Posts belonging to Category Certification Rulings

Earlier in November, the California Court of Appeal revived a proposed overtime class action brought by Joe’s Crab Shack managers against their employer, reversing the trial court’s denial of class certification. Martinez v. Joe’s Crab Shack Holdings, No. B242807 (Second Dist. Div. 7 Nov. 10, 2014) (slip op. available here). The court initially had remanded the case back to the lower court to reconsider issues regarding the commonality of the managers. Martinez v. Joe’s Crab Shack Holdings, No. B242807 (Second Dist. Div. 7 Nov. 12, 2013). The prior decision was issued while Duran v. U.S. Bank National Assn. (59 Cal.4th 1 (2014)) was pending before the California Supreme Court; following the Duran decision, the Martinez matter was transferred back to the court of appeal for reconsideration in light of the case.

The court of appeal again remanded because it found the trial court had erred in denying certification because it had failed to adequately analyze the adequacy and typicality of the plaintiffs, as well as the commonality and predominance prongs under Brinker Rest. Corp. v. Superior Court (273 P.3d 513 (2012)), Duran, and Ayala v. Antelope Valley Newspapers, Inc. (59 Cal. 4th 522 (2014)). It reaffirmed that classwide relief remains “the preferred method” for resolving wage-and-hour claims, even in cases with difficult issues of proof, such as misclassification. Slip op. at 23. The court concluded, “[b]y refocusing its analysis on the policies and practices of the employer and the effect those policies and practices have on the putative class, as well as narrowing the class if appropriate, the trial court may in fact find class analysis a more efficient and effective means of resolving plaintiffs’ overtime claim.” Id.

The employees alleged that they worked overtime, were denied uninterrupted meal and rest breaks, and were misclassified as exempt despite having spent a majority of their time performing non-exempt “utility” tasks. The trial court had denied class certification, holding that, because the employees were unable to accurately estimate how much time they had spent doing exempt versus non-exempt tasks, individual inquiries were necessary. This finding meant that common issues did not “predominate” over individual issues, and that class treatment would not be the superior method for resolving the claims. Slip op. at 2.

The court of appeal’s second opinion in this case followed the California Supreme Court’s decision in Duran, a class action filed by former bank salespersons who alleged they had been misclassified. The Duran opinion addressed issues of class action manageability, ruling that individual issues do not necessarily overwhelm common issues when a case involves overtime exemptions premised on how employees spend the workday. Citing Duran, the Martinez court found that “courts in overtime exemption cases must proceed through analysis of the employer’s realistic expectations and classification of tasks rather than asking the employee to identify in retrospect whether, at a particular time, he or she was engaged in an exempt or nonexempt task.” Slip op. at 21.

Last month, the California Court of Appeal affirmed an order by the Alameda County Superior Court certifying a class of drivers for various wage-and-hour violations against their employer, Oakland Port Services Corp, d/b/a AB Trucking. Godfrey v. Oakland Port Services Corp., No. A139274 (First Dist. Div. 2 Oct. 28, 2014) (slip op. available here). The drivers claimed that that they had not been paid for missed meal and rest periods, among other violations. The appellate court also upheld the lower court’s judgment for the plaintiffs after a bench trial in which the plaintiffs had been awarded nearly $1 million, in addition to attorney fees, litigation expenses, and class representative enhancement awards. It also found that the Federal Aviation Administration Authorization Act (FAAAA) did not preempt California’s meal and rest break requirements.

The plaintiffs had alleged that the defendant had failed to pay its drivers for all hours worked, misclassified some drivers as non-employee trainees, and failed to provide meal and rest breaks. Finding for the plaintiffs, the trial court’s statement of decision and judgment held that: (1) AB Trucking failed to pay for all hours worked because its records showed that “it deducted one hour per day from each employee . . . , even though the driver did not receive a one hour meal period”; (2) “AB misclassified drivers who were suffered or permitted to work as non- employees, or unpaid ‘trainees.’”; and (3) plaintiffs had “presented substantial and persuasive evidence that class members were routinely and consistently precluded by AB from taking meal periods and rest breaks.” Slip op. at 3-4.

AB Trucking argued, on appeal, that the trial court had found erroneously that the FAAAA did not preempt state law with regard to meal and rest breaks. The FAAAA provides for federal regulation of commercial carriers and preempts state law “related to a price, route, or service of any motor carrier . . . with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). The court disagreed with the defendant, finding that the FAAA does not preempt claims for missed meal and rest periods by the drivers and that the defendant failed to offer any evidence that the state’s break laws had any actual impact on its prices, routes, or services. Citing recent federal and California precedents such as Dilts v. Penske Logistics, LLC, No. 12-55705 (9th Cir. July 9, 2014), and People ex rel. Harris v. PAC Anchor Transportation, Inc., No. S194388 (July 28, 2014), which have limited the preemptive reach of the FAAAA, the court concluded that compliance with the state’s meal and rest break laws does not conflict with federal law. 

The trial judge in the Santa Clara Superior court, Judge Peter H. Kirwan, certified a class of employees who alleged that Ma Laboratories Inc. failed to pay for all “hours worked” pursuant to 8 Cal. Code Regs., § 11070(2)(G). The wage-and-hour lawsuit claimed that the defendant was shaving time off employees’ actual hours worked; the judge found that time-shaving is a “one-way” practice and that workers are under their employers’ control as soon as they are on the clock, even if they are not performing any actual work. Tian v. Ma Laboratories Inc., No. 1-11-cv-195373 (Cal. Super. Ct. Oct. 9, 2014) (slip op. available here).

The court certified the time-shaving class and several subclasses, finding that even workers who are sitting around before their shifts smoking cigarettes and waiting for instructions are considered on the clock and working and thus must be paid. The class consisted of approximately 550 employees who worked at Ma Labs’ headquarters in San Jose or in its facility in Los Angeles. Stating, “even those who are waiting for instructions in the morning are clocked in and subject to Ma Labs’ control/suffered or permitted to work, whether or not required to do so,” the court held that, per the plaintiffs’ theory, “this still constitutes ‘hours worked’ for purposes of compensation, and the necessary findings can be made from the timekeeping alone.” Slip op. at 7.

Ma Labs allegedly had a strict start and end time for each employee, so that if and when workers clocked in before that set time starts or clocked out after it ends, the extra time needed to be approved and manually revised by a system administrator. The plaintiffs also alleged that this time-shaving practice allowed Ma Labs to not always pay for the extra time when workers arrived early or stayed late, but consistently docked their pay if they came in late or clocked out early. Approval for pre-shift time was “rarely if ever” granted, and post-shift time was not typically approved unless it was less than ten minutes. Slip op. at 6. The defendant argued that the plaintiffs were unable demonstrate that each particular employee was not incorrectly reporting his or her time or individual reasons for each individual’s denial of overtime or time card adjustment. Ma Labs also contended that workers would sometimes swipe their cards to clock in, then eat breakfast or perform personal tasks, rather than begin work right away. However, the court declined to address the merits of the plaintiffs’ time-shaving theory and stated that “[defendant’s] evidence that some employees occasionally engaged in personal activities after clocking in does not defeat certification because the record does not suggest that such instances would predominate over common ones.” Slip op. at 7 (emphasis added).

The court granted certification as to the time-shaving subclass, the auto-deduct lunch policy subclass consisting of employees from March 1, 2007 to February 15, 2010, the second meal period policy subclass, the rest period policy subclass from March 1, 2007 to February 15, 2010, the derivative wage statement class, and derivative waiting time penalty subclass. However, it denied the certification motion as to a drivers subclass within the auto-deduct lunch policy theory and a broader rest period policy subclass after February 15, 2010.

Earlier this month, the Ninth Circuit Court of Appeal affirmed the California district court’s order certifying a class of approximately 800 claims adjusters who alleged that Allstate denied them overtime pay, ruling the class met the commonality requirement. Jimenez v. Allstate Insurance Co., No. 12-56112 (9th Cir. Sept. 3, 2014) (slip op. available here). Stating that the use of statistical sampling testimony to show classwide liability did not contradict the U.S. Supreme Court’s ruling in Wal-Mart Stores Inc. v. Dukes, 131 S. Ct. 2541 (2011), the court found that it and its sister circuit courts have regularly found that statistical sampling and representative testimony are acceptable ways to show liability. Moreover, the lower court had preserved the defendant’s ability to raise any individualized defenses it might have at the damages stage, and thus the certification order did not violate its due process rights.

Claims adjuster Jimenez filed this putative class action in 2010, on behalf of all Allstate claims adjusters in California working since Sept. 29, 2006. After Allstate reclassified its California claims adjusters from exempt positions to hourly status in 2005, the plaintiffs alleged that the defendant did not pay them overtime wages or for missing meal breaks. In April 2012, U.S. District Court Judge Kronstadt certified the overtime class, ruling that if Allstate had a common practice of disregarding its own written policies and discouraging employees from reporting overtime, then the employees meet the requirements for commonality. Meal and rest break claims were denied, however, because they were too individualized.

The Ninth Circuit agreed with the lower court’s order finding that the plaintiffs had raised at least three common questions: whether the class was forced to work unpaid overtime due to the defendant’s unofficial policy of deterring employees from reporting overtime (among other reasons), whether the defendants knew or should have known that the class members were working unpaid overtime, and whether the defendants “stood idly by.” Citing Dukes, the court opined that the lower court did not abuse its discretion in determining that these three common questions contained the ‘glue’ necessary to say that ‘examination of all the class members’ claims for relief will produce a common answer to the crucial question[s]’ raised in the plaintiffs’ complaint. Slip op. at 11 (internal citations omitted). The panel also rejected Allstate’s argument that statistical sampling violates due process during the liability phase of class action proceedings. “[S]tatistical sampling and representative testimony are acceptable ways to determine liability so long as the use of these techniques is not expanded into the realm of damages.” Id. at 12.