After twice continuing the hearing for supplemental briefing and evidence, the trial court denied Plaintiffs' class certification motion because they failed to present substantial evidence showing their claims were typical of the proposed class and common issues of law or fact predominated. The court found Tristar's alleged misclassification of the proposed class members suitable for class treatment, but it denied the motion because misclassification does not give rise to liability on an overtime claim unless the employees first show they worked hours or days that required overtime compensation. The court explained Plaintiffs failed to present evidence showing Tristar had a generally applicable policy or practice that required employees to work overtime, and therefore Plaintiffs failed to show they could establish Tristar's liability based on proof common to all class members. Consequently, the court concluded class treatment of Plaintiffs' claims was not appropriate.
Plaintiffs contend the trial court erred because the amount of overtime worked by the individual class members is a damages
The trial court did not deny the motion based on Plaintiffs' failure to show the amount of overtime worked by each putative class member. Rather, the court denied the motion because Plaintiffs failed to show whether the putative class members worked any overtime at all was subject to common proof. To satisfy the commonality requirement for class certification, Plaintiffs were required to show they could establish their liability theory on a classwide basis through common proof. Typically, in overtime claims, plaintiffs show this by presenting evidence of an employer policy or practice that generally required the class members to work overtime. Plaintiffs presented no evidence of any such policy or practice.
Plaintiffs also contend the trial court erred in refusing class certification on their claim under California's unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq. ). According to Plaintiffs, the UCL authorizes restitution and other relief without a showing that each class member individually suffered injury, and therefore Plaintiffs were not required to present evidence of the overtime amount each putative class member worked. Plaintiffs again misconstrue the governing law. The cases Plaintiffs cite address standing to bring a UCL claim; they do not address the showing required to obtain class
I
FACTS AND PROCEDURAL HISTORY
Tristar provides third party risk management services, including claims adjusting and administrative services, with specialization in handling worker's compensation and general liability claims. Tristar's California clients include privately held, self-insured companies, publicly traded companies, and public entities, such as cities and counties. Tristar maintains branch offices in nine cities throughout California. Each branch typically is staffed with a branch manager, claims supervisors, administrative staff, and claims examiners I, II, and III.
Under Tristar's standardized "Position Description," the job duties and responsibilities for its claims examiners include managing a caseload of 150 to 180 worker's compensation files, investigating and fixing claims, managing medical treatment and billing, setting reserves, settling and finalizing claims, documenting all actions, and communicating with clients and claimants. Claims examiners typically work on claims for one client at a time, and the guidelines, protocols, rules, and expectations for managing the claims vary from client to client. Claims supervisors review files and supervise the work of claims examiners under standardized policies and procedures to ensure the claims examiners follow the necessary procedures and meet deadlines. Tristar's normal work schedule for claims examiners required them to work 7.5 hours per day, but Tristar also offered several alternative work schedules that allowed claims examiners to work 8.33 or 8.5 hours per day in exchange for receiving every other Monday or Friday off. Most
Kizer worked for Tristar as a claims examiner III from February 2011 to January 2014, and Williams worked for Tristar as a claims examiner II from April 2006 to January 2014. In February 2014, Plaintiffs filed this putative class action against Tristar alleging it misclassified them and other similarly situated claims examiners as exempt from California's overtime laws. According to Plaintiffs, Tristar required its claims examiners to work more than eight hours a day and 40 hours per workweek, but paid no overtime because
In November 2014, Plaintiffs filed a motion to certify a class composed of " 'all individuals who are or previously were employed by [Tristar] as Claims Examiner[s] II and Claims Examiner[s] III in [Tristar's] Workers' Compensation Division between February 25, 2010 and December 31, 2014.' "
In April 2015, the trial court conducted a hearing on Plaintiffs' motion. The court heard argument and continued the hearing for the parties to submit supplemental briefing and evidence on whether each element of the administrative employee exemption could be tried based on evidence common to the entire class, and if so, how. After receiving supplemental briefing, the court conducted another hearing on Plaintiffs' motion in June 2015.
The court issued a tentative ruling to deny the motion, explaining Plaintiffs had shown that some elements of the administrative employee exemption may be subject to common proof, but they failed to show that all of the elements could be established on a classwide basis. The court further explained that even if the misclassification claim could be tried on a
In July 2015, the trial court conducted the third hearing on Plaintiffs' motion after receiving more supplemental briefing and evidence. Plaintiffs conceded all elements of the administrative employee exemption except the general supervision element because the exemption does not apply if one element is lacking. Plaintiffs asserted they could defeat the general supervision element by presenting classwide evidence regarding Tristar's generally applicable policies and procedures governing claims examiners and their work.
The trial court accepted those concessions and found the general supervision element could be tried on a classwide basis. Nonetheless, the court denied Plaintiffs' motion because it found they failed to present substantial evidence establishing their claims were typical of the class or that common issues of law or fact predominated on Plaintiffs' overtime claims.
The court explained Plaintiffs failed to present any evidence of a generally applicable written or de facto policy that required claims examiners to work overtime. According to the court, Plaintiffs presented evidence of the written job requirements and Tristar's expectations for claims examiners, but the court could not infer those requirements and expectations required claims examiners to work overtime without evidence from an industry expert or other claims examiners explaining they could not complete Tristar's workload assignments without working overtime. Although Plaintiffs' most recent declarations explained they had to work overtime to complete their assigned files, the court explained those declarations were "anecdotal" and did not support class certification because they failed to establish Plaintiffs' experiences were typical or common to all claims examiners.
II
DISCUSSION
A. Governing Legal Principles
1. Overtime Pay Rules and Exemptions
"California's Labor Code generally requires overtime pay for employees working
The exemption at issue here is the exemption for administrative employees. Industrial Welfare Commission wage order No. 4-2001 governs this exemption and establishes a five-part test to determine whether it applies. ( Dailey , supra ,
2. Class Action Requirements
"Originally creatures of equity, class actions have been statutorily embraced by the Legislature whenever 'the question [in a case] 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 ....' " ( Brinker Restaurant Corp. v. Superior Court (2012)
"The party advocating class treatment must demonstrate the existence of an ascertainable and sufficiently numerous class, a well-defined community of interest, and substantial benefits from certification that render proceeding as a class superior to the alternatives. [Citations.] 'In turn, 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 certification question is "essentially a procedural one" ' [citation] that examines 'whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment.' " ( Martinez v. Joe's Crab Shack Holdings (2014)
Here, the trial court denied class certification because it found Plaintiffs failed to establish their claims were typical of the proposed class and that common questions of law or fact predominated over individual questions. "The typicality requirement's purpose ' "is to assure that the interest of the named representative aligns with the interests of the class. [Citation.] ' "Typicality refers to the nature of the claim or defense of the class representative, and not to the specific facts from which it arose or the relief sought." ' [Citations.] The test of typicality 'is whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiffs, and whether other class members have been injured by the same course of conduct.' " ' " ( Martinez , supra ,
"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.' " ( Dailey , supra ,
"On review of a class certification order, an appellate court's inquiry is narrowly circumscribed. 'The decision to certify a class rests squarely within the discretion of the trial court, and we afford that decision great deference on appeal, reversing only for a manifest abuse of discretion: "Because trial courts are ideally situated to evaluate the efficiencies and practicalities of permitting group action, they are afforded great discretion in granting or
"In determining whether the record contains substantial evidence supporting the ruling, a reviewing court does not reweigh the evidence and must draw all reasonable inferences supporting the court's order." ( Dailey , supra ,
B. The Trial Court Did Not Abuse Its Discretion in Denying Class Certification Based on Plaintiffs' Failure to Show Common Issues Predominated
1. The Overtime Claims
Plaintiffs contend the trial court erred by applying an improper legal standard because it found Plaintiffs failed to show common questions of law or fact predominated based on Plaintiffs' "purported failure to show the amount of overtime worked by the class." According to Plaintiffs, whether each class member worked overtime and the amount they worked is a damages issue that the governing legal standards prohibited the court from considering at the class certification stage. Plaintiffs misconstrue both the governing legal standards and the court's order.
As explained above, the ultimate issue on the predominance factor is whether the plaintiff's theory of liability is likely to prove amenable to class treatment. ( Brinker , supra ,
In the wage and hour context, courts routinely have found suitable for class treatment a claim alleging an employer consistently applied a uniform policy that harmed an identifiable class of employees when the policy and the harm it caused are subject to common proof for all class members. ( Brinker , supra ,
In Sotelo , a group of newspaper delivery people sued a conglomerate of newspapers, alleging they intentionally misclassified the plaintiffs as independent contractors to avoid paying overtime compensation. ( Sotelo , supra , 207 Cal.App.4th at pp. 644-645,
The Court of Appeal rejected that argument and affirmed the trial court's order because "simply having the status of an employee does not make the employer liable for a claim for overtime compensation .... An individual employee establishes liability by proving actual overtime hours worked
Here, the trial court found Plaintiffs failed to present substantial evidence they could establish through proof common
Contrary to Plaintiffs' contention, the court did not deny the motion because Plaintiffs failed to show the amount of overtime each potential class member worked. Rather, the court denied the motion because Plaintiffs failed to show they could establish through common proof that the potential class members-other than Plaintiffs-worked any overtime. Plaintiffs' contention confuses the fact of damage with the amount of damages. As explained above, the fact of damage is a liability issue that focuses on the existence of harm establishing a plaintiff's entitlement to damages; it is not concerned with the amount of damages. ( Safeway , supra ,
Substantial evidence supports the trial court's findings, and therefore we cannot say the court abused its discretion in denying Plaintiffs' motion. Plaintiffs presented no evidence to show Tristar had a written or de facto policy requiring claims examiners to work overtime, or that the performance
Plaintiffs argue the alternative work schedules for many of the claims examiners demonstrated they routinely worked overtime by working more than eight hours in a day. Plaintiffs point to the claims examiner and supervisor declarations Tristar submitted stating that many claims examiners
Plaintiffs forfeited this argument by failing to make it in the trial court, and more importantly, their contention lacks merit because it relies on an entirely different liability theory. Plaintiffs' asserted class certification was appropriate because the caseload Tristar assigned all claims examiners generally required them to work overtime to manage their cases and Tristar intentionally misclassified all claims examiners as exempt administrative employees to avoid paying overtime compensation. Plaintiffs below did not base their claims on voluntarily working more than eight hours in a day under invalid alternative work schedules.
To support their contention the existence of overtime work by the potential class members is a damages issue that may not prevent class certification, Plaintiffs cite Bell . According to Plaintiffs, "[t]he Bell Court held that the purported variances in overtime was [an] improper legal criteri[on] for denial of class certification, even where it was undisputed that some of the class members did not work overtime."
In affirming the order, the Bell court concluded the existence of this marginal number of class members who did not claim injury did not
Bell does not apply here because it did not address the issue on which the trial court relied in denying Plaintiffs' class certification motion. As explained above, the court did not deny Plaintiffs' motion because they failed to show the number of overtime hours each potential class member worked; rather, the court concluded class treatment was not appropriate because Plaintiffs failed to show they could prove through common evidence that Tristar generally required all claims examiners to work overtime. Unlike here, it was undisputed in Bell that the caseload Farmers assigned to its claim representatives generally required them to work overtime. ( Bell , supra , 115 Cal.App.4th at pp. 722-725,
Moreover, the trial court in Bell certified the class and denied the motion for class decertification based on its conclusion class treatment was appropriate. The governing standard of review required the Bell court to affirm that ruling unless there was a lack of substantial evidence to support it or a manifest abuse of discretion. ( Bell , supra , 115 Cal.App.4th at pp. 741-742,
Plaintiffs also cite Williams v. Superior Court (2013)
Finally, Plaintiffs contend the trial court was required to grant their motion because it found their theory of liability could be decided on a classwide basis. As explained above, in deciding whether common issues predominate, the trial court must consider whether plaintiff's theory of liability is likely
Plaintiffs' purported theory of liability is not a theory of liability at all. As explained above, exemptions from the statutory overtime requirements are affirmative defenses on which the employer bears the burden of proof. A plaintiff must first establish an underlying basis for liability before affirmative defenses are considered. Here, the underlying basis for liability is Tristar's alleged failure to pay class members for their overtime work. Only after Plaintiffs make that showing may the fact finder reach the question whether Tristar misclassified the class members as exempt. Plaintiffs' theory of liability therefore is actually a theory that Tristar's defense fails, and the suitability of that defense to class treatment did not require the court to grant Plaintiffs' motion without a showing there also was a liability theory that was suitable to class treatment.
Based on our conclusion the trial court did not err in denying Plaintiffs' motion because Plaintiffs failed to establish that common issues predominated on their overtime claims, we need not address the court's additional finding that class treatment was inappropriate because Plaintiffs failed to show their claims were typical of the proposed class. We simply note much of the foregoing analysis is applicable to the court's typicality finding, and as explained above, typicality examines whether all class members suffered the same or similar injuries, whether the class representatives' claims are based on conduct that is not unique to them, and whether all class members have been injured by the same course of conduct. ( Martinez , supra ,
2. The UCL Claim
Plaintiffs contend the trial court also erred by applying an improper legal criterion in denying their class certification motion on the UCL claim. According to Plaintiffs, their purported failure to present evidence showing the amount of overtime worked by each putative class members was an improper basis for denying their motion because "proof of injury as to the individual class members can never preclude [class] certification of a UCL claim as a matter of settled California law." Plaintiffs again misconstrue the governing law and the trial court's ruling.
To advance that purpose, the UCL previously " 'authorized any person acting for the general public to sue for relief from unfair competition.' " ( In re Tobacco II Cases (2009)
In 2004, the electorate changed this broad standing rule under the UCL by approving Proposition 64, which "amended the UCL to provide that a private action for relief may be maintained only if the person bringing the action 'has suffered injury in fact and has lost money or property as a result of the unfair competition.' " ( Steroid Cases , supra ,
"Questions arose as to the effect of the Proposition 64 amendments on UCL class actions, particularly whether each class member must now establish that he or she suffered injury in fact and lost money as a result of the unfair competition. The California Supreme Court answered this question in Tobacco II , concluding that the standing provision added by Proposition 64 'was not intended to have any effect at all on unnamed members of UCL class actions.' [Citation.] Therefore, while a named plaintiff in a UCL class action now must show that he or she suffered injury in fact and lost money or
Tobacco II , the Steroid Cases , and the other cases Plaintiffs cite address standing requirements to bring an unfair competition claim under the UCL, including a class action claim. ( Tobacco II , supra ,
Indeed, subsequent appellate decisions have concluded Tobacco II is "irrelevant" to a class certification motion "because the issue of 'standing' simply is not the same thing as the issue of 'commonality.' Standing, generally speaking, is a matter addressed to the trial court's jurisdiction because a plaintiff who lacks standing cannot state a valid cause of action. [Citations.] Commonality, on the other hand, and in the context of the class certification issue, is a matter addressed to the practicalities and utilities of litigating a class action in the trial court. We see no language in Tobacco II that suggests to us the Supreme Court intended our state's trial courts to dispatch with an examination of commonality when addressing a motion for class certification. On the contrary, the Supreme Court reiterated the requirements for maintenance of a class action, including (1) an ascertainable class and (2) a ' "community of interests" ' shared by the class members." ( Cohen v. DIRECTV, Inc. (2009)
As explained above, and contrary to Plaintiffs' contention, the trial court did not deny Plaintiffs' class certification motion based on their failure to
III
DISPOSITION
The order is affirmed. Tristar shall recover its costs on appeal.
WE CONCUR:
BEDSWORTH, ACTING P.J.
THOMPSON, J.
Notes
In later briefing, Plaintiffs modified the class definition to include "all individuals who are or previously were employed by [Tristar] as Claims Examiner II and Claims Examiner III in [Tristar's] Workers' Compensation Division between February 25, 2010 and December 31, 2014 who did not work as Return to Work Coordinators, Backup Supervisors, or Hearing Representatives." The modifications to the class definition have no bearing on the trial court's ruling or this appeal.
Aside from the UCL claim, we consider all of Plaintiffs' claims collectively because Plaintiffs conceded in the trial court all their claims were derivative of their overtime claim, and, with the exception of the UCL claim, they do not treat any of the claims separately on appeal.
Plaintiffs' choice of the word "variances" in this statement demonstrates their misunderstanding of the court's ruling and the governing law. Simple variance in the amount of overtime class members worked, including some class members working no overtime, would be a damages issue that would not justify denying class certification. The court, however, did not simply find a variance in the amount of overtime worked. Rather, the court found Plaintiffs could not establish through evidence common to all class members Tristar had a generally applicable policy or practice that required claims examiners to work overtime. As explained above, such a generally applicable policy is what makes class treatment appropriate in wage and hour cases. (See Brinker, supra,