MEMORANDUM & ORDER
Re: Plaintiffs Renewed Motion for Class Certification
This multidistrict litigation arises out of three putative collective actions and one putative class action by current and former Home Mortgage Consultants (“HMCs”), against Wells Fargo Home Mortgage (“defendant” or “Wells Fargo”), the HMCs’ current or former employer. The HMCs seek to recover overtime pay under various federal and state laws. On October 18, 2007, this court granted a motion for class certification filed by James Mevorah (“Mevorah”), the proposed class representative of a class of HMCs who worked for Wells Fargo in California. In re Wells Fargo Home Mortgage Overtime Pay Litig., 06-1770 MHP,
BACKGROUND
The court discussed the employment conditions of Wells Fargo’s California HMCs in great detail in its order initially granting plaintiffs motion for class certification. As none of the material facts have changed, the court provides essentially the same factual summary as background to the following discussion.
I. Wells Fargo’s Practices Related to HMCs
HMCs are employees of Wells Fargo whose primary function is to market and sell residential mortgages, for which they are paid a commission based on their sales. Since January 2005, HMCs have also been paid a minimum, non-recoverable draw against commissions. Defendant asserts that there are currently between 1,000 and 1,500 HMCs in California, plus thousands more nationwide. Since 2001, there have been approximately 5,000 California HMCs and approximately 20,000 nationwide. See Docket No. 51 (Blackwell Dec.) ¶ 3. During the relevant period, California HMCs were paid an
HMCs may specialize in a particular type of mortgage they sell, with each specialization entailing a distinct set of strategies and activities. Among the specializations identified by Wells Fargo are “prime HMCs,” who work with borrowers qualifying for the best interest rates, “sub-prime HMCs,” who work with borrowers with impaired credit, “reverse mortgage HMCs,” who work primarily with seniors, “renovation HMCs” specializing in mortgages to finance home improvement, “builder HMCs” focusing on particular housing developments and “emerging market HMCs” who develop relationships with historically underserved communities. Id. ¶¶ 6-9.
In addition to these varied specializations, Wells Fargo identifies a host of factors which, according to Wells Fargo, create wide variations in compensation, total hours worked, and the amount of time that HMCs spend in and out of the office or consulting with clients. Firstly, HMCs’ work-style preferences and marketing strategies lead to different approaches and time commitments based on different target customers and referrers. Id. ¶ 10. Secondly, because Wells Fargo provides training only and does not supervise HMCs, an HMC may set his or her own compensation goal and work as little or as much as desired to attain that goal. Id. ¶¶ 11-12. Thirdly, HMCs allocate work time differently as they gain experience and build skills and client bases. Id. ¶ 13. Fourth, HMCs operate in a variety of geographic locations within California, including densely-populated and sparsely-populated cities, affluent suburbs and rural communities, with demographic and economic variations creating different experiences among HMCs. Id. ¶ 14. Finally, market forces such as fluctuations in interest rates and consumer preferences based on the time of year (with fewer people buying property during the Fall and Winter months) create differences among HMC work. Id. ¶ 15.
II. Procedural Background
This action was initially filed by Mevorah on February 10, 2005, in the California Superior Court for the County of San Francisco, alleging eight causes of action related to defendant’s classification of HMCs as exempt employees: (1) violation of California Business and Professions Code section 17200 (“section 17200”) for failure to pay overtime as required by the Fair Labor Standards Act (“FLSA”); (2) violation of section 17200 for violation of California Wage Order 4-2001; (3 & 4) two causes of action for violation of California Labor Code section 1194 for failure to pay overtime; (5) violation of section 17200 for failure to pay overtime; (6) violation of California Labor Code sections 201 and 202 for failure to pay overtime upon termination; (7) violation of California Labor Code section 226.7 for failure to provide required meal and rest breaks; and (8) declaratory relief. Defendant removed the action to this court on March 22, 2005. Mevorah’s action was subsequently related to the Multidistrict Litigation captioned as In re Wells Fargo Home Mortgage Overtime Pay Litigation, No. MDL 06-1770 MHP.
a. The October 18, 2007, order granting the motion for class certification
Mevorah moved the court to certify a class defined as “All persons who were employed by Wells Fargo Home Mortgage in the State of California as a Home Mortgage Consultant after February 10, 2001.” As is alluded to above, this court granted that motion and certified the class action. In the order granting the motion, the court devoted the
To resolve the issue, the court examined each exemption carefully. It found that individualized inquiries would be required to determine if class members qualified for the federal and California “outside sales exemption”, the California “administrative exemption”, the California “commissioned sale exemption”, and the federal “highly compensated employee exemption.” In re Wells Fargo,
Wells Fargo’s uniform policies regarding HMCs weigh heavily in favor of class certification. As numerous courts have recognized, it is manifestly disingenuous for a company to treat a class of employees as a homogenous group for the purposes of internal policies and compensation, and then assert that the same group is too diverse for class treatment in overtime litigation. This is particularly true in a situation such as this, where the difficulty of proving hours worked and compensation received is exacerbated by defendant’s complete failure to maintain pertinent records. Accordingly, plaintifff] have satisfied their burden and demonstrated that common issues predominate.
Id. The court’s holding rested largely on the reasoning of Wang v. Chinese Daily News,
b. The Ninth Circuit’s Opinion
Wells Fargo appealed the court’s October 18, 2007, order to the Ninth Circuit, which subsequently reversed. The Ninth Circuit held that this court, when determining that common issues predominated, abused its discretion by relying on Wells Fargo’s uniform internal exemption policy “to the near exclusion of other factors relevant to the predominance inquiry.” In re Wells Fargo,
c. Rebriefing
After remand to this court, the court ordered the parties to rebrief the motion for class certification in light of the Ninth Cir
LEGAL STANDARD
The court laid out the standard for certifying a class under Rule 23(b)(3), but does so again here. A party seeking to certify a class must satisfy the four prerequisites enumerated in Rule 23(a), as well as at least one of the requirements of Rule 23(b). Under Rule 23(a), the party seeking class certification must establish: (1) that the class is so large that joinder of all members is impracticable (i.e., numerosity); (2) that there are one or more questions of law or fact common to the class (i.e., commonality); (3) that' the named parties’ claims are typical of the class (i.e., typicality); and (4) that the class representatives will fairly and adequately protect the interests of other members of the class (i.e., adequacy of representation). Fed.R.Civ.P. 23(a). In addition to satisfying these prerequisites, parties seeking class certification must show that the action is maintainable under Rule 23(b)(1), (2) or (3). See Rule 23(b); Amchern Products, Inc. v. Windsor,
The party seeking class certification bears the burden of establishing that the requirements of Rules 23(a) and 23(b) have been met. See Zinser v. Accufix Research Inst, Inc.,
DISCUSSION
I. Rule 23(a) Requirements
As the Ninth Circuit noted in In re Wells Fargo, there is no dispute in this case that the 23(a) requirements have been satisfied. See In re Wells Fargo,
II. Rule 23(b)(3) Requirements
a. Predominance
The Ninth Circuit’s decision—especially when viewed in conjunction with Vinole v. Countrywide Home Loans, Inc.,
Vinole, however, appears to foreclose any viable path for certifying this action as a class action. The Vinole class consisted of home loan consultants (“HLCs”), the functional equivalent of the HMCs in this case, who worked for Countrywide Home Loans, Inc. Vinole,
On the above set of facts, the Ninth Circuit affirmed the district court’s denial of the plaintiffs motion for class certification. The district court did not abuse its discretion in holding that “analysis of the outside salesperson exemption precluded certification because that analysis would require an individualized inquiry into the manner in which each HLC actually carried out his or her work, and that this burden was not lessened by the presence of other issues susceptible to common proof.” Id. at 944 (citing to the district court order). In contrast to the bright line Wang rule adopted by this court, the Ninth Circuit “favor[s] an approach that takes into consideration all factors that militate in favor of, or against, class certification.” Id. at 946. Denial of certification was appropriate in Vinole because “[pjlaintiffs’ claims will require inquiries into how much time each individual HLC spent in or out of the office and how the HLC performed his or her job; all of this where the HLC was granted almost unfettered autonomy to do his or her job.” Id. at 947. Trial would unavoidably require the court to conduct “several hundred mini-trials
Three principles that can be gleaned from In re Wells Fargo and Vinole prove fatal to the instant plaintiffs renewed motion for class certification. Firstly, under both decisions, an employer’s uniform exemption policy is only one of many factors that must to be taken into account in the predominance analysis. Secondly, if an employer asserts an exemption as a defense and the inquiry into whether the individual class members qualify for that exemption is fact-intensive, the district court must weigh the complexity of that inquiry in the predominance calculus. Finally, when an employer asserts an exemption as a defense, such as the outside sales exemption, the resolution of which depends upon how employees spend their time at work, unless plaintiff proposes some form of common proof, such as a standard policy governing how and where employees perform their jobs, common issues of law or fact are unlikely to predominate.
In light of these principles, the court cannot see and plaintiff has not presented any viable method for certifying this action as a class action. To be certain, there are a number of common issues in this ease. Wells Fargo does not dispute that all HMCs were uniformly classified as exempt. All class members had common job descriptions, uniform training, the same primary goal (to sell mortgages), uniform job expectations, similar compensation plans, and standardized employee evaluation standards. The record before the court indicates that all HMCs operated without supervision. However, this court has already held that analysis of five of the seven exemptions asserted by Wells Fargo would require fact-intensive inquiries into how individual HMCs performed their job. Under In re Wells Fargo and Vinole, the complexity of those inquiries must factor into this court’s predominance analysis. In re Wells Fargo and Vinole also make clear that a plaintiff could satisfy the predominance requirement by coming forward with some form of common proof that would absolve this court from inquiring into how each HMC spent their working day. Plaintiff has not, however, done so. She has not produced (or even alleged the existence of) any policy that requires HMCs to spend a specified amount of time in or out of the office. At the very least, to determine if each HMC qualified for the outside sales exemption the court would need to conduct “inquiries into how much time each individual [HMC] spent in or out of the office and how the [HMC] performed his or her job; all of this where the [HMC] was granted almost unfettered autonomy to do his or her job.” Vínole,
Plaintiff comes forward with two forms of common proof that she suggests could avoid individual inquiries into how HMCs spent their work days. Firstly, plaintiff points to the Uniform Residential Loan Application (“Form 1003”). For each loan that an HMC facilitates, the borrower is required by federal law to complete, with the assistance of the HMC, a copy of Form 1003. Among the information that the borrower must include is whether the loan application was taken face to face or by mail, telephone, or internet. Plaintiff suggests that “if ‘mail,’ ‘telephone’ or ‘internet’ are consistently cheeked, the surrounding sales activity was not done in the field.” Docket No. 305 (Renewed Mot. for Class Certification (“Renewed Mot.”)) at 27-28. Plaintiff admits that the “completed Form 1003s are not completely definitive, but can be a very helpful objective tool.” Id. at 28. In arguing for reliance on Form 1003, plaintiff fails to acknowledge its myriad shortcomings as a form of common proof in this case. First, the prevalence of cell phones and cell phones with internet access means that simply because an HMC collected a loan application by telephone or the internet does not establish that they were in the office when they did so. Second, even if the court assumed that all mail, phone and internet applications were taken at a Wells Fargo office, there is no evidence regarding what percentage of an HMC’s job duties involved the accepting of loan applications or that the percentage was the same for all HMCs. Because Form 1003 has so little to say about where an HMC undertook his or her work, it falls well short as an acceptable form of common proof.
None of the plaintiffs other arguments come close to persuading the court that plaintiff has met her burden. Firstly, it appears that plaintiff fundamentally misunderstands the purpose of the predominance requirement. Plaintiff argues that because defendant, at trial, has the burden of proving that class members qualified for one of the asserted exemptions, plaintiff is somehow freed from meeting the predominance requirement with respect to those defenses. Such a view is directly at odds with the way the Ninth Circuit has interpreted Rule 23(b)(3). The important inquiry is not whether common issues predominate with respect to plaintiffs prima facie ease, but rather will common issues predominate in the entire litigation. See Zinser v. Accufix Research Inst., Inc.,
Secondly, plaintiff asserts that there is a single common question at issue in this case that is easily resolved with common proof: “What is the primary duty of the HMCs?” Renewed Mot. at 7. Plaintiff contend that all HMCs had the same primary job duty. They further claim that identifying their primary job function is the only real issue in this case in light of Wells Fargo’s conflicting exemption claims. For example, plaintiff avers that if, as Wells Fargo claims, the HMCs qualify for the administrative exemption, they cannot also qualify for the outside sales exemption or the commissioned sales exemption. Thus, because resolving the applicability of the exemptions will entail identifying the HMCs’ primary job duty, which is the same across the class, common issues will predominate. Although there is some inherent logic to plaintiffs argument, plaintiff again misses the point of the predominance requirement. Plaintiff assumes that in practice all HMCs have the same primary job duty. Such a conclusion is not necessarily warranted by the current record in this case. More importantly, not all of Wells Fargo’s claimed exemptions hinge on the HMCs’ job function. The applicability of the outside sales exemption, which poses the greatest problem from a predominance perspective, has nothing to do with what an employee does; it focuses solely on where an employee completes his or her work. As a result, plaintiffs attempt to recast the focus of this case in a manner more amenable to class treatment is unavailing.
Thirdly, plaintiff asks this court to revisit its acceptance of declarations submitted by current HMCs in support of Wells Fargo’s opposition to the motion for class certification. Plaintiff again argues that the declarations are “untrustworthy” and “vague and inconclusive.” Renewed Mot. at 25-26. The court has already ruled on this issue. While recognizing that the declarations of current employees, who may fear for their jobs if they do not comply with their employer’s wishes, are “inherently suspect,” see In re Wells Fargo,
In sum, the various theories of the case put forward by the parties combined with the current state of the record lead to a single conclusion: In order to adjudicate Wells Fargo’s exemption defenses, especially the outside sales person exemption, a substantial quantity of individual inquiries will be necessary. Although there are some issues in this case amenable to common proof, individual inquiries will predominate over common questions. Accordingly, plaintiff cannot meet the predominance requirement of Rule 23(b)(3), and plaintiffs renewed motion to for class certification is DENIED.
b. Superiority
Because the court holds that plaintiff has not satisfied the predominance requirement, it need not address the superiority requirement. However, the court notes that had plaintiff come forward with a tenable method for trying this case that avoided extensive individual mini-trials, it is likely that plaintiff would have been able to satisfy the superiority requirement. It is not ideal for the court or the parties that plaintiff and class members, if they seek to continue with this litigation, must proceed on a case-by-case basis. At the same time, given the plaintiffs predominance problems, the court simply cannot
CONCLUSION
For the reasons stated, plaintiffs renewed motion for class certification is DENIED.
IT IS SO ORDERED.
Notes
. The new class definition is as follows: "Those persons who were employed by Wells Fargo and worked in California during any period after February 11, 2001, in the capacity of Home Mortgage Consultant, excepting any period when they were engaged in selling reverse mortgages.” Docket No. 305 (Renewed Mot. for Class Certification ("Renewed Mot.”)) at 3.
. Had plaintiff provided the court with a statistical report in support of her motion, this analysis may have been different. Plaintiff did not, however, and asks this court to certify the class based on abstract statements about what statistical sampling might be able to establish. This litigation is over four years old. Even assuming that most discovery related to this case was stayed pending the resolution of the appeal, plaintiff has had ample time to hire a statistical expert, conduct some random sampling and present the findings to the court.
. At the hearing on this renewed motion, counsel representing the nationwide class of HMCs suggested that, were the court to hold that, as a matter of law, certain exemptions did not apply in this case, the individualized inquiries that are of greatest concern to the court—the inquiries related to the exemptions asserted by Wells Fargo—would disappear. Counsel is correct that the court has not yet definitively held, on the merits, that the exemptions apply in this action. If, at a later stage of this litigation, the court were to hold that some or all of the exemptions do not apply, the court may permit plaintiff to file a motion for leave to file a third motion for class certification. On the current record and given the state of the law, however, it appears likely that at least the federal and California outside sales exemption will apply in this action. See In re Wells Fargo,