of Motor Vehicles (DMV) petitioned for a writ of mandate to direct a Los Angeles trial court to vacate an order certifying a class of persons entitled, per a prior California Supreme Court decision (Woosley v. State of California (1992) 3 Cal.4th 758 [13 Cal.Rptr.2d 30, 838 P.2d 758]), to the refund of license fees for vehicles originally sold outside of California that were higher than the fees charged for similar vehicles sold in California. But also before the court was the issue of how to give, and who should pay for, notice to members of the class, an issue complicated by the actions of the DMV regarding its own records. The court resolved this problem thusly: “Ordinarily, it would be the plaintiff‘s burden to identify class members and establish their numerosity. However, because of the particular circumstances presented here, we find it would be equitable in this case to require the DMV to share the costs of notification with plaintiff for the purposes of identifying potential class members. Plaintiff has the responsibility of determining the eligibility of each for inclusion in the litigation class. The trial court shall have the discretion to modify the costs burdens in the event the parties’ conduct justifies.”
I would apply this same principle here: if, for example, the trial court‘s inquiry on remand shows that petitioner‘s counsel has been less than diligent in pursuing available discovery to identify potential class members, the ordering of a reasonable class identification procedure proposed by defendant (including “opt-in“) after the USA Today and Web site publications would seem appropriate. Conversely, if the court determines that defense counsel was mostly responsible for the current state of affairs, ordering that the class be identified in any reasonable manner proposed by petitioner would likewise seem appropriate.
But remanding this matter to the trial court for a careful look at “who killed Cock Robin” in the discovery wars and then revisiting the methodology of class notice is not what the majority does. Rather, it undertakes an extended discussion of the application of
With this sentence, the majority effectively announces a brand new rule for, apparently, all California class actions: a trial court may never use “opt-in” for any purpose in such actions. But the vehicle by which it does so (1) involves both a very limited record and an unfortunate division of authority between various lower court judges, and (2) is made with only a token acknowledgment, of a trial court‘s inherent discretion in such matters.
I think the facts of this case—including but not limited to Judge Mittlesteadt‘s legitimate concerns over “under inclusion and over inclusion“—make it an inappropriate vehicle by which to preclude a trial court‘s possible discretionary use of an “opt-in” procedure for class identification and notification. Further, the majority opinion effectively announces the same rule for cases involving class certification. I would have thought the proper vehicle by which to announce a rule governing class certification would be a case involving that issue.
In contrast to the majority‘s extended exercise of “judicial maximalism,” I would simply reverse the lower court‘s order and remand the matter to it with directions to revisit the issue of class notification in the manner suggested above.
A petition for a rehearing was denied June 6, 2005, and the opinion was modified to read as printed above. Haerle, J., was of the opinion that the petition should be granted.