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California Court of Appeal Finds Dismissal of Claims for “Death Knell” Doctrine

Death Knell DoctrineIn order to protect potential class members’ rights, the “death knell” doctrine permits immediate appeal from a court order denying the certification of class claims, yet preserving individual claims.  In Miranda v. Anderson Enterprises, Inc., 241 Cal. App. 4th 196, 200 (2015), the Court of Appeal ruled that it also applies to the dismissal of a representative action under California’s Private Attorneys General Act of 2004 (PAGA) (Lab.Code §2698 et. seq.) In Miranda, Plaintiff Isidro Miranda brought a putative class action against employer Defendants alleging wage and hour violations, as well as a representative action under the PAGA. Defendants moved to compel individual arbitration, and to dismiss Plaintiff’s PAGA claims. The trial court granted Defendants’ motion.  Plaintiff subsequently appealed.

Pursuant to Code Civ. Proc. § 904.1, a right of appeal exists where an order has resulted in a final judgment.  This is sometimes referred to as the “final judgment” rule.  See Aleman v. AirTouch Cellular, 209 Cal. App. 4th 556, 585 (2012).  In determining whether there has been a final judgment, the California Supreme Court held “that the question, as affecting the right of appeal, is not what the form of the order or judgment may be, but what is its legal effect.”  Daar v. Yellow Cab Co., 67 Cal. 2d 695 (1967).

Focusing on the legal effect of an order, California courts have found a right of appeal where a motion for class certification has been denied, “because it effectively rings the death knell for the class claims.” Miranda, 241 Cal. App. 4th at 200 (2015) (citations omitted). The underlying logic is “that an order denying certification is tantamount to a dismissal as to all the members of the class other than plaintiff.”  Daar, 67 Cal. 2d at 699.

“Appealability under the death knell doctrine requires an order that (1) amounts to a de facto final judgment for absent plaintiffs, under circumstances where (2) the persistence of viable but perhaps de minimis individual plaintiff claims creates a risk no formal final judgment will ever be entered.” Miranda v. Anderson Enterprises, Inc., 241 Cal. App. 4th 196, 200 (2015) (citations omitted).

In Miranda, Defendants argued that the trial court’s order was not immediately appealable because the trial court’s dismissal was not a final judgment, and that the death knell doctrine did not apply to the dismissal of a representative PAGA claim.  In adjudicating this issue, the First Appellate District of the California Court of Appeal found that “the rationale underlying the death knell doctrine—that without the incentive of a possible group recovery the individual plaintiff may find it economically imprudent to pursue his lawsuit to a final judgment and then seek appellate review of an adverse class determination, thereby rendering the order effectively immunized by circumstance from appellate review—applies equally to representative PAGA claims.” Id. at 201.

Given the recent rise of PAGA actions following the Supreme Court’s ruling in Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal. 4th 348 (2014), the Court of Appeal’s ruling in Miranda elucidates an expanding area of law, which is especially pertinent in situations where certification has been denied but Plaintiff’s PAGA claims remain.  Absent such a right of appeal, compensation for aggrieved employees would be further delayed.

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