Williams v. U.S. Bancorp Invs., Inc.

50 Cal.App.5th 111

263 Cal.Rptr.3d 643

Scott WILLIAMS, Plaintiff and Appellant,

v.U.S. BANCORP INVESTMENTS, INC., et al., Defendants and Respondents.

A156226

Court of Appeal, First District, Division 4, California.

Filed June 8, 2020

Counsel for Appellant: Capstone Law APC, Ryan H. Wu ; and John E. Stobart, Los Angeles

Counsel for Respondents: K&L Gates LLP, Paul W. Sweeney, Jr. ; Christina N. Goodrich ; Kate G. Hummel, Los Angeles; and Zach T. Timm

TUCHER, J.

(City & County of San Francisco Super. Ct. No. CGC10499011), In a class action, an order denying certification to a proposed class does not preclude an absent member of the putative class from later seeking to certify an identical class in a second action. ( Smith v. Bayer Corp. (2011) 564 U.S. 299, 312–316, 131 S.Ct. 2368, 180 L.Ed.2d 341 ( Smith ); Bridgeford v. Pacific Health Corp. (2012) 202 Cal.App.4th 1034, 1041–1044, 135 Cal.Rptr.3d 905 ( Bridgeford ).) In this case, we are called upon to decide a closely related question: whether collateral estoppel bars an absent member in a putative class that was initially certified, but later decertified, from subsequently pursuing an identical class action. We conclude that the rule of Smith and Bridgeford applies equally in this context. Accordingly, we reverse the trial court's order dismissing plaintiff's class claims and compelling arbitration of his individual claims.

FACTUAL AND PROCEDURAL BACKGROUND

The Burakoff Action

Two lawsuits are at issue here. The first of them, Burakoff et al. v. U.S. Bancorp (Super. Ct., L.A. County, 2008, No. BC341430) (Burakoff ), was a class action brought in the Los Angeles County Superior Court in 2005 by Robert Burakoff and Mohamed Alakozai, seeking restitution of overtime wages and wage deductions, waiting time penalties, and meal and rest breaks. In the Burakoff action, the named plaintiffs alleged they worked for U.S. Bancorp. Subclass A was those "who worked more than 40 hours in a week or 8 hours in a day, but did not receive overtime pay," and Subclass B was those who were illegally required to bear the cost of their business expenses.

On May 8, 2008, the Los Angeles County Superior Court granted Burakoff and Alakozai's motion for class certification, certifying a class of "[a]ll individuals who are or were employed by Defendant as Investment Financial Consultants in the State of California" for a period running through the date of the order, and certifying the two requested subclasses. The court ordered that notice be given to class members.

Williams Files the Present Action

The plaintiff in the present action, Scott Williams, joined U.S. Bancorp as a financial consultant in May 2007. He immediately became a member of the Burakoff putative class, and presumably received notice after that class was certified the following year. Then on April 23, 2010, he filed his own class action against U.S. Bancorp Investments, Inc. and U.S. Bancorp (collectively, U.S. Bancorp) in the San Francisco Superior Court, similarly alleging causes of action for unpaid overtime, unpaid meal-period premiums, unpaid rest-period premiums, unpaid business expenses, wages not timely paid, non-compliant wage statements, and unfair business practices. He alleged U.S. Bancorp employed him as a financial advisor and investment financial consultant, which are commission-paid positions. His complaint proposed a class period beginning the day after the Burakoff class period ended, and two subclasses consistent with those in Burakoff : (1) the "Unpaid Wages Subclass," defined as "All commission paid employees who worked for Defendants in California from May 9, 2008 until the date of certification," and (2) the "Unreimbursed Business Expenses Subclass," defined as "All employees of Defendants who paid for business-related expenses, including expenses for assistants, client or prospect beverages or meals, or cell phone expenses, in California from May 9, 2008 until the date of certification."

U.S. Bancorp demurred to the first amended complaint on the ground Williams was part of the certified class in the Burakoff action then pending in the Los Angeles Superior Court. The trial court determined Williams's case was "founded upon the same primary rights, states substantially the same causes of action, and involves substantially the same parties" as the Burakoff action, and so it stayed the case until the proceedings in Burakoff concluded.

Decertification and Settlement in Burakoff

After the parties in Burakoff engaged in extensive discovery around class issues, U.S. Bancorp moved to decertify the class. In May 2011, the Los Angeles Superior Court granted the motion as to Subclass A, decertifying this overtime subclass on the ground its alleged members lacked sufficient commonality. The court concluded it would be required to conduct numerous case-by-case inquiries into such matters as the amount of time the individual class members spent on various job duties and their level of autonomy in carrying out their work in order to determine whether each individual member fell within various exemptions from state and federal overtime pay laws. The court denied the motion as to Subclass B, allowing the claims for unreimbursed business expenses to go forward on a class-wide basis.

The following year, the parties settled Burakoff. The named plaintiffs agreed to release all their claims against U.S. Bancorp, and the members of Subclass B released their claims for unpaid business expenses. The trial court approved the settlement agreement and entered judgment accordingly. Williams participated in the Burakoff settlement and received compensation as a member of Subclass B. But he did not, nor did any of the other absent members of alleged Subclass A, release his wage and hour claims.

Arbitration Demand and Earlier Appeal

U.S. Bancorp then demanded in the present action that Williams drop his class claims and arbitrate his individual claims. U.S. Bancorp cited an agreement Williams had signed that required arbitration of individual disputes and that prohibited arbitration of claims alleged as class claims until class certification had been denied, or the class decertified.¹ When Williams did not agree to arbitrate his individual claims, U.S. Bancorp brought a motion to compel arbitration and to dismiss the first amended complaint. It argued the Burakoff decertification order collaterally estopped Williams from relitigating the appropriateness of class certification because he was a member of the Burakoff class, and because the two cases raised substantially the same claims and identical class certification issues. Williams agreed to the dismissal of his claim for unpaid business expenses only.

The trial court initially denied U.S. Bancorp's motion to compel arbitration and dismiss the remaining class claim, concluding that Burakoff's Subclass A and the putative class in this case were not identical. They were comprised of different class members during different time periods, so collateral estoppel did not apply, the trial court ruled.

U.S. Bancorp appealed, and a different panel of this division affirmed the trial court's order. ( Williams v. U.S. Bancorp Investments, Inc. (June 27, 2016, A141199) 2016 WL 3597779 [nonpub. opn.] ( Williams I ).) We noted that no record had yet been developed in connection with a motion for class certification, and concluded that U.S. Bancorp had not met its burden to show that the job duties of members of the Burakoff class were identical to those of the current putative class, covering a later period, or that any differences between the Burakoff class and the proposed class were immaterial.

The Present Dispute

On remand, U.S. Bancorp renewed its motion to compel arbitration of Williams's individual claims after conducting discovery relevant to class certification. The trial court granted the motion on October 25, 2018, concluding that a class decertification order may have collateral estoppel effect, and that the decertification order in Burakoff barred Williams's claims because facts developed in discovery showed brokers’ job duties and time spent performing those duties were materially the same during both class periods. On November 21, 2018, the trial court dismissed Williams's class claims with prejudice, and then added that it was making no "order regarding the class claims of absent putative class members."

DISCUSSION

I. Appealability—Death Knell Doctrine

A threshold question is whether the order compelling plaintiff to arbitrate his individual claims is immediately appealable. Normally, an order compelling arbitration may be challenged only in an appeal from the ensuing judgment. ( Nelsen v. Legacy Partners Residential, Inc. (2012) 207 Cal.App.4th 1115, 1121–1122, 144 Cal.Rptr.3d 198.) But an exception to this rule is found in the death knell doctrine.

According to this doctrine, " ‘an order which allows a plaintiff to pursue individual claims, but prevents the plaintiff from maintaining the claims as a class action, ... is immediately appealable because it "effectively r[ings] the death knell for the class claims." ’ " ( Miranda v. Anderson Enterprises, Inc. (2015) 241 Cal.App.4th 196, 200, 193 Cal.Rptr.3d 770 ; accord In re Baycol Cases I & II (2011) 51 Cal.4th 751, 759, 122 Cal.Rptr.3d 153, 248 P.3d 681 ( Baycol Cases ).) An order directing a plaintiff to arbitrate his or her claims individually, rather than pursuing class claims in court, falls within the scope of the death knell doctrine. ( Phillips v. Sprint PCS (2012) 209 Cal.App.4th 758, 766, 147 Cal.Rptr.3d 274.)

The scope of the death knell doctrine is limited, however. When an order does not terminate an action's class claims entirely, but merely limits the scope of the class or the claims available, the order does not act as a death knell and is not immediately appealable. ( Baycol Cases , supra , 51 Cal.4th at pp. 757–758, 122 Cal.Rptr.3d 153, 248 P.3d 681.) This may occur, for instance, when a trial court certifies a class...