Opinion
Eva Vidal Mies seeks to bring a class action against her former employer, Sephora U.S.A., Inc. (Sephora), on behalf of employees who, like her, worked as “Specialists” in Sephora’s California retail stores. Mies claims Sephora misclassified Specialists as exempt from certain provisions of California labor law and, as a result, failed to pay overtime wages and failed to compensate them for missed meal periods. However, after crediting evidence that all Specialists do not engage in the same tasks to the same extent, the trial court denied class certification, concluding individualized issues, not common ones, would predominate the determination of liability. We conclude the trial court used proper legal criteria in assessing class certification and substantial evidence supports the trial court’s findings. We therefore also conclude the court did not abuse its discretion in denying class certification.
Factual and Procedural Background
Sephora operates 47 retail cosmetics stores in California. Each store has a “Store Director,” who runs the store, and one to four Specialists. Specialists manage “Cast Members” (sales associates) and “Leads” (lead consultants, floor leads, or sales leads who take on greater responsibilities and who typically seek promotion to Specialist), and may manage between 10 and 45 subordinates at any given time.
In her February 27, 2012, complaint, Mies alleges Sephora has misclassified Specialists as exempt and paid them lower wages than required by law. She further alleges Sephora failed to pay overtime wages in violation of Labor Code section 1194, and engaged in unfair competition in violation of Business
Mies seeks to certify a class of the 99 California-based Specialists employed between February 22, 2006, and the present. 1 The common issue, according to Mies, is “whether Sephora improperly classified the Specialists as exempt executives or administrators.” She claims the proper classification of these Specialists can be determined by common proof, without a highly individualized inquiry for each employee.
In support of her class certification motion, Mies presented evidence she maintains shows the Specialist position is standardized, and thus amenable to class treatment. 2 This included the fact there has been a single job description for Specialists since 1999. This description includes such activities as “directly manage a zone in terms of sales, operational and human resources functions,” “ensure . . . adherence to” corporate culture and policies, model client service standards, recruitment, supervision, and discipline of employees, ensure store presentations are appropriate, conduct inventories, “learn to perform cashier duties,” move about the selling floor and offices, and “[ajssume Store Director’s responsibilities when assigned as Director-in Charge.”
The job description also refers to companywide policies covering innumerable tasks to be performed in Sephora stores, whether completed by a Specialist or some other employee. Additionally, some tasks are assigned from above “store level” via e-mail or an electronic planning system, and Specialists review these communications and assure task completion. There is also a training program for all new Specialists, to ensure consistency in
In making her case for class certification, Mies also pointed to a 2010 in-house survey of how Sephora leadership (Store Directors, Specialists and Leads) spent nonselling time, which relied upon a single list of activities to analyze leadership time at all stores. The survey found leadership employees, collectively, generally spent the same percentage of time tackling nonselling tasks regardless of their store’s sales volume.
Mies also asserted the trial court could look to statistical evidence to determine liability on a classwide basis. Mies did not propose or justify any particular statistical method of her own, however, and submitted no expert testimony. In her opening memorandum in the trial court, Mies simply stated “[g]iven we know the universe of tasks Sephora believes a Specialist can perform (based on its [2010] survey),” Mies “will present evidence through a statistical sample of the class, which will determine how much time Specialists spend on specified tasks” and “therefore establish, on a collective basis, whether [they] spend more than 50% of their time” doing nonexempt work. In her reply memorandum, Mies clarified she was not offering a statistical method of her own, but relying on Sephora’s expert’s deposition testimony, which she believed was evidence statistical sampling would give proof of classwide liability. She cited Sephora’s expert’s testimony about the usefulness of time and motion studies (essentially, employee monitoring) to ascertain what time a given employee spends on certain tasks. Moreover, the expert testified he had used such a study in connection with a class certification motion in a different case involving the question of employee classification. According to e-mails between Sephora and its expert, Sephora had considered conducting an observation study of 10 Specialists for its own purposes in this case, but apparently decided it was not then worth the cost.
Sephora opposed class certification with evidence the duties of Specialists varied. A Sephora district manager, Kelly Guerriero, declared company policies do not dictate everything a Specialist does, and Specialists “constantly have to use good judgment” to resolve situations with clients and with the employees they manage. She further stated the work of a Specialist varies with the size of the store, the number of Specialists employed at the store, the skills and experience of the Specialists, and the management style of the Store Director. Additionally, some stores have operation specialists and HR (human resources) specialists. In stores without such employees, Specialists also perform these functions. In stores with operation and HR specialists, regular Specialists “spend more time coaching, training and developing their subordinates” on the sales floor.
Both Mies and Sephora submitted declarations from Specialists who estimated the time they spent performing various tasks. On the whole, Mies’s declarants testified to spending most of their time selling to clients on the sales floor (activity Mies contends is not exempt from the labor laws). One Specialist stated she was selling 90 percent of her time and taking directions from the Store Director the remaining 10 percent and never “really engage[d] in any training” of employees. Another said she spent 75 percent of her time on the sales floor, while another said she spent 95 percent of her day in direct contact with clients.
Sephora’s declarants related different experiences. For example, one said she spent 80 to 90 percent of her time on management tasks, including working as director in charge (in the Store Director’s absence), preparing the store schedule, hiring, and human resources development, and only 10 to 20 percent of her time selling, an activity which was to be avoided. Another Specialist estimated spending 60 to 70 percent of her time on management and back office tasks, and 30 to 40 percent of her time on sales tasks. And another testified to spending 70 to 80 percent of her time on back office management and 20 to 30 percent on sales as a “Director in Charge” and coaching/training staff. Deposition testimony of a Sephora designee most knowledgeable about the duties of Specialists stated “in an ideal world” Specialists “would be out there [selling] all the time” but “it’s not realistic” because of the job’s “operational and people development . . . responsibilities.” The witness continued, the percentage of time selling “would range by store size and volume etc. . . . and so one expectation wouldn’t even be realistic.”
According to Sephora’s district manager, it was common for Specialists to take charge of a store because, given the long retail hours, Store Directors were not always present. Sephora’s Specialist declarants, likewise, reported spending differing amounts of time as Director in Charge (for example, between seven and 15 hours per week, or 10 and 16 hours per week, or 15 and 20 hours per week, or up to 25 hours during holidays). Many noted they exercised their independent judgment while Director in Charge, and also while eliminating applicants from hiring pools or recommending them, deciding what employee conduct to discipline, when to coach staff, or whether to bend rules for customers (e.g., regarding sales promotions).
In ruling on the class certification motion, the trial court focused on whether common or individual issues would predominate. It found there would be some common issues, such as “how to define nonexempt v. exempt tasks, as well as the law that applies to those found to be working over 50% at nonexempt tasks.” It also acknowledged the existence of companywide policies applicable to Specialists (and numerous other categories of Sephora employees) suggesting how Specialists might spend portions of their time, at least in theory. These policies governed, for example, how to work the selling floor (when to greet customers, what to wear, and how to price and arrange many of the products).
The court concluded, however, the “central issue for trial” would be
“how the Specialists spend their time,
not whether a given task” is exempt. It further concluded the generally applicable company policies, alone (which applied to Specialists and other employees alike), could not “at least in this case” provide a common basis for determining whether a given Specialist was exempt, because the Specialists’ declarations — the trial court credited declarations submitted by Mies and Sephora equally — showed Specialists “handled their time very differently” in performing a wide variety of tasks.
3
The declarations equally supported the propositions some Specialists spent more, and some Specialists spent less, than 50 percent of their time doing exempt work,
4
and it was not clear to the trial court how it could determine, on a classwide basis, how the Specialists spent their time and whether they were collectively nonexempt or exempt. It found Mies’s promise of statistical evidence to prove classwide liability insufficient, as she did not explain her proposal or how it could manage class issues. The court also believed use of statistical evidence to prove liability would violate Sephora’s right to due
Discussion
Relevant Labor Law
“California’s Labor Code generally requires overtime pay for employees working more than 40 hours in a given workweek. (Lab. Code, § 510, subd. (a).)”
(Dailey v. Sears, Roebuck & Co.
(2013)
IWC wage order No. 7-2001 governs mercantile 5 employees, such as Specialists. (Cal. Code Regs., tit. 8, § 11070.) It implements the overtime and break requirements of the Labor Code for “nonexempt” employees and defines those “exempt” employees who are to be treated differently. Exempt individuals are “persons employed in administrative, executive, or professional capacities.” (Cal. Code Regs., tit. 8, § 11070, subd. 1(A).)
Sephora maintains Specialists are exempt because they are employed in an executive or administrative capacity. Under IWC wage order No. 7-2001, a person “employed in an executive capacity means any employee” earning a certain minimum amount “(a) Whose duties and responsibilities involve the management of the enterprise in which he/she is employed or of a customarily recognized department or subdivision thereof; and [(J[] (b) Who customarily and regularly directs the work of two or more other employees therein; and [¶] (c) Who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight; and [|] (d) Who customarily and regularly exercises discretion and independent judgment; and [¶] (e) Who is primarily engaged[
6
] in duties which meet the test of the exemption. The activities
Similarly, a “person employed in an administrative capacity means any employee” earning a certain minimum amount whose duties involve “office or non-manual work directly related to management policies or general business operations of his/her employer or their employer’s customer[].” (Cal. Code Regs., tit. 8, § 11070, subd. 1(A)(2)(a).) The employee also must be one “(b) Who customarily and regularly exercises discretion and independent judgment; and [¶] (c) Who regularly and directly assists a proprietor, or an employee employed in a bona fide executive or administrative capacity (as such terms are defined for purposes of this section); or [][] (d) Who performs
Under both definitions, whether an employee is exempt depends not only upon factors related to the job, itself (e.g., “employer’s realistic expectations” and “realistic requirements of the job”), but also “first and foremost” upon what an employee actually does on the job (e.g., “work actually performed”). (See
Duran v. U.S. Bank National Assn.
(2014)
“A class action may be maintained if there is ‘an ascertainable class and a well-defined community of interest among the class members.’ [Citations.] As part of the community of interest requirement, the party seeking certification must show that issues of law or fact common to the class predominate.”
(Duran, supra,
Because actions asserting misclassification will typically require an inquiry into a particular job type and into the work actually done by individuals within that job category, these actions often involve both common and individualized issues. The inquiry into a job’s requirements and an employer’s expectations likely involves common issues.
(Duran, supra,
The inquiry into what work is actually done, however, can be heavily individualized. (See
Duran, supra,
When there are both common and individual issues, the question for the trial court is which sort of issues predominate.
(Duran, supra,
59 Cal.4th at
One distinction the Supreme Court has drawn with respect to an employer’s defense of exempt classification is whether the defense merely raises questions about individuals’ recovery (“questions about the calculation of
damages
generally do not defeat certification”) or whether the defense hinges on the employer’s liability and the determination of “factual questions specific to individual claimants,” which can present a “greater challenge to manageability.”
(Duran, supra,
Yet “individual issues will not
necessarily
overwhelm common issues when a case involves exemptions premised on how employees spend the workday.”
(Duran, supra,
Whether to grant or deny class certification is a matter within a trial court’s discretion.
(Dunbar v. Albertson’s, Inc.
(2006)
Given the Conflicting Evidence, the Trial Court Did Not Abuse Its Discretion in Denying Certification
“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. . . .” (Dailey,
supra,
As the Supreme Court has noted, this deferential aspect of the standard of review means that when an employee has sought to certify a “misclassification” class of fellow employees with the same job title, the Courts of Appeal have “routinely upheld” trial court orders denying certification, while also upholding other trial court orders granting certification.
(Duran, supra,
The Court of Appeal in
Dailey, supra,
214 Cal.App.4th at pages 991-992, applied the same deferential standard of review to affirm denial of certification. It saw “nothing inappropriate in the trial court’s examination of the parties’ substantially conflicting evidence of Sears’s business policies and practices and the impact those policies and practices had on the proposed
Given the deference owed to the trial court
(Sav-On, supra,
The trial court reasonably credited the declarations of Specialists from both sides, which, read together, suggest Specialists’ exempt duties vary significantly from store to store and Specialist to Specialist, despite there being an understanding as to what tasks Specialists are likely to perform and despite Sephora having companywide operational policies.
(Dailey, supra,
Given the evidence before it, the trial court here could reasonably view the likely disputes at trial as being less about how to classify certain tasks (such as selling) and the impact of company policies, and more about
Mies claims the trial court did not consider her theory that, to be exempt, a Specialist must “customarily and regularly exercise[] discretion and independent judgment.” (See Cal. Code Regs., tit. 8, § 11070, subd. 1(A)(1) — (2).) She then faults the court for not evaluating whether every Specialist uniformly could not, and did not, perform exempt work requiring such independence, because Sephora’s detailed policies governed all aspects of store operations and curtailed all Specialists’ independence.
However, the trial court did recognize there would likely be common questions about whether a given task involved sufficient discretion or independent judgment to be exempt. Nevertheless, it viewed “how Specialists spend their time” as being the more “central” issue for trial. Resolution of this issue, the court concluded, would likely turn less on Sephora’s general operational policies, and more on evidence, as in the Specialists’ declarations, pertaining to the nature of each individual’s actual work. The court also acknowledged the policies’ detailed nature, but reasonably found such operational minutia offered little insight into classwide liability, especially in light of the declarations showing Specialists handled their time very differently, varying as to the nature and level of the tasks and the time spent on those tasks. In the end, the trial court weighed the foreseeable common and individual issues, and reasonably concluded the Specialists’ proper classification would likely hinge on individualized proof. This sort of balancing analysis was appropriate. (See
Sav-On, supra,
Moreover, the mere fact Sephora has common policies applicable to all employees, including Specialists, cannot, alone, compel class certification.
Mies would have us, from Sephora’s detailed policies, draw inferences about what every Specialist
actually
does and how much independence every Specialist
actually
exercises, while essentially ignoring the declarations from both sides, which the trial court credited on those very subjects — declarations that indicate a lack of classwide uniformity.
14
Mies’s request, then, is one to reweigh the evidence on appeal, something we cannot do.
(Dailey, supra,
Mies also claims the trial court erroneously reviewed the evidence for success on the merits, and not merely for commonality or individuality of class members’ issues. (See
Jaimez v. Daiohs USA, Inc.
(2010)
Finally, the trial court did not err in rejecting Mies’s proposal to use statistical evidence to prove liability with respect to absent class members. Mies’s proposal was undeveloped and unsubstantiated, and the court was not required to accept her unjustified assurances regarding what she could prove, especially given the declaration of Sephora’s expert stating the use of sampling to determine liability with respect to absent class members would not work.
(Duran, supra,
The order denying class certification is affirmed.
Margulies, Acting P. J., and Dondero, J., concurred.
A petition for a rehearing was denied March 18, 2015, and appellant’s petition for review by the Supreme Court was denied June 10, 2015, S225600.
Notes
Mies also sought to certify a class of all Sephora employees receiving accrued PTO in lieu of actual wages. The trial court did not certify this class, and Mies has not challenged that ruling on appeal.
Mies also submitted evidence she claims establishes the Specialists do not perform certain classic “exempt” functions (i.e., do not choose which products Sephora will sell and do not set companywide policies) and do perform, to some extent, classic “nonexempt” functions (such as selling product pursuant to detailed policies set from above). This evidence largely goes to the merits of her claims, not to the crucial question of whether the status of Specialists should be adjudicated on a classwide basis, except to the extent the evidence also relates to whether employees performed the same tasks or spent the same or different amounts of time on various tasks. (See
Brinker Restaurant Corp. v. Superior Court
(2012)
The trial court found Specialists engaged in tasks such as “selling, arranging products, tending the cash register, as well as assuming store director responsibilities from time to time, interviewing and making at least preliminary decisions as to hiring, contributing to performance evaluations and other tasks which are arguably exempt work.”
The trial court viewed the evidence as to how much time Specialists spent on the selling floor, as opposed to in the back office, as “highly varied.” Reviewing the declarations of Specialists from both parties, it concluded they presented “widely divergent views of how Specialists spend their time.”
“ ‘Mercantile Industry’ means any industry, business, or establishment operated for the purpose of purchasing, selling, or distributing goods or commodities at wholesale or retail; or for the purpose of renting goods or commodities.” (Cal. Code Regs., tit. 8, § 11070, subd. 2(H).)
“ ‘Primarily’ as used in Section 1, Applicability, means more than one-half the employee’s work time.” (Cal. Code Regs., tit. 8, § 11070, subd. 2(K).) The Labor Code section authorizing
Title 29 United States Code section 201 et seq.
“Generally, ‘management’ includes, but is not limited to, activities such as interviewing, selecting, and training of employees; setting and adjusting their rates of pay and hours of work; directing the work of employees; maintaining production or sales records for use in supervision or control; appraising employees’ productivity and efficiency for the purpose of recommending promotions or other changes in status; handling employee complaints and grievances; disciplining employees; planning the work; determining the techniques to be used; apportioning the work among the employees; determining the type of materials, supplies, machinery, equipment or tools to be used or merchandise to be bought, stocked and sold; controlling the flow and distribution of materials or merchandise and supplies; providing for the safety and security of the employees or the property; planning and controlling the budget; and monitoring or implementing legal compliance measures.” (29 C.F.R. § 541.102 (2014).)
These regulations discuss the importance of managing two or more subordinates (29 C.F.R. § 541.104 (2014)); what it means for an employee’s hiring or firing recommendation to be given particular weight (29 C.F.R. § 541.105 (2014) [consider whether part of employee’s job duties, frequency given and relied upon, can have weight “even if a higher level manager’s recommendation has more importance and even if the employee does not have authority to make the ultimate decision as to the employee’s change in status”]); and the impact of performing exempt and nonexempt tasks concurrently (29 C.F.R. § 541.106 (2014) [“An assistant manager can supervise employees and serve customers at the same time without losing the exemption” yet “a relief supervisor or working supervisor whose primary duty is performing nonexempt work on the production line in a manufacturing plant does not become exempt merely because the nonexempt production line employee occasionally has some responsibility for directing the work of other nonexempt production line employees . . . .”]).
To be work directly related to management or general business operations, “an employee must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example, from working on a manufacturing production line or selling a product in a retail or service establishment.” (29 C.F.R. § 541.201(a) (2014).) “The exercise of discretion and independent judgment implies that the employee has authority to make an independent choice, free from immediate direction or supervision. However, employees can exercise discretion and independent judgment even if their decisions or recommendations are reviewed at a higher level.” (29 C.F.R. § 541.202(c) (2014) [discussing types of activity that involve independent judgment].)
Thus, the fact some trial courts certify classes based in part on an employer’s common policies and procedures, or whether some appellate courts affirm these certification orders, does not tell us whether the trial court in this case abused its discretion in declining to certify a class.
This is unlike
Sav-On,
where the trial court
did not credit
evidence time spent on tasks varied significantly from employee to employee, such that, in spite of any variations, the dispute was primarily over how to characterize the tasks the employees performed.
(Sav-On, supra,
That the variation is relevant to the liability question differentiates this case from
Bradley v. Networkers Internat., LLC
(2012)
We also note Specialists, according to their job description, are to “[e]nsure compliance” and “motivate” compliance with company policies, which is a very different thing than simply complying with them. Mies misrepresents the job description, stating on page eight of her opening brief and on page five of her reply brief, only that the description mandates personal compliance with various policies. That Specialists are, on paper, responsible for overseeing policies suggests the job has more room for independence and nuance than Mies suggests.
This is not a case like
Williams
v.
Superior Court
(2013)
While
Jaimez
reversed a trial court’s denial of certification, the misclassification question in that case was not complicated by evidence employees in the prospective class carried out varied duties that would affect the classification analysis on an employee by employee basis — the only “individualized” issue was whether an employee suffered more or less damages.
(Jaimez, supra,
Thus, if Mies later wishes to argue in an individual action that Sephora policies are viable evidence of the nature of her work as a Specialist, she may still do so.
On November 19, 2014, after the case was submitted following argument, Mies filed a letter asking this court to consider the recent (and not yet final) decision of
Martinez
v.
Joe’s Crab Shack Holdings
(2014)
In Martinez, 182 managers (including general managers and several types of assistant managers) at 13 California Joe’s Crab Shack eateries sought class treatment in an overtime case, which, like this one, appears to hinge on the employee classification question. (Martinez, supra, 231 Cal.App.4th at pp. 369-371, fn. 4.) According to the Martinez plaintiffs, “[w]hat was common to [the manager] plaintiffs, in addition to . . . standard policies implemented . . . at each of their restaurants, was their assertions their tasks did not change once they became managers; they performed a utility function and routinely filled in for hourly workers in performing nonexempt tasks; and they worked far in excess of 40 hours per week without being paid overtime wages.” (Id. at p. 376.)
Martinez
did not view all the managers equally. The appellate court distinguished between the assistant managers, where “many of the tasks [they] performed ... are identical to those performed by nonexempt employees”
(Martinez, supra,
The record in the instant case differs. There is substantial evidence Specialists do not share the same level of uniformity in work as the subordinate managers in
Martinez.
Rather, the evidence, as permissibly credited by the trial court, shows Specialists, depending on their individual situation, engaged in various amounts of higher level managerial tasks, tasks like those done by the general managers in Martinez. Moreover, the key question in this case need not be viewed as “whether a typically nonexempt task becomes exempt” when performed by a Specialist, but whether individual Specialists engaged in management more than half of their time.
(Martinez, supra,