Citizens of Humanity, LLC v. Ramirez

• Decision Date: 19 April 2021
• Docket Number: B299469
• Citation: 63 Cal.App.5th 117,277 Cal.Rptr.3d 501
• Court: California Court of Appeals Court of Appeals
• Parties: CITIZENS OF HUMANITY, LLC, et al., Plaintiffs and Respondents, v. Oscar RAMIREZ et al., Defendants and Appellants.

63 Cal.App.5th 117

277 Cal.Rptr.3d 501

CITIZENS OF HUMANITY, LLC, et al., Plaintiffs and Respondents,

v.Oscar RAMIREZ et al., Defendants and Appellants.

B299469

Court of Appeal, Second District, Division 5, California.

Filed April 19, 2021

California Anti-SLAPP Project and Mark Goldowitz, Berkeley, for Defendants and Appellants Oscar Ramirez and Law Offices of Oscar Ramirez.

Verum Law Group, Sam K. Kim and Yoonis J. Han, Sherman Oaks, for Defendants and Appellants Kevin Mahoney and Mahoney Law Group.

Mahoney Law Group, Kevin Mahoney, Long Beach, and Joshua D. Klein for Defendant and Appellant Ana Jimenez.

Browne George Ross, Peter W. Ross and Charles Avrith, Los Angeles, for Plaintiffs and Respondents.

RUBIN, P. J.

An employee brought a wage and hour class action against her employer. Prior to certification, the action was settled. The employer paid a sum to the employee to resolve her individual claims, and she dismissed the class claims without prejudice, with court approval. Thereafter, the employer brought the current malicious prosecution action against the employee and her counsel. The employee and her counsel each moved to strike the action under the anti-SLAPP law ( Code Civ. Proc., § 425.16 ). The trial court denied the anti-SLAPP motions on the basis that the employer established a prima facie showing of prevailing on its malicious prosecution cause of action. We disagree. As the prior action resolved by settlement, the employer is unable to establish the action terminated in its favor as a matter of law. We therefore reverse and remand for determination of one unadjudicated anti-SLAPP issue, and whether the employee and her counsel are entitled to an award of attorney fees.

FACTUAL AND PROCEDURAL BACKGROUND

1. The Underlying Action

Because we resolve this appeal on the element of favorable termination, we focus our discussion of the underlying action on the facts and procedure relevant to the termination of the action, and omit the substantial history relating to whether it was pursued with probable cause and/or malice.

A. The Complaint

Ana Jimenez was an hourly employee of Oheck, LLC, making clothing for Citizens of Humanity, LLC. In May 2015, Jimenez brought suit against Oheck, Citizens of Humanity, and Eric Kweon (collectively, Oheck) alleging eight causes of action for wage and hour violations.¹ Jimenez brought this action as an individual and on behalf of all other employees similarly situated. She also asserted a claim for civil penalties under the Private Attorney General Act (PAGA; Lab. Code, § 2698 ). Jimenez was represented by attorneys from two different law firms: Kevin Mahoney of Mahoney Law Group, APC; and Oscar Ramirez of Law Offices of Oscar Ramirez, PC.

B. Jimenez Expresses Interest in Settlement

At a case management conference in January 2017, the court opened discovery on class issues only, and directed Jimenez to file her motion for class certification by September 29, 2017.

Jimenez was deposed on April 27, 2017. The parties disputed whether Jimenez was to make herself available for a second day of deposition. At this point, according to Jimenez, she decided she did not want to pursue the case further and instructed her attorneys to attempt to resolve the case.²

C. Initial Settlement Negotiations Are Unsuccessful

The parties agreed to put discovery disputes on hold pending settlement negotiations. May 2017 e-mails between counsel show that both sides were agreeable to a settlement "on an individual basis," which encompassed a payment to Jimenez and a dismissal without prejudice of the class claims. By June 2017, it appeared that the parties’ demands were too far apart, and the case did not settle at this time.

The record does not reflect any further settlement negotiations for approximately five months.

D. Issues Arise Regarding Class Notice and a Motion to Strike Class Allegations

An informal discovery conference was held on October 11, 2017. The parties were ordered to meet and confer regarding outstanding discovery issues, and the court directed that a notice be sent to the prospective class members by November 1, 2017.³ The parties could not agree on the terms of the notice, so, on October 19, 2017, they submitted a joint status report that attached their competing drafts of the notice. While Jimenez believed the court had "ordered" the notice be sent by November 1, 2017, Oheck believed that date was simply "suggested" by the court. Oheck planned to file a motion to strike class allegations, and proposed that the notice be delayed until resolution of its upcoming motion to strike.

On November 7, 2017, Oheck filed its motion to strike the class and PAGA claims, on the basis that Jimenez lacked standing to pursue them. Specifically, Oheck argued that Jimenez did not herself possess any wage and hour claims, so was unfit to be a class representative. Oheck further argued that the complaint could not be amended to find a more appropriate class representative, because Oheck's policies were compliant with the Labor Code, so "individual issues would predominate."

E. The Matter Is Settled

On appeal, Oheck takes the position that, although Jimenez's individual claims were resolved by settlement agreement, the class claims were unilaterally voluntarily dismissed, prompted by Oheck's pending motion to strike the class claims. We therefore set forth the facts surrounding whether the parties’ settlement encompassed the class claims.

The record does not specifically reflect the date when settlement negotiations reopened, but by November 14, 2017, the parties had an agreement on the amount to be paid Jimenez and were working on a draft settlement agreement.

On November 20, 2017, Jimenez filed a "Notice of Settlement of Entire Case." She checked the box indicating that the settlement was conditional, indicating, "The settlement agreement conditions dismissal of this matter on the satisfactory completion of specified terms that are not to be performed within 45 days of the date of the settlement."

F. Oheck Withdraws Its Motion to Strike in Light of the Settlement

On December 4, 2017, Oheck filed a notice of withdrawal of its motion to strike the class claims. Oheck's motion stated that it withdrew the motion, "in light of the filing of Plaintiff's Notice of Settlement of Entire Case on November 20, 2017."

G. The Terms of the Settlement Agreement

The settlement agreement was executed by all parties and counsel between November 30 and December 13, 2017. It provided for Oheck to pay Jimenez $50,000, with $15,000 of the amount to be paid to Jimenez and the remainder to her attorneys. Jimenez would dismiss her individual claims with prejudice and the class claims without prejudice. Dismissal was required before she would receive the settlement check.⁴ Jimenez also released all further claims arising from her employment.

H. Jimenez's Request for Dismissal and Court Approval

On January 4, 2018, Jimenez filed a request for dismissal of class action claims. In it, she sought dismissal of her individual claims with prejudice, and the class and PAGA claims without prejudice.

In language Oheck would later find significant, Jimenez's request, prepared by counsel, stated, "Ultimately, Plaintiff determined it would be in the best interests of the class to dismiss the class allegations and PAGA claims, without prejudice, thereby preserving the individual claims of the putative class members." The document then has a heading reading, "SETTLEMENT OF INDIVIDUAL CLAIMS." The first sentence under that heading reads, "After determining that the best interests of the class would be preserved by dismissing the class allegations and PAGA claims, the parties discussed a settlement of Plaintiff's individual claims."⁵

Dismissal of a class action requires court approval. ( Cal. Rules of Court, rule 3.770(a).) The court requested submission of supplemental evidence demonstrating that the amount of the settlement was fair. On February 15, 2018, Jimenez's counsel submitted a declaration estimating Jimenez's damages at $14,710, comprised of: $4,500 for lost meal and rest breaks; $4,050 for unpaid overtime; $4,000 for inaccurate wage statements; and $2,160 in waiting time penalties. The declaration did not discuss the claims of the class.

On February 26, 2018, the court indicated its approval of the request to dismiss the class claims without prejudice and the individual claims with prejudice. California Rules of Court, rule 3.770(c) provides that if the class action is dismissed prior to certification and/or notice, the action may be dismissed "without notice to the class members if the court finds that the dismissal will not prejudice them." As the court dismissed the class action without prejudice and without notice, it impliedly found the class members would not be prejudiced by the dismissal.

On March 9, 2018, the trial court dismissed the class action without prejudice and Jimenez's individual claims with prejudice.

2. The Current Action

A. The Complaint

On October 19, 2018 – some seven months later – Oheck filed the current action against Jimenez and one of her attorneys (Ramirez) who had represented her in the underlying action. On March 27, 2019, Oheck filed a Doe amendment naming Attorney Mahoney.⁶ The complaint alleged two causes of action. The first, against Jimenez and the attorneys, was for malicious prosecution of the underlying action. The second was against Jimenez alone, seeking sanctions against her under Code of Civil Procedure section 128.5, for allegedly pursuing fraudulent workers’ compensation claims. This latter cause of action is not before us on appeal.

As to malicious prosecution, Oheck alleged each element of the cause of action: First, that the underlying action was pursued without probable cause, as Jimenez had been properly paid all wages and had taken all breaks to which she was entitled; and, further, that Jimenez and her counsel were unaware of any other Oheck employee who had a viable wage and hour claim. Oheck...