Bernuy v. Bridge Property Management Co.

Filed 3/30/23
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION THREE
RONALD BERNUY,
Plaintiff and Appellant,
A163240
v.
BRIDGE PROPERTY (City & County of San Francisco
MANAGEMENT COMPANY, Super. Ct. No. CGC-19-579278)
Defendant and Respondent.
The Investigative Consumer Reporting Agencies Act (ICRAA; Civ.
Code, §1786 et seq.)1 is a consumer protection measure that mandates certain
disclosures for investigative consumer reports, which as relevant here are
often used by landlords to make decisions regarding consumers who apply for
housing. ICRAA requires the adoption of “reasonable procedures” for
providing consumer information “in a manner which is fair and equitable to
the consumer, with regard to the confidentiality, accuracy, relevancy, and
proper utilization” of their information. (§ 1786, subd. (f).) Any investigative
consumer reporting agency or user of information that fails to comply with
the requirements of ICRAA is liable to the affected consumer for any actual
damages or $10,000, whichever sum is greater. (§ 1786.50, subd. (a)(1).)
1 All unlabeled statutory references are to this code.
1
In 2015, a conflict developed in the Courts of Appeal over whether
ICRAA was unconstitutionally vague and therefore unenforceable. In First
Student Cases (2018) 5 Cal.5th 1026 (First Student), the California Supreme
Court resolved the conflict by upholding the constitutional validity of ICRAA
and disapproving two earlier Court of Appeal decisions that concluded to the
contrary.
This action filed by plaintiff Ronald Bernuy is one of 27 consolidated
actions seeking damages against defendant Bridge Property Management
Company (BPMC) for its commission of ICRAA violations in 2017. By
stipulation and court order, Bernuy’s action has been designated a
“bellwether” case for purposes of adjudicating the following issues:
(1) whether the California Supreme Court’s 2018 decision in First Student
amounted to a subsequent change in the law that relieves BPMC of liability
for its ICRAA violations; and (2) whether certain plaintiffs’ ICRAA claims are
time-barred under the applicable two-year statute of limitations or whether
the limitations period was tolled by the pendency of a putative class action.
The trial court granted summary adjudication in favor of BPMC on both of
these issues.
We conclude the First Student decision is properly given retroactive
effect so as to subject BPMC to liability for its ICRAA violations. But we also
conclude that the policy considerations underlying the class action tolling
doctrine do not support its application in Bernuy’s case and that therefore his
ICRAA claim is time-barred. Thus, while we hold the trial court erred in
refusing retroactive application of the First Student decision, we will affirm
the court’s judgment in favor of BPMC on statute of limitations grounds.
2
FACTUAL AND PROCEDURAL BACKGROUND
The following undisputed facts are taken largely from the trial court’s
order on the parties’ cross-motions for summary adjudication.
BPMC manages and operates an affordable housing complex in Chino
known as Ivy II at College Park Apartments (Ivy II). On May 24, 2017,
BPMC received Bernuy’s “ ‘Application for Residency’ ” for a unit in Ivy II.
As part of the application process, Bernuy signed a “ ‘Release of
Information’ ” form, and at some point by August 29, 2017, BPMC used the
release form to obtain “ ‘investigative consumer reports’ ” about Bernuy from
a company called National Tenant Network (NTN). BPMC obtained at least
five investigative consumer reports about Bernuy without complying with
ICRAA’s legal requirements. These reports included: (1) a County Criminal
Search report, dated August 9, 2017; (2) a multistate Criminal Search report,
dated August 29, 2017; (3) an Office of Foreign Asset Control Terrorist
Search report, dated August 9, 2017; (4) a Tenant Performance Profile report,
dated August 9, 2017; and (5) a Decision Point Plus report, dated August 9,
2017.
On May 22, 2019, other Ivy II applicants who are not parties to this
litigation filed a federal class action lawsuit called Limson v. Bridge Property
Management Company (N.D.Cal. 2019) 416 F.Supp.3d 972 (Limson). As
relevant here, the Limson class action complaint alleged that BPMC violated
ICRAA for the same reasons alleged in the instant lawsuit. On December 9,
2019, the Limson plaintiffs voluntarily dismissed their ICRAA claims,
apparently because they were unable to meet the $5 million amount-in-
controversy requirement for class actions in federal court.2
2 We grant BPMC’s request for judicial notice of four case documents
from the Limson action. Though the trial court made no ruling on BPMC’s
3
Meanwhile, on September 16, 2019, Bernuy filed this action against
BPMC alleging causes of action for violation of ICRAA, unfair business
practices, declaratory relief, and invasion of privacy. Bernuy’s complaint
seeks “general and special damages in an amount to be determined by a jury
for each violation” of his rights, as well as statutory damages, under ICRAA.
BPMC applied for trial court designation of Bernuy’s case as complex,
seeking to relate the action to 27 other lawsuits filed against BPMC for
alleged ICRAA violations. The trial court granted a complex designation and
consolidated Bernuy’s case with the others for pretrial purposes.3 Thereafter
Bernuy’s action was selected as the “bellwether case” for a hearing on cross-
motions for summary adjudication addressing a range of issues common to
the plaintiffs in the consolidated cases.
As relevant here, the trial court ultimately issued a decision concluding
BPMC could not be held liable for ICRAA violations committed before the
California Supreme Court upheld ICRAA’s constitutional validity in First
Student, supra, 5 Cal.5th 1026. In the trial court’s view, BPMC had
“reasonably relied” on a pair of 2007 Court of Appeal decisions that had
invalidated ICRAA as unconstitutionally vague. The court also determined
that Bernuy’s ICRAA claim was filed after the applicable statute of
request for judicial notice of these documents in the proceedings below, the
court referred to such matters in its decision. However, we deny BPMC’s
request for judicial notice of court documents reflecting that other plaintiffs
had filed ICRAA lawsuits against BPMC in San Bernardino County before
the Limson class action was filed. These documents were not before the trial
court, and they are irrelevant to our disposition of the case. (See People v.
Rowland (1992) 4 Cal.4th 238, 268 fn. 6.)
3 One of the cases was voluntarily dismissed, leaving a total of 27
consolidated cases currently intact.
4
limitations period had run and that the Limson class action did not toll the
limitations period in his case.
Pursuant to the parties’ stipulation, the trial court severed Bernuy’s
action from the consolidated cases and dismissed all causes of action with
prejudice so that Bernuy could seek expedited appellate review of the court’s
summary adjudication order on the retroactivity and statute of limitations
issues. The court stayed all the consolidated cases pending the appellate
decision in this case. This appeal followed.
DISCUSSION
In enacting ICRAA, the Legislature emphasized the need to ensure
that “investigative consumer reporting agencies exercise their grave
responsibilities with fairness, impartiality, and a respect for the consumer’s
right to privacy.” (§ 1786, subd. (b).) As relevant here, ICRAA includes the
following liability provision to encourage compliance with its terms: “(a) An
investigative consumer reporting agency or user of information that fails to
comply with any requirement under this title with respect to an investigative
consumer report is liable to the consumer who is the subject of the report in
an amount equal to the sum of all the following: [¶] (1) Any actual damages
sustained by the consumer as a result of the failure or, except in the case of
class actions, ten thousand dollars ($10,000), whichever sum is greater.”
(§ 1786.50, subd. (a)(1).)
This case presents two questions. First, did the trial court erroneously
rule that the 2018 decision in First Student should not be given retroactive
effect? Second, did the court err in holding that the Limson class action did
not toll the applicable limitations period? We address these issues in order.
5
A. Retroactivity of the First Student Decision
1. Additional background facts
The material facts are undisputed. In 2007, a division of the Fourth
District Court of Appeal ruled that ICRAA was unconstitutionally vague in
Ortiz v. Lyon Management Group, Inc. (2007) 157 Cal.App.4th 604 (Ortiz), a
case that involved tenant screening reports. Specifically, the appellate court
held that ICRAA failed to provide adequate notice as to its application
because persons of reasonable intelligence could not readily determine
whether the unlawful detainer information implicated in tenant screening
reports was “ ‘character’ ” information subject to ICRAA or
“ ‘creditworthiness’ ” information governed by the Consumer Credit Reporting
Agencies Act (CCRAA; § 1785.1 et seq.). (Ortiz, at p. 611.) On the same day,
the same division issued another opinion reiterating and applying Ortiz’s
ICRAA analysis in a companion case called Trujillo v. First American
Registry, Inc. (2007) 157 Cal.App.4th 628 (Trujillo). (See Trujillo, at p. 640.)
The California Supreme Court denied petitions for review and requests for
depublication of these companion cases. (Ortiz (Rae F.) v. Lyon Management
Group, Inc. (Mar. 12, 2008, No. S159802) __ Cal.4th __ [2008 Cal. Lexis 3069]
*1; Trujillo (Robert) v. First American Registry, Inc. (Mar. 12, 2008,
No. S159821) __ Cal.4th __ [2008 Cal. Lexis 2940] *1.)
A few years later, current and former bus drivers filed a class action
lawsuit alleging the defendant conducted employee background checks on
them in 2010 that violated ICRAA. (See First Student, supra, 5 Cal.5th at
pp. 1030, 1031.) In 2015, a division of the Second District Court of Appeal
issued a published opinion in Connor v. First Student, Inc. (Connor),4
4 After the California Supreme Court granted review of Connor, the
name of the case was changed to First Student Cases.
6
concluding that, “although ICRAA and CCRAA might overlap to some degree,
there is no ‘positive repugnancy’ between them that would render ICRAA
unconstitutional.” (First Student, at p. 1032, quoting the Court of Appeal’s
Connor opinion.) Thus, the appellate court held, agencies that provide
reports “ ‘can comply with each act without violating the other.’ ” (Ibid.)
Because the 2015 opinion squarely rejected Ortiz’s analysis that ICRAA is
unconstitutionally vague, the California Supreme Court granted review of the
case in order to resolve the appellate court conflict. (See First Student, at
p. 1030.) Under the California Rules of Court in effect at the time, the grant
of review resulted in the automatic depublication of the Connor decision.
(See Cal. Rules of Ct., former rule 8.1115.)5
On August 20, 2018, the California Supreme Court issued its opinion in
First Student, supra, 5 Cal.5th 1026. The high court began by observing that
both ICRAA and the modern version of CCRAA were enacted in 1975 (First
Student, at p. 1032) and that the most recent statutory amendment occurred
in 1998 when the Legislature amended ICRAA to “expand the statute’s scope
to include character information obtained under CCRAA or ‘obtained through
any means’ ” (First Student, at pp. 1033–1034). Describing the “threshold
question” as “one of statutory interpretation,” the court reasoned that if
ICRAA and CCRA “are sufficiently clear to indicate that both apply” to a
background report, then “neither statute is vague.” (First Student, at
p. 1034.) In affirming the Court of Appeal judgment, the court agreed that,
5 All further references to rules are to the California Rules of Court.
Reference to former rule 8.1115’s rule of automatic depublication of a
published opinion of a Court of Appeal upon a grant of review may be found
at https://www.courts.ca.gov/documents/Rules-160601.pdf (as of Mar. 30,
2023). Effective July 1, 2016, the California Rules of Court were amended to
eliminate automatic depublication when the California Supreme Court
grants review of the case.
7
despite any partial overlap between ICRAA and CCRAA, the two statutes
“can coexist because both acts are sufficiently clear [citation], and each act
regulates information that the other does not.” (First Student, at p. 1038.)
Observing that “potential employers can comply with both statutes without
undermining the purpose of either” (id. at p. 1036), the California Supreme
Court disapproved the Ortiz and Trujillo decisions to the extent they held
otherwise (First Student, at p. 1038). The matter was then remanded “for
further proceedings” consistent with the court’s opinion. (Ibid.)
2. Analysis
“ ‘ “The general rule that judicial decisions are given retroactive effect
is basic in our legal tradition.” ’ ” (Frlekin v. Apple Inc. (2020) 8 Cal.5th 1038,
1057 (Frlekin).) However, exceptions are sometimes made in the interests of
“ ‘fairness and public policy.’ ” (Ibid.) In discussing when one of its own
decisions might be excepted from retroactive effect, the California Supreme
Court has emphasized that reliance on the prior rule or decision must be
justified: “Although prospective application may be appropriate in some
circumstances when our decision alters a settled rule upon which parties
justifiably relied, ordinarily this is only when a decision constitutes a ‘ “clear
break” ’ with decisions of this court or with practices we have sanctioned by
implication, or when we ‘disapprove[] a longstanding and widespread practice
expressly approved by a near-unanimous body of lower-court authorities.’ ”
(Grafton Partners v. Superior Court (2005) 36 Cal.4th 944, 967 (Grafton
Partners).) A party seeking to avoid the general rule of retroactivity
shoulders the burden to demonstrate its justifiable reliance on the prior rule.
(See In re Retirement Cases (2003) 110 Cal.App.4th 426, 443 (Retirement
Cases).)
8
The California Supreme Court has repeatedly cautioned that a single
erroneous Court of Appeal decision “is hardly the kind of ‘uniform body of law
that might be justifiably relied on.’ ” (Grafton Partners, supra, 36 Cal.4th at
p. 967; see Pineda v. Williams-Sonoma Stores, Inc. (2011) 51 Cal.4th 524, 536
[“it is difficult to see how a single decision by an inferior court could provide a
basis to depart from the assumption of retrospective operation”].) Similarly,
a conflict among the Courts of Appeal “bars a claim of justifiable reliance
because ‘. . . there was no clear rule on which anyone could have justifiably
relied.’ ” (Burckhard v. Del Monte Corp. (1996) 48 Cal.App.4th 1912, 1917.)
With these principles in mind, we assess whether BPMC met its
burden to demonstrate justifiable reliance on the Ortiz and Trujillo decisions
so as to bar retroactive operation of the First Student decision to its ICRAA
violations.
As a preliminary matter, we seriously doubt that the Ortiz and Trujillo
decisions, taken together, are properly viewed as having established “ ‘a
longstanding and widespread practice expressly approved by a near-
unanimous body of lower-court authorities’ ” or as constituting the requisite
“ ‘uniform body of law’ ” that the California Supreme Court would view as
defeating the general rule of retroactivity. (Grafton Partners, supra, 36
Cal.4th at p. 967.) After all, Ortiz and Trujillo were companion decisions
issued by the same court on the same day, and they can hardly be said to
represent a long line of settled lower court authority.6 Moreover, the
circumstance that review was denied in those cases did not imply California
6 The record contains no indication that investigative consumer reporting
agencies and users of consumer information reports were routinely failing to
comply with ICRAA’s requirements between the act’s inception in 1975 or its
amendment in 1998, and the time when Ortiz and Trujillo were decided in
2007.
9
Supreme Court approval of their holdings, as it is well established that “ ‘a
denial of a petition for review is not an expression of opinion of the Supreme
Court on the merits of the case.’ ” (People v. Saunders (1993) 5 Cal.4th 580,
592, fn. 8.)
More to the point here, BPMC committed the 2017 ICRAA violations at
issue after appellate conflict over the constitutional validity of ICRAA had
ripened. The Court of Appeal’s 2015 published opinion in Connor disagreed
with Ortiz and Trujillo, which prompted the California Supreme Court to
grant review in Connor to resolve the conflict. Thus, while the California
Supreme Court did not issue its First Student opinion until 2018, its grant of
review in 2015 made clear that the question of ICRAA’s constitutional
validity was an open one that required an authoritative opinion from the
California Supreme Court. The only reasonable inference to be drawn from
this record is that BPMC was not justified in relying on Ortiz and Trujillo
when it violated ICRAA in 2017. (See Grafton Partners, supra, 36 Cal.4th at
p. 967; Doe v. Marten (2020) 49 Cal.App.5th 1022, 1029 [whether a party’s
reliance was reasonable is a question of fact for the factfinder “ ‘unless
reasonable minds could reach only one conclusion based on the evidence’ ”].)
Accordingly, the trial court’s conclusion to the contrary was an abuse of
discretion.
BPMC relies on the circumstance that, prior to the California Supreme
Court’s decision in First Student, nearly every federal district court that
considered the issue apparently followed Ortiz and Trujillo in holding that
ICRAA was unconstitutional. (But see Cunha v. IntelliCheck, LLC (N.D.Cal.
2017) 254 F.Supp.3d 1124, 1135 [declining to follow Ortiz due to its
inconsistency with California Supreme Court and United States Supreme
Court precedent regarding interpretation of overlapping statutes].)
10
Emphasizing the point that federal courts “follow decisions of the California
Court of Appeal unless there is convincing evidence that the California
Supreme Court would hold otherwise” (Carvalho v. Equifax Information
Services, LLC (9th Cir. 2010) 629 F.3d 876, 889), BPMC contends these
federal cases established the “ ‘near-unanimous body of lower-court
authorities’ ” that justified BPMC’s reliance on the state of the law predating
First Student. (Grafton Partners, supra, 36 Cal.4th at p. 967.)
Federal decisions “have limited relevance to whether our Supreme
Court’s decision, which interprets a California statute, should have
retroactive application.” (Retirement Cases, supra, 110 Cal.App.4th at
p. 465.) But even if we assume that federal district court reliance on a single
pair of companion Court of Appeal decisions bears consideration in
determining whether an authoritative California Supreme Court decision
should be restricted to prospective effect, the assumption lends no meaningful
support to BPMC’s position. Whether one or 20 federal courts opted to follow
Ortiz and Trujillo, it was clear from the Court of Appeal’s Connor decision
that 1,200 plaintiffs in coordinated state court cases were pressing their
ICRAA claims despite the holdings in Ortiz and Trujillo (see First Student,
supra, 5 Cal.5th at p. 1030, fn. 2), thus reflecting that the issue was a matter
of continuing litigation in California courts. When review of the Connor case
was granted in 2015, BPMC and others subject to regulation under ICRAA
were on notice that the Ortiz and Trujillo holdings were potentially subject to
disapproval or other modification by our state’s highest court, regardless of
the federal courts’ assessment of the matter.
BPMC also suggests the trial court did not abuse its discretion in
according only prospective application to First Student, supra, 5 Cal.5th
1026, because the court was bound by principles of stare decisis to follow the
11
published decisions in Ortiz and Trujillo. Specifically, BPMC contends the
trial court was barred from relying on the Court of Appeal’s Connor decision
because it had been depublished under former rule 8.1115. (See ante, fn. 5;
rule 8.1115(a) [nonpublished Court of Appeal decision “must not be cited or
relied on by a court or a party in any other action”].) As BPMC sees it, the
trial court correctly concluded that where a depublished opinion represents
the sole case creating a split of authority, its depublication “ ‘undoes any
split.’ ”
We accept that trial courts were obligated to follow Ortiz and Trujillo
until those decisions were disapproved. But that circumstance did not
detract from the reality that the grant of review in Connor put agencies and
users subject to ICRAA on reasonable notice that the issue of ICRAA’s
validity was an open one and that Ortiz and Trujillo were being examined in
light of another Court of Appeal decision that disagreed with their holdings.7
As already explained, it is highly unlikely the California Supreme Court
would view the single pair of companion cases as defeating the general rule of
retroactivity, especially when BPMC’s noncompliance with ICCRA occurred
after the high court granted review to resolve the conflict that had developed
in the Courts of Appeal.
BPMC next points to the California Supreme Court’s observation that
“ ‘fairness and public policy sometimes weigh against the general rule that
judicial decisions apply retroactively.’ ” (Frlekin, supra, 8 Cal.5th at p. 1057.)
Here, BPMC contends, those considerations strongly favor prospective
application of First Student, supra, 5 Cal.5th 1026.
7 We need not opine as to whether BPMC’s contention might have more
force had the California Supreme Court depublished the Court of Appeal’s
Connor decision without granting review—that is not what happened.
12
We are not convinced. “ ‘Considerations of fairness would measure the
reliance on the old standards by the parties or others similarly affected, as
well as “the ability of litigants to foresee the coming change in the law.’ ”
(Retirement Cases, supra, 110 Cal.App.4th at p. 454.) In Frlekin, the
California Supreme Court declined to depart from the general rule of
retroactivity because the defendant could not “ ‘claim reasonable reliance on
settled law.’ ” (Frlekin, supra, 8 Cal.5th at p. 1057.) Similarly, and for the
reasons already discussed, BPMC cannot claim reasonable reliance on settled
law. Thus, Frlekin and the instant case stand in contrast to those cases in
which the California Supreme Court denied retroactive effect of their
decisions where considerations of fairness and public policy included the
circumstance that the party resisting retroactivity established reasonable or
justified reliance on prior California case law. (E.g., Williams & Fickett v.
County of Fresno (2017) 2 Cal.5th 1258, 1282 [language in prior California
Supreme Court decision “was unequivocal, lending itself to reasonable
reliance by plaintiff and others”]; Claxton v. Waters (2004) 34 Cal.4th 367,
377–379 [decision changed evidentiary rule as stated in two Court of Appeal
decisions and a prior California Supreme Court decision]; Woods v. Young
(1991) 53 Cal.3d 315, 330 [unanimous conclusion of seven published Court of
Appeal decisions regarding statutory tolling “established a settled rule upon
which plaintiff could reasonably rely”].)
BPMC further suggests that fairness and public policy strongly favor
prospective-only application of ICRAA’s civil remedies provision because the
evidence establishes that Bernuy suffered no actual damages and that BPMC
did not mishandle, misuse, or profit from any consumer’s private information.
BPMC also asserts the $10,000 in authorized statutory damages represents
“a massive sum” to a non-profit entity such as itself that acted fully in
13
accordance with published case law that found ICRAA unconstitutionally
vague. We are not persuaded.
We have already explained why BPMC has not established justifiable
reliance on Ortiz and Trujillo. And to the extent BPMC believes that a
$10,000 statutory penalty is unfair when no actual damage is shown or is too
much when a non-profit entity fails to comply with ICRAA requirements,
those are policy matters for the Legislature to decide. Indeed, BPMC’s
contentions on this point largely reflect its substantive disagreement with the
damages provision of ICRAA and provide no basis for limiting First Student
to prospective application.
Finally, we observe Frlekin expressed a public policy concern that bears
emphasizing here. There, the California Supreme Court held that certain
activity was compensable as “ ‘hours worked’ ” and therefore within the
statutory and wage order penalty provisions. (Frlekin, supra, 8 Cal.5th at
p. 1057.) In addressing the retroactivity of its holding, Frlekin observed, “we
have declined to restrict our decisions to prospective application when doing
so ‘would, in effect, negate the civil penalties, if any, that the Legislature has
determined to be appropriate in this context, giving employers a free pass as
regards their past conduct’ and hence ‘would exceed our appropriate judicial
role.’ ” (Ibid.) Inasmuch as ICRAA has been found “sufficiently clear” and
not “unconstitutionally vague” (First Student, supra, 5 Cal.5th at p. 1038), we
take our cue from Frlekin and decline to give users of consumer information
such as BPMC “ ‘a free pass’ ” with respect to their liability for ICRAA
violations. (Frlekin, at p. 1057.)8
8 In Moss v. Superior Court (1998) 17 Cal.4th 396, the California
Supreme Court declined to give retroactive effect to its holding that contempt
sanctions can be imposed on a parent whose inability to pay child support is
the result of a willful failure to seek employment. (Id. at pp. 428–430.) Moss
14
B. Statute of Limitations
Section 1786.52 provides a two-year statute of limitations for ICRAA
claims. There appears no dispute that the statutory period began to run on
August 14 and/or September 1, 2017 or that Bernuy filed the instant action
on September 16, 2019. This means that Bernuy’s action is untimely unless
the limitations period had been tolled. To determine whether the trial court
correctly held that the federal Limson class action did not toll the limitations
period, we turn to the seminal decisions in American Pipe & Construction Co.
v. Utah (1974) 414 U.S. 538 (American Pipe) and Jolly v. Eli Lilly & Co.
(1988) 44 Cal.3d 1103 (Jolly).
In American Pipe, the State of Utah brought a putative class action on
behalf of its public agencies and others, claiming the defendants conspired to
rig steel and concrete pipe prices in violation of the Sherman Act. (American
Pipe, supra, 414 U.S. at p. 541.) The district court ultimately denied class
certification for failure to satisfy the numerosity requirement of rule 23(a)(1)
of the Federal Rules of Civil Procedure. (American Pipe, at p. 543.) The
public agencies who were alleged as class members then filed motions to
intervene, which the district court denied on statute of limitations grounds.
(Id. at p. 544.) The United States Supreme Court unanimously agreed with
the circuit court that the district court had erred: “We hold that in this
posture, at least where class action status has been denied solely because of
failure to demonstrate that ‘the class is so numerous that joinder of all
members is impracticable,’ the commencement of the original class suit tolls
the running of the statute for all purported members of the class who make
does not compel a contrary conclusion here. Unlike the situation in Moss, the
First Student court did not reverse a century of settled precedent. Nor will
retroactive application of First Student subject BPMC to criminal contempt.
15
timely motions to intervene after the court has found the suit inappropriate
for class action status.” (Id. at pp. 552–553.)
As relevant here, Jolly addressed whether the filing of a class action
seeking declaratory relief against manufacturers of an allegedly defective
drug (the Sindell class action) served to toll the statute of limitations for
members of the putative class, including the plaintiff in Jolly. (See Jolly,
supra, 44 Cal.3d at p. 1120.) The California Supreme Court began its
analysis by observing that “in the absence of controlling state authority,
California courts should utilize the procedures of rule 23 of the Federal Rules
of Civil Procedure.” (Jolly, at p. 1118.) Drawing from American Pipe, the
Jolly court identified “protection of the class action device” and “effectuation
of the purposes of the statute of limitations” as “two major policy
considerations” underlying the high court’s tolling rule. (Jolly, at p. 1121.)
With regard to protecting the class action device, the Jolly court
explained: “In cases where class certification is denied for what the high
court characterized as ‘subtle factors,’ unforeseeable by class members, a rule
that failed to protect putative class members from the statute of limitations
after denial of certification would induce potential class members to ‘file
protective motions to intervene or to join in the event that a class was later
found unsuitable,’ depriving class actions ‘of the efficiency and economy of
litigation which is a principal purpose of the procedure.’ ” (Jolly, supra, 44
Cal.3d at p. 1121, quoting American Pipe, supra, 414 U.S. at p. 553.) In such
situations, tolling the statute of limitations upon commencement of a
putative class action promotes the goal of efficiency because each class
member would otherwise need to file an individual lawsuit prior to the
expiration of that class member’s own limitations period.
16
As for effectuating the purposes of the statute of limitations, the Jolly
court reiterated American Pipe’s observation that limitation periods serve
to “ ‘ensur[e] essential fairness to defendants” and to “bar[] a plaintiff who
has ‘ “slept on his rights.” ’ ” (Jolly, supra, 44 Cal.3d at p. 1121, quoting
American Pipe, supra, 414 U.S. at p. 554; see also Crown, Cork & Seal Co.,
Inc. v. Parker (1983) 462 U.S. 345, 352 [“[l]imitations periods are intended to
put defendants on notice of adverse claims and to prevent plaintiffs from
sleeping on their rights”].) These purposes would not be violated by tolling
where commencement of the class suit “ ‘notifie[d] the defendants not only of
the substantive claims being brought against them, but also of the number
and generic identities of the potential plaintiffs who may participate in the
judgment.’ ” (Crown, at p. 353.) The Jolly court also referenced Justice
Blackmun’s caution that American Pipe “ ‘must not be regarded as
encouragement to lawyers in a case of this kind to frame their pleadings as a
class action, intentionally, to attract and save members of the purported class
who have slept on their rights.’ ” (Jolly, at p. 1124, quoting American Pipe, at
p. 561 (conc. opn. of Blackmun, J.).)
Weighing both of these policy considerations, the Jolly court declined to
extend the class action tolling doctrine of American Pipe to the case before it.
In particular, the court found it significant that the Sindell class action had
not sought to certify the class as to personal injury claims, which was the
gravamen of the plaintiff’s untimely action. (Jolly, supra, 44 Cal.3d at
p. 1123.) Thus, “the differences in issues of fact and law” presented in the
two actions made it evident that the class claim in Sindell did not put the
defendants in Jolly on notice of the plaintiff’s personal injury allegations
“within the statutory period of limitation so that [the defendants] might
17
prepare their defense.”9 (Jolly, at pp. 1123–1124.) In sum, “[b]ecause the
Sindell complaint never put defendants on notice that personal injury
damages were being sought on a class basis, it would be unfair to defendants
to toll the statute of limitations on such personal injury actions.” (Id. at
p. 1125.)
In assessing the propriety of applying American Pipe’s tolling doctrine
in the instant case, the damages provision in ICRAA weighs significantly in
our analysis. Under ICRAA, an investigative consumer reporting agency or
user of information that fails to comply with the act’s requirements is liable
to the affected consumer for any actual damages or $10,000, whichever sum
is greater, but the act expressly precludes the recovery of the statutory
$10,000 amount in class actions. (§ 1786.50, subd. (a)(1).) As relevant here,
the Limson class action was brought on behalf of a putative class consisting
of Ivy II applicants, alleging that BPMC violated ICRAA by getting
investigative consumer reports about the putative class members, and the
complaint sought recovery on behalf of the putative class for actual damages,
or in the alternative, for statutory damages in the amount of $10,000. But
given section 1786.50’s express bar on class action recovery of statutory
9 As described by the Jolly court, the named plaintiff in the Sindell class
action sought damages for specific personal injury she “suffered as a result of
her mother’s ingestion of DES during pregnancy.” (Jolly, supra, 44 Cal.3d at
p. 1120.) In the cause of action relating to class claims, the Sindell action
“sought only declaratory relief and an order directing defendants to publicize
the dangers of DES and the necessity of medical evaluations and to fund the
establishment and maintenance of clinics to provide free examinations to the
DES daughters.” (Ibid.) In contrast, the plaintiff’s action for damages in
Jolly “put[] into issue the prenatal treatment of her mother, the specific form
of DES prescribed (e.g., tablet, capsule), the dosage taken, her mother’s
obstetrical history and many other issues necessarily involved in proving
causation, damages and defenses.” (Id. at p. 1123.)
18
damages, it was clear from the outset that statutory damages could not be
awarded in the Limson class action.
We first examine whether application of tolling during the pendency of
the Limson action serves to protect the class action device. (Jolly, supra, 44
Cal.3d at p. 1121.) Here, the patent unavailability of the class action device
as a means for Ivy II applicants who suffered no significant actual damages
but simply seek to recover the minimum ICRAA damages of $10,000 stands
in sharp contrast to those situations in which tolling may be appropriate
where unforeseeable “ ‘subtle factors’ ” may lead to denial of class
certification. (Jolly, at p. 1121, quoting American Pipe, supra, 414 U.S. at
p. 553.) As Jolly and American Pipe indicate, the possibility that certification
could be denied based on subtle factors theoretically induces potential class
members to file “ ‘protective’ ” individual actions despite the pendency of the
class action, which in turn deprives the class action device “ ‘of the efficiency
and economy of litigation which is a principal purpose of the procedure.’ ”
(Jolly, at p. 1121; see Crown, Cork, supra, 462 U.S. at p. 352 [American Pipe
extends to class members filing separate actions].) But ICRAA itself provided
certainty that the district court could not and would not grant certification of
a class composed of Ivy II applicants seeking statutory damages of $10,000
instead of actual damages. Consequently, such applicants had no option but
to file individual actions to recover such damages, and their doing so would
have had no material impact on the efficiency or economies of the pending
Limson class action. In other words, the principal objectives of the class
action device to promote efficiency and economy are not undermined when
plaintiffs file individual actions because they have no other alternative for
pursuing their claims and remedies.
19
We next assess whether application of the tolling doctrine under the
present circumstances serves to effectuate the policy purposes of the statute
of limitations. Strictly speaking, we cannot say the policy of “ ‘ensuring
essential fairness to defendants’ ” would be frustrated by applying the tolling
doctrine in this matter. (Jolly, supra, 44 Cal.3d at p. 1121, quoting American
Pipe, supra, 414 U.S. at p. 554.) After all, Bernuy was a member of the
putative class in Limson and here he has pleaded the same damages for the
same alleged violations involved in that action. Consequently, the Limson
class action provided BPMC with ample notice of the “ ‘substantive claims
being brought against them,’ ” as well as the “ ‘number and generic identities
of the potential plaintiffs.’ ” (Jolly, supra, 44 Cal.3d at p. 1121, quoting
American Pipe, at p. 555.)
Nonetheless, we remain mindful that limitation periods are also
intended “to prevent plaintiffs from sleeping on their rights.” (Crown, Cork,
supra, 462 U.S. at p. 352; see Jolly, supra, 44 Cal.3d at p. 1121.) Given
ICRAA’s express prohibition on class recovery of the $10,000 minimum
damages amount, Ivy II applicants who were not prepared to prove actual
damages in excess of $10,000 had no reasonable basis for relying on the
Limson action to toll the statute of limitations for their ICRAA claims.
Instead, they had every incentive to file their individual actions within the
two-year limitations period in order to preserve their rights, and indeed, they
had no other option. Under these circumstances, tolling the statute of
limitations for these particular Ivy II applicants would impermissibly reward
them for “sleeping on their rights.” (Crown, Cork, at p. 352.)
The remaining question in this matter is whether the trial court’s grant
of summary adjudication on Bernuy’s ICRAA cause of action was in error
because his complaint purports to seek actual damages resulting from
20
BPMC’s ICRAA violations and “general and special damages in an amount to
be determined by a jury for each violation of [his] rights.” Referring generally
to case law recognizing that “ ‘actual damages consist of both general and
special damages’ ” (Beeman v. Burling (1990) 216 Cal.App.3d 1586, 1601),
Bernuy contends that damages for pain, suffering, and emotional distress are
paradigmatic examples of general damages. Significantly, however, Bernuy
admits he has incurred no out-of-pocket damages from BPMC’s conduct, and
his counsel acknowledged in argument to the trial court that Bernuy
experienced no actual damage. Bernuy cites no authority indicating that an
award of emotional distress damages in excess of $10,000 would be
appropriate on this record.10 Accordingly, the trial court did not err in
granting summary adjudication on Bernuy’s ICRAA cause of action.11
10 We note Bernuy’s counsel indicated to the trial court that some of the
other plaintiffs in the consolidated cases experienced actual damage from
problematic reports, though such damage did not amount to $10,000. To the
extent Bernuy’s counsel was attempting to preserve the claims of the
plaintiffs whose actual damages would exceed $10,000 if their out-of-pocket
damages were combined with emotional distress damages, we express no
opinion as to whether summary adjudication would be appropriate in such
cases.
11 Having concluded that Bernuy’s ICRAA claims are time-barred for the
reasons above, we need not and do not address BPMC’s other arguments for
rejecting the tolling doctrine, including its contentions that: (1) because
Bernuy filed his individual action while the Limson class action was pending,
he did not actually rely on the pendency of the class action to preserve his
ICRAA claims; (2) the circumstance that 48 plaintiffs filed individual
complaints based on the same alleged ICRAA violations by BPMC shows that
many people believed a class action was inappropriate and that denial of
certification foreseeable; and (3) the Limson class action did not provide
notice to BPMC of Bernuy’s potential ICRAA claims because BPMC had prior
notice of potential and actual ICRAA claims well before the Limson action
was filed in federal court.
21
DISPOSITION
The judgment is affirmed. In the interests of justice, the parties shall
bear their own costs on appeal.
FUJISAKI, ACTING P.J.
WE CONCUR:
PETROU, J.
RODRÍGUEZ, J.
22
Trial Court: City & County of San Francisco Superior Court
Trial Judge: Hon. Anne-Christine Massullo
Counsel: Litigation Advocacy Group, Glenn A. Murphy for Plaintiff
and Appellant
Goldfarb & Lipman, Celia W. Lee, James T. Diamond, Jr.,
and Rye P. Murphy for Defendant and Respondent
Bernuy v. Bridge Property Management Company (A163240)
23