Wilson v. Farmers Insurance: Court Certifies Class, Citing Harris v. Liberty Mutual Administrative Exemption Holding

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A Los Angeles Superior Court judge has certified a class of insurance adjusters alleging that they were improperly classified as exempt from overtime pay and meal and rest breaks. See Wilson v. Farmers Ins. Exch., No. BC 371597 (L.A. Super. Ct. Oct. 5, 2012) (order granting motion for class certification) (available here).

The plaintiffs contend that Farmers misclassified more than 600 claims representatives, and consequently failed to comply with California’s meal and rest break laws and pay overtime. Farmers invoked the administrative exemption, which, it argued, gives rise to predominant individual questions, thereby precluding class treatment. However, Superior Court Judge John Shepard Wiley, Jr. rejected Farmers’ argument, citing relatively recent Court of Appeal authority that compelled certification, and holding that certification is appropriate because the proposed class worked under standardized policies and performed the same core set of duties company-wide.

Judge Wiley relied extensively on another insurance adjuster decision, the long-awaited Harris v. Liberty Mutual, in which California’s Second Appellate District (following California Supreme Court consideration and remand back to the Court of Appeal) made it more difficult for employers to avail themselves of the administrative exemption to block class treatment. See Harris v. Liberty Mut. Ins., 207 Cal. App. 4th 1225 (Cal. Ct. App. 2012) (available here).

In Harris, the defendant argued that the administrative exemption’s requirement that work must be “directly related” to administrative functions gave rise to a predominance problem, since it would require the court to ascertain the duties of many individual claims adjusters, working in different offices, under different managers, and with different skill sets. However, the majority concluded that “no evidence shows that any class members primarily engage in work that satisfies the qualitative component of the ‘directly related’ requirement. That conclusion disposes of Employers’ affirmative defense based on the administrative exemption, and it is a predominant issue that is common to the claims of all class members.” Harris at 1247-48.

While the Harris panel was careful to clarify that it was not holding that claims implicating the administrative exemption are per se amenable to class treatment, the ruling in Wilson makes clear that the position asserted by many employer/defendants — that raising an administrative exemption defense is a guaranteed bulwark against class treatment — is similarly without merit. The Wilson action will now proceed to the class notice and merits phases before Judge Wiley.