## Facts

- Plaintiffs were clients of an accounting firm and alleged that an accountant continued practicing and representing himself as a licensed CPA during a period when his license had lapsed.
- Plaintiffs sought restitution/disgorgement of fees and other relief based on consumer-protection and fraud theories.
- Plaintiffs filed the action as an unlimited civil case and pled it as a putative class action.
- At an early status conference, before class certification proceedings and with no developed record on damages, the trial court (without prior notice):
  - Reclassified the case as a limited civil case based on an assumed amount in controversy not exceeding the statutory threshold, and
  - Effectively determined the matter would not proceed as a class action.

## Issues

1. Whether a trial court may sua sponte reclassify an action as a limited civil case based on amount in controversy without prior notice and an opportunity to present evidence and argument.
2. Whether reclassification is proper absent a showing that the action will necessarily result in a verdict below the jurisdictional threshold for an unlimited civil case.
3. Whether a trial court may decide that a matter will not proceed as a class action at an early status conference without notice and an opportunity to present evidence regarding class certification.

## Decision

- The Court of Appeal treated plaintiffs’ attempted appeal as a petition for writ of mandate.
- The court granted extraordinary relief and directed the trial court to vacate the reclassification order.
- The court held the trial court erred by reclassifying without notice, a hearing, or evidence establishing the amount in controversy.
- The court also held the trial court could not determine class-action status without notice and an opportunity to present evidence.

## Legal Principles

- A trial court may order jurisdictional reclassification based on amount in controversy only after providing notice and an opportunity to be heard.
- Reclassification based on the amount in controversy is proper only when it appears the action will necessarily result in a verdict below the statutory threshold for an unlimited civil case; a prediction that recovery is merely likely below the threshold is insufficient.
- Determination whether an action may proceed as a class action requires appropriate procedure, including notice and an opportunity to present evidence; it cannot be summarily resolved at an early status conference on an undeveloped record.

## Conclusion

The Court of Appeal issued a writ of mandate because the trial court’s sua sponte reclassification to a limited civil case and its effective denial of class treatment were made without notice, hearing, or evidentiary support, contrary to the governing standard for amount-in-controversy reclassification and the required procedure for class certification.


Stern v. Superior Court, 105 Cal. App. 4th 223, 129 Cal. Rptr. 2d 275 (Ct. App. 2003)