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May 29, 2014

CLASS ACTIONS

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Hall v. Rite Aid Corporation, 2014 WL 1989384

Fourth District Court of Appeal reverses trial court’s decertification of class action based on finding that the trial court improperly based its decision on the merits of the plaintiff’s theory of liability.

Kristin Hall, a former Rite Aid cashier, filed a class-action lawsuit against Rite Aid alleging that it violated section 14 of the applicable California Wage Order by failing to provide its cashiers with suitable seats when the nature of their work reasonably permitted them to sit.  Hall alleged Rite Aid had a “uniform policy” in this regard, and that Rite Aid was required by law to provide seating regardless of the amount of time its cashiers were required to perform other non-seated duties.

The case was certified as a class action but, shortly before trial, decertified on motion of Rite-Aid.  The trial court based its decertification decision on its conclusion that individualized issues predominated as to whether the nature of each cashier’s individual working situation, as a whole, reasonably permitted the use of seats.  The court reasoned that Rite Aid’s legal obligation to provide seating could only be assessed by examining the job of each individual cashier in its entirety, including the amount of time each individual cashier was required to stand or walk.  The issue of Rite Aid’s liability in this regard was not, according to the trial court, amenable to class-wide resolution.

Hall appealed, arguing the trial court improperly decertified the case on the basis that her proffered theory of liability – i.e., that Rite Aid was required to provide seats to all its cashiers despite the amount of time they could reasonably use them – lacked merit.  The Court of Appeal agreed and reversed.  In so doing, it found that the trial court had improperly reached conclusions regarding the merits of Hall’s claim and that the trial court’s analysis and decertification decision violated the principles announced by the California Supreme Court in its 2012 Brinker decision.

“The starting point for purposes of class certification,” according to the Court of Appeals, “commences with [the plaintiff’s] theory of liability,” and “whether the theory of recovery advanced by the plaintiff is likely to prove amenable to class treatment.”  The Court found that, if the theory of liability asserts the employer’s uniform policy violates California’s labor laws, factual distinctions among whether or how employees were or were not adversely impacted by the allegedly illegal policy do not preclude certification.  Those types of factual distinctions, the Court of Appeal concluded, relate to damages to be resolved at a later time.

Hall’s theory of liability, the Court determined, was just the type of claim the Brinker Court envisioned would be subject to resolution on a class-wide basis.  Responding to Rite Aid’s concern that the Court’s ruling would permit plaintiffs to “invent” class actions by proposing incorrect rules of law and arguing, “If my rule is right, I win on a class basis,” the Court of Appeal held:  “We read Brinker to hold that, at the class certification stage, as long as the plaintiff’s  posited theory of liability is amendable to resolution on a class-wide basis, the court should certify the action for class treatment even if the plaintiff’s theory is ultimately incorrect at its substantive level, because such  an approach relieves the defendant of the jeopardy of serial class action and, once the defendant demonstrates the posited theory is substantively flawed, the defendant ‘obtains the preclusive benefits of such victories against an entire class and not just a named plaintiff.”

Under the Hall Court’s interpretation of Brinker, rare will be the case when reaching the merits of a plaintiff’s claim is ever necessary to answer the procedural question of whether class certification is proper.  Rather, the extent to which a plaintiff’s claim lacks merit should be addressed after certification.

While the Hall decision appears to broadly endorse certification, the Court of Appeal reiterated that the certification question must focus on whether common questions relevant to proving a plaintiff’s theory would predominate over individual issues.  The answer to this question requires a factually intense analysis and is generally vested to the trial court’s broad discretion.  The trial court in Hall, however, reached its decertification decision based on the flaw in the plaintiff’s theory of liability.  The Hall decision thus illustrates the importance of focusing on the proper procedural factors – even in the face of unmeritorious claims – when evaluating, defending, or attacking the propriety of class certification.

Practice Area: Employment
Attorney: Douglas J. Melton, Shane M. Cahill

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