Shuster v. California Auto Dealers Exchange

Filed 3/13/07 Shuster v. California Auto Dealers Exchange CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeals from orders of the Superior Court of Orange County, Stephen J. Sundvold and David C. Velasquez, Judges. Motion to dismiss cross-appeal. Order denying certification affirmed. Motion to dismiss granted.

Blecher & Collins, James Robert Noblin; Trush Law Office, James M. Trush; Law Office of Kevin T. Barnes and Kevin T. Barnes for Plaintiff and Appellant.

Rus, Miliband & Smith, Joel S. Miliband, Randall A. Smith and M. Peter Crinella for Defendants and Appellants.

This case is before us again after we remanded it to the trial court because it had not ruled on all of the grounds raised by plaintiff Elsa S. Shuster in her motion to certify a class action for her complaint for restraint of trade under the Cartwright Act (Bus. & Prof. Code,  16720 & 16726) and by defendants California Auto Dealers Exchange, Inc., California Auto Dealers Exchange, LLC, Manheim Auctions, and Jim DesRochers in their opposition to the motion. (Shuster v. California Auto Dealers Exchange, Inc. (Oct. 26, 2004, G032163) [nonpub. opn.].) Plaintiff argues the trial court erred when it did not allow her to file a new certification motion, including the declaration of an expert, but instead considered only the prior motion. She also claims the court made erroneous legal assumptions and applied improper criteria when it ruled she had not produced sufficient evidence of common proof of damages. We disagree and affirm.

Defendants cross-appealed from the denial of a motion for summary adjudication on the cause of action under the Cartwright Act, asserting the court erred when it found they had not presented a sufficient prima facie case that the claim had no merit. Plaintiff filed a motion to dismiss the cross-appeal, claiming it is untimely and denial of the motion was not a final and therefore appealable order. We agree with the latter argument and dismiss the cross-appeal.

FACTS

The facts underlying this case are set out in the first opinion and we do not repeat them here. We remanded the case to the superior court to rule on all of the issues raised in the motion to certify and the opposition to the motion, especially the issue of whether plaintiff had shown there could be common proof of damages. (Shuster v. California Auto Dealers Exchange, Inc., supra, G032163, p. 6.)

After remand, plaintiff filed a new motion, adding a declaration by an expert witness, an antitrust economist, which had not been included in the motion at issue. Defendants then applied to continue the hearing so they could file a motion to compel plaintiff to comply with our prior opinion. The court granted defendants application and set a hearing to determine the scope of its authority to decide the question of class certification. Thereafter, the court ruled that it would not consider the new motion or any additional evidence or supplemental briefing but would rule based on the motion at issue only. Specifically, it stated that the only issues remaining for its determination were whether plaintiff presented sufficient evidence to support a claim defendants had violated the Cartwright Act, whether common issues predominate, and any other questions raised in the motion or opposition.

Subsequently the court denied the motion to certify the class, giving a lengthy explanation of its rationale. As to the common proof of damages, the main issue remaining after remand, the court found there was no common question of fact or law because, [a]lthough[] plaintiff has produced sufficient evidence to show . . . defendants conspired to violate the Vehicle Code, . . . plaintiff has not presented sufficient evidence to show that the violation . . . resulted in either higher prices or reduced merchandise, a predicate to a Cartwright Act violation. Plaintiff has not proffered a plausible theory that the alleged violation of the Cartwright Act affects all members of the putative class in the same way. That is, plaintiff has not produced evidence that classwide damages caused by a violation of the Cartwright Act can be proved by common proof. Therefore, the court cannot find by a preponderance of the evidence that proceeding with the Cartwright Act claim as a class action is superior over the traditional form of litigation. (Italics omitted.)

The court continued, plaintiff does not offer a plausible basis for determining whether the conspiracy to violate the Vehicle Code [of which the court found evidence] resulted in a violation of the Cartwright Act by increasing prices and preventing competition. That is, plaintiff does not offer a tangible theory for proving whether the entire class was affected by higher prices and reduced merchandise because of the participation of retail consumers in the bidding process. Plaintiff offers no theory of proof from which it could be determined that, more likely than not, the participation of retail customers in the auction process affected the price of the cars in any way. (Italics omitted.)

The court further stated, Alternatively, plaintiff argues that an un-named expert can offer the results of a[n] econometric study of defendants auctions based on an unspecified mathematical model to calculate the effect increased demand has on prices. But plaintiff does not offer any expert testimony describing how the alleged effect on the market can be isolated to retail[] buyers. The court accepts the possibility that a mathematical model can be a useful tool to describe or predict the effect of variables upon a segment of the market. But anything is possible and the burden is on . . . plaintiff to present evidence of the method by which her expert will attempt to prove what plaintiff claims can be proved. (Italics omitted.)

DISCUSSION

Plaintiffs Appeal

1. The trial court did not abuse its discretion in limiting its ruling to only those issues contained in the existing motion and opposition.

Plaintiff contends the trial court should have allowed her to file a new motion that included the declaration of an expert to suggest a method for common proof of damages. She maintains that, in our prior opinion, we did not limit the trial courts role to ruling on the motion at issue. She is wrong. That is exactly what we did.

Our opinion instructed the trial court to rule on the issue of whether common issues predominated as to all other issues raised in the motion and in the opposition to the motion to certify the class. (Shuster v. California Auto Dealers Exchange, Inc., supra, G032163, p. 6.) Our intent, which is clear from the opinion, was that the court limit its decision to the motion at issue. This is due to the unique standard of review for rulings on motions to certify class actions, that is, that we review the reasoning, not just the result, of the courts decision. Even if that decision is supported by substantial evidence, if the reasons for the decision are not correct or set forth, we may not uphold the ruling. (Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 828-829.) We reject plaintiffs argument that the unusual standard of review applicable to rulings on class certifications applies to our review of the ruling of the decision as to the trial courts scope of its authority on remand. Abuse of discretion is the standard and we find none.

In originally ruling on the motion at issue, the trial court did not deal with the issue of fact of injury, one of the criteria in deciding a certification motion. We sent the case back for a ruling on that question and the other issues in that motion only. We did not contemplate or allow for a new motion or even new evidence. This was clear from the language of our opinion and we did not need to explicitly so state. Plaintiffs repeated parsing of the language of the opinion does not change its plain meaning.

This dispenses with all other arguments plaintiff makes regarding this issue. This was not the grant, or the equivalent of the grant, of a new trial, a mistrial, or a remand after reversal of a judgment. It was a decision which recognized that the trial court had not fully ruled on a motion pending before it.

Nor does the trial courts order under Code of Civil Procedure section 

170.6, subdivision (a)(2) disqualifying the judge who first heard the motion at issue have any bearing. The trial court may have found, for purposes of that proceeding, that the trial judge was assigned to conduct a new trial but that does not transform our ruling into a grant of a new trial.

Further, this does not present a due process issue. Plaintiff had the full opportunity to brief issues and present evidence when it filed the motion at issue. The only action necessary after remand was for the court to complete its ruling on that motion. Moreover, contrary to plaintiffs unsupported conclusion, the death knell doctrine does not transform our ruling into a reversal of the judgment. (The death knell doctrine allows appeal from an order ordinarily not final but which would have the effect of dismissing the action as to all class members other than the named plaintiff if the order has virtually demolished the action as a class action. [Citation.] (Alch v. Superior Court (2004) 122 Cal.App.4th 339, 359-360).)

2. The trial court did not abuse its discretion when it found that plaintiff failed to show that common issues of fact or law predominate, thereby barring a class action.

a. Introduction

We review denial of a motion to certify for abuse of discretion. (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326.) Because trial courts are ideally situated to evaluate the efficiencies and practicalities of permitting group action, they are afforded great discretion in granting or denying certification. . . .  [A] trial court ruling supported by substantial evidence generally will not be disturbed unless (1) improper criteria were used [citation]; or (2) erroneous legal assumptions were made [citation] [citation]. . . .  Any valid pertinent reason stated will be sufficient to uphold the order. [Citations.] (Id. at pp. 326-327) [S]o long as [the trial] court applies proper criteria and its action is founded on a rational basis, its ruling must be upheld. [Citations.] [Citations.] [Citation.] (Quacchia v. DaimlerChrysler Corp. (2004)

122 Cal.App.4th 1442, 1448-1449.)

To certify a class action a party must show, among other things, a well-defined community of interest among class members. [Citations.] (Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th at p. 326.) A well-defined community of interest includes proof of predominant common questions of law or fact . . . . (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470.) [E]ach member [of the putative class] must not be required to individually litigate numerous and substantial questions to determine his right to recover following the class judgment; and the issues which may be jointly tried, when compared with those requiring separate adjudication, must be sufficiently numerous and substantial to make the class action advantageous to the judicial process and to the litigants. [Citations.] (City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 460.) Generally, common proof of damages is a required element to certify a class. (J.P. Morgan & Co., Inc. v. Superior Court (2003) 113 Cal.App.4th 195, 218; B.W.I.Custom Kitchen v. Owens-Illinois, Inc. (1987) 191 Cal.App.3d 1341, 1351-1353.)

[T]o determine whether common questions of fact predominate the trial court must examine the issues framed by the pleadings and the law applicable to the causes of action alleged. (Hicks v. Kaufman and Broad Home Corp. (2001)

89 Cal.App.4th 908, 916, fn. omitted, citing Vasquez v. Superior Court (1971) 4 Cal.3d 800, 809.) Although certification is generally a procedural question, in determining community of interest the court must look to some extent at the merits of the underlying issue. (Carov. Procter & Gamble Co. (1993) 18 Cal.App.4th 644, 656.)

b. Violation of Cartwright Act

In denying the motion, the trial court determined that there was no prima facie showing that defendants had violated the Cartwright Act. Specifically, it found that although there was sufficient evidence of a conspiracy to violate the Vehicle Code, there was no showing it caused a reduction in merchandise or higher prices for cars purchased by plaintiff and members of the putative class, a predicate to a Cartwright Act violation. (Italics omitted.)

The Cartwright Act prohibits a conspiracy to increase the price of merchandise or agreements that unite any interests . . . connected with the sale . . . of any . . . article or commodity, that its price might in any manner be affected. (Bus. & Prof. Code, 16720, subds. (b), (e)(4).) To recover under this act, plaintiff must prove an antitrust violation. (Rosack v. Volvo of America Corp. (1982) 131 Cal.App.3d 741, 752.) To have the case certified as a class action, she must set forth a claim of illegal conduct, which must be proved predominantly with facts applicable to the class as a whole, rather than by a series of facts relevant to only individual or small groups of plaintiffs . . . . (Ibid.)

Plaintiff claims the trial court found on three occasions that she satisfied this element. First, she relies on the order overruling the demurrer. But that only goes to whether she alleged a Cartwright Act claim. More than mere pleading is required to prove a basis for a class certification.

Second, plaintiff points to denial of defendants motion for summary adjudication of the Cartwright Act cause of action. However, that simply signifies there is a triable issue of fact; it does not mean there is a sufficient showing to certify the class. Contrary to deciding a motion for summary adjudication, in ruling on a certification motion, the court generally may consider conflicting evidence (Quacchia v. DaimlerChrysler Corp., supra, 122 Cal.App.4th at p. 1448) and must make a determination on the merits that there is, in fact, a community of interest. (Carov. Procter & Gamble Co., supra, 18 Cal.App.4th at p. 656.)

Finally plaintiff maintains that when the trial court initially decided the motion at issue, it did not decide whether the Cartwright Act had been violated, impliedly finding [this] element[] satisfied. Not so. The courts failure to rule on this element means only that and it was a cause of our remand for a complete ruling.

Contrary to plaintiffs assertion, the court found she had not produced sufficient evidence to show that the facts substantiating the Vehicle Code violations amounted to violations of the Cartwright Act, that is, that they caused higher prices or reduced inventory. Nor has she pointed out sufficient evidence to us, thus failing to satisfy her burden. (City of San Jose v. Superior Court, supra, 12 Cal.3d at p. 460.) An alleged agreement to allow consumers in the guise of front men into the auction and their purchase of cars does not equate to a conspiracy to fix prices or reduce inventory. Even if the evidence of these claims is overwhelming, as plaintiff contends, it only shows a violation of the Vehicle Code, which prohibits such activity.

Our statement in the prior opinion that plaintiff had produced evidence of injury (Shuster v. California Auto Dealers Exchange, Inc., supra, G032163, p. 6) is not the equivalent of a finding of a Cartwright Act violation. In fact, we specifically stated we were not deciding that issue but were merely assuming so for purposes of our discussion. (Id. at p. 5.) Thus, plaintiffs assertion the trial court did not follow the law of the case on the fact of injury as set out in our prior opinion has no merit. Further, any statements the court made at the hearing on the motion at issue, which might be contrary to the actual ruling, have no effect on the final decision. (Whyte v. Schlage Co. (2002) 101 Cal.App.4th 1443, 1451.)

c. Common Proof of Damages

The court also found that plaintiff had not put forth a plausible theory that the alleged violation of the Cartwright Act affects all members of the putative class in the same way[, t]hat is, . . . that classwide damages caused by a violation of the Cartwright Act can be proved by common proof. (Italics omitted.)

Plaintiff contends this was error because there was evidence of a per se violation of the Cartwright Act leading to an inference of classwide damages. Specifically she asserts that defendants conspiracy to increase demand at the auction by admitting retail buyers and selling cars to them constitutes a per se violation of the Cartwright Act. (Italics omitted.) She bases this contention on the premise that the alleged wrongful acts amount to price-fixing. Price-fixing, she maintains, allows a court to hold, without further evidence, that parties have been injured, eliminating the need for individual proof of damages. (B.W.I. Custom Kitchen v. Owens-Illinois, Inc., supra,

191 Cal.App.3d at pp. 1350-1351.) From this she concludes that, because the court did not make such a determination, it applied improper criteria, requiring reversal. (Linder v. Thrifty OilCo.(2000) 23 Cal.4th 429, 435-436.) We disagree.

Even assuming a Cartwright Act violation, plaintiff has not sufficiently shown defendants alleged activities amount to price-fixing. Plaintiff herself argues only that it was a species of price-fixing. She provides no authority to support her theory that the alleged wrongful conduct of defendants, i.e., conspiring to allow consumers to purchase cars at auctions while pretending to be drivers for car dealers, thereby increasing the average price of cars sold at the auction and requiring the putative class members to pay higher fees to defendants to purchase cars (Shuster v. California Auto Dealers Exchange, Inc., supra, G032163, pp. 2-3), constitutes price-fixing, notwithstanding the numerous cases she cited in an attempt to do so. No evidence shows defendants fixed the price of the cars sold at auction. That the court did not make a specific ruling on this issue is of no moment as it is not a viable theory.

d. Individual Proof of Damages

Alternatively, plaintiff argues that common questions of law and fact predominate even if each plaintiff would have to individually prove damages. She asserts the court relied on an erroneous legal assumption when it decided proof of individual damages would dominate common issues of liability and impact. We disagree.

First, the determination that a class action was inappropriate because classwide damages could not be shown by common proof was a factual finding, not a legal assumption, notwithstanding the somewhat overbroad statement in B.W.I. Custom Kitchen v. Owens-Illinois, Inc., supra, 191 Cal.App.3d 1341 on which plaintiff relies: It has been repeatedly held . . . that the presence of individual damage issues cannot bar certification. . . .  In almost every class action, factual determinations [of damages] . . . to individual class members must be made. [Citations.] Still we know of no case where this has prevented a court from aiding the class to obtain its just restitution. Indeed, to decertify a class on the issue of damages or restitution may well be effectively to sound the death-knell of the class action device. [Citations.] (Id. at p. 1354.)

B.W.I., a price-fixing case, notes that most such cases hold common questions predominate over any questions affecting only individual class members. [Citations.] (B.W.I. Custom Kitchen v. Owens-Illinois, Inc., supra, 191 Cal.App.3d at

p. 1348.) But, as noted above, plaintiff has not shown this is a price-fixing case. Moreover, in Global Minerals & Metals Corp. v. Superior Court (2003) 113 Cal.App.4th 836, the court, distinguishing B.W.I., found there was an insufficient showing that classwide proof of illegality and impact could readily be proved, such that individual damages issues should also be appropriately handled in the class action context. (Id. at p. 857.) Such is the case here as well.

Plaintiff argues that two traditional means of calculating damages in an antitrust case, the before and after method and the yardstick method, could be used. She points to discussions of how these methods are applied in her moving and reply papers. However, whether these are appropriate or not, she cites no admissible evidence of their application. Instead, she relies on evidence or argument in several documents that the court did not take into account, including briefs from the prior appeal, the declaration of Mike Shuster, plaintiffs husband, in opposition to a motion to reconsider the original grant of class certification under Business and Professions Code section 17200 that was subsequently overturned (see Shuster v. California Auto Dealers Exchange, Inc., supra, G032163, p. 3), and the new motion filed after remand that the court barred. None of these was part of the motion at issue and the court properly refused to consider them.

Plaintiff complains the court erred in refusing to rely on a new expert declaration discussing methods of calculating classwide damages submitted with her reply to defendants opposition to the motion at issue. She claims San Diego Watercrafts, Inc. v. Wells Fargo Bank, N. A. (2002) 102 Cal.App.4th 308, on which the court relied in excluding the declaration, applies only to motions for summary judgment. Instead, referring to class action statutes and California Rules of Court, former rule 1854 (now rule 3.764), she contends the certification process is preliminary and subject to modification. Thus, she concludes, the court applied improper criteria.

This is not correct. Former rule 1854 only allowed a motion to amend or modify an existing order certifying a class. (Cal. Rules of Court, former rule 1854(a)(3).) Moreover, although the rule allowed for the filing of a reply to an opposition to a motion to certify a class, it did not provide for submission of evidence plaintiff should have submitted with her moving papers in order to satisfy her burden to certify the class. (Cal. Rules of Court, former rule 1854(c)(2) & (c)(3).) And plaintiff fails to direct us to anything in the class action statutes supporting this claim. The courts refusal to consider a new declaration filed with the reply was consistent with the principle of San Diego Watercrafts, Inc. v. Superior Court, supra, 102 Cal.App.4th at p. 316 [in summary judgment motion, due process violated if court considers evidence submitted for first time in reply papers].

e. Expert Opinion

We also reject plaintiffs assertion that the court required expert testimony describing a method to commonly prove damages. The court merely acknowledged that a mathematical model, which plaintiff claimed an expert could provide, might be useful, but explained that plaintiff had not presented evidence of that model and therefore her claim was not persuasive. And, despite a generalized statement that appellate courts consistently look to the allegations of the complaint and the declarations of attorneys representing the plaintiff class . . . (Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th at p. 327) to determine certification, nothing in that case states that these will always be sufficient in and of themselves. Plaintiff must meet her burden by whatever means is required.

f. Class action not superior

The trial court found that, because there was no showing plaintiffs damages could be shown by common proof, there was insufficient evidence that certifying as class action was superior over the traditional form of litigation. The burden of persuasion is on the moving party to show by a preponderance of the evidence that the class action proceeding is superior to alternate means for a fair and efficient adjudication of the litigation. (Sav-on Drugs Stores, Inc. v. Superior Court, supra, 34 Cal.4th at p. 332.) [T]he Supreme Court has given the trial courts [an admonishment] to carefully weigh the respective benefits and burdens of a class action and to permit its maintenance only where substantial benefits will be accrued by both litigants and the courts alike. [Citation.] (Global Minerals & Metals Corp. v. Superior Court, supra, 113 Cal.App.4th at p. 849.) [E]ven if questions of law or fact predominate, the lack of superiority provides an alternate ground to deny class certification. (Basurco v. 21st Century Ins. Co. (2003) 108 Cal.App.4th 110, 120; see also Linder v. Thrifty Oil Co., supra, 23 Cal.4th at p. 435.)

Here, there is no evidence the trial court abused its discretion in finding that a class action was not superior due to plaintiffs inability to show damages by common proof. We must defer to the trial courts broad discretion in determining whether a case is suitable for a class action. (Sav-On Drug Stores, Inc. v. Superior Court, supra,

34 Cal.4th at p. 326.) The fact that this ruling might be the death knell of the claim does not in itself support a contrary ruling.

3. There is no basis to certify the class on liability only.

Plaintiff proposes that if we do not determine that an unequivocal order certifying the class is appropriate, we should direct the trial court to certify the class solely on the issue of liability. This, she contends, would give the court time to deal with the per se damages claim and then, after evaluating expert reports and deposition testimony, it could truly evaluate whether damages could be proven classwide. We are not persuaded.

First, as discussed above, plaintiff has failed to show a violation of the Cartwright Act. Thus, there is no basis to certify on liability. Moreover, the trial court found there was insufficient evidence that a class action on a Cartwright Act claim was substantially beneficial to the court or the parties. This alone also defeats even a partial certification.

Defendants Cross-Appeal

1. Introduction

In April 2003, on the same day the trial court originally denied the motion to certify, it also denied defendants motion for summary adjudication as to the Cartwright Act cause of action. In the first appeal defendants did not file an appeal or writ petition challenging the ruling.

When plaintiff filed the instant appeal of the denial of the motion to certify, defendants filed a cross-appeal from the 2003 order denying their motion for summary adjudication, stating it was made pursuant to plaintiffs notice of appeal.

Subsequently, by order this court invited letter briefs from the parties as to whether we had jurisdiction to hear the cross-appeal and whether it was proper. After considering the briefs, we ordered that the appeal and cross-appeal may now proceed. Thereafter, plaintiff filed a motion to dismiss the cross-appeal on the grounds that it was not timely and that the denial of the motion for summary adjudication was not a final order.

2. This court has no jurisdiction to hear the cross-appeal.

As defendants acknowledge, because denial of a motion for summary adjudication is not a final order or judgment, it generally is not appealable but is reviewable by a petition for writ of mandate. (Code Civ. Proc.,  437c, subd. (m)(1); Travelers Casualty & Surety Co. v. Superior Court (1998) 63 Cal.App.4th 1440, 1450.) Defendants rely on the class action death knell doctrine to avoid this problem. That doctrine provides that where the legal effect of [an] order is tantamount to a dismissal of the action as to all members of the class other than plaintiff and if the order has virtually demolished the action as a class action[] . . ., the death-knell order may be appealed. (Alch v. Superior Court, supra, 122 Cal.App.4th at pp. 359-360.)

Defendants conclude that the order denying certification is the equivalent of a final judgment which allows them to appeal from denial of their motion for summary adjudication. We are not persuaded. Plaintiffs right to appeal does not transform the order denying certification into a final judgment.

We also reject defendants claim that this motion is a reconsideration of our prior order allowing the cross-appeal to go forward and that we may not consider it. Our order allowing the cross-appeal to proceed was only that; it was not a ruling that the cross-appeal was viable or proper.

DISPOSITION

The order denying certification is affirmed. The cross-appeal is dismissed. The parties shall bear their own costs on appeal.

RYLAARSDAM, ACTING P. J.

WE CONCUR:

BEDSWORTH, J.

ARONSON, J.

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