(Marin County Super. Ct. No. CV053770). Trial Judge: Honorable Lynne Duryee.
The opinion of the court was delivered by: Lambden, J.
CERTIFIED FOR PARTIAL PUBLICATION*fn1
This is a consolidated appeal of matters that arose in the course of a class action in the Marin County Superior Court case, Perry v. Vitamin Shoppe. Case No. CV053770 (Perry).
After the trial court conditionally certified the class for settlement purposes, appellant Jeffrey Spencer, attorney for appellant Lisa Hernandez, a plaintiff in Perry, sent a letter to various class members urging them to opt out of the settlement, and to retain him as counsel against Vitamin Shoppe in another class action involving the same matters. The court subsequently issued orders and rulings regarding these communications, barring Spencer from certain future communications, and granting monetary sanctions against him, which appellants Hernandez and Spencer challenge on appeal. In the published portion of this opinion, we affirm these rulings and orders, except that we reverse the trial court's imposition of monetary sanctions against Spencer.
In the unpublished portion of this opinion, we consider the arguments of appellant Andrew Shatz, the sole objector to the settlement, who contends that the trial court acted improperly in the course of supervising the exclusion period, and should not have approved an inadequate settlement. We reject Shatz's arguments, and affirm the court's final judgment.
BACKGROUND TO BOTH APPEALS
Perry was filed in the Marin County Superior in August 2005 on behalf of certain California employees of Vitamin Shoppe. The complaint alleged nonpayment of overtime wages, meal and rest period violations, other violations of the Labor and Business and Professions Codes and of Industrial Welfare Commission wage orders, and violations of common law.
After Vitamin Shoppe answered the complaint, it informally provided extensive written discovery, and plaintiffs' counsel interviewed class members and putative class representatives, and conducted operational observations. This informal discovery included disclosure of Vitamin Shoppe's wage, payroll, and time records for the class period, and its applicable written policies. The information exchanged indicated that Vitamin Shoppe had been operating in California since December 2002, starting with a handful of stores. At the time of the complaint's filings, it had approximately 36 stores, 36 store managers, and 72 assistant managers. Vitamin Shoppe had not classified assistant managers as exempt and had reclassified managers as non-exempt prior to January 1, 2004. Declarations from 55 store managers and assistant managers indicated that the declarants were receiving meal and rest breaks on a consistent basis.
In the second half of 2005, Vitamin Shoppe's counsel approached plaintiffs' counsel in the three different putative class actions that had been filed regarding these matters, including Perry, and offered to settle on a classwide basis if the plaintiffs would agree to participate in mediation. Spencer, as attorney for the named plaintiff Thompson in Thompson v. The Vitamin Shoppe (Thompson), filed in Orange County, declined to participate.
The parties in Perry reached a settlement after a day of mediation. They established a settlement fund of $351,000, which, after deduction of $105,000 for attorney fees, $7,500 for litigation expenses, and $7,500 for administrative expenses, provided for payments to two subclasses of Vitamin Shoppe employees. The unpublished section of this opinion.*fn2 In February 2006, certain named plaintiffs and Vitamin Shoppe jointly moved for preliminary approval of the class settlement, arguing that it was fair for numerous reasons.
Spencer had petitioned the Judicial Council to coordinate the three class actions and stay them, without success, and had moved in Thompson to stay the Perry proceedings, also without success. The Thompson court deferred hearing a pending petition for coordination to give the Perry court the opportunity to rule on the motion for preliminary approval of the settlement.
Hernandez and plaintiff Thompson in Thompson, both represented by attorneys Spencer and Jeffrey Wilens, opposed preliminary approval on the grounds that class counsel had not engaged in formal discovery with Vitamin Shoppe, that the settlement was based on erroneous factual and legal assumptions, and that it was not within a range of reasonableness. The named plaintiffs in the third class action, Beauford v. Vitamin Shoppe Industries, Inc., filed in Marin County, also opposed this preliminary approval.
In April 2006, after hearing oral argument, including by Spencer, the trial court, Judge Sutro presiding, granted the motion for preliminary approval and conditionally certified a class for settlement purposes. The court found that ―[t]he unique circumstances of this case, including the short time period, the small class size, the unsettled law regarding the applicable statute of limitations, and the extensive documentary evidence produced by [Vitamin Shoppe] and reviewed by all counsel and the mediator, support a proposed settlement at this stage of the litigation.‖ The court also found that the lack of discovery was not an obvious deficiency in light of the extensive documents produced, and that the settlement ―was negotiated between experienced counsel who investigated and evaluated the case, conducted a lengthy mediation, and reached a settlement untainted by collusion.‖ The court concluded that the proposed settlement appeared to be fair and within the range of reasonableness. It approved the proposed notice to class members regarding the settlement and a procedure for class members to object to, and exclude themselves from the settlement, appointed a claims administrator and ordered the administrator to mail the approved notices and exclusion forms, designated Janine Perry and Tom Vitrano as the class representatives, designated Wynne Law Firm as class counsel, and scheduled the hearing for final review of the settlement for October 2006.
Hernandez's appeal centers around a dispute that resulted from letters Hernandez's attorney, Spencer sent in June 2006 to various Vitamin Shoppe employees after the court had conditionally certified the class and approved the notice of proposed class settlement, but before the Perry claims administrator sent the notice. The dispute led to certain court rulings and orders, the disqualification of Judge Sutro, the appointment of a new judge, and the issuance of written rulings, orders, and sanctions against Spencer.
Spencer, identifying himself as counsel in Thompson, represented in his letters to various members of the conditionally certified class that if the Perry settlement were approved, ―substantial compensation will be forfeited,‖ that ―you will not be able to recover compensation for all the rest and meal periods you were denied or for all of the overtime compensation or penalties you are owed,‖ and that ―[u]nder California law you are entitled to an extra hour of pay for each rest and meal period that you missed during your employment.‖ He advised them to ―protect‖ themselves from the Perry settlement by opting out of the class and joining the Thompson action, which he stated was ―in progress,‖ encouraged them to request exclusion from the settlement, and warned that those who did not exclude themselves would be ―stuck‖ with the settlement's terms. He solicited them to retain him as counsel, or to contact him for advice or assistance with respect to excluding themselves from the class, and enclosed his retainer agreement.
Upon learning about Spencer's letter, counsel for the Perry class representatives and Vitamin Shoppe jointly applied ex parte for an order enjoining Spencer from further communications with any class members. They also sought orders disqualifying him from further participation in the action, imposing monetary sanctions against him, directing that a corrective notice be sent to class members, and establishing a procedure to determine Spencer had improperly influenced class members who had opted out of the settlement. Spencer, as counsel for Hernandez, argued that he had not received proper notice of the application, that his letters were proper because he had sent them as counsel in Thompson rather than in Perry, that the recipients, as members of a conditionally certified class, were not represented by class counsel, and that the letters constituted protected speech. The court, Judge Sutro presiding, continued the hearing to give Spencer a further opportunity to respond.
At the continued hearing in July 2006, the court, Judge Sutro presiding, heard further argument and granted the application. It rejected Spencer's arguments based on the fact that he had sent his letters after the court had conditionally certified a class and approved a notice procedure. It found that Spencer's letters were misleading, violated the Rules of Professional Conduct regarding communications with represented parties, and had attempted to interfere with the proper procedures governing the proposed settlement of the case. It ordered that a corrective notice be sent, directed Spencer to refrain from any further communications with class members that he did not represent, and granted the request for monetary sanctions, subject to further hearing on the amount. Among other things, the court stated it was contemplating referring Spencer to the State Bar, but would not take action at that point, and that Spencer's ethical violations merited his disqualification as Hernandez's attorney, but granted Spencer an opportunity to further brief that issue.
Spencer, as counsel for Hernandez, filed a verified statement of disqualification of Judge Sutro, arguing that Judge Sutro's rulings and certain of his remarks about Spencer at the hearing demonstrated bias and prejudice towards Hernandez. Judge Sutro struck Hernandez's statement pursuant to Code of Civil Procedure section 170.4, subdivision (b), finding that it failed to set forth legally cognizable grounds for disqualification. In Hernandez v. Marin County Superior Court, case No. A114600, Hernandez filed a petition for writ of mandate with this court regarding Judge Sutro's striking of the statement. We issued an alternative writ of mandate on August 24, 2006, and the statement was reinstated.
The Judicial Council subsequently assigned the matter to Santa Clara Superior Court Judge John J. Garibaldi. Judge Garibaldi ordered Judge Sutro ―disqualified from sitting and acting in the above case because of the appearance of probable bias toward a lawyer in the proceeding pursuant to [Code of Civil Procedure section] 170.1, [subdivision] (a)(6).‖ In his analysis, Judge Garibaldi relied upon Code of Civil Procedure section 170.1, subdivisions (a)(6)(A) and (B), and considered the ―[t]he totality of Judge Sutro's statements made at the subject hearing‖ in July 2006. He determined that a judge's impartiality was subject to an objective, rather than a subjective standard, and that ―the issue is not limited to the existence of an actual bias. The question becomes whether a reasonable person would entertain doubts concerning the judge's impartiality.‖ Judge Garibaldi found a number of Judge Sutro's hearing comments were appropriate, but was ―concerned‖ about a half a dozen other comments, ―which appear to show judicial bias against counsel in this case.‖ After discussing these comments, Judge Garibaldi stated:
―Much of this gratuitous language to an objective observer is highly indicative that Judge Sutro has adopted a ‗mental attitude or disposition' against a lawyer to the action. The comments strongly suggest, if they do not directly state, that the court believed Mr. Spencer was an attorney who lacked credibility, whose only concern about litigation was to make money for himself, and whose willingness to engage in unprofessional behavior for his own financial gain undermined the principles of justice that Judge Sutro believed so deeply in. To a member of the discerning public, it would reasonably appear Judge Sutro has formed such a negative opinion of Mr. Spencer that he would be unable to give him fair consideration in any future hearings in this case.‖
Judge Garibaldi also stated that his order was not a ruling on ―the legal soundness of Judge Sutro's rulings at the [ex parte application] hearing. A party's remedy for erroneous ruling is not a motion to disqualify, but rather a review by appeal or writ.‖ He also expressed concerns about the court's award of sanctions, but stated that he was not ruling on its legal propriety either.
The case was reassigned to Judge Duryee. Class counsel and Vitamin Shoppe moved for an order formalizing Judge Sutro's rulings and for sanctions, all of which Hernandez opposed. The court, Judge Duryee presiding, after considering briefing and argument on the merits of Judge Sutro's rulings, granted most of what was requested. It found that Judge Sutro's disqualification had not rendered his oral rulings void, and that it had the authority to both impose monetary sanctions under Code of Civil Procedure section 128 and enjoin Spencer. The court enjoined Spencer from communicating with class members other than those who had retained him before the date of the preliminary approval of the class settlement, ordered the parties to prepare corrective notice to be sent to all class members, authorized the parties to establish a procedure to review decisions by class members to opt out of the class settlement to determine if they were impacted by Spencer's letter, and awarded attorney fees of $1,700 to class counsel and $9,412.50 to Vitamin Shoppe's counsel, to be later supplemented, as sanctions against Spencer. The court stated in its order that ―Spencer's communications with the conditionally certified class members were improper,‖ and that Judge Sutro's orders were not void pursuant to Code of Civil Procedure section 170.3, subdivision (b)(4).*fn3
Hernandez and Spencer (referred to collectively as Hernandez herein) subsequently filed a timely notice of appeal from this order.
B. Issues Raised on Appeal
Hernandez argues that the trial court erred in numerous ways when it formalized Judge Sutro's rulings and orders.
1. Judge Sutro's Orders Were Not Void
First, Hernandez argues that the trial court erred when it formalized Judge Sutro's orders and rulings because they were null and void as a result of his subsequent disqualification. This is incorrect.
Code of Civil Procedure section 170.1, subdivision (6)(A), provides that a judge shall be disqualified if, for any reason, ―(iii) A person aware of the facts might reasonably entertain a doubt that the judge would be able to be impartial.‖ Section 170.1, subdivision (6)(B), provides that a judge shall be disqualified if ―(B) Bias or prejudice toward a lawyer in the proceeding may be grounds for disqualification.‖ Generally, a judge's disqualification occurs as of when the disqualifying facts arise. (Christie v. City of El Centro (2006) 135 Cal.App.4th 767, 770 [finding that the disqualification occurred at the time a judge discussed a case with a previously disqualified judge].)
Hernandez argues that Judge Sutro's July 2006 orders, as subsequently ―formalized‖ by the trial court, are void because Judge Sutro made them at the end of the July 2006 hearing, after he made the comments that Judge Garibaldi subsequently cited in his disqualification order. This argument lacks merit for two reasons.
First, Judge Garibaldi did not disqualify Judge Sutro based on a finding of actual bias. Instead, Judge Garibaldi found Judge Sutro had the ―appearance of probable bias toward a lawyer,‖ and stated that ―it would reasonably appear Judge Sutro formed such a negative opinion of Mr. Spencer that he would be unable to give him fair consideration in any future hearings in this case.‖ (Italics added.) In other words, Judge Garibaldi did not find actual bias, or that Judge Sutro was disqualified at any time before his July 2006 hearing rulings. Rather, Judge Garibaldi's finding related only to Judge Sutro's appearance of bias, and was expressly prospective in nature.
Second, to the extent Spencer argues that the facts giving rise to Judge Sutro's disqualification occurred at the time of the July 2006 hearing, we agree with respondents*fn4 that the analysis employed in People v. Williams (2007) 156 Cal.App.4th 949 (Williams), applies here. In Williams, the appellate court held that a judge's order, issued at a hearing denying a motion to suppress evidence, was valid pursuant to Code of Civil Procedure section 170.3, subdivision (b)(4), even though the judge made statements at the same hearing that subsequently led to his prospective disqualification in the case for the appearance of bias against defendant. (Williams, at pp. 956-958.) The appellate court relied on the fact that the judge had not given the appearance of any bias against defendant prior to the hearing, and that the disqualification order referred to ―further proceedings‖ rather than ―past proceedings.‖ (Id. at p. 958.)
Hernandez argues that the cases are distinguishable because Judge Sutro made his comments just before announcing his ruling at the hearing, while the judge in Williams made his comments just afterwards. This is a distinction without meaning. Both judges were disqualified prospectively because of the appearance of bias created by their remarks, and not because of a finding of actual bias existing at the time the judges made their substantive rulings. In short, Hernandez's ―null and void‖ argument lacks merit.
2. Judge Duryee Conducted an Independent Review
Even if Judge Sutro's orders were null and void, we see no reason why Judge Duryee's subsequent order would not stand on its own. It was based on independent review and determinations regarding Spencer's communications, Judge Sutro's ...