CALIFORNIA CLASS ACTION LAW

The Southern District of California in Soto v. Diakon Logistics (Delaware), Inc., Civil No. 08cv33-L(AJB), 2010 WL 3420779 (S.D. Cal. Aug. 30, 2010) denied class certification for, inter alia, failure to include in plaintiffs’ counsel’s declaration a statement that counsel are free from conflicts of interest and failure to address all the issues the court must consider for appointment of class counsel.

Defendant Diakon Logistics (Delaware), Inc. provides home delivery services to various retailers selling large items. Id. *1. Plaintiffs are truck drivers who worked for Defendant in California, who claim they were inappropriately classified by Defendant as independent contractors when they were in fact non-exempt employees. Id. Plaintiff Soto filed a putative class action complaint alleging failure to pay minimum wages, provide proper meal and rest periods, reimburse for reasonable business expenses, issue itemized wage statements and for other alleged violations of the California Labor Code provisions. Id. Plaintiffs moved to certify, defining the putative class as:

All persons presently and formerly employed by Defendant in the State of California between December 5, 2003 and the present as delivery personnel during the Class Period who were subject to the “Service Agreement” (or similar document), which categorized them as independent contractors and not employees.

Id. *1.

The court found commonality satisfied since “If they were erroneously classified as independent contractors, then additional issues common to the putative class members are whether they were paid the minimum wage, provided with meal and rest periods, and whether they were reimbursed for certain expenses as required by California law.” “This is sufficient to satisfy the commonality requirement of Rule 23(a)(2).” Id. *2

The court found adequacy lacking because of the deficient declarations of counsel:

Resolution of two questions determines legal adequacy: (1) do the named plaintiffs and their counsel have any conflicts of interest with other class members and (2) will the named Plaintiffs and their counsel prosecute vigorously on behalf of the class?” Hanlon, 150 F.3d at 1020. Plaintiffs failed to meet this requirement because none of their counsel’s declarations states that they are free from conflict of interest.  Furthermore, Rule 23(c)(1)(B) requires that any order certifying a class action appoint counsel pursuant to Rule 23(g). Based on the record before the court, counsel cannot be appointed because the counsel’s declarations do not address all the issues the court must consider for appointment. See Fed. R. Civ. Proc. 23(g); see also Fed. Jud. Ctr., Manual for Complex Litigation (“Manual”), ¶ 21:271 at 278-79 (4th ed.). For example, none of the declarations addresses “the resources that counsel will commit to representing the class.” Fed. R. Civ. Proc. 23(g)(1)(A)(iv). In considering appointment of counsel, the court may also consider the attorney’s fees and nontaxable costs. Fed. R. Civ. Proc. 23(g)(1)(C).

Id. *3.

The court denied certification on this basis.  It then gave alternative grounds for denying certification, including Plaintiffs’ failure to “adequately address relevant issues under Rule 23(b)(3).” Id. *3.

Judge and Attorneys

District Judge M. James Lorenz.

Derek J. Emge, Emge and Associates, Todd J. Hilts, Law Offices of Todd J. Hilts, San Diego, CA, Issa J. Michael, The Michael Law Firm, San Francisco, CA, for Plaintiffs.

Christopher C. McNatt, Jr., Scopelitis Garvin Light Hanson & Feary LLP, Pasadena, CA, James H. Hanson, R. Jay Taylor, Jr., Robert L. Browning, Scopelitis, Garvin, Light, Hanson & Feary, PC, Indianapolis, IN, for Defendant.

By CHARLES H. JUNG