Articles from December 2013

In Williams v. Superior Court of Los Angeles County (Allstate Insurance Company), No. B244043 (Cal. Ct. App. Dec. 6, 2013), non-exempt field adjusters alleged overtime claims based upon a company-wide policy that an adjuster’s workday did not begin until the start time of the day’s first field appointment. The company did not track, and thus failed to compensate adjusters for, time worked off-the-clock prior to the first inspection and after the last inspection of the day. The trial court granted class certification in 2010, but then decertified the class in July 2012 based on the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011). The California Court of Appeal (Second Appellate District, Division Eight) reversed (slip opinion available here).

Williams is consistent with other post-Brinker decisions which have held that that class treatment of California employment claims is usually appropriate when the plaintiff’s theory of liability is linked to a class-wide policy. Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012). The opinion also indicates that the Dukes analysis, which occurred in the context of a Title VII gender discrimination claim, should not be applied to California wage and hour claims, providing “[w]e agree with those courts that have found Dukes distinguishable in comparable situations.” Slip op. at 9.

The opinion distinguishes Dukes on several points. It notes that the portion of Dukes on which the trial court’s decertification order was based was focused on F.R.C.P. 23(b)(2) (which covers injunctive relief class actions), whereas the plaintiff in the instant case sought damages. The Court explained that “the trial court’s reliance on Dukes analysis of [Rule 23(b)(2)]—a class action seeking injunctive relief—was thus misplaced because appellant’s class members here were seeking principally, if not exclusively, monetary damages.” Slip op. at 11. In addition, the opinion distinguishes Dukes on the ground that it involved certain statutory affirmative defenses which raised individual issues: “Dukes concluded a class proceeding could not deprive Wal-Mart of its right to present those [statutory] defenses. As those . . . defenses required individualized evidence, Dukes disapproved a ‘Trial by Formula’ of Wal-Mart’s affirmative defenses because it prevented Wal-Mart from offering its individualized evidence.” Id. (internal citations omitted).

The opinion also clarifies the phrase “Trial by Formula,” and explains that statistical sampling is a valid method of calculating damages, which has “little, if any, relevance at the certification stage.” Slip op. at 12. Instead, at this stage, “the concern is whether class members have raised a justiciable question applicable to all class members. . . . Here, the question is whether Allstate had a practice of not paying adjusters for off-the-clock time. The answer to that question will apply to the entire class of adjusters.” Id. Additionally, the panel contrasted the difficulty in managing trial of the discrimination claims in Dukes, “which depended on proof of the subjective intents of thousands of individual supervisors” to the current case, where “[plaintiff] asserts there is a companywide policy to deny overtime pay,” which can be shown by objective standards. Id. at 11.

Finally, the Court rejected Allstate’s argument that certification should be denied because Allstate could show some adjusters may not have worked any unpaid overtime, i.e., that there was an absence of commonality due to varying damages among the class members. Slip op. at 18-19. Declining to address the veracity of Allstate’s assertions to avoid an inquiry on the merits, the Court stated that an unlawful company policy can create commonality even if the practice affects class members in differing ways and such differences merely go to the damages that each employee is owed. Id. at 19.

Thus, the panel found that the unpaid overtime claim was properly certified under the Dukes framework and that the claim had been improperly decertified.

In the past 10 days, the California Court of Appeal, Second Appellate District, has published a pair of recent opinions reversing the denial of class certification by the trial court. See Martinez v. Joe’s Crab Shack Holdings, No. B242807 (Cal. Ct. App. Nov. 12, 2013); Jones et al. v. Farmers Insurance Exchange, No. B237765 (Cal. Ct. App. Oct. 28, 2013) (slip opinions available here and here). The publication orders issued on 12/4/13 and 11/26/13, respectively. Both Martinez and Jones are wage and hour class actions asserting multiple claims, including for unpaid overtime and improper wage statements.

In Martinez, filed in 2007, a proposed class of restaurant managers sued their employers for unpaid overtime, based on a theory of misclassification. The defendants claimed that individualized determinations would have to be made regarding the amount of time each employee spent on non-managerial tasks in order to determine liability for misclassification, and the trial court denied certification on that basis. However, the appellate court disagreed, finding that individual issues of proof did not predominate over common issues, and held that the trial court had not followed the directives of Sav-On and Brinker: “Sav-on instructs courts in overtime exemption cases to proceed through analysis of the employer’s realistic expectations and classification of tasks rather than whether the employee can identify in retrospect whether, at a particular time, he or she was engaged in an exempt or nonexempt task” and “we understand from Brinker . . . a renewed direction that class-wide relief remains the preferred method of resolving wage and hour claims, even those in which the facts appear to present difficult issues of proof.” Slip op. at 15, 19.

The Jones plaintiffs, a putative class of insurance adjusters, filed their complaint in 2009, alleging unpaid overtime, wage statement, and minimum wage violations. All of the purported violations stemmed from a company-wide written policy dictating that time spent on certain job-related tasks (such as logging into the company’s computer system to get an assignment, or travel time to the first assignment of the day) was not compensable. The trial court had denied class certification, finding that common issues did not predominate and that the plaintiffs had not demonstrated that defendant had a classwide policy of refusing to pay overtime, but the court of appeal emphatically disagreed. Just as in Martinez, the court relied on Sav-on and Brinker, as well as Jaimez v. Daiohs, and concluded that the trial court erred in “focusing on individual issues concerning the right to recover damages rather than evaluating whether the theory of recovery is amenable to class treatment.” Slip op. at 14.

Publication of Martinez and Jones appears to represent a renewed endorsement of resolving wage and hour class actions on a class-wide basis, and should be frequently cited in the future.