Tucker v. Pac. Bell Mobile Servs.

208 Cal.App.4th 201

145 Cal.Rptr.3d 340

12 Cal. Daily Op. Serv. 9011

2012 Daily Journal D.A.R. 10,953

Diane TUCKER et al., Plaintiffs and Appellants,

v.PACIFIC BELL MOBILE SERVICES et al., Defendants and Respondents.

No. A132619.

Court of Appeal, First District, Division 5, California.

Aug. 7, 2012.

Franklin & Franklin, J. David Franklin, San Diego; Law Offices of Anthony A. Ferrigno and Anthony A. Ferrigno, Walnut Creek, for Plaintiffs and Appellants.

Drinker Biddle & Reath, Michael J. Stortz and Beth O. Arnese, San Francisco, for Defendants and Respondents.

BRUINIERS, J.

Plaintiffs alleged that the defendant wireless telephone companies (collectively, Defendants) ¹ made material misrepresentations to the consuming public as to the actual number of usable (i.e., conversational) airtime minutes in advertised subscriber rate plans.² THE TRIAL COURT SUstained defendants' demurRer to the class action allegations of the fifth amended complaint without leave to amend, relying in part on Knapp v. AT & T Wireless Services, Inc. (2011) 195 Cal.App.4th 932, 944, 124 Cal.Rptr.3d 565( Knapp ), involving similar allegations. We reverse as to dismissal of Plaintiffs' equitable claims under the unfair competition law (UCL; Bus. & Prof.Code, § 17200 et seq.),³ and otherwise affirm.I. Background

Plaintiffs' ⁴ complaint, originally filed in December 2003, challenged Defendants' disclosures of the practice of billing for airtime in full minute increments, with partial minutes of use rounded up.⁵ Plaintiffs alleged that Defendants' advertisements and other promotional materials misrepresented or inadequately disclosed this rounding up policy, in violation of the UCL and the false advertising law ( § 17500 et seq.). Plaintiffs filed their fifth amended complaint (FAC) in this action in approximately February 2011. The first three causes of action of the FAC assert claims under the UCL. The first cause of action claims unlawful business practices, the second cause of action alleges unfair business practices, and the third cause of action sets forth a claim for fraudulent business practices. The fourth cause of action claims fraud by Defendants. The fifth cause of action asserts a claim for the violation of the Consumer's Legal Remedies Act (CLRA; Civ.Code, § 1750 et seq.) Plaintiffs sought to represent a class composed of “all consumers who have subscribed to a term contract for wireless telephone service in California from one or more of the Defendants herein, at any time from and after January 1, 1999 until the present time.” Plaintiffs requested damages, restitution, and injunctive relief.

Defendants demurred to the class allegations of the FAC on the ground that there was no reasonable probability Plaintiffs could certify a class following the decision in Knapp, and that Plaintiffs were collaterally estopped from doing so. Defendants requested judicial notice of portions of the papers Plaintiffs had filed in support of their motion for leave to file the FAC, of trial court pleadings filed in Ball, of the then unpublished appellate decision in Knapp, and of the operative trial court pleading at issue in Knapp. Plaintiffs also filed a request seeking judicial notice of prior pleadings in the instant case, certain trial court pleadings in Ball, and a declaration filed on behalf of Cingular Wireless in the Alameda County Superior Court in coordination proceedings seeking to compel arbitration ( Cellphone Termination Fee Cases, JCCP No. 4332).

A hearing on the demurrer was held on June 17, 2011. The court granted the unopposed requests for judicial notice of both parties. The demurrer of the Defendants to the class allegations of the FAC was sustained without leave to amend.⁶Citing Knapp, the trial court concluded that “there is no reasonable possibility that Plaintiffs can establish a community of interest among the potential class members and that individual issues predominate over common questions of law and fact.”

The court entered its order after hearing on July 1, 2011. A timely notice of appeal was filed on July 13, 2011.⁷

II. Discussion

Plaintiffs contend that the trial court erred in making a determination of class sufficiency at the pleading stage, and in its reliance on Knapp, which Plaintiffs insist is a case involving the policies, practices and procedures of a completely separate entity in the marketing and sale of rate and service plans.

We first note our standard of review in this circumstance. We do not consider here the denial of a motion for class certification. In that instance, “ ‘[b]ecause trial courts are ideally situated to evaluate the efficiencies and practicalities of permitting group action, they are afforded great discretion in granting or denying certification.... [Accordingly,] a trial court ruling supported by substantial evidence generally will not be disturbed “unless (1) improper criteria were used [citation]; or (2) erroneous legal assumptions were made [citation]” [citation].... “Any valid pertinent reason stated will be sufficient to uphold the order.” ’ [Citations.]” ( Sav–On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326–327, 17 Cal.Rptr.3d 906, 96 P.3d 194.)

“On review from an order sustaining a demurrer, ‘we examine the complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory, such facts being assumed true for this purpose. [Citations.]’ [Citation.] We may also consider matters that have been judicially noticed. [Citations.]” ( Committee For Green Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42, 105 Cal.Rptr.3d 181, 224 P.3d 920.) “ ‘[W]hen the allegations of the complaint contradict or are inconsistent with such facts, we accept the latter and reject the former. [Citations.]’ [Citation.] We give the same precedence to facts evident from exhibits attached to the pleading. [Citations.]” ( Hill v. Roll Internat. Corp. (2011) 195 Cal.App.4th 1295, 1300, 128 Cal.Rptr.3d 109.)

If denying class certification, the trial court must state at least one valid reason for denying the motion. ( Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 440, 435–436, 97 Cal.Rptr.2d 179, 2 P.3d 27( Linder ).) If a demurrer is sustained, we exercise our independent judgment on whether a cause of action has been stated as a matter of law, regardless of reasons stated by the trial court. ( Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 111, 55 Cal.Rptr.3d 621.) We affirm if the trial court's decision was correct on any theory. ( Gutierrez v. California Commerce Club, Inc. (2010) 187 Cal.App.4th 969, 975–976, 114 Cal.Rptr.3d 611( Gutierrez ).)

When a demurrer is sustained without leave to amend, “we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff.” ( Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.) Leave to amend should not be granted where amendment would be futile. ( Newell v. State Farm General Ins. Co. (2004) 118 Cal.App.4th 1094, 1100, 13 Cal.Rptr.3d 343( Newell ).)

“The plaintiff ‘bears the burden of demonstrating that the trial court erroneously sustained the demurrer as a matter of law’ and ‘must show the complaint alleges facts sufficient to establish every element of [the] cause of action.’ [Citation.]” ( Sui v. Price (2011) 196 Cal.App.4th 933, 938, 127 Cal.Rptr.3d 99.)

A. Disposition of Class Actions on Demurrer

The decision whether a case is suitable to proceed as a class action ordinarily is made on a motion for class certification. But our Supreme Court found it “settled” that courts are authorized “to weed[ ] out” legally meritless class action suits prior to certification by demurrer or pretrial motion. ( Linder, supra, 23 Cal.4th at p. 440, 97 Cal.Rptr.2d 179, 2 P.3d 27.) “When the substantive theories and claims of a proposed class suit are alleged to be without legal or factual merit, the interests of fairness and efficiency are furthered when the contention is resolved in the context of a formal pleading (demurrer) or motion (judgment on the pleadings, summary judgment, or summary adjudication) that affords proper notice and employs clear standards.” ( Ibid.) However, a court may decide the question by “sustaining a demurrer to the class action allegations of a complaint only if it concludes as a matter of law that, assuming the truth of the factual allegations in the complaint, there is no reasonable possibility that the requirements for class certification will be satisfied. [Citations.]” ( Bridgeford v. Pacific Health Corp. (2012) 202 Cal.App.4th 1034, 1041–1042, 135 Cal.Rptr.3d 905;Gutierrez, supra, 187 Cal.App.4th at p. 975, 114 Cal.Rptr.3d 611.)

There is a divergence in intermediate appellate authority on the level of scrutiny to be given to demurrer rulings on class action pleadings, particularly to those sustaining a demurrer. In this District, we have said that “[C]ourts have routinely decided the issue of class certification on demurrer, sustaining demurrers without leave to amend where it is clear that there is no reasonable possibility that the plaintiffs could establish a community of interest among the potential class members and that individual issues predominate over common questions of law and fact. [Citations.]” ( Clausing v. San Francisco Unified School Dist. (1990) 221 Cal.App.3d 1224, 1234, 271 Cal.Rptr. 72( Clausing ); accord, Silva v. Block (1996) 49 Cal.App.4th 345, 349, 56 Cal.Rptr.2d 613.) Demurrers may serve “as a screening mechanism for improperly pleaded class action allegations.” ( TJX Companies, Inc. v. Superior Court (2001) 87 Cal.App.4th 747, 752–753, 104 Cal.Rptr.2d 810; see also Alvarez v. May Dept. Stores Co. (2006) 143...