If class certification is denied, can a plaintiff’s lawyer simply find a new representative plaintiff, file a new class action, and take another stab at class certification?
This was the situation WinCo Foods faced after defeating class certification in Gales v. WinCo Foods [here], an assistant manager misclassification class action filed in the Northern District of California. Plaintiff’s counsel found new plaintiffs — two individuals who had submitted declarations in the prior class action — and filed a virtually identical class action lawsuit in California state court alleging the same claims, on behalf of virtually the same class.
In the first decision of its kind in the Ninth Circuit, Judge Charles Breyer of the United States District Court for the Northern District of California granted Seyfarth’s early motion to deny class certification under Rule 23 (before any discovery) [here] thereby killing the copycat class action.
So how do you kill a copycat class action?
This is actually harder than you might think. The Supreme Court held in Smith v. Bayer [here], that denial of class certification does not bind absent class members and collateral estoppel does not prevent a different plaintiff from taking another run at trying to certify a class action. Since Smith v. Bayer was decided Judge Posner and a number of other courts have issued decisions affirming the right of different individual plaintiffs to file copycat class actions, leaving defendants faced with the prospect of re-litigating the issue of class certification in virtually identical subsequent class action lawsuits.
In Williams v. WinCo Foods, WinCo took a different approach. With Seyfarth’s help, WinCo removed the case to federal court under the Class Action Fairness Act, transferred it back to the Northern District of California, and related the case back to Judge Breyer, the same judge who denied class certification in the prior class action. Then WinCo immediately filed a motion to deny class certification under Rule 23 prior to the onset of discovery, arguing that the plaintiffs should not be permitted to maintain a copycat class action because extensive discovery had already been conducted in in the prior case on behalf of the same class, regarding the same claims, during the same time period, and therefore, no further discovery was necessary to decide whether the case could proceed as a class action.
Can a court deny class certification prior to discovery?
Although federal courts have discretion to decide class certification on a defendant’s motion, very few courts have denied class certification prior to discovery. Nonetheless, Judge Breyer found that under Rule 23(c), courts have the discretion to deny class certification at the pleadings stage if the plaintiffs fail to make a prima facie showing that discovery would substantiate the class allegations. In what appears to be a first in the Ninth Circuit, Judge Breyer rejected plaintiffs’ request for classwide discovery and granted WinCo’s motion to deny class certification.
Critically, Judge Breyer found that he had “the discretion to consider [his] decision in Gales in ruling on class certification” in a copycat class action. The Court further observed that the “discovery requested by Plaintiffs has generally already been performed in [the prior case],” and therefore, he concluded there was “no reason to permit duplicative [class] discovery.” Based on the evidentiary record in the prior case and his prior order denying class certification, the Court granted WinCo’s motion to deny class certification, thereby killing plaintiffs’ copycat class action for good.
The significance of Williams v. WinCo
There are several key take-aways from the Court’s decision in Williams. First, the case highlights the advantages of removing cases to federal court and transferring venue to get before the same judge who ruled on the prior class action. The Court’s familiarity with the allegations, issues, and evidence enabled it to conclude that no discovery was necessary to decide whether the case could proceed as a class action.
Second, the case establishes that a court may deny class certification under Rule 23(c) prior to any discovery. Class action plaintiffs are not entitled to conduct discovery as a matter of right if there are strong indications that no amount of discovery will enable them to substantiate their class allegations. Courts have the discretion to take judicial notice of the evidence and orders from prior class actions.
Lastly, perhaps the best part of Judge Breyer’s order is at the end where he observes that “what happened in this case aptly illustrates why future copycat suits would be ill-advised. Cf. Moreno v. City of Sacramento, 534 F.3d 1106, 1111 (9th Cir. 2008) (‘Lawyers must eat, so they generally won’t take cases without a reasonable prospect of getting paid.’)”
In no uncertain terms, Williams disapproves of copycat class actions and warns the plaintiffs’ bar to think twice before pursuing them.