California’s Class Action Laws

The California statutes governing class actions are based on the New York Field Code, which was adopted by the New York Assembly in 1849, and subsequently adopted and amended by California and other states. Unlike the comprehensive Federal Rule, the California statute does not address all aspects of class action litigation. Because of certain gaps in the California statutes, California courts are directed to look to Federal Rule 23 for guidance if the statutes are inadequate. As a result, many aspects of the rules governing class actions in California have developed through the courts, rather than being expressly set forth in the statutes. In addition to the general rules governing class actions, California also has specific rules governing consumer class actions (the Consumer Legal Remedies Act) and special provisions governing lawsuits in which shareholders sue on behalf of corporations (“derivative” suits). While many of the provisions for these two special types of class action suits are similar to the general rules, a full discussion of their specific provisions is beyond the scope of this chapter.

California law provides that a party may sue or be sued as a representative of others when two criteria for class certification are met. The first statutory prerequisite is that the members of the class have questions of law or fact in common. The second statutory prerequisite is that there is such a large number of parties as to make it impractical to bring them all before the court. This is the simplest prerequisite to satisfy and is seldom disputed. Like the federal court judges, state court judges look at the number of claimants, the location of the class members, the amount of the claims, and the ability of individual members to sue on their own, as well as the likelihood that they would do so.

Additional criteria developed through the courts require that to maintain a class action there is a “community of interest.” The community of interest is made up of three factors. The first factor is that the common questions of law or fact must predominate those the parties do not share. This issue becomes the subject of litigation if a defendant demonstrates that he or she could assert a defense against some, but not all, of the members of the class–the defense is separate and independent from the common issues. Although defendants use this argument to challenge class certification, such challenges are seldom successful. Courts usually determine that the use of the class action will not impair the defendant’s ability to assert the appropriate defenses, and that the defendant will not be harmed by having to do so within one large proceeding, as opposed to individual hearings. The second factor is that the claims or defenses of the class representative must be typical of the class. The third factor is that the class representative must be able to fairly and adequately protect the interests of the class members. This incorporates from the Federal Rule the requirement that the named representative have common interests with the members of the class so he or she will be motivated to vigorously fight for the common rights. Because the representative must speak for all absent class members, the court must be assured that the representative shares their interests sufficiently to advocate for them.

If the court determines that these prerequisites for class certification are met, under California law the court then must determine if there are grounds for the case to be treated as a class action. In making this determination, the court looks to many of the same factors set forth in the Federal Rule. First, the court must determine if class action, as opposed to individual lawsuits, will create a risk of substantial prejudice to members of the class or to non-class members. For example, a class action lawsuit may be proper if there is a possibility that a defendant will run out of money after the first few individual claims are settled so that some individuals will not be compensated. A defendant also could be prejudiced by the denial of certification, in that a defendant would be required to respond to individual claimants. A second ground for approval of the use of class action is if the suit is for injunctive or declaratory relief, as in cases of employment discrimination, consumer protection, or environmental issues. In these cases, the class is seeking to halt some practice of the defendant that affects the entire group of people. The final, and most common, ground for granting a class certification, is that the common questions of law or fact predominate over those the class members do not share and class action litigation is superior to other methods available for resolving the controversies. This two-part test mirrors factors set forth in the Federal Rule for “predominance” and “superiority.” In making this determination, the courts will consider the practicality of alternative methods for litigation, including joinder. The court also considers the difficulty of managing the case as a class action, as well as the desirability of bringing all parties together in the California courts, and the nature and extent of any individual lawsuits about the same issues that are underway already. Finally, the court will consider the interest each class member may have in personally controlling his or her own case. In the Dalkon Shield cases, for example, the court denied certification of the class on the ground that the injuries and trauma suffered were so great that each injured woman should have an opportunity to present her case to the court.

In addition to the criteria listed, California courts have identified two other factors that are considered “germane” to the question of class certification. A court will more likely grant the certification if, by doing so, substantial benefits will accrue to the litigants, the class, the public, or the court. Civil rights violations, employment discrimination, and environmental pollution are cases in which courts tend to find substantial benefits accruing to the public through class action litigation. A court will be more likely deny a motion for class certification if it is likely that a high percentage of the class members would ultimately sue individually.

Employment Attorney in Fresno and also serving Northern and Southern California.