Clothesrigger, Inc. v. GTE Corp.

• Decision Date: 28 April 1987
• Citation: 191 Cal.App.3d 605,236 Cal.Rptr. 605
• Court: California Court of Appeals Court of Appeals
• Parties: CLOTHESRIGGER, INC., Plaintiff and Appellant, v. GTE CORPORATION et al., Defendants and Respondents. D004758.

Page 605

236 Cal.Rptr. 605

191 Cal.App.3d 605

CLOTHESRIGGER, INC., Plaintiff and Appellant, v. GTE CORPORATION et al., Defendants and Respondents.

D004758.

Court of Appeal, Fourth District, Division 1, California.

April 28, 1987.

Review Denied July 23, 1987.

[191 Cal.App.3d 609]

Milberg, Weiss, Bershad, Specthrie & Lerach, William S. Lerach, Margaret G. Dobies and James A. Mangione, San Diego, for plaintiff and appellant

Reboul, MacMurray, Hewitt, Maynard & Kristol, Mark A. Flagel, Naomi A. Brunner, Los Angeles, Kathleen Janetatos Smith, Howard G. Kristol and William I. Sussman, New York City, for defendants and respondents.

KREMER, Presiding Justice.

Plaintiff Clothesrigger, Inc. appeals an order denying its motion to modify the class definition to certify a nationwide plaintiff class and deeming moot its motion to amend its complaint. We find the superior court did not proceed as required by law in denying Clothesrigger's motion to modify the class. We reverse and remand to the superior court with directions to decide Clothesrigger's motions according to applicable law and proper criteria.

I

In January 1984 Clothesrigger filed a class action complaint for compensatory damages, punitive damages and injunction against defendants GTE Corporation, GTE Sprint Communications Corporation, Southern Pacific Company and Southern Pacific Communications Co. Clothesrigger's complaint alleges causes of action for fraud, negligent misrepresentation and unfair business practices, asserting defendants charge subscribers to their Sprint long distance telephone system for certain unanswered long distance calls without disclosure. The complaint also alleges Clothesrigger seeks to represent a class numbering in the thousands "... composed of all residents of California who subscribed to the long distance telephone service provided by defendants known as Sprint since January 1, 1981, and were charged for one or more long distance calls which were not answered."

In March 1985 after considering the parties' declarations and counsel's argument, the superior court granted Clothesrigger's motion to certify the case to "... be maintained as a class action on behalf of all residents of California who subscribed to the long distance service known as Sprint since January 1, 1981 and who were charged for one or more long distance calls using the Sprint service, which were not answered."

In December 1985 Clothesrigger moved to modify the definition of the certified class to include all Sprint subscribers nationwide since January 1981 who were charged for an unanswered call. Later Clothesrigger filed a motion to amend its complaint to allege Clothesrigger sought to represent such nationwide class "composed of over a million persons."

In May 1986 after hearing, the superior court denied Clothesrigger's motions. The court stated:

"When you consider the totality of the circumstances of this case, I just do not consider a national class to be suitable in this type of case. I mean, you have got your class action for the citizens of California....

"[T]here was a recent case out of the 2nd district [Riley v. Fitzgerald (1986) 178 Cal.App.3d 871, 223 Cal.Rptr. 889] where they had that business of the Texas people, and the 2nd district said, 'Well, look. We are not going to take care of these people in Texas.' I guess what I am telling you is that I have got enough problems in California without worrying about all the citizens of Florida, Kansas and Dokerville, South Dakota, and everything.

"I just have considered the totality of the circumstances of this case, and I do not consider a national class action to be suitable in this case. I have denied it on the merits....

[191 Cal.App.3d 611] "[T]he amendment becomes moot because I faced the issue on the merits, ...

"............................................................................... .

"It just seems to me, when I look at the total picture as they did in the case out of Kansas [Phillips Petroleum Co. v. Shutts (1985) 472 U.S. 797, 105 S.Ct. 2965, 86 L.Ed.2d 628], it just does not make sense to try to bring in the other 49 states into this action."

Referring to Riley v. Fitzgerald, supra, 178 Cal.App.3d 871, 223 Cal.Rptr. 889, the court also said "... it seems to me California has no interest in providing residents of other states greater protection than their home states provide. I mean, why should California take it upon itself to be the savior of the other 49 states of the union? ..."

The court entered an order denying Clothesrigger's motion for modification of class definition and deeming moot Clothesrigger's motion for leave to amend its complaint. Clothesrigger appeals.

II

As in every appellate matter, the threshold issue here is the proper standard of review. The hierarchical process and respective roles of the trial and appellate courts involve more than ceremony. Generally appropriate appellate deference to the trial court will be accomplished by affirming a correct trial court order even though the trial court may have given the wrong reason for its actions. (Davey v. Southern Pacific Co. (1897) 116 Cal. 325, 329, 48 P. 117.) Defendants contend that rule must be applied here since "... the role of this Court is not to review the record to determine whether it would have decided the issue differently but, rather, simply to ascertain whether the Superior Court had any rational basis for what it did," citing DeYoung v. Del Mar Thoroughbred Club (1984) 159 Cal.App.3d 858, 863, 206 Cal.Rptr. 28, as exemplifying the rule. Defendants are in error. Their reliance on DeYoung is also erroneous. DeYoung merely repeats the frequently quoted substantial evidence rule of Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 429, 45 P.2d 183. That rule has nothing to do with the standard of review in this case.

"There are several situations in which the reasons for the trial court's decision are either required by statute or, though not required, may have a significant effect on the determination of the appeal." (9 Witkin, Cal.Procedure (3d ed. 1985) Appeal, § 262, p. 269.) These non-statutory situations involve issues where the appellate focus is on the means used by the trial court. The [191 Cal.App.3d 612] right result is an inadequate substitute for an incorrect process. Thus the appellate scrutiny should be on the reasons expressed by the trial court in the context of counsel's arguments not merely whether the trial court reached a result which can be justified by implication.

Code of Civil Procedure section 382 authorizes a class action suit "... 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 party seeking certification as a class representative must establish the existence of an ascertainable class and a well-defined community of interest among the class members. [Citation.] The community of interest requirement embodies 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. (See Civ.Code, § 1781, subds. (b)(2)-(4).)" (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470, 174 Cal.Rptr. 515, 629 P.2d 23.)

"Reviewing courts consistently look to the allegations of the complaint and the declarations of attorneys representing the plaintiff class to determine if the class is ascertainable and has a well-defined community of interest. [Citations.]" (Lazar v. Hertz Corp. (1983) 143 Cal.App.3d 128, 134, 191 Cal.Rptr. 849.) Although the trial court has great discretion with regard to class certification, its ruling may be reversed where, as here, the court made erroneous legal assumptions or used improper criteria. (Id. at pp. 133-134, 191 Cal.Rptr. 849, citing Richmond v. Dart Industries, Inc., supra, 29 Cal.3d at p. 470, 174 Cal.Rptr. 515, 629 P.2d 23.) In denying Clothesrigger's motion to modify the certified class definition, the superior court did not engage in the analysis required under Phillips Petroleum Co. v. Shutts, supra, 472 U.S. 797, 105 S.Ct. 2965, 86 L.Ed.2d 628, California law regarding class actions and

California choice of law rules. Our focus on correct process requires us to reverse even though there may be substantial evidence to support the court's order

III

A state may constitutionally exercise jurisdiction over the claims of nonresident plaintiffs in a nationwide class action case where the named plaintiff adequately represents the absent class members' interests and the members of the plaintiff class are given adequate notice, the opportunity to be heard and the opportunity to remove themselves from the class. (Phillips Petroleum Co. v. Shutts, supra, 472 U.S. at pp. 811-812, 105 S.Ct. at pp. 2975-76.) To apply its law constitutionally to the claims of nonresident class members, the forum state must have a " 'significant contact or aggregation[191 Cal.App.3d 613] of contacts' to the claims asserted by each member of the plaintiff class, contacts 'creating state interests' in order to ensure that the choice of [forum] law is not arbitrary or unfair." (Id. at pp. 821-822, 105 S.Ct. at p. 2980.)

Defendants contend applying California law to the claims of nonresident plaintiffs would be unconstitutional under Phillips. Clothesrigger contends applying California law would be constitutional because California has a constitutionally sufficient aggregation of contacts with the claims of nonresident plaintiffs consisting of the facts defendants do business in California, defendant Southern Pacific Corporation's principal offices are in California, a significant number of Sprint subscribers are California residents, and defendant GTE Sprint Communications Corporation's employees and agents who prepare advertising and promotional literature for the Sprint service are...