Opinion
B291568
04-21-2020
HARRY HAHN et al., Plaintiffs and Respondents, v. HANIL DEVELOPMENT, INC., et al., Defendants and Respondents; MYUNG JA KANG et al., Objectors and Appellants.
Moon & Dorsett and Dana M. Dorsett for Objectors and Appellants. Engstrom Lipscomb & Lack and Steven J. Lipscomb for Plaintiffs and Respondents. Lee, Hong, Degerman, Kang & Waimey, Douglas Smith and Nathaniel Tarvin for Defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(a). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115(a). Los Angeles County Super. Ct. No. BC468669 APPEAL from an order of the Superior Court of Los Angeles County, J. Stephen Czuleger, Judge. Affirmed. Moon & Dorsett and Dana M. Dorsett for Objectors and Appellants. Engstrom Lipscomb & Lack and Steven J. Lipscomb for Plaintiffs and Respondents. Lee, Hong, Degerman, Kang & Waimey, Douglas Smith and Nathaniel Tarvin for Defendants and Respondents.
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INTRODUCTION
This is the second appeal in this class action. A different panel of this division dismissed the first appeal, concluding that Myung Ja Kang and 93 other unnamed class members (objectors) lacked standing to challenge a class settlement because they never became parties to the lawsuit. (Hahn v. Hanil Dev., Inc. (Dec. 12, 2017, B268596 [nonpub. opn.] (Hahn I).) Shortly after Hahn I was decided, the California Supreme Court issued Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal.5th 260 (Hernandez). Hernandez relied on long-standing Supreme Court precedent to reaffirm that unnamed class members may not appeal from a judgment or settlement unless they have become parties to the lawsuit.
After the remittitur issued in Hahn I, the objectors moved to intervene in the lawsuit in order to obtain standing to challenge the settlement. The trial court denied the motion, finding it untimely and meritless. The objectors appeal again, arguing the court erred in denying the motion. We conclude the motion was untimely and affirm the order denying intervention.
On August 22, 2019, the objectors filed a motion for augmentation or, in the alternative, for judicial notice of the briefs filed by the respondents in Hahn I. We grant the motion and take judicial notice of those briefs.
FACTS AND PROCEDURAL BACKGROUND
1. The Prior Appeal
We draw the relevant background facts from Hahn I. Briefly stated, each of the class members purchased a membership in a spa and fitness center (Aroma) located in the Koreatown neighborhood of Los Angeles. The class members paid initiation fees ranging between $10,000 and $30,000 in exchange for either a 10-year or lifetime membership at Aroma. The complaint asserted the memberships violated the Health Studio Services Act (Civil Code section 1812.80 et seq.) and the Unfair Competition Law (Business and Professions Code section 17200 et seq.).
Harry Hahn and James Hong (representative plaintiffs) initiated the class action on August 30, 2011, and filed the operative complaint on May 11, 2012 against Hanil Development, Inc. and Aroma Spa & Sports, LLC (defendants). The court certified a class of "[a]ll individuals and/or families who purchased lifetime memberships and ten year memberships at Aroma Spa Resort during the period of November 2000 to present." The cause was extensively litigated but the parties ultimately negotiated a settlement shortly before the trial was to take place. The court granted the representative plaintiffs' motion for preliminary approval of the settlement on April 10, 2015, and set July 10, 2015 as the deadline for class members to object to or reject the terms of the settlement. More than 100 of the 301 class members objected to the settlement.
On July 16, 2015, a group of 10 class members filed a motion asserting that one of the representative plaintiffs promised them a greater recovery than was provided by the settlement. The class members requested that the court retroactively extend the date to opt out of the class action so they could then opt out of the class. The court denied the motion.
Meanwhile, the representative plaintiffs filed a motion for final approval of the settlement. The same 10 class members submitted a written opposition to the motion. After hearing argument, the court requested and received supplemental briefing from the 10 class members and the parties. On October 2, 2015, the court granted the motion for final approval of the class action settlement and dismissed the action pursuant to the terms of the settlement agreement (judgment).
The objectors appealed from the judgment. Guided by the Supreme Court's decision in Eggert v. Pac. States S. & L. Co. (1942) 20 Cal.2d 199 (Eggert), holding that unnamed class members may not appeal from a judgment or settlement in a class action unless they are parties to the action, this division dismissed the appeal. (Hahn I, supra, B268596.) The remittitur issued on March 15, 2018.
2. The Present Appeal
On May 16, 2018, the objectors filed a motion for mandatory or permissive intervention under Code of Civil Procedure section 387. Although they acknowledged that a motion for intervention must be timely, they argued "there is no way that [they] could have known that they needed to intervene before January 29, 2018," when the Supreme Court issued its opinion in Hernandez.
Undesignated section references are to the Code of Civil Procedure.
The representative plaintiffs and defendants opposed the motion. They argued the motion was untimely because the objectors knew by April 10, 2015, when the court granted preliminary approval of the class settlement, that their interests in the litigation were not aligned with or adequately represented by the representative plaintiffs. Further, Hernandez did not change the legal landscape—it only reaffirmed Eggert.
The representative plaintiffs and defendants also argued they would be prejudiced if the motion were granted because payments made to class members and counsel under the terms of the settlement could not be retrieved. Indeed, 41 of the 94 objectors received and cashed their settlement payment checks. The representative plaintiffs emphasized that intervention at this late date would create "a logistical accounting nightmare for all parties."
The court denied the motion on June 8, 2018. The objectors filed a timely notice of appeal.
CONTENTIONS
The objectors contend the trial court abused its discretion in finding their motion for intervention untimely "under the totality of the circumstances of this case." According to the objectors, "few would have foreseen the overturning of decades old precedent [by Hernandez] in favor of a 75-year old Eggert that has been consistently ignored."
DISCUSSION
Intervention, whether permissive or as of right, must be sought on "timely application." (§ 387, subd. (d)(1); Lofton v. Wells Fargo Home Mortgage (2018) 27 Cal.App.5th 1001, 1012.) Timeliness is measured from "the date [the proposed interveners] knew or should have known their interests in the litigation were not being adequately represented[.]" (Ziani Homeowners Assn. v. Brookfield Ziani LLC (2015) 243 Cal.App.4th 274, 282; see also Allen v. California Water & Tel. Co. (1947) 31 Cal.2d 104, 108 [stating the "general rule" that a right to intervene should be asserted "within a reasonable time" and the proposed intervener "must not be guilty of an unreasonable delay after knowledge of the suit"].) The determination of the timeliness of intervention is committed to the discretion of the trial court, and we review such a determination for an abuse of discretion. (Northern Cal. Psychiatric Society v. City of Berkeley (1986) 178 Cal.App.3d 90, 109.)
Viewing the objectors' proposed intervention through this lens, the trial court did not abuse its discretion when it denied the motion as untimely. Although no statutory time limit is placed on motions to intervene, it is significant that the objectors took no steps to intervene in the litigation until May 16, 2018, several years after the class action settlement had been reached. But on July 16, 2015, many of the objectors had moved to extend the date to opt out of the class action retroactively because they were "displeased with the settlement and believe[ed] it to be unfair[.]" Thus, their own actions reflect that these objectors knew no later than July 2015 that their interests in the litigation were not being adequately represented. Moreover, all the objectors should reasonably have suspected their interests were not adequately represented even earlier—i.e., by February 2015 when the parties filed a notice of class settlement, or by April 2015 when the court granted preliminary approval of the proposed settlement.
In addition, allowing the objectors to intervene at this late stage would have upended the settlement reached by the representative plaintiffs and defendants in 2015—an untenable result. As noted by the class administrator, settlement checks were mailed to class members nearly two years ago, in April 2018. And 41 of the 94 objectors involved in this appeal received, and cashed, their settlement checks prior to the hearing on their motion to intervene in the litigation.
These issues notwithstanding, the objectors attempt to justify the delay of approximately three years between the court's preliminary approval of the settlement and their motion for intervention by pointing to our Supreme Court's recent Hernandez decision. They argue their motion was timely because, they contend, prior to Hernandez, class members had standing to appeal without having to intervene in the litigation and it would therefore be inequitable to apply Hernandez retroactively. The objectors also argue that if Hernandez does apply to this case, then the settlement notice violates due process because it failed to inform class members that they must intervene in the class action to have standing to appeal. We find no merit in these arguments.
First, the objectors incorrectly argue that Hernandez effected a change in the law. In January 2018, the Supreme Court issued its opinion in Hernandez, affirming the appellate court's determination that unnamed class members "may not appeal a class judgment, settlement, or attorney fees award unless they intervene in the action." (Hernandez, supra, 4 Cal.5th at p. 263.) Specifically, Hernandez confirmed that the standing rule announced in Eggert remains the rule in California and requires that a class member wishing to challenge a judgment pursuant to settlement on appeal must have become a party of record in the trial court, either by formally intervening in the class action or by filing a motion to vacate the judgment. And before Hernandez, Eggert was binding Supreme Court precedent. (See Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455.) Thus, the objectors failed to comply with the Eggert rule at their own peril.
Second, Hernandez expressly addressed, and rejected, the objectors' argument that the Eggert rule should not apply to class action settlements: "[Unnamed class member] Muller alternatively claims that because a class settlement is generally binding on all class members (assuming class representatives have complied with due process regarding notice and adequate representation), we should create an exception to Eggert that allows members to appeal their denied objections to settlement without formal intervention. [Citation.] We decline to do so. Following Eggert and requiring intervention does not discourage unnamed class members from filing a meritorious appeal. Rather, it continues a manageable process under a bright-line rule that promotes judicial economy by providing clear notice of a timely intent to challenge the class representative's settlement action. Formal intervention also enables the trial court to review the motion to intervene in a timely manner." (Hernandez, supra, 4 Cal.5th at p. 272.)
Equally unpersuasive is the objectors' argument that Hernandez should not be applied retroactively to this case because retroactive application would be unfair. The main problem with the argument against retroactive application of Hernandez is that Hernandez does not establish a new rule of law. Rather, as we have said, Hernandez merely reaffirmed and directly applied a well-established rule of law. Hernandez did not expand or modify Eggert, such that Hernandez could reasonably be construed to constitute a new application of an old rule. As the Hernandez court explained, the rule requiring that one must be a party of record to have standing to appeal has been the rule in California for over 75 years, since Eggert. (Hernandez, supra, 4 Cal.5th at p. 272.) And because Hernandez did not announce new law, it "simply becomes part of the body of case law of this state, and under ordinary principles of stare decisis applies in all cases not yet final." (People v. Guerra (1984) 37 Cal.3d 385, 399.)
In addition, as noted in Hahn I, "after the court certified the class, the class members were advised that they may 'choose to remain in the class or to opt out of it.' Further, they were informed that they would be 'bound by the outcome of the lawsuit' unless they requested to be excluded from the class. If they elected to opt out of the class, however, the class members would 'not be bound by any judgment' and could file a separate lawsuit against defendants. Having elected to stay in the class, or having failed to opt out in a timely manner, the objectors cannot be heard to complain on appeal that they are bound by the judgment." (Hahn I, supra, B268596.)
Finally, we reject the objectors' contention that the May 26, 2015 notice regarding the proposed settlement violated their due process rights. Procedural due process requires that affected parties be provided with "the right to be heard at a meaningful time and in a meaningful manner." (In re Vitamin Cases (2003) 107 Cal.App.4th 820, 829.) To satisfy due process, the notice provided to class members regarding a settlement must fairly apprise the class members of the terms of the proposed compromise and of the options open to dissenting class members. (Cho v. Seagate Technology Holdings, Inc. (2009) 177 Cal.App.4th 734, 746.) Under the California Rules of Court governing class actions, "notice of the final approval hearing must be given to the class members in the manner specified by the court. The notice must contain an explanation of the proposed settlement and procedures for class members to follow in filing written objections to it and in arranging to appear at the settlement hearing and state any objections to the proposed settlement." (Cal. Rules of Court, rule 3.769(f).) Here, there is no indication that the settlement notice failed to disclose the process for objecting to the settlement, or that it omitted any other relevant information that was required by the court to be included in the notice. The objectors do not argue otherwise.
Instead, the objectors claim that the settlement notice violated their right to due process by failing to inform them that they must become a party of record to have standing to appeal from the judgment to be entered. This argument suggests that a settlement notice or settlement agreement must advise class members that if they wish to appeal, they must also intervene. The objectors provide no authority for such a proposition, and we decline to adopt such a rule.
In short, the objectors' motion for intervention was untimely. We therefore affirm the order denying intervention.
DISPOSITION
The order is affirmed. The representative plaintiffs and defendants shall recover their costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
LAVIN, Acting P. J. WE CONCUR:
EGERTON, J.
Retired Presiding Justice, Division Four, of the Court of Appeal, Second Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution. --------