Galavis v. >L.A.>
Models





















Filed 1/9/13
Galavis v. L.A. Models CA2/2

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>NOT TO BE PUBLISHED IN THE
OFFICIAL REPORTS

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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(b). This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115>.





IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA



SECOND APPELLATE DISTRICT



DIVISION TWO




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FEDERICO GALAVIS, Plaintiff and Appellant, v. L.A. MODELS, INC., Defendant and Respondent.

B235476 (Los Angeles County Super. Ct. No. BC382372)

APPEAL
from an order of the Superior Court of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">Los Angeles
County.

Luis A. Lavin, Judge. Affirmed.



Johnson
& Johnson, Douglas L. Johnson, Lan P. Vu and Nausheen Kazalbasch for
Plaintiff and Appellant.



Atkinson,
Andelson, Loya, Ruud & Romo, Robert R. Roginson, Paul G. Szumiak, Barbara
S. Van Ligten; Hantman & Associates and Robert J. Hantman for Defendant and
Respondent.



_________________________



Federico
Galavis (Galavis) appeals the denial of his motion for class certification in a
multi-count action against respondent L.A. Models, Inc. (L.A. Models). We find no error and therefore affirm.

L.A. Models
requests sanctions against opposing counsel.
The request for sanctions is denied.

FACTS

>L.A.> Models

L.A.
Models was founded by its president, Heinz Holba (Holba). In connection with its representation of
models, it uses a variety of form contracts.
In 2001, the Labor Commissioner approved a form agency agreement (2001
agency agreement) that required a model to pay a 20 percent commission on all
compensation for professional services.
A subsequent form agency agreement was approved in 2009 (2009 agency
agreement). It contained the same 20
percent commission structure. In
addition, it provided: “Artist/Model
understands and agrees that [L.A. Models] will from time to time incur expenses
on Artists/Models [sic] behalf. Artist/Model
agrees that all expenses, other than normal minimum office overhead
expenses, incurred by [L.A. Models] on behalf of Artist/Model, including,
without limitation, messenger fees, overnight courier fees, color copies,
pictures, transportation and living expenses while traveling, accommodation,
promotion, including, but without limitation, Interest promotion, Internet, Web
and CD Rom promotion, publicity expenses and any other charges shall be
promptly paid or reimbursed to [L.A. Models] by Artist/Model. Artist/Model agrees that [L.A. Models] is
hereby irrevocably authorized to deduct the amount of expenses from any sums
which [L.A. Models] may receive for Artist/Model [sic] services.”

Prior
to 2010, a model working for L.A. Models was asked to sign an agreement to
certify that he or she was an independent contractor (Independent Contractor
Agreement). That agreement provided: “I understand and agree that [L.A. Models]
will from time to time charge expenses on my behalf such as color copies,
pictures, airfares, hotel expenses, messengers, etc. Such expenses will be deducted from my
checks, as they become available.”
Beginning in 2010, a model was asked to sign a disclosure agreement
(Disclosure Agreement) that certified the model’s status as an independent
contractor and stated: “I understand and
agree that [L.A. Models] will from time to time charge expenses incurred on my
behalf including, but not limited to, color copies, pictures, airfare, hotel
expenses, web portfolios, website services, and messenger fees to me. I understand and agree that such expenses
will be deducted from my checks as funds become available.”

When L.A. Models
recruits a model, the negotiations are handled by bookers. If a model is new to the industry, the booker
explains the commission structure, what L.A. Models charges the model for
expenses and what it charges to clients.
If a model is experienced, the model is normally familiar with these
charges and less time will be spent discussing them.

Even though L.A.
Models uses form agreements, models can negotiate changes such as a reduction
or waiver of L.A. Models’s commission and its right to recoup expenses. Once L.A. Models decides to represent a
model, it asks the model to sign the form agreements. However, for a variety of reasons, models
often do not sign and simply begin working.

>The service fee to clients

When
a client hires L.A. Models, it often provides logistical services such as
casting, payroll and travel arrangements.
For these services, L.A. Models typically charges the client 20 percent
of the amount of the model’s fee, but the service fee varies from job to job. Oftentimes, the service fee is less than 20
percent. And if there is a large
commission, L.A. Models will sometimes waive the service fee. No service fee is charged to the client when
L.A. Models does not perform logistical services.

>Disclosure of expenses and service fees to
models

When
a booker finishes negotiating a modeling job with a client, the booker presents
the job to the model. This includes
informing the model of the associated service fee and expenses. The model can offer input and ask the booker
to go back to the client and negotiate the terms further. Before commencing a job, the model must agree
to all the terms.

Some
jobs are confirmed orally, and others are confirmed in writing. When jobs are confirmed in writing, the
writing typically states the rate of compensation for the model. It also provides for the payment of a service
fee to L.A. Models. Target Stores, an
L.A. Models client, uses a form contract that states: “Unless otherwise agreed in writing [Target
Stores] will pay [L.A. Models] a fee equal to 20 % on Model’s total compensation
(excluding expenses). Model warrants and
represents that [Target Stores] will not be under any obligation for the
payment of any commission or fees to any other third party as a result of this
Contract.” A model who works on a job
for Target Stores must sign the form contract.

In
order for a model to be paid on a job, the model and client must sign a voucher
form. The voucher forms used by L.A.
Models provide for the rate paid to the model and a 20 percent service fee.

>Galavis’s action

Galavis,
a model, sued L.A. Models on behalf of himself and similarly situated
models. He alleged that L.A. Models
breached the 2001 agency agreement and the 2009 agency agreement by charging
clients a 20 percent service fee, and that it breached the Independent
Contractor Agreements and the Disclosure Agreements by charging models for
improper or fraudulent expenses. Based
on these facts, Galavis further alleged that L.A. Models is liable for breach
of the implied covenant of good faith and fair dealing, breach of fiduciary
duty, unjust enrichment, accounting and unfair business practices.

>The motion for class certification

In
his motion for class certification, Galavis defined the class as “[a]ll current
and former models who have entered into written standard form agency agreements
with [L.A. Models] from December 17, 2003[,] to the date of judgment.” He claimed that the size of the proposed
class was at least 3,500 members, and that the members were readily identifiable
from L.A. Models’s business and accounting records. As for the class claims, Galavis argued that
L.A. Models is guilty of uniform and systematic wrongdoing because it collected
an undisclosed 20 percent service fee from the earnings of class members and
also charged them for excessive and unsubstantiated expenses such as: (1) a $40 monthly charge to each model
who is posted on L.A. Models’s Web site; (2) a $50 charge for posting
a model’s picture on a third-party Web site, L.A. Model Casting, even
though this is a free service; (3) a $1 charge for each color copy made for
model cards that are sent to potential clients; (4) an excessive 5 percent
advance fee for checks given to models; (5) FedEx and messenger fees incurred
every time L.A. Models unilaterally sends a model’s cards and/or portfolios to
clients; (6) parking costs and airfare on modeling jobs; and (7) every other
possible cost associated with each modeling job.

The trial court
denied the motion. The decision, in
part, was based on the recognition that there would have to be individualized
inquiry as to whether L.A. Models failed to disclose service fees. In addition, inter alia, the trial court
concluded that “the highly individualized nature of the damages will defeat the
commonality that might otherwise exist.”

This timely appeal
followed.

DISCUSSION

I. Standard of Review.

An order denying
class certification is reviewed for an abuse of discretion. (Osborne
v. Subaru of America, Inc. (1988) 198 Cal.App.3d 646, 654.) As our Supreme Court instructs, an appellate
court will “not disturb a trial court ruling on class certification which is
supported by substantial evidence unless (1) improper criteria were used
[citation]; or (2) erroneous legal assumptions were made [citation].” (Richmond
v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470 (Richmond).) Thus, “‘[s]o
long as [the trial] court applies proper criteria and its action is founded on
a rational basis, its ruling must be upheld.’
[Citations.]” (>Dean Witter Reynolds, Inc. v. Superior Court
(1989) 211 Cal.App.3d 758, 764–765.)

II. Class Action Law.

When a party
seeks class certification, he or she must establish “an ascertainable class and
a well-defined community of interest among the class members. [Citation.]”
(Richmond, >supra, 29 Cal.3d at p. 470.) The existence of a well-defined community of
interest is determined by looking at three factors: “(1) [whether] common questions of law or
fact [predominate]; (2) [whether the] class representative [has] claims or
defenses typical of the class; and (3) [whether the] class representative[]
. . . can adequately represent the class. [Citation.]”
(Richmond, >supra, 29 Cal.3d at p. 470.)

To determine
whether common questions predominate, we must examine “‘the issues framed by
the pleadings and the law applicable to the causes of action alleged.’ [Citation.]”
(Ali v. U.S.A. Cab Ltd. (2009)
176 Cal.App.4th 1333, 1347.) When
compared to issues requiring separate adjudication, the common issues must be
sufficiently numerous and substantial to make the class action advantageous to
the judicial process and litigants. (>Washington Mutual Bank v. Superior Court
(2001) 24 Cal.4th 906, 913–914.) A
“‘court may properly deny certification where there are diverse factual issues
to be resolved even though there may also be many common questions of
law.’” (Soderstedt v. CBIZ Southern California, LLC (2011) 197 Cal.App.4th
133, 154.) If disparate proof of damages
is required, a trial court has discretion to either grant or deny class
certification. (Evans v. Lasco Bathware, Inc. (2009) 178 Cal.App.4th 1417, 1430 (>Evans) [“[A]lthough
a trial court has discretion to
permit a class action to proceed where the damages recoverable by the
class must necessarily be based on estimations, the trial court equally has
discretion to deny certification when it concludes the fact and extent of each
member’s injury requires individualized inquiries that defeat predominance”].)

III. The Trial Court
Properly Denied Class Certification Because the Fiduciary Duty Cause of Action
would Require an Individualized Inquiry as to whether L.A. Models Made Secret
Profits.

Galavis contends
that L.A. Models systematically breached its fiduciary duties by collecting
undisclosed service fees. Indeed, an
agent must make a full disclosure to the principal when the agent has dealings
with the subject matter of the agency.
As a result, an agent is barred from making secret profits. (Store
of Happiness v. Carmona & Allen (1957) 152 Cal.App.2d 266, 276.) And if an agent “makes any secret profits
from his agency[,] the principal can recover them. [Citations.]”
(Rodes v. Shannon (1963) 222
Cal.App.2d 721, 725.)

The trial court
found that the service fee issue would require an individualized inquiry. That finding was supported by substantial
evidence. Holba filed a declaration
stating that new models are informed of the service fee. That may or may not be the case with
experienced models because they are already familiar with the concept of
agencies imposing a service fee. A
booker discusses service fees with each model on a continuing basis throughout
their relationship. Thus, as the trial
court found, the claim that service fees were undisclosed would require an
examination of each model’s level of experience and what they already
understood about industry practice. Then, as to each job booked by L.A. Models,
there would have to be an examination of the model and booker.

Even
if there were common issues, the individual issues pertaining to the service
fees justified the denial of class certification.

IV. The Trial Court Properly Denied Class
Certification for the Additional Reason that Damages would Require
Individualized Inquiries.

There
is no dispute that damages would require individualized inquiries as to each
model in the class. Indeed, as for any
unlawful or unfair expenses passed on to the models, the trier of fact would
have to engage in a model by model examination of those expenses. As for service fees imposed on the models’
employers in breach of the fiduciary duty of disclosure, the trier of fact’s
examination would have to cover every job involving such a fees. The fact that issues related to damages are
so individualized simply bolsters the trial court’s ruling that certification
was inappropriate. (Evans, supra, 178
Cal.App.4th at p. 1427 [“there was substantial evidence to support the
trial court’s conclusion that . . . class treatment was
inappropriate because individualized trials for each class member’s damages
would be required to determine the appropriate award for each class member” ].)

Galavis
suggests that disparate damages should not stand in the way of class
certification because all of the expenses and service fees can be discerned
from L.A. Models’s records. Because the
trial court relied on individualized liability issues as well as individualized
damages issues, this argument does not have any traction. In any event, on the merits, the argument
fails.

This case is
unlike Daar v. Yellow Cab Co. (1967)
67 Cal.2d 695. There, the complaint
alleged the existence of two subclasses that had been overcharged when using
the taxicab services of the defendant.
It was alleged that the exact amount of the overcharge could be
ascertained from defendant’s books and records and from information within the
defendant’s knowledge. (>Id. at pp. 713–714.) The court concluded that a class action was
proper because the two classes were entitled to recover the overcharges under a
common set of facts and because “[p]roof of separate claims would not be
required. [Citations.]” (Id.
at p. 714.) Here, a simple review
of L.A. Models’s records would not disclose the degree to which the expenses
and service fees were disclosed or not disclosed, and whether the expenses were
substantiated, reasonable or otherwise consented to.

V. Sanctions.

L.A. Models moves
for sanctions against opposing counsel for committing unreasonable violations
of the California Rules of Court. (Cal.
Rules of Court, rule 8.276(a)(4).)
According to L.A. Models, Galavis miscited the appellate record, made
unsupported or false factual assertions, misstated the trial court’s rulings,
argued objections that have been waived and changed theories on the undisclosed
expenses and service fees. Upon review
of Galavis’s appellate briefs and the record, we conclude that this is not an
appropriate case for sanctions.

The href="http://www.fearnotlaw.com/">motion for sanctions is denied.

>DISPOSITION

The order is affirmed.

L.A. Models shall recover its costs on
appeal.

NOT
TO BE PUBLISHED IN THE OFFICIAL REPORTS.









______________________________,
J.

ASHMANN-GERST





We concur:







_______________________________,
Acting P. J.

DOI TODD







_______________________________,
J.

CHAVEZ