California Court of Appeal Green Lights Repetitive Class Action Litigation

Most employers assume that if they successfully defeat a plaintiff’s motion for class certification in a wage and hour class action, the same class claims cannot be raised again in another case. On January 18, 2012, however, the California court of appeal in Bridgeford v. Pacific Health Corp, 2012 WL 130615, dashed that commonly held assumption.

In Bridgeford, the court held that “under California law, … the denial of class certification cannot establish collateral estoppel [i.e., issue preclusion] against unnamed putative class members on any issue because unnamed putative class members were neither parties to the prior proceeding nor represented by a party to the prior proceeding so as to be considered in privity with such a party for purposes of collateral estoppel.” The plaintiffs in Bridgeford were unnamed putative class members in prior litigation brought by a different plaintiff against the same employer defendants in both the prior litigation and in Bridgeford. The defendants in the prior litigation had defeated class certification of the wage and hour claims asserted against them. Undeterred by the lack of success of the other plaintiff in the prior litigation, the Bridgeford plaintiffs brought their own action against the same employer defendants seeking class certification of the same wage and hour claims which were not previously certified.

Concluding that the class claims were not barred as a matter of law, the Bridgeford court relied substantially on the United States Supreme Court decision in Smith v. Bayer Corp, 131 S. Ct. 2368 (June 16, 2011). That decision held that, under federal law, “unnamed putative class members cannot be bound by issue preclusion if the class was never certified in the prior proceeding.”

The Bridgeford court disagreed with a few other California courts of appeal, including the one that decided Alvarez v. May Department Stores Co. (2006) 143 Cal. App. 4th 1223. In Alvarez, the court determined that, under appropriate circumstances, the doctrine of collateral estoppel “does not lead to an unfair result” and, therefore, can bind in subsequent litigation the unnamed putative class members from the prior litigation. The Bridgeford court made clear that it was reaching a conclusion “contrary” to the one reached in Alvarez.

The conflict which now exists between the decisions of different courts of appeal on the application of collateral estoppel to denials of class certification motions may spur the California Supreme Court to resolve the conflict, and it may happen if a petition for review is filed in Bridgeford.

Even without a petition for review, or if one is filed and denied, employers still may be able to defeat repetitive class action litigation based on perhaps the only helpful portion of the United States Supreme Court’s decision in Bayer. In particular, the Court states that, even if a collateral estoppel is inappropriate in a denial of class certification, courts should still “apply principles of comity to each other’s class certification decisions when addressing a common dispute” so as “to mitigate the sometimes substantial costs of similar litigation brought by different plaintiffs.” In other words, while collateral estoppel may not stop the revolving door of class action litigation, a court’s discretion to respect another court’s prior decision on class certification might.

 Keep informed on this changing area of the law.

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