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Farmers Insurance Exchange v. Superior Court (Audrey Wilson)

California Court of Appeals, Second District, Third Division

July 23, 2013

FARMERS INSURANCE EXCHANGE, Petitioner and Defendant,
v.
SUPERIOR COURT OF THE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES, Respondent AUDREY WILSON et al., Plaintiffs and Real Parties in Interest.

ORIGINAL PROCEEDINGS in mandate. John Shepard Wiley, Jr., Judge Los Angeles County Super. Ct. No. BC371597 Petition granted.

Seyfarth Shaw, George E. Preonas, Andrew M. Paley and Sheryl L. Skibbe; Gibson, Dunn & Crutcher, Theodore J. Boutrous, Jr., Julian W. Poon, Christopher Chorba, Kirsten R. Galler and Neta Levanon for Petitioner and Defendant.

No appearance for Respondents.

R. Rex Parris Law Firm, R. Rex Parris, Alexander R. Wheeler, Jacob L. Karczewski and John M. Bickford; Altshuler Berzon, Michael Rubin, Peder J. Thoreen and Matthew J. Murray for Plaintiffs and Real Parties in Interest.

CROSKEY, J.

The trial court in the instant matter granted a motion for class certification based solely on a single appellate court opinion. Shortly after the class certification motion was granted, the Supreme Court depublished the appellate court opinion on which the trial court had relied. By this time, the 10-day period for the defendant to seek reconsideration of the trial court’s order under Code of Civil Procedure section 1008, subdivision (a) had lapsed. The defendant therefore requested that the trial court exercise its discretion under Code of Civil Procedure section 1008, subdivision (c) to reconsider the order granting class certification on its own motion. That subdivision permits a trial court to reconsider its prior order if it determines “there has been a change of law” that warrants reconsideration. In this case, the trial court determined that it was precluded from granting reconsideration on the basis that the Supreme’s Court’s order depublishing the sole authority on which it had previously relied did not, in fact, constitute a “change of law.”

The defendant sought review by petition for writ of mandate. We issued an order to show cause and will now grant the petition. The Supreme Court’s act of depublishing a case on which a prior court order relied can, in fact, constitute a change of law. In this case, where the sole legal basis for the trial court’s order was the depublished decision, the depublication order necessarily constituted a change of law.

FACTUAL AND PROCEDURAL BACKGROUND

The instant case was brought against Farmers Insurance Exchange (Farmers) by three of its claims adjusters, alleging, on behalf of a class of claims adjusters employed by Farmers, various violations of the Labor Code, including a failure to pay overtime and a failure to provide meal and rest breaks. The operative complaint is the second amended complaint, filed February 20, 2012. A major issue in the case will be if the plaintiff employees are subject to these requirements of the Labor Code, or if, in the alternative, they are exempt administrative employees.

The complaint seeks to define the class as “all persons who, since May 18, 2003, have been employed, or are currently employed, by [Farmers] in California as a Claims Representative who were paid as exempt employees during the Class Period, as the same are defined pursuant to statute and/or California or federal regulatory determination, and were not included as class members in the Bell v. Farmers Insurance Exchange[1] judgment.”

On March 26, 2012, the plaintiffs moved for certification of the class.[2] They argued that class certification was appropriate in this case as all of the putative class members perform (or performed) a finite and uniform grouping of job duties. As such, plaintiffs argued, a court could determine on a class basis whether the class members were exempt administrative employees.

On July 27, 2012, Farmers opposed the motion. Farmers argued that class certification was inappropriate because the job duties performed by members of the purported class varied tremendously. As such, Farmers argued, individual issues predominated over class issues and class certification was therefore inappropriate. Farmers also argued the merits of the exemption issue, taking the position that all of its adjusters were, in fact, exempt. Farmers argued that there was no basis for class certification as there was no common issue regarding liability.

A few days before Farmers filed its opposition, Division One of the Second Appellate District issued its published opinion in Harris v. Superior Court (July 23, 2012, B195121, B195370) (Harris).[3] That opinion held that a class of claims adjusters was appropriately certified and, furthermore, that the members of the class were not exempt. Farmers recognized that Harris had been filed, and mentioned the opinion briefly in its opposition, seeking permission to further address the case in a sur-reply.[4]

On September 28, 2012, plaintiffs filed their reply in support of class certification.[5] To say that the reply relied heavily on Harris would be an understatement. Plaintiffs argued that Harris was directly on point and controlled the disposition of the class certification motion. Plaintiffs argued that Harris was “controlling law for this Court both on merits and class certification issues.” Plaintiffs categorized Farmers’s opposition as simply urging the court “to adopt arguments that the Harris... court has already expressly rejected.”

A petition for review was filed in Harris on September 4, 2012. On October 5, 2012, the day of the hearing on the class certification motion, the parties in the instant matter filed a joint statement setting forth their positions on the issue of whether the trial court should resolve the class certification motion immediately or defer ruling until the Supreme Court had ruled on the petition for review in Harris. Farmers, not surprisingly, requested that the court defer ruling. Plaintiffs disagreed, stating, of Harris, “as long as it remains published the Court is required to follow it.... ” The trial court ultimately chose to resolve the matter before it, without waiting for the Supreme Court to rule on the petition for review in Harris.

Before the hearing, the court issued its tentative ruling, which stated, in its entirety[6]: “The class certification motion is granted. [¶] The issue is whether insurance adjusters are exempt. Harris v. Superior Court (2012) 207 Cal.App.4th 1225, 1231, 1233 1248 said no: not exempt. The wage and hour laws apply to them: meal breaks, rest breaks, and all the rest. Farmers dismisses this ‘erroneous analysis’ [citation], but this appellate law compels certification. [¶] Harris held that the alleged heterogeneity of the class was no reason to deny class certification. (Har ...


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