Co-authored by Tim Nelson and Brandon McKelvey

The California Court of Appeal has issued a published decision holding that denial of class certification in one lawsuit may not prevent similar class action claims in a later lawsuit.  On January 18, 2012, in Bridgeford v. Pacific Health Corporation, the court expressly disagreed with a prior Court of Appeal decision from the same district that held collateral estoppel could prevent class actions that are similar to prior cases where class certification was denied.

In Bridgeford, the plaintiffs filed a class action complaint against Pacific Health Corporation and other hospitals and health care entities for various violations of California’s wage and hour laws.  The defendants demurred to the complaint on the grounds that the plaintiffs were collaterally estopped from seeking class certification because class certification was denied in a prior action that involved the same causes of action and subclasses that were similar to those in Bridgeford.  The trial court sustained the defendants’ demurrer in Bridgeford on these grounds and dismissed the plaintiffs’ complaint in its entirety. 

The Court of Appeal reversed, holding that the prior denial of class certification does not bar the claims of absent putative class members in a subsequent suit.  The court relied heavily on a recent United States Supreme Court decision, Smith v. Bayer Corporation, which held that a federal court could not enjoin a state court from considering a plaintiff’s request to approve a class action when a federal court had denied a motion for class certification in a case with similar claims brought by a different plaintiff against the same defendant.  Relying on Smith, the Court of Appeal expressly disagreed with Alvarez v. May Dept. Stores Co., a decision from a Court of Appeal in the same district.  Alvarez held that denial of class certification could collaterally estop absent class members from re-litigating class certification in a subsequent lawsuit.  Reaching the opposite conclusion, the court in Bridgeford held that the denial of class certification cannot establish collateral estoppel against unnamed putative class members on any issue because unnamed putative class members were neither parties to the prior proceeding nor represented by a party to the prior proceeding.

This decision has important implications for employers facing class actions in California.  The holding in Bridgeford will make it harder for employers to rely on the denial of class certification in a prior class action to preclude copy-cat class actions.