Case No.: 1-14-CV-258879

This is a putative class action. Plaintiffs Raymond and Michelle Plata (collectively, “Plaintiffs”) allege that defendant City of San Jose (“Defendant” or “San Jose”) owns and operates the San Jose Municipal Water System (“Muni Water”). (Amended and Supplemental Complaint for Refund, Declaratory Relief, and Injunctive Relief (“FAC”), ¶ 1.) Muni Water is the exclusive water utility for approximately 10 percent of the population of San Jose. (FAC, ¶ 7.) Plaintiffs allege that, since 1997, Defendant has used and transferred Muni Water funds for purposes other than those for which the funds were collected, in violation of Proposition 218. (FAC, ¶¶ 10, 13.) The FAC sets forth the following causes of action: [1] Violation of Article XIII D of the California Constitution; and [2] Declaratory Relief. Plaintiffs now move to certify the class.

Plaintiffs request that the Court take judicial notice of the FAC, a series of documents titled “Statement of Source and Use of Funds for the Water Utility Fund (Fund 515)” for the years 1999 to 2015, and certain sections of the San Jose Municipal Code. Plaintiffs’ request for judicial notice is GRANTED. (Evid. Code, § 452, subds. (b), (d), (h).)

Defendant’s objections to evidence are OVERRULED.

A. Class Certification

i. Legal Standard

As explained by the California Supreme Court,

The certification question is essentially a procedural one that does not ask whether an action is legally or factually meritorious. A trial court ruling on a certification motion determines whether the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants.

(Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th at 326, internal quotation marks, ellipses, and citations omitted.)

California Code of Civil Procedure section 382 authorizes certification of a class “when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court . . . .” As interpreted by the California Supreme Court, Section 382 requires: (1) an ascertainable class; and (2) a well-defined community of interest among the class members. (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326.)

The “community-of-interest” requirement encompasses three factors: (1) predominant questions of law or fact; (2) class representatives with claims or defenses typical of the class; and, (3) class representatives who can adequately represent the class. (Id. at p. 326.) “Other relevant considerations include the probability that each class member will come forward ultimately to prove his or her separate claim to a portion of the total recovery and whether the class approach would actually serve to deter and redress alleged wrongdoing.” (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435.) The plaintiff has the burden of establishing that class treatment will yield “substantial benefits” to both “the litigants and to the court.” (Blue Chip Stamps v. Superior Court (1976) 18 Cal.3d 381, 385.)

ii. Analysis

(A) Ascertainable Class

“The trial court must determine whether the class is ascertainable by examining (1) the class definition, (2) the size of the class and (3) the means of identifying class members.” (Miller v. Woods (1983) 148 Cal.App.3d 862, 873.) “Class members are ‘ascertainable’ where they may be readily identified without unreasonable expense or time by reference to official records.” (Rose v. City of Hayward (1981) 126 Cal. App. 3d 926, 932.)

Plaintiff brings this action on behalf of one main class. Plaintiff’s proposed class is defined as: “All past and current customers of the San Jose Municipal Water System who have paid for water service from the San Jose Municipal Water System since January 1, 1997.”

Plaintiffs assert that Muni Water services approximately 10% of Defendant’s residents and Defendant does not dispute that the size of the proposed class is large enough for certification. Further, the class definition uses objective criteria such that it could be easily determined who is a member of the class. Defendant argues, however, that there is no means by which all class members with claims can be identified. Defendant states that it has no customer bills from before July 2006 and that Plaintiffs have not provided a methodology for identifying class members.

As stated in a case cited by Plaintiffs, a “representative plaintiff need not identify, much less locate, individual class members to establish the existence of an ascertainable class.” (Aguirre v. Amscan Holdings, Inc. (2015) 234 Cal. App. 4th 1290, 1301.)

If personal notification is unreasonably expensive or the stake of individual class members is insubstantial, or if it appears that all members of the class cannot be notified personally, the court may order a means of notice reasonably calculated to apprise the class members of the pendency of the action—for example, publication in a newspaper or magazine; broadcasting on television, radio, or the Internet; or posting or distribution through a trade or professional association, union, or public interest group.

(Aguirre v. Amscan Holdings, Inc., supra, 234 Cal. App. 4th at p. 1301, quoting Cal. Rules of Court, rule 3.766(f), italics in original.)

The class definition simply needs to be “sufficient to allow a member of that group to identify himself or herself as having a right to recover based on the description.” (Aguirre v. Amscan Holdings, Inc., supra, 234 Cal. App. 4th at p. 1301.) Plaintiffs’ proposed class meets that requirement. Accordingly, the Court finds that there is an ascertainable class.

(B) Community of Interest

1. Predominant Questions of Law or Fact

i. Legal Standard

Regarding the predominance of questions of law or fact:

The ultimate question in every case of this type is whether . . . the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants.

(Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1104-1105, quoting Collins v. Rocha (1972) 7 Cal.3d 232, 238.)

Thus,

each member must not be required to individually litigate numerous and substantial questions to determine his right to recover following the class judgment; and the issues which may be jointly tried, when compared with those requiring separate adjudication, must be sufficiently numerous and substantial to make the class action advantageous to the judicial process and to the litigants.

(City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 460.)

For example,

if the community of interest is mainly one of law, and if the factual issues requiring separate adjudication are numerous and substantial, a class action does not subserve the judicial process or the litigants.

(Bozaich v. State of California (1973) 32 Cal.App.3d 688, 694-695.)

Therefore,

[c]lass actions will not be permitted where there are diverse factual issues to be resolved, even though there may be many common questions of law. A class action cannot be maintained where each member’s right to recover depends on facts peculiar to his case.

(Basurco v. 21st Century Ins. Co. (2003) 108 Cal.App.4th 110, 118, internal ellipses, quotation marks, citations, and brackets omitted.)

Nevertheless,

[a] class action can be maintained even if each class member must at some point individually show his or her eligibility for recovery or the amount of his or her damages, so long as each class member would not be required to litigate substantial and numerous factually unique questions to determine his or her individual right to recover.

(Acree v. General Motors Acceptance Corp. (2001) 92 Cal.App.4th 385, 397; See also Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715, 742-743.)

ii. Analysis

Plaintiffs argue that all of the prospective class members share the major issues of law and fact implicated by this lawsuit. Some examples of issues set forth by Plaintiffs are: the extent Proposition 218 restrains Defendant from imposing fees or charges on Muni Water customers for general governmental purposes; the extent Proposition 218 restrains Defendant from using Muni Water revenue for general governmental purposes; what Defendant disclosed to Muni Water customers about how it spends Muni Water revenue; whether Defendant has used revenue collected from Muni Water customers for general governmental purposes; whether Defendant has engaged in a pattern and practice of using Muni Water as a source of general government revenue.

Defendant responds that each of the class members suffered different alleged injuries, which would depend on a range of variables that would require individual calculations and evaluations. Defendant assert such individual factors would include: the dates during which they were customers; location of the residence; the size of their water meter; the amount of water used during each two-month billing cycle; the amount of water and charges at each tier during each billing period; and whether they paid late fees. Defendant’s arguments go to damages, not liability. The fact that there may be variation in damages between members of the class does not preclude certification. (Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal. App. 4th 908, 916 [“As a general rule if the defendant’s liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages.”].) The legal issues on which liability will depend are common to the members of the class because they relate to the application of Proposition 218 and Defendant’s practices with regard to the collection and use of Muni Water fees. In sum, individual issues do not predominate over common issues.

2. Typicality

The typicality requirement is meant to ensure that the class representative is able to adequately represent the class and focus on common issues. It is only when a defense unique to the class representative will be a major focus of the litigation, or when the class representative’s interests are antagonistic to or in conflict with the objectives of those she purports to represent that denial of class certification is appropriate. But even then, the court should determine if it would be feasible to divide the class into subclasses to eliminate the conflict and allow the class action to be maintained.

(Medrazo v. Honda of North Hollywood (2008) 166 Cal. App. 4th 89, 99, internal citations, brackets, and quotation marks omitted.)

Plaintiffs have been customers of Muni Water since January 2005. (Declaration of Raymond Plata in Support of Plaintiffs’ Motion for Class Certification (“Raymond Plata Declaration”), ¶ 3.) Defendant contends that Plaintiffs are not typical in that they do not consistently pay their bills on time and have been charged late fees 29 times. (Declaration of Stephen Gaffaney in Support of Defendant City of San Jose’s Opposition to Motion for Class Certification, ¶ 11.) Defendant’s argument again goes to damages. There is no dispute that Plaintiffs have been customers of Muni Water and that they have paid numerous bills to Muni Water. While it may be that many class members are not assessed late fees, it is not apparent how Plaintiffs’ payments of late fees would subject them to a unique defense.

To the extent Defendant argues that liability as to individual ratepayers would depend on various factors such as the time period during which they were customer, location of their residence, etc., that argument is not related to whether Plaintiffs meet the typicality requirement. Defendant also argues that requests for before November 4, 2012 would be barred under the Government Claims Act, but this argument goes to the merits of the case and is not properly addressed on a motion for class certification. Moreover, it is again not relevant to the typicality requirement.

Defendant does not assert that there is any defense unique to Plaintiffs that makes them unable to adequately represent the class and focus on common issues. The Court finds that the typicality requirement has been met.

3. Adequacy of Representation

“Adequacy of representation depends on whether the plaintiff’s attorney is qualified to conduct the proposed litigation and the plaintiff’s interests are not antagonistic to the interests of the class.” (McGhee v. Bank of America (1976) 60 Cal. App. 3d 442, 450.) The fact that a class representative does not personally incur all of the damages suffered by each different class member does not necessarily preclude the representative from providing adequate representation to the class. (Wershba v. Apple Computer, Inc. (2001) 91 Cal. App. 4th 224, 238.)

With regard to adequacy, Plaintiffs provide evidence that Raymond Plata will represent the interests of all members of the class. (Raymond Plata Declaration, ¶¶ 10-15.) Plaintiffs also provide evidence that they have retained qualified counsel that will vigorously prosecute the action. (Declaration of James McManis in Support of Plaintiffs’ Motion for Class Certification, ¶¶ 1-13.)

Defendant argues only that Plaintiffs have not met their burden of establishing they are adequate representatives because there is no declaration from Michelle Plata. Acknowledging this deficiency, Plaintiffs have filed a declaration from Michelle Plata in connection with their reply papers. The declaration adequately sets forth her understanding of her duties as class representative and the tasks that she has already performed. The Court finds that the declaration establishes that Michelle Plata will be an adequate class representative. However, since the declaration was not filed with the moving papers and was instead filed with the reply papers, Defendant is entitled to a chance to respond. If Defendant would like a chance to respond in writing to the declaration, Defendant may make such a request at the hearing on this motion.

(C) Substantial Benefits of Class Litigation

“[A] class action should not be certified unless substantial benefits accrue both to litigants and the courts. . . .” (Basurco v. 21st Century Ins., supra, 108 Cal.App.4th at p. 120, internal quotation marks omitted.) The question is whether a class action would be superior to individual lawsuits. (Ibid.) “Thus, even if questions of law or fact predominate, the lack of superiority provides an alternative ground to deny class certification.” (Ibid.) Generally, “a class action is proper where it provides small claimants with a method of obtaining redress and when numerous parties suffer injury of insufficient size to warrant individual action.” (Id. at pp. 120-121, internal quotation marks omitted.)

This action involves a large number of proposed class members, each with a small potential recovery. Aside from damages, the legal issues to be decided by the Court are common throughout the class. It would be inefficient for the Court to hear and decide the same issues separately and repeatedly for each class member. Further, it would be cost prohibitive for each class member to file suit individually. Moreover, a class action is appropriate “when the question is one of a common or general interest.” (Code Civ. Proc., § 382.) Therefore, it can be seen that a class action provides substantial benefits in this instance.

In sum, Plaintiffs have demonstrated that common issues predominate over individual ones and a class action is appropriate to handle the claims of the putative class. Accordingly, Plaintiffs’ motion for class certification is GRANTED.