California Legislator Proposes Bill to Clarify And Revise Class Action Procedures
After witnessing the birth and maturation of the wage and hour class action industry, now entering its late teens, California employers justifiably wonder whether these enormously costly lawsuits will ever slow down. The answer is probably no, since the question of whether a class should be certified remains an unpredictable matter, and the current law does not provide any assurance that a trial court will decide the issue in a particular way. Under the current state of the law, trial courts have enormous discretion in whether to certify a class. Because of this, inconsistent results abound, notwithstanding almost identical factual and legal issues in cases with conflicting certification results. Employers frequently feel compelled to pay out large settlements just to avoid the risky unknowns of class certification, since settlement demands often skyrocket once a class has been certified and the plaintiffs’ attorneys can assert the claims of an entire class, rather than just threaten the possibility of a certified class. Because so few class actions ever go to trial, judges remain free to declare class actions to be “manageable” even based on passing references to methodologies that are, as a practical matter, unproven, untried and often amount to pure speculation as to whether such methods would properly or effectively manage the issues in the case at trial. However, absent a clear set of rules to apply, employers are left to roll the dice on each trial court’s view of the certification question under a highly discretionary standard. Presumably, only a change in the law - either legislatively or by groundbreaking precedent - can provide the much-needed clarification and predictability for such cases.
On February 10, 2010, California Assemblywoman Audra Strickland introduced a bill, ABX8 38, that proposes substantial revisions to California’s class action procedures.Specifically, the bill “would create a comprehensive set of procedures to be followed in all class actions,” and, among other things, “would establish the prerequisites for a class action and would prohibit the maintenance of a class action unless other criteria are met.” The proposed statutory language states that “the lack of clear standards for certifying and managing class actions in California has led to abuses of the class action device,” and that “these abuses have undermined public respect for our judicial system.” The bill therefore proposes the implementation of “a uniform set of standards for the certification and management of all class actions in California that is modeled on Rule 23 of the Federal Rules of Civil Procedure and that will provide judges with adequate guidelines and tools for the fair and efficient oversight of class actions.” Perhaps most significantly, the bill proposes that the legislature explicitly “eliminate any presumption or policy in favor of class certification and allow class certification only when all requirements set forth in this act are satisfied.” On a practical level, the bill urges that its purpose is to rectify the economic harm caused by frivolous class action lawsuits, noting its purpose in seeking to “create jobs and promote a more robust economy by creating some guidelines for class action litigation.” The proposed text asserts that “too often, frivolous lawsuits clog courts, harming businesses and consumers and draining California’s economy” and that “the growing number of abusive cases has cost businesses millions of dollars.” In an attempt to prevent such costly abuses, the bill endeavors to “provide a balanced and fair set of standards and rules for class action lawsuits.”
Were this proposed bill enacted, California employers would surely be relieved even at the possibility of increased predictability and clarity with respect to class certification rulings. However, employers can expect aggressive opposition from trial lawyers’ organizations and similarly interested groups who profit in the current climate of unpredictability and conflicting results. We will continue to monitor the status of this proposed legislation and will report on any developments.