Opinion
E040511
4-24-2008
In re ACKNOWLEDGMENT CASES.
The Law Offices of Jon Webster, Jon Webster and Alexandra Seldin for Defendants and Appellants Anthony Alvo and Daniel Fernandez. Rockard J. DelGadillo, City Attorney, Claudia McGee Henry, Senior Assistant City Attorney, and Kim Rodgers Westhoff, Deputy City Attorney, for Plaintiff and Respondent City of Los Angeles.
NOT TO BE PUBLISHED
This appeal presents two issues: Did the trial court abuse its discretion when it denied a petition to certify a collective action pursuant to the Fair Labor Standards Act (29 U.S.C. § 216(b))? If so, did the denial of certification violate due process? Because we conclude that the order is not appealable, however, we need not reach either issue.
FACTUAL AND PROCEDURAL HISTORY
On August 9, 2001, the City of Los Angeles (the city) filed a complaint in San Bernardino County Superior Court for breach of contract, quantum meruit and fraud against Anthony Alvo, a resident of that county, alleging that Alvo was required by the terms of a contract he signed upon his employment as a police officer with the Los Angeles Police Department (LAPD) to reimburse the city $34,000, representing a portion of the cost the city incurred in training Alvo. The contract, referred to in these proceedings as the "acknowledgment," provides that if Alvo left the employ of the LAPD less than 60 months after he completed his training at the Los Angeles Police Academy and was hired by another law enforcement agency within one year after leaving the LAPD, he would be required to repay a prorated portion of the cost of his training at the police academy. Alvo answered the complaint, denying the allegations and asserting affirmative defenses, including the illegality of the acknowledgment. Alvo and Daniel Fernandez filed a cross-complaint and then a first amended cross-complaint, on behalf of themselves and others similarly situated. Fernandez was also a former LAPD officer who had signed the acknowledgment, and the city had threatened him with legal action. However, as of the date of filing the cross-complaint, the city had not yet filed suit against him.
The document is entitled "Acknowledgment of Los Angeles Police Departments Intent To Seek Reimbursement Of Costs Of Basic And Lateral Training, And Agreement To Repay Pro-Rated Costs Of Training." It is authorized by Los Angeles Administrative Code section 4.1700.
The first amended cross-complaint alleged, among other things, that the acknowledgment violates provisions of the Fair Labor Standards Act (FLSA) (29 U.S.C. § 201 et seq.) which prohibit an employer from compelling an employee to refund any portion of his or her wages. (29 U.S.C. §§ 206, 215(a)(2); 29 C.F.R. § 531.35 (2007).) Title 29 United States Code section 216(b) (hereafter section 216(b)) authorizes the filing of a complaint on behalf of the plaintiff and others similarly situated., Alvo and Fernandez sought a declaration that the acknowledgment agreement violated the FLSA, restitution of all back wages and/or sums seized or recovered from those similarly situated to the named cross-complainants, and for liquidated damages according to the statute. Approximately 28 other individuals filed opt-in notices to the cross-complaint.
The cross-complaint asserted additional causes of action; however, this appeal pertains solely to the cause of action for violation of the FLSA.
As it pertains to the issues in this case, section 216(b) provides as follows:
"Any employer who violates the provisions of section 206 or section 207 of [title 29] shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages. . . . An action to recover the liability prescribed in either of the preceding sentences may be maintained against any employer (including a public agency) in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated. No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought. . . ."
In collective actions brought pursuant to the FLSA, employees wishing to be part of the action must opt in, rather than opting out as in most class action suits. (§ 216(b).)
The city filed breach of contract claims in Los Angeles County against four additional defendants. Alvo and Fernandez sought to have all of the lawsuits litigated in a coordinated proceeding in San Bernardino County. (The suit against Alvo was filed in San Bernardino County because he resides there.) The chair of the Judicial Council authorized the presiding judge of the San Bernardino Superior Court to assign a coordination judge. Judge Shahla Sabet was assigned. Judge Sabet ordered coordination of the five cases, and recommended that the cases be tried in Los Angeles County, outside the city limits of the City of Los Angeles. Judge Sabet designated this court as the court for any writ or appellate relief. Judge Sabet also ordered that seven additional "add-on" cases, which had by then been filed, be stayed until a coordination judge had been appointed and had ruled on the appropriateness of coordinating the add-on cases.
Section 404.2 of the Code of Civil Procedure provides that the coordination motion judge shall select the reviewing court having appellate jurisdiction if the actions to be coordinated are within the jurisdiction of more than one appellate court. In contrast, the coordination motion judge merely recommends to the chair of the Judicial Council a particular superior court for trial of the coordination proceedings. (Cal. Rules of Court, rule 3.530(a).)
Judge Daniel Solis Pratt, sitting in Norwalk, was assigned as the coordination judge. Judge Pratt ordered what was by then a total of 34 cases coordinated. However, litigation would proceed only on the original five cases. The remaining cases, and any additional cases filed thereafter, would be stayed pending resolution of the five original cases.
Thereafter, Alvo and Fernandez filed a petition to certify the case as a collective action pursuant to section 216(b). Judge Pratt denied the motion.
Alvo and Fernandez (hereafter defendants) filed a timely notice of appeal from the order denying certification.
THE ORDER DENYING CERTIFICATION AS A COLLECTIVE ACTION IS NOT APPEALABLE
An order denying certification of a class in a class action suit may be appealed immediately under Californias so-called "death knell" doctrine. (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 699.) Denial of certification of a class is "tantamount to a dismissal of the action as to all members of the class other than plaintiff" and, as to those class members, "`prevents further proceedings as effectually as would any formal judgment. [Citations.]" (Ibid.) Moreover, because many class action suits involve claims which are too small to warrant individual litigation, denial of class certification may operate to deprive class members of any remedy. (See Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 469.) Therefore, denial of certification effectively sounds the death knell for the claims of many class members and is considered a final judgment. (Daar v. Yellow Cab Co., supra, at p. 699.) In contrast, an order denying coordination is not appealable because it does not preclude either action from proceeding; rather, each action will proceed in the court in which it is pending. (Lautrup, Inc. v. Trans-West Discount Corp. (1976) 64 Cal.App.3d 316, 317-318.)
The United States Supreme Court rejected the death knell doctrine in federal class action suits, holding, that, "[a]n order refusing to certify, or decertifying, a class does not of its own force terminate the entire litigation because the plaintiff is free to proceed on his individual claim." (Coopers & Lybrand v. Livesay (1978) 437 U.S. 463, 467.)
Here, because the trial court referred to the proposed collective action as "akin" to a class action, defendants contend that the order denying certification is immediately appealable. We are not necessarily persuaded that the death knell rule applies to collective actions under the FLSA. A collective action is similar to a class action in some respects, but it also differs from a class action. (See Early v. Superior Court (2000) 79 Cal.App.4th 1420, 1435, fn. 12 and cases discussed therein.) Additionally, there may be policy considerations in litigation arising under the FLSA which militate against applying the death knell rule in that case. The parties do not address the policies underlying the FLSA in this context, nor do they discuss the similarities and distinctions between class actions and collective actions under the FLSA. We need not make that determination, however, because, even if we assume for the sake of argument that the death knell rule can be applied to an order denying certification of a collective action under the FLSA, we conclude that the order denying certification is not a final judgment under the criteria established in Daar v. Yellow Cab Co., supra, 67 Cal.2d 695.
Whether an order constitutes a final judgment depends upon the legal effect of the order. (Daar v. Yellow Cab Co., supra, 67 Cal.2d at pp. 698-699.) An order denying certification of a class is immediately appealable only if the order is "tantamount to a dismissal of the action as to all members of the class" except the named plaintiff and thus "virtually demolishe[s] the action as a class action," and deprives members of the class other than the named plaintiff of a remedy. (Id. at p. 699.) Defendants contend that denial of certification in this case "terminated the trial court proceedings" for all of the individuals who had attempted to opt in as cross-complainants. This is simply not true. Defendants appear to believe that Judge Pratt dismissed the claims of all of the opt-ins when, at a hearing which took place after he denied the motion for certification, he stated that the individuals who had not been sued by the city are not parties, and that the individuals who had been sued by the city are not parties to the first amended cross-complaint. However, the defendants who had been sued by the city as of that date remained defendants by virtue of the coordination order, and the order did not preclude them from filing cross-complaints for affirmative relief under the FLSA. The coordination order also included any individuals who were sued by the city after that date. As defendants acknowledge, all but two of the individuals who attempted to opt in as cross-complainants were eventually sued by the city. The order therefore did not terminate the trial court proceedings as to the majority of the claimants, so as to amount to a death knell order within the meaning of Daar v. Yellow Cab Co., supra, 67 Cal.2d 695.
We take judicial notice of the complaints filed by the city against 25 of these individuals, as requested by defendants. (Evid. Code, § 452, subd. (d).)
We recognize that defendants argued in the trial court that some individuals may be time-barred from seeking affirmative relief under the FLSA unless they are allowed to join in the original cross-complaint. They did not identify the individuals they claimed would be so affected, and they have not cited to any facts in the record in support of that contention except as to Dustin Kato and Corey Austin. Kato and Austin, who filed opt-in consents, had not been sued by the city as of the date of the coordination order, and they were therefore effectively dismissed from the coordinated actions. In their petition for rehearing, defendants point to facts which tend to show that any claims Kato and Austin had against the city would be time-barred unless they were allowed to join in a collective action. Defendants contend that the order denying certification therefore deprived Kato and Austin of any remedy. However, that is not sufficient to render the courts order a death knell within the meaning of Daar v. Yellow Cab Co., supra, 67 Cal.2d 695. The courts order may have left Kato and Austin out in the cold, but it did not dismiss the action as to the majority of the claimants. Nor did it "virtually demolish[]" the action as a collective action. (Id. at p. 699.) It may have deprived the defendants of some administrative benefits under the FLSA, as defendants assert, but it does not prevent them from asserting their claims, and it does not make it so unduly burdensome for them to do so as to be tantamount to a dismissal of their actions.
Defendants do not raise any issue in their opening brief as to Kato and Austin as distinct from any other of the claimants, maintaining instead that all claimants are similarly situated. If Kato and Austin are the only individuals who filed opt-in notices but were not sued by the city, however, they are not similarly situated with the other claimants, all of whom, according to defendants, were sued by the city and are therefore able to seek relief in the coordinated actions. Whether this distinction might have afforded Kato and Austin any grounds for relief at this juncture is not addressed by defendants.
Finally, we note that despite defendants protests, we do not here hold or imply that the trial court did not err in denying certification. We merely hold that the appeal is premature.
DISPOSITION
The appeal is dismissed. The parties are to bear their own costs on appeal.
We concur:
Ramirez, P.J.
Gaut, J.