ORIGINAL PROCEEDINGS in mandate. Janet Hilde, Judge. (Super. Ct. No. CV0900065)
The opinion of the court was delivered by: Hull, J.
CERTIFIED FOR PUBLICATION
Petition granted with directions.
In this mandamus proceeding, petitioners-defendants seek to overturn a decision of the Superior Court of Plumas County certifying the underlying dispute as a class action. Real parties in interest-plaintiffs are various real property or business owners or operators and the City of Portola, all of whom are located near Lake Davis in Plumas County. (For purposes of clarity, petitioners shall be referred to as defendants and real parties in interest shall be referred to as plaintiffs.) They claim to have been harmed by efforts of the State Department of Fish and Game (DFG) in 2007 to eradicate an invasive species of fish, the northern pike, from the lake and its tributaries in order to preserve tourism in the area and to prevent migration of the fish to other bodies of water.
Plaintiffs allege defendants' efforts created a decline in tourism that adversely affected business income, property values and tax receipts for the period leading up to and following the eradication effort. They assert claims for public nuisance, negligence, inverse condemnation, various types of business interference, strict liability, and equal protection.
Resolution of the class certification issue turns primarily on whether the legal and factual issues that must be resolved in this dispute are predominantly common to all class members or must be determined on an individual basis. The trial court concluded common issues predominate.
We conclude the trial court applied incorrect legal criteria and made erroneous legal assumptions in resolving the predominance issue, thereby rendering its decision an abuse of discretion. We therefore grant the requested relief.
As alleged in the complaint, northern pike were first discovered in Lake Davis in 1994 and, in 1997, DFG undertook to eradicate the species from the lake and its tributaries by applying a poison (the 1997 poisoning). The Legislature thereafter determined residents in the area had suffered economic harm as a result of the 1997 poisoning and appropriated $9,176,000 to compensate them. (Gov. Code, § 998.)
The 1997 poisoning was unsuccessful in eliminating the northern pike. Between 1999 and 2006, DFG attempted to control and contain the species. However, this too proved ineffective and DFG decided once again to poison the lake. This second poisoning occurred in September 2007. In addition to applying poison to the lake, DFG "widely publicized the [plan to poison the lake], closed all roads that access Lake Davis during the [poisoning] and placed large, blinking Department of Transportation signs on Highway 70 to advise the general public of Lake Davis's closing. The signs were unclear and misleading, which led the general public to believe that the entire area, including the City of Portola, was closed." DFG "left the large road signs up for more than a week after the roads to Lake Davis were actually re-opened, unnecessarily creating the continued appearance that the City of Portola and surrounding vicinity were closed." The forest around Lake Davis remained closed from September 2007 through January 2008 and the lake was not certified for re-use as a source of drinking water until May 2008. (Hereafter, the foregoing acts attendant to the second poisoning effort, as well as the poisoning itself, are referred to collectively as the 2007 poisoning.)
Plaintiffs Ira R. Adams, Anthon and Sylvia Olsen, Frank L., Patricia A. and Judy Ann Genescritti, the Genescritti Family Trust, Sleepy Hollow RV Park, LLC, and the City of Portola filed claims with the Victim Compensation and Government Claims Board (Claims Board) (see Gov. Code, § 900.2) for damages caused by the 2007 poisoning. Their claims were rejected. Plaintiffs then commenced this action on behalf of themselves and all others similarly situated. Named as defendants are DFG, John McCamman, the former acting director of DFG, and two DFG employees, Ed Pert and Randy Kelley. The first amended complaint contains nine causes of action: (1) public nuisance; (2) negligence; (3) inverse condemnation; (4) intentional interference with economic relationship; (5) negligent interference with economic relationship; (6) intentional interference with prospective economic relations; (7) negligent interference with prospective economic relations; (8) strict liability; and (9) equal protection.
Plaintiffs moved for certification of the following three subclasses:
"Class A: All persons, entities and/or political subdivisions owning and/or operating one or more businesses in the Lake Davis area that timely submitted one or more claims to the Claims Board for damages suffered as a result of the [2007 poisoning], and whose claims were rejected by the Claims Board.
"Class B: All persons, entities and/or political subdivisions owning real property in the Lake Davis area during the relevant time period that timely submitted one or more claims to the Claims Board for damages incurred as a result of the decrease in real property values, loss of real property income or lost sales of real property, suffered as a result of the [2007 poisoning], and whose claims were rejected by the Claims Board.
"Class C: All persons, entities and/or political subdivisions that were injured by the [2007 poisoning], including, but not limited to lost property and sales tax revenues, lost economic development and economic growth, or suffered any other loss alleged in the First Amended Complaint as a result of the [2007 poisoning], and that timely submitted one or more claims to the Claims Board, and whose claims were rejected by the Claims Board."
In support of their motion, plaintiffs submitted the declarations of Arthur Gimmy, a professional property and business appraiser, Dr. James Robert Fountain, a consultant in real estate and land development, Jeff Rogers, an accountant specializing in the determination of business losses, and Estelle Saltzman, a public relations specialist.
Gimmy claimed he could determine overall lost real property values in the Lake Davis area caused by the 2007 poisoning by comparing property value fluctuations in that area during the relevant period with those in a comparable area and attributing any discrepancy to the 2007 poisoning. Dr. Fountain suggested the same approach could be used to determine the amount of overall business decline in the Lake Davis area caused by the 2007 poisoning. In other words, any business decline in the area not also experienced in other, comparable areas must be attributable to the 2007 poisoning. Rogers claimed he could use a common methodology to compute the losses suffered by any particular business in the area. Finally, Saltzman indicated a marketing effort to revitalize Lake Davis tourism would cost between $1 million and $1.5 million each year for the next three years.
In opposition to plaintiffs' motion, defendants submitted the declarations of Dr. Michael J. Harris, an economist, James W. McCurley, an accountant, and Reese Perkins, a real estate appraiser. Dr. Harris opined that a class-wide methodology could not be used to determine business losses in light of significant differences in the natures of the various businesses included in plaintiffs' proposed class A. Dr. Harris also asserted real property losses among class B members would necessarily vary depending on whether the property was used for a business or a residence and whether the owner attempted to sell during the relevant period. McCurley likewise opined that a single format approach to calculating business losses in class A would not be appropriate under the circumstances because of differences in the businesses. Finally, Perkins indicated a case-by-case analysis would be necessary to evaluate adverse impacts on individual parcels of property.
The trial court granted the motion for class certification. The court explained: "The predominant legal issue: whether the actions taken by DFG to eradicate Northern Pike in 2007 resulted in a common impact based upon the causes of action alleged, and the predominant factual issues: what were the actions taken by DFG to eradicate Northern Pike in 2007, are amenable to class treatment." The court analyzed each of plaintiffs' nine causes of action and concluded they primarily involve common issues.
On September 24, 2010, defendants filed a petition for writ of mandate in this court seeking to reverse the trial court's order. On October 15, we issued an alternative writ of mandate.
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 . . . ." (Code Civ. Proc., § 382.) "Courts long have acknowledged the importance of class actions as a means to prevent a failure of justice in our judicial system. [Citations.] '"By establishing a technique whereby the claims of many individuals can be resolved at the same time, the class suit both eliminates the possibility of repetitious litigation and provides small claimants with a method of obtaining redress . . . ."' [Citation.] Generally, a class suit is appropriate 'when numerous parties suffer injury of insufficient size to warrant individual action and when denial of class relief would result in unjust advantage to the wrongdoer.' [Citations.] But because group action also has the potential to create injustice, trial courts are required to '"carefully weigh respective benefits and burdens and to allow maintenance of the class action only where substantial benefits accrue both to litigants and the courts."' [Citation.]" (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 434-435 (Linder).)
In order to obtain class certification, a proponent must demonstrate the existence of both an ascertainable class and a well-defined community of interest among the proposed class members. (Linder, supra, 23 Cal.4th at p. 435.) "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." (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470.) "The predominance factor requires a showing 'that questions of law or fact common to the class predominate over the questions affecting the individual members.' [Citation.] 'The ultimate question in every case of this type is whether . . . the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants.'" (In re Cipro Cases I & II (2004) 121 Cal.App.4th 402, 410.)
"A class action can be maintained even if each class member must at some point individually show his or her eligibility for recovery or the amount of his or her damages, so long as each class member would not be required to litigate substantial and numerous factually unique questions to determine his or her individual right to recover." (Acree v. General Motors Acceptance Corp. (2001) 92 Cal.App.4th 385, 397.) "Individual issues do not render class certification inappropriate so long as such issues may effectively be managed." (Sav-on Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 334 (Sav-On Drug Stores).)
"A trial court's order granting or denying class certification is subject to review for abuse of discretion." (In re Cipro Cases I & II, supra, 121 Cal.App.4th at p. 409.) "Because 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." (Linder, supra, 23 Cal.4th at p. 435.) "'Our task on appeal is not to determine in the first instance whether the requested class is appropriate but rather whether the trial court has abused its discretion . . . .'" (Reese v. Wal-Mart Stores, Inc. (1999) 73 Cal.App.4th 1225, 1233.)
Nevertheless, the trial court's ruling must be reversed if its findings are not supported by substantial evidence, if improper criteria were used, or if erroneous legal assumptions were made. (In re Cipro Cases I & II, supra, 121 Cal.App.4th at p. 409.) "The appeal of an order denying class certification presents an exception to the general rule that a reviewing court will look to the trial court's result, not its rationale. If the trial court failed to follow the correct legal analysis when deciding whether to certify a class action, 'an appellate court is required to reverse an order [granting] class certification . . . , "even though there may be substantial evidence to support the court's order."'" (Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 828.)
The trial court in this case issued a 22-page opinion that reviewed the evidence presented by the parties and analyzed the various legal and factual issues presented by the claims alleged in the complaint. The court initially concluded there is an ascertainable class, an issue that does not appear to be disputed in light of the fact all class members were purportedly identified by name in exhibit A to the complaint. The court then determined that issues of fact and law common to all class members predominate over individual issues. Next, the court found the named plaintiffs have claims typical of the class and can provide adequate representation. Finally, the court concluded plaintiffs adequately demonstrated that proceeding in a class action format would be advantageous both to the litigants and to the court.
Defendants contend the trial court abused its discretion in concluding common issues predominate in this matter. According to defendants, this case "is predicated on facts peculiar to each proposed plaintiff regarding both liability and damages" and there are many diverse issues as to how each class member may have been impacted by the various aspects of the 2007 poisoning. Defendants argue "no class-wide economic or financial model or formula could be devised to calculate damages for these diverse claimants." Instead, the circumstances of each class member "must be scrutinized to assess impact and damages."
Defendants place particular reliance on City of San Jose v. Superior Court (1974) 12 Cal.3d 447 (City of San Jose), where the plaintiffs sued the city on behalf of all real property owners located in the flight pattern of the San Jose Municipal Airport. They alleged nuisance and inverse condemnation and sought recovery for diminution in market value of their individual properties. (Id. at pp. 452-453.) The trial court found the matter appropriate for class treatment, but the California Supreme Court disagreed and granted the city's petition for extraordinary relief. (Id. at p. 465.)
According to the high court, "the community of interest requirement is not satisfied if every member of the alleged class would be required to litigate numerous and substantial questions determining his individual right to recover following the 'class judgment' determining issues common to the purported class." (City of San Jose, supra, 12 Cal.3d at p. 459.) The court found the matter before it to be such a case: "[T]he present action for nuisance and inverse condemnation is predicated on facts peculiar to each prospective plaintiff. An approaching or departing aircraft may or may not give rise to actionable nuisance or inverse condemnation depending on a myriad of individualized evidentiary factors. While landing or departure may be a fact common to all, liability can be established only after extensive examination of the circumstances surrounding each party. Development, use, topography, zoning, physical condition, and relative location are among the many important criteria to be considered. No one factor, not even noise level, will be determinative as to all parcels. [¶] The uncontradicted evidence reveals the development, character, and uses of the geographic region of this proposed class are diverse. Within the region are industrial plants, public buildings, body shops, warehouses, gas stations, office buildings, multi-unit apartments, single family residences, and vacant land--some being farmed. The region is bisected by a major thoroughfare and bounded by a highway. Finally, a railroad right-of-way passes through a portion of the proposed region." (Id. at pp. 460-461, fn. omitted.)
The high court also rejected the plaintiffs' attempt to divide the purported class into subclasses and to determine, as to each subclass, the overall diminution in value. According to the court, such a "scheme is incompatible with the fundamental maxim that each parcel of land is unique. [Citations.] Although this rule was created at common law, the very factors giving it vitality in the simple days of its genesis take on added significance in this modern era of development. Simply stated, there are now more characteristics and criteria by which each piece of land differs from every other." (City of San Jose, supra, 12 Cal.3d at pp. 461-462.) Furthermore, the court reasoned, "even were we to allow a subclassification process here, the factors giving the uniqueness rule vitality would serve to break down the alleged beneficial aspects which such a process might yield under these facts, making a class action here unmanageable. Given the many recognized factors combining to make up the uniqueness of each parcel of land, the number of subclassifications into which the class would be required to be divided to yield any meaningful result would be substantial. Then, because liability is here predicated on variables like the degree of noise, vapor, and vibration, the problem is compounded by the factors of distance and direction affecting these variables. The result becomes a statistical permutation, and the requisite number of subclassifications quickly approaches the total number of parcels in the class. Under such circumstances, there is little or no benefit in maintaining the action as a class." (Id. at p. 462.)
Defendants contend the liability and damage issues presented in the present matter are "far more individualized" than those in City of San Jose. According to defendants, the real property at issue here includes rental properties, owner-occupied properties, commercial properties, properties located near Lake Davis, properties located elsewhere, properties the owners attempted to sell and properties the owners did not attempt to sell. They further assert the businesses at issue "range from a tent rental business to a drug testing facility to a women's advocacy organization." Defendants argue that because of the wide diversity of class members and properties, each member will be required to prove both liability and damages, and common issues are few and "certainly do not predominate."
Plaintiffs argue City of San Jose did not establish a per se bar to class certification in actions involving nuisance and inverse condemnation claims or where each member's right to recover depends on facts individual to that member's case. They cite Sav-On Drug Stores, where the high court said: "[T]he Court of Appeal erroneously cited City of San Jose . . . in suggesting trial courts must 'deny class certification when each member's right to recover depends on facts individual to the member's case.' In [City of San Jose] the trial court had certified a class of property owners pressing claims against a municipal airport. We reversed, remarking at one point that the general rule 'that a class action cannot be maintained where each member's right to recover depends on facts peculiar to his case . . . remains viable in this state.' [Citation.] But reading this categorical extract out of context would misstate the established legal standard for commonality, which . . . is comparative. Our holding in [City of San Jose] was, in fact, expressly comparative [citation], and we consistently have adhered to that approach [citation]." (Sav-On Drug Stores, supra, 34 Cal.4th at pp. 338-339, fn. omitted.)
Plaintiffs essentially set up and knock down a straw man. Nowhere do defendants claim City of San Jose created a per se rule with respect to nuisance and inverse condemnation claims or claims involving any degree of individual proof. City of San Jose clearly applied a comparison standard, whereby those issues that may be subject to common adjudication are compared with those requiring individual determination. The court merely concluded that, in light of the claims asserted and the individualized nature of the property involved, the trial court abused its discretion in determining that common issues predominated. Defendants, for their part, argue the issues presented in this matter are even more individualized than those in City of San Jose, thereby necessitating the same result.
Plaintiffs argue the trial court correctly concluded City of San Jose is "easily distinguished" from the present matter on the basis that "[t]he class proposed in City of San Jose did not involve a common nucleus of operative facts arising from a single incident" but rather "landowner claims with no temporal limitation on the class."
We fail to see how the fact the conduct alleged in City of San Jose did not involve a single incident distinguishes that case from the present one. Whether plaintiffs' damages arose from a single incident or a continuum of conduct over time, the question for purposes of class certification remains to what extent the issues of liability and damages may be determined on a collective basis. There is no logical reason why a single act causing injury should be treated differently from a series of acts causing injury. In City of San Jose, it was not the nature of the misconduct but the uniqueness of the individual parcels, in light of the claims asserted, that made class treatment inappropriate. In the present matter, the trial court was required to determine whether the uniqueness of the individual properties and businesses, in light of the claims asserted, likewise makes class treatment inappropriate.
The trial court also purported to distinguish City of San Jose on the basis that, in the present matter, uniqueness of the individual parcels of property is not an obstacle to class treatment because "the problems of liability and the calculation of diminished value of each parcel in this case do not depend upon the same variables [as] in City of San Jose because Plaintiffs do not allege similar damages on their land as such." We are not altogether certain what the trial court meant by the foregoing. The loss sought to be recovered by the class B plaintiffs here, like the plaintiffs in City of San Jose, is the diminished value of their property resulting from the defendants' conduct. On the other hand, in City of San Jose, at least a portion of the alleged diminished value claimed by the plaintiffs was caused by the physical invasion of their property by dust, noise, and vibrations. Plaintiffs' theory in this matter does not appear to be based on any such physical invasion. Rather, plaintiffs appear to allege the 2007 poisoning caused people to stay away from the area in general and created a perception that the area around Lake Davis was somehow tainted, thereby driving down property values on more or less a uniform basis.
In light of this difference in theories, uniqueness of the individual parcels may have been more of a factor in City of San Jose than it is here. However, this is a difference in degree rather than kind. It remains a question of assessing the issues presented in terms of whether those that may be determined on a common basis predominate over those that require individual adjudication. As explained more fully hereafter, the impact of the 2007 poisoning, like the impact of a physical invasion in City of San Jose, may be different depending on the particular characteristics and location of each individual parcel. And, in light of the claims asserted by plaintiffs, these differences are more than just a matter of damages, but go to the fundamental issues of liability.
Defendants cite a number of other decisions which, they argue, support denial of class certification in the present matter. For example, in Frieman v. San Rafael Rock Quarry (2004) 116 Cal.App.4th 29 (Frieman), two individuals living near a quarry brought an action against the operator on behalf of themselves and all others similarly situated alleging unlawful business practices and nuisance. (Id. at pp. 31-32.) The plaintiffs moved for certification of two classes, one for the unlawful business practices claim and another for the nuisance claim. (Id. at p. 33.) The trial court denied the motion, concluding the plaintiffs failed to show any need for a class to pursue the disgorgement remedy on their unlawful business practices claim and failed to show common questions predominated as to the nuisance claim. (Ibid.)
The Court of Appeal affirmed. Expert evidence submitted by the defendant established that variations in noise experienced at different locations in the class area depended on the distances between the noise sources and the homes and the presence of any shielding provided by natural terrain, intervening homes or vegetation. As a result, in many locations, homes within a few hundred feet of each other could have dramatically different noise exposures. In addition, noise exposure could also vary depending on the orientation of rooms in a home, the nature of the furnishings, the size and construction of windows and whether windows are open or closed. (Frieman, supra, 116 Cal.App.4th at p. 39.) Further expert evidence established that the impact on individual homes from blasting activities at the quarry depended on "the presence of rock or soil formations that alter the frequency of blast waves, the natural or 'resonant' frequencies in each structure that change the response to vibration, distance from the blast site and differences in the duration of the blasts." (Ibid.)
The appellate court distinguished the matter from cases in which class certification was found to be appropriate despite the fact each class member would be required to prove individual damages. The court found the case before it would require not only individual proof of damages but individual proof of liability. The court analogized the situation presented to that in City of San Jose: "The City of San Jose case is similar to this case, and its rationale supports the trial court's decision. The variables that prevented class treatment in City of San Jose are analogous to the variables present in this case. Rather than mere variations in the measure of damages, these factors are the keys to defendant Quarry's liability. Whether each resident even heard or felt the impact of Quarry's operations is subject to separate and differing matters of proof. Each resident would have to prove interference with the comfortable enjoyment of life or property and that the interference was 'substantial and unreasonable.' [Citation.] Plaintiffs produced no evidence that these issues do not vary significantly as to each individual in the defined area." (Frieman, supra, 116 Cal.App.4th at p. 42.)
Defendants also cite Eaton v. Ventura Port Dist. (1975) 45 Cal.App.3d 862 (Eaton). In Eaton, the plaintiffs were members of an organization known as the Ventura Marina Protective Association who filed a class action for declaratory relief and damages on behalf of 160 named association members and a class of unnamed persons who owned boats and other property that was damaged or destroyed when the Santa Clara River overflowed and flooded the Ventura Marina. (Id. at p. 864.) The named defendants were various public entities, including the Ventura Port District, which designed and operated the marina, the City of San Buenaventura, where the marina was located, and various flood control districts. (Id. at p. 865.) Among the many causes of action of the complaint were claims for negligent design and construction of the marina, negligent failure to warn of impending disaster and negligent failure to safeguard property. (Ibid.) The plaintiffs sought damages in the form of reduced value or destruction of boats, damage to other personal property, loss of occupancy, loss of use, personal injuries, and other damages. (Ibid.) The trial court concluded the matter could not be maintained as a class action for several reasons, including the absence of a well-defined community of interest in the issues presented. (Id. at p. 866.)
The Court of Appeal affirmed, concluding "the theories of liability as alleged in the complaint are so diverse and individualized that they fail to portray [the necessary] community of interest." (Eaton, supra, 45 Cal.App.3d at p. 869.) Quoting the trial court, the Court of Appeal explained: "'[T]he number, variety and the diversity of the individual plaintiffs' respective claims, the number, variety and diversity of the legal theories under which such claims are asserted, and the number, variety and diversity of the individual defendants against some or all or none of whom such claims are made demonstrate a contrariety of issues of both law and fact not countenanced by [Code of Civil Procedure] Section 382, . . . as the requisites for maintaining a class action.'" (Ibid.) The court continued: "The pleadings of the representative plaintiffs demonstrate that even as among themselves they are not 'similarly situated.' Hence, the unnamed plaintiffs, who are characterized as 'persons similarly situated' to the representative plaintiffs, could not by virtue of that magic phrase be transformed into a well-defined and ascertainable class. The only common feature appearing in the ...