Hernandez v. Vitamin Shoppe Industries Inc., 174 Cal.App.4th 1441, 95 Cal.Rptr.3d 734 (2009)

Brief Summary
Class action plaintiffs’ lawyer who contacted members of a conditionally certified class violated rule against communications with represented parties even though the lawyer already represented one of the class members and represented named plaintiffs in a separate but substantially related class action.

Complete Summary
Attorney Jeffrey Spencer was involved in two class action lawsuits against Vitamin Shoppe Industries, Inc. (“Vitamin Shoppe”). Spencer represented the named plaintiff in one action (the Thompson action), and also represented plaintiff Lisa Hernandez as an individual in a separate but related action (the Perry action). Despite the wishes of both Spencer and Hernandez, the parties in Perry agreed on a settlement. The trial court approved the settlement, conditionally certified the class for settlement purposes and approved a proposed notice to class members.

Spencer then wrote to various members of the Perry class encouraging them to opt out of the settlement and join the Thompson litigation. Spencer’s letters prompted both class counsel in Perry and the Vitamin Shoppe to move for, inter alia, sanctions against Spencer and to enjoin him from communication with class members other than those who had already retained him. The trial judge granted the motions. Spencer then sought to disqualify the judge, which led to a finding that the judge would be unable to give Spencer fair consideration in future hearings. The judge’s prior rulings, however, were formalized by a new judge assigned to the case. Spencer appealed, arguing the new judge erred in formalizing the rulings.

The Court of Appeal, Division 2, upheld the trial court’s rulings except for the order of sanctions. The court held that the order of sanctions was improper because it was made under California Code of Civil Procedure section 128 (powers of the court), which does not grant the power to impose sanctions.

Addressing Spencer’s argument that the disqualification of the first judge rendered his ruling null and void, the court held that the judicial disqualification did not affect the prior rulings for two reasons. First, the disqualification was not based on a finding of actual bias; it was merely a finding based on an appearance of bias. Second, the judge was disqualified to protect Spencer from bias in future hearings. Therefore the judge’s prior rulings were valid.

Spencer also argued that the court’s order enjoining him from communicating with class members created an irreconcilable conflict with his ethical duty to communicate with his clients. The court chose to disregard this issue because Spencer failed to establish necessary facts to show that a conflict actually existed as to one or more of Spencer’s actual clients.

The court also held that the trial court’s injunction against Spencer was not an abuse of discretion. The court noted that in the context of a class action settlement, a trial court must protect all parties by assuring that notice of settlement is neutral and objective. Because Spencer’s letters were neither neutral nor objective, the trial court was well within its discretion in attempting to remedy Spencer’s misconduct.

Finally, the court held that a lawyer who is not class counsel in a case may not unilaterally contact members of a conditionally certified class in that case based on California Rule of Professional Conduct 2-100(A), which prohibits communications with represented parties. Although there was no question that Rule 2-100(A) protected members of a certified class, it was a matter of first impression whether the rule protected members of a conditionally certified class. The court concluded that Rule 2-100(A) and the court’s obligation to protect class members from improper communications were independent grounds for enjoining Spencer’s communications.

Significance of Opinion
This opinion clarifies the status and rights of unnamed class members. The court here notes that representation begins — at least for purposes of the rule prohibiting communication by non - class counsel with represented parties — when the class is conditionally certified.

This alert has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.

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