Following the Supreme Court’s class action rulings in Wal-Mart Stores, Inc. v. Dukes and Comcast Corp. v. Behrend, lower courts continued to grapple with significant class action issues.  One discernible trend during the past few years has been increased appellate scrutiny of the entire class action mechanism.

In 2014, both state and federal appellate courts issued significant rulings interpreting the Supreme Court’s landmark decisions in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), and Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013).

In Dukes, the Supreme Court unanimously rejected the use of statistical sampling and extrapolation to circumvent resolution of individualized inquiries in a class trial.  The plaintiffs in Dukes proposed, and the Ninth Circuit endorsed, a procedure in which “[a] sample set of the class members would be selected,” and the “percentage of claims determined to be valid would then be applied to the entire remaining class . . . without further individualized proceedings.”  131 S. Ct. at 2561.  The Supreme Court “disapprove[d]” this “novel project” of “Trial by Formula,” and held that, because the Rules Enabling Act “forbids interpreting Rule 23 to ‘abridge, enlarge or modify any substantive right, . . . a class cannot be certified on the premise that [a defendant] will not be entitled to litigate its statutory defenses to individual claims.”  Id.(quoting 28 U.S.C. § 2072(b)).

Although the Court premised its rejection of “Trial by Formula” on the Rules Enabling Act, the use of statistical sampling and extrapolation to eliminate the class action defendant’s right to present individualized defenses also raises serious due process concerns.  Those concerns were placed before the California and Pennsylvania Supreme Courts in 2014–and those courts came to very different conclusions.

The California Supreme Court squarely held that a “Trial By Formula” approach raises due process concerns.  In Duran v. U.S. Bank National Association, 59 Cal. 4th 1 (2014), employees claimed they were improperly denied overtime compensation.  The court overturned a $15 million verdict that was the product of a trial that adjudicated claims of a 21-person sample set, and the results were extrapolated to the remaining class members.  In doing so, the court unanimously concluded that the trial court’s “decision to extrapolate classwide liability from a small sample, and its refusal to permit any inquiries or evidence about the work habits of [employees] outside the sample group,” impermissibly “deprived” U.S. Bank of its right to litigate its defenses to liability.  Id. at 35.

Echoing Dukes, the California Supreme Court explained that “the class action procedural device may not be used to abridge a party’s substantive rights,” and thus “a class action trial management plan may not foreclose the litigation of relevant affirmative defenses, even when these defenses turn on individual questions.”  Id. at 34.  Significantly, the court grounded its holding in “both class action rules and principles of due process.”  Id. at 35.  While the court declined to resolve definitively “whether or when sampling should be available as a tool for proving liability in a class action,” it instructed that “any class action trial plan, including those involving statistical methods of proof, must allow the defendant to litigate its affirmative defenses.”  Id. at 40.

1. California appellate courts have denied class certification alleging rest and meal period violations in cases where common proof of the alleged violations is lacking

The following case involves both misclassification as well as rest and meal period “violations”, the latter of which pertains to our case. Abstract statements of what a sampling may “prove”, absent any actual substantive proof, is insufficient to certify a class.

In Dailey v. Sears, Roebuck and Co., 214 Cal.App.4^th 974 (2013, the California Court of Appeal held the trial court did not abuse its discretion when it denied class certification in a case alleging Sears misclassified as exempt auto center managers and assistant managers. Plaintiff alleged Sears misclassified as exempt auto center managers and store managers when they should have been classified as non-exempt because, according to plaintiff, policies and practices common to all of them effectively required them to regularly spend more than 50 percent of their time performing nonexempt work, and because they did not regularly exercise discretion and independent judgment at Sears.

Based on that theory, plaintiff alleged that Sears was required to pay its auto center managers and assistant managers overtime wages and to provide to them the same rest periods and meal periods to which non-exempt employees are entitled. The trial court denied plaintiff’s motion for class certification and granted Sears’ motion to preclude class certification on the following grounds: (1) individual issues predominate over issues common to the proposed class, (2) it would not be impracticable for each manager or assistant manager to litigate his or her claim(s) individually, and (3) the plaintiff class representative would not be an adequate class representative on account of alleged resume fraud on his part.

On appeal, the court held the trial court did not abuse its discretion by crediting Sears’ evidence over plaintiff’s evidence. Sears successfully argued to the trial court and on appeal that wide variations existed between how each manager and assistant manager allocated their working time and that each managerial employee had substantial discretion in how they managed each store. The trial court held that this variation from manager to manager and from store to store made it impractical to try the case as a class action and denied certification finding that individual issues predominated over common issues. Notably, the Court of Appeal reiterated that a trial court determining whether to certify a class “must determine ‘whether the elements necessary to establish liability are susceptible to common proof,’” and held the trial court did not abuse its discretion when it ruled the plaintiff failed to meet his burden of showing that the alleged misclassification could be established by common proof. page 1 / 2

The court of appeal rejected plaintiff’s contention that the trial court failed to sufficiently consider the proposed statistical sampling methodology proposed by plaintiff’s expert witness to prove both liability and damages. The court explained plaintiff failed to identify any legal authority that a court has “deemed a mere proposal for statistical sampling to be an adequate evidentiary substitute for demonstrating the requisite commonality, or suggested that statistical sampling may be used to manufacture predominate common issues where the factual record indicates that none exist.” 

In other words, plaintiff “asked the trial court to certify the class based on little more than abstract statements about what statistical sampling might be able to establish,” which the court held is not sufficient.

The Court of Appeal affirmed the trial court’s denial of class certification of the plaintiff’s rest period and meal period claims. The court held the plaintiff failed to present substantial evidence “that Sears employed any policy or routine practice to deprive proposed class members of ‘off-duty’ meal and rest breaks and, accordingly, [plaintiff] failed to show that this allegation could be proved on a classwide basis” by common proof.

If the parties’ evidence on a motion for class certification is conflicting on the issue of whether common or individual questions predominate, the trial court is permitted to credit one party’s evidence over the other’s in determining whether the requirements for class certification have been met, and doing so is not an improper evaluation of the merits of the case.  Cal. Civ. Proc. Code § 382.

This decision by the court of appeal shows a growing reluctance by California courts to certify for class treatment cases alleging rest and meal period violations in cases where common proof of the alleged violations is lacking.

AL MOHAJERIAN – MOHAJERIAN APLC

Filed Under: Class Action (Employment), Labor & Employment, Litigation

In anticipation of Plaintiffs attempting to submit to the court a small number of employees who will claim to have suffered violations of wage and hour law, the defense should rely to a great extent upon the case of Duran v. U.S. Bank, decided in 2014 by the California Supreme Court, 59 Cal.4^th 1 (2014), as well as other supporting case law which prohibits “biased” sampling to prove liability. The case of Duran v. U.S. Bank is summarized below.

In 2014, the California Supreme Court unanimously upheld an intermediate appeals ruling that struck down a $15 million judgment in a class action case against U.S. Bank. The court reversed an employee class action win, finding that the Alameda County trial judge mismanaged a wage and hour class action where the court relied on flawed statistical sampling by relying on testimony of just 20 employees in extrapolating damages that had a 43 percent margin of error. The class involved 260 current and former business banking officers who claimed they were misclassified as exempt.

Writing for a unanimous court, Justice Carol Corrigan criticized the trial court’s flawed reliance on statistics:

As even the plaintiffs recognize, this result cannot stand. The judgment must be reversed because the trial court’s flawed implementation of sampling prevented USB from showing that some class members were exempt and entitled to no recovery. A trial plan that relies on statistical sampling must be developed with expert input and must afford the defendant an opportunity to impeach the model or otherwise show its liability is reduced. Statistical sampling may provide an appropriate means of proving liability and damages in some wage and hour class actions. However, as outlined below, the trial court‘s particular approach to sampling here was profoundly flawed.

The court further noted, “[s]tatistical sampling may provide an appropriate means of proving liability and damages in some wage and hour class actions,” but “after a class has been certified, the court’s obligation to manage individual issues does not disappear.” 59 Cal.4^th 1 (2014)

The decision is critically important in highlighting the challenge by the trial court certifying class actions, particularly in the misclassification context, and the obligation of the court in determining not just whether common questions exist, but also whether it will be feasible to try the case as a class action. Duran makes clear that class certification is not appropriate, unless these individual questions can be managed with an appropriate trial plan. Thus, depending on the nature of the claimed exemption and the facts of a particular case, a misclassification claim has the potential to raise numerous individual questions that may be difficult, or even impossible, to litigate on a classwide basis.

Detailed Discussion of Duran

The California Supreme Court in Duran highlighted the challenges in certifying class actions, particularly as related to calculation of damages at trial. The well-reasoned decision makes it more challenging to certify a class, as the court called on trial judges to consider whether a class action is manageable and can withstand a trial – at the class certification stage. The court criticized the trial court’s reliance on flawed statistical sampling, as a substitute in determining damages at trial, and noted:

After certifying a class of 260 plaintiffs, the trial court devised a plan to determine the extent of USB’s liability to all class members by extrapolating from a random sample. In the first phase of trial, the court heard testimony about the work habits of 21 plaintiffs. USB was not permitted to introduce evidence about the work habits of any plaintiff outside this sample. Nevertheless, based on testimony from the small sample group, the trial court found that the entire class had been misclassified. After the second phase of trial, which focused on testimony from statisticians, the court extrapolated the average amount of overtime reported by the sample group to the class as a whole, resulting in a verdict of approximately $15 million and an average recovery of over $57,000 per person.

The court explained that in marshaling through these types of cases, the trial court must consider the issue of “manageability,” separate and apart from whether common questions predominate, to determine whether it is possible to litigate on a classwide basis:

Although predominance of common issues is often a major factor in a certification analysis, it is not the only consideration. In certifying a class action, the court must also conclude that litigation of individual issues, including those arising from affirmative defenses, can be managed fairly and efficiently. In wage and hour cases where a party seeks class certification based on allegations that the employer consistently imposed a uniform policy or de facto practice on class members, the party must still demonstrate that the illegal effects of this conduct can be proven efficiently and manageably within a class setting. (Brinker, at p. 1033; Dailey v. Sears, Roebuck & Co. (2013) 214 Cal.App.4th 974, 989.)

Trial courts must pay careful attention to manageability when deciding whether to certify a class action. In considering whether a class action is a superior device for resolving a controversy, the manageability of individual issues is just as important as the existence of common questions uniting the proposed class.

The court also cautioned that reliance on a single policy cannot circumvent the aforementioned requirements, to justify certification. It took note of U.S. Bank’s well-written policies and noted that class certification is more likely to be appropriate in cases where the job is highly standardized, and if the corporate policy uniformly requires overtime work, noting that “[w]here standardized job duties or other policies result in employees uniformly spending most of their time on nonexempt work, class treatment may be appropriate even if the case involves an exemption that typically entails fact-specific individual inquiries.” However, the court explained that the employer’s “blanket” classification of a group of employees as exempt is not sufficient to justify certification of a class based on common questions.

The court acknowledged that the way to defeat certification remains by demonstrating that individual issues will swamp the common ones: USB’s exemption defense raised a host of individual issues. While common issues among class members may have been sufficient to satisfy the predominance prong for certification, the trial court also had to determine that these individual issues could be effectively managed in the ensuing litigation. (See Brinker, supra, 53 Cal.4th at p. 1054 (conc. opn. of Werdegar, J.); Sav-On, supra, 34 Cal.4th at p. 334.) Here, the certification order was necessarily provisional in that it was subject to development of a trial plan that would manage the individual issues surrounding the outside salesperson exemption.

In general, when a trial plan incorporates representative testimony and random sampling, a preliminary assessment should be done to determine the level of variability in the class.  If the variability is too great, individual issues are more likely to swamp common ones and render the class action unmanageable. No such assessment was done here. With no sensitivity to variability in the class, the court forced the case through trial with a flawed statistical plan that did not manage but instead ignored individual issues.

Notably, the court stated that if a court does not find that the class is manageable through a uniform trial plan at the certification stage, then the certification is reversed:

Although courts enjoy great latitude in structuring trials, and we have encouraged the use of innovative procedures, any trial must allow for the litigation of affirmative defenses, even in a class action case where the defense touches upon individual issues. As we will explain, the trial plan here unreasonably prevented USB from supporting its affirmative defense. Accordingly, the class judgment must be reversed. The trial court is of course free to entertain a new certification motion on remand, but if it decides to proceed with a class action it must apply the guidelines set out here.

The trial court could not abridge USB’s presentation of an exemption defense simply because that defense was cumbersome to litigate in a class action. Under Code of Civil Procedure section 382, just as under the federal rules, “a class cannot be certified on the premise that [the defendant] will not be entitled to litigate its statutory defenses to individual claims.” (Wal-Mart Stores, Inc. v. Dukes (2011) 564 U.S. __, __ [131 S.Ct. 2541, 2561].) These principles derive from both class action rules and principles of due process. (See Lindsey v. Normet (1972) 405 U.S. 56, 66; Philip Morris USA v. Williams (2007) 549 U.S. 346, 353.

1. Duran prohibits “cherry picking” or biased selection of a “sample” 

A sample must be randomly selected for its results to be fairly extrapolated to the entire class. A random sample is one in which each member of the population has an equal probability of being selected for inclusion in the sample. Even when selection procedures appear to be random, errors may arise that undermine randomness. Nonresponse bias can occur if a sample is chosen randomly from a group containing only survey respondents. The potential for bias arises because those who do not respond have no probability of inclusion in the sample. Thus, although the participants are randomly selected from among respondents, the sample will not reflect the characteristics of members of the population who chose not to respond to the survey. Duran, 59 Cal.4^th 1 (2014)

Selection bias occurs when members of the population are chosen based on a nonrandom criterion or are selectively included or excluded from the sample group. In litigation, selection bias can occur when members of the population are allowed to opt out of the class. If plaintiffs with high-value claims opt out, the sample will be skewed toward low value claims and may result in an unfairly low estimate of damages. Conversely, if the opt-outs represent mainly low-value claims or plaintiffs with no valid claim, the sample results will be unfairly inflated. Self-interest may motivate class members to act in ways that will maximize the class award. Thus, one must always suspect that any nonrandom method of picking sample cases will be skewed and therefore will be an inaccurate estimate of the population average. Selection bias can also occur if named plaintiffs are included in the sample based not on random selection but on their status in the litigation. Class counsel are entitled to select named plaintiffs in a manner that enhances their position. However, that tactical choice should not compromise the statistical approach required for random sampling. Duran, 59 Cal.4^th 1 (2014)

A sample that includes even a small number of interested parties can produce biased results. The impact of this error is magnified when the biased results are extrapolated to the entire population. Selection bias cannot be cured simply by increasing the size of the sample. When a selection procedure is biased, taking a large sample does not help. This just repeats the basic mistake on a larger scale. A sample that is representative of a population when first drawn may become less so over time. In class action litigation, such changes can occur with opt-outs or other events that change the class composition. Attention must be paid to possible changes that could render a previously representative sample unrepresentative. When that occurs, sampling will not accurately reflect what needs to be known about a population. Duran, 59 Cal.4^th 1 (2014).

AL MOHAJERIAN – MOHAJERIAN APLC

Filed Under: Class Action (Employment), Labor & Employment, Litigation

To summarize, California courts have long viewed class actions as a means whereby claims of many individuals can be resolved at the same time.

“Section 382 of the Code of Civil Procedure authorizes class suits in California 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.’

“Class certification requires proof (1) of a sufficiently numerous, ascertainable class, (2) of a well-defined community of interest, and (3) that certification will provide substantial benefits to litigants and the courts, i.e., that proceeding as a class is superior to other methods.”

“The ‘community of interest’ requirement embodies 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.”

1. Question of “common issue” 

California law requires that the complaint contain a “common” issue to all putative class members. In our case, we will argue that there is not a common issue, as the employee records will indicate the individualized time entries, break times, and compensation for each employee. These are individualized disputes, and cannot be resolved by a class action lawsuit since all employee time records differ, and there is not a “uniform” policy or common error in place to make this action suitable for a class action lawsuit.

Below is supporting case law to this point.

On the issue of whether common issues predominate in the litigation, a court must “examine the plaintiff’s theory of recovery” and “assess the nature of the legal and factual disputes likely to be presented.”  (Brinker, supra, 53 Cal.4th at p. 1025.)   The court may consider the elements of the claims and defenses, but should not rule on the merits unless necessary to resolve the certification issues.  (Ibid.;  Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1106;  Linder, supra, 23 Cal.4th at pp. 439–440.)   “The ‘ultimate question’  is 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.’ ”  (Brinker, at p. 1021.)  “ ‘As a general rule if the defendant’s liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages.’ ”  (Id. at p. 1022.)

For class certification purposes, a plaintiff is required to present substantial evidence that proving both the existence of an employer’s uniform policies and practices and the alleged illegal effects of such conduct could be accomplished efficiently and manageably within a class setting.  (See Sotelo v. Medianews Group, Inc. (2012) 207 Cal.App.4th 639, 654 [“A class may establish liability by proving a uniform policy or practice by the employer that has the effect on the group of making it likely that group members will work overtime hours without overtime pay, or to miss rest/meal breaks.” (italics added) ].)  [See more at: http://caselaw.findlaw.com/ca-court-of-appeal/1626126.html#sthash.CFaIVhYB.dpuf]

“Critically, if the parties’ evidence is conflicting on the issue of whether common or individual questions predominate (as it often is), the trial court is permitted to credit one party’s evidence over the other’s in determining whether the requirements for class certification have been met,” the appeals court said in Dailey v. Sears Robuck and Co. (2013).

1. The existence of Company “guidelines” does not support certification absent an employer’s application of a uniform policy

Often, there is no uniform application of a company policy or guideline, other than to clock in and out for work time, and break times.

Further support for the proposition that merely stating  a company has “guidelines” which violate California law, does not in itself support class certification, is in the case of Koval v. Pacific Telephone Co.

A recent case decided in January 2014 is  Koval v. Pacific Bell Telephone Co., 232 Cal.App.4^th1050 (2014), where plaintiffs alleged “systematic company guidelines” restricted employee activities during meal and rest breaks and “prevented employees from fully realizing the [meal and rest] breaks to which they were entitled.”  Following Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012), the trial court held the mere existence of a uniform policy does not mandate class certification, concluding that variations in the employer’s application of policy created “serious doubt as to whether the rules were consistently applied so as to allow adjudication of the liability issues on a class-wide basis.”  The California Court of Appeal affirmed, in a published decision.

The plaintiffs in the case sought to certify a class of approximately 6,700 current and former field technicians employed at company locations throughout California.  Plaintiffs alleged the company failed to relinquish control over their activities during meal and rest breaks and thus violated California law.  They argued that, collectively, an array of more than a dozen employer manuals contained “systematic company guidelines” prohibiting employees from doing any of the following during breaks:  meeting up with their colleagues; going home; leaving their work vehicles; riding in other vehicles; sleeping in their work vehicles, or driving their work vehicles outside normal work routes to get a meal.  Further, a company representative had testified that employees were “expected to adhere to the expectations” contained in a number of the manuals and that failure to do so could result in disciplinary action.

Opposing certification, the company submitted evidence that the manner in which supervisors enforced and/or orally conveyed the information in the written policies was highly variable, and therefore “determining whether the policies were so restrictive as to have transformed break time into work time would necessitate individualized inquires.”

The trial court denied certification, reasoning: “What is important, and ultimately fatal to Plaintiffs’ bid for class certification, is the manner in which the six rules reflected in the written materials were applied, and that in turn begins with the question of how the rules were communicated.”

On appeal, the court first recognized that, under Brinker, an employer is only obligated to make uninterrupted meal periods and rest breaks available to its employees, “but is not obligated to ensure they are taken.”  The court then emphasized Brinker’s recognition that claims may be suitable for class treatment where (i) a uniform policy (ii) is consistently applied to a group of employees.

On this basis, the appellate court rejected plaintiffs’ argument that, under Brinker, plaintiffs did not need to “introduce facts showing both uniform policies and consistent application of those policies.”  The court also rejected plaintiffs’ argument that the trial court had committed legal error by assessing “how the allegedly unlawful policies were implemented.”  The failure of plaintiffs to demonstrate that the allegedly unlawful policies were consistently applied, the appellate court reasoned, “create[d] a shifting kaleidoscope of liability determinations that render this case unsuitable for class action treatment.”

Koval joins post-Brinker state court decisions such as Dailey v. Sears, Roebuck & Co. 214 Cal. App. 4th 974, 1002 (2013)(“the absence of a formal written policy explaining [employees’] rights to meal and rest periods does not necessarily imply the existence of a uniform policy or widespread practice of either depriving these employees of meal and rest periods or requiring them to work during those periods”) and In re Walgreen Co. Overtime Cases 231 Cal. App. 4th 437, 443(2014) (“under the Brinker’ make available’ standard, you additionally must ask why the worker missed the break before you can determine whether the employer is liable”) in requiring more than a uniform policy to support class certification. These cases strengthen employers’ hand in opposing class certification where the plaintiff cannot establish both (i) the existence of a uniform unlawful policy and (ii) the consistent application of that policy to a putative class.

The above mentioned cases support a deeper pre-certification analysis, which seems to be the trend in California over the last year or two, as courts attempt to halt the class action epidemic.

AL MOHAJERIAN – MOHAJERIAN APLC

Filed Under: Class Action (Employment), Labor & Employment, Litigation

To summarize, California courts have long viewed class actions as a means whereby claims of many individuals can be resolved at the same time.

“Section 382 of the Code of Civil Procedure authorizes class suits in California 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.’

“Class certification requires proof (1) of a sufficiently numerous, ascertainable class, (2) of a well-defined community of interest, and (3) that certification will provide substantial benefits to litigants and the courts, i.e., that proceeding as a class is superior to other methods.”

“The ‘community of interest’ requirement embodies 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.”

1. Question of “common issue” 

California law requires that the complaint contain a “common” issue to all putative class members. In our case, we will argue that there is not a common issue, as the employee records will indicate the individualized time entries, break times, and compensation for each employee. These are individualized disputes, and cannot be resolved by a class action lawsuit since all employee time records differ, and there is not a “uniform” policy or common error in place to make this action suitable for a class action lawsuit.

Below is supporting case law to this point.

On the issue of whether common issues predominate in the litigation, a court must “examine the plaintiff’s theory of recovery” and “assess the nature of the legal and factual disputes likely to be presented.”  (Brinker, supra, 53 Cal.4th at p. 1025.)   The court may consider the elements of the claims and defenses, but should not rule on the merits unless necessary to resolve the certification issues.  (Ibid.;  Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1106;  Linder, supra, 23 Cal.4th at pp. 439–440.)   “The ‘ultimate question’  is 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.’ ”  (Brinker, at p. 1021.)  “ ‘As a general rule if the defendant’s liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages.’ ”  (Id. at p. 1022.)

For class certification purposes, a plaintiff is required to present substantial evidence that proving both the existence of an employer’s uniform policies and practices and the alleged illegal effects of such conduct could be accomplished efficiently and manageably within a class setting.  (See Sotelo v. Medianews Group, Inc. (2012) 207 Cal.App.4th 639, 654 [“A class may establish liability by proving a uniform policy or practice by the employer that has the effect on the group of making it likely that group members will work overtime hours without overtime pay, or to miss rest/meal breaks.” (italics added) ].)  [See more at: http://caselaw.findlaw.com/ca-court-of-appeal/1626126.html#sthash.CFaIVhYB.dpuf]

“Critically, if the parties’ evidence is conflicting on the issue of whether common or individual questions predominate (as it often is), the trial court is permitted to credit one party’s evidence over the other’s in determining whether the requirements for class certification have been met,” the appeals court said in Dailey v. Sears Robuck and Co. (2013).

1. The existence of Company “guidelines” does not support certification absent an employer’s application of a uniform policy

Often, there is no uniform application of a company policy or guideline, other than to clock in and out for work time, and break times.

Further support for the proposition that merely stating  a company has “guidelines” which violate California law, does not in itself support class certification, is in the case of Koval v. Pacific Telephone Co.

A recent case decided in January 2014 is  Koval v. Pacific Bell Telephone Co., 232 Cal.App.4^th1050 (2014), where plaintiffs alleged “systematic company guidelines” restricted employee activities during meal and rest breaks and “prevented employees from fully realizing the [meal and rest] breaks to which they were entitled.”  Following Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012), the trial court held the mere existence of a uniform policy does not mandate class certification, concluding that variations in the employer’s application of policy created “serious doubt as to whether the rules were consistently applied so as to allow adjudication of the liability issues on a class-wide basis.”  The California Court of Appeal affirmed, in a published decision.

The plaintiffs in the case sought to certify a class of approximately 6,700 current and former field technicians employed at company locations throughout California.  Plaintiffs alleged the company failed to relinquish control over their activities during meal and rest breaks and thus violated California law.  They argued that, collectively, an array of more than a dozen employer manuals contained “systematic company guidelines” prohibiting employees from doing any of the following during breaks:  meeting up with their colleagues; going home; leaving their work vehicles; riding in other vehicles; sleeping in their work vehicles, or driving their work vehicles outside normal work routes to get a meal.  Further, a company representative had testified that employees were “expected to adhere to the expectations” contained in a number of the manuals and that failure to do so could result in disciplinary action.

Opposing certification, the company submitted evidence that the manner in which supervisors enforced and/or orally conveyed the information in the written policies was highly variable, and therefore “determining whether the policies were so restrictive as to have transformed break time into work time would necessitate individualized inquires.”

The trial court denied certification, reasoning: “What is important, and ultimately fatal to Plaintiffs’ bid for class certification, is the manner in which the six rules reflected in the written materials were applied, and that in turn begins with the question of how the rules were communicated.”

On appeal, the court first recognized that, under Brinker, an employer is only obligated to make uninterrupted meal periods and rest breaks available to its employees, “but is not obligated to ensure they are taken.”  The court then emphasized Brinker’s recognition that claims may be suitable for class treatment where (i) a uniform policy (ii) is consistently applied to a group of employees.

On this basis, the appellate court rejected plaintiffs’ argument that, under Brinker, plaintiffs did not need to “introduce facts showing both uniform policies and consistent application of those policies.”  The court also rejected plaintiffs’ argument that the trial court had committed legal error by assessing “how the allegedly unlawful policies were implemented.”  The failure of plaintiffs to demonstrate that the allegedly unlawful policies were consistently applied, the appellate court reasoned, “create[d] a shifting kaleidoscope of liability determinations that render this case unsuitable for class action treatment.”

Koval joins post-Brinker state court decisions such as Dailey v. Sears, Roebuck & Co. 214 Cal. App. 4th 974, 1002 (2013)(“the absence of a formal written policy explaining [employees’] rights to meal and rest periods does not necessarily imply the existence of a uniform policy or widespread practice of either depriving these employees of meal and rest periods or requiring them to work during those periods”) and In re Walgreen Co. Overtime Cases 231 Cal. App. 4th 437, 443(2014) (“under the Brinker’ make available’ standard, you additionally must ask why the worker missed the break before you can determine whether the employer is liable”) in requiring more than a uniform policy to support class certification. These cases strengthen employers’ hand in opposing class certification where the plaintiff cannot establish both (i) the existence of a uniform unlawful policy and (ii) the consistent application of that policy to a putative class.

The above mentioned cases support a deeper pre-certification analysis, which seems to be the trend in California over the last year or two, as courts attempt to halt the class action epidemic.

AL MOHAJERIAN – MOHAJERIAN APLC

Filed Under: Class Action (Employment), Labor & Employment, Litigation