Farmers Ins. Exch. v. Superior Court of State

• Decision Date: 01 January 2013
• Docket Number: B246901
• Citation: 159 Cal.Rptr.3d 580,218 Cal.App.4th 96
• Court: California Court of Appeals Court of Appeals
• Parties: FARMERS INSURANCE EXCHANGE, Petitioner and Defendant, v. SUPERIOR COURT of the State of California, County of Los Angeles, Respondent; Audrey Wilson et al., Plaintiffs and Real Parties in Interest.

218 Cal.App.4th 96

159 Cal.Rptr.3d 580

FARMERS INSURANCE EXCHANGE, Petitioner and Defendant,

v. SUPERIOR COURT of the State of California, County of Los Angeles, Respondent;Audrey Wilson et al., Plaintiffs and Real Parties in Interest.

B246901

Court of Appeal, Second District, Division 3, California.

Filed 7/23/2013

See 9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 603.

ORIGINAL PROCEEDINGS in mandate. John Shepard Wiley, Jr., Judge. Petition granted. (Los Angeles County Super. Ct. No. BC371597)

Seyfarth Shaw, George E. Preonas, Andrew M. Paley and Sheryl L. Skibbe; Gibson, Dunn & Crutcher, Theodore J. Boutrous, Jr., Julian W. Poon, Christopher Chorba, Kirsten R. Galler and Neta Levanon, Los Angeles, for Petitioner and Defendant.

No appearance for Respondents.

R. Rex Parris Law Firm, R. Rex Parris, Alexander R. Wheeler, Jacob L. Karczewski and John M. Bickford, Lancaster; Altshuler Berzon, Michael Rubin, Peder J. Thoreen and Matthew J. Murray, San Francisco, for Plaintiffs and Real Parties in Interest.

CROSKEY, J.

The trial court in the instant matter granted a motion for class certification based solely on a single appellate court opinion. Shortly after the class certification motion was granted, the Supreme Court depublished the appellate court opinion on which the trial court had relied. By this time, the 10–day period for the defendant to seek reconsideration of the trial court's order under Code of Civil Procedure section 1008, subdivision (a) had lapsed. The defendant therefore requested that the trial court exercise its discretion under Code of Civil Procedure section 1008, subdivision (c) to reconsider the order granting class certification on its own motion. That subdivision permits a trial court to reconsider its prior order if it determines “there has been a change of law” that warrants reconsideration. In this case, the trial court determined that it was precluded from granting reconsideration on the basis that the Supreme's Court's order depublishing the sole authority on which it had previously relied did not, in fact, constitute a “change of law.”

The defendant sought review by petition for writ of mandate. We issued an order to show cause and will now grant the petition. The Supreme Court's act of depublishing a case on which a prior court order relied can, in fact, constitute a change of law. In this case, where the sole legal basis for the trial court's order was the depublished decision, the depublication order necessarily constituted a change of law.

FACTUAL AND PROCEDURAL BACKGROUND

The instant case was brought against Farmers Insurance Exchange (Farmers) by three of its claims adjusters, alleging, on behalf of a class of claims adjusters employed by Farmers, various violations of the Labor Code, including a failure to pay overtime and a failure to provide meal and rest breaks. The operative complaint is the second amended complaint, filed February 20, 2012. A major issue in the case will be if the plaintiff employees are subject to these requirements of the Labor Code, or if, in the alternative, they are exempt administrative employees.

The complaint seeks to define the class as “all persons who, since May 18, 2003, have been employed, or are currently employed, by [Farmers] in California as a Claims Representative who were paid as exempt employees during the Class Period, as the same are defined pursuant to statute and/or California or federal regulatory determination, and were not included as class members in the Bell v. Farmers Insurance Exchange [ ¹] judgment.”

On March 26, 2012, the plaintiffs moved for certification of the class. ² They argued that class certification was appropriate in this case as all of the putative class members perform (or performed) a finite and uniform grouping of job duties. As such, plaintiffs argued, a court could determine on a class basis whether the class members were exempt administrative employees.

On July 27, 2012, Farmers opposed the motion. Farmers argued that class certification was inappropriate because the job duties performed by members of the purported class varied tremendously. As such, Farmers argued, individual issues predominated over class issues and class certification was therefore inappropriate. Farmers also argued the merits of the exemption issue, taking the position that all of its adjusters were, in fact, exempt. Farmers argued that there was no basis for class certification as there was no common issue regarding liability.

A few days before Farmers filed its opposition, Division One of the Second Appellate District issued its published opinion in Harris v. Superior Court (July 23, 2012, B195121, B195370) (Harris ).³ That opinion held that a class of claims adjusters was appropriately certified and, furthermore, that the members of the class were not exempt. Farmers recognized that Harris had been filed, and mentioned the opinion briefly in its opposition, seeking permission to further address the case in a sur-reply.⁴

On September 28, 2012, plaintiffs filed their reply in support of class certification.⁵ To say that the reply relied heavily on Harris would be an understatement. Plaintiffs argued that Harris was directly on point and controlled the disposition of the class certification motion. Plaintiffs argued that Harris was “controlling law for this Court both on merits and class certification issues.” Plaintiffs categorized Farmers's opposition as simply urging the court “to adopt arguments that the Harris... court has already expressly rejected.”

A petition for review was filed in Harrison September 4, 2012. On October 5, 2012, the day of the hearing on the class certification motion, the parties in the instant matter filed a joint statement setting forth their positions on the issue of whether the trial court should resolve the class certification motion immediately or defer ruling until the Supreme Court had ruled on the petition for review in Harris. Farmers, not surprisingly, requested that the court defer ruling. Plaintiffs disagreed, stating, of Harris, “as long as it remains published the Court is required to follow it....” The trial court ultimately chose to resolve the matter before it, without waiting for the Supreme Court to rule on the petition for review in Harris.

Before the hearing, the court issued its tentative ruling, which stated, in its entirety ⁶: “The class certification motion is granted. [¶] The issue is whether insurance adjusters are exempt. Harris v. Superior Court (2012) 207 Cal.App.4th 1225, 1231, 1233–1248 said no: not exempt. The wage and hour laws apply to them: meal breaks, rest breaks, and all the rest. Farmers dismisses this ‘erroneous analysis' [citation], but this appellate law compels certification. [¶] Harris held that the alleged heterogeneity of the class was no reason to deny class certification. ( Harris v. Superior Court (2012) 207 Cal.App.4th 1225, 1247–1248.) Farmers offers no evidentiary citations to distinguish that holding, which governs.”

At the hearing on the motion, the trial court emphasized that Harris controlled the disposition of the motion. The court stated, “Farmers will have many arguments to make in its appellate attack on my ruling today. It in effect will be an opportunity to weigh in on the July Harris ruling. [¶] So, you've made a complete record here. You can say anything you want now, but I believe my role is severely confined in terms of any kind of legal analysis.” The trial court added that it was aware that Farmers argued that Harris conflicted with other Court of Appeal opinions. The court stated, however, that it would not attempt to resolve that dispute. The court stated, “You know, it's an amusing rule really for a trial court to consider that when there's an argument that there's a conflict between the Court of Appeal and the Court of Appeal, it's some lonesome trial judge somewhere who's supposed to say: Oh, yes, I'm appointed [to] the Supreme Court for temporary purposes here and I will make the call on this. [¶] That is [Auto Equity ].[ ⁷] I'm not persuaded the conflict is so sharp as to require that exercise of supposed authority by me. I'm going to defer to your ability before the Court of Appeal to make an argument to folks who can look at another Court of Appeal opinion and decide whether [it's] impressive or not.”

At one point, the trial court stated, to Farmers's counsel, “I just think it would be akin to trial court insubordination for a case such on all fours, factually speaking, to come down from the Court of Appeal in July and for me to reach some other result on some other ground.” The court continued, “one of the great advantages of living in a society governed by the rule of law is the law is predictable. I think if you asked a hundred objective observers what would a trial court do with an insurance company adjuster class proposal only months after [Harris ], the overwhelming super majority of objective observers would say it would reach the same result. And if it didn't, something smells funny.”

Plaintiffs did not disagree with the court's tentative opinion. However, plaintiffs' counsel did note that the tentative opinion stated, “The issue is whether insurance adjusters are exempt,” when, in fact, the issue was whether the insurance adjusters in this case were exempt, not whether insurance adjusters in general were exempt. The court agreed, and added the word “these” before “adjusters,” before adopting its tentative opinion.⁸

The trial court made its ruling at the October 5, 2012 hearing. On October 24, 2012, the Supreme Court denied the petition for review in Harris, but ordered the opinion not to be officially published. As a result of the depublication order, the Harris opinion could not “be cited or relied on by a court or a party in any other action.” (Cal. Rules of Court, rule 8.1115(a).) Because the trial court had relied heavily on Harris, which could no longer be relied upon, Farmers requested that ...