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Class Action Defense Cases–Starbucks v. Superior Court: California State Appellate Court Orders Judgment In Favor Of Starbucks In Labor Law Class Action Holding Named Plaintiffs In Class Action Suffered No Injury

Class Action Seeking Statutory Damages on behalf of all Applicants could not Survive Defense Motion for Summary Judgment because Class Action Representatives Suffered no Injury and Legislature did not Intend to Permit Unaffected Individuals to Recover Statutory Damages California State Court Holds

Plaintiffs filed a class action against Starbucks alleging violations of California labor law provisions concerning information collected from prospective employees during the application process; specifically, the class action complaint asserted that Starbucks improperly asked applicants “about prior marijuana convictions that are more than two years old.” Starbucks v. Superior Court, 168 Cal.App.4th 1436 (Cal.App. 2008) [Slip Opn., at 2]. According to the class action, “Starbucks uses the same two-page job application form nationwide for store level employees” and that one of the questions asked is, “Have you been convicted of a crime in the last seven (7) years?” Id. The application makes clear that “arrests are not convictions,” and advises that a conviction “will not necessarily disqualify you for employment.” Id. The class action sought statutory damages in the amount of $200 per applicant – “a remedy which, by Starbucks’ estimation, could total a whopping $26 million.” Id. The trial court granted plaintiffs’ motion for class action treatment, certifying a class of approximately 135,000 applicants. Id. The trial court certified the class action on behalf of all applicants who completed a questionnaire with the convictions question and who sought no more than $200 in damages, id., at 5. In the trial court’s words, “The mere offering of the application containing the impermissible question is a violation of the Labor Code. [¶] Damages may be calculated simply by multiplying the probable number of applicants during the class period times $200.00.” Id. Defense attorneys moved for summary judgment of the class action claims, asserting in part that class members suffered no damage. Id., at 2. The trial court denied the motion, and defense attorneys sought extraordinary relief from the Court of Appeal, id. The California Court of Appeal reversed, concluding that “[n]othing in the statutes in question authorizes job applicants to automatically recover $200 per person without proof they were aggrieved persons with an injury the statute was designed to remedy,” and ordered the trial court to enter judgment in favor of Starbucks.

The thrust of the class action was that California prohibits employers “from asking about marijuana-related convictions that are more than two years old.” Starbucks, at 4. The class action further argued that California law permits applicants “to recover actual damages or $200 each, whichever is greater.” Id. (citations omitted). The appellate court observed, however, that Starbucks disclosed on the reverse side of the application that California applicants need not disclose marijuana-related convictions that are more than two years old, stating in full: “CALIFORNIA APPLICANTS ONLY: Applicant may omit any convictions for the possession of marijuana (except for convictions for the possessions of marijuana on school grounds or possession of concentrated cannabis) that are more than two (2) years old, and any information concerning a referral to, and participation in, any pretrial or post trial diversion program.” Id., at 2-3. Notably, each of the named plaintiffs had read the disclaimer on the reverse of the Starbucks application and each understood that they were not required to disclose any marijuana convictions that were more than two years old; moreover, none of the named plaintiffs had been arrested for or convicted of a marijuana-related crime. Id., at 4-5. The Court of Appeal summarized at page 2, “Plaintiffs’ lawsuit suffers from two fundamental flaws, either of which provides ample grounds for writ relief. First, Starbucks attempted to disclaim an interest in such prohibited information, and two of the plaintiffs understood Starbucks not to be seeking it. Second, no plaintiff had any marijuana-related convictions to reveal.”

In denying Starbuck’s summary judgment motion, the trial court questioned the legal sufficiency of the disclaimer, and concluded that plaintiffs had standing because actual damages were not required. Starbucks, at 5-6. We do not discuss the first issue, other than to note that the appellate court also expressed concern as to the legal sufficiency of Starbuck’s disclaimer, see id., at 6-9, and concluded that “Starbucks’ one-size-fits-all style for its employment applications” created ambiguity, such that it could not be said as a matter of law that the application “unambiguously directs applicants not to disclose prohibited marijuana-related convictions,” id., at 9. But this, the appellate court explained, was the beginning, not the end, of its inquiry, id.

The Court first held that plaintiffs’ admission that they knew, based on their review of the disclaimer, marijuana-related convictions need not be disclosed if more than two years old precluded them from prosecuting the action because, even if the disclaimer may have been ambiguous to some class members, it was not ambiguous to the plaintiffs. Starbucks, at 10. The appellate court explained, “By analogy, California does not sanction lawsuits for fraudulent misrepresentations brought by persons who, rather than having been deceived, act for the sole purpose of bringing a lawsuit against ‘potential targets for litigation.’… ‘“‘The maker of a fraudulent misrepresentation is not liable to one who does not rely upon its truth but upon the expectation that the maker will be held liable in damages for its falsity.’”’…” Id., at 10-11 (citations omitted).

The appellate court next explained that the plaintiffs were not members of a “legally protected group” – and therefore were not members of the class – because they “had no marijuana convictions to disclose.” Starbucks, at 12. Plaintiffs lost nothing as a result of Starbucks’ application; rather, they argued that they were “automatically entitled to a minimum of $200 simply because they filled out the job application.” Id. The Court explained that the Legislature intended to protect individuals from the lasting impacts of marijuana-related convictions, not to award damages to any applicant, regardless of whether they had ever used marijuana. Id., at 13-14. The Court further noted that if the Legislature “intended to confer a right to automatic damages upon all job applicants, regardless of actual injury, we doubt they would have been so opaque in their draftsmanship.” Id., at 17. In sum, class action litigation should not be used “‘to precipitate payoffs by private businesses for alleged violations of law having no real relationship to a true public interest.’” Id. (citation omitted). More to the point, “There are better ways to filter out impermissible questions on job applications than allowing ‘lawyer bounty hunter’ lawsuits brought on behalf of tens of thousands of unaffected job applicants.” Id. (citation omitted).

Finally, recognizing that Starbucks may be forced to settle if interlocutory relief is not granted, the appellate court held that Starbucks was entitled to the relief sought and ordered the trial court to enter judgment in favor of Starbucks. See Starbucks, at 19-20. In so holding, the Court of Appeal observed, “The civil justice system is not well-served by turning Starbucks into a Daddy Warbucks.” Id., at 20.

NOTE: In rejecting the trial court’s opinion that the knowledge of the named-plaintiffs was immaterial, the Court of Appeal explained, “There are practical reasons why [plaintiffs’] actual understanding is critical. Without it, there would be nothing to stop them from freely roaming throughout the state ‘as knights errant amici searching for deficiencies . . . where no harm has been caused them or anyone else as a result . . . .’ [Citation.] This could create a whole new category of employment — professional job seekers, whose quest is to voluntarily find (and fill out) job applications which they know to be defective solely for the purpose of pursuing litigation. This is not the law in California. [Citation.]”

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