Posts belonging to Category Certification Rulings

U.S. Supreme Court Denies Cert. in Moldy Washer Cases

After re-listing the “moldy washing machine” cases multiple times, the Supreme Court finally denied certiorari petitions in a trio of cases: Whirlpool Corp. v. Glazer, 722 F.3d 838 (6th Cir. 2013), Sears, Roebuck & Co. v. Butler, 727 F.3d 796 (7th Cir. 2013), and BSH Home Appliance Corp. v. Cobb, 289 F.R.D. 466 (C.D. Cal. 2012). See Supreme Court 2013 Term Order List 02/24/14 (available here). Plaintiffs in the Whirlpool and Sears suits alleged that various models of Whirlpool’s front-loading washing machines contain a design defect that causes moldy odors. Petitioners asked the Court to rule on two issues: 1) whether a class can be certified where most members did not experience the alleged defect or harm and 2) whether Federal Rule 23(b)(3) predominance requirement can be fulfilled where the courts have not found that the aggregate of common liability issues predominates over the aggregate of individual issues.

Previously, the courts in Whirlpool and Sears (Sixth and Seventh Circuits, respectively) had upheld certification of classes which included consumers whose washers did not manifest the alleged mold defect. The Sixth Circuit had found that the presence of a defect might be a compensable injury even if it never manifested in some washers, because the plaintiffs might be able to show they were injured by having to pay a premium for the washer as it was designed. Whirlpool, 678 F.3d 409, at 420 (6th Cir. 2012). The Seventh Circuit had found that the class could be certified even if the members had not all suffered the same damages. Sears, 702 F.3d 359 (7th Cir. 2012). However, following the Supreme Court’s ruling in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), which held that where damages are an element of liability, they need be determinable on a class-wide basis, the Court granted, vacated, and remanded the certiorari petitions in Whirlpool and Sears, instructing the circuit courts to revisit the certification analysis in light of Comcast. On remand, both the Sixth and Seventh Circuits reaffirmed their prior decisions granting certification, construing the Comcast decision narrowly, as not applicable to cases where the plaintiffs proposed the certification of liability-only classes and left damages issues for individual determination.

Many in the legal community thought that another reversal and vacatur would have dealt a huge blow to consumer class actions, in keeping with the trend of the conservative, pro-business Supreme Court’s decisions circumscribing class certification. Instead, the Court’s passing on any kind of review shows that consumer class actions, where fewer than all of the class members experienced injury, remain fully viable. The denial of certiorari in these moldy washer cases leaves the circuit courts’ decisions undisturbed, allowing for more favorable class certification standards in product defect and privacy cases.

Decertification Reversed in Williams v. Superior Court, Distinguishes Dukes

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.

Reversal of Fortune for Two Class Action Defendants

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.

Additional Subclass Certified in Brinker, 17 Months After Landmark Ruling

In Brinker v. Superior Court, the court affirmed certification of a rest break subclass, reversed certification of an “off-the-clock” subclass and remanded for reconsideration the question of meal period subclass certification in light of clarifications of law provided in that decision. Last Thursday, Judge Dato granted certification of the meal period subclass (tentative ruling available here). 

Judge Dato’s class certification decision focused on “the plaintiff theory of liability and proof, not on alternative approaches a defendant might prefer were being pursued.” The plaintiffs’ main theory of meal period liability is that Brinker’s meal period policies, particularly its written policy, violate California law. Focusing on that theory, Judge Dato held that the validity of Brinker’s meal period policy is a classwide issue subject to common proof.

Judge Dato’s decision is in line with other post-Brinker decisions (which he cites) such as Bradley v Networkers International LLC (2012) 211 Cal.App.4th 129 and Faulkinbury v. Boyd Associates, Inc. (2013) 216 Cal.App.4th 1129, which also read Brinker as focusing on plaintiffs’ theory of liability and, in particular, whether they allege that a policy violates California law. Whether in fact a policy violates California law is not part of the certification analysis – it is a merits issue. Brinker, Bradley and Faulkinbury all follow this approach. In addition, to show that common issues did not predominate, Brinker argued that there is wide variation in how meal period policies were implemented and applied. Judge Dato, relying on Bradley, stated that whether there is a lack of company-wide policy that violates California law is also a classwide issue subject to common proof.