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Easy Cases Can Make Bad Law — Belaire-West Landscape and Discovery in California Wage and Hour Class Actions

May 2008
Executive Compensation, Benefits and Employment Law Focus
Daniel J. Woods

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With the explosion in recent years of broad-based wage and hour litigation targeting employers of all types and sizes, the ability of plaintiffs to obtain pre-certification discovery as to the identity of putative class members has taken a particular importance. The right to discovery of names, addresses and telephone numbers of putative class members has been addressed in several recent California cases.

We are all familiar with the adage that "hard cases make bad law." In the cases regarding the right to discovery of contact information for putative class members, however, the opposite is true. An easy case — Belaire-West Landscape, Inc. v. Superior Court, 149 Cal. App. 4th 554 (2007) — has made bad law because the Court of Appeal opinion omits an important fact that has caused cases following it in both the appellate and trial courts to expand the discovery that should be permitted in wage and hour class action litigation.

This article addresses the cases leading up to Belaire-West, the Belaire-West decision and an unpublished decision issued by the same panel on the same day and cases decided subsequent to Belaire-West.

A. Cases Leading Up to Belaire-West
One of the key cases in the area of discovery in wage and hour class actions is Parris v. Superior Court, 109 Cal. App. 4th 285 (2003). In Parris, plaintiffs filed a lawsuit purporting to represent a class of non-exempt department managers, customer service pros and customer service representatives employed by Lowe's in any of its home improvement centers in California, alleging violations of California's wage and hour laws. Plaintiffs moved the trial court for an order permitting them to communicate with potential class members and for approval of a proposed notice to send to potential class members, providing them with information about the case and the contact information of the lawyers. Plaintiffs also sought an order compelling names and addresses of potential class members who were to be recipients of the proposed notice. The trial court denied both motions without explanation and plaintiffs filed a petition for writ of mandate.

The Second District Court of Appeal began its analysis by addressing the issue of plaintiffs' right to communicate with potential class members and held that judicial approval was not necessary prior to pre-certification communications. Then, the Court addressed whether plaintiffs should be allowed discovery of the names and addresses of potential class members to facilitate such communication. The Court found that "in addition to applying the normal rules governing discovery motions, the trial court must also expressly identify any potential abuses of the class action procedure that may be created if the discovery is permitted and weigh the danger of such abuses against the rights of the parties under the circumstances." Id. at 301. Because the trial court did not balance these interests, the court remanded the case, directing the trial court to "prepare 'a carefully crafted order demonstrating [its] weighing of any abuses or potential abuses against the rights of the parties, including potential class members and the integrity of the litigation process.'" Id. In remanding the case, the Court left open the issue of whether, and under what circumstances, plaintiffs could obtain putative class members' contact information.

In Best Buy v. Superior Court, 137 Cal. App. 4th 772 (2006), a lawyer brought an action in pro per, on behalf of a class, alleging that Best Buy charged an illegal "restocking fee" for returned merchandise. Because a lawyer cannot serve as both class representative and class counsel, the trial court issued an order to show cause why the case should not be dismissed. Plaintiff responded by moving to compel Best Buy to send a notice to all customers who were charged a restocking fee during the class period, for the purpose of discovering a new class representative. The trial court granted plaintiff's motion and ordered Best Buy to send the notice. Best Buy filed a petition for writ of mandate arguing that the proposed notice constituted an improper solicitation, that even if a new plaintiff was found, the lawyer would control the litigation, the order violated judicial ethics and sending the letter would violate the customers' privacy rights. The Fourth District Court of Appeal rejected all of these arguments. The Court did, however, find that the privacy rights of the customers must be protected. To protect the customers' privacy, the Court ordered that the letter should not facilitate direct contact with the lawyer; instead, the lawyer would only be given the identity of those individuals who affirmatively request that it be done (an "opt in" procedure). Id.

In Pioneer Electronics (USA), Inc. v. Superior Court, 40 Cal. 4th 360 (2007), plaintiffs filed a consumer class action on behalf of all persons who purchased the same model of an allegedly defective DVD player. During discovery, plaintiffs sought the names and contact information of approximately 700 to 800 consumers who had filed complaints with the manufacturer regarding the DVD player, for the purpose of facilitating communication with potential class members. Pioneer refused to provide the information, asserting a right to privacy on behalf of the consumers. Plaintiffs moved to compel the information. The trial court granted the motion and ordered that, prior to the disclosure of the contact information, Pioneer must send a letter to all putative class members notifying them of their right to object to disclosure of their contact information. Pioneer petitioned for a writ of mandate. The appellate court issued the writ, ordering an "opt in" procedure similar to that adopted in Best Buy, such that an affirmative letter of consent from the consumer would be required for a waiver of the consumer's right to privacy. Plaintiffs obtained review by the Supreme Court.

In analyzing whether the contact information should be provided to plaintiffs, the Supreme Court evaluated the consumers' right to privacy as measured against the plaintiffs' right to discovery. The Supreme Court found that, although consumers did have a right to privacy in their contact information, it is a limited privacy interest because the information is not particularly sensitive and the consumers had themselves disclosed their identity by virtue of having sent complaints to Pioneer. It also found that discovery of the information was important to ensure fairness to the litigants. The Court explained that if the information was not disclosed, "Pioneer would possess a significant advantage if it could retain for its own exclusive use and benefit the contact information of those customers who complained regarding the product. Were plaintiff also able to contact these customers and learn of their experiences, he could improve his chances of marshalling a successful class action against Pioneer, thus perhaps benefiting some, if not all, those customers." Id. at 374. Thus, after balancing privacy versus the need for discovery, the Court held that the consumers' privacy interest would be adequately protected by sending them a notice of their right to object to the disclosure of the information. Like Best Buy, the Pioneer court found that a consumer's right to privacy is an important consideration that courts must address when deciding whether plaintiffs are entitled to the discovery of contact information of putative class members. The Pioneer court, however, expanded plaintiffs' discovery rights by allowing an "opt out" procedure rather than the "opt in" procedure of Best Buy.

In First American Title Insurance Co. v. Superior Court, 146 Cal. App. 4th 1564 (2007), plaintiff brought a class action on behalf of purchasers of a title insurance policy from First American Title Company ("First American") for property located in California, alleging that First American was involved in an illegal reinsurance kickback scheme. During discovery, plaintiff requested the names and addresses of approximately 38,000 individuals who had received refunds pursuant to a settlement that First American had entered into in response to an investigation by the Colorado Division of Insurance into First American's insurance practices. Prior to serving this discovery, however, plaintiff discovered that he may not have been affected by the alleged title insurance scheme. Thus, plaintiff contended that he needed the sought-after contact information to help "identify a suitable class representative and also lead to potential witnesses to First American's improper rebatings, 'kickback' and/or payment practices." Id. at 1570. First American refused to produce the information and plaintiff moved to compel. First American opposed the motion on the grounds that plaintiff had no standing, and never had standing, and therefore could not use the discovery process to enlist its help in finding a new plaintiff to sue it. Plaintiff admitted that he may not have had standing to sue on behalf of certain members of the class, but argued that he could be a representative "for a class consisting of First American policyholders who have otherwise been harmed by wrongful practices." Id. at 1572. The trial court granted the motion to compel and First American filed a petition for writ of mandate.

The Second District Court of Appeal, using the Parris balancing test, found that allowing a plaintiff who never had standing to use discovery to find an appropriate class representative would be an abuse of the class action procedures that outweighed any right plaintiff had to discovery. Thus, the court issued the writ of mandate. In issuing this decision, the Second District Court of Appeal recognized the danger of allowing discovery of contact information of putative class members when maintenance of the case as a class action was defective for lack of a proper class representative.

B. The Belaire-West Case
Then, in Belaire-West Landscape, Inc. v. Superior Court, 149 Cal. App. 4th 554 (2007), former employees brought a putative class action against Belaire-West, alleging wage and hour violations. During pre-certification discovery, plaintiffs served interrogatories requesting the names, last known addresses and last known telephone numbers of all putative members of the class. Belaire-West refused to produce the information and plaintiffs moved to compel. The trial court granted the motion and ordered Belaire-West to send a notice to all putative class members, informing them of their right to object to the disclosure of their contact information. Belaire-West filed a petition for a writ of mandate on the grounds that the notice sent to the putative class members should require that they affirmatively "opt in" to the disclosure of their contact information. Following Pioneer, which was issued while the Belaire-West petition was pending, the Second District Court of Appeal held that although employees may have a greater expectation of privacy in their personal information than consumers, the "opt out" notice adequately protected their privacy. Id. at 562. The Court thus approved the "opt out" procedure in the context of wage and hour litigation.

Critically, however, the Court of Appeal's opinion does not mention the fact that the case involved employees in only one job position, that of landscaper. Although the Court of Appeal's opinion in Belaire-West does not specify the group of employees of which plaintiffs sought discovery, the trial court's file discloses that the notice approved was for contact information of employees with the position of landscapers. Realizing that the discovery only involved employees in one particular job position makes the decision easy to understand and, based on Pioneer and other prior cases, should have been a relatively easy decision for the Court to reach. Omitting that key fact, however, leaves the opinion subject to expansion by later decisions, in either the appellate courts or trial courts, beyond what may have been intended when the Court of Appeal approved the "opt out" notice procedure for use in that case.

Swissport Corp. v. Superior Court, No. B194691, 2007 WL 1040987, at *1 (Cal. App. 2 Dist. April 9, 2007), is an unpublished decision issued concurrently with Belaire-West and heard by the same Division 7 panel in the Second District. The Swissport plaintiff filed a putative class action, alleging that Swissport failed to provide required meal and rest breaks to him and similarly situated employees. In his original complaint, plaintiff defined the class as all non-exempt employees of defendant employed by its California airport locations at any time between July 25, 2001 and July 25, 2005. In his first amended complaint, he redefined the class as "All Ramp Employees (i.e., cleaners and baggage handlers) of Defendant employed at Defendant's California airport locations who were employed at any of these locations at any time between July 25, 2001 and July 25, 2005." Id. During pre-certification discovery, plaintiff sought the names and contact information of all employees of defendant who worked as aircraft cleaners at Los Angeles International Airport ("LAX"). After a motion to compel, the trial court ordered disclosure of the contact information subject to the employees' right to object to the disclosure following their notification of this right. Plaintiff then sought the contact information of all baggage handlers employed by Swissport who worked at LAX. Swissport refused to disclose the information and plaintiff filed a second motion to compel, which the trial court granted.

Swissport then filed a petition for writ of mandate, arguing that the individuals whose contact information was sought for disclosure were not possibly members of the class because the class representative, who was an aircraft cabin cleaner, could not represent a class of baggage handlers. Swissport argued that the baggage handlers were a distinct group of employees with "different job functions, a distinct supervisory chain and employment experiences unknown to plaintiffs." Id. at *3. Because they were a distinct group, Swissport argued these employees had a heightened privacy interest which shifted the balance away from permitting discovery. Plaintiff, on the other hand, contended that baggage handlers were part of his class definition and baggage handlers and aircraft cleaners were covered by the same employment rules, followed the same time-keeping system and utilized identical timesheets.

The appellate court found that it could not "definitely resolve the class certification question at this pre-certification stage, based on the limited evidence and arguments before us, we cannot say that it is impossible as a matter of law for a putative class representative who is a cabin cleaner to establish the existence of an ascertainable class and a well-defined community of interest among the class members for a class that extends beyond cabin cleaners to other ramp employees, baggage handlers." Id. Further, "Plaintiff's discovery of evidence of common employment practices and a potentially identical meal break violation against the other class of ramp employees is sufficient to permit discovery into the scope and existence of those violations; the baggage handlers may be appropriate members of the class and may also be percipient witnesses to Swissport's meal and break policies." Id. Thus, the Court held that there was no heightened privacy interest and denied the petition for writ.

Because it involved two categories of employees, the Swissport case was slightly more complicated and difficult than the Belaire-West case. The Swissport decision hinted at the potential for plaintiffs to abuse the class action procedure to obtain unwarranted discovery, but avoided fully addressing the issue by finding that employees in two similar job positions may be part of a certifiable class. The Court of Appeal chose to publish only Belaire-West, not Swissport, however.

C. Cases Following Belaire-West
In addition to these cases, the Court of Appeal issued two relevant decisions in January 2008. In the first, Puerto v. Superior Court, 158 Cal. App. 4th 1242 (2008), heard by the same Division 7 panel as Belaire-West and Swissport, eight employees filed suit against Wild Oats, not on a class basis, alleging wage and hour violations. During discovery, each plaintiff served form interrogatories on Wild Oats that included a request that Wild Oats state the name, address and telephone number of each potential witness. Wild Oats responded by identifying as witnesses many or all of the people who were employees during the time plaintiffs were employed by it, between 2,600 and 3,000 individuals and providing their names and positions. Wild Oats, however, refused to disclose the contact information of these people and plaintiffs filed a motion to compel. The trial court granted the motion and instructed the parties to send a letter to all individuals identified by Wild Oats notifying them that if they wanted their contact information disclosed they would need to affirmatively consent to the disclosure. Id. at 1247.

Plaintiffs then filed a petition for writ of mandate. In evaluating whether the "opt in" notice was appropriate, the appellate court balanced the employees' expectation of privacy against the need for the information. The Court found that the employees had a legitimate expectation of privacy as to their contact information, but that interest was limited because the identification of witnesses is a routine part of the discovery process. Thus, when balancing the interests, the Court found that the right to discovery outweighed the limited privacy interest. The Court held that the privacy interest of the employees could be adequately protected by a protective order and, therefore, the use of an opt in letter exceeded the protections necessary to safeguard the employees' privacy interests. Id. at 1259.

In CashCall, Inc. v. Superior Court, 159 Cal. App. 4th 273 (2008), plaintiffs filed a class action alleging that CashCall violated the class members' privacy by secretly monitoring telephone conversations between the class members and CashCall employees. During discovery, plaintiffs realized that all of the named plaintiffs were not class members, because they were not persons whose calls were monitored. Plaintiffs filed a motion for an order compelling CashCall to identify all class members, approximately 551 persons, without first formally requesting discovery of this information. In the motion, plaintiffs stated that they sought the information for the purpose of finding a class representative whose calls were actually monitored. CashCall opposed the motion, arguing that without an appropriate class representative, plaintiffs did not have standing to obtain the discovery. The trial court, finding that the discovery was necessary to protect individuals who may not have known that their conversations were recorded, granted the motion.

CashCall petitioned for a writ of mandate, arguing that allowing the disclosure of the information without a proper plaintiff would be an abuse of class action procedures because it would in effect require CashCall to give plaintiffs' lawyers, without actual clients, standing to continue the class action. The Fourth District Court of Appeal recognized that in certain circumstances, pre-certification discovery could result in abuse of the class action procedures, but the abuse was not present in the case because the lawyers had obtained clients who were actual customers of CashCall and who had suspected that their calls had been monitored. Thus, the court denied the writ.

Perhaps more importantly, trial courts are now handling issues relating to this type of discovery in wage and hour litigation. Plaintiffs' counsel now routinely seek names and contact information for all members of putative classes. Following Belaire-West, trial courts are now regularly allowing such discovery without considering if the putative class is certifiable. Thus, trial courts are ordering employers to produce contact information for all members of a putative class, even where the class is not confined to one or two job positions.

Belaire-West and Swissport compelled disclosure of the contact information of the employees in the putative class following a notice procedure providing the employees with the right to "opt out." Significantly, these cases approved the disclosure for narrow classes. In Belaire-West, the class was a group of landscapers. In Swissport, the notice only went to employees working in two specific positions, airline cleaners and baggage handlers. Unfortunately, the Belaire-West opinion does not say that and the Swissport case is unpublished.

In all of the reported cases where the court compelled the disclosure of the contact information, there was an ascertainable or at least fairly circumscribed class. Although the courts did not specifically focus on this aspect, these cases support the position that courts should not compel disclosure of the identity and contact information of all employees merely because plaintiffs have filed a class action. First American demonstrated the importance of evaluating whether plaintiffs should be allowed discovery of contact information and provided an example of when allowing such discovery would be an abuse of the class action procedure. In Swissport, the court briefly considered whether it would be appropriate to allow discovery of contact information if the class was inappropriate. Although the Swissport court ultimately allowed the discovery, the fact that it considered whether discovery of contact information of employees working in a position other than that of the named plaintiff was proper, demonstrates that the court recognized the potential abuse that may occur when plaintiffs define a putative class which includes employees in job positions other than their own.

Unfortunately, no published decision has addressed the potential abuse of the class action procedure to obtain the contact information of putative class members who may not be appropriate members of the class. The Belaire-West decision has provided courts with authority to allow plaintiffs discovery of contact information of all putative class members in wage and hour cases, regardless of how many employees may be involved, whether plaintiffs' claims are typical of those employees, or whether sufficient commonality exists among the employees to justify their inclusion in the class. Allowing such broad-based discovery not only creates an unnecessary invasion of the employees' right to privacy, but also carries a significant cost to the employer defending the class action. If ordered to provide employee contact information, employers are faced with the daunting task of scouring records to identify the employees, locating their contact information and administering a mass mailing for the purpose of providing the employees with the opportunity to object to the disclosure of their contact information. For employers of tens of thousands of employees, the time and cost of this process can be significant and is currently borne by employers. The benefit of this process, however, is borne by plaintiffs' counsel. Armed with access to as many as all of an employer's workforce, plaintiffs' counsel has the opportunity to contact and solicit grievances from employees — potentially resulting in additional lawsuits against the employer. The straightforward, easy decision in Belaire-West has opened Pandora's box. The bad law it has created has given courts authority to freely grant discovery of employee contact information without doing the careful analysis laid down by the Parris court — resulting in what the Parris court sought to avoid — abuse of the class action procedure.

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