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Wednesday, December 14, 2011

Pirjada v. Superior Court: Court Denies Leave to Find New Class Rep.

Can a defendant in a putative class action defeat or moot the action by settling with the putative class representative -- or merely by offering to settle?  

In Pitts v. Terrible Herbst, Inc., --- F.3d ----, 2011 WL 3449473 (9th Cir. 8/9/11) (blogged here) the Ninth Circuit held that a full value offer to a putative class representative in an action under the Fair Labor Standards Act (FLSA) and Nevada state law does not moot the action.  In Damasco v. Clearwire Corp., --- F.3d --- (7th Cir. 11/18/11), the Seventh Circuit held that such a full-value offer, if made before a class certification motion is filed, renders the putative collective action moot.  

A different issue arises when the putative class representative actually accepts the defendant's offer.  See Cameron-Grant v. Maxim Healthcare Serv., Inc., 347 F.3d 1240, 1248-49 (11th Cir. 2003) (accepted offer to class representatives moots FLSA collective action).  

In California class actions, this situation typically is addressed by allowing putative class counsel to conduct discovery to find a new class representative.  Best Buy Stores, L.P. v. Superior Court (2006) 137 Cal.App.4th 772.  

In Pirjada v. Superior Court (Pacific National Security, Inc.) (12/12/11), the Second District Court of Appeal held that the trial court (L.A. Superior Court, Judge Michael M. Johnson) did not abuse its discretion in denying as moot counsel's motion to compel defendant to identify the putative class members in response to pre-settlement discovery requests: 
[T]he decision to deny the motion to compel was also within the broad discretion of the court: By the time the motion was filed, the court had already chosen other means to protect the absent class members—it gave [counsel] leave to amend the complaint after using informal means to identify potential replacement class representatives and deferred any determination whether the entire case should be dismissed and, if so, how to comply with the notice requirements of Rule 3.770(c), to a later date. Although the court's decision to deny [counsel's] motion for notice to the class was based largely on a distinction between consumer and employee class actions, a distinction we implicitly rejected in Belaire–West Landscape, Inc. v. Superior Court, supra, 149 Cal.App.4th 554, the propriety of that ruling is not before us. [Counsel] did not seek writ review of the court's May 26, 2011 order. Instead, it elected to proceed by way of a motion to compel. The court's subsequent decision to deny that motion, finding the outstanding discovery requests propounded by Pirjada moot in light of his individual settlement, was in no way arbitrary or capricious or otherwise in excess of the bounds of reason. 
Slip op. at 8.  The Court also rejected counsel's argument that the trial court's refusal to require the defendant to identify the class members would interfere with notice to the class prior to dismissal of the action.  The court noted that the trial court had not yet dismissed the action and held, in essence, that the trial court should cross that bridge when it comes to it.  At that point, counsel "will have an opportunity to demonstrate to the court that some form of notice is required to avoid prejudice to absent class members."  Slip op. at 9.  

The opinion is available here

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