Opinion
F074938
11-07-2017
CAROLYN CORTINA, et al., Plaintiffs and Respondents, v. NORTH AMERICAN TITLE COMPANY, Defendant and Appellant.
Morgan, Lewis & Bockius, Barbara J. Miller, John D. Hayashi, Thomas M. Peterson, Deborah E. Quick; Littler Mendelson, Michael E. Brewer; Jackson Lewis and Bren K. Thomas for Defendant and Appellant. Wagner, Jones, Kopfman & Artenian, Lawrence M. Artenian, Laura E. Brown; Wanger Jones Helsley, Oliver W. Wanger, Patrick D. Toole; Cornwell & Sample, Stephen R. Cornwell and René Turner Sample for Plaintiffs and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 07CECG01169)
OPINION
APPEAL from orders of the Superior Court of Fresno County. Jeffrey Y. Hamilton, Jr., Judge. Morgan, Lewis & Bockius, Barbara J. Miller, John D. Hayashi, Thomas M. Peterson, Deborah E. Quick; Littler Mendelson, Michael E. Brewer; Jackson Lewis and Bren K. Thomas for Defendant and Appellant. Wagner, Jones, Kopfman & Artenian, Lawrence M. Artenian, Laura E. Brown; Wanger Jones Helsley, Oliver W. Wanger, Patrick D. Toole; Cornwell & Sample, Stephen R. Cornwell and René Turner Sample for Plaintiffs and Respondents.
-ooOoo-
In this class action, two classes of employees, those North American Title Company (NATC) categorized as non-exempt and exempt, sued NATC for unpaid overtime. Following a bench trial on a claim for violation of the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.), the trial court issued a detailed statement of decision in which it, among other things: (1) dismissed, without prejudice, the individual claims of Janet Doran, who was one of the named plaintiffs; (2) decertified the non-exempt class; and (3) found NATC liable to the exempt class and ordered the amount of restitution for the exempt class members' unpaid overtime to be determined by a referee, with NATC to bear the cost of the reference.
NATC purports to appeal from the orders dismissing Doran, decertifying the non-exempt class, and requiring it to pay the cost of the reference. Named plaintiffs Carolyn Cortina, Judith Bates, Tina Texeira, Janet Doran, Kimberly Baker, Laurel Johnstone, Mary Weidmark, Cheryl Fuller, Melodie Benton, Catherine Bell, Teresa Spender and Martha Dominguez (collectively plaintiffs), have moved to dismiss the appeal as being taken from nonappealable orders and because NATC does not have standing to appeal. Plaintiffs also seek sanctions and costs against NATC pursuant to California Rules of Court, rule 8.276(a)(1), for filing a frivolous appeal. We grant the motion to dismiss the appeals from the decertification order and cost order, deny it as to the order dismissing Janet Doran, and deny the request for sanctions.
FACTUAL AND PROCEDURAL BACKGROUND
In April 2007, Cortina filed a class action complaint against NATC alleging it violated the Labor Code and engaged in unfair business practices when it failed to pay overtime, and provide meal and rest breaks, to escrow officers it employed in California. The complaint was amended twice, adding first four and then another seven representational plaintiffs.
Plaintiffs moved for, and obtained class certification in August 2010. Two classes were certified: (1) an "exempt" class comprised of people employed in positions which, at the time of employment, were classified by defendants as exempt from the obligation to pay overtime; and (2) a "non-exempt" class comprised of people employed in positions which, at the time of employment, were classified as not exempt, and therefore were entitled to be paid overtime. North American Services (NAS) was added as a defendant in 2010, on the theory that it was a co-employer of the class members.
The exempt class was defined as: "All persons employed by defendants and each of them, in the positions of Escrow Associate or equivalent position, however titled, in the State of California who were classified as overtime exempt by defendant at any time within four years prior to filing of the original complaint up to the time final judgment is entered. It is to include, but is not limited to, person[s] holding the job titles of Escrow Officers, Senior Escrow Officer, Special Projects Escrow Officer, Escrow Supervisor, Advisory Escrow Officer, Escrow Unit Manager, Escrow Manager, Branch Manager, and Escrow Operations Manager. The Exempt Class does not include persons occupying the position of Escrow Assistant."
The non-exempt class was defined as: "All persons employed by defendants, and each of them, in the position of Escrow Associate or equivalent position, however titled, in the State of California who were classified as non-exempt from overtime by defendants at any time within four years prior to the filing of the original Complaint up to the time final judgment is entered. The Non-Exempt Class includes, but is not limited to persons holding the job titles of Junior Escrow Officer, Escrow Officer, Senior Escrow Officer, Special Projects Escrow Officer, and Escrow Supervisor. The Non-Exempt [Class] does not include persons occupying the position of Escrow Assistant."
In 2012, NATC filed a motion to decertify the class. NATC argued plaintiffs could not prove their allegations class wide in a manner that afforded it due process, and it would be a miscarriage of justice to continue the class action and force NATC to either undertake 700 mini-trials or defend against plaintiffs' proposed evidence. The trial court denied the motion. NATC challenged the denial via writ petition, which we denied in an unpublished decision. We concluded the trial court did not abuse its discretion in denying the motion, as there was substantial evidence to support the trial court's finding that common issues predominate, namely the plaintiffs' claim that NATC had a uniform policy of pressuring escrow officers to work uncompensated overtime and skip breaks. (North American Title Company v. Superior Court (Mar. 17, 2014, F065900) [nonpub. opn.].)
A bench trial commenced in September 2015 on only one cause of action - violation of the UCL, with the classes seeking to recover restitution of unpaid wages resulting from uncompensated overtime and work during meal periods. By stipulation of the parties, the presentation of evidence concluded in March 2016, and the matter continued with briefing as ordered by the trial court.
The trial court issued its final statement of decision on October 20, 2016. The trial court found it inequitable to hold NAS liable, as there was no evidence it performed any functions that resulted in the misclassification of employees as exempt or encouraged employees not to report overtime. As to the exempt class, the trial court stated that under Business and Professions Code section 17204, and as explained in In re Tobacco II Cases (2009) 46 Cal.4th 298, 314, a UCL claim must be brought by a person who has suffered injury and lost money or property as a result of the unfair competition, but the standing requirement applied solely to the class representative, not absent class members, and that restitution under the UCL may be ordered without individualized proof of harm.
The trial court rejected NATC's affirmative defense that it properly deemed certain job titles to encompass exempt status, as the evidence established (1) class members were subject to a loss in pay if they did not have adequate leave balances for missed days and furlough days; (2) NATC's attempt to divide employees into exempt and non-exempt categories after 2003 was done on a speculative basis without proper assessment; and (3) before 2004, NATC mischaracterized employees as exempt based on title alone. Noting that it had broad equitable powers to order restitution in UCL cases, the trial court ordered restitution of unpaid overtime wages earned during the class period to the exempt class members and stated it would refrain from entering final judgment until an amount was determined.
The trial court further noted that under the Federal Rules of Civil Procedure and federal law, special masters may be appointed without the parties' consent to resolve questions involving difficult damages computations. Due to the consumption of time required to assess the amounts of individual restitution, the trial court ordered the factual issue to be considered by a referee pursuant to Code of Civil Procedure section 639, subdivision (a)(3), based on the referee's review of individual testimony and any other evidence the referee found appropriate, and ordered the referee to report his findings to the trial court. The trial court declined to reopen discovery and advised the referee to be guided by the principle that California courts shift the burden of proof to employers when inadequate records prevent employees from proving their claims for unpaid overtime and meal periods.
Undesignated statutory references are to the Code of Civil Procedure.
As for the referee's fee, the trial court ordered: "No party has established an economic inability to pay for the reference. Payment of wages is a fundamental public policy in the state of California. [Citations.] For these reasons, the Court orders that NATC shall bear the cost of the reference." As the parties submitted the names of proposed referees to the court pursuant to section 640, and no party objected to any proposed referee in the time permitted by section 641, the trial court selected the Hon. Patrick J. O'Hara (Ret.) as referee and set his maximum hourly rate at $500.
Regarding the non-exempt class, the trial court explained the unlawful conduct at issue was "a company-wide policy of pressuring class members to work unreported overtime as well as through meal periods and rest breaks." The trial court found that while there was substantial evidence that some employees worked unreported overtime so they could earn commissions for closing escrows, with some earning six figures a year, there also was "a wealth of evidence that many employees did not work any overtime, worked overtime and were paid for it, or were disciplined for failing to report overtime they did work (as well as paid for it)." In addition, several witnesses who claimed large amounts of unreported and unpaid overtime were impeached. Although plaintiffs' original trial plan included a promise of expert opinion to establish class-wide proof via a valid sampling or statistical evidence, at trial the plaintiffs' expert failed to lay the necessary foundation for his opinion, which left the defendants' expert, Dr. Saad, "unchallenged on the issue of lack of a class-wide policy of encouraging unpaid, unreported overtime, except by individual representative testimony, which was . . . often impeached."
Based on plaintiffs' failure to submit expert testimony and the impeachment of several witnesses, the trial court was persuaded that "no uniform policy consistently applied was demonstrated for the non-exempt class[,]" the existence of which was "a prerequisite to relief under the UCL for a class of employees, and for maintenance of a class action." Due to this finding "on the absence of a class-wide policy," the trial court determined that decertification of the class was required. The trial court, however, made clear that it saw evidence of unreported and unpaid overtime, just not on a class-wide basis, and stated that its decision "should have no impact on any individual worker's attempt to secure recovery on an individual basis."
The trial court ordered that notice of dismissal of the non-exempt class claims be sent to the non-exempt class members. Noting that under Grogan-Beall v. Ferdinand Roten Galleries, Inc. (1982) 133 Cal.App.3d 969, judgment may be entered for only a named plaintiff after a post-trial decertification of the class, the trial court (1) ordered that judgment be entered against two named plaintiffs, Carolyn Cortina and Kimberly Baker, on their individual claims, as they did not testify; (2) "dismissed without prejudice" the claims of "Janet Dornan," who the parties had advised was originally a named class representative but withdrew herself from that position and opted out of the class; and (3) ordered the referee to consider the claims of the other named plaintiffs for restitution of overtime pay for time employed as non-exempt workers.
On December 16, 2016, NATC filed a notice of appeal from "the currently appealable portions" of the October 20, 2016 statement of decision, "including: [¶] (1) The order dismissing named plaintiff Janet Doran without prejudice ([Code] Civ. Proc. [] § 581d); and [¶] (2) The order decertifying the Non-Exempt Class (see, e.g., Linder v. Thrifty Oil, 23 Cal.4th 429, 435 (2000); Walsh v. IKON Office Solutions, Inc., 148 Cal.App.4th 1440, 1448-49 (2007)."
Four days later, NATC filed a petition for writ of prohibition in this court. Through its petition, NATC sought vacation of the trial court's reference order because the reference was not authorized by statute and violated several established limits on the scope of a permissible, non-consensual reference, such as by improperly referring all elements of certain claims and legal issues, rather than carefully delineated questions of fact, and delegating judicial functions to the referee. NATC noted that it had filed a notice of appeal from the order decertifying the non-exempt class and dismissing Doran without prejudice. NATC asserted writ review was proper to correct the invalid reference and necessary because, without it, NATC and plaintiffs would be put to the unnecessary time and expense of unauthorized extra-judicial proceedings that would deprive them of their rights to judicial determination of the pleaded elements of the rights and claims at issue. On March 3, 2017, we issued an order denying the petition.
Meanwhile, NATC and NAS filed a motion to correct clerical errors or, in the alternative, to modify the statement of decision. In its January 12, 2017 ruling on the motion, the trial court explained it could not make any rulings that might affect defendants' appeal of "class member Doran's dismissal without prejudice" and decertification of the non-exempt class, except for correcting a clerical error or reviewing a new trial motion. Noting that the statement of decision incorrectly referenced plaintiff "Janet Dornan," the trial court granted the motion to correct her name to "Doran." As there was no clerical error regarding the dismissal of Doran's claims without prejudice, the trial court declined to change its ruling. With respect to the judgment in favor of NAS, the trial court explained it affected only the exempt class claims and the individual claims of the remaining class representatives for the non-exempt class, not the claims of absent class members in the decertified non-exempt class whose claims were dismissed without prejudice.
On March 14, 2017, we issued an order in which we advised we were considering dismissing the appeal based on NATC's lack of standing as an aggrieved party and directed NATC to file a letter brief setting forth the jurisdictional basis for the appeal. That same day, NATC advised Judge O'Hara that its appeal included "within its scope" the trial court's decision that NATC pay all of his fee and it would post a bond pursuant to section 917.1, staying execution of the trial court's October 20, 2016 decision. NATC stated it would pay Judge O'Hara's current invoice, but would thereafter bond the remainder of his fees pending resolution of the appeal. According to NATC, it decided to post a bond because it was concerned the reference costs would escalate, since plaintiffs had proposed that Judge O'Hara conduct hearings for class member testimony in locations throughout California, with NATC to pay all costs associated with the facilities used for the hearings.
In its April 13, 2017 letter brief in response to our order, NATC argued the October 10, 2016 orders dismissing Doran's claim without prejudice, decertifying the class, and requiring NATC to pay the referee's fees were appealable orders that aggrieved it. On May 3, 2017, we issued an order allowing the appeal to proceed, but advised that nothing in the order precluded the question of standing from being raised in the appeal.
On May 25, 2017, NATC gave notice that it had given a $600 undertaking pursuant to section 917.1, to secure an April 10, 2017 invoice for Judge O'Hara's fees totaling $400 through March 31, 2017.
On August 11, 2017, plaintiffs filed the motion to dismiss the appeal and for sanctions. They also applied to the trial court for an order to show cause why NATC should not be held in contempt for failing to pay the referee. The trial court denied the request, finding that while it had jurisdiction to hear the motion as the order of reference was not an appealable order, NATC could not be in contempt for failing to make payments because the referee had not filed a certification with the court and therefore was not yet able to serve. Until the referee filed the certificate, no payments needed to be made. The trial court nevertheless noted that it appeared NATC was "improperly attempting to prevent the rendering of a final judgment against it by derailing the reference" by refusing to pay the costs and NATC's conduct substantially prejudiced the exempt class members. The trial court made it clear that NATC was ordered to "advance the costs of the reference" by paying the referee's invoices, "subject to its right to contest the reasonableness of the fees as in any non-consensual reference" within 10 days of the invoice date, otherwise contempt proceedings would ensue, and stated that "further misconduct by [NATC] will not be tolerated."
DISCUSSION
"In California, the right to appeal is wholly statutory." (Allabach v. Santa Clara County Fair Assn. (1996) 46 Cal.App.4th 1007, 1010.) To exercise that right, a party must appeal from a statutorily declared appealable judgment or order (§ 904.1) and must be aggrieved by that judgment or order (§ 902). An appellate court lacks jurisdiction to consider an appeal from a nonappealable order or judgment. (Griset v. Fair Political Practices Com'n. (2001) 25 Cal.4th 688, 697.) When an appellate court lacks jurisdiction, it must dismiss the appeal. (Art Movers, Inc. v. Ni West, Inc. (1992) 3 Cal.App.4th 640, 645.)
"Under the one final judgment rule, ' "an appeal may be taken only from the final judgment in an entire action." ' " (In re Baycol Cases I & II (2011) 51 Cal.4th 751, 756 (Baycol).) " ' "The theory [behind the rule] is that piecemeal disposition and multiple appeals in a single action would be oppressive and costly, and that a review of intermediate rulings should await the final disposition of the case." ' " (Ibid.) Our Supreme Court has stated that, "[g]iven the one final judgment rule's deep common law and statutory roots and the substantial policy considerations underlying it," the Court "is reluctant to depart its principles and endorse broad exceptions that might entail multiple appeals absent compelling justification." (Id. at p. 757.) Exceptions to the rule " 'should not be allowed unless clearly mandated.' " (Ibid.)
Plaintiffs correctly point out that there is no final judgment in this case. Therefore, NATC's appeal cannot proceed unless there is an applicable exception to the one final judgment rule. In their motion to dismiss, plaintiffs contend none of the orders from which NATC purports to appeal are in fact appealable and even if appealable, NATC does not have standing to appeal. We discuss each order in turn.
I. The Order Dismissing Janet Doran Without Prejudice
In its statement of decision, the trial court dismissed Janet Doran's claims without prejudice. Plaintiffs argue this order is not appealable because a judgment has not yet been filed. Plaintiffs are wrong.
A dismissal order is appealable as a final judgment when the order complies with section 581d, which provides in part that, "[a]ll dismissals ordered by the court shall be in the form of a written order signed by the court and filed in the action and those orders when so filed shall constitute judgments and be effective for all purposes ...." (italics added). "An involuntary dismissal effected by a minute order signed by the trial court is an appealable order." (Cano v. Glover (2006) 143 Cal.App.4th 326, 328, fn. 1, citing § 581d.) According to our Supreme Court, " 'an order of dismissal is to be treated as a judgment for the purposes of taking an appeal when it finally disposes of the particular action and prevents further proceedings as effectually as would any formal judgment.' " (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 699.) A dismissal without prejudice has the effect of a final judgment in favor of the defendant because it terminates the action and concludes the rights of the parties in that particular action (except that the plaintiff may bring another action on the same cause before expiration of the statute of limitations). (Gagnon Co. v. Nevada Desert Inn (1955) 45 Cal.2d 448, 455.)
An order disposing of the sole cause of action against the parties is appealable when it is not accompanied by either a stipulation of the parties as to future litigation or a waiver of the statute of limitations. (Davis v. Southern California Edison Company (2015) 236 Cal.App.4th 619, 622, fn. 3.) The possibility of a potential future lawsuit does not render the judgment non-appealable. (Ibid.)
Where, as here, the dismissal was entered without prejudice, in the form of a written order signed by the trial court, was involuntary, and disposed of all of Doran's claims, it constitutes a final judgment under section 581d, and is therefore appealable.
II. The Order Decertifying the Non-Exempt Class
NATC also purports to appeal from the order decertifying the non-exempt class. NATC asserts the order is appealable under the "death knell doctrine." NATC also asserts it was aggrieved by the order because (1) the trial court "unambiguously found that none of the evidence at trial supported that NATC had a uniform policy of pressuring members of the non-exempt class to work unreported, unpaid overtime"; (2) plaintiffs, therefore, failed to prove liability under their chosen theory; (3) since the existence of a uniform, consistently applied policy or practice is a prerequisite to relief under the UCL for a class of employees, NATC was entitled to have judgment entered in its favor; and (4) instead of entering judgment, the trial court decertified the non-exempt class and made clear that class members were free to pursue the same claim that just was tried.
"The death knell doctrine, a judicially created exception to the one final judgment rule, treats an order that dismisses class claims while allowing individual claims to survive as an appealable order." (Cortez v. Doty Bros. Equipment Company (2017) 15 Cal.App.5th 1, 8 (Cortez), citing Baycol, supra, 51 Cal.4th at p. 757 [under the "death knell doctrine," when an "order effectively [rings] the death knell for the class claims, [the court] treat[s] it as in essence a final judgment on those claims, which [is] appealable immediately"].) The doctrine is based on two procedural circumstances: (1) the appealed-from order is the practical equivalent of a final judgment for absent class members; and (2) without the incentive of a possible group recovery, the plaintiff may lack the incentive to pursue his or her individual claims to a final judgment, thereby foreclosing appellate review of class issues. (Baycol, supra, 51 Cal.4th at pp. 757-759.)
Under the death knell doctrine, an order terminating class claims is appealable when the order "(1) amounts to a de facto final judgment for absent plaintiffs, under circumstances where (2) the persistence of viable but perhaps de minimis individual plaintiff claims creates the risk no formal final judgment will ever be entered." (Baycol, supra, 51 Cal.4th at p. 759.) Since "[t]he scope of the death knell doctrine is coextensive with its rationale[,]" the doctrine does not apply under circumstances where there is no risk that a named plaintiff might fail to press on until the entry of an appealable final judgment or where it is unnecessary to treat the original order as immediately appealable so as to prevent the trial court's class determinations from ever being reviewable. (Id. at p. 760.)
NATC contends the decertification order is appealable under the death knell doctrine because the decertification of the non-exempt class and dismissal of its members resulted in a final judgment as to the class members while keeping alive the individual claims of some of the named plaintiffs. While this satisfies the first underpinning of the doctrine, the second fundamental underpinning is lacking - the risk that no final judgment will ever be entered. The trial court found there was evidence that supported liability in favor of some individual class members and it was appropriate to have judgment entered in favor of the named plaintiffs who were not dismissed. Therefore, it ordered the referee to consider their claims for restitution of overtime pay for time employed as non-exempt workers. In this circumstance, where the only remaining consideration is the restitution owed the plaintiffs, the plaintiffs remain incentivized to proceed to judgment on their individual claims. (See, e.g., Cortez, supra, 15 Cal.App.5th at p. 8 [death knell exception does not apply when a plaintiff's representative Private Attorney General Act (PAGA) claim remains pending in the trial court following the termination of class claims, as a PAGA plaintiff remains incentivized by the statutory scheme to proceed to judgment on behalf of himself or herself, as well as the individuals he or she represents].) As such, there is no need to treat the decertification order as immediately appealable to prevent the trial court's class determination from never being reviewable.
Thus, we hold that the death knell exception to the one final judgment rule does not apply when the only issues left to be determined on the named plaintiffs' claims are damages or restitution. Accordingly, the order decertifying the class was not appealable under the death knell doctrine.
Since we find the order was not appealable on this basis, we do not reach plaintiffs' argument that a defendant may not appeal a decertification order or that NATC is judicially estopped from contesting the decertification.
III. The Order to Bear the Cost of the Reference
Finally, NATC purports to appeal from the trial court's order requiring it to "bear the cost of the reference" (the cost order). NATC asserts first that the cost order is appealable under the "collateral order doctrine," which is an "exception to the one final judgment rule" codified in Code of Civil Procedure section 904.1. (In re Marriage of Skelley (1976) 18 Cal.3d 365, 368 (Skelley).) Our Supreme Court has explained that "[w]hen a court renders an interlocutory order collateral to the main issue, dispositive of the rights of the parties in relation to the collateral matter, and directing payment of money or performance of an act, direct appeal may be taken. [Citations.]. . . . Such a determination is substantially the same as a final judgment in an independent proceeding." (Ibid.)
Under the test set forth in Skelley, an interlocutory order or judgment is appealable if it: (1) finally determines a collateral issue in the case; and (2) requires "the immediate payment of money, or the performance forthwith of an act." (City of Riverside v. Horspool (2014) 223 Cal.App.4th 670, 683; Skelley, supra, 18 Cal.3d at p. 368.) To satisfy the first element, "the interlocutory order must be a final determination of a matter that is collateral - i.e., distinct and severable - from the general subject of the litigation. [Citations.] The order is deemed final if further judicial action is not required on the matters dealt with by the order." (Koshak v. Malek (2011) 200 Cal.App.4th 1540, 1545.) Thus, there must be " 'no issue . . . left for further consideration except the facts of compliance or noncompliance .... [W]here anything further in the nature of a judicial action on the part of the court is essential to a final determination of the rights of the parties, the decree is [nonappealable].' " (Meehan v. Hopps (1955) 45 Cal.2d 213, 217.)
Here, the order appointing Judge O'Hara as referee is a nonconsensual special reference to ascertain the amounts of individual restitution owed the class members. (Lindsey v. Conteh (2017) 9 Cal.App.5th 1296, 1303 ["A special reference is an appointment to a referee made pursuant to . . . section 639, giving the referee authority to perform certain specified tasks and report a recommendation back to the trial court for independent consideration and further action by the court."].) An order directing a special reference is a nonappealable interlocutory decree because further judicial action is required in approving or disapproving the referee's report. (Yeboah v. Progeny Ventures, Inc. (2005) 128 Cal.App.4th 443, 448; Fallon v. Brittan (1890) 84 Cal. 511, 514; § 644, subd. (b) [in the case of a nonconsensual special reference, "the decision of the referee or commissioner is only advisory. The court may adopt the referee's recommendations, in whole or in part, after independently considering the referee's findings and any objections and responses thereto filed with the court."].)
NATC recognizes that the reference order is not immediately appealable and may only be challenged by extraordinary writ. It asserts, however, that the reference order may be separated from the order that it bear the costs of the reference, which it contends is immediately appealable as a collateral order.
Here, the general subject of the litigation was NATC's liability for overtime. The trial court resolved that issue against NATC and decided a special reference was required to perform the complicated task of determining the restitution owed the class members and that NATC should "bear the cost of the reference" as a matter of public policy based on NATC's failure to pay overtime. The cost order is not " 'distinct and severable' " from the issue of NATC's liability for unpaid overtime and is a necessary step to determining the damages owed the exempt class. (Steen v. Fremont Cemetery Corp. (1992) 9 Cal.App.4th 1221, 1227.) As such, it is distinguishable from orders to pay arbitration costs and granting appellate attorney fees, which have been found to be immediately appealable in part because they are distinct and severable from the subject matter of the underlying litigation. (Apex LLC v. Korusfood.com (2013) 222 Cal.App.4th 1010, 1016 [order granting appellate attorney fees]; Spence v. Omnibus Industries (1975) 44 Cal.App.3d 970, 976 [order requiring plaintiffs to pay arbitration filing fee].)
NATC's reliance on In re Victor Technologies Securities Litigation (9th Cir. 1986) 792 F.2d 862 (Victor), in which the Ninth Circuit Court of Appeals held an order governing class notice procedures was appealable, is misplaced. There, the order was separable from the merits and analysis of the order did not entail the merits of the action. (Id. at p. 864.) Here, however, an analysis of the propriety of the cost order necessarily entails an analysis of the merits of the action.
NATC cites to the Victor court's determination that the plaintiffs there would be irreparably injured were review denied. There, the district court had ordered the plaintiffs to reimburse brokerage houses for the administrative costs of notifying beneficial owners of the class action. The Ninth Circuit found the plaintiffs may not be able to recover those payments from the brokerage houses after final judgment, and recovery would be expensive and time consuming. (Victor, supra, 792 F.2d at p. 864.) In contrast here, should NATC prevail at the reference or on appeal, NATC may be able to recover some or all of the reference costs from plaintiffs, which would be neither time consuming nor expensive. Moreover, NATC may object to the referee's findings, including the cost allocation or the reasonableness of any fee actually charged. (§ 643, subd. (c) [a referee is required to file a report with the court that includes a recommendation on the merits of any disputed issue, a statement of total hours spent and fees charged, and the referee's recommended allocation of payment, to which the parties may object; after reviewing the report and any objections, the court shall "enter appropriate orders"].)
NATC also contends the cost order is appealable as an order granting an injunction. (See § 904.1, subd. (a)(6) [orders granting injunctions are appealable].) "Whether a particular order constitutes an appealable injunction depends not on its title or the form of the order, but on ' "the substance and effect of the adjudication." ' [Citation.] An injunction is defined as 'a writ or order requiring a person to refrain from a particular act.' [Citation.] Injunctions also may command a person to perform a particular act." (PV Little Italy, LLC v. MetroWork Condominium Assn. (2012) 210 Cal.App.4th 132, 142-143.)
Here, the cost order was not a grant of an injunction. Instead, it simply was an order that NATC pay the reference fees as part of the trial court's power to order a nonconsensual reference to determine the restitution to which the class members are entitled. The trial court's later order requiring NATC to "advance the costs of the reference by paying the invoices of the referee, subject to its right to contest the reasonableness of the fees as in any non-consensual reference[,]" within 10 days of the invoice date or be held in contempt does not transform the cost order into an injunction. Orders controlling litigation conduct are not injunctions simply because they require action or inaction from parties or counsel. It is "well established that courts have fundamental inherent equity, supervisory, and administrative powers, as well as inherent power to control litigation before them." (Rutherford v. Owens-Illinois, Inc. (1997) 16 Cal.4th 953, 967; see § 128, subd. (a)(4) & (5) [powers include compelling obedience to the court's "judgments, orders, and process," and controlling the "conduct of . . . persons . . . connected with a judicial proceeding before it ...."].) "In the context of a class action, it is the court's authority and duty to exercise control over the class action to protect the rights of all parties, and to prevent abuses which might undermine the proper administration of justice." (Howard Gunty Profit Sharing Plan v. Superior Court (2001) 88 Cal.App.4th 572, 581.) Characterizing the cost order as an injunction is just a creative way of trying to shoehorn such an order into something otherwise appealable.
In sum, the cost order is not an appealable as either a collateral order or an injunction.
IV. Sanctions
Plaintiffs seek sanctions against NATC for filing a frivolous appeal. (Cal. Rules of Court, rule 8.276(a)(1).) They contend NATC had no legal basis to appeal either the decertification order or cost order. They further contend the appeal from the decertification order was based on an unreasonable reading of the statement of decision that NATC had prevailed on the merits as to the entire non-exempt class, and NATC was appealing the cost order solely to delay and obstruct the reference process.
Plaintiffs cite to California Rules of Court, rule 8.891, as the basis for their sanctions request. That rule, however, applies to civil and misdemeanor appeals in the appellate division. (Cal. Rules of Court, rule 8.880.)
"An appeal taken for an improper motive represents a time-consuming and disruptive use of the judicial process. Similarly, an appeal taken despite the fact that no reasonable attorney could have thought it meritorious ties up judicial resources and diverts attention from the already burdensome volume of work at the appellate courts. Thus, an appeal should be held to be frivolous only when it is prosecuted for an improper motive—to harass the respondent or delay the effect of an adverse judgment—or when it indisputably has no merit—when any reasonable attorney would agree that the appeal is totally and completely without merit." (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650.)
While we have dismissed the appeal from the decertification and cost orders, we cannot say the purported appeal from those orders was necessarily frivolous. NATC presented arguable issues as to their appealability. Moreover, we are mindful that if a judgment or order is appealable, aggrieved parties must file an appeal or forever lose the opportunity to obtain review. (Eisenberg et al., Cal. Practice Guide: Civil Appeals & Writs (2016) ¶ 2:13, pp. 2-13 to 2-14.) We agree with NATC that it could not risk forfeiting review of the orders were they actually appealable. We therefore decline to award sanctions to plaintiffs.
Plaintiffs also assert we should dismiss the appeal under the disentitlement doctrine, under which the appellate court has the inherent power to dismiss an appeal by a party who refuses to comply with a lower court order. (Stoltenberg v. Ampton Investments (2013) 215 Cal.App.4th 1225, 1229-1230.) The doctrine does not apply here, since the trial court declined to find NATC in contempt.
DISPOSITION
We grant plaintiffs' motion to dismiss the appeal from the decertification order and cost order, but deny it as to the appeal from the order dismissing Janet Doran. We deny plaintiffs' motion for sanctions. Plaintiffs shall recover their costs on the motion to dismiss the appeal. NATC's request for judicial notice is granted (Evid. Code, § 452, subd. (d)). The stay issued on September 19, 2017, is hereby lifted and the appeal from the order dismissing Janet Doran shall proceed. Appellant's opening brief is due 30 days from the filing of this opinion.
/s/_________
GOMES, J. WE CONCUR: /s/_________
LEVY, Acting P.J. /s/_________
FRANSON, J.