New CA Case Confirms: No Absolute Rule to Permit Leave to Amend to Substitute Class Representative If Named Plaintiff Is Found Inadequate
In Jones v. Farmers Ins. Exchange (2013) 221 Cal.App.4th 986 (“Jones”), the California Court of Appeal held that “[t]he lack of an adequate class representative … does not justify the denial of the certification motion. Instead, the trial court must allow Plaintiff[ an opportunity to amend [his] complaint to name a suitable class representative. [Citation & fn. omitted.] The court should then grant the certification motion if it approves a class representative.” Id. at 999.
The Jones rule seemed to imply, and Plaintiffs’ counsel often argued, that even if a class representative is found to be inadequate, the remedy is simply to permit Plaintiffs’ counsel to find a new class representative as a substitute. In essence, Plaintiffs’ counsel’s failure to choose an adequate representative was often considered to be a type of “harmless error” which could easily be remedied if it became an issue at class certification. But a recent decision from the Court of Appeal challenges this assumption.
In Payton v. CSI Electrical Contractors, Inc. (September 28, 2018), the Court of Appeal affirmed the trial court’s denial of class certification in a wage and hour class action. In doing so, it affirmed the trial court’s denial of leave to amend to search for another class representative after the named plaintiff was found to be an inadequate class representative.
The Payton Court agreed with the trial court’s reasoning in distinguishing Jones, and held “[a]n absolute rule requiring substitution of a new class representative after a ruling that the named plaintiff is inadequate would be inconsistent with the general principle that a trial court has discretion in deciding whether to permit an amended complaint.”
Then, in reviewing the facts of the case, including plaintiff’s delay in seeking leave to amend once it knew of plaintiff’s adequacy issues, and the futility of an amendment due to the other issues with plaintiff’s certification motion, the Payton Court held that “the trial court acted within its discretion in denying Payton’s request to amend the complaint to add a new class representative.”
While Payton provides some additional support for credibility challenges to a named class representative, had Payton’s inadequacy been the only barrier to class certification, the result may have been different. Thus, it is still important for employers to attack class certification on grounds other than adequacy alone. However, in a “close call” case, an appropriate challenge to the named plaintiff’s adequacy may help tip the scales in favor of denying class certification.