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California Supreme Court Forces Class Action Objectors to Intervene

[caption id="attachment_9346" align="alignnone" width="620"] Restoration Hardware store.[/caption] The California Supreme Court ruled on Monday that objectors in class actions must intervene before filing an appeal of a settlement or decision, raising the burden on objectors and setting the state apart from more lenient federal rules. The unanimous ruling is another setback for objector attorney Lawrence Schonbrun, who lost a California Supreme Court case two years ago challenging the calculation of attorney fees in class actions. This time, Schonbrun, a solo practitioner in Berkeley, California, had asked the California Supreme Court to reconsider its 1942 precedential decision in Eggert v. Pacific States Savings & Loan, in which it found that only “a party to the record” may appeal decisions in class actions brought in state court. The case had “significant practical consequences,” wrote a lawyer for the Consumer Attorneys of California in an amicus brief, and could prevent the frivolous objections that have made the federal system “unsound” and “lax.” “We conclude the Court of Appeal correctly relied on Eggert to hold that unnamed class members may not appeal a class judgment, settlement, or attorney fees award unless they intervene in the action,” Justice Ming Chin wrote for the court, upholding a 2016 decision by the California Court of Appeal. Schonbrun said the ruling would “without question” makes it harder to bring objections in class actions in California state courts. “It’s clear these two decisions are decisions in favor of courts, judges and lawyers, and against the interests of unnamed class members in class actions,” he said, referring to Monday’s decision and the 2016 decision he lost in Laffitte v. Robert Half International. “The undercurrent of the Restoration Hardware case are problems caused to class action lawyers by objectors, as if that wasn’t a manageable problem, as if that was the most important. Not the rights of class members, but is this being annoying to lawyers and judges?” Allison Goddard of Patterson Law Group in San Diego, who represented the plaintiffs, did not return a call for comment. Restoration Hardware Inc. was represented by Miriam Vogel of Morrison & Foerster but wasn’t involved in the appeal. The class action was brought in 2008 alleging that Restoration Hardware’s retail stores asked customers for their ZIP codes in violation of the Song-Beverly Credit Card Act. The case ended in a $36.4 million judgment against Restoration Hardware. Schonbrun’s client, a class member named Francesca Muller, appeared in the class, raising concerns that class members hadn’t been notified of a request for $9.1 million in attorney fees. When former San Diego Superior Court Judge William Dato approved the judgment, Muller petitioned the Fourth District Court of Appeal, which tossed her appeal on the ground that she wasn’t a “party aggrieved” as required under the California Code of Civil Procedure. In petitioning the California Supreme Court, Schonbrun argued that the Eggert decision was a “remnant of a bygone era” given the 1966 revisions to the Federal Rule 23 of Civil Procedure governing class actions. Those rules don’t require intervention, just a notice of appearance. “How big is this impediment? Is it a wall that’s impenetrable? No,” Schonbrun said. But it does create an additional burden, he said. “The bottom line is they want to get rid of appeals.” But the Consumer Attorneys of California, in its brief, noted that Rule 23 was recently amended to address concerns that “professional objectors” were bringing frivolous appeals, holding up settlement payments to class members. The new rules require court approval of payments to objectors who later drop their appeals. “Eggert’s intervention requirement acts to discourage professional and frivolous objections, and thereby protects the integrity of the class action procedure,” Goddard wrote, calling Muller’s appeal a “frivolous appeal” that has cost lawyers $100,000. For its part, the California Supreme Court declined to follow the federal rules. “Our state common law, legislation, and procedural rules of court differ significantly from the federal common law and procedural rules,” Chin wrote. “As the Court of Appeal emphasized here, our legislature has chosen to continue Eggert’s rule despite changes in federal class action rules.”

Restoration Hardware store.