Litigation

When Can A Disqualified Class Representative Conduct Discovery To Find a Better Plaintiff? Muddy Waters Get Murkier

By Bruce Nye

    A recurring scenario in post-Proposition 64 Unfair Competition Law cases has been this:  the plaintiff files a UCL case on behalf of all persons allegedly injured by the business practice in question; and it becomes clear that he or she has sustained no actual injury, and therefore can't serve as a plaintiff.  So the plaintiff seeks leave to conduct discovery to find a better representative plaintiff (the scenario can also come up in a more traditional class action setting, and it has).

More after the jump.

    Here's how the cases have developed so far:

• Parris v. Superior Court (2003) 109 Cal.App.4th 285 held that in ruling on a motion to allow precertification discovery to identify potential class members, the court mus "expressly identify any potential abuses of the class action procedure that may be created if the discovery is permitted, and weigh the danger of such abuses against the rights of the parties under the circumstances."  (Id. at pp. 300-301.)

• First American Title Ins. Co. v. Superior Court (2007) 146 Cal.App.4th 1564,  seemed to hold that when a plaintiff had never been a class member, such discovery was always such an abuse of the class action mechanism that no weighing process was necessary, and  the plaintiff had no right to conduct discovery to find a better class representative; an order holding that he could was an abuse of discretion.  CalBizLit's post on First American Title is here.

• Cryoport Systems v. CNA Ins. Cos. (2007) 149 Cal.App.4th 627 was a case where the facts were kind of a mess, but quoted First American Title in support of a holding that a plaintiff who lost UCL standing because of Proposition 64 could not conduct discovery to find a better plaintiff.  CalBizLit posted on this one here.

• Well, at this point defendants encountering this scenario really thought they were sitting pretty.  Then along comes Cashcall, Inc. v. Superior Court (2008) 159 Cal.App.4th 273.  There, the plaintiffs had never been class members.  When they found that out, they substituted new class representatives who, as it turned out, had never been class members either.  In a decision that is awfully, awfully hard to reconcile with First American Title and Cryoport Systems, the CashCall court held that plaintiffs who had never had standing should not necessarily be treated less favorably than plaintiffs who once had but lost standing, and that the Parris weighing test applied.  Remember, in First American Title, after the trial court had failed to weigh under Parris, the Court of Appeal held there was no reason to weigh, and that the plaintiff would not be allowed discovery no matter what.

    Now, we have a new case (you were wondering when I was going to get to that, right?)  It's Safeco Insurance Company of America v. Superior Court (April 30, 2009) ___Cal.App.4th___ (B213044).  In Safeco, the plaintiff got shut down mid-case by Proposition 64.  But then she filed a new case, with a new theory, under which she not only should have known but actually knew that she had never been a class member.  The trial court held that not only had she abused the class action process, but she had abused discovery as well by first conducting merits discovery, then changing gears and trying to conduct discovery to find another class representative.  And the Court of Appeal agreed.  Nonetheless, after seemingly distinguishing First American Title and Cryoport Systems out of existence, both the trial court and the Court of Appeal said still, after balancing, discovery should be permitted.

    So what seemed not long ago like a very narrow window for conducting discovery to find new class representatives seems to have turned into a very wide door.

Full post as published by CalBizLit on May 04, 2009 (boomark / email).