Linder v. Thrifty Oil Co.

• Decision Date: 26 June 2000
• Docket Number: No. S065501.,S065501.
• Citation: 97 Cal.Rptr.2d 179,2 P.3d 27,23 Cal.4th 429
• Court: California Supreme Court
• Parties: Rochelle C. LINDER, Plaintiff and Appellant, v. THRIFTY OIL CO., Defendant and Respondent.

97 Cal.Rptr.2d 179

23 Cal.4th 429

2 P.3d 27

Rochelle C. LINDER, Plaintiff and Appellant, v. THRIFTY OIL CO., Defendant and Respondent.

No. S065501.

Supreme Court of California.

June 26, 2000.

As Modified August 9, 2000.

Daar & Newman, Jeffery J. Daar and David Daar, Los Angeles, for Plaintiff and Appellant.

Chavez & Gertler, Mark A. Chavez, Mill Valley; The Sturdevant Law Firm, James C. Sturdevant, Steven S. Kaufhold, San Francisco; Bruce A. Broillet; David S. Casey, Jr., San Diego; Deborah David, Los Angeles; Douglas Devries, Sacramento; Laurence E. Drivon, San Joaquin; Thor Emblem, Escondido; Joseph F. Harbison III, Sacramento; Ian Herzog, Santa Monica; Steven J. Keifield; Harvey R. Levine; Moses Lebovits, Los Angeles; Wayne McClean, Woodland Hills; Mark P. Robinson, Jr., Newport Beach; David A. Rosen, Los Angeles; Leonard Sacks, Granada Hills; Daniel Smith, Los Angeles; Chris Spagnoli; Robert B. Steinberg, Los Angeles; Tony Tanke, San Mateo; Lea-Ann Tratten; Rick Simons; Thomas G. Stolpman, Long Beach; William D. Turley; and Roland Wrinkle, Woodland Hills, for Consumer Attorneys of California as Amicus Curiae on behalf of Plaintiff and Appellant.

Bird, Marella, Boxer, Wolpert & Matz, Ronald J. Nessim, Mark T. Drooks, Thomas R. Freeman and Thomas V. Reichert, Los Angeles, for Defendant and Respondent.

Thomas & Walton, John R. Walton; Daniel J. Popeo and Richard A. Samp, for Washington Legal Foundation as Amicus Curiae on behalf of Defendant and Respondent.

Fred J. Hiestand, Sacramento, for the Association for California Tort Reform as Amicus Curiae on behalf of Defendant and Respondent.

Riordan & McKinzie, Kenneth Klein, Gina M. Calvelli and Karen Meckstroth, Los Angeles, for Union Oil Company of California, doing business as Unocal, and California Retailers Association as Amici Curiae on behalf of Defendant and Respondent.

BAXTER, J.

The trial court below denied certification of this case as a class action. The Court of Appeal affirmed. We granted review to consider several questions. First, may certification of a proposed class be denied based upon a trial court's preliminary assessment that the cause of action alleged on behalf of the class lacks sufficient merit? Second, was adequate consideration given to the possible benefits of class action in this case? Third, did the Court of Appeal properly conclude that the aggregate amount of potential statutory penalties would be either too small or too onerous to support certification of a class?

We conclude that the answer to each of the foregoing questions is no. Accordingly, we reverse the judgment of the Court of Appeal with directions to remand the matter to the trial court for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Rochelle C. Linder (Linder) filed this action on behalf of herself and all others "similarly situated." According to Linder, defendant Thrifty Oil Co. (Thrifty) violated two provisions of the Song-Beverly Credit Card Act of 1971 (Civ.Code,¹ § 1747 et seq.) (the Credit Card Act) and committed other unfair business practices. She seeks injunctive relief, money damages, statutory treble damages and civil penalties.

After Thrifty answered the second amended complaint, Linder moved to certify the case as a class action with two plaintiff classes. The first class, "the surcharge class," consists of more than 1,000,000 California residents who, by using credit cards between May of 1992 and May of 1995 to purchase gas at over 200 Thrifty service stations in California, were compelled to pay an allegedly illegal surcharge of roughly 4 cents per gallon more than customers paying in cash. (See § 1748.1.) The second class, "the penalty class," is comprised of numerous individuals who used their credit cards to make purchases at approximately 80 Thrifty service stations that allegedly violated the law by using credit card forms with a preprinted space for cardholders to fill in their telephone numbers. (See § 1747.8.)

The trial court denied Linder's certification motion in its entirety, but its stated reasons were limited to the proposed surcharge class. The Court of Appeal affirmed, additionally determining that the penalty class should not be certified because the aggregate amount of the potential penalties against Thrifty would be either too small to justify the burdens of class treatment or too onerous in relation to the alleged wrongdoing. We granted Linder's petition for review.

DISCUSSION

Courts long have acknowledged the importance of class actions as a means to prevent a failure of justice in our judicial system. (See City of San Jose v. Superior Court, (1974) 12 Cal.3d 447, 458, 115 Cal.Rptr. 797, 525 P.2d 701 (City of San Jose); Door v. Yellow Cab Co. (1967) 67 Cal.2d 695, 703-704, 63 Cal.Rptr. 724, 433 P.2d 732.) "`By establishing a technique whereby the claims of many individuals can be resolved at the same time, the class suit both eliminates the possibility of repetitious litigation and provides small claimants with a method of obtaining redress...."' (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 469, 174 Cal.Rptr. 515, 629 P.2d 23.) Generally, a class suit is 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." (Blue Chip Stamps u. Superior Court (1976) 18 Cal.3d 381, 385, 134 Cal.Rptr. 393,556 P.2d 755 (Blue Chip Stamps); see Vasquez v. Superior Court (1971) 4 Cal.3d 800, 808, 94 Cal.Rptr. 796, 484 P.2d 964 (Vasquez).) But because group action also has the potential to create injustice, trial courts are required 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, supra, 18 Cal.3d at p. 385, 134 Cal.Rptr. 393,556 P.2d 755, quoting City of San Jose, supra,12 Cal.3d at p. 459,115 Cal.Rptr. 797,525 P.2d 701.)

Section 382 of the Code of Civil Procedure authorizes class suits in California 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." To obtain certification, a party must establish the existence of both an ascertainable class and a well-defined community of interest among the class members. (Richmond v. Dart Industries, Inc., supra, 29 Cal.3d at p. 470, 174 Cal.Rptr. 515, 629 P.2d 23; Vasquez, supra, 4 Cal.3d at p. 809, 94 Cal.Rptr. 796, 484 P.2d 964.) The community of interest requirement involves 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." (Richmond v. Dart Industries, Inc., supra, 29 Cal.3d at p. 470, 174 Cal. Rptr. 515, 629 P.2d 23.) Other relevant considerations include the probability that each class member will come forward ultimately to prove his or her separate claim to a portion of the total recovery and whether the class approach would actually serve to deter and redress alleged wrongdoing. (See Blue Chip Stamps, supra, 18 Cal.3d at pp. 386-387, 134 Cal.Rptr. 393, 556 P.2d 755.)

Because trial courts are ideally situated to evaluate the efficiencies and practicalities of permitting group action, they are afforded great discretion in granting or denying certification. The denial of certification to an entire class is an appealable order (Richmond v. Dart Industries, Inc., supra, 29 Cal.3d at p. 470, 174 Cal. Rptr. 515, 629 P.2d 23; Daar v. Yellow Cab Co., supra, 67 Cal.2d at pp. 698-699, 63 Cal.Rptr. 724, 433 P.2d 732), but in the absence of other error, a trial court ruling supported by substantial evidence generally will not be disturbed "unless (1) improper criteria were used [citation]; or (2) erroneous legal assumptions were made [citation]" (Richmond v. Dart Industries, Inc., supra, 29 Cal.3d at p. 470, 174 Cal.Rptr. 515, 629 P.2d 23). Under this standard, an order based upon improper criteria or incorrect assumptions calls for reversal "`even though there may be substantial evidence to support the court's order.'" (Caro v. Procter & Gamble Co. (1993) 18 Cal.App.4th 644, 655, 22 Cal. Rptr.2d 419, quoting Clothesrigger, Inc. v. GTE Corp. (1987) 191 Cal.App.3d 605, 612, 236 Cal.Rptr. 605; see National Solar Equipment Owners' Assn. v. Grumman Corp. (1991) 235 Cal.App.3d 1273, 1281, 1 Cal.Rptr.2d 325.) Accordingly, we must examine the trial court's reasons for denying class certification. "Any valid pertinent reason stated will be sufficient to uphold the order." (Caro v. Procter & Gamble Co., supra, 18 Cal.App.4th at p. 656, 22 Cal.Rptr.2d 419.)

In this case, the trial court gave two reasons for its denial order. First, it observed that the statute prohibiting surcharges for credit card purchases contains a provision permitting discounts for cash purchases. (See § 1748.1, subd. (a).) Noting evidence that Thrifty service stations posted both their cash and credit card gas prices, the court concluded customers were free to choose the form of payment and therefore Linder could not establish a class community interest as a matter of law. Second, the court indicated that, even if members of the proposed class were to prevail on the surcharge claim, they would not receive a substantial benefit because their potential monetary recovery, if any, would be small. Based on the alleged 4 cents per gallon price differential between Thrifty's cash and credit prices, the court noted that a member who bought 20 gallons of gas would receive only 80 cents.²

A. Merits of the Surcharge Cause of Action

The Credit Card Act provides in relevant part: "No retailer in any sales ... transaction with a consumer may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash.... A retailer may, however, offer...