A Victory for class actions – Denial of Class Certification Is Not Binding on Absent Class Members

California’s Second Appellate District held that “unnamed putative members of a class that was never certified cannot be bound by collateral estoppel.” Bridgeford v. Pacific Health Corp., No. B227486, 2012 Cal. App. LEXIS 26, * 1-2 (Cal. Ct. App. Jan. 18, 2012).

Plaintiffs filed a class action alleging wage and hour violations against their employer, Los Angeles Memorial Medical Center, a subsidiary of Pacific Health Corporation.  In a prior class action, another named plaintiff had moved for and lost class certification against the same defendant for substantially the same wage and hour claims. The defendants demurred case on grounds that collateral estoppel barred the plaintiffs from seeking class certification because the issue of class certification was decided against plaintiffs in a prior related action.  The trial court sustained the demurrer, without leave to amend.

Relying on the Supreme Court’s decision in Smith v. Bayer, which held that a District Court’s denial of a Rule 23 class certification motion does not prevent separate plaintiffs from seeking certification in a separate state court action, the Court of Appeal reversed the trial court’s and held that “the denial of class certification cannot establish collateral estoppel against unnamed putative class members on any issue because unnamed putative class members were neither parties to the prior proceeding nor represented by a party to the prior proceeding so as to be considered in privity with such a party for purposes of collateral estoppel.” Accordingly, because the plaintiffs in Bridgeford were not parties to the prior action, they could not be precluded from pursuing their own class claims against the defendant.

This is a good decision for plaintiffs and class actions.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.