Appeal from an order of the Superior Court of Orange County, Gail Andrea Andler, Judge. Affirmed in part and reversed in part. Appellants' request for judicial notice. Granted. Respondent's request for judicial notice. Granted in part and denied in part. (Super. Ct. No. 05CC00107).
The opinion of the court was delivered by: Fybel, J.
CERTIFIED FOR PUBLICATION
Plaintiffs Josie Faulkinbury and William Levene (together, Plaintiffs), on behalf of themselves and all others similarly situated, appeal from the trial court's order denying their motion for class certification. They sought to represent and certify a class of about 4,000 current and former employees of defendant Boyd & Associates, Inc. (Boyd), which provides security guard services throughout Southern California. Plaintiffs and the putative class members work or worked for Boyd as security guards. They assert Boyd denied the putative class members off-duty meal breaks and off-duty rest breaks, and failed to include certain reimbursements and an annual bonus payment in calculating the employees' hourly rate of overtime pay.
Plaintiffs proposed three subclasses, which we will refer to as the Meal Break Class, the Rest Break Class, and the Overtime Class. We affirm the order denying the motion for class certification as to the Meal Break Class and the Rest Break Class because, we conclude, the trial court did not abuse its discretion in finding common issues of law and fact did not predominate over individual issues. We reverse the order denying the motion for class certification as to the Overtime Class and remand with directions to certify that class.
Boyd is a private security guard company providing security services throughout Southern California. Boyd's clients include gated residential communities, hospitals, commercial buildings, and retail stores.
Plaintiffs brought this action on behalf of themselves and about 4,000 current and former employees of Boyd, who had been employed in the position of security guard, post commander, or post supervisor, or a similar position at any time during the class period, defined as the period beginning four years preceding the filing of the original complaint and ending on the date a class is certified. The third amended complaint, the operative pleading, asserted various causes of action under the Labor Code and Business and Professions Code section 17200 et seq. for alleged failure to pay wages, failure to pay non-discretionary bonus wages, and failure to provide meal and rest periods.
Faulkinbury was employed by Boyd as a security guard from October 2003 to November 2004, and Levene was employed by Boyd as a security guard from January 2003 to February 2005. In declarations, Plaintiffs asserted that, when hired by Boyd, each had to sign an agreement to take on-duty meal periods and that, while employed by Boyd, neither ever took an uninterrupted, off-duty meal break. They also asserted that, while employed by Boyd, they were instructed not to leave their posts and never took any off-duty rest breaks.
Plaintiffs declared their hourly rate of pay was reduced by the amount received as a gasoline allowance and as a uniform maintenance allowance. Faulkinbury declared her stated hourly rate was $11.00, which was reduced to $10.30 for the gasoline and uniform maintenance allowances. Levene similarly declared his stated hourly rate was $9.00, which was reduced to $8.30 for the gasoline and uniform maintenance allowances. He declared that his overtime hourly rate was based on the reduced rate of $8.30 per hour.
CLASS CERTIFICATION MOTIONS
Plaintiffs first moved for class certification in October 2008. Based on the third amended complaint, the first motion for class certification proposed a broadly defined class of "all of these current and former security guards employed by Boyd at any time during a four-year statute of limitations period consisting of approximately 4,000 putative class members" and proposed eight subclasses.*fn1
The trial court issued a tentative ruling denying the first motion for class certification "without prejudice." The tentative ruling was lengthy and recited two grounds for denying class certification: (1) inadequacy of the proposed class representatives and (2) lack of typicality of the class representatives' claims. The tentative ruling identified problems in Plaintiffs' evidence and described additional evidence needed to address the court's concerns.
At the conclusion of the hearing on the first motion for class certification, the court stated: "At this time the court denies the motion for certification. [¶]... [¶] While the court pointed out in its tentative its primary concerns as to how the moving party had failed to meet its burden, based on the discussions that we've had, I don't want the moving party to feel that there is not a need to beef up a showing in any other regard as well. Because I think some good points were raised by counsel for defendants regarding whether common issues predominate in some of these areas, such as the bonuses. [¶] So I do make those comments to counsel so that you don't... think that all you have to do in order to be successful in certifying a class is give me two more declarations that have a few more magic words in it. Please take to heart the comments, because you will hear them again. And they may or may not be persuasive to the court if certification is requested next time. [¶] So the court does deny certification. It does deny it without prejudice; notwithstanding the request of defendants, because I feel that that's appropriate under the law."
A minute order denying the first motion for class certification without prejudice was entered in November 2008. The minute order recited the trial court's tentative ruling.
One month later, Plaintiffs filed a second motion for class certification, again seeking certification of a broad class of all "current and former security guards employed by Boyd at any time during a four-year statute of limitations period consisting of approximately 4,000 putative class members." The second motion reduced the number of subclasses to these three:
"(1) All current and former Security Guards, Security Guard Supervisors, Post Commanders, Rovers and other similar hourly paid job positions, who were required by Boyd to take an 'on-duty' meal break and therefore were not provided mandated, uninterrupted meal periods and who worked for Boyd in California at any time between March 19, 2003 and the date class certification is granted.... ([Meal Break Class]).
"(2) All current and former Security Guards, Security Guard Supervisors, Post Commanders, Rovers and other similar hourly paid job positions, who worked for Boyd at any time between March 19, 2003 and the date class certification is granted... who were not provided with mandated rest periods. ('Rest Break Class')
"(3) All current and former Security Guards, Security Guard Supervisors, Post Commanders, Rovers and other similar hourly paid job positions, who worked for Boyd at any time from May 13, 2001 and the date class certification is granted... and were not paid overtime wages to reflect annual bonus payments and allowances.... ([Overtime Class])."
On the day before the hearing, the trial court issued a tentative ruling to grant the second motion for class certification.*fn2 The tentative ruling stated Plaintiffs' claims appeared to be typical of those of the class members and Plaintiffs' counsel could adequately represent the class. It also stated that Plaintiffs had established a "well-defined community of interest," that "[c]ommon questions of law and fact include whether the members of the various subclasses were in fact entitled to the breaks, overtime, reimbursements, and bonuses," and that "maintenance of the class action will result in a substantial benefit to the litigants and the court."
At the outset of the hearing on the second motion for class certification, the trial court emphasized, "[t]his is a tentative ruling." The court explained, "I've gone back and forth several times about the issue of individual issues" and stated, "I just wanted to share with counsel that the issue of whether there were common issues, or whether individual issues predominated did give the court most concern."
After hearing argument, the trial court took the second motion for class certification under submission. In February 2009, the trial court issued an order stating: "The Motion for Class Certification is denied. Moving party has not met its burden of establishing the requisites for class treatment. It is not clear, for the reasons stated by defendant, that the proposed classes are ascertainable. Additionally, it appears that individual questions of fact predominate, as set forth by defendant. These individual issues prevail over the common issues."
I. General Class Action Principles and Standard of Review
"Code of Civil Procedure section 382 authorizes class actions 'when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court....' The party seeking certification has the burden to establish the existence of both an ascertainable class and a well-defined community of interest among class members. [Citation.] The 'community of interest' requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class. [Citation.]" (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326 (Sav-On).)
The question of class certification is essentially procedural and does not involve the legal or factual merits of the action. (Sav-On, supra, 34 Cal.4th at p. 326.) The ultimate question in ruling on a class certification motion is whether the issues which may be adjudicated as a class, when compared with the issues which must be adjudicated individually, are sufficiently numerous or substantial to make a class action advantageous to both the litigants and the judicial process. (Ibid.)
Trial courts have discretion in granting or denying motions for class certification because they are well situated to evaluate the efficiencies and practicalities of permitting a class action. (Sav-On, supra, 34 Cal.4th at p. 326.) Despite this grant of discretion, appellate review of orders denying class certification differs from ordinary appellate review. Under ordinary appellate review, we do not address the trial court's reasoning and consider only whether the result was correct. (Kaldenbach v. Mutual of Omaha Life Ins. Co. (2009) 178 Cal.App.4th 830, 843.) But when denying class certification, the trial court must state its reasons, and we must review those reasons for correctness. (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435-436 (Linder).) We may only consider the reasons stated by the trial court and must ignore any unexpressed reason that might support the ruling. (Id.; see also Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193, 1204-1205 (Bufil).)
We will affirm an order denying class certification if any of the trial court's stated reasons was valid and sufficient to justify the order, and it is supported by substantial evidence. (Sav-On, supra, 34 Cal.4th at pp. 326-327; see also Kaldenbach v. Mutual of Omaha Life Ins. Co., supra, 178 Cal.App.4th at p. 844 ["We may not reverse, however, simply because some of the court's reasoning was faulty, so long as any of the stated reasons are sufficient to justify the order"].) We will reverse an order denying class certification if the trial court used improper criteria or made erroneous legal assumptions, even if substantial evidence supported the order. (Sav-On, supra, 34 Cal.4th at p. 327; Linder, supra, 23 Cal.4th at pp. 435-436.) A trial court's decision that rests on an error of law is an abuse of discretion. (In re Tobacco II Cases (2009) 46 Cal.4th 298, 311; Pfizer Inc. v. Superior Court (2010) 182 Cal.App.4th 622, 629.)
Boyd argues Plaintiffs' failure to appeal from the order denying the first motion for class certification made the order final and res judicata on the issue of class certification. As a consequence, Boyd argues, Plaintiffs cannot challenge the order denying the second motion for class certification.
Boyd did not make this argument in the trial court. Rather than assert res judicata, Boyd opposed the second motion for class certification on its merits and sought a ruling on the motion. By failing to assert res judicata in the trial court, Boyd denied Plaintiffs the opportunity to develop a factual record and denied the trial court the opportunity to make findings on the issue.
The trial court expressly denied the first motion for class certification without prejudice and with the anticipation Plaintiffs could and would bring another motion. "The term 'without prejudice,'... means that there is no decision of the controversy on its merits, and leaves the whole subject... open to another application.... [Citations.]" (Chambreau v. Coughlan (1968) 263 Cal.App.2d 712, 718; see Devereaux v. Latham & Watkins (1995) 32 Cal.App.4th 1571, 1587, disapproved on another ground in Moran v. Murtaugh Miller Meyer & Nelson, LLP (2007) 40 Cal.4th 780, 785, fn. 7 ["the fact that the denial of the first motion was without prejudice allowed respondent to bring a later motion"].) The purpose and effect of the words "without prejudice" is to prevent the defendant from asserting res judicata in a subsequent proceeding by the same plaintiffs on the same subject. (Williams v. City of Oakland (1973) 30 Cal.App.3d 64, 69.)
Relying on Guenter v. Lomas & Nettleton Co. (1983) 140 Cal.App.3d 460, Boyd argues the order denying the first motion for class certification was res judicata notwithstanding use of the term "without prejudice." In Guenter v. Lomas & Nettleton Co., the trial court denied a motion to certify a class without prejudice on the grounds the putative class was not large enough and "'class action would not be a superior form of remedy.'" (Id. at p. 465.) At the hearing on the motion, the trial court suggested the case proceed as an association of 27 plaintiffs rather than as a class action. (Ibid.) In light of those comments and the stated reasons for denying class certification, the Court of Appeal concluded denial of ...