In Hendershot v. Ready to Roll Transportation, Inc., ___ Cal.App.4th ___  (August 14, 2014), the California Court of Appeal (Second Appellate District, Division Three) reversed the order of the Los Angeles County Superior Court (Judge Fahey) denying class certification of plaintiffs’ claims for unpaid overtime wages.

Plaintiffs were non-exempt employees who chauffeured vehicles for the defendant. They claimed that defendant failed to compensate them for periods when they were required to remain on-call in between trips transporting clients.  Consequently, they filed a class action on behalf of themselves and other drivers alleging unpaid overtime wages and related claims.  While the litigation was pending, but before the hearing on plaintiff’s class certification motion, defendant’s chief executive officer met individually with putative class members and obtained their signatures on agreements releasing any and all claims they might have against the defendant, presumably in accordance with Chindarah v. Pick Up Stix, Inc., 171 Cal. App. 4th 796 (2009) and its progeny. In the meantime, defendant delayed providing key information, such as the list of class members, numerous discovery responses and documents and the settlement agreements. Then, two weeks before the deadline for plaintiffs to file their class certification motion, defendant suddenly produced thirty-six (36) settlement agreements with the putative class members.  Furthermore, one week after plaintiffs filed their motion for class certification, defendant produced twenty-four (24) arbitration agreements and two (2) additional settlement agreements signed by putative class members.  In its opposition to plaintiffs’ motion for class certification, defendant argued that the remaining members of class (who had not settled or agreed to arbitration) were not sufficiently numerous to justify class action treatment.   The trial court agreed with defendant and denied the motion, finding that plaintiffs had failed to satisfy the numerosity requirement because “at most, there would be only nine plaintiffs in this case: the three plaintiffs and six other drivers.”  Plaintiffs appealed.

The appellate court reversed.  First, the court found that the trial court’s analysis of the “numerosity” factor was incorrect: “there is no set number required to maintain a class action, and the statutory test is whether a class is so numerous that ‘it is impracticable to bring them all before the court.’” The trial court failed, however, to engage in this analysis.  Second, “in finding that only nine individuals could be part of the class, the [trial] court improperly ruled on the merits of the defendant’s affirmative defenses.”  In other words, the trial court “essentially ruled that the defendant’s affirmative defenses based on the releases and arbitration agreements had merit, and thereby determined that the majority of putative class members could not assert claims against the defendant in this action.” Finally, the trial court denied plaintiffs due process by failing to grant them an adequate opportunity to perform discovery related to defendant’s affirmative defenses – including the validity of releases and arbitration agreements – which were asserted for the first time in opposition to plaintiffs’ motion for class certification.