Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
APPEAL from a judgment of the Superior Court of San Diego County, Ct. No. GIC868662 Patricia A.Y. Cowett, Judge
McINTYRE, Acting P.J.
Angel Mendoza and Salomon Vasquez (the Plaintiffs) appeal a judgment entered by the superior court after it granted a motion for judgment on the pleadings, on collateral estoppel grounds, in favor of their employer, Mayer Roofing, Inc. (Mayer), as to their class action allegations. The Plaintiffs contend that the superior court erred in concluding that the denial of class action certification in a prior action against Mayer by another set of employees bars them from seeking to certify a class in this action. Because we agree Mayer did not meet its burden to show that the prior denial of class certification bars this proposed class action as a matter of law, we reverse the judgment and remand the matter for further proceedings.
FACTUAL AND PROCEDURAL BACKGROUND
Mayer was a leading residential roofing company in Southern California that employed a large number of roofers and related workers whom it paid on a piecework (or per square) basis. (Diaz v. Mayer Roofing, Inc. (Feb. 23, 2007, E040340) [nonpub. opn.] (Diaz) at p. 4.) The San Diego District Attorney's Office began investigating Mayer for fraudulently classifying its roofers and falsifying their timecards to allow it to pay reduced worker's compensation premiums. (See Diaz, supra, at p. 2.) This resulted in an indictment being filed against a number of Mayer's officers and employees, as well as a series of actions filed against Mayer by its existing and former employees.
1. The Class Actions
A. Diaz v. Mayer
In January 2005, Julian Diaz, Miguel Cordova and certain other of Mayer's former employees filed an action against it in Riverside superior court for (1) unfair competition, (2) failure to pay wages when due, (3) failure to pay overtime, (4) secretly paying less than a designated wage scale, and (5) failure to provide accurate itemized wage statements. (Diaz, supra.) The named plaintiffs moved to certify a class that included "all current and former roofing employees of [Mayer] who, at any time from January 4, 2001 through the present . . .:
"(a) were not provided with adequate wage statements;
"(b) were not paid for all work performed; [or]
"(c) were not paid overtime for work over 8 hours in a day and 40 hours in a week. . . ." (Diaz, supra, at pp. 3-4.)
In April 2006, the superior court denied the class certification motion on the grounds that the common issues of law and fact did not predominate over individual issues, the claims of the named plaintiffs were not typical of the class and the class action mechanism was not superior to individual trials.
B. Roldan v. Mayer
In May 2006, nine other Mayer employees filed a proposed class action against Mayer in San Diego superior court (Roldan v. Mayer Roofing, Inc. (Super. Ct. San Diego County, 2006, No. GIN052872 (Roldan)); the named plaintiffs (who had submitted declarations in support of the motion for class certification in Diaz) were represented by the same counsel who had represented the Diaz plaintiffs. As in Diaz, the Roldan complaint asserted claims for (1) unfair competition, (2) failure to pay wages when due, (3) failure to pay overtime, (4) secretly paying less than a designated wage scale, (5) failure to provide an accurate itemized wage statement; it also asserted claims for (6) failure to provide mandated meal and rest breaks, (7) failure to provide tools or to reimburse employees for use of their personal vehicles for work purposes, (8) retaliation, and (9) entering into construction contracts that did not provide it with adequate funds to enable it to comply with applicable laws relating to its employees.
The Roldan complaint identified as the prospective class all current and former roofers employed by Mayer in the four years preceding its filing and defined the proposed class to include the subclasses specified in Diaz, as well as additional subclasses of those who were not reimbursed for use of their own vehicles for work purposes, certain roofers who were required to purchase their own tools, roofers who were not provided with required meal and rest breaks, roofers who were terminated in retaliation for their participation in the San Diego investigation or the Diaz action and roofers who worked for Mayer on contracts that were inadequately funded.
C. This Action
In July 2006, the Plaintiffs filed this proposed class action against Mayer for failure to pay the legally mandated minimum wage, failure to pay for all of the time worked, failure to pay overtime, failure to properly pay wages to terminated employees or employees who resigned, failure to comply with the applicable requirements for wage statement itemizations and unfair competition. The complaint defined the proposed class to include all of Mayer's California loaders, roofers and other employees in related positions who were paid on a piece rate basis that resulted in them receiving less than the minimum hourly compensation rate mandated by law, with subclasses for those who (a) were paid for less piece work than they actually performed; (b) were not paid overtime wages as required by law; (c) held certain managerial positions but were not paid wages owing at the time of their termination or resignation from the company in accordance with the requirements of Labor Code sections 201 through 203; and (d) were not provided accurate wage statements.
2. Subsequent Procedural Background
The Diaz plaintiffs noticed an appeal from the superior court's ruling denying class certification in that action and in February 2007, the court of appeal affirmed the superior court's decision. After concluding that the plaintiffs' evidence relating to the criminal investigation of Mayer's employer practices was inadmissible (largely because they had not laid the necessary foundation), the appellate court rejected the superior court's finding that the named plaintiffs' claims were not common with, or typical of, those of the proposed class. It nonetheless found that the denial of class certification was appropriate because (1) the plaintiffs' evidence was insufficient to establish that there were a sufficient number of potential class members (and thus failed to establish the numerosity requirement for class action treatment) and (2) the proposed class was defined in such a way that the determination of whether a particular Mayer employee was a member of the class could only be made after the plaintiffs submitted evidence of Mayer's liability to that employee (and thus failed to support the ascertainability requirement for class treatment). (Diaz, supra, at pp. 9-12.)
After the decision in Diaz became final, Mayer moved for judgment on the pleadings as to the class action allegations in Roldan and in this action, arguing the collateral estoppel bar. In June 2007, the superior court granted Mayer's motion in Roldan and a month later, another judge of the same court granted Mayer's motion in this action and dismissed the class action allegations allowing only the Plaintiffs' individual claims to go forward. The Plaintiffs appeal from the resulting judgment in this case.
DISCUSSION
1. General Principles
A. Class Actions
Pursuant to Code of Civil Procedure section 382, a class action may be brought "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[.]" Two requirements must be met in order to sustain any class action: (1) an ascertainable class; and (2) a well defined community of interest among the parties to be represented. (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435.) To establish the requisite community of interest, there must be (1) predominant common questions of law or fact; (2) class representatives who have claims or defenses typical of the class; and (3) class representatives who can adequately represent the class. (Ibid.; Civ. Code, § 1781, subd. (b).)
The decision about whether to certify a class in a particular case is a discretionary matter that demands the weighing of many relevant considerations. (Linder v. Thrifty Oil Co., supra, 23 Cal.4th at p. 435.) "The ultimate question in every case of this type is whether, given an ascertainable class, 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." (Collins v. Rocha (1972) 7 Cal.3d 232, 238.) As the California Supreme Court has recently reiterated, however, wage and hour litigation is particularly appropriate for class action treatment given the limited nature of awards made on an individual basis, the existing disincentives for employees to file suit (i.e., the possibility of retaliation or blackballing) and the fact that many employees may simply be unaware of what the law requires its employer to do and that the employer has violated those requirements. (Gentry v. Superior Court (2007) 42 Cal.4th 443, 457-458.)
B. Collateral Estoppel
Res judicata prohibits the relitigation of claims and issues that were (or might have been) adjudicated in an earlier proceeding. The doctrine has two components, claim preclusion and issue preclusion. The former, which is sometimes referred to as "the primary aspect" of the doctrine of res judicata, bars a second action between the same parties asserting the same causes of action as the earlier proceeding. The latter, known as collateral estoppel, does not bar a second action but precludes a party who brings such an action from relitigating issues that were presented and determined in a prior proceeding. (Border Business Park, Inc. v. City of San Diego (2006) 142 Cal.App.4th 1538, 1563.)
The collateral estoppel component of the doctrine "is an equitable concept based on fundamental principles of fairness." (Sandoval v. Superior Court (1983) 140 Cal.App.3d 932, 941.) For collateral estoppel to apply: (1) the issue sought to be barred must be identical to one that was actually litigated and necessarily decided in the prior proceeding; (2) the decision in the prior proceeding must have been final and on the merits as to that issue; and (3) the party against whom preclusion is sought in the current proceeding must have been a party, or in privity with a party, to the prior proceeding. (Alvarez v. May Dept. Stores Co. (2006) 143 Cal.App.4th 1223, 1233 (Alvarez).) A prior judgment will have collateral estoppel effect as to issues that were raised and resolved therein, notwithstanding that some factual matters or legal arguments that could have been presented were not. (Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193, 1202 (Bufil).)
The party asserting collateral estoppel bears the burden of establishing these requirements. (Pacific Lumber Co. v. State Water Resources Control Bd. (2006) 37 Cal.4th 921, 943.) Meeting this burden, however, does not necessarily mean that the doctrine will apply. (Mooney v. Caspari (2006) 138 Cal.App.4th 704, 717.) Rather, in each case the court must balance the rights of the party to be estopped against the need to apply collateral estoppel in the particular case so as to minimize repetitive litigation, prevent inconsistent judgments that would undermine the integrity of the judicial system or protect against vexatious litigation. (Ibid.; Clemmer v. Hartford Ins. Co. (1978) 22 Cal.3d 865, 875; Alvarez, supra, 143 Cal.App.4th at p. 1233.) The doctrine will not apply if considerations of policy or fairness outweigh its purposes as applied in a particular case or if the party to be estopped did not have a full and fair opportunity to litigate the issue in the prior proceeding. (Zevnik v. Superior Court (2008) 159 Cal.App.4th 76, 82; see also Consumers Lobby Against Monopolies v. Public Utilities Com. (1979) 25 Cal.3d 891, 902.)
Collateral estoppel principles may apply in class action litigation on the issue of whether a class is properly certifiable. (Alvarez, supra, 143 Cal.App.4th at p. 1236; Bufil, supra, 162 Cal.App.4th at pp. 1202-1204; also In re Piper Aircraft Dist. Sys. Antitrust Lit. (8th Cir. 1977) 551 F.2d 213, 218-219.) Specifically, where class certification is denied in an action, collateral estoppel principles may preclude an absent putative member of the proposed class from seeking to have a court certify a similar class in a second action against the same defendant. (Alvarez, supra, 143 Cal.App.4th at p. 1236.)
C. Motions for Judgment on the Pleadings
Like a general demurrer, a motion for judgment on the pleadings tests the sufficiency of the pleading's allegations to state a cause of action. (Wise v. Pacific Gas & Electric Co. (2005) 132 Cal.App.4th 725, 738.) In ruling on such a motion, the court must assume the truth of all factual allegations set forth in the challenged pleading; it may also consider matters for which judicial notice is requested and appropriate (Code Civ. Proc., § 430.30, subd. (a)), including (as relevant here) court records. (Evid. Code, § 452, subd. (d)(1); Cal. Rules of Court, rule 8.1115(b).)
If judicially noticed records from prior litigation show the complaint is barred by collateral estoppel, certain authorities have held that they will provide a basis for granting a motion for judgment on the pleadings as to class action allegations. (See Bame v. City of Del Mar (2001) 86 Cal.App.4th 1346, 1363 [demurrer]; Frommhagen v. Board of Supervisors (1987) 197 Cal.App.3d 1292, 1299.) To succeed on the motion, however, the court records must establish, as a matter of law, that the doctrine of collateral estoppel bars the challenged pleading. (Bame v. City of Del Mar, supra, 86 Cal.App.4th at pp. 1363-1364; Bufil, supra, 162 Cal.App.4th at p. 1202.) We review the superior court's ruling in this case de novo. (Miller v. Campbell, Warburton, Fitzsimmons, Smith, Mendel & Pastore (2008) 162 Cal.App.4th 1331, 1337 [de novo review of a ruling on a motion for judgment on the pleadings]; see Bame v. City of Del Mar, supra, 86 Cal.App.4th at pp. 1363-1364 [similar]; also Jenkins v. County of Riverside (2006) 138 Cal.App.4th 593, 618 [issue of whether collateral estoppel applies is itself a question of law subject to de novo review].)
2. Application of Collateral Estoppel in this Case
As in Diaz, the fundamental underlying issue here is whether the standards for certification of a class of Mayer employees have been met. (See Alvarez, supra, 143 Cal.App.4th at p. 1237 [concluding that the issue asserted in each case was the right to litigate claims as a class action].) However, whether this issue was identical in both cases turns on the definition of the proposed classes and the claims asserted therein. (Bufil, supra, 162 Cal.App.4th at p. 1203; see Alvarez, supra, 143 Cal.App.4th at p. 1237 [holding that the issues in two separate actions seeking class certification are identical if each asserts claims arising out of the same primary right]; also In re Bridgestone/Firestone, Inc., Tires Products (7th Cir. 2003) 333 F.3d 763, 765-766.)
In this action, the Plaintiffs sought to certify a class of roofing employees who Mayer required "to work on a piece rate basis that, in practice, fell below the minimum hourly rate" required by law, essentially alleging that the amount of Mayer's piece rate was insufficient, relative to the time required to do the work, to compensate the roofing employees at the minimum hourly rate required by law. By contrast, the proposed class in Diaz consisted of roofing employees whose time records Mayer altered or falsified or who Mayer required to work "off-the-clock," thus resulting in those employees not getting credit for the amount of time actually worked and not being paid at the minimum hourly rate required by law for that time. Thus, although both actions were based on alleged violations of the same statutory provisions, the misconduct underlying the proposed class claims in each of the actions is, facially, different. As a result, the materials properly considered in connection with Mayer's motion for judgment on the pleadings do not establish, as a matter of law, the identity of issues necessary to support the application of collateral estoppel.
Bufil is illustrative of the point. There, an employee sued her employer for violations of meal and rest break laws and sought to represent a class of employees who were denied a meal break period as a result of (1) being the only employee on shift or (2) supervising a new employee who was the only other employee on shift. (Bufil, supra, 162 Cal.App.4th at p. 1201.) The employer moved for judgment on the pleadings on collateral estoppel grounds based on the denial of class certification in an earlier action brought on behalf of all hourly store employees who were not provided meal or rest breaks mandated by California law, based on the finding that common issues of fact and law did not predominate over individualized issues. (Id. at pp. 1200-1201.) The superior court granted the employer's motion and denied the named plaintiff's concurrent motion for class certification. (Id. at p. 1201.)
The named plaintiff appealed, contending in part that the two proposed classes were not the same and thus the issue presented in the first action was not identical to the issue of whether a class was properly certifiable in her case. The appellate court agreed, indicating that the "obvious narrowing" of the class definition rendered the factual inquiry necessary to resolve the class claims substantially different than that presented in the earlier action. (Bufil, supra, 162 Cal.App.4th at pp. 1203.) It reasoned:
"[i]n this case, [the named plaintiff] proposes a class that on its face attempts to correct flaws identified in the [prior] lawsuit resulting in denial of certification. The trial court here erred in ruling that the class proposed by [the named plaintiff] involved 'the same class problems involving liability' as were implicated in [the prior action], and thus erroneously concluded that issue preclusion should bar her request for class certification. [Citation.]" (Id. at p. 1204.)
As in Bufil, the proposed class definition and class claims in this action have been modified from that used in Diaz in a manner that may eliminate the flaws identified in the appellate opinion in that case, to wit, the numerosity and ascertainability of the proposed classes. For example, defining the proposed class as the Plaintiffs have here, to include all Mayer employees who performed roofing related work and were paid on an inadequate piecework basis, on its face appears to have far broader application (and thus include a larger number of claimants) than the proposed class definition in Diaz, which included only those roofing employees whose records were altered or falsified and thus were not paid as required by law for all of the work performed by them. Similarly, the Plaintiffs' proposed class definition may also provide a class whose membership is more readily ascertainable than that in Diaz. These are matters that the superior court did not address in ruling on Mayer's motion for judgment on the pleadings, but will presumably be asked to rule upon on remand.
Based on the differences in the proposed class definitions, Mayer did not meet its burden to establish as a matter of law that collateral estoppel doctrine applies to bar the class action allegations in this case and thus the superior court erred in granting its motion for judgment on the pleadings as to those allegations. In so concluding, we emphasize that we express no opinion as to whether Mayer will be able to prove, on a motion for summary judgment or at trial, that the Plaintiffs' class action allegations are barred by collateral estoppel.
DISPOSITION
The judgment is reversed and the matter is remanded with directions to the superior court to vacate its decision granting Mayer's motion for judgment on the pleadings and dismissing the Plaintiffs' class action allegations and enter a new order denying that motion and for further proceedings consistent herewith. The Plaintiffs are entitled to recover their costs on appeal.
I CONCUR: AARON, J.
O'Rourke, J., dissenting
I respectfully dissent. I would affirm the trial court's order granting judgment on the pleadings because in my view, plaintiffs in this case should be collaterally estopped as a matter of law by the denial of certification in Diaz v. Mayer Roofing, Inc. (Feb. 23, 2007, E040340) [nonpub. opn.] (Diaz). The Court of Appeal in Diaz affirmed the denial of certification in that case based on the trial court's finding as to superiority: that a class action was not superior to individual trials and would not confer a substantial benefit on both the court and parties, and the case would involve " 'a multitude of mini[-]trials if the matter was certified for class action.' " (Diaz, at p. 10.) The court explained that " '[w]hether or not a particular employee was or was not paid over time [sic], and was or was not paid for all piecemeal work performed, would vary from employee to employee, job site to job site, and would be based on a multitude of factors so that no meaningful generalization could be made.' " (Ibid.)
The Mendoza plaintiffs, like the Diaz plaintiffs, are Mayer roofers and loaders who ultimately were not paid by Mayer for overtime worked or the minimum hourly rate required by law. Diaz identified the class of plaintiffs in that case as "those Mayer roofers who either (1) were not paid overtime, (2) were not paid for all work performed, or (3) were not provided with adequate wage statements." (Diaz, supra, at p. 9.) As the majority acknowledges, both actions are based on violations of the same statute, and while there are some factual differences in the allegations of the Mendoza and Diaz complaints, I perceive no meaningful difference between the identity of the issues presented or the same general misconduct, i.e., failure to pay legally mandated minimum hourly or overtime wages.
"Issue preclusion . . . bars 'successive litigation of an issue of fact or law actually litigated and resolved in a valid court determination essential to the prior judgment,' even if the issue recurs in the context of a different claim. [Citation.] By 'preclud[ing] parties from contesting matters that they have had a full and fair opportunity to litigate,' [claim and issue preclusion] protect against 'the expense and vexation attending multiple lawsuits, conserv[e] judicial resources, and foste[r] reliance on judicial action by minimizing the possibility of inconsistent decisions.' " (Taylor v. Sturgell (2008) ___ U.S. ___ [128 S.Ct. 2161, 2171].) It is well settled that application of collateral estoppel does not depend on the legal theory advanced in the successive lawsuits; a former judgment is collateral estoppel on issues that were raised, even though some factual matters or legal arguments that could have been presented were not. (Johnson v. Glaxosmithkline, Inc. (2008) 166 Cal.App.4th 1497, 1516, citing Interinsurance Exchange of the Auto. Club v. Superior Court (1989) 209 Cal.App.3d 177, 181 & Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193, 1202.)
Under the circumstances, I cannot agree with the majority's analysis, which focuses on factual allegations leading to the same injuries and wrongdoing to the same general class of plaintiffs. Because the issues underlying class certification are the same, I would affirm the order granting judgment on the pleadings.