Hamilton v. Vail Corp. CA3 ( 2024 )

Filed 10/10/24 Hamilton v. Vail Corp. CA3
NOT TO BE PUBLISHED
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(El Dorado)
----
CHRISTOPHER HAMILTON et al., C095844
Plaintiffs and Respondents, (Super. Ct. No. SC20210148)
v.
VAIL CORPORATION et al.,
Defendants and Respondents;
RANDY DEAN QUINT et al.
Movants and Appellants.
CHRISTOPHER HAMILTON et al., C097604
Plaintiffs and Respondents, (Super. Ct. No. SC20210148)
v.
VAIL CORPORATION et al.,
Defendants and Respondents;
JOHN LINN et al.,
Appellants.
1
Vail Resorts, Inc., The Vail Corporation (doing business as Vail Resorts
Management Company), and Heavenly Valley, Limited Partnership (Heavenly) are all
related companies that together own and operate mountain resorts. Starting in 2020,
several current and former employees in Colorado (Colorado Plaintiffs) and in California
(California Plaintiffs) sued one or more of these entities for alleged labor law violations.
California Plaintiffs filed five separate suits in California, including this one. Colorado
Plaintiffs filed one suit in Colorado. Most of these suits raised putative class action
claims and some also raised putative collective action claims under the Fair Labor
Standards Act of 1938 (FLSA; 29 U.S.C. § 201 et seq.).
This appeal concerns a settlement in one of these cases. California Plaintiffs
entered into a settlement agreement with The Vail Corporation and Heavenly (together,
defendants) that, if approved, would extinguish the claims of current and former
employees nationwide, including Colorado Plaintiffs. Colorado Plaintiffs moved to
intervene in this case shortly after, when California Plaintiffs said they would ask the trial
court overseeing this case to approve their proposed settlement. The trial court denied
the motion to intervene and, over Colorado Plaintiffs’ objection, entered judgment
approving the settlement.
On appeal, Colorado Plaintiffs raise various issues. Among other things, they
argue that the trial court wrongly denied their motion to intervene, lacked jurisdiction to
consider the settlement, improperly presumed the settlement was fair, and wrongly
certified the class action. We agree the trial court should have granted their motion to
intervene and improperly presumed the proposed settlement was fair. For those reasons,
we will reverse the order denying intervention and direct the trial court to vacate its
judgment approving the settlement.
2
BACKGROUND
I
California Plaintiffs’ and Colorado Plaintiffs’ Suits
California Plaintiffs—Anna Gibson, Zachariah Saiz-Hawes, William Berrier,
Matthew Allen, Adam Heggen, Paul Greg Roberds, and Christopher Hamilton—and
Colorado Plaintiffs—Randy Dean Quint, John Linn, and Mark Molina—all alleged
employment claims against Vail Resorts, The Vail Corporation, Heavenly, or some
combination of the three.
Heggen filed the first suit (the Heggen action). In October 2020, he filed a
putative class action complaint against Heavenly in California state court, seeking to
represent a California class of current and former employees. Apart from raising
proposed class action claims, he also alleged a claim under the Labor Code Private
Attorneys General Act of 2004 (PAGA; Lab. Code, § 2698 et seq.)—a law that
authorizes employees who have been the subject of certain Labor Code violations to file
representative actions on behalf of themselves and other aggrieved employees. (Lab.
Code, § 2699.)
Colorado Plaintiffs filed their own suit two months later in federal court in
Colorado (the Colorado action). They filed a putative FLSA collective and class action
complaint against Vail Resorts that was nationwide in scope. They alleged that Vail
Resorts violated the FLSA—a federal law establishing minimum wage, overtime pay,
and other requirements (29 U.S.C. §§ 206, 207) and giving employees the right to bring a
private cause of action on their own behalf and on behalf of other similarly situated
employees (29 U.S.C. § 216(b)). They further alleged that Vail Resorts violated the labor
laws of nine states in which it operates—namely, Colorado, California, Utah, Minnesota,
Wisconsin, Washington, New York, Vermont, and Michigan.
3
Gibson, Saiz-Hawes, Hamilton, and Roberds filed their own suits in the following
months. Gibson and Saiz-Hawes filed a putative FLSA collective and class action
complaint against The Vail Corporation in California state court (the Gibson action).
They also alleged in their complaint a claim under PAGA. Roberds filed a putative class
action complaint against The Vail Corporation and Heavenly in California state court (the
Roberds action). And Hamilton filed two complaints, both against Heavenly in
California state court. He first filed a putative class action complaint (the Hamilton I
action), and he later filed a complaint alleging a PAGA cause of action (the Hamilton II
action).
All the actions filed in California, apart from the Hamilton II action, were
eventually removed to federal court. Defendants moved to remove the Gibson action
based on the existence of a federal question (28 U.S.C. §§ 1331, 1441) and the other
actions based on the Class Action Fairness Act of 2005 (Pub.L. No. 109-2 (Feb. 18,
2005) 119 Stat. 4).
II
Proposed Settlement and Motion to Intervene
Before the last of these complaints against defendants were filed, defendants,
Heggen, Gibson, and Saiz-Hawes reached an agreement on material settlement terms
following a mediation. Vail Resorts afterward moved to stay the Colorado action,
asserting that the settlement, if approved, would be nationwide in scope and resolve and
release all outstanding claims raised in the Colorado action. Hamilton, Roberds, Berrier,
and Allen later joined the settlement.
In October 2021, defendants, Gibson, and Saiz-Hawes told the federal court
overseeing the Gibson action that they had finalized their agreement. They also revealed
where they planned to file their proposed settlement. Although in earlier filings they
indicated they would file the settlement with the court overseeing the Gibson action, they
4
now said they would instead file the settlement with the court overseeing the Hamilton II
action—the one action, again, that ultimately remained in California state court.
Three weeks later, Colorado Plaintiffs moved to intervene in the Hamilton II
action (i.e., this action), arguing they were entitled to intervene as of right (mandatory
intervention) or at least should be allowed to intervene as a matter of discretion
(permissive intervention). Focusing on mandatory intervention, they asserted that their
motion was timely, that they had an interest in this action, and that disposition of this
action may impair their interest because the trial court’s approval of the planned
settlement would extinguish their claims. They also asserted that California Plaintiffs did
not adequately represent their interest. They reasoned that California Plaintiffs had a
significant incentive to settle to overcome potential personal jurisdiction issues, noting
that while California Plaintiffs sought to represent individuals nationwide, California
courts would not have personal jurisdiction over the claims of out-of-state individuals.
Colorado Plaintiffs added that should they be allowed to intervene, they would move to
dismiss this action under the first-filed rule.
The trial court denied the motion. Starting with mandatory intervention, it found
Colorado Plaintiffs could not meet their burden to show that their interest may be
impaired, because they could opt out or object to the proposed settlement. It also found
they had not met their burden to show that California Plaintiffs inadequately represented
their interest, reasoning that California Plaintiffs performed extensive litigation activity in
this case and no evidence showed they colluded with defendants. Turning to permissive
intervention, the court found intervention inappropriate on that ground too because
Colorado Plaintiffs could opt out or object to the settlement and, if allowed to intervene,
would enlarge the issues and delay resolution of this case.
Colorado Plaintiffs timely appealed the trial court’s decision. (See Hodge v.
Kirkpatrick Development, Inc. (2005) 130 Cal.App.4th 540, 547 [“An order denying a
5
motion for leave to intervene is directly appealable because it finally and adversely
determines the moving party’s right to proceed in the action”].)
III
Approval of the Settlement
After the trial court denied the motion to intervene, California Plaintiffs filed a
motion for preliminary approval of the proposed settlement. They also prepared an
amended complaint that would supplant Hamilton’s PAGA complaint and be filed in the
event the court granted preliminary approval. In the proposed amended complaint,
California Plaintiffs alleged putative FLSA collective and class action claims against
defendants that were nationwide in scope. They also alleged a cause of action under
PAGA. The proposed amended complaint defined the class and the FLSA collective to
include all non-exempt employees who, over a defined period, “worked for and were
employed by . . . The Vail Corporation d/b/a Vail Resorts Management Company, and all
of its parent corporations, subsidiaries, and other affiliates . . ., in the United States and
worked primarily at one of its resort locations or mountain facilities.”
The court preliminarily approved the settlement. It then directed California
Plaintiffs to file their amended complaint (which they did) and to provide notice of the
proposed settlement to potential class and collective action members. The next month,
the settlement administrator sent notice of the proposed settlement to over 100,000
individuals.
California Plaintiffs filed a motion for final approval of the settlement shortly
after. Over Colorado Plaintiffs’ objection, and after applying a presumption that the
settlement was fair, the court certified the class for settlement purposes and granted final
approval of the settlement. The approved settlement included a recovery of up to $13.1
million, with class counsel taking about $4.37 million of this amount (a third of the total).
6
Gibson received a $50,000 payment in exchange for a general release and waiver of all
claims. The remaining named plaintiffs each received a $10,000 incentive award.
In exchange for this recovery, the settlement extinguished the claims of tens of
thousands of current and former employees of defendants and their parent corporations,
subsidiaries, and affiliates. The settlement explained that covered individuals would have
their class claims extinguished unless they opted out of the settlement. It further
explained that covered individuals would have their FLSA claims extinguished only if
they opted into the settlement. In treating the class and FLSA claims differently in this
respect, the settlement hinted at a key difference between class actions and FLSA
collective actions. “Class actions under California and federal law generally require class
members to opt out to avoid being bound by the terms of a judgment. In contrast, an
employee must opt in to become a plaintiff in an FLSA collective action.” (Amaro v.
Anaheim Arena Management, LLC (2021) 69 Cal.App.5th 521, 539.)
Colorado Plaintiffs moved to set aside and vacate the judgment approving the
settlement—a procedural step they needed to take to have standing to challenge the
judgment on appeal. (Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal.5th 260,
267 [unnamed class members may become a party with the right to appeal either by
intervening or “filing an appealable motion to set aside and vacate the class judgment
under [Code of Civil Procedure] section 663”]; County of Alameda v. Carleson (1971) 5
Cal.3d 730, 736 [those who are “denied the right to intervene in an action ordinarily may
not appeal from a judgment subsequently entered in the case,” unless they “become a
party of record and obtain a right to appeal by moving to vacate the judgment pursuant to
Code of Civil Procedure section 663”].) But the trial court denied the motion, and
Colorado Plaintiffs then timely appealed. We later consolidated Colorado Plaintiffs’ two
appeals.
7
DISCUSSION
I
Appeal of the Denial of Intervention
We start with Colorado Plaintiffs’ appeal of the order denying intervention. They
contend the trial court should have granted their request to intervene, either because they
met the requirements for mandatory intervention or because they met the requirements
for permissive intervention. We agree the court should have granted their request for
mandatory intervention.
A. Code of Civil Procedure Section 387
Code of Civil Procedure section 387 (section 387) sets forth the rules for
intervention. Relevant here, it provides that a “court shall, upon timely application,
permit a nonparty to intervene in the action or proceeding if” that nonparty “claims an
interest relating to the property or transaction that is the subject of the action and that
person is so situated that the disposition of the action may impair or impede that person’s
ability to protect that interest, unless that person’s interest is adequately represented by
one or more of the existing parties.” (§ 387, subd. (d)(1)(B).) To break this down, a
court must allow a nonparty to intervene if the nonparty (1) files a timely motion, (2)
shows an interest in the action, (3) demonstrates that disposition of the action may impair
or impede the nonparty’s ability to protect this interest, and (4) shows that the existing
parties will not adequately represent the nonparty’s interest.
B. Standard of Review
Our standard of review when a trial court denies mandatory intervention is
unsettled. (State Water Bd. Cases (2023) 97 Cal.App.5th 1035, 1043.) For a long time,
section 387 spoke only of permissive intervention. (People v. Superior Court (Good)
(1976) 17 Cal.3d 732, 736 [quoting text of § 387].) Trial courts had broad discretion
under the statute to grant or deny a motion to intervene, and so appellate courts reviewed
8
a trial court’s denial of intervention for abuse of discretion. (Good, at pp. 736-737;
County of Alameda v. Carleson, supra, 5 Cal.3d at p. 736, fn. 4.) But in 1977, the
Legislature amended section 387 to allow for both permissive intervention and
mandatory intervention. (Stats. 1977, ch. 450, p. 1486, § 1.)
Courts of Appeal since have questioned the standard of review for mandatory
intervention. (See, e.g., State Water Bd. Cases, supra, 97 Cal.App.5th at p. 1043;
Edwards v. Heartland Payment Systems, Inc. (2018) 29 Cal.App.5th 725, 732
(Edwards).) Most have settled on a few conclusions. One, the standard of review is
either de novo or abuse of discretion. Two, section 387’s text tracks the text of its federal
counterpart: rule 24 of the Federal Rules of Civil Procedure (28 U.S.C.; Rule 24). And
three, because the Legislature appears to have modeled section 387 on Rule 24,
California courts can look to federal courts for guidance on the standard of review. (State
Water Bd. Cases, at p. 1043; Accurso v. In-N-Out Burgers (2023) 94 Cal.App.5th 1128,
1139-1140, review granted Nov. 29, 2023, S282173 (Accurso); Edwards, at pp. 732-733.)
Some courts have ventured further. One court concluded that California courts
should review a trial court’s denial of mandatory intervention de novo, reasoning in part
that this approach would be consistent with federal case law. (Accurso, supra, 94
Cal.App.5th at p. 1140, review granted.) Other courts, while stopping short of endorsing
a particular standard of review, have likewise concluded that federal courts review these
decisions de novo. (See, e.g., Edwards, supra, 29 Cal.App.5th at p. 732.) But another
court has disagreed, concluding that federal case law varies across circuits. (Crestwood
Behavioral Health, Inc. v. Lacy (2021) 70 Cal.App.5th 560, 573.)
Our view largely aligns with the last of these courts. To start, consistent with
other courts, we agree section 387’s language tracks that of Rule 24—which we find
important. Rule 24’s mandatory intervention language took its current general form in
1966. (See Amendments to Rules of Civil Procedure (1966) 39 F.R.D. 69, 109.) Section
9
387 followed suit in 1977, when the Legislature adopted nearly verbatim Rule 24’s
language on mandatory intervention. (Stats. 1977, ch. 450, p. 1486, § 1.) The
Legislature’s doing so strongly suggests that it modeled section 387 on Rule 24. And the
legislative history confirms this. According to one committee report, the proposed
changes to section 387 “parallel the procedures set by the Federal Rules of Civil
Procedure.” (Assem. Office of Research, 3d reading analysis of Sen. Bill No. 750 (1977
Reg. Sess.) as amended Jun. 1, 1977, p. 1.) And according to another, the proposed
changes “would incorporate the language of [Rule] 24(a) into [section] 387.” (Sen. Com.
on Judiciary, Analysis of Sen. Bill No. 750 (1977 Reg. Sess.) as introduced Mar. 31,
1977, p. 2.)
Apart from finding similar language in these two rules, we also agree that
California courts may look to federal courts for guidance on section 387. Because
section 387 was modeled on Rule 24, “we presume the Legislature intended to adopt the
construction employed by the federal courts.” (In re M.S. (1995) 10 Cal.4th 698, 713, fn.
5.) Courts have typically employed this presumption in interpreting the statutory text of
state laws modeled on federal law, not in divining the standard of review governing
applications of this text. (See ibid.) But in the absence of clear California case law on
the appropriate standard of review here, we at least find federal case law potentially
instructive. Our view, in this respect, aligns with existing California case law on this
topic. (See, e.g., State Water Bd. Cases, supra, 97 Cal.App.5th at p. 1043; Edwards,
supra, 29 Cal.App.5th at p. 732.)
Although we find federal case law potentially instructive, we find few definitive
answers there. Some federal appellate courts have generally stated that they review a
district court’s denial of mandatory intervention de novo. (See, e.g., Medical Liability
Mut. Ins. Co. v. Alan Curtis LLC (8th Cir. 2007) 485 F.3d 1006, 1008.) But some have
found it better to review these decisions for abuse of discretion. (See, e.g., Victim Rights
10
Law Center v. Rosenfelt (1st Cir. 2021) 988 F.3d 556, 559 [adding, among other things,
that even under the abuse of discretion standard, abstract legal rulings are still reviewed
de novo].) And although the Supreme Court has provided some guidance, it has been
limited to date. It has said, for instance, that timeliness—both for mandatory and
permissive intervention—“is to be determined by the court in the exercise of its sound
discretion; unless that discretion is abused, the court’s ruling will not be disturbed on
review.” (NAACP v. New York (1973) 413 U.S. 345, 366.) It has also applied an abuse
of discretion standard in reviewing adequacy of representation under Rule 24. (Georgia
v. Ashcroft (2003) 539 U.S. 461, 477.) But more recently, it declined to confirm whether
this standard in fact applies. (Berger v. North Carolina State Conference of the NAACP
(2022) 597 U.S. 179, 200, fn. * (Berger).)
In the end, leaving some issues for another day, we will review the trial court’s
decision here in part de novo and in part for abuse of discretion. We will review
timeliness de novo, for while timeliness is generally reviewed for abuse of discretion, the
trial court here made no finding at all on timeliness. So we must make our own
determination on that topic. (Cook v. Boorstin (D.C. Cir. 1985) 763 F.2d 1462, 1468.)
We will also review the trial court’s decision concerning Colorado Plaintiffs’ interest in
this action and potential impairment of that interest de novo, for in this case, both issues
center on pure issues of law. (Guardianship of Saul H. (2022) 13 Cal.5th 827, 847; Fund
For Animals, Inc. v. Norton (D.C. Cir. 2003) 322 F.3d 728, 732.) Lastly, for the trial
court’s decision on adequacy of representation, we find it unnecessary to weigh in on the
appropriate standard of review. That is because, as covered below, we find reversal
appropriate even under the more deferential abuse of discretion standard.
11
C. Timeliness
With this shifting standard of review in mind, we turn to the requirements for
mandatory intervention. First, as no party disputes, Colorado Plaintiffs met their burden
to show that they timely filed their motion to intervene.
In evaluating timeliness, we consider the totality of the circumstances. (NAACP v.
New York, supra, 413 U.S. at p. 366.) In this case, Colorado Plaintiffs had no reason to
intervene in this action (and likely could not have intervened) until California Plaintiffs
reached a settlement agreement with defendants. Before that time, after all, this action
focused only on California law, with Hamilton pursuing a single PAGA cause of action
based on alleged violations of the California Labor Code. Colorado Plaintiffs had no
clear interest in this California-specific litigation, for in their complaint against
defendants, they only alleged that they suffered harm in Colorado. Nor did they have any
reason to know of this California action before the settlement, as the trial court
acknowledged.
After learning the scope of this action would expand, however, Colorado Plaintiffs
promptly moved to intervene. On October 29, 2021, California Plaintiffs and defendants
noted their intent to seek approval of a nationwide class settlement in this action, which
would fully resolve and release all outstanding claims raised in the Colorado action.
Three weeks later, Colorado Plaintiffs moved to intervene. We find their motion timely.
D. Interest in Action
Next, as the trial court appeared to accept, Colorado Plaintiffs met their burden to
show that they have an interest relating to the property or transaction that is the subject of
this action. No party disputes this point either.
To support intervention, a proposed “intervener’s interest must be direct rather
than consequential, and determinable in the action.” (People v. Superior Court (Good),
supra, 17 Cal.3d at p. 736; see also Donaldson v. United States (1971) 400 U.S. 517, 531
12
[Rule 24 requires “a significantly protectable interest”].) Colorado Plaintiffs
demonstrated such an interest here. At the time of the motion to intervene, California
Plaintiffs planned to seek approval of a nationwide settlement in this action; and if that
settlement were approved, it would extinguish Colorado Plaintiffs’ claims.
Under these circumstances, Colorado Plaintiffs clearly had an interest in this
action. (Technology Training Associates, Inc. v. Buccaneers Limited Partnership (11th
Cir. 2017) 874 F.3d 692, 696 (Technology Training) [proposed intervenors “have an
interest in this case because, as class members, they will be bound by the terms of the
settlement if it is approved and judgment is entered”]; In re Community Bank of Northern
Virginia (3d Cir. 2005) 418 F.3d 277, 314 [absent class members have an interest in the
case “by the very nature of [class action] representative litigation”].)
E. Impairment of Interest
For similar reasons, Colorado Plaintiffs met their burden to show that disposition
of this action may impair or impede their ability to protect their interest. (§ 387, subd.
(d)(1)(B).)
At the time of their motion to intervene, again, California Plaintiffs and defendants
had reached a settlement that, if approved, would bind a nationwide class that included
Colorado Plaintiffs. Colorado Plaintiffs, then, faced at this time the risk that California
Plaintiffs would pursue an unsatisfactory class action settlement, bind them to this
settlement, and extinguish their claims. On these facts, we conclude that Colorado
Plaintiffs have shown that disposition in this action “may” impair or impede their ability
to protect their interest. (§ 387, subd. (d)(1)(B), italics added; see Technology Training,
supra, 874 F.3d at pp. 696-697 [“the risk that the movants will be bound by an
unsatisfactory class action settlement satisfies [the impairment requirement]”]; In re
Community Bank of Northern Virginia, supra, 418 F.3d at p. 314 [absent class members’
interest may be impaired “by the very nature of [class action] representative litigation”].)
13
In finding otherwise, the trial court relied on Edwards, supra, 29 Cal.App.5th 725.
In that case, absent class members (i.e., class members who were not named plaintiffs)
sought to intervene in a putative class action suit after learning the named plaintiff had
entered into a proposed settlement with the defendant. (Id. at p. 728.) The court,
however, found mandatory intervention inappropriate. It noted that the absent class
members “truly only s[ought] one goal—to challenge the adequacy of the settlement.”
(Id. at p. 733.) It then concluded that under these circumstances, the absent class
members’ “ability to protect their interest would not be practically impaired or impeded
by the settlement . . . because they could opt out of or object to the settlement.” (Ibid.)
The trial court here found this reasoning “directly on point,” concluding that Colorado
Plaintiffs’ ability to opt out or object rendered intervention unnecessary.
We find the trial court’s reliance on Edwards misplaced. To start, we note that
federal case law on mandatory intervention under Rule 24—which again, was the
inspiration for section 387—is largely inconsistent with Edwards. Take Technology
Training, supra, 874 F.3d 692. Absent class members there sought to intervene to
challenge a proposed class action settlement. (Id. at p. 695.) Tracking the reasoning of
Edwards, the district court denied intervention, largely because it believed the class
members’ general procedural rights, including their right to object, made intervention
unnecessary. (Id. at p. 696.) But the Eleventh Circuit reversed. It concluded that a court
could not deny intervention simply because class members “have recourse to [class
action] procedural protections.” (Ibid.) The Eighth Circuit found likewise in Swinton v.
SquareTrade, Inc. (8th Cir. 2020) 960 F.3d 1001, finding “ ‘surely wrong’ ” the logic
“ ‘that class members are not entitled to intervene because they can protect their interests
by opting out of the class.’ ” (Id. at pp. 1004-1005.) And consistent with both these
cases, an oft-cited treatise on federal procedure states that “the availability of [class
action] procedural protections”—including the right to opt out of the class—“does not
14
automatically bar class members from showing that disposition of the action will impair
or impede their ability to protect their interests.” (6 Moore’s Federal Practice - Civil
(2024) § 24.03.)
All these authorities appear inconsistent with Edwards. We need not, however,
address the merits of Edwards here. It is enough for our purposes that this case is readily
distinguishable. Edwards, again, cabined its holding to cases involving absent class
members who “truly only seek one goal—to challenge the adequacy of the settlement.”
(Edwards, supra, 29 Cal.App.5th at p. 733.) But Colorado Plaintiffs’ principal goal here
was different. They sought to intervene to file a motion to dismiss, arguing this case
should be dismissed under the first-filed rule in favor of the Colorado action. And had
they been allowed to intervene, they would have been entitled to file this motion—even
if, as the record shows, the trial court appeared inclined to reject the motion to dismiss.
(Coalition of Arizona/New Mexico Counties for Stable Economic Growth v. Department
of Interior (10th Cir. 1996) 100 F.3d 837, 844 [“If a party has the right to intervene under
Rule 24(a)(2), the intervenor becomes no less a party than others and has the right to file
legitimate motions, including venue motions”].) Under these circumstances, we reject
the trial court’s conclusion that Colorado Plaintiffs’ right to object or opt out was an
adequate substitute for their right to intervene as a party. (See ibid.)
We also reject defendants’ claim that Edwards cannot be distinguished. They
argue that “[w]hat matters [under Edwards] is the non-parties’ interests, not the
procedural mechanism by which the non-party seeks to protect those interests, whether
via an objection to settlement, opposition to preliminary settlement approval, or motion to
dismiss.” So, they assert, Colorado Plaintiffs cannot distinguish Edwards on the ground
that “the proposed interveners there sought to challenge the settlement, whereas here,
Colorado Plaintiffs sought to dismiss the entire . . . action.” But defendants’ position
finds no support in Edwards. Edwards—whether rightly or wrongly—concluded that the
15
absent class members before it could not intervene because they sought only to challenge
the adequacy of the settlement. It reasoned that even without intervening, these class
members could still file objections challenging the settlement, or, alternatively, could opt
out of the class, making intervention unnecessary to accomplish their “one goal—to
challenge the adequacy of the settlement.” (Edwards, supra, 29 Cal.App.5th at p. 733.)
In the court’s view, then, that the absent class members sought only to challenge the
adequacy of the settlement was a critical consideration. And again, those are not the
circumstances of this case.
F. Adequacy of Representation
Turning to the final requirement for mandatory intervention, Colorado Plaintiffs
met their burden to show that their interest would not be adequately represented by
California Plaintiffs. Our analysis proceeds in three parts. First, we cover the standard
for showing inadequacy of representation. Next, we cover the requirement of personal
jurisdiction, focusing on cases holding that a court in one state generally cannot exercise
personal jurisdiction over the claims of individuals from other states. Last, we discuss
the implications of those cases here. We find these cases created a powerful incentive for
California Plaintiffs to settle with defendants to overcome potential personal jurisdiction
issues for the many out-of-state claims raised in this case. Under these circumstances, we
conclude the trial court abused its discretion in finding Colorado Plaintiffs had not met
their burden to show inadequacy of representation.
1. Standard For Showing Inadequacy of Representation
We begin with the standard for showing inadequacy of representation. To
establish that an existing party is an inadequate representative, proposed intervenors
typically face a low bar. They need only show that representation of their interests
“ ‘may be’ inadequate; and the burden of making that showing should be treated as
minimal.” (Trbovich v. United Mine Workers (1972) 404 U.S. 528, 538, fn. 10
16
[discussing Rule 24]; see also In re M.S., supra, 10 Cal.4th at p. 713, fn. 5 [“When a state
statute is modeled on a federal statute we presume the Legislature intended to adopt the
construction employed by the federal courts”]; Accurso, supra, 94 Cal.App.5th at p.
1138, review granted [finding “ ‘minimal’ ” showing can be sufficient].)
Some courts, however, have required a heightened showing when the existing
party and the proposed intervenor share the same objective, finding a presumption of
adequate representation in these circumstances. (Berger, supra, 597 U.S. at p. 196
[noting some lower courts have adopted this presumption].) A subset of these cases,
moreover, have specifically found this presumption appropriate in the context of class
actions and FLSA collective actions, though they have differed on the showing necessary
to overcome this presumption. The Fifth Circuit, for example, has applied a presumption
of adequacy and said that “[t]o overcome this presumption, the movant must establish
‘adversity of interest, collusion, or nonfeasance on the part of the existing party.’ ”
(Guenther v. BP Retirement Accumulation Plan (5th Cir. 2022) 50 F.4th 536, 543 [class
action].) The Eleventh Circuit, to give another example, has also applied a presumption
of adequacy, though a less weighty one. It has said that this presumption is “ ‘weak; in
effect, it merely imposes upon the proposed interven[o]rs the burden of coming forward
with some evidence to the contrary.’ ” (Technology Training, supra, 874 F.3d at p. 697
[class action]; see Burns v. MLK Express Services, LLC (M.D. Fla. Apr. 16, 2020) 2020
WL 1891175, p. *3 [imposing the same presumption in an FLSA collective action].)
In this case, both Colorado Plaintiffs and defendants appear to agree that a
presumption of adequate representation applies. But they dispute the showing necessary
to overcome this presumption. Colorado Plaintiffs, favoring the Eleventh Circuit’s
approach, argue that this presumption is weak and can be overcome with “ ‘some
evidence’ ” showing inadequacy. (Technology Training, supra, 874 F.3d at p. 697.) But
defendants, citing a Ninth Circuit case, assert that the proposed intervenor can rebut this
17
presumption of adequacy only with a compelling showing to the contrary. (Perry v.
Proposition 8 Official Proponents (9th Cir. 2009) 587 F.3d 947, 951 [compelling
showing required when the party and the proposed intervenor share the same ultimate
objective].)
We take a different approach, declining to apply any presumption of adequacy.
While some courts, to be sure, presume adequate representation where a movant’s
interests are identical to those of an existing party, “this presumption applies only when
interests ‘overla[p] fully.’ ” (Berger, supra, 597 U.S. at p. 197.) In this case, for reasons
we will expand on below, Colorado Plaintiffs’ interests and California Plaintiffs’ interests
do not overlap fully. That is because California Plaintiffs had a significant incentive to
settle with defendants to overcome potential personal jurisdiction issues, while Colorado
Plaintiffs faced no comparable incentive. Both California Plaintiffs and Colorado
Plaintiffs nonetheless may have retained similar overall interests. But “[w]here ‘the
absentee’s interest is similar to, but not identical with, that of one of the parties,’ that
normally is not enough to trigger a presumption of adequate representation.” (Ibid.)
2. Requirement of Personal Jurisdiction
We turn next to the requirement of personal jurisdiction. The Fourteenth
Amendment’s due process clause bars a state court from rendering a valid judgment
against a defendant unless it has personal jurisdiction over the defendant. (Bristol-Myers
Squibb Co. v. Superior Court (2017) 582 U.S. 255, 261-262 (Bristol-Myers).) A
defendant may waive this requirement of personal jurisdiction. (Insurance Corp. v.
Compagnie des Bauxites (1982) 456 U.S. 694, 704.) But absent waiver, a state court
must have one of two types of personal jurisdiction to proceed—either “general
(sometimes called all-purpose) jurisdiction [or] specific (sometimes called case-linked)
jurisdiction.” (Ford Motor Co. v. Montana Eighth Judicial Dist. (2021) 592 U.S. 351,
358 (Ford).)
18
General jurisdiction, as its name implies, allows a state court to exercise
jurisdiction over all claims against a defendant, even claims unrelated to the state or the
defendant’s conduct there. (Ford, supra, 592 U.S. at p. 358.) But it exists only when the
defendant is “ ‘essentially at home’ ” in the state—which, for a corporate defendant, is
often said to be either its place of incorporation or its principal place of business. (Ibid.)
Specific jurisdiction, in contrast, “covers defendants less intimately connected with a
State, but only as to a narrower class of claims.” (Id. at p. 359.) It exists for those claims
arising out of or relating to the defendant’s contacts with the state. (Ibid.) In general,
then, a state court has personal jurisdiction over claims against a defendant only if those
claims are sufficiently linked to the state (specific jurisdiction) or the defendant is
essentially at home in the state (general jurisdiction).
Applying these principles in Bristol-Myers, the Supreme Court held that a state
court could not entertain out-of-state claims against a defendant in a mass action, because
it lacked personal jurisdiction over these claims. In that case, hundreds of plaintiffs from
California and 33 other states sued a pharmaceutical company in California court,
alleging they suffered injuries because of one of the company’s drugs. (Bristol-Myers,
supra, 582 U.S. at pp. 258-259.) The company objected that California courts lacked
personal jurisdiction over the nonresidents’ claims. (Id. at p. 259.) And the Supreme
Court ultimately agreed, focusing on specific jurisdiction. Although the in-state and out-
of-state plaintiffs raised similar claims and allegedly suffered the same injuries, the court
found these similarities insufficient to allow the state to exercise specific jurisdiction over
the nonresidents’ claims. (Id. at p. 265.) It explained that the out-of-state plaintiffs still
needed to show that their claims had an adequate link to California; and because they
could not make that showing, California courts could not entertain their claims. (Id. at
pp. 264-266.)
19
Several courts since Bristol-Myers have found its reasoning requires courts to have
personal jurisdiction over the claims of both named plaintiffs and absent class members
in class actions. So in the absence of general jurisdiction, these courts have held that a
court in one state cannot entertain the claims of absent class members from other states—
unless these claims have the requisite connection to the forum state to support specific
jurisdiction. (See, e.g., Carpenter v. PetSmart, Inc. (S.D. Cal. 2020) 441 F.Supp.3d
1028, 1035, 1041-1042 [concluding that it lacked personal jurisdiction over absent class
members’ claims that arose outside of California and that had an insufficient link to
California]; Smith v. Apple, Inc. (S.D.N.Y. 2022) 583 F.Supp.3d 554, 565; Gaston v.
LexisNexis Risk Solutions, Inc. (W.D.N.C. 2020) 483 F.Supp.3d 318, 338, fn. 13.)1
Many courts have found similarly in FLSA collective actions, though in these cases,
courts speak of named plaintiffs and opt-in plaintiffs rather than named plaintiffs and
absent class members. Relying on Bristol-Myers’s reasoning, they have held that in the
absence of general jurisdiction, a court in one state cannot entertain the claims of opt-in
plaintiffs from other states—unless, again, these claims have the requisite connection to
the forum state to support specific jurisdiction. (See, e.g., Canaday v. Anthem
Companies, Inc. (6th Cir. 2021) 9 F.4th 392, 397 [“The principles animating Bristol-
Myers’s application to mass actions under California law apply with equal force to FLSA
collective actions under federal law”]; Vallone v. CJS Solutions Group, LLC (8th Cir.
2021) 9 F.4th 861, 865-866; Fischer v. Federal Express Corp. (3d Cir. 2022) 42 F.4th
366, 375 [“opt-in plaintiffs are required to demonstrate the court has personal jurisdiction
1 Most courts, however, have held that a court does not need to have personal
jurisdiction over the claims of absent class members, including three federal appellate
courts. (See, e.g., Mussat v. IQVIA, Inc. (7th Cir. 2020) 953 F.3d 441, 447; Lyngaas v.
Curaden AG (6th Cir. 2021) 992 F.3d 412, 435; Kelly v. RealPage Inc. (3d Cir. 2022) 47
F.4th 202, 211, fn. 7.)
20
with respect to each of their claims”]; Vanegas v. Signet Builders, Inc. (7th Cir. 2024)
113 F.4th 718, 724 [same].)2
3. California Plaintiffs’ Incentive to Settle
With this legal context in mind, we turn to the facts of this case. California
Plaintiffs’ personal claims all concern defendants’ conduct in California. But absent
class members’ claims and potential opt-in plaintiffs’ claims predominantly concern
defendants’ conduct outside of California. And all parties in this appeal appear to accept
that, absent defendants’ consent, California courts would lack personal jurisdiction over
these out-of-state claims. Considering the record before us, moreover, we cannot say that
defendants are essentially at home in California, as required for general jurisdiction. Nor
can we say on this record that the out-of-state claims had a sufficient link to California to
warrant specific jurisdiction. So absent defendants’ consent to suit, California courts
would appear to lack personal jurisdiction over these claims.
That is potentially problematic for California Plaintiffs. As just covered,
significant federal authority holds that a court cannot entertain claims of absent class
members and opt-in plaintiffs unless the court has personal jurisdiction over these claims.
The only exception is when the defendant waives personal jurisdiction. Under these
authorities, then, California Plaintiffs could pursue the out-of-state claims of absent class
members and opt-in plaintiffs only if defendants agreed to waive personal jurisdiction.
Or to put it another way, under these authorities, California Plaintiffs could pursue the
2 One federal appellate court and many federal district courts, however, have found
otherwise, concluding that courts need not have personal jurisdiction over the claims of
opt-in plaintiffs. But their reasoning has largely focused on the perceived broader
jurisdiction of federal courts compared to state courts. (See, e.g., Waters v. Day &
Zimmermann NPS, Inc. (1st Cir. 2022) 23 F.4th 84, 92-97 [finding Bristol-Myers
distinguishable, in part, because it “rests on Fourteenth Amendment constitutional limits
on state courts exercising jurisdiction over state-law claims”]; Haro v. Walmart, Inc.
(E.D. Cal., Feb. 27, 2023) 2023 WL 2239333, p. *3.)
21
out-of-state claims only with defendants’ blessing, creating a powerful incentive (and
more, an inescapable need) for these plaintiffs to settle with defendants if they were to
proceed with these claims. Otherwise, defendants could argue to the court, and very well
could convince the court, that these claims should be dismissed for lack of personal
jurisdiction. (See Canaday v. Anthem Companies, Inc., supra, 9 F.4th at p. 397 [FLSA
collective action]; Carpenter v. PetSmart, Inc., supra, 441 F.Supp.3d at p. 1035 [class
action].)3
None of this is to say, as Colorado Plaintiffs sometimes claim, that California
Plaintiffs in fact colluded with defendants to achieve a settlement. But at the very least, it
shows these plaintiffs had a significant incentive to settle with defendants to overcome
this potential issue. It shows too that these plaintiffs, relative to Colorado Plaintiffs, had
a diminished bargaining position. Colorado Plaintiffs, after all, sued in a state with
general jurisdiction over Vail Resorts, The Vail Corporation, and Heavenly, for according
to the record, all three are incorporated or have their principal place of business in
Colorado. (See Ford, supra, 592 U.S. at p. 359 [a corporation is subject to general
jurisdiction in its place of incorporation and principal place of business].) Colorado
Plaintiffs, then, sued in a state that has personal jurisdiction over all claims against
defendants, while California Plaintiffs sued in a state that arguably lacks the requisite
jurisdiction over most claims raised in this case.
3 Some federal courts—including the court where defendants, Gibson, and Saiz-Hawes
initially indicated they would file their proposed settlement—have transferred class
action suits from a state without general jurisdiction to a state with general jurisdiction, in
part because of these same potential personal jurisdiction issues. (See, e.g., D.L.
Markham, DDS, MSD, Inc. v. Variable Annuity Life Insurance Company (E.D. Cal., Mar.
25, 2022) 2022 WL 891290, p. *4, fn. 4; Cienega v. Echo Global Logistics, Inc. (E.D.
Cal., Feb. 4, 2022) 2022 WL 348167, pp. *3, *5.)
22
Under these circumstances, and even assuming we review for abuse of discretion
rather than de novo, we conclude the trial court abused its discretion in finding Colorado
Plaintiffs failed to meet their burden to show that California Plaintiffs did not adequately
represent their interest. As another court has observed, an existing party’s “ ‘greater
willingness to compromise can impede [it] from adequately representing the interests of a
nonparty.’ ” (Technology Training, supra, 874 F.3d at p. 697.) So too can circumstances
giving an existing party a “greater incentive” to compromise compared to the proposed
intervenors. (Ibid. [noting the risk that the plaintiffs’ claims may have been time-barred
gave “the plaintiffs a greater incentive to settle as compared to the movants”].) That is
the case here. And neither California Plaintiffs nor defendants have even asserted
differently in this appeal.4
II
Appeal Concerning the Judgment Approving the Settlement
We consider next Colorado Plaintiffs’ appeal concerning the judgment approving
the settlement. They contend the trial court lacked both subject matter and personal
jurisdiction, improperly struck some of their objections to the proposed settlement,
sanctioned a defective settlement notice, wrongly certified the class action, and
improperly found the settlement fair. Although we reject several of their arguments, we
4 We do not, and ultimately need not, address whether these circumstances would
prevent California Plaintiffs from being deemed adequate representatives for class
certification purposes. (See In re Tobacco II Cases (2009) 46 Cal.4th 298, 313 [class
certification requires, among other things, proof that the class representatives can
adequately represent the class].) We will simply note that federal courts—which
California courts often look to in class action matters—have “generally interpreted the
‘adequately represented’ prong of Rule 24 to set a lower bar than that of Rule 23,” the
federal rule dealing with class certification. (3 Newberg and Rubenstein on Class
Actions (6th ed. 2024) § 9:35; see Brinker Restaurant Corp. v. Superior Court (2012) 53
Cal.4th 1004, 1021 [looking to federal precedent].)
23
conclude that the trial court improperly presumed the settlement was fair and that this
error requires vacatur of the court’s judgment.
A. Subject Matter Jurisdiction
Starting with subject matter jurisdiction, Colorado Plaintiffs raise two arguments.
First, they assert that the trial court lacked subject matter jurisdiction in this case because
four related actions—the Heggen action, the Gibson action, the Roberds action, and the
Hamilton I action—had earlier been removed to federal court. We find differently. The
trial court, we agree, lacked subject matter jurisdiction over the cases that had been
removed to federal court. That is because once a notice of removal is filed, the state
court “ ‘los[es] all jurisdiction over the case’ ” and “ ‘shall proceed no further unless and
until the case is remanded.’ ” (Roman Catholic Archdiocese of San Juan, Puerto Rico v.
Acevedo Feliciano (2020) 589 U.S. 57, 63.) But this case—the Hamilton II action—has
never been removed to federal court. And even Colorado Plaintiffs’ own cited authorities
emphasize that “the removal statute only commands the state court to stay the case that
was actually removed.” (Kansas Public Employees Retirement System v. Reimer &
Koger Associates, Inc. (8th Cir. 1996) 77 F.3d 1063, 1069, italics added.)
Colorado Plaintiffs also suggest the trial court lacked subject matter jurisdiction
for another reason. They note that when a litigant files a separate state action for the
purpose of subverting the federal removal statute, some federal courts have found that
they have the authority to enjoin this action. (See, e.g., Kansas Public Employees
Retirement System v. Reimer & Koger Associates, Inc., supra, 77 F.3d at p. 1069.) They
then suggest that Hamilton filed such a separate state action when he filed this case to
assert a PAGA claim, in part because, in doing so, he improperly split his claims. But
even if that is true, no court ever attempted to stay this action. And while Colorado
Plaintiffs sought an injunction in federal court, they never obtained one. They asked
several courts to enjoin defendants from moving forward with the settlement, including a
24
federal district court and the 10th Circuit; but both rejected their efforts. (Quint v. Vail
Resorts, Inc. (10th Cir. 2023) 89 F.4th 803, 806.)
B. Personal Jurisdiction
Turning to personal jurisdiction, Colorado Plaintiffs raise several arguments.
They first argue that federalism concerns required the trial court to decline jurisdiction
because Colorado (which has general jurisdiction over defendants) has a greater interest
in this suit than California (which does not). We disagree. We acknowledge that
federalism concerns can matter in evaluating personal jurisdiction. “[P]rotecting
‘interstate federalism’ ” is in fact, together with “treating defendants fairly,” one of “two
sets of values” underlying the requirement of personal jurisdiction. (Ford, supra, 592
U.S. at p. 360.) But even so, when a defendant agrees to waive personal jurisdiction,
federalism concerns cannot step in to deprive the court of personal jurisdiction. The
Supreme Court long ago rejected the idea that federalism concerns could “operate[] as an
independent restriction on the sovereign power of the court.” (Insurance Corp. v.
Compagnie des Bauxites, supra, 456 U.S. at p. 703, fn. 10.) And only last year, a
plurality of the court wrote (and a majority agreed) that the court’s “personal jurisdiction
cases have never found a Due Process Clause problem sounding in federalism when an
out-of-state defendant submits to suit in the forum State. After all, personal jurisdiction
is a personal defense that may be waived or forfeited.” (Mallory v. Norfolk Southern
Railway Co. (2023) 600 U.S. 122, 144 (plur. opn.); see id. at p. 156 (conc. opn. of Justice
Alito) [finding the same].) Because in this case, defendants agreed to waive personal
jurisdiction, Colorado Plaintiffs cannot invoke the concept of federalism to override this
waiver.
Colorado Plaintiffs next argue “the trial court lacked personal jurisdiction over all
Class Members because non-California residents did not have a ‘significant contact or
significant aggregation of contacts, creating state interests,’ such that the application of
25
California law was neither ‘arbitrary nor fundamentally unfair.’ ” But Colorado Plaintiffs
distort the quote they rely on. The actual quote is from a plurality opinion and has
nothing to do with personal jurisdiction. It instead concerns choice of law, with the
plurality stating: “[F]or a State’s substantive law to be selected in a constitutionally
permissible manner, that State must have a significant contact or significant aggregation
of contacts, creating state interests, such that choice of its law is neither arbitrary nor
fundamentally unfair.” (Allstate Ins. Co. v. Hague (1981) 449 U.S. 302, 312-313 (plur.
opn.).) The plurality added in a footnote that different rules govern personal jurisdiction
and choice of law. (Id. at p. 317, fn. 23; see also Hanson v. Denckla (1958) 357 U.S.
235, 254 [distinguishing between personal jurisdiction and choice of law].)
Misciting another case, Colorado Plaintiffs suggest that California courts have
personal jurisdiction to “approve a nationwide settlement only where: (1) the defendant’s
principal offices are located in California; (2) the defendant does business in California;
(3) a significant number of class members are located in California; and (4) the
wrongdoing occurred in California.” (Italics & boldface omitted.) Colorado Plaintiffs
derive this principle from Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224.
But that case too focused on choice of law, not personal jurisdiction. (See id. at p. 241.)
It never even referred to personal jurisdiction. And although in their reply brief,
Colorado Plaintiffs shift their argument to focus on choice of law, arguing there that the
trial court wrongly applied both California procedural and substantive law, we decline to
consider this belated argument. (Neighbours v. Buzz Oates Enterprises (1990) 217
Cal.App.3d 325, 335, fn. 8.) We also decline to consider their related claim that the
settlement violates the presumption against the extraterritorial application of state law.
Although they at least raise this claim in their opening brief, they cite nothing in the
record to support it. We thus will disregard it. (Cal. Rules of Court, rule 8.204(a)(1)(C)
[each brief must “[s]upport any reference to a matter in the record by a citation to the
26
volume and page number of the record where the matter appears”]; Jumaane v. City of
Los Angeles (2015) 241 Cal.App.4th 1390, 1406 [courts “may disregard any claims when
no reference [to the record] is furnished”].)
Raising one final argument on personal jurisdiction, Colorado Plaintiffs contend
“a California state court that lacks personal jurisdiction of non-California plaintiffs has no
power to approve a nationwide settlement that would bind them.” Not so. So far our
discussion has focused on the due process rights of defendants. Here, though, Colorado
Plaintiffs shift their attention to the due process rights of plaintiffs and suggest the same
principles applicable to defendants apply to plaintiffs too. But they do not. As Bristol-
Myers explains, different requirements protect the due process rights of defendants and
plaintiffs. (Bristol-Myers, supra, 582 U.S. at p. 267.) And fatal to Colorado Plaintiffs’
claim here, in discussing the due process rights of plaintiffs, the Supreme Court has held
that “a forum State may exercise jurisdiction over the claim of an absent class-action
plaintiff, even though that plaintiff may not possess the minimum contacts with the forum
which would support personal jurisdiction over a defendant.” (Phillips Petroleum Co. v.
Shutts (1985) 472 U.S. 797, 811 (Shutts).)
C. Striking of Objections and Oppositions
Next, Colorado Plaintiffs challenge the trial court’s decision to strike the
objections and oppositions they filed to California Plaintiffs’ motion for preliminary
approval of the settlement and motion for final approval of the settlement. The trial court
struck Colorado Plaintiffs’ objections and opposition to the motion for preliminary
approval for “good cause” after defendants argued the filing was improper for various
reasons. The court later struck Colorado Plaintiffs’ objections and opposition to the
motion for final approval, once more for “good cause,” after defendants argued this filing
too was improper for various reasons. Colorado Plaintiffs challenge both decisions here
and, as relief, ask us to vacate the judgment approving the settlement.
27
But as California Plaintiffs and defendants note, Colorado Plaintiffs never show
(or even argue) in their opening brief that the trial court’s actions were prejudicial even if
in error. (See Code Civ. Proc., § 475 [no decision may be reversed unless prejudicial];
Jameson v. Desta (2018) 5 Cal.5th 594, 608-609 [appellants have the burden to show that
reversal is appropriate].) They also gloss over that they filed other objections to the
proposed settlement that were not stricken and that raised largely the same issues covered
in the stricken objections and oppositions. At any rate, because we will direct the trial
court to vacate the judgment for reasons covered below—and so grant Colorado Plaintiffs
the relief they seek—we decline to consider their claims concerning the stricken
objections and oppositions.
D. Notice
Colorado Plaintiffs also challenge the adequacy of the settlement notice, asserting
that it was defective because it failed to disclose the Colorado action. We reject their
argument.
Because the settlement here would bind absent class members and extinguish their
claims for monetary damages, the Fourteenth Amendment’s due process clause required
these individuals to receive notice and an opportunity to be heard before the trial court
entered judgment approving the settlement. (Shutts, supra, 472 U.S. at pp. 811-812.) In
these types of cases, California law, like federal law, requires this notice to be provided
after the class action has been certified or is proposed for certification for purposes of
settlement. (Cal. Rules of Court, rules 3.766, 3.769(c); Fed. Rules Civ. Proc., rule
23(c)(2), (e)(1), 28 U.S.C.)
Describing the notice required following certification, the Supreme Court has said:
“The notice must be the best practicable, ‘reasonably calculated, under all the
circumstances, to apprise interested parties of the pendency of the action and afford them
an opportunity to present their objections.’ ” (Shutts, supra, 472 U.S. at p. 812.) It has
28
added that the notice “should describe the action and the [class members’] rights in it,”
including their right to opt out. (Ibid.) Other courts have since described the standard for
settlement notices. Some, for example, have said “ ‘[n]otice is satisfactory if it
“generally describes the terms of the settlement in sufficient detail to alert those with
adverse viewpoints to investigate and to come forward and be heard.” ’ ” (In re Hyundai
and Kia Fuel Economy Litigation (9th Cir. 2019) 926 F.3d 539, 567.) Others, to give
another example, have said “the settlement notice must ‘fairly apprise the prospective
members of the class of the terms of the proposed settlement and of the options that are
open to them in connection with the proceedings.’ ” (Wal-Mart Stores, Inc. v. Visa
U.S.A., Inc. (2d Cir. 2005) 396 F.3d 96, 114.) California courts have tended to cite the
latter language. (See, e.g., Duran v. Obesity Research Institute, LLC (2016) 1
Cal.App.5th 635, 644; Litwin v. iRenew Bio Energy Solutions, LLC (2014) 226
Cal.App.4th 877, 883.)
Here, Colorado Plaintiffs argue that the settlement notice was flawed because it
did not inform class members about the Colorado action or their ability to participate in
it. They cite in support Trotsky v. Los Angeles Fed. Sav. & Loan Assn. (1975) 48
Cal.App.3d 134. In that case, settling litigants failed to inform both the trial court and
absent class members about a related action and the effect of the settlement on that
action. (Id. at pp. 145-146.) The court found this failure prevented a full and fair
consideration of the adequacy of the settlement. (Id. at p. 146.) It also suggested that the
notice failed to fairly apprise potential class members of their options, stating that notice
of the related case would have been “highly significant” to class members in deciding
whether to opt out or object and would have created a “powerful incentive” for class
members to investigate whether the named plaintiff in this case or the related case better
represented their interests. (Id. at pp. 151-152.) Citing this reasoning, Colorado
29
Plaintiffs assert that the settlement notice here was likewise flawed in failing to inform
class members about the Colorado action and their ability to participate in it.
We reject Colorado Plaintiffs’ argument and decline to follow Trotsky to the
extent it suggests that a class notice necessarily violates the due process clause when it
neglects to mention a related case. To begin, we agree the class members here would
have been better informed about their options had they known about the Colorado action.
We accept too that a notice including this type of information would, as a policy matter,
be preferable, at least in some cases, for settling parties could readily provide this
information and the information could potentially benefit class members seeking to
investigate their options. But we are not persuaded that the Fourteenth Amendment’s due
process clause requires a settlement notice to discuss related cases. The due process
clause establishes “minimal,” not ideal, procedural requirements. (Shutts, supra, 472
U.S. at p. 812.) It is also flexible, “eschew[ing] rigid or formalistic limitations.” (Board
of Regents v. Roth (1972) 408 U.S. 564, 572.) Mindful of these considerations, we
decline to find that a settlement notice that omits related cases has necessarily failed to
fairly apprise potential class members of the settlement terms and their options.
In reaching this conclusion, we acknowledge, as the Trotsky court found, that
information about related cases can be highly relevant. But it also may carry marginal
relevance, as could be true, for instance, for a related case from a copycat plaintiff. The
circumstances of the case matter. And even when information is highly relevant, its
omission from a settlement notice does not necessarily violate the due process clause.
All sorts of information can be highly relevant to class members, including the formula
for calculating individual damages, the potential value of the class’s claims, and existing
objections to the settlement. Yet courts have declined to find that these details must be
included in a settlement notice. (Haggart v. Woodley (Fed. Cir. 2016) 809 F.3d 1336,
1348 [“notice need not ‘contain a formula for calculating individual awards’ ” or provide
30
“all relevant details”]; Lane v. Facebook, Inc. (9th Cir. 2012) 696 F.3d 811, 826 [due
process “does not require an estimate of the potential value” of the class’s claims];
Rodriguez v. West Publishing Corp. (9th Cir. 2009) 563 F.3d 948, 962 [notice not
defective for failing to detail the content of objections to the settlement].)
Most relevant here, moreover, the Ninth Circuit in Roes, 1-2 v. SFBSC
Management, LLC (9th Cir. 2019) 944 F.3d 1035, 1045 (SFBSC Management) rejected
an argument mirroring Colorado Plaintiffs’ own. In that case, the appellants—who were
objectors to a class settlement—argued that the settlement notice should have disclosed
two related cases. They reasoned that in omitting this information, “the notice did not
provide sufficient information to allow class members to ‘make an intelligent, informed
decision about what to do.’ ” (Id. at p. 1044.) But the court rejected their claim. It
wrote: “While it may be true that such information could have allowed class members to
make a more ‘informed’ decision about their options, declining to include the information
did not contravene the due process requirement to provide sufficient information about
the settlement in this case.” (Id. at p. 1045.)
We conclude similarly here. In this case, an 11-page settlement notice informed
class members about the nature of the suit, the general settlement terms, their estimated
share of the settlement, their ability to opt out and the consequence of failing to do so,
their right to object and be heard, and more. If any class member desired more
information, the notice also described several resources. They could contact the
settlement administrator, inspect the court files, or request a copy of the settlement
agreement. Courts have deemed this very type of information sufficient to satisfy due
process requirements. (Gooch v. Life Investors Ins. Co. of America (6th Cir. 2012) 672
F.3d 402, 423 [“ ‘[t]he contents of a . . . notice are sufficient if they inform the class
members of the nature of the pending action, the general terms of the settlement, that
complete and detailed information is available from the court files, . . . that any class
31
member may appear and be heard at the hearing,’ [citation], and ‘information [about] the
class members’ right to exclude themselves and the results of failure to do so’ ”].) And
while, again, we accept that the settlement notice would have been more informative had
it disclosed the Colorado action, we cannot say that the notice, simply because it omitted
this information, failed to “ ‘fairly apprise the prospective members of the class of the
terms of the proposed settlement and of the options that are open to them in connection
with the proceedings.’ ” (Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., supra, 396 F.3d at p.
114.)
E. Settlement and Certification
Lastly, Colorado Plaintiffs challenge the settlement and certification of the class
action. Although their arguments on these topics are many, our discussion focuses on
one—their contention that the trial court wrongly presumed the proposed settlement was
fair. We agree the court improperly presumed the settlement was fair, undermining the
court’s ultimate conclusion that the settlement was in fact fair. We also find this
improper presumption affected the court’s decision to certify the class, for its decision to
certify the class was tied to its decision finding the settlement fair. For these reasons, we
conclude that the trial court’s judgment approving the settlement must be set aside.
Before final approval of a class action settlement, the trial “court must conduct an
inquiry into the fairness of the proposed settlement.” (Cal. Rules of Court, rule,
3.769(g).) In conducting this inquiry here, the trial court believed a presumption of
fairness applied under the reasoning of Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th
1794 (Dunk). In that case, the court said “a presumption of fairness exists where: (1) the
settlement is reached through arm’s-length bargaining; (2) investigation and discovery
are sufficient to allow counsel and the court to act intelligently; (3) counsel is
experienced in similar litigation; and (4) the percentage of objectors is small.” (Id. at p.
32
1802.) Dunk cited, in support, a prominent treatise on class actions—Newberg on Class
Actions (now Newberg and Rubenstein on Class Actions). (Dunk, at p. 1802.)
But Dunk itself involved a negotiated settlement after class certification, not
before. (Dunk, supra, 48 Cal.App.4th at p. 1800.) And in a footnote, the Dunk court
cautioned that “class action settlements should be scrutinized more carefully if there has
been no adversary certification.” (Id. at p. 1803, fn. 9.) The treatise Dunk cited says the
same. It explains that while courts have applied a presumption of fairness when the
parties proposed a settlement for approval after class certification, courts have often taken
a different approach “where the parties proposed a settlement for approval prior to class
certification, as the danger of collusion [i]s greater in such circumstances.” (4 Newberg
and Rubenstein on Class Actions, supra, § 13:45; see also id., § 13:13 [noting that several
circuits have “demanded closer inspection—at the final fairness hearing—of settlements
that were proposed prior to class certification”].)
Case law bears this out. The Ninth Circuit, for instance, has “never endorsed
applying a broad presumption of fairness, but ha[s] actually required that courts do the
opposite—by employing extra caution and more rigorous scrutiny—when it comes to
settlements negotiated prior to class certification.” (SFBSC Management, supra, 944
F.3d at p. 1049.) Many other federal courts have similarly demanded greater scrutiny of
such settlements. (In re General Motors Corp. Pick-Up Truck Fuel Tank Products
Liability Litigation (3d Cir. 1995) 55 F.3d 768, 805; Mars Steel Corp. v. Continental
Illinois Nat. Bank and Trust (7th Cir. 1987) 834 F.2d 677, 681.) So too have California
courts. (Carter v. City of Los Angeles (2014) 224 Cal.App.4th 808, 819 [“When class
certification is deferred to the settlement stage, a more careful scrutiny of the fairness of
the settlement is required”]; Dunk, supra, 48 Cal.App.4th at p. 1803, fn. 9; see Cohelan
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on California Class Actions (2023-2024 ed.) § 9:14 [“A precertification class settlement
is reviewed on appeal using a ‘higher standard of fairness’ ”].)5
Consistent with these authorities, we find a presumption of fairness inapplicable in
this context. As another court has explained, “settlements negotiated prior to class
certification are subject to a heightened risk that self-interest, even if not purposeful
collusion, will seep its way into the settlement terms”—favoring a more probing inquiry
than may normally be required. (SFBSC Management, supra, 944 F.3d at p. 1060.) As
covered above, moreover, this risk is greater still here because of California Plaintiffs’
incentive to settle with defendants to overcome potential personal jurisdiction issues. For
these reasons, we find the trial court erred in presuming the settlement was fair under
Dunk.
We further find that in improperly applying this presumption, the trial court
abused its discretion. While a decision about the fairness of a settlement rests within the
discretion of the trial court (Clark v. American Residential Services LLC (2009) 175
Cal.App.4th 785, 798), “[a]n abuse of discretion is shown when the trial court applies the
wrong legal standard” (Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725,
733). That is the case here. (In re Apple Inc. Device Performance Litigation (9th Cir.
2022) 50 F.4th 769, 783 [“the district court abused its discretion by stating that it applied
a presumption of reasonableness and fairness to the settlement”].) For similar reasons,
we find the trial court’s decision to certify the class problematic too. Because the court
appeared to find certification appropriate on the ground that the settlement was fair, we
5 The Ninth Circuit, moreover, has questioned whether a presumption of fairness should
ever apply under federal law, particularly given “Congress’ 2018 codification of
standards for evaluating whether a proposed class settlement is ‘fair, reasonable, and
adequate.’ ” (SFBSC Management, supra, 944 F.3d at p. 1049, fn. 12 [a presumption of
unfairness “is very likely inappropriate under the standards now codified”].)
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conclude that the court’s flawed presumption of fairness undermined both the fairness
inquiry and its certification decision.6
Favoring a contrary conclusion, California Plaintiffs assert that California courts
have actually permitted a presumption of fairness for precertification settlements, citing
Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th 224. We agree that Wershba
lends some support to their position. The court there, quoting Dunk, said “that California
courts have recognized that ‘class action settlements should be scrutinized more carefully
if there has been no adversary certification.’ ” (Id. at p. 240.) It noted too “the
heightened need for class protection in precertification settlements.” (Ibid.) Yet it then
proceeded to presume that the precertification settlement before it was fair, citing Dunk
and its four-factor test in support. (Id. at p. 245.) We decline to follow that approach
here. We instead believe the better practice is for courts to employ more searching
scrutiny when evaluating precertification settlements—period—without applying any
presumption of fairness. That is consistent with Dunk’s cautioning that these settlements
should be scrutinized more carefully. (Dunk, supra, 48 Cal.App.4th at p. 1803, fn. 9.)
And it is consistent with federal case law finding the same and rejecting any presumption
of fairness. (See, e.g., SFBSC Management, supra, 944 F.3d at p. 1049; see Linder v.
Thrifty Oil Co. (2000) 23 Cal.4th 429, 437 [noting California courts have looked to the
procedures governing federal class actions for guidance on novel issues].)
6 To the extent the court found certification appropriate because it believed the
settlement was fair, we note that several courts have rejected this practice. (Amchem
Products, Inc. v. Windsor (1997) 521 U.S. 591, 621-622 [federal courts cannot find
certification proper simply because they believe a proposed settlement is fair]; Luckey v.
Superior Court (2014) 228 Cal.App.4th 81, 94 [in the settlement-only class context,
courts must find both that the settlement is fair and that certification is appropriate, with
some “certification issues . . . requir[ing] heightened scrutiny”].)
35
California Plaintiffs further suggest that the trial court’s presuming fairness was
harmless, noting that the trial court followed Kullar v. Foot Locker Retail, Inc. (2008)
168 Cal.App.4th 116 and only applied an “initial” presumption of fairness. Kullar noted
that the presumption of fairness under Dunk is an “ ‘initial presumption [that] must then
withstand the test of the plaintiffs’ likelihood of success.’ ” (Id. at p. 130.) And the trial
court here, consistent with Kullar, stated the very same. Still, because the trial court
improperly started with the presumption that the settlement was fair, we find this
presumption—even if only labeled an initial presumption—undermined its entire
analysis. (See Costco Wholesale Corp. v. Superior Court, supra, 47 Cal.4th at p. 733
[“An abuse of discretion is shown when the trial court applies the wrong legal standard”];
In re Apple Inc. Device Performance Litigation, supra, 50 F.4th at p. 783 [“while the
district court’s probing analysis suggests that it may have applied heightened scrutiny, its
written order relied on a flawed legal standard,” requiring reversal].)
Because we find reversal appropriate based on the trial court’s flawed presumption
of fairness, we decline to address Colorado Plaintiffs’ remaining arguments concerning
the settlement terms and class certification. We will not detail all these remaining
arguments here. But we will note a couple issues that appeared to go unaddressed in the
proceedings below and that warrant attention on remand.
First, the trial court should consider the propriety of the settlement’s opt-in
procedures for the FLSA collective action. The settlement requires the settlement
administrator to send checks to all class members, and it provides that class members
who cash these checks will be deemed to have opted into the FLSA collective action.
The settlement notice mentioned this same opt-in procedure for potential members of the
collective action. But the legitimacy of that practice is disputed. Some courts have
approved settlements following this practice. (Franco v. Ruiz Food Products, Inc. (E.D.
Cal., Nov. 27, 2012) 2012 WL 5941801, p. *24.) But others have rejected this practice,
36
some on the ground that this approach is inconsistent with the FLSA’s language stating
that “ ‘[n]o employee shall be a party plaintiff to any such action unless he gives his
consent in writing to become such a party and such consent is filed in the court in which
such action is brought.’ ” (Smothers v. NorthStar Alarm Services, LLC (E.D. Cal., Jan.
22, 2019) 2019 WL 280294, pp. *10-*11 [finding a settlement allowing this practice
“fatally flawed”]; see, e.g., Salinas v. Nestle Purina Petcare Company (E.D. Cal., Apr.
19, 2024) 2024 WL 1722301, p. *15 [“Courts have repeatedly determined the cashing of
a check to opt-in to an FLSA collective fails to satisfy the FLSA’s requirement of written
consent”].)
Second, the trial court should consider the propriety of another feature of the
settlement’s opt-in procedures. Both the settlement and the settlement notice contemplate
that each covered individual will receive a single check containing both FLSA and class
settlement payments. Some courts, however, have found this payment structure
“suspect.” (Smith v. Kaiser Foundation Hospitals (S.D. Cal., Nov. 7, 2019, No. 3:18-
CV-00780-KSC) 2019 WL 5864170, p. *11.) They have reasoned that this structure
offers no option for individuals who want to remain in the class and accept their class
settlement payment, yet do not want to opt into the FLSA collective action. These
individuals are instead left with an all-or-nothing choice—either opt into the FLSA
collective action and take the payment, or forego compensation altogether. (Ibid.; see
Sharobiem v. CVS Pharmacy, Inc. (C.D. Cal., Sept. 2, 2015) 2015 WL 10791914, p. *3
[“We question the legality of imposing such a penalty on the exercise of a federal right to
not opt-in under the FLSA”].) We express no opinion here on the merits of these issues,
nor do we mean to suggest that these are the only issues the trial court should address on
remand. We simply note that the trial court should consider these and other appropriate
issues on remand.
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DISPOSITION
The orders denying the motion to intervene and the motion to set aside and vacate
the judgment are reversed. The matter is remanded for further proceedings consistent
with this opinion, including vacatur of the judgment approving the settlement and entry
of an order granting Colorado Plaintiffs leave to intervene. Colorado Plaintiffs are
entitled to recover their costs on appeal. (Cal. Rules of Court, rule 8.278(a).)
/s/
BOULWARE EURIE, J.
We concur:
/s/
ROBIE, Acting P. J.
/s/
MESIWALA, J.
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