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Tuesday, February 23, 2010

Court of Appeal Issues Significant Class Certification Decision

In Jaimez v. DAIOHS USA, Inc. --- Cal.Rptr.3d ----, 2010 WL 93848 (Second District, January 12, 2010), a former routes sales representative filed a putative class action alleging that his former employer applied a uniform policy of misclassifying the putative class members as exempt employees. The plaintiff moved to certify four separate classes: (1) overtime; (2) meal periods; (3) rest periods; and (4) pay stub violations. The trial court denied class certification:
The trial court found Jaimez failed, however, to establish a “community of interest” among the putative class members in that: (1) Jaimez's claims were not representative of the proposed class, as demonstrated by First Choice's 25 declarations; (2) Jaimez was not an adequate class representative because he lied on his First Choice employment application about his felony conviction and incarceration, he admitted his view that it is acceptable to lie in order to obtain or maintain employment, questions surrounded his purported falsification of time records and other documents (notably, manifests), and his declaration may be contradicted by his deposition testimony; (3) common questions of law and fact did not predominate because First Choice's evidence demonstrated a strong indication of conflicting testimony at trial, which therefore precluded a finding of common questions of fact; and (4) a class action was not the superior method for adjudicating the claims in the Complaint given the lack of commonality and typicality and thus the corresponding need for individualized inquiry.
Slip op. at 5. The Court also denied the plaintiff's motion for leave to amend naming two new class representatives.

The Court of Appeal reversed in part and affirmed in part. First, the Court noted that trial courts have broad discretion in certification decisions unless they apply improper criteria or make erroneous legal assumptions. After citing Sav-On v. Superior Court for the proper class certification criteria, the Court held that the trial court had used the wrong criteria in denying class certification:
The trial court misapplied the criteria, focusing on the potential conflicting issues of fact or law on an individual basis, rather than evaluating “whether the theory of recovery advanced by the plaintiff is likely to prove amenable to class treatment.” (Ghazaryan, supra, 169 Cal.App.4th at p. 1531, 87 Cal.Rptr.3d 518 [italics added]; see also Sav-On Drug Stores, supra, 34 Cal.4th at p. 327, 17 Cal.Rptr.3d 906, 96 P.3d 194 [“[I]n determining where there is substantial evidence to support a trial court's certification order, we consider whether the theory of recovery advanced by proponents of certification is, as an analytical matter, likely to prove amenable to class treatment. [Citations.]”).) “Although individual testimony may be relevant to determine whether these policies unduly restrict ... the drivers as a whole ..., the legal question to be resolved is not an individual one. To the contrary, the common legal question remains the overall impact of [respondent's] policies on its drivers....” (Ghazaryan, supra, 169 Cal.App.4th at p. 1536, 87 Cal.Rptr.3d 518; see also Prince v. CLS Transportation, Inc. (2004) 118 Cal.App.4th 1320, 1329, 13 Cal.Rptr.3d 725 [reversing trial court's order sustaining defendant's demurrer to class allegations in complaint as premature, court observed that plaintiff had alleged “institutional practices by CLS that affected all of the members of the potential class in the same manner, and it appears from the complaint that all liability issues can be determined on a class-wide basis.”].)

Plaintiff's “theory of recovery” involves uniform policies applicable to the RSR's that are more amenable to class treatment. Predominant questions of fact and law include whether First Choice misclassified RSR's as exempt employees, thereby misapplying meal and rest break requirements, as well as the attendant record-keeping duties. Plaintiff alleges First Choice consistently administered a uniform corporate policy that violated overtime and meal and rest break requirements. Even when properly classified, RSR's were still subject to uniform policies and practices, notably, failure to properly compensate them, failure to pay them proper straight time, premium overtime, double time, missed meal and rest period compensation, and failure to provide them with compliant pay stubs and waiting time penalties.

Additionally, under plaintiff's theory of recovery, uniform corporate practices applicable to RSR's (even once they were reclassified as non-exempt) are more amenable to class treatment. Plaintiff submitted evidence of the following practices and policies: that RSR's performed the same duties; regardless of the exempt or non-exempt status of RSR's, First Choice failed to properly pay overtime compensation, although RSR's earned it; First Choice created routes and delivery schedules which it pressured RSR's to complete in 8 hours; rather than promoting meal and rest breaks, this action had the opposite effect, despite supervisors' statement or encouragement that RSR's should take their breaks; First Choice failed to compensate RSR's for missed, late, or interrupted meal and rest breaks Under the Sav-On Drug Stores standard, Plaintiff's theory of recovery, focused on uniform policies and practices applicable to RSR's within the relevant time period, as compared to individual claims, was and is more amenable to class treatment than individual disposition.
Slip op. at 8.

Next, the Court held that common issues of law and fact predominated over individual issues. The Court identified common issues in the declarations submitted by the defendants: several admitted that they regularly missed meal periods, and none stated that defendants paid them extra for their missed meal periods. The Court also noted that the need to prove individual damages does not defeat class certification. Slip op. at 9.

The Court held that common issues predominated with regard to the overtime claims. The Court held that the predominant issues were whether the defendants had a practice of deeming the class members as exempt employees and failing to pay them overtime compensation. The Court further held:
The absence of time sheets (during the time when First Choice misclassified its RSR's as exempt) does not make it “impossible” to ascertain overtime hours worked by particular employees. In fact, as the Class declarations demonstrate, RSR's routinely worked overtime, and it is a straightforward matter to determine the relevant numbers of hours. The Class RSR's performed the same duties every day, including making daily deliveries to preset customers and counting all items that were loaded and delivered, as well as those items returned to the First Choice facility. The RSR's also stated that they often worked more than eight hours per day without taking all required uninterrupted meal and/or rest breaks. RSR's who made such deliveries on a daily basis could attest to the typical amount of overtime time they worked each day, even in the absence of time records. Variations in individual RSR overtime hours go to damages and do not preclude class certification. The possible use of survey evidence or testimony from a random and representative sampling of class members can certainly be explored to facilitate the necessary calculations.
Slip op. at 10.

With regard to the meal and rest period claims, the Court first held that defendant's assertion that its policy complied with the law was beside the point. Contrasting Cicairos with Brinker and Brinkley, the Court reiterated that its role was not to determine the merits of the case on certification. Slip op at 11. Rather, the question is whether the defendants' policies and practices present predominant questions of fact and law that are amenable to class treatment. Ibid. On this question, the Court held that the plaintiff "presented evidence of these predominant common factual issues:
  • RSR's often were not able to take their required rest breaks;
  • The delivery schedules made it extremely difficult for RSR's to timely complete the deliveries and take all required rest breaks;
  • After First Choice reclassified the RSR's as hourly employees, RSR's were told to complete their deliveries within eight hours, making it even more difficult for RSR's to take all required rest breaks; and
  • RSR's never received compensation for missed rest breaks.
Slip op. at 12. The Court noted that even the defendants' declarants "did not indicate they always received every rest break to which they were entitled." Ibid.

As to the paystub claims, the Court rejected the defendant's argument that the class members' need to show injury arising from the violations made certification improper. Citing Wang v. Chinese Daily News, Inc. (C.D.Cal.2006) 435 F.Supp.2d 1042; Elliot v. Spherion Pacific Work, LLC (C.D.Cal.2008) 572 F.Supp.2d 1169. The Court then held common issues predominate with regard to this claim. Slip op. at 13.

The Court held that: the plaintiff's claims were typical of the class members', as evidenced by the nine almost identical declarations submitted in support of the motion; the plaintiff's credibility issues - lying on his job application and testifying in deposition that it was OK to do so - make him inadequate as a class representative; and class treatment was the superior method of resolving the case. Slip op. at 14. Finally, the Court held that the trial court abused its discretion in denying the plaintiff's motion for leave to substitute new class representatives. Slip op. at 15.

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