In re Baycol

Opinion

The right to appeal in California is generally governed by the “one final judgment” rule, under which most interlocutory orders are not appealable. (See Code Civ. Proc., § 904.1.)^[1] In Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695 [ 63 Cal.Rptr. 724 , 433 P.2d 732 ] (Daar), however, concerned that orders dismissing all class action claims might in some instances escape review, we adopted a “death knell” doctrine that allowed a party to appeal such orders immediately. Here, we address uncertainty over the scope of the death knell doctrine: does it extend to orders that simultaneously terminate individual claims as well, or does it apply only where, as was the case in Daar itself, individual claims survive?

We conclude the preservation of individual claims is an essential prerequisite to application of the death knell doctrine: the doctrine renders appealable only those orders that effectively terminate class claims but permit individual claims to continue. When instead an order terminates both class and individual claims, there is no need to apply any special exception to the usual one final judgment rule to ensure appellate review of class claims. Instead, routine application of that rule suffices to ensure review while also avoiding a multiplicity of appeals. Because the Court of Appeal misapplied these principles in dismissing an appeal from the sustaining of a demurrer to class claims here, we reverse.

Factual and Procedural Background

In 1997, defendant Bayer Corporation (Bayer) gained United States Food and Drug Administration approval for, and shortly thereafter began marketing, the drug Baycol. (In re Baycol Products Litigation (D.Minn. 2003)

Under the one final judgment rule, “ ‘an appeal may be taken only from the final judgment in an entire action.’ ” (Molien v. Kaiser Foundation Hospitals (1980) 27 Cal.Sd 916, 921 [ 167 Cal.Rptr. 831 , 616 P.2d 813 ], quoting Tenhet v. Boswell (1976) 18 Cal.3d 150 , 153 [ 133 Cal.Rptr. 10 , 554 P.2d 330 ].) “ ‘The theory [behind the rule] is that piecemeal disposition and multiple appeals in a single action would be oppressive and costly, and that a review of intermediate rulings should await the final disposition of the case.’ ” (Griset v. Fair Political Practices Com. (2001) 25 Cal.4th 688 , 697 [ 107 Cal.Rptr.2d 149 , 23 P.3d 43 ]; see also Flanagan v. United States (1984) 465 U.S. 259 , 264 [ 79 L.Ed.2d 288 , 104 S.Ct. 1051 ] [the one final judgment rule “reduces the ability of litigants to harass opponents and to clog the courts through a succession of costly and time-consuming appeals”]; Morehart v. County of Santa Barbara (1994) 7 Cal.4th 725 , 741, fn. 9 [ 29 Cal.Rptr.2d 804 , 872 P.2d 143 ] [the rule ensures a complete record for the reviewing court, allows it to better craft its directions to the trial court, and reduces trial court uncertainty and delay].)

The one final judgment rule is “a fundamental principle of appellate practice” (Walker v. Los Angeles County Metropolitan Transportation Authority (2005) 35 Cal.4th 15 , 21 [ 23 Cal.Rptr.3d 490 , 104 P.3d 844 ]), recognized and enforced in this state since the 19th century (see, e.g., Ashley v. Olmstead (1880) 54 Cal. 616 , 618; Agard v. Valencia (1870) 39 Cal. 292 , 297; Hibberd v. Smith (1870) 39 Cal. 145 , 146).^[2] The Legislature first codified the rule in the Practice Act of 1850 (Stats. 1850, ch. 142, § 258, p. 451; see Howe v. Key System Transit Co. (1926) 198 Cal. 525 , 531 [ 246 P. 39 ]), later incorporated it as part of the original Code of Civil Procedure (see former § 963, enacted 1872), and has retained it in the Code of Civil Procedure to this day (see § 904.1; Kinoshita v. Horio (1986) 186 Cal.App.3d 959 , 962-963 [ 231 Cal.Rptr. 241 ] [§ 904.1 codifies the common law one final judgment rule]).^[3]

We found compelling justifications for one such exception in Daar, supra, 61 Cal.2d 695 , embracing what is known in this and other jurisdictions as the “death knell” doctrine.^[4] In Daar, the plaintiff filed a putative class action. The trial court sustained a demurrer, concluding the plaintiff could neither maintain a class action nor satisfy the jurisdictional minimum amount in controversy for superior court actions, and transferred the action to the municipal court. On appeal, we considered as a threshold issue whether such an order, determining the plaintiff could not maintain his claims as a class action but could seek individual relief, was appealable, and we concluded it was. What mattered was not the form of the order or judgment but its impact. {Daar, at pp. 698-699.) Because the order effectively rang the death knell for the class claims, we treated it as in essence a final judgment on those claims, which was appealable immediately. (Id. at p. 699; see also Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429 , 435 [ 97 Cal.Rptr.2d 179 , 2 P.3d 27 ] [citing Daar with approval]; Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462 , 470 [ 174 Cal.Rptr. 515 , 629 R2d 23 ] [same].)

Two procedural circumstances were critical to our decision in Daar, supra, 61 Cal.2d 695 : first, that the appealed-from order was the practical equivalent of a final judgment for some parties, and second, that in the absence of our treating the order as a de facto final judgment, any appeal likely would be foreclosed. On the first point, the order “virtually demolished the action as a class action” {id. at p. 699) and was in “ ‘legal effect’ . . . tantamount to a dismissal of the action as to all members of the class other than plaintiff” {ibid., citation omitted). In cases decided since Daar, we and the Courts of Appeal have emphasized that orders that only limit the scope of a class or the number of claims available to it are not similarly tantamount to dismissal and do not qualify for immediate appeal under the death knell

Underlying this original settled rule was the recognition that “to hold the person [whose rights have been finally disposed of] bound to wait until the final judgment against the other party before taking an appeal from the judgment against the first party already rendered is wholly unreasonable and finds no warrant in any provision of the [Code of Civil Procedure].” (Rocca v. Steinmetz (1922) 189 Cal. 426 , 428 [ 208 P. 964 ]; see also Howe v. Key System Transit Co., supra, 198 Cal. at pp. 531-533 [notwithstanding the express terms of former § 963, appeal from an order is permitted where it amounts to a final decree disposing of a collateral party’s claims, although the principal parties’ claims remain unresolved]; Dollenmayer v. Pryor (1906) 150 Cal. 1 , 3 [ 87 P. 616 ] [“So far as the intervener and his rights in that action were concerned, [the order appealed from] was final. We see no good end to be secured by requiring him to await judgment between the other parties after a trial in which he could not participate. It ended the litigation as to him, and he should be allowed an immediate appeal.”].) The rule within which Daar, supra, 61 Cal.2d 695 , was intended to fit thus applied when, and only when, other parties in the litigation had claims still unresolved. Otherwise, there

Embracing this understanding of Daar, supra, 67 Cal.2d 695 , the Court of Appeal in Farwell v. Sunset Mesa Property Owners Assn., Inc. (2008) 163 Cal.App.4th 1545 , 1547 [ 78 Cal.Rptr.3d 666 ] correctly described the death knell doctrine as “a tightly defined and narrow concept.” It properly recognized the doctrine’s application depended on the contrast between the continuing viability of individual claims and the terminated status of absent class member claims: “[A]n appeal is allowed because the action has in fact and law come to an end, as far as the members of the alleged class are concerned. Since, in theory, the individual plaintiff’s action can go forward, the death knell doctrine fits comfortably into the exception to the ‘one final judgment’ rule that arises when parties have separate and distinct interests; when this is true, there can be a final and appealable judgment for each such party.” (Ibid.) In the absence of such a difference in claim status, where both class and individual claims have been resolved and a single judgment soon will follow, that exception is inapplicable and no justification for applying the death knell doctrine exists.

Here, a single order was entered dismissing both individual and class claims. No divergence between individual and class interests was thereby created. (Cf. Farwell v. Sunset Mesa Property Owners Assn., Inc., supra, 163 Cal.App.4th at p. 1547.) No risk arose that the named plaintiff, lacking incentive to pursue his individual claims, might fail to press on until the entry of an appealable final judgment. (Cf. Coopers & Lybrand v. Livesay, supra, 437 U.S. at pp. 469-470.) No need was present to treat the original order as immediately appealable, so as to prevent the trial court’s class determinations from never being reviewable. (Cf. Daar, supra, 67 Cal.2d at p. 699.) The scope of the death knell doctrine is coextensive with its rationale. The doctrine does not apply here.^[6]

The Court of Appeal below recognized that at least one other Court of Appeal had concluded, as we do, that where an order sustains a demurrer as to both class and individual claims, appeal lies from the subsequent entry of

We readily agree that bright lines are essential in this area, to avoid both inadvertent forfeiture of the right to appeal and excessive protective appeals by parties afraid they might suffer such a forfeiture.^[7] Properly understood, however, the principle that appeal lies only from the final judgment when an order terminates both class and individual claims is not an ill-defined, ad hoc exception to the death knell doctrine, but an appropriate recognition of the doctrine’s limits. As Daar itself expressed, and as we have explained above, the doctrine comes into play for class claims only when an order “is tantamount to a dismissal of the action as to all members of the class other than plaintiff,(Daar, supra, 61 Cal.2d at p. 699, italics added.) The rule that the death knell doctrine applies to render an order foreclosing class claims appealable when, and only when, individual claims survive is, we trust, sufficiently bright to guide future courts and litigants.

Bayer’s additional arguments on appeal do not persuade us otherwise. Bayer urges on us a wealth of cases applying the death knell doctrine to render orders dismissing class claims appealable.^[8] But none of them addressed the appealability of an order that also terminated individual claims. In the aftermath of Daar, we have repeatedly reaffirmed that an order that denies class certification or otherwise extinguishes class claims in their entirety is