Opinion
B302664
04-20-2021
RUTH CAMPBELL et al., Plaintiffs and Appellants, v. FPI MANAGEMENT, Inc., Defendant and Respondent.
The Law Offices of Alan Himmelfarb, Alan Himmelfarb; Parisi & Havens, David C. Parisi, Suzanne Havens Beckman; and Thomas W. Kielty for Plaintiffs and Appellants. Lewis Brisbois Bisgaard & Smith, Jeffrey A. Miller, Lann G. McIntyre, Jon P. Kardassakis, Michael K. Grimaldi, Jeffrey Scott Ranen and Joshua David Carlon for Defendant and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. BC576604) APPEALS from orders of the Superior Court of Los Angeles County, Daniel J. Buckley, Judge. Appeals dismissed and deemed petitions for writ of mandate. Petitions granted. The Law Offices of Alan Himmelfarb, Alan Himmelfarb; Parisi & Havens, David C. Parisi, Suzanne Havens Beckman; and Thomas W. Kielty for Plaintiffs and Appellants. Lewis Brisbois Bisgaard & Smith, Jeffrey A. Miller, Lann G. McIntyre, Jon P. Kardassakis, Michael K. Grimaldi, Jeffrey Scott Ranen and Joshua David Carlon for Defendant and Respondent.
A group of former tenants of low-income housing units filed a putative class action against FPI Management, Inc., a property management company, alleging FPI had violated federal law by failing to provide at least 30 days' notice before terminating their tenancies for failure to pay rent. The trial court granted class certification of the former tenants' claims for wrongful termination of tenancy and violations of the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.) and the Consumers Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.). The former tenants then filed a fifth amended complaint asserting the same claims on behalf of two additional putative sister classes and moved for class certification of the new claims. After the case was transferred to a different judge, the court denied class certification of the new putative class claims and, upon reconsideration, vacated the prior order certifying the existing class claims. In the rulings class certification of the wrongful termination of tenancy claim was denied or vacated without prejudice.
On appeal the former tenants contend the trial court exceeded its authority in vacating the class certification order made by a different trial judge. As to the merits of the court's rulings, they contend (1) the court erred in finding the UCL claim inherently unmanageable as a class action; and (2) the court improperly considered the merits of the CLRA and wrongful termination of tenancy claims rather than their amenability to class treatment.
We dismiss the appeals for lack of jurisdiction under the death knell doctrine and, upon further briefing, exercise our discretion to deem them petitions for writ of mandate and consider them on their merits. While we find no error in the trial court's consideration of the continued merit of class certification, we agree the trial court considered improper criteria in denying certification of, and decertifying, the class claims. Accordingly, we grant the petitions.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Parties
Ruth Campbell, Jair Campbell, Shelia Handy and Alexis Gray (collectively the Campbell plaintiffs), former tenants of low-income housing units subject to the requirements of the Cranston-Gonzalez National Affordable Housing Act (HOME Act) (42 U.S.C. § 12701 et seq.), filed a putative class action against FPI alleging violations of the UCL, CLRA and a cause of action for wrongful termination of tenancy arising from FPI's failure to give at least 30 days' notice before terminating their tenancies.
The HOME Act provides in part, "An owner shall not terminate the tenancy or refuse to renew the lease of a tenant of rental housing assisted under this title except for serious or repeated violation of the terms and conditions of the lease, for violation of applicable Federal, State, or local law, or for other good cause. Any termination or refusal to renew must be preceded by not less than 30 days by the owner's service upon the tenant of a written notice specifying the grounds for the action. Such 30-day waiting period is not required if the grounds for termination or refusal to renew involve a direct threat to the safety of the tenants or employees" of the rental housing. (42 U.S.C. § 12755(b).)
FPI manages low-income apartment buildings on behalf of property owners. When tenants in FPI-managed low-income housing units failed to pay their rent, FPI issued three-day notices to quit or pay rent pursuant to California law. If the rent was not paid within the three-day notice period, unlawful detainer proceedings were initiated; and the tenants, including the Campbell plaintiffs, lost possession of their low-income housing units. Some of the Campbell plaintiffs lost possession following an unlawful detainer judgment; others surrendered the premises in accordance with agreements entered after unlawful detainer proceedings were initiated. Several, including Ruth Campbell, became homeless.
2. The Motion for Class Certification of a HOME Class
In December 2018 the Campbell plaintiffs, on behalf of a putative class of former tenants who had rented properties subject to the HOME Act requirements and who "during the period December 28, 2011 to the present, were served by FPI with a notice of termination of tenancy term of less than 30 days" (the HOME class), sought certification of three causes of action in their fourth amended complaint: violations of the UCL and CLRA and wrongful termination of tenancy.
On January 25, 2019 the court (Judge Michelle Williams Court) granted the Campbell plaintiffs' motion and certified the class claims. The court rejected most of FPI's arguments as merits-based challenges not before the court on class certification. "Given the relatively straightforward nature of Plaintiffs' theory of recovery," the court ruled, "any supposed individual inquiries raised by [FPI] are substantially predominated by common questions of law and fact." The court also found a class action was a superior means for resolving the dispute, explaining class treatment would allow the court to consider the lawfulness of FPI's uniform three-day notice practice with regard to the HOME class "en masse."
Class notice was approved and provided to members of the HOME class.
3. The Motion for Class Certification Based on Two "Sister Classes"—a Section 8 Class and a Regulatory Class
On January 23, 2019 the Campbell plaintiffs filed a fifth amended complaint adding two putative "sister classes," former tenants of low-income housing units subject to Section 8 of the United States Housing Act of 1937 (42 U.S.C. § 1437f) ("Section 8 class"), and former tenants of low-income housing units subject to publicly recorded federal regulatory agreements between local housing authorities and building owners (the "regulatory class"). Plaintiffs Ruth Campbell and Shelia Handy were alleged to represent both new classes. FPI filed an answer to the fifth amended complaint.
The putative Section 8 class asserted the same claims as the HOME class. The putative regulatory class asserted the same CLRA claim and wrongful termination of tenancy claim but not a UCL cause of action. A "late fee class," which was also identified in the fifth amended complaint, was dismissed at the request of the Campbell plaintiffs prior to filing their class certification motion.
On April 23, 2019 the Campbell plaintiffs moved for certification of class claims on behalf of the putative sister classes. As they did in their motion to certify the HOME class claims, the Campbell plaintiffs provided declarations from the named plaintiffs, among others, and a trial plan that envisioned a three-day bifurcated trial: Part one (one day) would address liability under all three causes of action supported by proof that members of each class received less than 30 days' notice of the termination of their tenancies. Part two (two days) would address "economic damages." The trial plan did not distinguish among causes of action, even though damages are not an available remedy under the UCL, nor did it address the available remedies of restitution and injunctive relief for that cause of action. The trial plan stated the "amount of economic loss/damages" is "direct and straightforward. The declaration of Richard J. Devine [submitted with the Campbell plaintiffs' moving papers] demonstrates that damages are calculated using wholly objective criteria: (1) the rent paid; (2) comparable market rents; and (3) the age of the tenant. The economic damages calculations do not rely on any individual testimony or statistical sampling." Accordingly, the Campbell plaintiffs maintained, the determination of economic damages for every class member will be "a ministerial task."
Although Ruth Campbell and Handy were the putative class representatives for the new classes, they did not distinguish themselves from the other Campbell plaintiffs in their briefing in the lower court when seeking class certification nor have they done so on appeal. Accordingly, and for ease of reference, we continue to refer to the Campbell plaintiffs collectively when addressing the motion for certification of class claims with respect to the putative Section 8 and regulatory classes.
In his supporting declaration Devine, an economist, stated "economic loss" damages would be easily calculated "with only a few data points per tenant. The information needed is (1) the dollar amount of the rent that was being paid by the tenant prior to displacement; (2) the market rent for a comparable apartment in the same general area with comparable amenities that did not have a restricted rent; and (3) the age of the tenant. Once the differential in rent is calculated, the differential may be projected for the number of years that the displaced tenant could reasonably be expected to have maintained occupancy had displacement not occurred. I use a set of five-year increments for the annual differentials and discount the cumulative amounts back to the present value of the date of displacement. If the expected duration of future tenancy was five, ten, or fifteen years (or longer), the economic loss for each of these tenures could be calculated."
FPI opposed the motion, primarily arguing the three-day notices to quit were lawful for defaulting tenants in housing units subject to Section 8 and regulatory agreements. FPI also argued individual issues predominated, as each named plaintiff had different reasons for defaulting on rent. Moreover, any illegality was harmless because each of the named plaintiffs had remained in his or her tenancy for at least 30 days before surrendering his or her unit. Finally, FPI argued the plaintiffs' trial plan was "illogical and unrealistic" in that causation and harm would have to be adjudicated as to each class member, a feat that would require "years to adjudicate" in a case involving potentially thousands of Section 8 class members.
4. The Court's Denial of Class Certification of Claims for the Proposed Sister Classes
Following a hearing, on September 26, 2019 the court (Judge Daniel J. Buckley) denied the motion to certify class claims on behalf of the putative Section 8 and regulatory classes.
a. The UCL claim
While finding the putative Section 8 class was ascertainable and numerous and common questions of law and fact (primarily whether FPI had provided less than 30 days' notice before terminating tenancies and initiating unlawful detainer proceedings) predominated over individual issues, the court denied class certification of the UCL claim on manageability and superiority grounds, ruling the Campbell plaintiffs had failed to demonstrate that class treatment was the superior means for adjudicating a UCL claim for restitution. The court explained the UCL cause of action necessarily required the court to balance the individual equities—including each plaintiff's unclean hands and other potential equitable defenses FPI might assert—in order to fashion an appropriate restitution remedy. However, the plaintiffs' trial plan, with its emphasis on economic damages, a remedy not available under the UCL, was "wholly silent on any methodology for manageability [for] determining a remedy under the UCL. Thus, Plaintiffs' have not met their burden of demonstrating superiority."
b. The CLRA claim
The court denied class certification of the CLRA claim, ruling the CLRA was not applicable to leases of real property.
c. Wrongful termination of tenancy
The court observed the Campbell plaintiffs had provided no law supporting, and California appeared not to recognize, a cause of action for wrongful termination of tenancy. As a result, the court found it lacked a framework to determine whether common questions of law and fact predominated and whether a class action was the superior means for adjudicating the claim. "In an abundance of caution," the court denied certification of this claim "without prejudice" and informed the Campbell plaintiffs they could renew their motion for class certification at a later date with "appropriate supplemental briefing."
5. The Campbell Plaintiffs' Motion for Reconsideration
The Campbell plaintiffs moved pursuant to Code of Civil Procedure section 1008 for reconsideration of the court's ruling denying certification of claims with respect to the putative Section 8 and regulatory classes. They observed the proposed sister classes differed from the already certified HOME class only as to the federal law or regulation that mandated 30 days' notice. The claims were, in every other respect, identical to those that had already been certified for class treatment. Thus, they argued, the court's ruling was inconsistent with the prior ruling certifying the HOME class claims and should be changed.
The Campbell plaintiffs also argued the court's analysis was flawed as to their UCL and wrongful termination of tenancy causes of action. (Their motion for reconsideration did not challenge the court's denial of their request to certify the CLRA cause of action.) As to the UCL claim, the Campbell plaintiffs argued the court had misunderstood their complaint and their trial plan. They were not seeking damages for their UCL claim, but restitution in monetary form because their leaseholds, now occupied by other tenants, cannot be returned. And, to the extent such a remedy required the court to weigh the equities for each individual plaintiff in arriving at an appropriate amount of restitution, that consideration is insufficient to defeat class treatment.
As to the cause of action for wrongful termination of tenancy, the Campbell plaintiffs argued that, despite the label, their claim was really one of wrongful eviction, a cause of action that is recognized under California law. They argued the court erred in elevating the label of the cause of action over the substantive allegations to deny class treatment.
Finally, citing a supporting declaration from their counsel David Parisi, the Campbell plaintiffs argued the issues identified by the court for denying class treatment had not been raised by FPI in their opposition to either certification motion and Judge Court had not considered them when she certified the HOME class claims.
FPI opposed the motion for reconsideration, arguing it provided no new facts or law and was therefore procedurally defective. In addition, FPI argued a wrongful termination of tenancy claim was not cognizable in California; the allegations did not support a claim for wrongful eviction; and no matter how they disguised it, the Campbell plaintiffs were essentially seeking damages for their UCL claim. FPI agreed with the Campbell plaintiffs that the court's ruling was "completely in conflict" with the prior ruling certifying the HOME class claims, but insisted the appropriate action in light of that inconsistency was for the court to use its inherent power to reconsider, decertify or otherwise vacate the prior class certification order with respect to the HOME class.
The trial court granted the Campbell plaintiffs' motion for reconsideration, reevaluated the merits of their arguments and declined to change its ruling denying class certification. Persuaded by the argument of all parties that its ruling was inconsistent with the court's (Judge Court's) prior ruling certifying the HOME class claims, the court declared its intent to use its inherent power to reconsider the prior certification order of the HOME class claims and requested the parties submit further briefing on that issue.
6. The Court's Order Vacating the January 25, 2019 Order Certifying the HOME Class Claims
On January 16, 2020 the court vacated the January 25, 2019 order certifying the HOME class claims.
The Campbell plaintiffs filed timely notices of appeal.
The Campbell plaintiffs filed two notices of appeal: the first from the court's September 26, 2019 order denying certification of the Section 8 and regulatory class claims; the second from the order vacating class certification of the HOME class claims. We consolidated the appeals and requested further briefing as to whether we had appellate jurisdiction under the death knell doctrine in light of the court's rulings denying certification of, and decertifying, the wrongful termination of tenancy claim without prejudice.
DISCUSSION
1. Appealability
The existence of an appealable order or judgment is a jurisdictional prerequisite to an appeal. (Jennings v. Marralle (1994) 8 Cal.4th 121, 126.) Although an order denying class certification of, or decertifying, all class claims is appealable under the death knell doctrine as an exception to the one final judgment rule (see In re Baycol Cases I & II (2011) 51 Cal.4th 751, 757 [when an order "effectively [rings] the death knell for the class claims, [the court] treat[s] it as in essence a final judgment on those claims"]), an order denying class certification without prejudice is not. (See Williams v. Impax Laboratories, Inc. (2019) 41 Cal.App.5th 1060, 1070-1071 ["[a]n order denying or decertifying a class will generally qualify as a death knell order only if it is entered with prejudice"]; Aleman v. AirTouch Cellular (2012) 209 Cal.App.4th 556, 586 [denial of class certification without prejudice is not an appealable order under the death knell doctrine; because denial of class certification without prejudice means the remaining plaintiffs "are free to move for class certification again," "[t]he death knell has not yet sounded"].)
The trial court explained it was denying certification of the wrongful termination of tenancy claim without prejudice as to the putative Section 8 and regulatory classes to allow the Campbell plaintiffs the opportunity to demonstrate such a claim was legally cognizable in California, leaving open the possibility certification would follow if the Campbell plaintiffs were able to demonstrate its legal sufficiency. Although it did not use the words "without prejudice" when it later decertified the HOME class claims, the court's explanation for its ruling indicates that was also true as to the HOME class claim for wrongful termination of tenancy.
Although the trial court suggested to the parties its order decertifying the remaining class claims was an appealable order, its "without prejudice" ruling leaves us without appellate jurisdiction. (See Aleman v. AirTouch Cellular, supra, 209 Cal.App.4th at p. 586; Alch v. Superior Court (2004) 122 Cal.App.4th 339, 360 ["no appeal lies if, after the trial court's order, a viable class claim remains pending in the trial court"].) To alleviate the legal uncertainty raised by the trial court's orders and because we perceive no prejudice or delay would be caused by our intervention at this point, we exercise our discretion to treat the purported appeals as petitions for writ of mandate and consider the merits of both certification orders. (See Olson v. Cory (1983) 35 Cal.3d 390, 401; Cortez v. Doty Bros. Equipment Co. (2017) 15 Cal.App.5th 1, 10.)
In response to our request for supplemental briefing FPI argued there was no ambiguity concerning the appealability of the trial court's orders—they were not appealable. Yet it responded to the Campbell plaintiffs' opening brief by addressing the merits of the orders without raising any question about our jurisdiction to decide the appeal.
2. Governing Law and Standard of Review
Class actions "'serve an important function in our judicial system. By establishing a technique whereby the claims of many individuals may be resolved at the same time, the class suit both eliminates the possibility of repetitious litigation and provides small claimants with a method of obtaining redress for claims which would otherwise be too small to warrant individual litigation.'" (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 473; accord, Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435 (Linder); Ramirez v. Balboa Thrift & Loan (2013) 215 Cal.App.4th 765, 775.)
"Section 382 of the Code of Civil Procedure authorizes a class action 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.' '[The Supreme Court] ha[s] articulated clear requirements for the certification of a class' under this statute. [Citation.] 'The party advocating class treatment must demonstrate the existence of an ascertainably and sufficiently numerous class, a well-defined community of interest, and substantial benefits from certification that render proceeding as a class superior to the alternatives.'" (Noel v. Thrifty Payless, Inc. (2019) 7 Cal.5th 955, 968 (Noel); accord, Brinker Restaurant Corp. v. Superior Court (2014) 53 Cal.4th 1004, 1021 (Brinker).)
"'The community of interest requirement involves three factors: "(1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class."' [Citation.] Regarding the first of these factors, . . . "'if the defendant's liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages.'"'" (Noel, supra, 7 Cal.5th at p. 968; accord, Brinker, supra, 53 Cal.4th at p. 1022.)
To certify a class action "the court must also conclude that litigation of individual issues, including those arising from affirmative defenses, can be managed fairly and efficiently." (Duran v. U.S. Bank National Assn. (2014) 59 Cal.4th 1, 28-29 (Duran); accord, Noel, supra, 7 Cal.5th at p. 968.) "[O]ther considerations relevant to certification 'include the probability that each class member will come forward ultimately to prove his or her separate claim to a portion of the total recovery and whether the class approach would actually serve to deter and redress alleged wrongdoing.'" (Noel, at pp. 968-969.)
"In reviewing a class certification order, our inquiry is 'narrowly circumscribed.'" (Noel, supra, 7 Cal.5th at p. 967.) "Because trial courts are ideally situated to evaluate the efficiencies and practicalities of permitting group action, they are afforded great discretion in granting or denying certification. [Citation.] A certification order generally will not be disturbed unless (1) it is unsupported by substantial evidence, (2) it rests on improper criteria, or (3) it rests on erroneous legal assumptions. [Citation.] Under this standard, an order based upon improper criteria or incorrect assumptions calls for reversal even though there may be substantial evidence to support the court's order." (Id. at p. 968, internal quotation marks omitted; see Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522, 537 ["[a] certification decision is reviewed for abuse of discretion, but when the supporting reasoning reveals the court based its decision on erroneous legal assumptions about the relevant questions, that decision cannot stand"].) "'"We may only consider the reasons stated by the trial court and must ignore any unexpressed reason that might support the ruling."'" (McCleery v. Allstate Ins. Co. (2019) 37 Cal.App.5th 434, 450; accord, Moderaei v. Action Property Management, Inc. (2019) 40 Cal.App.5th 632, 637.)
After a class action is certified, "a trial court retains flexibility to manage the class action, including to decertify a class if 'the court subsequently discovers that a class action is not appropriate.'" (Kight v. CashCall, Inc. (2014) 231 Cal.App.4th 112, 125; see Duran, supra, 59 Cal.4th at pp. 29-30 ["decertification must be ordered whenever a trial plan proves unworkable"].) To prevail on a decertification motion, a party must generally show "'new law or newly discovered evidence showing changed circumstances'" that make continued class treatment improper. (Kight, at p. 125; accord, Williams v. Superior Court (2013) 221 Cal.App.4th 1353, 1360 [decertification request is not an opportunity for a dissatisfied defendant to request a do-over; "'"[i]n the absence of materially changed or clarified circumstances . . . courts should not condone a series of arguments on the class issues"'"].) We review the court's decision to decertify a class for abuse of discretion, giving great deference to the trial court, and may disturb the ruling only upon a finding of a manifest abuse of discretion. (Kight, at p. 125.)
3. The Trial Court Did Not Exceed Its Authority in Reconsidering the Certification Ruling of a Different Judge
Relying on In re Marriage of Oliverez (2015) 238 Cal.App.4th 1242 (Oliverez), the Campbell plaintiffs contend the court (Judge Buckley) exceeded its authority when it reconsidered and vacated the ruling of a different trial judge certifying the HOME class's claims. In Oliverez the family law court denied a motion to enforce a marital settlement agreement, finding the agreement unenforceable. After the case was transferred to a different department for trial, the new judge reconsidered on his own motion the ruling and found it unsupported by substantial evidence. (Id. at p. 1246.) The court vacated the prior ruling, found the marital settlement agreement enforceable and incorporated it into the judgment of dissolution. (Ibid.)
The court of appeal reversed, explaining that, while the trial court had the inherent power as recognized in Le Francois v. Goel (2005) 35 Cal.4th 1094, 1108 (Le Francois) to reconsider its own ruling, it exceeded its authority in reconsidering and vacating the ruling of another judge: "Generally, one trial court judge may not reconsider and overrule an interim ruling of another trial court judge. [Citations.] 'This principle is founded on the inherent difference between a judge and a court and is designed to ensure the orderly administration of justice. . . .' 'For one superior court judge, no matter how well intended, even if correct as a matter of law, to nullify a duly made, erroneous ruling of another superior court judge places the second judge in the role of a one-judge appellate court.'" (Oliverez, supra, 238 Cal.App.4th at p. 1248; accord, In re Alberto (2002) 102 Cal.App.4th 421, 427-428 ["'The Superior Court of Los Angeles County, though comprised of a number of judges, is a single court and one member of that court cannot sit in review on the actions of another member of that same court'"].) The Oliverez court acknowledged exceptions to this rule—when the first judge is unavailable to reconsider the motion, when the facts have changed or when the judge has considered further evidence and law or when there is evidence of inadvertence, fraud or mistake—but explained none of those exceptions was applicable to the case before it. (Oliverez, at pp. 1248-1249.)
The question "when and under what circumstances one judge may revisit a ruling of another judge" was not before the Court in Le Francois. (See Le Francois, supra, 35 Cal.4th at p. 1097, fn. 2 [because the issue is not before us, "we express no opinion on when and under what circumstances one judge may revisit a ruling of another judge"].)
According to the Campbell plaintiffs, the same claims and trial plan Judge Buckley found wanting had been presented to Judge Court; Judge Buckley simply disagreed with her findings as to their adequacy for class treatment, a review that violated Oliverez. However, as acknowledged in Parisi's declaration, the parties had not briefed, and Judge Court had not considered, arguments relating to the legal cognizability of a wrongful termination of tenancy claim or the effect on manageability of equitable defenses with respect to the UCL claim. Consideration of these new issues was at the core of Judge Buckley's ruling.
More fundamentally, the nature of this case as a class action distinguishes Judge Buckley's ruling from that in Oliverez. As discussed, the court retains flexibility after certification of class claims to manage the class action, including decertifying a class if appropriate. (Duran, supra, 59 Cal.4th at p. 28.) In both its opposition to the Campbell plaintiffs' motion for reconsideration and in supplemental briefing ordered by the court, FPI agreed the two certification rulings were inconsistent with each other and urged the court to decertify the HOME class claims. In this specific context Judge Buckley had the authority to consider FPI's decertification request. The Campbell plaintiffs' assertion that decertification was unwarranted goes to the merits of that decision (see generally Williams v. Superior Court, supra, 221 Cal.App.4th at p. 1360), not the court's authority to act.
4. The Court Erred in Decertifying (and Denying Certification of) the UCL Class Claims
In decertifying the HOME class's UCL claim (and denying certification of the same claim on behalf of the putative Section 8 class), the court found common questions of law and fact predominated over individual issues, the class representatives' claim was typical of the class, and the named plaintiffs could adequately represent the class. Nevertheless, the court denied class certification of the UCL claim on superiority and manageability grounds, observing at least some of the named plaintiffs had described different reasons for their failures to pay rent. That was significant, according to the court, because "individual equities," such as the plaintiffs' unclean hands, would have to be balanced and considered in fashioning a restitution remedy.
The court observed that Ruth Campbell had withheld rent based on a bona fide property damage dispute with her landlord while other named plaintiffs, such as Gray, provided no explanation for their failure to pay rent.
Generally, potential affirmative defenses may be considered in determining whether a class claim can be managed fairly and efficiently (Duran, supra, 59 Cal.4th at p. 59), and equitable defenses are properly taken into account in fashioning an equitable remedy under the UCL. (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 179.) Nonetheless, to the extent equitable defenses such as unclean hands could be applicable here, they "may not be asserted to wholly defeat a UCL claim since such claims arise out of unlawful conduct." (Ibid.; see Ticconi v. Blue Shield of California Life & Health Ins. Co. (2008) 160 Cal.App.4th 528, 543 ["Courts have long held that the equitable defense of unclean hands is not a defense to an unfair trade or business practices claim based on a violation of a statute. To allow such a defense would be to judicially sanction the defendant for engaging in an act declared by statute to be void or against public policy"].) Nor is consideration of individual equities at the remedy stage sufficient, without more, to bar class treatment. (Ticconi, at pp. 545-546 ["'Of course, the trial court has the discretion to consider equitable defenses such as unclean hands in creating the remedies authorized by Business and Professions Code section 17203. [Citation.] Such defenses may not be used, however, to wholly defeat the UCL cause of action [citation], and so they may not be used to prevent class certification'"].)
It is difficult to conceive how the reasons for nonpayment affect the UCL claim at all. As alleged, every class member defaulted on the rental obligation; their rental default triggered the three-day notice that is at the center of the claim. The motivation for the default seems irrelevant.
As expressed in the court's order, the court's manageability concern was based largely on the Campbell plaintiffs' erroneous identification in their trial plan of economic damages as the remedy for all their claims when such damages are not authorized under the UCL. (See Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1144 ["[w]hile the scope of conduct covered by the UCL is broad, its remedies are limited" to injunctive relief and restitution; "damages cannot be recovered"].) By focusing on economic damages and not restitution, the court concluded, the Campbell plaintiffs had provided no plan at all for how the remedy portion of the UCL claim would be managed.
The court's observation that the Campbell plaintiffs' trial plan conflated damages, which are not authorized under the UCL, with a prayer for restitution, which is, may well be sound; but it is not sufficient to defeat class certification, particularly here, where the Campbell plaintiffs also sought injunctive relief for this claim, an authorized remedy under the UCL. There is no manageability problem, nor did the court identify one, with granting or denying injunctive relief.
Moreover, the court's focus on individual restitution remedies as a generalized problem of manageability is misplaced. It is well established that individual issues regarding remedies may be decided in a bifurcated proceeding without defeating class treatment. (Cf. Brinker, supra, 53 Cal.4th at p. 1023 [individual itemization of damages will not defeat class certification].) Accordingly, while manageability of the class action is an appropriate criterion for deciding class certification, there was no evidence to support the court's finding that the UCL claim was "uniquely unmanageable." (See generally Noel, supra, 7 Cal.5th at p. 968; Linder, supra, 23 Cal.4th at p. 436.)
5. The Court Erred in Denying Certification of (and Decertifying) the CLRA and Wrongful Termination of Tenancy Claims Based on a Merits Finding Rather Than Class Action Criteria
"'The [class] certification question is "essentially a procedural one that does not ask whether an action is legally or factually meritorious."'" (Brinker, supra, 53 Cal.4th at p. 1023.) "'"In determining the propriety of a class action, the question is not whether the plaintiff or plaintiffs have stated a cause of action or will prevail on the merits, but rather whether the requirements [of class certification] are met."' A class certification motion is not a license for a free-floating inquiry into the validity of the complaint's allegations; rather, resolution of disputes over the merits of a case generally must be postponed until after class certification has been decided [citation] with the court assuming for purposes of the certification motion that any claims have merit." (Id. at p. 1023; see Linder, supra, 23 Cal.4th at pp. 439-440.)
a. The CLRA cause of action
The Campbell plaintiffs contend the court denied class certification of their CLRA cause of action based on an improper evaluation of the merits of that claim. We agree. Although couched in language that the Campbell plaintiffs had not carried their burden to demonstrate common questions of law or fact predominated over individual issues with respect to the CLRA claim, the court's ruling was expressly based on its assessment that the CLRA was inapplicable to the Campbell plaintiffs' leasehold-related claims. That may well prove to be true. (See Berryman v. Merit Property Management, Inc. (2007) 152 Cal.App.4th 1544, 1448 [transactions involving sale or lease of real property do not involve the sale or lease of goods or services to any consumer as contemplated under the CLRA]; McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1488 [CLRA protects consumers against unfair business practices with respect to the sale or lease of goods and services; transactions involving sale of real property are not subject to CLRA].) But at the certification stage, the issue for the court is simply whether the class criteria have been established: the existence of an ascertainable and sufficiently numerous class, a well-defined community of interest and substantial benefits from certification that makes class treatment superior. None of those class criteria is affected, let alone undermined, by the question of the CLRA's applicability, which may be properly considered in motions for summary judgment or judgment on the pleadings. (See Linder, supra, 23 Cal.4th at p. 439 [rejecting argument that preliminary evaluation whether a CLRA cause of action has merit is appropriate in class certification context; such issues are properly resolved in the context of formal pleadings, including demurrer, summary judgment/adjudication and motions for judgment on the pleadings].)
The Campbell plaintiffs assert the CLRA applies because FPI provides management services that fall within the scope of the CLRA.
As discussed, FPI answered the fifth amended complaint prior to the Campbell plaintiffs' motion for certification of the two new sister classes.
b. The wrongful termination of tenancy claim
Quoting from Erica P. John Fund, Inc. v. Halliburton Co. (2011) 563 U.S. 804, 809 ("[c]onsidering whether 'questions of law or fact common to class members predominate' begins, of course, with the elements of the underlying cause of action"), the court found the Campbell plaintiffs' failure to identify the elements of a cause of action for wrongful termination of tenancy, particularly when it appeared no such cause of action existed in California, deprived the court of a framework to consider whether common questions of law or fact predominated over individual issues. Accordingly, the court ruled, the Campbell plaintiffs had failed to carry their burden to demonstrate a community of interest necessary to obtain class certification of this claim with respect to the putative regulatory and Section 8 classes. The court decertified the HOME class wrongful termination of tenancy claim for the same reason.
The Campbell plaintiffs contend that, despite its label, their cause of action was really one for wrongful eviction, as FPI acknowledged when it described it that way in papers opposing class certification (see Nativi v. Deutsche Bank National Trust Co. (2014) 223 Cal.App.4th 261, 293 [recognizing tort cause of action for wrongful eviction]), and argue the court erred in elevating the label over the substance of the cause of action. (See Tomales Bay Oyster Corp. v. Superior Court (1950) 35 Cal.2d 389, 392 ["[t]he nature and character of a pleading, however, is to be determined from its allegations, regardless of what it may be called by the parties"]; Malott v. Summerland Sanitary District (2020) 55 Cal.App.5th 1102, 1110 [same].) FPI, however, asserts a wrongful eviction cause of action requires either a forcible entry or interference with quiet enjoyment (see Bevis v. Terrace View Partners, LP (2019) 33 Cal.App.5th 230, 250), neither of which was pleaded.
We need not weigh into this aspect of the parties' dispute, nor should the trial court have done so. (See Linder, supra, 23 Cal.4th at p. 439 [decision whether to certify a class is not informed by an evaluation of the merits of the proposed class claims].) Although the trial court identified legitimate concerns as to whether the facts support a claim for wrongful eviction and, if not, whether any cause of action for wrongful termination of tenancy exists in California, resolution of those questions, which may be properly raised in dispositive motions directed to the adequacy of pleadings or proof, is not necessary to the determination of class certification. (See id. at p. 440; Brinker, supra, 53 Cal.4th at p. 1025 ["a court generally should eschew" resolution of the merits unless necessary to the class determination].) When, as here, the facts alleged—a uniform policy of using three-day notices to quit or pay rent rather than a 30-day notice of termination of tenancy—require a simple matter of proof common to all plaintiffs, the question of predominance is clear even if the legal merit of the claim is not. (See Brinker, at p. 1033 [allegation that defendant has a uniform policy that violates the law "is by its nature a common question eminently suited for class treatment"]; see also Alberts v. Aurora Behavioral Health Care (2015) 241 Cal.App.4th 388, 406 [in denying class certification the trial court "failed to analyze the proper question—whether plaintiffs had articulated a theory susceptible to common resolution"; that is a different question from whether plaintiffs could ultimately prevail on their claim]; Hall v. Rite Aid Corp. (2014) 226 Cal.App.4th 278, 294 [the issue cashiers were required to stand when performing checkout functions is "subject to common proof whether or not the practice actually violated wage and hour laws; court erred in decertifying class action based on a finding the cause of action failed to state a claim].)
Emphasizing that it was the Campbell plaintiffs' burden, as the parties seeking class certification, to demonstrate common issues predominated (see Arias v. Superior Court (2009) 46 Cal.4th 969, 977, fn. 2; Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906, 913), FPI argues the Campbell plaintiffs' failure to identify the elements of a wrongful termination of tenancy cause of action was fatal to their certification request because it left the court unable to determine which elements of their cause of action, if any, were subject to common proof. (See Brinker, supra, 53 Cal.4th at p. 1024 ["whether an element may be established collectively or only individually, plaintiff by plaintiff, can turn on the precise nature of the element and require resolution of disputed legal or factual issues affecting the merits"].) In denying class certification, however, the court did not reject the Campbell plaintiffs' contention, supported by declarations, that FPI's uniform policy of using three-day notices was subject to common proof, nor did it identify any individual issues that predominated over class issues. Instead, it focused on the dubious nature of the claim itself, both legally and factually. We do not address, let alone take issue with, those observations. We hold only that those matters are properly considered through substantive motions directed to the merits of the cause of action, not in the context of class certification.
The Campbell plaintiffs' request for judicial notice is denied as unnecessary.
In sum, this is not the type of "exceptional case" where a determination of legal sufficiency is necessary to deciding the question of class certification. (See Linder, supra, 23 Cal.4th at p. 443 ["we do not foreclose the possibility that, in the exceptional case where the defense has no other reasonable pretrial means to challenge the merits of a claim to be asserted by a proposed class, the trial court may, after giving the parties notice and opportunity to brief the merits question, refuse class certification because the claim lacks merit as a matter of law"]; Hall v. Rite Aid Corp., supra, 226 Cal.App.4th at pp. 296-297.)
The Campbell plaintiffs' request that we remand the matter to a different trial judge pursuant to Code of Civil Procedure section 170.1, subdivision (c), is denied. (See In re Marriage of Walker (2012) 203 Cal.App.4th 137, 153 ["[o]ur power to direct that a different judge hear the matter on remand should be 'used sparingly and only where the interests of justice require it'"]; Hernandez v. Superior Court (2003) 112 Cal.App.4th 285, 303 [rejecting appellant's request to direct a different trial court hear matter on remand; challenged orders "do not suggest bias or whimsy on behalf of the court, only frustration and a desire to manage a complex case"].)
DISPOSITION
The appeals are dismissed. Deeming the appeals petitions for writ of mandate, the petitions are granted. Let a peremptory writ of mandate issue directing the trial court to (1) vacate its January 16, 2020 order decertifying the HOME class claims; (2) vacate its September 26, 2019 order denying class certification of the Section 8 and regulatory class claims; and (3) issue a new order certifying the Section 8 and regulatory class claims. The Campbell plaintiffs are to recover their costs in this proceeding.
PERLUSS, P. J.
We concur:
FEUER, J
Judge of the Orange County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.