Despite daunting facts, Court of Appeal confirms that California class actions are "opt-out" classes

Use of an opt-in approach for class actions has been rejected as contrary to California law.  Hypertouch Inc. v. Superior Court, 128 Cal. App. 4th 1527 (2005).  In Los Angeles Gay & Lesbian Center v. Superior Court, the rule in Hypertouch was tested with a more challenging set of facts, namely, the need to protect medical privacy rights.  The Court of Appeal (Second Appellate District, Division One) held, in Los Angeles Gay & Lesbian Center v. Superior Court (April 13, 2011), that the opt-out rule stated in Hypertouch is indeed the rule for class notice.  However, the Court fashioned other relief intended to protect the substantial privacy interest in medical information.

This matter was before the Court of Appeal for the second time.  In Bomersheim v. Los Angeles Gay & Lesbian Center, 184 Cal. App. 4th 1471, 1478 (2010) (Bomersheim I), the Court reversed the denial of class certification.  The matter alleged that, from January 1999 to March 2004, the Center administered an incorrect form of penicillin to person with confirmed or suspected cases of syphilis.

Once the matter was certified, the issue of notice became a focus of the litigation.  The Center argued that, due the sensitive nature of medical nature of the claims at issue, the court should utilize an opt-in mechanism.  The trial court held that an opt-out notice was appropriate and the Center filed a petition for a writ of mandate.  The Court heard the matter, saying, "This case presents the novel issue of whether an opt-out class is appropriate under California law where privacy rights and the physician-patient privilege will be severely compromised by the traditional opt-out procedure."  Slip op., at 11.

In concluding that opt-out notices were the only appropriate approach to class action notice proceedings, the Court said:

We recognize the benefits of a class action do not as readily accrue where members must affirmatively join the class. Here, the putative class members are those seeking free medical advice, and only approximately two-thirds of them responded to the Center's explanation of the error in medication and sought free retreatment. It is less likely that such members would affirmatively seek to join a class. Without the mandatory joinder effect of an opt-out class action, the Center will not obtain res judicata effect of a judgment; small individual class plaintiffs will not obtain the benefit of a settlement; and the cost of administering many small actions will not be avoided. Nonetheless, the Center points out that it has been more than six years since the error in medication, and if small class plaintiffs had wanted to come forward and file individual suits, they would have. This fact only underscores the point that the class plaintiffs in this action are likely of limited means and have limited access with which to pursue their claims judicially. A class action in which they automatically become participants benefits them.

Slip op., at 16-17.  However, the Court issued very specific instruction to protect the privacy of class members from disclosure without consent:

To the extent putative class members opt-out of the class, their names, other identifying information, and Medical Information shall not be subject to disclosure and shall remain sealed. With respect to those class members who do not opt-out of the class action, no class members' name, identifying information, or medical information is to be disclosed without that class members' prior authorization. Further, the trial court is to take steps to ensure that the names, identifying information, and medical information of the class members are not subject to disclosure under any circumstances in any public proceeding or public filing.

Slip op., at 24.  The Court limited disclosure of the class list to the third party administrator that would handle mailing of the notice.