Collins v. Safeway Stores, Inc.

• Decision Date: 21 November 1986
• Citation: 187 Cal.App.3d 62,231 Cal.Rptr. 638
• Court: California Court of Appeals Court of Appeals
• Parties: Marilyn D. COLLINS, et al., Plaintiffs and Appellants, v. SAFEWAY STORES, INC., et al., Defendants and Respondents. A028572.

Page 638

231 Cal.Rptr. 638

187 Cal.App.3d 62

Marilyn D. COLLINS, et al., Plaintiffs and Appellants, v. SAFEWAY STORES, INC., et al., Defendants and Respondents.

A028572.

Court of Appeal, First District, Division 2, California.

Nov. 21, 1986.

Hoberg, Finger, Brown, Cox & Molligan, Stephen T. Cox, David W. Moyer, Barbara A. Zuras, Dennis C. Birkhimer, San Francisco, for plaintiffs and appellants.

Carr & Mussman, Timothy E. Carr, Lenell Topol, Edward J. McFetridge, Curtis R. Ponzi, St. Clair, Zappettini, McFetridge & Griffin, San Francisco, for defendants and respondents Hayre's Egg Producers, Dennis Hayre and Adrian Francken.

Wood, Chettle, Henrioulle & Maddux, Gary N. Wood, Hayward, for defendant and respondent Safeway Stores, Inc..

BENSON, Associate Justice.

This action is brought by four named plaintiffs on behalf of themselves and other residents of California who, during the period November 1979 through March 1980, had purchased eggs produced by the defendant Hayre's Egg Producers and sold by defendant Safeway Stores, Inc. The named plaintiffs moved to have their proposed class certified. This appeal is from the trial court's order denying their motion to certify the class. We affirm the trial court's decision, and in doing so we hold: (1) that the trial court did not utilize improper criteria in determining the appropriateness of class certification; (2) that the action is without merit; (3) that the proffered economic damage class was not ascertainable; (4) that the device of "fluid recovery" cannot serve as a substitute for proof of the necessary element of damage where there is no probability of any individual class members coming forward and proving their particular damages, and where no public policy is served by utilization of a "fluid recovery" means of distribution.

Factual and Procedural Background

Hayre's is a producer of eggs located in Lathrop, California. During the period November 1979 through March 1980, Hayre's sold Safeway approximately 1.5 million dozen eggs which were then sold by Safeway under the Lucerne brand to California consumers.

In October 1979, Hayre's removed old laying chickens from three of its ten units which supplied eggs to Safeway. Before restocking with new, young chickens, the three units were cleaned by an employee. The employee, without asking or informing anyone at Hayre's, used an insect spray containing chlordane to rid the units of spiders, mites and other pests. Following the clean up, the units were restocked and egg production within the three units resumed.

In March 1980, the Food and Drug Administration ("FDA"), in a routine inspection, discovered traces of chlordane in the eggs and in the chickens in these three units. The eggs produced in these units constituted approximately 20 percent of the eggs sold by Hayre's to Safeway.

Hayre's system of production kept the eggs from different units separate only until the eggs reach the grading and packing area. Once the eggs are processed and are ready to be packaged, they are comingled and can no longer be identified by the unit in which they were produced.

In Safeway stores, eggs produced by Hayre's were stocked with eggs produced by other egg suppliers. During the relevant time period, 20 percent to 30 percent of the eggs sold by Safeway under the Lucerne label were produced by Hayre's. The Lucerne cartons containing Hayre's eggs were stamped with an "M" which identified them as coming from that supplier.

Upon discovering the chlordane contamination, the FDA notified Hayre's which in turn immediately notified its customers, including Safeway. ¹ Since there was no way to identify which eggs came from the three Hayre's units sprayed with chlordane, it was impossible for Safeway to ascertain which eggs produced by Hayre's were contaminated. Safeway, therefore, ordered all Hayre's eggs pulled from the shelves. Safeway cooperated with the media in warning the public not to use eggs from Lucerne cartons marked with an "M" and offered to refund the purchase price of the eggs to any customer who returned a Hayre's carton with that marking. All Hayre's eggs produced during the period November 1979 to March 1980 and remaining in Safeway's stock were then disposed of in hazardous waste dumps.

In their first amended complaint, plaintiffs defined the class they wished to represent as all persons who purchased and/or consumed Lucerne eggs contaminated by chlordane. Discovery revealed Hayre's had comingled its good eggs with the contaminated eggs and there was no way to tell which of the eggs were contaminated. At the motion to certify that class, appellants argued for a class definition that included those who purchased contaminated eggs and also those who purchased Hayre's eggs during the relevant period which were comingled with the contaminated eggs. Because appellants argued for a different class definition than that set forth in the pleadings, the court denied the first motion to certify the class and allowed appellants leave to amend the complaint. Appellants filed a second amended complaint ² amending the class definition and brought a second motion to certify the class. The denial of that second motion is the subject of this appeal.

The class proposed for certification in the second motion consists of two subclasses. Subclass A is defined as all residents of California, who between November 19, 1979 and March 13, 1980, purchased from Safeway and/or consumed, or whose family consumed, Lucerne eggs which had been produced by Hayre's and who thereby suffered economic harm. Subclass B is defined as all persons who ingested said contaminated eggs and who sustained personal injuries as a result.

The trial court denied certification of subclass A on the ground that the class was not ascertainable as an economic class that had suffered an economic loss. The court denied certification of subclass B on the ground that common questions of law and fact did not predominate on those claims arising out of personal injury. Appellants appeal the ruling as to subclass A only.

Appellants urge trial court error in two particulars: First, they contend there was a lack of substantial evidence supporting the court's conclusion that the "economic damage class" was not ascertainable; second, they contend that by considering whether the proposed class would prevail on the merits, the court used improper criteria in determining whether class certification was appropriate. Before addressing these specific contentions we deem it worthwhile to briefly comment on established legal principles particularly relevant to a review of the class certification proceeding before us.

"The class action is a product of the court of equity--codified in section 382 of the Code of Civil Procedure.[ ³ It rests on considerations of necessity and convenience, adopted to prevent a failure of justice." (City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 458, 115 Cal.Rptr. 797, 525 P.2d 701; Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 703-704, 63 Cal.Rptr. 724, 433 P.2d 732.) While the California Supreme Court has acknowledged its "general support of class actions," it has also recognized the "dangers of injustice" which sometimes accompany this type of litigation and "the limited scope within which these suits serve beneficial purposes." (City of San Jose v. Superior Court, supra, 12 Cal.3d at p. 459, 115 Cal.Rptr. 797, 525 P.2d 701; Collins v. Rocha (1972) 7 Cal.3d 232, 238, 102 Cal.Rptr. 1, 497 P.2d 225; Vasquez v. Superior Court (1971) 4 Cal.3d 800, 810, 94 Cal.Rptr. 796, 484 P.2d 964; Daar v. Yellow Cab Co., supra, 67 Cal.2d at p. 713, 63 Cal.Rptr. 724, 433 P.2d 732.) Our Supreme Court " 'has consistently admonished trial courts to carefully weigh respective benefits and burdens and to allow maintenance of the class action only where substantial benefits accrue both to litigants and the courts.' " (Blue Chip Stamps v. Superior Court (1976) 18 Cal.3d 381, 385, 134 Cal.Rptr. 393, 556 P.2d 755; City of San Jose v. Superior Court, supra, 12 Cal.3d at p. 459, 115 Cal.Rptr. 797, 525 P.2d 701; Vasquez v. Superior Court, supra, 4 Cal.3d at p. 810, 94 Cal.Rptr. 796, 484 P.2d 964.) The burden rests with the plaintiff to show that substantial benefits, both to the litigants and to the court, will result from class certification. (City of San Jose v. Superior Court, supra, 12 Cal.3d at p. 460, 115 Cal.Rptr. 797, 525 P.2d 701.)

It is without question that a consumer class action in many circumstances will result in substantial benefit to the parties and the court. "The class action has been held appropriate when numerous parties suffer injury of insufficient size to warrant individual action and when denial of class relief would result in unjust advantage to the wrongdoer [citations]." (Blue Chip Stamps v. Superior Court, supra, 18 Cal.3d at pp. 385-386, 134 Cal.Rptr. 393, 556 P.2d 755.) Among the salutary by-products of the consumer class action are "... [the] therapeutic effect upon those sellers who indulge in fraudulent practices, aid to legitimate business enterprises by curtailing illegitimate competition, and avoidance to the judicial process of the burden of multiple litigation involving identical claims." (Vasquez v. Superior Court, supra, 4 Cal.3d at p. 808, 94 Cal.Rptr. 796, 484 P.2d 964.)

On the other hand it is equally without question that not all multiple consumer cases lend themselves to a class proceeding. Some limiting considerations were described by the Supreme Court in the Blue Chip Stamps case. "A factor in determining feasibility of the group approach is the probability each member will come forward ultimately, identify himself, and prove his separate claim to a portion of the total recovery. [Citation.] [p] However, when potential recovery to the individual is small and when substantial time and expense would be consumed in distribution, the purported class member is unlikely to receive any appreciable benefit. The...