Canez v. King Van & Storage, Inc.

• Decision Date: 07 December 2010
• Docket Number: No. BC396040,B216838,BC396040
• Court: California Court of Appeals Court of Appeals
• Parties: FRANK CANEZ et al., Plaintiffs and Appellants, v. KING VAN & STORAGE, INC., Defendant and Respondent.

FRANK CANEZ et al., Plaintiffs and Appellants,

v.KING VAN & STORAGE, INC., Defendant and Respondent.

B216838

No. BC396040

COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

FILED: December 7, 2010

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

APPEAL from a judgment of the Superior Court of the County of Los Angeles, David L. Minning, Judge. Reversed, in part, and remanded with instructions.

Law Offices of Stephen Glick, Stephen Glick, Anthony Jenkins for Plaintiffs and Appellants.

Jeffers, Mangels, Butler & Marmaro, Louise Ann Fernandez, Jon C. McNutt for Defendant and Respondent.

INTRODUCTION

Plaintiffs¹ and appellants (plaintiffs) filed a class action against defendant and respondent King Van & Storage, Inc. (defendant) alleging that defendant, as their employer, did not pay them overtime and other wages due in violation of, inter alia, the Labor Code. The trial court sustained defendant's demurrer to the class claims without leave to amend and granted defendant's motion to strike the class allegations. Both rulings were based on the trial court's determination that the alleged class was not ascertainable. Plaintiffs appeal from the orders sustaining the demurrer and granting the motion to strike.²

We hold that plaintiffs' proposed pleading raised a reasonable possibility that plaintiffs can establish an ascertainable class. We therefore reverse the orders sustaining the demurrer without leave to amend and granting the motion to strike and instruct the trial court to enter new orders sustaining the demurrer and granting the motion, but granting leave to amend to state an ascertainable class.

FACTUAL BACKGROUND³

The individual plaintiffs are nine movers⁴ who were employed by Ruben Urtez, doing business as Urtez Trucking, during the class period.⁵ Plaintiffs and an alleged class of similarly situated movers usually worked more than 40 hours a week and more than 8 to 12 hours a day for Urtez.

Defendant is a large, sophisticated moving company that handles home and commercial moving jobs for United Van Lines. Defendant used Urtez as a "straw man" employer to act as a "buffer" to avoid paying overtime, higher payroll taxes, workers' compensation insurance premiums, and employee benefits. Defendant either directly or indirectly, or through agents or other persons, employed or exercised control over the wages, hours, or working conditions of plaintiffs and the putative class members. For example, defendant required plaintiffs and the putative class members to arrive at certain locations by designated times, wear defendant's uniforms, and abide by defendant's rules and regulations. Defendant also issued its own identification cards to plaintiffs and the putative class members.

The dates and hours plaintiffs and the putative class members worked for defendant and Urtez were recorded on at least two types of forms: a bill of lading for non-warehouse jobs and a warehouse inventory form for United Van Lines warehouse jobs. Defendant was also directly or indirectly involved in creating IRS 1099 forms for plaintiffs and the putative class members that listed Urtez as the payer.

Plaintiffs and the putative class members were paid hourly by defendant and Urtez as non-exempt employees. Defendant failed to compensate plaintiffs and the putative class for the overtime hours they worked, failed to pay them the legal minimum wage, failed to ensure or provide meal breaks, failed to provide accurate wage statements, failed to maintain employment records, and failed to reimburse plaintiffs for out-of-pocket costs they incurred to purchase required uniforms.⁶

PROCEDURAL BACKGROUND

Plaintiffs sued defendant and Urtez, ⁷ doing business as Urtez Trucking, asserting eight causes of action based on wage and hour violations of the Labor Code and related violations of Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.). After filing a first amended complaint, plaintiffs moved for and were granted leave to file a second amended complaint. The second amended complaint asserted 11 causes of action for violations of the Labor Code, the Unfair Competition Law, and the Fair Labor Standards Act (29 U.S.C. §§ 207(a) and 216(b)). The second amended complaint alleged five subclass definitions based on the state and federal statutory violations alleged in the action.

Defendant responded to the second amended complaint by filing a demurrer and motion to strike. The demurrer asserted that the second amended complaint was "uncertain in its entirety in that Plaintiffs fail[ed] to properly define the class ofindividuals they [purported] to represent." The demurrer attacked each cause of action and sought an order sustaining it without leave to amend. The motion to strike asserted that the employees of defendant and Urtez "who would arguably fall within the purported classes are so numerous and their job categories so diverse that the putative classes cannot be reasonably ascertained." The motion sought an order striking all of the class allegations from the second amended complaint.

Plaintiffs did not oppose either the demurrer or motion to strike on the merits. Instead, they lodged a proposed third amended complaint, arguing that it addressed the issues raised by defendant and rendered the demurrer and motion moot. The proposed third amended complaint set forth 18 subclasses, each asserting multiple characteristics for defining the putative class members such as, for example, "all people who (a) worked moving things for [defendant] driving a bobtail truck displaying the name 'King Relocation Services' and/or 'United Van Lines, ' (b) received an IRS Form 1099 issued by any contractor or subcontractor of [defendant], and (c) worked any overtime hours for which he or she was not compensated at the legal overtime rate."

In reply, defendant asserted that the multiple subclasses in the proposed complaint were not ascertainable because, inter alia, they were fail-safe⁸ classes that required aninquiry into the merits to determine class membership. Plaintiffs countered with a surreply that was lodged with the proposed complaint upon which this appeal is based. The proposed complaint defined 14 subclasses and included certain exhibits that, according to plaintiffs, addressed the issues raised by defendant's reply brief.

At the hearing on defendant's demurrer and motion to strike, the trial court stated its tentative ruling as follows: "The tentative is to strike the class allegations. I cannot for the life of me figure out how we can ascertain the members of this class. I have gone through it every which way and this is a case which is complicated because the plaintiff is alleging a duel employment relationship, and in ascertaining the class they really can't use that factor." At the argument, plaintiff suggested that discovery might be necessary. After hearing argument, the trial court ruled that the "demurrer [was] sustained without leave [to amend]" and that the "motion to strike the class [allegations was] granted." The trial court entered a minute order reflecting its oral ruling, from which minute order plaintiffs timely appealed.⁹

DISCUSSION

A. Standard of Review

"A demurrer to class allegations may be sustained without leave to amend only if it is clear '"there is no reasonable possibility that the plaintiffs could establish a community of interest among the potential class members and that individual issues predominate over common questions of law and fact."' (Blakemore v. Superior Court (2005) 129 Cal.App.4th 36, 53 .)... [¶] On review from an order sustaining a demurrer, we exercise our independent judgment on whether a cause of action has been stated as a matter of law. (Tarkington [v. California Unemployment Ins. Appeals Bd. (2009)] 172 Cal.App.4th [1494,] 1502.) '"Our task in reviewing a judgmentof dismissal following the sustaining of... a demurrer is to determine whether the complaint states, or can be amended to state, a cause of action."' (Ibid.; see Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125 [271 Cal.Rptr. 146, 793 P.2d 479].) We will affirm if the trial court's decision was correct on any theory. (Kennedy v. Baxter Healthcare Corp [(1996)] 43 Cal.App.4th [799,] 808 (Kennedy).)" (Gutierrez v. California Commerce Club, Inc. (2010) 187 Cal.App.4th 969, 975-976 (Gutierrez).)

B. Adjudicating Class Suitability at Pleading Stage

Some courts look with disfavor upon determinations on class suitability at the pleading stage, while others hold that the making of such determinations at an early stage in the proceedings is appropriate. For example, in Gutierrez, supra, 187 Cal.App.4th 969, the court explained, "Judicial policy in California has long discouraged trial courts from determining class sufficiency at the pleading stage and directed that this issue be determined by a motion for class certification. '"In order to effect this judicial policy, the California Supreme Court has mandated that a candidate complaint for class action consideration, if at all possible, be allowed to survive the pleading stages of litigation." [Citations.]' (Tarkington, supra, 172 Cal.App.4th at p. 1510.) [¶] The wisdom of permitting the action to survive a demurrer is elementary. '"Class action litigation is proper whenever it may be determined that it is more beneficial to the litigants and to the judicial process to try a suit in one action rather than in several actions.... It is clear that the more intimate the judge becomes with the character of the action, the more intelligently he may make the determination. If the judicial machinery encourages the decision to be made at the pleading stages and the...