Court of Appeal Reverses Decision Denying Class Certification

The California Court of Appeal recently reversed a decision denying class certification, holding that the trial court had abused its discretion. In Ghazaryan v. Diva Limousine, Ltd. (December 22, 2008, ordered published January 12, 2009) 169 Cal.App.4th 1524, the plaintiff challenged his employer's policy of "paying its drivers an hourly rate for assigned trips but failing to pay for on-call time between assignments ('gap time')." The plaintiff, like his co-workers, frequently had substantial periods of gap time for which he was not compensated. After a run-in with his employer over his right to eat during this "gap time," the plaintiff filed suit, alleging failure to pay overtime and earned wages, failure to provide meal and rest periods, failure to provide timely and accurate wage and hour statements, and violation of the Unfair Competition Law.

The plaintiff sought to certify two classes of employees: "(1) based on Diva’s alleged failure to pay earned overtime and straight time, 'All current and former employees of Defendant who worked as Limousine Drivers during the period of May 10, 2002 to the present'; and (2) targeting Diva’s failure to provide mandatory rest breaks, 'All current and former employees of Defendant who work as Limousine Drivers at any time during the period of May 10, 2002 to the present, worked one or more four hour increments of time without being given a rest break for each such increment and who were not properly compensated therefor.'"

The employer used a very common strategy in defending class certification, focusing on purported differences in the way that its drivers used their gap time. The employer emphasized that some members of the putative class were paid for their gap time and submitted declarations from others who stated that they used gap time for personal business and did not support the law suit.

The trial court found the declarations "convincing" and denied class certification. The trial court held that it could not determine how many people would be in the class (and thus whether the numerosity requirement was satisfied) without first determining whether the employer's gap time policy was legal, which the court said it could not do at the certification stage. Similarly, the court held that it could not tell who would fit into the class unless it determined the legality of the policy, and thus found that ascertainability was lacking.

The Court of Appeal held that the trial court utilized "improper criteria" in analyzing the class certification motion.

The trial court is, of course, correct, under well-established Supreme Court authority, “The certification question is ‘essentially a procedural one that does not ask whether an action is legally or factually meritorious.’” (Sav-On Drug Stores, supra, 34 Cal.4th at p. 326.) But the trial court fundamentally misconceived the import of the rule against evaluating the merits of the plaintiff’s claims in deciding whether class treatment is appropriate. Rather than denying certification because it cannot reach the merits, as the court did here, the trial court must evaluate whether the theory of recovery advanced by the plaintiff is likely to prove amenable to class treatment: “As the focus in a certification dispute is on what type of questions -- common or individual -- are likely to arise in the action, rather than on the merits of the case [citations], in determining whether there is substantial evidence to support a trial court’s certification order, [the reviewing court] consider[s] whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment.” (Id. at p. 327.)

Having set forth the proper standard for evaluating the class certification motion, the Court went on to hold that the case satisfied all requirements for class certification.

Regarding ascertainability and numerosity, the Court held that the plaintiff had properly identified the class. The Court stated, "a class is properly defined in terms of 'objective characteristics and common transactional facts,' not by identifying the ultimate facts that will establish liability." The plaintiff's proposed class, consisting of all drivers employed during a particular time, was perfectly appropriate. Any drivers who had been paid for their on-call time, the Court held, could be excluded from the class without destroying ascertainability. "Alternatively, the class can be modified to specify only those drivers who were not paid for their on-call or gap time." Either way, the proposed class satisfied "the purpose of the ascertainability requirement to ensure notice to potential class members who at some time during their employment by Diva accumulated gap time."

Regarding community of interest, the Court reiterated: "Determining whether a sufficient community of interest exists to warrant class certification, however, depends not on the differences among individual drivers’ use of their gap time but on the reasonableness of Diva’s policies as applied to its drivers as a whole." Rather than focusing on the different rates at which the drivers accumulated gap time or the way they spent that time, the Court held that the proper focus was on the employer's gap time policies -- policies that should be examined on a class-wide basis:

Diva dictates to a large extent how drivers use their on-call time. Diva distributes an official “Chauffeur’s Handbook” to all drivers that expressly bars personal use by drivers of Diva’s vehicles (albeit Diva appears to ignore incidental errands within a geographically proximate area), requires drivers to respond promptly to dispatch calls and accept trip assignments absent pre-arranged circumstances, requires drivers to be in full uniform while in or proximate to their vehicles and requires drivers to clean and maintain their vehicles during their on-call time. Those limitations apply across the board to all drivers who have on-call time during the course of a day. Although individual testimony may be relevant to determine whether these policies unduly restrict the ability of drivers as a whole to utilize their oncall time for personal purposes, the legal question to be resolved is not an individual one. To the contrary, the common legal question remains the overall impact of Diva’s policies on its drivers, not whether any one driver, through the incidental convenience of having a home or gym nearby to spend his or her gap time, successfully finds a way to utilize that time for his or her own purposes.

Regarding superiority, the Court held:

There is no question class treatment constitutes the superior mode of resolving Ghazaryan’s claims in this action. Based on the evidence submitted by Diva in opposition to the motion, its compensation policy has been carefully drafted; and Diva very well may find its policy upheld as reasonable under the existing DLSE standard. We see no advantage to either party to resolution of this question on a piecemeal basis and agree with Ghazaryan such a prospect would jeopardize the ability of employees to find competent representation if restricted to their own individual claims.

Judge Perluss wrote the Court's opinion. Judges Zelon and Jackson joined.