Recent California Court of Appeal Decision Makes It Harder To Fight Copycat Class Actions

The California Court of Appeal has issued a published decision holding that denial of class certification in one lawsuit may not prevent similar class action claims in a later lawsuit. On January 18, 2012, in Bridgeford v. Pacific Health Corporation, the court expressly disagreed with a prior Court of Appeal decision from the same district that held collateral estoppel could prevent class actions that are similar to prior cases where class certification was denied. This decision may change the way courts look at denials of class certification and whether such denials can be used to prevent similar subsequent class actions.

The Bridgeford Decision

In Bridgeford, the plaintiffs filed a class action complaint against Pacific Health Corporation and other hospitals and health care entities for various violations of California's wage and hour laws. Pacific Health demurred to the complaint on the grounds that the plaintiffs were collaterally estopped from seeking class certification, because class certification was denied in a prior action that involved the same causes of action and subclasses that were similar to those in Bridgeford. The trial court sustained Pacific Health's demurrer and dismissed the plaintiffs' complaint in its entirety.

The Court of Appeal reversed, holding that the prior denial of class certification does not bar the claims of absent putative class members in a subsequent suit. The court relied heavily on a recent United States Supreme Court decision, Smith v. Bayer Corporation, 131 S. Ct. 2368 (2011), which held that a federal court could not enjoin a state court from considering a plaintiff's request to approve a class action when a federal court had denied a motion for class certification in a case with similar claims brought by a different plaintiff against the same defendant. Relying on Smith, and without pondering the significance of Smith's special procedural context, the Court of Appeal in Bridgeford expressly disagreed with Alvarez v. May Dept. Stores Co., 143 Cal. App. 4th 1223 (2006), a decision from a Court of Appeal in the same district. Alvarez had held that denial of class certification could collaterally estop absent class members from re-litigating class certification in a subsequent lawsuit. Reaching the opposite conclusion, the court in Bridgeford held that the denial of class certification cannot establish collateral estoppel 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.

What Bridgeford Means For Employers

Bridgeford has important implications for employers. Prior to Bridgeford, employers could argue that prior denials of class certification prevented plaintiffs from bringing similar subsequent class actions. If the reasoning in Bridgeford is widely adopted, employers will no longer be able to make that argument. Instead, even if an employer is successful in defeating class certification, the Bridgeford decision would allow attorneys to forum-shop by recruiting new plaintiffs to file a case with similar allegations and seek class certification from a different judge.

By: Timothy Nelson

Timothy Nelson is an associate in Seyfarth's Sacramento office. If you would like further information, please contact your Seyfarth Shaw LLP attorney or Timothy Nelson at tnelson@seyfarth.com.