Hernandez v. Restoration Hardware, Inc. , 4 Cal. 5th 260 ( 2018 )


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  • Filed 1/29/18
    IN THE SUPREME COURT OF CALIFORNIA
    MIKE HERNANDEZ et al.,                  )
    )
    Plaintiffs and Respondents; )
    )
    FRANCESCA MULLER,                       )
    )
    Plaintiff and Appellant,    )                           S233983
    v.                                )
    )                     Ct.App. 4/1 D067091
    RESTORATION HARDWARE, INC.,             )
    )                      San Diego County
    Defendant and Respondent.   )                        Super. Ct. No.
    )                      37-2008-00094395-
    )                         CU-BT-CTL
    _______________________________________)
    Under Code of Civil Procedure1 section 902, “[a]ny party aggrieved” may
    appeal a judgment. “It is generally held, however, that only parties of record may
    appeal; consequently one who is denied the right to intervene in an action
    ordinarily may not appeal from a judgment subsequently entered in the case.
    [Citations.] Instead, he may appeal from the order denying intervention.” (County
    of Alameda v. Carleson (1971) 
    5 Cal.3d 730
    , 736 (Carleson).) The issue we
    address is when does an unnamed class action member become a party of record
    with the right to appeal a class action settlement or judgment under section 902?
    We address this issue in the context of Justice Traynor’s 75-year-old decision,
    which held that unnamed class members do not become parties of record under
    1         All statutory references are to the Code of Civil Procedure unless otherwise
    stated.
    SEE CONCURRING OPINION.
    section 902 with the right to appeal the class settlement, judgment, or attorney fees
    award unless they formally intervene in the class litigation before the action is
    final. (Eggert v. Pac. States S. & L. Co. (1942) 
    20 Cal.2d 199
    , 201 (Eggert).) We
    conclude the Court of Appeal correctly relied on Eggert to hold that unnamed
    class members may not appeal a class judgment, settlement, or attorney fees award
    unless they intervene in the action. (Ibid.)
    FACTUAL AND PROCEDURAL BACKGROUND
    In 2008, plaintiff Michael Hernandez filed a class action law suit against
    defendant Restoration Hardware, Inc. (RHI), alleging the company committed
    numerous violations of the Song-Beverly Credit Card Act (the Act) when it asked
    for and recorded ZIP codes from customers who used credit cards in making RHI
    purchases. (Civ. Code, § 1747.08.) After several years of litigation, the court
    certified the case as a class action and appointed plaintiffs Mike Hernandez and
    Amanda Georgino as class representatives (collectively Representatives). The
    court also appointed the Patterson Law Group and Stonebarger Law as class
    counsel.
    In June 2013, a notice to potential class members advised them of the
    pending class action and presented them with the following options: (1) they could
    remain as part of the class and be bound by the judgment, or (2) they could
    exclude themselves from the class (opt out) and not be bound by the judgment.
    (Cal. Rules of Court, rule 3.766.) The notice also advised the potential class
    members that if they elected to remain in the class, they could appear in court
    through class counsel. Francesca Muller (Muller), an unnamed class member and
    the appellant here, received the June 2013 class action notice, but did not join the
    class as a party or opt out at that time. Instead, Muller’s attorney filed a notice of
    an appearance on her behalf.
    2
    Following a bench trial, the court found RHI liable for “as many as”
    1,213,745 violations of the Act, set a penalty of $30 per violation, and rendered a
    judgment against RHI in the amount of $36,412,350. The court ordered the parties
    to meet and confer on the claims process and procedures for distributing the
    award, “including a means for RHI to challenge the accuracy of any recorded ZIP
    codes.”
    The parties met and agreed that the judgment of $36,412,350 was based on
    the maximum number of violations at $30 per violation, and that sum would be
    treated as a common fund inclusive of any attorney fees, costs, and class
    representative enhancements. RHI waived its right to appeal the judgment.
    Muller never moved to intervene during the bench trial on the merits by filing a
    formal complaint in intervention under section 387.
    After conducting negotiations with RHI, Representatives then moved for
    attorney fees “equivalent to 25 percent of the total judgment recovered for the
    class.” The trial court requested that Representatives submit a supplemental
    motion for attorney fees with a “lodestar calculation” as a cross-check on the fee
    request. Representatives calculated the fee amount using a lodestar calculation
    and multiplier that showed class counsel spent over 3,500 hours on the litigation
    and incurred advanced costs and fees of nearly $2.7 million. Representatives also
    submitted reasons for supporting “application of a ‘multiplier’ to the lodestar
    calculation.” RHI agreed not to oppose the requested fee award if class counsel
    sought no more than 25 percent of the total recovery. (See Ruiz v. California State
    Automobile Assn. Inter-Insurance Bureau (2013) 
    222 Cal.App.4th 596
    , 598
    [allowing counsel for plaintiff class to seek attorney fees award with defendant’s
    assurance not to oppose fee application if amount is less than or equal to specified
    dollar amount].)
    3
    Muller was served with the attorney fees motion and a copy of class
    counsel’s percentage of the common fund calculation, but did not object to the
    proposed total fee award. Instead, on August 29, 2014, she filed a “Request for
    Clarification” and asked to appear telephonically at the settlement fairness hearing
    on the fee proposal. The request stated that “[t]he parties’ pleadings do not
    indicate that class members were notified of the settlement of the attorney fees
    issue and of the hearing on September 5, 2014, to approve [c]lass [c]ounsel’s fee
    request.” The trial court permitted Muller to file her request.
    Before its scheduled fairness hearing on the proposed class attorney fees
    settlement, the court issued its tentative ruling on the fee request, determining that
    (1) California law permits a percentage award in common fund cases, (2) courts
    use a 25 percent fee figure as a “starting benchmark,” and (3) a fee at or above the
    benchmark was appropriate because of the risks counsel incurred when they
    brought the action and the result they obtained in the litigation. All parties and
    Muller’s attorney received a copy of the tentative ruling by e-mail.
    On September 5, 2014, the court held a fairness hearing on
    Representatives’ attorney fees application. Muller, who appeared telephonically
    through her counsel, objected to the court’s consideration of the proposed fee
    award. (See Cal. Rules of Court, rule 3.769(f) [allows unnamed class members to
    appear and object to settlement but is silent regarding any right to appeal denial of
    objections].) Her principal claim was that the fee award violated class action
    procedure because class members were not given notice of their right to appear
    and comment on the proposed attorney fees settlement following the bench trial on
    the merits. The court noted, and counsel acknowledged, that there was no
    authority to support the claim that the court should have given the class additional
    notice (besides the initial class certification notice) of the subsequent settlement
    fairness hearing on the proposed attorney fees award. Muller also claimed that the
    4
    court was required to calculate the fee award using the “lodestar multiplier
    approach,” rather than a “percentage of the fund approach,” but did not argue the
    court’s tentative ruling rendered the fee award excessive.
    After the hearing on the settlement of the proposed fee award, the court
    issued a “Second Amended Minute Order” denying Muller’s request for
    clarification and approving the fee and costs requests. On September 29, the court
    filed its final judgment that tracked the parties’ claims process and granted class
    counsel’s requested attorney fees award. Class counsel then distributed a notice of
    the judgment to class members, including instructions for the claims process.
    Muller did not file a section 663 motion to vacate the judgment; instead she
    filed a notice of appeal. She limited her appeal to the attorney fees award,
    renewing her claim that in failing to provide class members with notice of the fee
    negotiations and proposed settlement with RHI, Representatives and class counsel
    breached their fiduciary duties to the class. Muller also reiterated her claim that
    the court should have used the lodestar multiplier approach to calculate the fee
    award.
    Representatives challenged Muller’s claims on their merits. They also
    challenged Muller’s right to file her appeal because she was neither a “party” nor
    “aggrieved” by the trial court’s alleged erroneous judgment as required under
    section 902 and our decision in Eggert, supra, 20 Cal.2d at page 201. The court
    dismissed Muller’s appeal for lack of standing, concluding it was bound to follow
    Eggert under Auto Equity Sales, Inc. v. Superior Court (1962) 
    57 Cal.2d 450
    , 455
    (decisions of state supreme court are binding on all other state courts; courts of
    inferior jurisdiction may not overrule higher court decisions). The Court of
    Appeal also concluded that Muller cited no persuasive authority to support her
    argument that changes to federal procedural rules for managing class actions in
    5
    federal trials undermine the analysis of state statutes limiting who may appeal.
    We granted Muller’s petition for review on the right to appeal issue only.
    DISCUSSION
    The class action is codified in section 382, and its procedural rules for class
    certification, notice, settlement, and judgment appear in our California Rules of
    Court, rules 3.760-3.771. The action is a product of the court’s equitable
    jurisdiction that rests on considerations of necessity, convenience, and the belief
    that in large cases, the class action will prevent a failure of justice. (City of San
    Jose v. Superior Court (1974) 
    12 Cal.3d 447
    , 458.) Case law imposes fiduciary
    duties on the trial courts, class counsel, and class representatives, who must ensure
    the action proceeds in the class members’ best interest. The class action structure
    relieves the unnamed class members of the burden of participating in the action.
    (Earley v. Superior Court (2000) 
    79 Cal.App.4th 1420
    , 1434.) Unnamed parties
    may be considered “parties” for the limited purpose of discovery, but those same
    unnamed parties are not considered “parties” to the litigation. (National Solar
    Equipment Owners’ Assn. v. Grumman Corp. (1991) 
    235 Cal.App.3d 1273
    , 1282
    [unnamed class members are not the same as named parties].)
    California Rules of Court, rule 3.769 requires class representatives to notify
    class members of a pending settlement on the merits and provide them with the
    opportunity to object at the final settlement fairness hearing. Rule 3.771(b)
    requires that notice of a pending judgment be provided to class members, and rule
    3.769(f) provides that “notice of the final approval hearing must be given to the
    class members in the manner specified by the court. The notice must contain an
    explanation of the proposed settlement and procedures for class members to
    follow in filing written objections to it and in arranging to appear at the settlement
    hearing and state any objections to the proposed settlement.” The rules also state
    6
    that “[b]efore final approval, the court must conduct an inquiry into the fairness of
    the proposed settlement.” (Cal. Rules of Court, rule 3.769(g).)
    The right to appeal judgments in state civil actions, including class actions,
    is entirely statutory, so long as the Legislature does not “ ‘ “substantially impair
    the constitutional powers of the courts, or practically defeat their exercise.” ’ ”
    (Powers v. City of Richmond (1995) 
    10 Cal.4th 85
    , 110.) Unnamed class members
    may become parties of record to class actions in one of two generally acceptable
    ways. First, they may file a timely complaint in intervention before final judgment
    that sets forth the grounds upon which the intervention rests. (§ 387.) If parties
    seek permissive intervention under section 387, subdivision (a), they must show
    they have an interest in the litigation. For intervention as a matter of right under
    section 387, subdivision (b), intervenors must show they are class members whose
    interests are not adequately represented by the existing parties. The complaint in
    intervention is “filed by leave of the court and served upon the parties to the action
    or proceeding who have not appeared in the same manner as upon the
    commencement of an original action, and upon the attorneys of the parties who
    have appeared, or upon the party if he has appeared without an attorney . . . .”
    (§ 387, subd. (a); see Klinghoffer v. Barasch (1970) 
    4 Cal.App.3d 258
    , 261.) The
    fact that section 387 allows for a “timely” application means that intervention after
    a judgment is possible. (Mallick v. Superior Court (1979) 
    89 Cal.App.3d 434
    , 437
    [intervention not barred by fact that judgment was rendered]; see 4 Witkin, Cal.
    Procedure (5th ed. 2008) Pleading, § 224, pp. 298-299.)
    Second, although not a method of intervention, an unnamed party to the
    action may also become a named party by filing an appealable motion to set aside
    and vacate the class judgment under section 663. (Eggert, supra, 20 Cal.2d at p.
    201; Carleson, supra, 5 Cal.3d at pp. 736, 738 [one who is legally “aggrieved” by
    judgment may become “party of record” with the right to appeal by moving to
    7
    vacate judgment for “incorrect legal conclusion” or “erroneous judgment upon the
    facts” under § 663 before entry of judgment]; see § 663a, subd. (a)(1); In re
    Marriage of Burwell (2013) 
    221 Cal.App.4th 1
    , 13-14 [interpreting Carleson rule
    to apply to any motion to vacate or set aside judgment].)
    Representatives assert that because Muller was an unnamed class member
    who never exercised her right to intervene during the class action by filing a
    complaint in intervention under section 387, she never became a party of record
    and the court should dismiss her appeal under Eggert, supra, 
    20 Cal.2d 199
    , a case
    that the Court of Appeal believed stood “on ‘all fours’ ” with the present matter.
    Muller, on the other hand, urges us to overrule Eggert as a “remnant of a
    bygone era,” that is out of step with current class action practice. She repeats her
    Court of Appeal argument that Eggert’s bright-line rule has been superseded by
    several more recent Court of Appeal decisions that were influenced by 1966
    amendments to rule 23 of the Federal Rules of Civil Procedure (28 U.S.C.) (Rule
    23), which created the federal opt-out damages class action and “led to greatly
    expanded use of the device.” (Bone & Evans, Class Certification and the
    Substantive Merits (2002) 
    51 Duke L.J. 1251
    , 1260.) These same amendments
    encouraged a rise in settlement class actions. (See Franklin, The Mass Tort
    Defendants Strike Back: Are Settlement Class Actions a Collusive Threat or Just
    a Phantom Menace? (2000) 53 Stan. L.Rev. 163, 167-172 [discussing rise of
    settlement class actions].) Muller asserts that Rule 23 is persuasive authority that
    courts should not require unnamed class members to formally intervene in the
    underlying action to gain the right to appeal a trial court’s order concerning the
    unnamed class members’ objections to the proposed settlement. We disagree and
    find that Eggert remains good law.
    In Eggert, the plaintiff, as holder of a “Fidelity Definite Term Certificate”
    initiated a class action on behalf of himself and approximately 1,500 certificate
    8
    holders against defendant in the amount of over $1.8 million. (Eggert, supra, 20
    Cal.2d at pp. 199-200.) The complaint included a request for attorney fees. (Id. at
    p. 200.) The court awarded judgment to the plaintiffs, but reserved jurisdiction to
    determine the amount of fees owed. (Ibid.) The complaint incorporated by
    reference an exhibit containing the names of the outstanding certificate holders as
    well as each certificate’s number and face value. The names of certificate holders
    Jessie C. Kelley and Dorothy C. Given (the objectors) appeared in the exhibit.
    (Ibid.)
    The court appointed a receiver to facilitate payment of the judgment and
    directed both the plaintiff and interested persons to show cause why it should not
    order fixed attorney fees. (Eggert, supra, 20 Cal.2d at p. 200.) Notice of the order
    was published daily until the return date. (Ibid.) At the hearing on the plaintiff’s
    motion for the receiver to pay the judgment after deducting the attorney fees, an
    attorney representing the objectors appeared and contested the petition’s attorney
    fees provision. (Ibid.) After the court granted the petition in the plaintiff’s favor,
    both objectors filed an appeal on behalf of themselves and all other certificate
    holders who were without legal representation. (Ibid.) They also petitioned this
    court for a writ of supersedeas, hoping to stay the trial court’s order to pay the
    attorney fees. (Ibid.)
    Eggert dismissed the objectors’ appeal and denied their application for a
    writ of supersedeas to stay the execution of the trial court’s fee order. (Eggert,
    supra, 20 Cal.2d at p. 200.) Noting that “it is a settled rule of practice in this state
    that only a party to the record can appeal,” Eggert refused to grant party status to
    the objectors (who were never named as parties of record to the class action) even
    though their names and interest in the action were included in the exhibit to the
    complaint, and their attorney had appeared at the hearing on petition for payment
    of attorney fees to object to the fee payment. (Id. at p. 201.) As Eggert observed,
    9
    the “[a]ppellants had ample opportunity even after the court had made its orders to
    become parties of record by moving to vacate the orders to which they objected.
    They could then have appealed from the order denying the motion.” (Ibid.)
    Although Eggert’s analysis provides the court with sound guidance for
    interpreting current section 902 and the right to appeal a final judgment, Muller
    asks us to overrule Eggert and adopt the view of more recent Court of Appeal
    decisions that incorporate amended Rule 23, to give unnamed class member
    objectors who informally object to settlement during fairness hearings the right to
    appeal their overruled objections. (See, e.g., Consumer Cause, Inc. v. Mrs.
    Gooch’s Natural Food Markets, Inc. (2005) 
    127 Cal.App.4th 387
    , 395-396
    [acknowledging Eggert, but holding that class member who appears at fairness
    hearing and objects to settlement has a right to appeal, even though that member
    did not intervene in the action]; see also Trotsky v. Los Angeles Fed. Sav. & Loan
    Assn. (1975) 
    48 Cal.App.3d 134
    , 139 (Trotsky) [member of affected class whose
    objections to settlement were overruled is aggrieved party with right to appeal];
    Rebney v. Wells Fargo Bank (1990) 
    220 Cal.App.3d 1117
    , 1128-1132 [relying on
    Trotsky]; Wershba v. Apple Computer, Inc. (2001) 
    91 Cal.App.4th 224
    , 253
    [following Trotsky, holding that unnamed class members who appeared at final
    fairness hearing and objected to proposed settlement have standing to appeal];
    Roos v. Honeywell Internat., Inc. (2015) 
    241 Cal.App.4th 1472
    , 1486 [relying on
    Wershba for objector standing to appeal, but denying appeal to objectors who
    could not establish class membership].)2
    2      Muller asked us to judicially notice several unpublished Court of Appeal
    opinions that adopted the same rule. With certain exceptions, not applicable here,
    the Rules of Court generally prohibit us from noticing unpublished opinions. (Cal.
    Rules of Court, rule 8.1115(a).) We therefore declined to grant her request.
    10
    As the Court of Appeal observed, none of the cases on which Muller relies
    “made any effort to reconcile their conclusions with Eggert.” But instead, their
    logic is derived from Trotsky, supra, 48 Cal.App.3d at page 139, which was
    decided after the 1966 amendments to Rule 23 and addressed the right of an
    unnamed class member to object to a settlement and prosecute an appeal. Trotsky
    held that an unnamed class member whose objections to settlement were overruled
    became a “party aggrieved” and could appeal the trial court’s ruling as soon as she
    filed her objections to the settlement. (Ibid.) The court reasoned that “ ‘[i]t is
    possible that, within a class, a group of small claimants might be unfavorably
    treated by the terms of a proposed settlement. For them, the option to join is in
    reality no option at all’ ” because they could be forced to accept either nothing or
    an unfair settlement. (Id. at p. 139; id. at p. 140.)
    As the Court of Appeal noted, in focusing primarily on the “aggrieved”
    element of section 902, Trotsky failed to examine the statute’s additional
    requirement that the objector must also be a “party” of record to the class action to
    gain the right to appeal the trial court’s judgment. The Court of Appeal also
    faulted Trotsky for never attempting to reconcile its conclusion with Eggert’s rule
    that an objector must be an aggrieved party to gain the right to appeal an order or
    judgment in a class action. (Trotsky, supra, 48 Cal.App.3d at p. 139.) We agree
    with the Court of Appeal, and find that Trotsky’s failure to address section 902’s
    requirements for the right to appeal a settlement, or to distinguish or otherwise
    reconcile its holding with Eggert, renders the opinion unpersuasive and we
    disapprove it and its progeny.
    Muller contends that even if Trotsky misinterpreted section 902’s rules to
    establish the right to appeal a trial court’s dismissal of informal objections to a
    settlement, the United States Supreme Court rejected the requirement of
    intervention in a class action filed in the United States District Court of Maryland
    11
    to determine liability under the federal Employee Retirement Income Security Act
    for a retirement plan’s proposal to amend a cost of living adjustment for active and
    retired workers. (Devlin v. Scardelletti (2002) 
    536 U.S. 1
    , 14 (Devlin).) Devlin
    held that unnamed class members of a mandatory class action (with no option to
    opt out), who make timely objections to the class settlement at the fairness hearing
    have a right to appeal without first intervening in the action because they are
    bound by the settlement. (Ibid.) A motion to intervene under rule 24(a) of the
    Federal Rules of Civil Procedure (28 U.S.C.) (Rule 24(a)) would serve the same
    purpose as an objection in district court. (Devlin, at p. 11.) The majority found
    “most important” the fact that “petitioner had no ability to opt out of the
    settlement, see Fed. Rule Civ. Proc. 23(b)(1), [and] appealing the approval of the
    settlement [was] petitioner’s only means of protecting himself from being bound
    by a disposition of his rights he finds unacceptable and that a reviewing court
    might find inadequate.” (Devlin, 
    supra,
     536 U.S. at pp. 10-11.)
    Federal and state courts are far from uniform on whether Devlin’s rule even
    applies to all class proceedings, including opt-out class actions. Some courts limit
    Devlin to cases in which the unnamed class members had no ability to opt out of
    the class and either objected or intervened during the settlement proceedings.
    (See, e.g., Day v. Persels & Associates, LLC (11th Cir. 2013) 
    729 F.3d 1309
    ,
    1318-1319, 1321 [distinguishing Devlin to hold that unnamed absent class
    members who do not opt out are not “parties” to the litigation under 
    28 U.S.C. § 636
    (b), (c), and noting three ways to obtain party status, including intervention
    under Rule 24(a)]; Barnhill v. Florida Microsoft Anti-Trust Litigation (Fla.Ct.App.
    2005) 
    905 So.2d 195
    , 199 [finding “no consensus” on the scope of Devlin and
    agreeing with cases limiting Devlin’s applicability to mandatory class actions];
    Ballard v. Advance America (Ark. 2002) 
    79 S.W.3d 835
    , 837 [distinguishing
    Devlin as federal law, not Arkansas law, and holding nonparty objectors could not
    12
    appeal settlement without first seeking to intervene]; Snell v. Allianz Life Ins. Co.
    of North America (8th Cir. 2003) 
    327 F.3d 665
    , 670, fn. 2 [Devlin does not apply
    to opt-out class action in which unnamed class member did not object to
    settlement in district court]; In re General American Life Ins. Co. Sales Practices
    Litigation (8th Cir. 2002) 
    302 F.3d 799
    , 800 [dictum noting a limited reading of
    Devlin “has considerable merit”].)
    Other federal and state courts hold that Devlin applies to all class actions,
    including opt-out actions filed under Rule 23(b)(3) (See, e.g., Bachman v. A.G.
    Edwards, Inc. (Mo.Ct.App. 2011) 
    344 S.W.3d 260
    , 265, fn. 3 [included dictum
    stating Devlin applies to all class actions, though not applying federal standard
    because objector timely intervened under state law]; Nat’l Ass’n of Chain Drug
    Stores v. New England Carpenters Health Benefits Fund (1st Cir. 2009) 
    582 F.3d 30
    , 39-40 [claiming, without discussing contrary authority, that “weight of
    authority” finds Devlin applies to all class actions]; Fidel v. Farley (6th Cir. 2008)
    
    534 F.3d 508
    , 512-513 [applying Devlin to Rule 23(b)(3) class actions]; In re
    Integra Realty Resources, Inc. (10th Cir. 2004) 
    354 F.3d 1246
     [unnamed class
    members who do not opt out but seek to challenge settlement on appeal must first
    object in district court or file motion to intervene under Rule 24(a)]; Churchill
    Village, LLC. v. Gen. Elec. (9th Cir. 2004) 
    361 F.3d 566
    , 572-573 [finding no
    practical difference between mandatory and opt-out class actions which bind
    objectors for purposes of deciding federal question]; Rivera-Platte v. First Colony
    Life Ins. Co. (N.M.Ct.App. 2007) 
    173 P.3d 765
    , 773 [agreeing with Churchill that
    Devlin extends to opt-out class actions].) The split of authority illustrates the
    unsettled nature of the law in federal (and state) courts.
    We are not persuaded by the courts that have adopted Devlin as their rule.
    Our state common law, legislation, and procedural rules of court differ
    significantly from the federal common law and procedural rules. (Compare Rules
    13
    23, 24(a) [class members may appeal settlement as long as they provide notice to
    the court that they object to settlement (Rule 23(h)) or intervene under Rule 24(a)]
    with Eggert, supra, 20 Cal.2d at p. 201, and Cal. Rules of Court, rule 3.769(f)
    [silent on class member right to appeal].) Potential class members in our state can
    opt out of the class action litigation and pursue their own litigation against the
    same class defendant, timely intervene in the action or proceeding, or move to set
    aside the judgment. (Cal. Rules of Court, rule 3.766; see §§ 387, 663.) As the
    Court of Appeal emphasized here, our Legislature has chosen to continue Eggert’s
    rule despite changes in federal class action rules.
    Muller alternatively claims that because a class settlement is generally
    binding on all class members (assuming class representatives have complied with
    due process regarding notice and adequate representation), we should create an
    exception to Eggert that allows members to appeal their denied objections to
    settlement without formal intervention. (See DeLeon v. Verizon Wireless, LLC
    (2012) 
    207 Cal.App.4th 800
    , 807, fn. 3 [res judicata bars settling class members
    from thereafter seeking relief].) We decline to do so. Following Eggert and
    requiring intervention does not discourage unnamed class members from filing a
    meritorious appeal. Rather, it continues a manageable process under a bright-line
    rule that promotes judicial economy by providing clear notice of a timely intent to
    challenge the class representative’s settlement action. Formal intervention also
    enables the trial court to review the motion to intervene in a timely manner.
    Muller had the opportunity to intervene in the trial court proceedings but chose not
    to do so. Instead, she made a strategic choice to wait and see if she agreed with
    the settlement amount and attorney fees agreement. By filing an appeal without
    first intervening in the action however, Muller never became an “aggrieved party”
    14
    of record to the action as our law requires. (§ 902; Eggert, supra, 
    20 Cal.2d 450
    .)3
    Several policy considerations provide additional support for Eggert’s
    continued viability. Meritless objections “can disrupt settlements by requiring
    class counsel to expend resources fighting appeals, and, more importantly,
    delaying the point at which settlements become final.” (Fitzpatrick, The End of
    Objector Blackmail? (2009) 62 Vand. L.Rev. 1623, 1634.) These same objectors
    who appear and object to proceedings in different class actions—also known as
    “professional objectors,” are thought to harm the class members whose interests
    they claim to protect. “First, professional objectors’ almost invariably groundless
    objections delay the provision of relief to class members who, in most instances,
    have already waited years for resolution. Second, by feeding off the fees earned
    by class counsel who took the risk of suing defendants on a purely contingent
    basis, as is the normal practice in class actions, professional objectors create a
    disincentive for class counsel to take on such risky matters. That disincentive
    clashes with the public interest, repeatedly recognized by courts, to incentivize
    class counsel to handle such cases.” (Greenberg, Keeping the Flies out of the
    Ointment: Restricting Objectors to Class Action Settlements (2010) 84 St. John’s
    L.Rev. 949, 951.)
    Additionally, class representatives do not proceed in a vacuum that protects
    their interests only. Our case law imposes strict fiduciary responsibilities on class
    representatives and class counsel to ensure the litigation proceeds in the best
    interests of all unnamed class members. (See, e.g., Laffitte v. Robert Half
    Internat., Inc. (2016) 
    1 Cal.5th 480
    , 510 [trial court acts as fiduciary “ ‘guarding
    3      The fact that Federal Rules of Civil Procedure, rule 23(h), added in 2003,
    grants federal class members notice and a right to object to class counsel fee
    requests does not undermine Eggert’s persuasive authority.
    15
    the rights of absent class members’ ”]; Kullar v. Foot Locker Retail, Inc. (2008)
    
    168 Cal.App.4th 116
    , 130 [trial court must conduct independent and objective
    analysis “to protect the interests of absent class members”; La Sala v. American
    Sav. & Loan Assn. (1971) 
    5 Cal.3d 864
    , 871 [class representatives act as
    fiduciaries for absent class members].) Objectors who do not formally intervene
    have no such duty to the class.
    Muller also fails to justify her request that we overrule Eggert under the
    well-established jurisprudential rule of stare decisis that we follow prior applicable
    precedent even though the case, if considered anew, might be decided differently.
    This is so parties can “regulate their conduct and enter into relationships with
    reasonable assurance of the governing rules of law.” (9 Witkin, Cal. Procedure
    (5th ed. 2008) Appeal, § 481, at p. 541, and cases cited; id. at p. 540.) Although
    the doctrine is flexible because it permits this court to reconsider, and ultimately
    depart from, our own precedent when changes or developments in the law
    recommend it (see id., § 482, pp. 541-543), we conclude that Muller presents no
    persuasive reason for us to reconsider Eggert’s rule, much less depart from it. The
    contours of section 902 are clear, and Eggert’s bright-line rule is consistent with
    the statute. Muller will be bound by the Hernandez class judgment as an unnamed
    class member who never became a party to the action (§ 902).
    16
    CONCLUSION
    The Legislature has limited the right of unnamed class members to appeal
    by expressly requiring that class action objectors who wish to appeal be parties of
    record who have been aggrieved by the court’s decision. (§ 902.) Had Muller
    properly intervened in the class action or filed a section 663 motion to vacate the
    judgment, and been denied relief, she would have had a clear path to challenge the
    attorney fees award (or settlement or judgment) on appeal. Muller offers no
    persuasive reason why we should create an exception to our long-standing rule, or
    overrule or distinguish Eggert. For these reasons, we affirm the Court of Appeal
    judgment.4
    CHIN, J.
    WE CONCUR:
    CANTIL-SAKAUYE, C. J.
    CORRIGAN, J.
    CUÉLLAR, J.
    KRUGER, J.
    NICHOLSON, J.*
    _____________________________
    * Associate Justice of the Court of Appeal, Third Appellate District, assigned by
    the Chief Justice pursuant to article VI, section 6 of the California Constitution.
    4     We disapprove Trotsky v. Los Angeles Fed. Sav. & Loan Assn., supra, 
    48 Cal.App.3d 134
    , and its progeny (see p. 10, ante, for a partial list).
    17
    CONCURRING OPINION BY LIU, J.
    Under Eggert v. Pac. States S. & L. Co. (1942) 
    20 Cal.2d 199
     (Eggert),
    absent class members must formally intervene or file a motion to vacate the
    judgment in order to have the right to appeal as a party. (Id. at pp. 200–201; see
    Code Civ. Proc., § 902.) I agree we should continue to follow Eggert in light of
    the principle that adherence to precedent is a particularly strong consideration on
    matters of statutory interpretation. (People v. Latimer (1993) 
    5 Cal.4th 1203
    ,
    1213.) But I write separately to highlight significant changes in class action
    litigation practice since Eggert was decided. The Legislature, not bound as we are
    by stare decisis, may wish to revisit the controlling statute in light of those
    changes.
    Eggert long predates the development of the modern class action and the
    emergence of the settlement practices that now resolve the majority of class
    actions. In the seven decades since Eggert was decided, we have gained a better
    understanding of the agency problems posed by class action settlements, including
    the difficulties of monitoring class counsel who are often incentivized to settle and
    possibly collude with defendants. (See Erichson, The Problem of Settlement Class
    Actions (2014) 82 Geo. Wash. L.Rev. 951, 957–965; Coffee, The Regulation of
    Entrepreneurial Litigation: Balancing Fairness and Efficiency in the Large Class
    Action (1987) 54 U. Chi. L.Rev. 877, 883–889; see generally Issacharoff, Class
    Action Conflicts (1997) 30 U.C. Davis L.Rev. 805.)
    1
    In light of these understandings, the high court has concluded that
    nonnamed class members who object at a settlement fairness hearing are entitled
    to appeal. (See Devlin v. Scardelletti (2002) 
    536 U.S. 1
    , 11 (Devlin).) Devlin
    emphasized that the ability to appeal overruled objections “cannot be effectively
    accomplished through the named class representative — once the named parties
    reach a settlement that is approved over petitioner’s objections, petitioner’s
    interests by definition diverge from those of the class representative.” (Id. at p. 9.)
    Other appellate courts have also recognized this aspect of class action settlements:
    After a proposed settlement has been reached, the plaintiffs and defendants are no
    longer adversaries. “In such circumstances, objectors play an important role by
    giving courts access to information on the settlement’s merits.” (Bell Atlantic
    Corp. v. Bolger (3d Cir. 1993) 
    2 F.3d 1304
    , 1310; see Redman v. RadioShack
    Corp. (7th Cir. 2014) 
    768 F.3d 622
    , 629 [“When there are objecting class
    members, the judge’s task is eased because he or she has the benefit of an
    adversary process: objectors versus settlors.”]; Fitzpatrick, The End of Objector
    Blackmail? (2009) 62 Vand. L.Rev. 1623, 1630 (hereafter Fitzpatrick) [“[W]ithout
    objectors there would be no adversarial testing of class action settlements at all.”].)
    There is also reason to question the practical and policy advantages of the
    Eggert rule. It is true that if absent class members do not want to be bound by a
    settlement or judgment, they can opt out. But class members must decide whether
    to opt out before they have the opportunity to object to the resolution of the class
    claims. That was the case here: Class members had to opt out of the litigation by
    August 2013, but the trial court did not issue its proposed judgment until March
    2014. The fact that absent class members who do not opt out of the litigation are
    bound by the judgment is precisely the reason why the high court granted them the
    right to appeal in Devlin. (Devlin, 
    supra,
     536 U.S. at p. 10.)
    2
    Further, although a requirement that absent class members formally
    intervene for purposes of appeal offers “a bright-line rule” (maj. opn., ante, at
    p. 14), a rule that absent class members who appear and object at a settlement
    fairness hearing have the right to appeal is similarly clear and orderly. Moreover,
    objecting at the fairness hearing, just like intervention, puts the parties on
    sufficient notice regarding the nature of the objections and creates a record for
    appeal.
    There is a legitimate concern that the efficiencies of a class action would be
    defeated by “[m]eritless objections” raised by “ ‘professional objectors.’ ” (Maj.
    opn., ante, at p. 15.) But, as Devlin explained, “the power to appeal is limited to
    those nonnamed class members who have objected during the fairness hearing,”
    and such appeals must be limited to the overruled objections. (Devlin, supra, 536
    U.S. at p. 11.) Indeed, studies show that few class members in fact object to
    settlements. (Fitzpatrick, supra, 62 Vand. L.Rev. at pp. 1630–1631 [noting that
    “the median number of objections to a settlement was three — well less than one-
    tenth of one percent of class members”].) Although the possibility of lawyer-
    driven objector “blackmail” is real (id. at pp. 1633–1638), categorically denying
    objectors the right to appeal may not offer the best solution. (See Vaughn v. Am.
    Honda Motor Co. (5th Cir. 2007) 
    507 F.3d 295
    , 300 [“[I]mposing too great a
    burden on an objector’s right to appeal may discourage meritorious appeals or tend
    to insulate a district court’s judgment in approving a class settlement from
    appellate review.”]; Fitzpatrick, at p. 1638 [“To believe that class action objectors
    have the power to blackmail class counsel is not, of course, to say that all
    objections are an attempt to do so. Courts and commentators note that objectors
    can serve a very positive role in class action settlements by bringing attention to
    flaws in those settlements.”].)
    3
    Instead of restricting the right to appeal, courts and class counsel can
    invoke other mechanisms to limit the ability of professional objectors to delay
    class action settlements, such as imposing sanctions for frivolous appeals,
    expediting appeals, or requiring objectors to post a bond before taking an appeal.
    These approaches, among others, have been employed to varying degrees in
    federal class action practice. (See Lopatka & Smith, Class Action Professional
    Objectors: What to Do About Them? (2012) 39 Fla. St. U. L.Rev. 865, 896–918.)
    Other solutions can be implemented through legislation or amendments to court
    rules. For example, as amicus curiae Consumer Attorneys of California notes, the
    Advisory Committee on Federal Rule of Civil Procedure 23 recently proposed
    changes requiring objectors to state whether their objection “applies only to the
    objector, to a specific subset of the class, or to the entire class, and also state with
    specificity the grounds for the objection.” (Advisory Committee on Civil Rules,
    Report of the Advisory Committee on Civil Rules (May 12, 2016), at p. 3.)
    I express no definitive view on the merits of these alternatives. I simply
    note that the rule announced more than 75 years ago in Eggert may no longer
    strike an appropriate balance among the competing policy concerns raised by this
    case. Many courts in California and other jurisdictions have declined to follow
    Eggert’s rule. (Maj. opn., ante, at pp. 10, 13.) The Legislature may wish to revisit
    this issue in light of the current landscape of class action practice.
    LIU, J.
    4
    See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
    Name of Opinion Hernandez v. Restoration Hardware, Inc.
    __________________________________________________________________________________
    Unpublished Opinion
    Original Appeal
    Original Proceeding
    Review Granted XXX 
    245 Cal.App.4th 651
    Rehearing Granted
    __________________________________________________________________________________
    Opinion No. S233983
    Date Filed: January 29, 2018
    __________________________________________________________________________________
    Court: Superior
    County: San Diego
    Judge: William S. Dato
    __________________________________________________________________________________
    Counsel:
    Law Office of Lawrence W. Schonbrun and Lawrence W Schonbrun for Plaintiff and Appellant.
    Patterson Law Group, James R. Patterson, Allison H. Goddard; Stonebarger Law, Gene J. Stonebarger and
    Richard D. Lambert for Plaintiffs and Respondents.
    Nelson & Fraenkel, Gretchen M. Nelson; Hagens Berman Sobol Shapiro and Kevin K. Green for
    Consumer Attorneys of California as Amicus Curiae on behalf of Plaintiffs and Respondents.
    No appearance for Defendant and Respondent.
    Counsel who argued in Supreme Court (not intended for publication with opinion):
    Lawrence W Schonbrun
    Law Office of Lawrence W. Schonbrun
    86 Eucalyptus Road
    Berkeley, CA 94705
    (510) 547-8070
    Allison H. Goddard
    Patterson Law Group
    402 West Broadway, 29th Floor
    San Diego, CA 92101
    (619) 756-6990
    Kevin K. Green
    Hagens Berman Sobol Shapiro
    525 B Street, Suite 1500
    San Diego, CA 92101
    (619) 929-3340