Ivy v. Jiffy Lube International
Filed 9/4/12
Ivy v. Jiffy Lube International CA1/2
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST
APPELLATE DISTRICT
DIVISION
TWO
MARSHE IVY
et al.,
Plaintiffs and Appellants,
v.
JIFFY LUBE
INTERNATIONAL, INC.,
Defendant and Respondent.
A129545
(Alameda County Super. Ct.
No. RG9459032)
Marshe
Ivy and Greg Alcantara, former store managers at Jiffy Lube International (JLI)
service stations, filed a putative class action, on behalf of themselves and
others similarly situated, alleging that defendant JLI had misclassified them
as employees exempt from California’s overtime pay requirements and that, as a
result of this misclassification, defendant was liable for violation of various
provisions of the Labor Code and the Business and Professions Code. They appeal from the order of the trial court
denying their motion for class certification and seek reversal of that order,
contending that the court relied on improper
necessary analysis in determining whether common questions were predominant in
the case. We discern no error and affirm
the order.
Defendant
is based in Houston, Texas and has a nationwide network of over 2,000
automotive service outlets that provide an array of oil and filter
services. Each retail outlet is managed
by a store manager (SM). During the
period in question, defendant operated approximately 114 company-owned outlets
in California, though these outlets have since been franchised. The California outlets varied in size, in the
number of service bays, and in annual sales volume. Each SM supervised between 4 and 25
employees.
On
June 22, 2009, Ivy filed a complaint on her behalf and others similarly
situated, alleging that defendant had misclassified SMs as exempt
employees. The complaint stated the
following causes of action: (1) failure
to pay overtime wages; (2) failure to provide meal and rest periods; (3)
failure to provide accurate itemized wage statements; (4) failure to pay wages
on termination; and (5) unfair business practices. The complaint identified the plaintiff class
as: “All persons who were employed as a
Store Manager by Jiffy Lube in one or more of its California store locations at
any time on or after June 18, 2005.”
Alcantara was later added as a representative plaintiff.
A. Evidence Before the Court for Class Certification
Plaintiffs
filed their motion for class certification on June 11, 2010. In support of their motion, plaintiffs
submitted copies of defendant’s policies and manuals and the declarations of
eight putative class members, which in similar language described the tasks
they performed as SMs. Additionally,
plaintiffs submitted the declaration of David Lewin, a professor at UCLA, who
described himself as a specialist in human resource management and employment
relations. Lewin stated his opinion that
a random sample of SMs could be chosen for the purpose of testifying at
trial.
Defendant
opposed plaintiffs’ motion and submitted the declarations of two former SMs, a
trainer responsible for training new SMs, and four defendant managers (a
district manager, a regional manager, a safety manager, and a human resources
manager). These declarations described
differing individual experiences in the tasks that SMs performed and the amount
of time spent on those tasks. Defendant
also submitted transcripts of deposition testimony from plaintiffs’ declarants
that were in some respects inconsistent with their prior declarations.
deposition of Ivy, although she had not submitted a declaration on her own
behalf, and of the depositions of two of defendant’s own declarants. Defendant submitted a table detailing how the
deposition testimony differed from
the declarations that plaintiffs submitted.
In
their memorandum of points and authorities, plaintiffs emphasized that all
class claims share the same questions of law and maintained that defendant’s
centralized controls ensured conformity among the SMs. Plaintiffs also maintained that consideration
of how much time managers spent on particular work tasks would be an
impermissible inquiry for class
certification purposes. In contrast
to plaintiffs’ position, defendant maintained that the evidence indicated wide
variability from store to store in the duties that SMs performed and the time
SMs spent performing each of these duties.
Defendant contended that the individual questions about putative class
members’ duties would predominate over common questions and that, accordingly,
the class should not be certified.
Plaintiffs also proposed a
phased approach at trial. During phase
I, various questions that plaintiffs identified as common issues would be
tried, including which SM tasks are legally exempt under California law. During phase II, individual issues would be
tried, including the amount of time that SMs spent on particular tasks. Plaintiffs suggested that the use of a special
master or a survey would be useful.
B. Hearing on the Motion for Class Certification
Prior
to the hearing on the motion for class certification, the court issued a
tentative ruling that, considering the arguments made at the hearing, was
substantially the same as its final order.
Plaintiffs argued that the tentative ruling did not give enough
attention to the common issues and that the only individual issue would be the
amount of time each manager spent on the tasks that were common to them
all. Plaintiffs argued that the trial
plan they had proposed was a mechanism by which the court could manage the
individual issues. They also suggested
that the tentative ruling reflected an impermissible merits analysis and that
it required a level of precision on the part of plaintiffs that would be
impossible to achieve.
Defendant
stressed to the court its contention that plaintiffs had demonstrated no common
evidence on the issues of the ability of SMs to hire and fire, the extent of
their discretion in the exercise of their duties, and the amount of their time
they spent performing exempt duties.
Defendant supported the court’s tentative ruling because, in its view,
individual issues predominated over common issues.
C. The Trial Court’s Order on the Motion for Class Certification
The
trial court filed a 14-page order denying plaintiffs’ motion for class
certification, following which plaintiffs timely appealed. The court concluded that, while many of the
conditions for class certification were met, common issues did not predominate
and a class action was not the superior means of resolving the issues for the
putative class.
Regarding commonality, the court first noted that there was
“surprisingly little discussion in the parties’ briefs about the claims,
defenses and applicable law” and that the motion focused on defendant’s
defenses, “which will require it to demonstrate at trial that one or more of
three potential exemptions—the executive, administrative and professional
exemptions—apply to all SMs.” From the
arguments contained in the briefs, the court concluded that the following
issues would be litigated at trial: “(1)
whether SMs had the authority to hire or fire other employees and/or if their
suggestions and recommendations regarding hiring, firing, promotion or any
other change of employment status were given particular weight; [¶] (2)
whether SMs, in the performance of their jobs, customarily and regularly
exercised discretion and independent judgment; and [¶] (3) whether SMs were primarily engaged in duties
which meet the test of the exemption.”
The court considered each of these issues in turn.
For
the ability of SMs to hire and fire, the court found that plaintiffs had
submitted both common and individualized
evidence. The common evidence
consisted of policies and manuals that were distributed to all SMs and to which
defendant management expected SMs to conform.
However, these policies and manuals “permit (indeed, obligate) SMs to
participate in the hiring process, including their ability to recruit and hire
some (lower level) employees.” The
individualized evidence consisted of the declarations from SMs contending that
they did not have the power to hire, fire, promote, or change employee status. These declarations did not address the
question of whether the SMs’ suggestions and recommendations regarding hiring,
firing, promotions, and other changes in employment status were given
particular weight. The court found that
the declarations were “seriously undermined by the declarants’ deposition
testimony, which shows that SMs were in fact permitted and encouraged to
initiate and participate in many decisions concerning their subordinates’
employment status.” The court concluded
that it “fail[ed] to see how plaintiffs could litigate this issue on a common
basis” and that “if defendant management failed to permit SMs to participate in
hiring decisions (here, an assumption, because there is no evidence in the
record showing such a failure), it would not have been based upon a common
policy or practice or other evidence reasonably extrapolated to the plaintiff
class, but rather, an isolated occurrence based upon individual
experience.”
As
to the exercise of discretion and independent judgment, plaintiffs had
contended that the defendant policies and operations manuals demonstrated that
defendant so micromanaged SMs’ daily and weekly activities that they did not
customarily or regularly exercise discretion and independent judgment. The court determined, however, that the
policies and procedures “do not divest SMs of the exercise of discretion.” The court explained that the policies and
procedures only addressed specific areas of defendant concern, but left SMs
“significant leeway to determine how, when, and by whom defendant’s standards
[were] met.” The court found that
plaintiffs’ declarations that denied exercise of discretion or independent
judgment were contradicted by the depositions, in which “these declarants
admitted that they did in fact exercise judgment in ways that were outside of
the policy and practice manuals, or even contrary to them.” The court concluded that plaintiffs had
“offered no common evidence from which a finder of fact could draw conclusions
about SMs’ degree of discretion” and that “the deposition testimony suggests
that SMs’ experience varied based upon individual circumstances.”
Finally,
the court examined the issue of whether SMs primarily engaged in duties that
meet the test of the exemption. Dealing
with this issue at trial would involve an analysis of the tasks performed by
SMs, classifying them as exempt or nonexempt, and an analysis of how much time
SMs spent performing exempt versus nonexempt tasks. The court agreed with plaintiffs that the
classification of tasks could be litigated with common evidence, but found that
plaintiffs had “not adequately explained how the time allocation issue could be
litigated with reference to common—as opposed to individualized—evidence.” The court continued: “[Plaintiffs] have not shown that defendant’s
common policy and procedure documents dictate how and when SMs perform their
jobs; they only set minimum standards and provided tools to achieve those
standards. This is not sufficient to
show how SMs actually allocated their time.
[Citation.] Moreover, the only
common evidence presented in connection with this Motion tends to show that
defendant discouraged SMs from expending a significant amount of time on
nonexempt tasks (such as working on cars).
Plaintiffs have provided no common evidence showing that defendant
management practices directed to the putative class as a whole compelled SMs to
disobey defendant’s management directives.”
The
court observed that plaintiffs had admitted that the issue of time allocation
is not common, but that they contended that the amount of time spent on specific
tasks could be established through a survey or extrapolation from sample
evidence. The court found that “this
proposal ignores the evidence in the record, most of which shows that SMs’
actual activities varied widely from store to store and were not predetermined
by defendant’s policies or procedures.
[Citation.] This suggests that
the court could not fairly extrapolate a common SM experience from the
testimony of individual class members.”
Summarizing
its findings on the exemption issues that would be contested at trial, the
court concluded that “all of the creditable evidence before the court strongly
suggests a total absence of common evidence” on the question of
misclassification. The evidence, said the
court, does not tend to show “any pattern or practice of misclassification by
defendant. Even crediting plaintiff’s
highly suspect declarations, the evidence does not suggest that any
misclassification was more than an isolated, sporadic incident.”
As
to whether common issues predominated, the court concluded that some common
factual and legal issues were present, including defendant’s “realistic
expectations” of SMs, whether defendant kept time records for SMs, and whether
certain tasks are exempt or nonexempt.
“However, predominance is a comparative concept. Some of the common issues are unlikely to be
significant aspects of the trial. (For
example, defendant has admitted in written discovery that it did not keep time
records for SMs.) Taking into account
both the number and nature of disputed issues in this litigation, common issues
do not predominate over individualized ones.”
The
plaintiffs had proposed a trial plan which they believed would make
individualized issues manageable within a class action. The court termed this a “ ‘trial by survey’
procedure” and found that plaintiffs had not adequately explained how this
would be done, consistent with due process.
“Plaintiffs seem to admit that variances in data would affect the amount
of time spent on various tasks, which goes to liability
. . . . The trial by
checklist approach could deprive defendant of due process unless the
questionnaires were merely a prelude to an individualized hearing process. [Citation.]
Alternately, the checklist process could devolve into a mini-trial of
every class member’s time actually spent.”
The
court also considered the Lewin declaration and plaintiffs’ proposal for
“selecting random class members to provide representative testimony,” with
variables among locations addressed by stratifying SMs. “While this proposal is theoretically
workable, it appears to require subclasses.
Plaintiffs have not proposed any subclasses, and given the number and
nature of variables in play and the fact that some locations would possess
multiple (variable) characteristics, the court is concerned that there would be
ascertainability issues (as to subclasses), adequacy of
representation/typicality issues, and/or superiority issues (i.e. that this
process would engender further disputes rather than streamlining the litigation). Even if subclasses are not needed, plaintiffs
do not adequately explain how representative witnesses would be identified, how
many witnesses would be required, and how, as a practical matter, the jury could
reasonably extrapolate from representative witnesses to class members.” The court also noted that the Lewin opinion
was based on incomplete information, which did not include “the declarations
and the deposition transcripts of plaintiffs and putative class members,” and
that “[g]iven the significant contradictions between these two forms of sworn
testimony, the court is skeptical that questionnaires to this population would
produce reliable evidence.”
Additionally,
the court noted that an administrative remedy was available to plaintiffs and
that “the apparent main effect of plaintiff’s proposal would be to substitute a
court-supervised adversarial hearing procedure for the legislatively-created
adversarial administrative procedure.”
Class
actions in California are governed by Code of Civil Procedure section 382,
authorizing such suits “when the question is one of a common or general
interest, of many persons, or when the parties are numerous, and it is
impracticable to bring them all before the court . . . .”
“To
obtain certification, a party must establish the existence of both an
ascertainable class and a well-defined community of interest among the class
members. [Citations.] The community of interest requirement
involves three factors: ‘(1) predominant
common questions of law or fact; (2) class representatives with claims or
defenses typical of the class; and (3) class representatives who can adequately
represent the class.’ [Citation.] Other relevant considerations include the
probability that each class member will come forward ultimately to prove his or
her separate claim to a portion of the total recovery and whether the class
approach would actually serve to deter and redress alleged wrongdoing. [Citation.]”
(Linder v. Thrifty Oil Co.
(2000) 23 Cal.4th 429, 435 (Linder).) It is the plaintiff’s burden to support each
of the above factors with a factual showing.
(Hamwi v. Citinational-Buckeye
Inv. Co. (1977) 72 Cal.App.3d 462, 471-472.)
“A
trial court ruling on a certification motion determines ‘whether . . . the
issues which may be jointly tried, when compared with those requiring separate
adjudication, are so numerous or substantial that the maintenance of a class
action would be advantageous to the judicial process and to the
litigants.’ [Citations.]” (Sav-On
Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326 (
A
trial court’s ruling on a motion for class certification is reviewed for abuse
of discretion. (Sav-On, supra, 34 Cal.4th at p. 326.) When there is substantial evidence supporting
a trial court’s ruling, it will not generally be disturbed unless the court
employed improper criteria or made erroneous legal assumptions. (Id.
at pp. 326-327.)
The
trial court determined that in this case, the applicable wage order was
Industrial Welfare Commission Order No. 7-2001 (wage order), regulating wages,
hours and working conditions in the mercantile industry. (Cal. Code Regs., tit. 8, § 11070.) The wage order establishes three exemptions
(executive, administrative, and professional) from the application of its
provisions. (Cal. Code Regs., tit. 8, §
11070, subd. 1(A).) Defendant pled as a
defense that putative class members were, during the class period, exempt
employees under all three exemptions.
The
professional exemption applies only to individuals who are: (1) “licensed or certified by the State of
California and [are] primarily engaged in the practice of one of the following
recognized professions: law, medicine,
dentistry, optometry, architecture, engineering, teaching, or accounting” or
(2) “primarily engaged in an occupation commonly recognized as a learned or
artistic profession.” (Cal. Code Regs.,
tit. 8, § 11070, subds. 1(A)(3)(a)-(b).)
The trial court found that no evidence suggested that the professional
exemption would apply to defendant SMs and therefore concentrated on the
executive and administrative exemptions.
To
establish that the executive exemption applies to an employee, an employer must
prove six elements. (Cal. Code Regs.,
tit. 8, § 11070, subds. 1(A)(1)(a)-(f).)
From the parties briefing on the motion for class certification, the
court determined that three of these elements would be at issue: (1) the employee “has the authority to hire
or fire other employees or [the employee’s] suggestions and recommendations as
to the hiring or firing and as to the advancement and promotion or any other
change of status of other employees will be given particular weight”; (2) the
employee “customarily and regularly exercises discretion and independent
judgment” and (3) the employee is “is primarily engaged in duties which meet
the test of the exemption.” (Cal. Code
Regs., tit. 8, § 11070, subds. 1(A)(1)(c)-(e).)
To
establish that the administrative exemption applies to an employee, an employer
must prove seven elements. (Cal. Code
Regs., tit. 8, § 11070, subds. 1(A)(2)(a)-(g).)
Here, the court determined that two of these elements would be at issue:
(1) the employee “customarily and regularly exercises discretion and
independent judgment” and (2) the employee “is primarily engaged in duties that
meet the test of the exemption.” (Cal.
Code Regs., tit. 8, § 11070, subds. 1(A)(2)(b), (f).)
Because
the elements at issue for the administrative exemption match two of those at
issue for the executive exemption, the court found that the relevant three
elements for the executive exception would be the focus of a liability
determination at trial. The court
recognized that although it was the employer’s burden to plead and prove the
necessary facts to establish an exemption at trial, it was the plaintiff’s
burden in a motion for class certification to show that common issues of law
and fact predominate with respect to the elements of an exemption that would be
at issue at trial. (See
(2007) 148 Cal.App.4th 1440, 1450 [“The affirmative defenses of the defendant
must also be considered, because a defendant may defeat class certification by
showing that an affirmative defense would raise issues specific to each
potential class member and that the issues presented by that defense
predominate over common issues”].)
The Trial Court did not Rely on
Improper Legal Criteria
Plaintiffs
do not contend that the court’s findings are unsupported by substantial
evidence. Rather, they argue that the
trial court relied on improper legal criteria by: (1) conducting a merits-based analysis of
defendant’s proposed defenses, reaching conclusions as to defendant’s ultimate
liability; (2) failing to consider the use of subclasses as a means of
achieving class certification; (3) requiring plaintiffs to present a full trial
plan at the class certification stage; and (4) imposing non-existent exhaustion
requirements on plaintiffs.
A. The Trial Court did not Conduct an Improper Merits Analysis
Plaintiffs
first argue that the trial court “erred when it opted to conduct a merits-based
analysis of defendant’s proposed defenses, complete with a finding on
defendant’s liability.” Plaintiffs
contend that the court focused on whether plaintiffs had demonstrated that
“common answers” existed with regard to putative class members instead of the
proper inquiry into whether common questions were present. The trial court framed its analysis as an
examination of “whether any or all of these elements [relating to the wage
order exemptions] may be (dis)proven by common evidence.” In doing so, plaintiffs argue, the trial
court abused its discretion “to the extent that its ruling was based on a
resolution of the merits of a proposed defense.”
The
question of class certification is “essentially a procedural one that does not
ask whether an action is legally or factually meritorious.” (Linder,
supra, 23 Cal.4th at pp.
439-440.) Nevertheless, “issues
affecting the merits of a case may be enmeshed with class action requirements .
. . .” (Id. at p. 443.) “[T]he trial
court must evaluate whether the theory of recovery advanced by the plaintiff is
likely to prove amenable to class treatment . . . .” (Ghazaryan
v. Diva Limousine, Ltd. (2008) 169 Cal.App.4th 1524, 1531.)
In
Sav-on, supra, 34 Cal.4th 319,
action alleging . . . that salaried managers were misclassified as exempt from
overtime wage laws based on their job descriptions without regard to their
actual work. The Supreme Court
identified the underlying merits of the case as concerning ‘whether or not
plaintiffs and those similarly situated properly were classified and paid under
th[e] exemption.’ [Citation.] With respect to the trial court’s
predominance finding—a comparative concept—the Supreme Court held the standard
of review was whether the record contained substantial evidence. [Citation.]
The court explained: ‘[A]
reviewing court is not authorized to overturn a certification order merely
because it finds the record evidence of predominance less than determinative or
conclusive. The relevant question on
review is whether such evidence is substantial.’ [Citation.]
The court emphasized, ‘But, “[w]here a certification order turns on
inferences to be drawn from the facts, ‘ “the reviewing court has no authority
to substitute its decision for that of the trial court.” ’ ” [Citations.]’
[Citation.] Turning to the
evidence in the record, the Supreme Court found it was in conflict. The plaintiff had presented evidence
deliberate misclassification was defendant’s policy and practice; and further,
classification based on job description alone had resulted in widespread
misclassification. The defendant’s
evidence had shown there were wide variations in the types of activities and
the amounts of time managers spent on those activities. The Supreme Court observed there was
substantial albeit disputed evidence in support of two theories, either of
which was amenable to class treatment: a
deliberate misclassification policy and practice, or classification based on
job description resulting in widespread de facto misclassification. [Citation.]
The court held: ‘A reasonable
court, even allowing for individualized damage determinations, could conclude
that, to the extent plaintiffs are able to demonstrate pursuant to either
scenario that misclassification was the rule rather than the exception, a class
action would be the most efficient means of resolving class members’ overtime
claims.’ [Citation.]” (Arenas
v. El Torito Restaurants, Inc. (2010) 183 Cal.App.4th 723, 733-734 (
The
key observation is that in Sav-On,
the plaintiffs had presented substantial evidence supporting their theory of
recovery, even though that evidence was disputed by defendants. In granting the plaintiffs’ motion for class
certification, the trial court was not ruling on the merits of the plaintiffs’
case, but was simply recognizing that the plaintiffs had presented substantial
evidence, sufficient to allow the action to proceed as on a class basis, that
supported a viable theory of recovery.
Several
recent cases have presented the question of how trial courts should treat putative
class actions when the court does not find substantial evidence supporting
plaintiff’s theory of recovery.
In
Dunbar v. Albertson’s, Inc. (2006)
141 Cal.App.4th 1422 (Dunbar),
grocery managers claimed they had been misclassified as exempt from overtime
wage laws. (Dunbar, at p. 1424.) The
trial court denied the motion for class certification, concluding “that many of
the conditions for class certification were met, but that common issues did not
predominate, and that a class action was not the superior means of resolving
the litigation.” (Id. at p. 1426.) On review,
the court affirmed the trial court’s order, observing that “the presence of
individual liability issues was only one factor, not the controlling factor in
the court’s decision. The most important
consideration, in the court’s view, was the significant variation in the
grocery managers’ work from store to store and week to week. In light of that variation, the court
evidently believed that very particularized individual liability determinations
would be necessary.” (
Although
Dunbar’s analysis was not framed as
an inquiry into plaintiffs’ theory of recovery and whether substantial common
evidence had been presented to support it, the analysis could have been framed in
those terms. As Dunbar observed, “the [trial] court’s decision was not based on the
mere presence of individual liability issues; it turned on the
defendant’s evidence.” (
In Dunbar, the plaintiffs’
theory of recovery was not susceptible to common proof, but would have required
an individualized inquiry into the actual work experience of each putative
class member. (Ibid.)
In
Arenas, restaurant managers filed a
putative class action claiming that they were misclassified as exempt from
overtime wage laws. (
In considering plaintiffs’ motion for class certification, the trial
court found that “there appears to be differences in individual store
operations and in the experience of different putative class members” and
concluded that “[b]ased on the record presented, the plaintiffs have not
demonstrated that resolution of the common issues of fact and law will be
accomplished by common proof that can be extrapolated onto all class
members.” (Id. at p. 730.) On review,
and citing Dunbar, the court
observed: “[H]aving credited defendants’
evidence over plaintiffs’, the trial court could reasonably conclude there was
insufficient evidence of widespread misclassification, hence plaintiffs’ theory
of recovery was not susceptible to common proof. [Citations.]
In so concluding, the trial court did not improperly require plaintiffs
to prove they could prevail on the merits of their claim. It simply considered whether plaintiffs’
theory of recovery . . . was, as an analytical matter, amenable to class
treatment. [Citation.] Contrary to plaintiffs’ characterization of
the trial court’s ruling, the court did not find predominance
class as a whole was misclassified. The
trial court could, without abusing its discretion, conclude the requisite
predominance was missing where there was insufficient evidence misclassification
was the rule rather than the exception.”
(Id. at p. 734.)
In
Mora v. Big Lots Stores, Inc. (2011)
194 Cal.App.4th 496 (Mora), store
managers sought class certification, alleging that defendant misclassified
members of the putative class as exempt employees. (Id.
at p. 499.) “Relying on declarations
from 44 putative class members, the putative class representatives argued the
evidence demonstrated that the basic job duties of store managers in California
are the same regardless of location and that Big Lots runs all its stores in
the state in a uniform and standardized manner.
Strict compliance with corporate manuals and action plans, which set
forth statewide policies and procedures, is required and such compliance is
ensured by district managers, who supervise all store managers. In addition, training of store managers is
standardized, and their job performance is evaluated on the same basis and on
the same form regardless of purported store-to-store differences.” (Id.
at p. 500, fn. omitted.) Big Lots
presented evidence that it contended showed that “a manager’s duties at each
Big Lots store and his or her experience as a store manager vary widely,
notwithstanding they all share a job title and the same general job
description.” (Id. at p. 502.)
The
trial court in Mora, denying plaintiffs’
motion for class certification, “concluded common questions do not predominate
because Big Lots does not operate its stores or supervise its managers in a
uniform and standardized manner that would permit a determination of liability
for misclassification of managers on a classwide basis.” (Mora,
supra, 194 Cal.App.4th at p.
505.) On review, the court concluded
that “the [trial] court employed the correct analysis and concluded the theory
of recovery advanced—operational standardization imposed by Big Lots—was not
supported by substantial evidence and thus not amenable to class
treatment.” (Id. at p. 507.) The court
considered its conclusion substantially the same as reached in
similar to this case. All involve
managers who claimed that their employers misclassified them as employees
exempt from overtime wage laws. All
involve the theory that the tasks that managers performed and the operations of
individual stores, restaurants, or service stations were so standardized that
the classification sub-issues (such as ability to hire and fire, exercise of
discretion, and time spent on non-exempt tasks) could, in large part, be
extrapolated to the class via representative testimony and other common
evidence. Each case, including this
case, involve defendants who challenged the predominance criterion with
evidence that the operations of individual outlets, and the experience of
individual managers, so vary because of a number of factors that the
classification issue cannot be resolved for the class via common evidence.
Here,
in concluding that “none of the evidence on any of the elements tends to show
any pattern or practice of misclassification by defendant,” the trial court was
not ruling on the merits, but was concluding that plaintiffs’ theory of
recovery was not amenable to common proof.
As Sav-On makes clear, this
court cannot substitute its own judgment for the factual inferences that the
trial court draws from the evidence. (
turns on inferences to be drawn from the facts, the reviewing court has no
authority to substitute its decision for that of the trial court’ ”].) Based on its assessment of the evidence
presented, the trial court here found that insufficient evidence supported the
proposition that misclassification was widespread, as opposed to “an isolated,
sporadic incident.” As in
without abusing its discretion, conclude the requisite predominance was missing
where there was insufficient evidence misclassification was the rule rather
than the exception” without having embarked on an improper consideration of the
merits. (Arenas, supra, 183
Cal.App.4th at p. 734.) When a trial
court asks whether there has been a showing that common evidence provides
support for plaintiff’s theory of recovery, there is no error when the court
determines the “common answer” that it does not. (See Mora,
supra, 194 Cal.App.4th at p. 507 [no
legal error was committed when trial court found that plaintiffs’ theory of
recovery was not supported by substantial evidence and thus not amenable to
class treatment]; Sotelo v. Medianews
Group, Inc. (2012) 207 Cal.App.4th 639, 655 [affirming the denial of a
motion for class certification where defendants had failed to make “a factual
showing that any such [uniform practice or] policy could be established by
common evidence”].)
Plaintiffs
contend not only that the court’s predominance finding was based on an improper
merits analysis, but that the court also improperly considered the merits of
each of the elements of the exemption that would be at issue in the case. Plaintiffs’ arguments in this regard have no
merit because the trial court, in examining the issues of ability to hire and
fire (or make recommendations that are given weight), exercise of discretion or
independent judgment, and amount of time spent on exempt tasks, was simply
examining whether plaintiff had satisfied its burden of showing that common
evidence had been presented that could resolve these issues in plaintiffs’
favor. (See Arenas, supra, 183
Cal.App.4th at p. 730 [“ ‘[a] plaintiff must have common evidence to support a
legal theory of misclassification’ ”].)
Only by examining whether common evidence supports the individual
elements at issue could the trial court here have determined whether, overall,
common evidence supports plaintiffs’ legal theory.
B. The Trial Court did not Err by Inadequately Considering the Use of
Subclasses
A
trial court “has an obligation to consider the use of subclasses and other
innovative procedural tools proposed by a party to certify a manageable
class.” (Osborne v. Subaru of America, Inc. (1988) 198 Cal.App.3d 646,
653.) Plaintiffs contend that by
proposing to use selected class member testimony to stratify SMs to account for
variations across store locations, they were in effect proposing
subclasses. The trial court observed of
plaintiff’s proposal: “While this
proposal is theoretically workable, it appears to require subclasses. Plaintiffs have not proposed any subclasses,
and given the number and nature of variables in play and the fact that some
locations would possess multiple (variable) characteristics, the court is
concerned that there would be ascertainability issues (as to subclasses),
adequacy of representation/typicality issues, and/or superiority issues (i.e.
that this process would engender further disputes rather than streamlining the
litigation).”
We
agree with the trial court that plaintiffs’ proposal to stratify SM testimony
to account for variations was not equivalent to a proposal for subclasses. Certification of a subclass has the same
requirements as for the class at large and plaintiffs’ briefs did not address the
ascertainability or community of interest requirements in regard to the
subclasses they now claim to have proposed.
Because plaintiffs did not actually propose subclasses, we find no error
in the trial court’s treatment. (See
Cal.App.4th 538, 545 [“the plaintiffs failed to provide the trial court with a
concrete proposal describing how such subclasses would be defined, how they
would be administered, or how they would help the court deal with the
complexities inherent in the proposed class.
We cannot conclude the trial court erred when it failed to consider
something the plaintiffs never proposed”], fn. omitted.)
Plaintiffs
cite federal authority for the proposition that a court of appeals may remand a
denied motion for class certification to the trial court in order that
subclasses may be considered, even if the plaintiffs had not previously
proposed them. Plaintiffs could have
found support for this proposition in California law. As an example, consider: “Because the complexities of the case on which
the trial court relied to find class certification inappropriate can be
addressed by the use of subclasses and, with those issues resolved, the
requirements for class treatment are satisfied, we reverse the order denying
certification and remand the matter with directions for the trial court to
certify two subclasses of Cintas employees . . . .” (Aguiar
v. Cintas Corp. No. 2 (2007) 144 Cal.App.4th 121, 125.) We will not order the trial court to consider
subclasses, however, when plaintiffs fail, as they do here, to cite evidence in
the record that establishes the possibility that a reasonable number of
ascertainable subclasses could be constructed that satisfy the commonality
requirement and manageably resolve the issues of individual evidence that the
trial court identified. In the absence
of such evidence, we find no abuse of discretion in the trial court’s handling
of the question of subclasses. (See
[rejecting plaintiffs’ suggestion that “creative formation of subclasses” would
resolve issues of different rules of law because “[p]laintiffs have made no
showing that subclasses would be feasible here”].)
C. The Trial Court did not Err by Requiring a Detailed Trial Plan
The
trial court’s order stated that plaintiffs’ “ ‘trial by survey’ procedure” did
“not adequately explain how plaintiffs intend to do so, consistent with due
process.” The order also noted that
plaintiffs had proposed “selecting random class members to provide
representative testimony, and suggest that the variables among locations can be
addressed by stratifying the SMs.” The
court commented: “Plaintiffs do not
adequately explain how representative witnesses would be identified, how many
witnesses would be required, and how, as a practical matter, the jury could
reasonably extrapolate from representative witnesses to class members.” Plaintiffs contend that “[r]equiring such a
detailed roadmap at class certification belies the legal reality that a full
trial plan is not only unnecessary for class certification but also often
impossible to develop. No authority
calls for plaintiffs to present a full trial plan at the class certification
stage, so the trial court’s denial on this basis is reversible error.”
“[T]he
party seeking certification must demonstrate that the proposed class action is
manageable which requires the trial court to ‘carefully weigh the respective
benefits and burdens of a class action and to permit its maintenance only where
substantial benefits will be accrued by both litigants and the courts alike.’ ”
(Davis-Miller v. Automobile Club of
Southern California (2011) 201 Cal.App.4th 106, 115, fn. 6, quoting
Cal.App.3d 1263, 1275.) “It is not
sufficient . . . simply to mention a procedural tool; the party
seeking class certification must explain how the procedure will effectively
manage the issues in question . . . .” (
Because
plaintiffs here bore the burden of demonstrating that proceeding on a class
basis would be manageable, the trial court properly examined plaintiffs’
manageability proposals. The court
determined that specific issues of manageability were not resolved by
plaintiffs’ proposals. The most serious
issue for the court was that plaintiffs had not explained how the jury could
reasonably extrapolate from representative witnesses to the class as a whole, a
concern that harkens back to the numerous individual factors that the court had
already determined would affect liability.
The court was also skeptical that surveys of SMs would produce reliable
evidence because of the significant differences between the SM declarations and
the SM testimony during deposition.
The
trial court analyzed plaintiffs’ manageability proposals in a thoughtful and
thorough manner and found them wanting.
We discern no abuse of discretion in the trial court’s analysis. (See Dunbar,
supra, 141 Cal.App.4th at p. 1432
[“the record does not establish that the court failed to consider the use of
exemplar plaintiffs, survey results, subclassing, or the other means plaintiff
mentioned of managing individual issues.
The court impliedly rejected those proposals in concluding that findings
as to one grocery manager could not reasonably be extrapolated to others given
the variation in their work”].)
D. The Trial Court Did not Err by Requiring Exhaustion
The
court’s concluding paragraph in the section titled “Superiority and Trial
Management” was: “In addition, Labor
Code section 98 provides hearings that are supposed to be a ‘speedy, informal,
and affordable method of resolving wage claims.’ (Post
v. Palo/Haklar & Associates (2000) 23 Cal.4th 942, 947 [(
The apparent main effect of plaintiffs’ proposal would be to substitute
a court-supervised adversarial hearing procedure for the legislatively-created
adversarial administrative procedure.”
In a footnote to this paragraph, the court noted: “Plaintiffs cite Wang v. Chinese Daily News (C.D. 2005) 231 F.R.D. 602, contending
that it rejected this factor as relevant; however, that case is distinguishable
as there is no evidence on the present record that defendant has attempted to
stymie a DLSE investigation.” Plaintiffs
argue that no authority suggests that they were required to pursue their claims
through this administrative procedure and that its availability has no bearing
on a motion for class certification.
“[I]n
assessing the appropriateness of certification trial courts are charged with
carefully weighing the respective benefits and burdens of class litigation to
the end that maintenance of the class action will only be permitted where
substantial benefits accrue to the litigants and the court. [Citation.]
This obligation entails considering the role of the class action
mechanism in deterring and redressing wrongdoing. [Citation.]
Further, the substantial benefits analysis raises the question whether a
class action is superior to individual lawsuits and other alternative procedures for resolving the
controversy. [Citations.]” (Capitol
People First v. State Dept. of Developmental Services (2007) 155
Cal.App.4th 676, 689, italics added.)
Because
it is proper for a court to consider alternative procedures for resolving the
controversy in determining whether a class action is the superior procedure,
the court did not err by noting the existence of an administrative remedy. Nothing in the court’s language indicates
that the court was requiring the exhaustion of administrative procedures. Rather, the court implied that a class action
would not be superior to the administrative procedures, and given the court’s
prior finding that common issues did not predominate over individual issues, we
cannot fault that conclusion.
Evaluating Predominance
Plaintiffs
contend that the court erred in its predominance analysis by: (1) failing to consider relevant factors; (2)
misapplying the factors it did consider; (3) overlooking “key
common evidence; and (5) improperly performing the superiority analysis.
A. The Court Did not Fail to Consider Relevant Factors
Plaintiffs
argue that “[t]he trial court does not even discuss the breadth of common facts
that plaintiffs identify in their Motion (and which defendant does not dispute)
such as defendant’s highly standardized customer service requirements, its
employee hierarchy, its orientation and training protocols, its tools and
equipment, its job description, the limited products and services it sells and
its picture-specific work environments which were the same for all the SMs in California. The trial court ignored myriad
strived for ‘a consistent store presentation’ at all of its company owned
stores, micromanaged even the most mundane details of store operations,
afforded the SMs’ extremely limited responsibility for day-to-day management of
each store’s finances and enforced rigorous adherence to uniform environmental
controls. . . . Instead, the trial court
should have considered whether such common evidence can be used to determine
whether defendant’s uniformly applied restraints on the SMs’ discretion and
independent judgment categorically disqualify the SM position for coverage
under the executive exemption.”
Plaintiff’s
argument fails because the court clearly considered the common evidence that
plaintiffs claim it ignored: “Plaintiffs
contend that common evidence—the Pacesetter manual and other . . . policies and
operations manuals—show that defendant micromanaged SMs to such an extent that
SMs’ daily and weekly activities, and their response to every conceivable
situation, was pre-determined.
Plaintiffs contend on this basis that SMs did not customarily or
regularly exercise discretion and independent judgment. Defendant’s policies and procedures do tend
to show that Regional Managers were charged with closely monitoring many
aspects of store operations and SMs’ compliance with procedure, but they do not
divest SMs of the exercise of discretion.
Defendant’s policies and procedures, on their face, only address
specific concerns such as customer experience, and promulgated standards and
procedures in selected areas, such as loss prevention and safety. These documents do not dictate every aspect
of SM’s performance. Rather, they leave
to SMs significant leeway to determine how, when, and by whom defendant’s
standards are met. [Citations.] Even if you assume that SMs followed these
operating procedures exactly, these documents do not constitute evidence of
SMs’ actual work experience.
[Citation.]”
B. The Court Did not Misapply the Factors It Did Consider
Plaintiffs
contend that “[T]he Order failed to ascribe sufficient weight to its own
conclusions that (1) the employer’s ‘ “realistic expectations” of SMs could be
proven by common evidence’ [citation] and (2) ‘the question of whether certain
tasks are exempt or nonexempt is common as to all class members, and could be
litigated by reference to common evidence.’
[Citation] Despite express
findings that common evidence could be used to adjudicate a dispositive common
issue—i.e., whether the exemption applies—on a classwide basis, the trial court
opined that ‘predominance is a comparative concept. Some of the common issues are unlikely to be
significant aspects of the trial.’
[Citation] Since common evidence
can be used to adjudicate two key common
questions, the Order should be reversed . . . .”
In
the predominance analysis, “the issues which may be jointly tried, when
compared with those requiring separate adjudication, must be sufficiently
numerous and substantial to make the class action advantageous to the judicial
process and to the litigants.” (
(1974) 12 Cal.3d 447, 460 (San Jose),
superseded by statute on other grounds, Gov. Code, § 905.1; accord, Sav-On, supra, 34 Cal.4th
at p. 339.) Here, the trial court
expressly acknowledged that there were some common issues, but determined that
some were unlikely to be significant at trial, presumably because there would
be little basis for dispute. The court
concluded: “Taking into account both the
number and nature of disputed issues in this litigation, common issues do not
predominate over individualized ones.”
The court properly considered the number and the “nature” of the common
issues (i.e., whether they would be “substantial”
and we have no basis for concludingthat the court gave improper weight to the common factors that plaintiffs have
identified. (See Dunbar, supra, 141
Cal.App.4th at p. 1431 [“the court’s decision was not based on the mere
presence of individual liability issues; it turned on the nature of those issues as shown by defendant’s evidence. The decision was thus on solid legal
footing”].)
C. The Trial Court Did not Overlook “Key Ramirez Issues”
The
work order’s executive and administrative exemptions require that an exempt
employee be primarily engaged in performing exempt duties. (Cal. Code Regs., tit. 8, § 11070,
subds. 1(A)(1)(e), (2)(f).) The
provisions for both exemptions provide:
“The work actually performed by the employee during the course of the
workweek must, first and foremost, be examined and the amount of time the
employee spends on such work, together with the employer’s realistic
expectations and the realistic requirements of the job, shall be considered in
determining whether the employee satisfies this requirement.” (Ibid.)
Plaintiffs
contend that the realistic expectations of the employer can be a dispositive
issue because “if the employer’s expectations of a class of purportedly exempt
employees are not realistic, the position is categorically nonexempt.” Because the court found that the realistic
expectations of defendant could be proved by common evidence, plaintiffs argue
that this “alone warrants class certification.”
Plaintiffs’
argument would have merit if they were correct in contending that if it were
not realistic for defendant to expect that SMs would be primarily engaged in
performing exempt duties, then SMs were misclassified. Their contention, however, flies in the face
of the wage order, which specifies that the work actually performed by the
employee during the course of the workweek must first be examined, and the
court here determined that the actual work performed could not be proved by
common evidence.
Plaintiffs
cite only one case in support of their proposition, Cruz v. Dollar Tree Stores, Inc. (N.D.Cal. 2010) 270 F.R.D. 499,
503
(Cruz): “The employer must establish that it
realistically expected managers to spend at least half their time on exempt
tasks.” In support of this statement,
employee is an outside salesperson, must steer clear of these two pitfalls by
inquiring into the realistic requirements of the job. In so doing, the court should consider, first
and foremost, how the employee actually spends his or her time. But the trial court should also consider
whether the employee’s practice diverges from the employer’s realistic
expectations, whether there was any concrete expression of employer displeasure
over an employee’s substandard performance, and whether these expressions were
themselves realistic given the actual overall requirements of the job.” Ramirez
agrees with the language of the work order that the initial consideration is
how the employee actually spends his or her time and does not support the
conclusion that Cruz drew from it.
The
Supreme Court has criticized the use of Ramirez
as providing guidance in class actions:
“Ramirez was not a class
action and, to that extent, is not apposite.
In Ramirez, we did not even
discuss certification standards, let alone change them. Accordingly, Ramirez is no authority for constraining trial courts’ ‘great
discretion in granting or denying certification’ [citation] or, more
particularly as defendant asserts, for applying a particular set of ‘factors’
whenever plaintiffs in an overtime case seek class certification. The certification of a class is a
discretionary decision that demands the weighing of many relevant
considerations. [Citation.] And even as an overtime exemption case,
apposite. Our analysis was tied to the
‘logic inherent in the IWC’s quantitative definition of outside salesperson’
[citation] and would not necessarily apply, or apply with the same force, in
every exemption context. We expressed in
Ramirez, for example, a concern that
under a pure ‘actual activity’ test, an employee assigned to sell might ‘evade
a valid [outside salesperson] exemption’ by his own ‘substandard performance’
in selling. [Citation.] No one suggests a similar
concern applies here.” (Sav-On,
supra, 34 Cal.4th at p. 336.)
We
conclude that plaintiffs’ argument fails because it is grounded on a faulty
legal assumption.
D. The Trial Court Did not Err by Underweighting Pivotal Common Evidence
Plaintiffs
contend that they “submitted sufficient common evidence to show that common
questions can be addressed on a classwide basis. The trial court, however, ascribed
insufficient weight to its finding that ‘the question of whether certain tasks
are exempt or nonexempt is common as to
all class members, and could be litigated by reference to common evidence.’
” Plaintiffs criticize the court for
comparing the instant case to Marlo v.
United Parcel Service, Inc. (C.D.Cal. 2008) 251 F.R.D. 476 (
They conclude: “Since the trial
court has already found that common evidence can be used to adjudicate pivotal
common questions, it could and should have concluded that common issues do in
fact predominate over individualized inquiries.”
Plaintiffs
argument has no merit because it fails to recognize that the predominance
inquiry is a comparative one. (
Even if a court finds that some issues are common and can be proved by
common evidence, “each member must not be required to individually litigate
numerous and substantial questions to determine his right to recover following
the class judgment; and the issues which may be jointly tried, when compared
with those requiring separate adjudication, must be sufficiently numerous and
substantial to make the class action advantageous to the judicial process and
to the litigants.” (San Jose, supra, 12
Cal.3d at p. 460.) Thus, even though the
court found that the issue of classifying tasks as exempt or nonexempt could be
litigated by reference to common evidence, that finding did not require the
court to resolve the predominance question in plaintiffs’ favor.
As
for the comparison to Marlo, the
court wrote: “[This case] is more like
‘declarations and deposition testimony of FTS submitted by the parties suggest
variations in job duties that appear to be a product of employees working at
different facilities, under different managers, and with different customer
bases.’ ” (Quoting Marlo, supra, 251 F.R.D.
at p. 486.) The court, in the preceding
paragraph, had determined that the evidence tended to show that “SMs’ actual
activities varied widely from store to store and were not predetermined by
defendant’s policies or procedures.”
Given that determination, we cannot say that the comparison to
E. The Trial Court Did not Improperly Apply the Superiority Analysis
Plaintiffs
first contend that the trial court “misapplied the superiority and trial
management standards. The gravamen of
authority holds that the class action device is indeed the superior mechanism
by which to adjudicate wage and hour cases.”
While California encourages the use of class actions in wage and hour
cases (see Sav-On,
not relieve plaintiffs’ in wage and hour cases from satisfying the requirements
for class certification.
Plaintiffs’
arguments on this issue have no merit because they simply repeat their prior
arguments or misinterpret the court’s order.
For example, plaintiffs again criticize the court’s handling of their
trial management plans and again bring up the “Ramirez issues.” In
criticizing the court’s determination that “the checklist process could devolve
into a mini-trial of every class member’s time actually spent,” plaintiffs
contend that “any variation in total hours worked is a damages issue and subject to adjudication through expert
analysis.” However, the “time actually
spent” refers not to overtime hours, a damages issue nowhere addressed in the
court
| Description | Marshe Ivy and Greg Alcantara, former store managers at Jiffy Lube International (JLI) service stations, filed a putative class action, on behalf of themselves and others similarly situated, alleging that defendant JLI had misclassified them as employees exempt from California’s overtime pay requirements and that, as a result of this misclassification, defendant was liable for violation of various provisions of the Labor Code and the Business and Professions Code. They appeal from the order of the trial court denying their motion for class certification and seek reversal of that order, contending that the court relied on improper legal criteria and failed to perform the necessary analysis in determining whether common questions were predominant in the case. We discern no error and affirm the order. |
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