Lead Opinion
Opinion
The question presented is whether the trial court abused its discretion in certifying as a class action this suit for recovery of unpaid overtime compensation. We conclude it did not and accordingly reverse the judgment of the Court of Appeal.
Background
Plaintiffs Robert Rocher and Connie Dahlin, on behalf of themselves and others similarly situated, brought this action against defendant Sav-on Drug Stores, Inc., a drugstore chain. The operative second amended complaint alleges violation of the overtime statutes (Lab. Code, § 1194 et seq.) and the unfair competition law (Bus. & Prof. Code, § 17200 et seq.), as well as conversion, for which plaintiffs seek damages and injunctive and declaratory relief. Underlying each cause of action are factual allegations that defendant misclassified as exempt from the overtime laws and failed to pay overtime compensation owed to plaintiffs and similarly situated employees who worked during the relevant period at defendant’s retail stores in California.
The Legislature has commanded that “[a]ny work in excess of eight hours in one workday and any work in excess of 40 hours in any one workweek . . . shall be compensated at the rate of no less than one and one-half times the regular rate of pay for an employee.” (Lab. Code, § 510, subd. (a).) The Industrial Welfare Commission (IWC), however, is statutorily authorized to “establish exemptions from the requirement that an overtime rate of compensation be paid ... for executive, administrative, and professional employees, provided [inter alia] that the employee is primarily engaged in duties that meet the test of the exemption, [and] customarily and regularly exercises discretion and independent judgment in performing those duties . . . .” (Id., § 515, subd. (a).)
During the period covered by the complaint, defendant compensated plaintiffs as salaried managers, exempt from the overtime wage laws. Wage orders relating to the mercantile industry promulgated by the IWC and codified at California Code of Regulations, title 8, section 11070 provided during that same period an exemption from the overtime requirements for “persons employed in administrative, executive, or professional capacities.”
Our present inquiry concerns the trial court’s granting of plaintiffs’ motion for class certification. In support of their motion, plaintiffs argued that class members (i.e., defendant’s operating managers, hereafter sometimes OM’s, and assistant managers, hereafter sometimes AM’s) had, on the basis of their title and job descriptions and without reference to their actual work, uniformly been misclassified by defendant as exempt employees. In fact, defendant’s OM’s and AM’s were norananagerial, nonexempt employees under relevant law. Moreover, defendant’s store operations were “standardized.” Accordingly, the duties and responsibilities of defendant’s OM’s and AM’s were similar in critical respects from region to region, area to area, and store to store. Class members generally performed nonexempt work in excess of 50 percent of the time in their workday, and their workday routinely included work in excess of eight hours per day and/or 40 hours per week. Notwithstanding these facts, plaintiffs contended, class members were not paid statutorily mandated overtime compensation.
In opposing certification, defendant argued that whether any individual member of the class is exempt or nonexempt from the overtime requirements depends on which tasks that person actually performed and the amount of time he or she actually spent on which tasks. The actual activities performed by its OM’s and AM’s, and the amount of time spent by each OM and AM on exempt activities, defendant contended, varied significantly from store to store and individual to individual, based on multiple factors, including store location and size, physical layout, sales volume, hours of operation, management structure and style, experience level of managers, and number of hourly employees requiring supervision. For this reason, defendant argued, no meaningful generalizations about the employment circumstances of its managers could be made.
The trial court granted the certification motion, appointing plaintiffs to represent a class defined as “all current and former salaried [OM’s] and current and former salaried [AM’s] employed by defendant... in California
Defendant petitioned for writ relief. The Court of Appeal issued a writ of mandate commanding the trial court to vacate its order granting class certification and to enter a new and different order denying class certification. We granted plaintiffs’ petition for review.
Discussion
We quite recently reviewed the established standards for class certification generally. (Lockheed Martin Corp. v. Superior Court (2003)
The certification question is “essentially a procedural one that does not ask whether an action is legally or factually meritorious.” (Linder v. Thrifty Oil Co. (2000)
We review the trial court’s ruling for 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 denying certification. . . . [Accordingly,] a trial court ruling supported by
Defendant does not contend the trial court erred in concluding the named plaintiffs have claims typical of the class and are adequate representatives thereof. The issue in dispute is whether the trial court abused its discretion in concluding that common issues predominate. For the following reasons, we conclude it did not.
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 (Lockheed, supra, 29 Cal.4th at pp. 1106-1107; Linder, supra, 23 Cal.4th at pp. 439-440), in determining whether there is substantial evidence to support a trial court’s certification order, we consider whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment. (See Lockheed, supra, at p. 1108; Anthony v. General Motors Corp. (1973)
As noted, plaintiffs allege that defendant during the class period classified its AM’s and OM’s as exempt from the overtime laws and failed to pay them overtime compensation even though, pursuant to defendant’s uniform company policies and practices, they consistently worked overtime hours and, at least partly as a consequence of operational standardization imposed by defendant among its various stores, in fact spent insufficient time on exempt tasks to justify their being so classified. In moving for class certification, plaintiffs argued to the trial court that, if permitted to proceed on this theory, they could with common proof demonstrate, inter alia, that: (1) defendant required all class members to work more than 40 hours per week; (2) defendant deemed each class member exempt based on his or her job description rather than on any consideration of actual work performed; (3) defendant paid no overtime wages to any class member; (4) defendant categorically reclassified all of its AM’s from exempt to nonexempt in December 1999, without changing their job descriptions or their duties; (5) defendant kept no records of class members’ actual work activities; (6) defendant conducted no studies of how class members spent their work time; (7) defendant did not train class members on the difference between exempt
In opposing certification, defendant argued that determining its liability, if any, for unpaid overtime compensation necessarily requires making individual computations of how much time each class member actually spent working on specific tasks. Accordingly, defendant argued, plaintiffs’ evidence of policy uniformity and operational standardization is irrelevant and cannot amount to substantial evidence that common issues of law and fact will predominate in the action. In its briefing here, defendant emphasizes that any “[ejvidence, to be ‘substantial’ must be ‘of ponderable legal significance . . . reasonable in nature, credible, and of solid value’ ” (People v. Johnson (1980)
Both parties are correct about the general principles guiding our inquiry. Indeed, “we must consider whether the record contains substantial evidence to support the trial court’s predominance finding, as a certification ruling not supported by substantial evidence cannot stand.” (Lockheed, supra,
In moving for certification, plaintiffs presented, inter alia, defendant’s “Assistant Manager” and “Operating Manager” job descriptions (pursuant to which defendant treated all AM’s and OM’s as exempt from the overtime laws for some or all of the class period),
Defendant presented the declaration of Brad Adams, a human resources manager for defendant’s Southern California Northern Area Drug Division, describing defendant’s stores, policies, and procedures, and declarations from 51 current employees of defendant, each an AM or OM, describing their work.
Presuming in favor of the certification order, as we must, the existence of every fact the trial court could reasonably deduce from the record (People v. Johnson, supra,
The record contains substantial, if disputed, evidence that deliberate misclassification was defendant’s policy and practice. The record also contains substantial evidence that, owing in part to operational standardization and perhaps contrary to what defendant expected, classification based on job descriptions alone resulted in widespread de facto misclassification.
The record contains substantial evidence suggesting that the predominant issue in dispute is how the various tasks in which AM’s and OM’s actually engaged should be classified—as exempt or nonexempt. We previously have recognized in an overtime exemption case that task classification is a mixed question of law and fact appropriate for a court to address separately from calculating the amount of time specific employees actually spend on specific tasks. (Ramirez v. Yosemite Water, Inc. (1999)
On the one hand, each of the 51 declarations by the AM’s and OM’s describing their actual work (including specific tasks) that defendant submitted in opposing certification states that the declarant spends a majority of his or her time on managerial tasks. Plaintiffs characterize most of that same work as nonmanagerial.
Defendant, of course, does not concede the viability of plaintiffs’ misclassification theories. Defendant denies it engaged in deliberate misclassification, claiming it “treated its OM’s and AM’s as exempt based on its reasonable expectation that managers in those positions would be performing primarily managerial duties.” And defendant challenges plaintiffs’ allegations respecting the effect of standardization in defendant’s operations, pointing out, as the Court of Appeal observed, that its responses to plaintiffs’ interrogatories state that the actual tasks performed by class members and the amount of time spent on those tasks vary significantly from manager to manager and cannot be adjudicated on a class-wide basis. But the trial court was within its discretion to credit plaintiffs’ evidence on these points over defendant’s, and we have no authority to substitute our own judgment for the trial court’s respecting this or any other conflict in the evidence. (Walker v. Superior Court, supra,
The trial court was not deciding—nor are we—the merits of plaintiffs’ case. We previously have recognized, in the certification context, that common issues may be present when a defendant’s tortious acts, as here, “allegedly are the same with regard to each plaintiff.” (Lockheed, supra,
The trial court also specified the evidence it was relying upon in certifying this action, referencing “all the moving papers,” including the parties’ statements respecting common issues, plaintiffs’ multiple exhibits in support of the motion, and “the testimony of one Frank Paul, last name is D-E-G-AE-T-A-N-O. He’s . . . defendant’s corporate representative, and the person most knowledgeable. And also the defendant’s answers to interrogatories that have been involved.” The relevant minute order states that “[t]he motion for class-certification is granted based upon the grounds recited into the record by the court.” And the trial court’s signed order expressly notes the order is based on “all admissible evidence.”
Finally, the trial court applied the proper legal criterion for deciding whether to certify a class, stating that plaintiffs had established “by a preponderance of the evidence that the class action proceeding is superior to alternate means for a fair and efficient adjudication of the litigation.” (Cf. Washington Mutual, supra,
Defendant does not dispute that class certification may be appropriate in an overtime exemption case, only whether it is appropriate in this case. Defendant suggests this class action is likely to “degenerate into a multitude of mini-trials,” but, as noted, the evidence to the contrary is substantial. As alleged, each class member’s claim to unpaid overtime depends on whether he or she worked for defendant during the relevant period in a position that was misclassified either deliberately (on a class basis) or circumstantially (again, as a consequence of defendant’s class-wide policies and practices). That calculation of individual damages may at some point be required does not foreclose the possibility of taking common evidence on the misclassification questions. (Collins v. Rocha, supra,
Defendant sweepingly asserts, without support, that the portion of plaintiffs’ evidence that focused on defendant’s class-wide policies and practices, rather than on “whether each class member is meeting the employer’s reasonable expectations,” is irrelevant to the predominance issue. But defendant does not suggest any per se bar exists to certification based partly on pattern and practice evidence or similar evidence of a defendant’s class-wide behavior. California courts and others have in a wide variety of contexts considered pattern and practice evidence, statistical evidence, sampling evidence, expert testimony, and other indicators of a defendant’s centralized practices in order to evaluate whether common behavior towards similarly situated plaintiffs makes class certification appropriate.
Defendant characterizes plaintiffs’ declarations generally as conclusory and containing “boilerplate,” contrasting what it calls “Sav-on’s 52 detailed,
Defendant concedes that Mario Gardner’s declaration described his duties as an AM in a manner that might permit certification had plaintiffs marshaled more such declarations, but argues this single declaration does not support class treatment. Defendant is mistaken. Evidence of even one credible witness “is sufficient for proof of any fact.” (Evid. Code, § 411.) And “questions as to the weight and sufficiency of the evidence, the construction to be put upon it, the inferences to be drawn therefrom, the credibility of witnesses . . . and the determination of [any] conflicts and inconsistencies in their testimony are matters for the trial court to resolve.” (Thompson v. City of Long Beach (1953)
Nevertheless, defendant insists that because exempt employees are those engaged “in work which is primarily intellectual, managerial or creative, and which requires the exercise of discretion and independent judgment” (IWC Wage Order No. 7-98 (eff. Jan. 1, 1998), “the central factual issues in this dispute [are] the actual tasks performed by class members and the amount of time spent on each of those tasks.” But even if some individualized proof of such facts ultimately is required to parse class members’ claims, that such will predominate in the action does not necessarily follow.
We long ago recognized “that each class member might be required ultimately to justify an individual claim does not necessarily preclude maintenance of a class action.” (Collins v. Rocha, supra,
Nor is it a bar to certification that individual class members may ultimately need to itemize their damages. We have recognized that the need for
Accordingly, neither variation in the mix of actual work activities undertaken during the class period by individual AM’s and OM’s, nor differences in the total unpaid overtime compensation owed each class member, bar class certification as a matter of law. (Vasquez, supra, 4 Cal.3d at p. 815 [“although ultimately each class member will be required in some manner to establish his individual damages this circumstance does not preclude the maintenance of the suit as a class action”]; see Daar v. Yellow Cab Co., supra,
“It may be, of course, that the trial court will determine in subsequent proceedings that some of the matters bearing on the right to recovery require separate proof by each class member. If this should occur, the applicable rule ... is that the maintenance of the suit as a class action is not precluded so long as the issues which may be jointly tried, when compared to those requiring separate adjudication, justify the maintenance of the suit as a class action.” (Vasquez, supra, 4 Cal.3d at p. 815; see Lockheed, supra,
Defendant mistakenly suggests that our decision in Ramirez, supra,
Ramirez was an action for unpaid overtime brought by a bottled-water-route sales representative against his former employer. (Ramirez, supra, 20
Ramirez was not a class action and, to that extent, is not apposite. In Ramirez, we did not even discuss certification standards, let alone change them. Accordingly, Ramirez is no authority for constraining trial courts’ “great discretion in granting or denying certification” (Linder, supra,
While we recognized that a trial court may have to resolve significant factual discrepancies when applying the salesperson exemption in a particular case (Ramirez, supra,
Presence in a particular overtime class action of the considerations reviewed in Ramirez does not necessarily preclude class certification. Any dispute over “how the employee actually spends his or her time” (Ramirez, supra,
Defendant would have us extend Ramirez to shield employers from an action challenging a type of illegality that our decision in that case was actually designed to prevent. One of our core concerns in Ramirez was that “if hours worked on sales were determined through the employer’s job description, ... the employer could make an employee exempt from the overtime laws solely by fashioning an idealized job description that had little basis in reality.” (Ramirez, supra,
In sum, defendant’s reliance on Ramirez is misplaced. Perhaps realizing this, the Court of Appeal did not rely on that case or even cite it. But the Court of Appeal went astray in other ways. Although its summary of the evidence submitted on certification was generally accurate, the Court of Appeal erred to the extent it engaged in any reweighing of that evidence.
After reviewing defendant’s evidence respecting store variations, the Court of Appeal noted plaintiffs’ evidence of defendant’s uniform policies and standardization, plaintiffs’ declarations from AM’s and OM’s relating their experience of what defendant’s employees in those positions actually did, and the interrogatory evidence submitted both by defendant and plaintiffs also respecting actual tasks performed by class members. Thereafter, the court opined that plaintiffs’ declarations were “not determinative” and “not conclusive” because defendant’s evidence, in particular the declaration of defendant’s human resources manager Brad Adams, “showed the work of all the AM’s and OM’s is not uniform or identical.” But a reviewing court is not authorized to overturn a certification order merely because it finds the record evidence of predominance less than determinative or conclusive. The relevant question on review is whether such evidence is substantial.
The Court of Appeal also erred to the extent it stated or implied that the community of interest requirement for certification mandates that class members’ claims be uniform or identical. Plaintiffs’ theory does not depend on class members having identical claims, nor does the law of class certification require such. (Vasquez, supra, 4 Cal.3d at p. 809 [“a community of interest does not depend upon an identical recovery”].)
Finally, the Court of Appeal erroneously cited City of San Jose v. Superior Court (1974)
Courts seeking to preserve efficiency and other benefits of class actions routinely fashion methods to manage individual questions.
Considerations of sound public policy buttress our conclusion. Labor Code section 1194 confirms “a clear public policy . . . that is specifically directed at the enforcement of California’s minimum wage and overtime laws for the benefit of workers.” (Earley v. Superior Court (2000)
Many of the issues likely to be most vigorously contested in this dispute, as noted, are common ones. Absent class treatment, each individual plaintiff would present in separate, duplicative proceedings the same or essentially the same arguments and evidence, including expert testimony. The result would be a multiplicity of trials conducted at enormous expense to both the judicial system and the litigants. “It would be neither efficient nor fair to anyone, including defendants, to force multiple trials to hear the same evidence and decide the same issues.” (Boggs v. Divested Atomic Corp. (S.D.Ohio 1991)
Disposition
For the foregoing reasons, we reverse the judgment of the Court of Appeal.
George, C. J., Kennard, J., Baxter, J., Chin, J., and Moreno, 1, concurred.
Notes
The class period defined by the trial court’s certification order is April 3, 1996, through June 22, 2001, inclusive. During that period, three applicable IWC wage orders, containing substantially similar executive exemptions, successively governed. (See IWC Wage Order No. 7-98 (eff. Jan. 1, 1998); IWC Wage Order No. 7-2000 (eff. Oct. 1, 2000); and the current order, first adopted as IWC Wage Order No. 7-2001 (eff Jan. 1, 2001) and codified as amended, Cal. Code Regs., tit. 8, § 11070, subd. (1)(A)(1).)
Defendant concedes it “treated its OM’s and AM’s as exempt,” claiming it did so “based on its reasonable expectation that managers in those positio1ns would be performing primarily managerial duties.” The record also contains defendant’s interrogatory responses indicating it reclassified AM’s “from a salary form of compensation to an hourly rate of pay on December 19, 1999,” with “no change in the job description or job duties.”
Defendant’s motion for judicial notice and/or for the court to take additional evidence, and the request of amicus curiae Employers Group to take judicial notice, both are denied. (Mangini v. R. J. Reynolds Tobacco Co. (1994)
As earlier noted, defendant’s interrogatory responses indicate that during the class period it reclassified all AM’s from exempt to nonexempt with “no change in the job description or job duties.” The court could rationally have regarded the reclassification as common evidence
Plaintiffs argued in their issues statements submitted in support of the certification motion that “[w]hether a series of tasks are exempt or non-exempt for purposes of California overtime laws” is a common issue, referencing the “finite list of tasks” found in defendant’s own declarations by OM’s and AM’s. For example, plaintiffs argued, “[o]ne can prove that all class members spend a great deal of time greeting customers, selling, ringing up sales, answering the telephone, assisting customers, stocking shelves, merchandising, unloading and packing deliveries, and cleaning” without individual testimony from each class member. Plaintiffs also pointed to defendant’s interrogatory responses. There, defendant concedes that both AM’s and OM’s “may occasionally perform” certain “types of nonexempt tasks” including “checking out customers, stocking shelves, facing shelves, and cleaning the store.” Defendant also lists tasks (e.g., “supervising the unloading of trucks," “checking the quality and quantity of warehouse and vendor shipments,” “safeguarding company assets," “opening or closing the store,” “making the store safe for employees and customers,” “ordering emergency repairs”) that defendant contends were exempt, but plaintiffs contend were nonexempt.
See, e.g., International Brotherhood of Teamsters v. United States (1977)
It is to these considerations, apparently, that defendant means to refer when invoking what it calls “the Ramirez factors.”
Defendant claims it “treated its OM’s and AM’s as exempt based on its reasonable expectation that managers in those positions would be performing primarily managerial duties.” Defendant’s actual expectations (absent deliberate misclassification) presumably are indicated in its job descriptions and training materials, and as noted the record contains substantial evidence that whether these were realistic—in light of defendant’s policies and practices, and of operational standardization—may be addressed with common evidence.
Federal authority indicates that either allegation, if proved, would be sufficient to render the affected workers nonexempt and thus eligible for overtime. (Cf. Donovan v. Burger King Corp. (2d Cir. 1982)
The relevant comparison lies between the costs and benefits of adjudicating plaintiffs’ claims in a class action and the costs and benefits of proceeding by numerous separate actions—not between the complexity of a class suit that must accommodate some individualized inquiries and the absence of any remedial proceeding whatsoever. (Vasquez, supra, 4 Cal.3d at pp. 815-816; Reese v. Wal-Mart Stores, Inc. (1999)
See, e.g., Potter v. Firestone Tire & Rubber Co. (1993)
Courts on occasion have conducted separate judicial or administrative miniproceedings on individualized issues. (See, e.g., Lamb v. United Sec. Life Co. (S.D.Iowa 1972)
“ ‘If the factual circumstances underlying class members’ claims differ, or if class members disagree as to the proper theory of liability, the trial judge, through use of techniques like subclassing or [other judicial] intervention, may incorporate the class differences into the litigative process, and give all class members their due in deciding what is the proper outcome of the litigation.’ ” (Richmond v. Dart Industries, Inc., supra,
Concurrence Opinion
I agree that the trial court did not abuse its discretion in concluding that the common issues predominate and in certifying this action for recovery of unpaid overtime as a class action. Because I find the majority’s reasoning less than clear, however, I write separately to explain my own reasons for reaching this conclusion.
“Because trial courts are ideally situated to evaluate the efficiencies and practicalities of permitting group action, they are afforded great discretion in granting or denying certification.” (Linder v. Thrifty Oil Co. (2000)
To obtain class certification, a party must establish, among other things, a “well-defined community of interest among the class members.” (Richmond, supra,
“In order to determine whether common questions of [law and] fact predominate the trial court must examine the issues framed by the pleadings and the law applicable to the causes of action alleged.” (Hicks v. Kaufman & Broad Home Corp. (2001)
In their complaint, plaintiffs Robert Rocher and Connie Dahlin alleged that defendant Sav-on Drug Stores, Inc., misclassified its assistant managers (AM’s) and operating managers (OM’s) as exempt from the overtime wage laws. As a result, defendant improperly compensated plaintiffs and other similarly situated AM’s and OM’s as salaried managers and failed to pay them overtime compensation. Plaintiffs sought to certify as a class “all current and former salaried [OM’s] and current and former salaried [AM’s] employed by defendant ... in California at any time between April 3, 1996
The question of whether defendant’s AM’s and OM’s are exempt employees “is, like other questions involving the application of legal categories, a mixed question of law and fact.” (Ramirez v. Yosemite Water Co. (1999)
With this framework in mind, I now turn to the question presented on appeal; whether there is substantial evidence to support the trial court’s finding that the common issues of law and fact predominate. After carefully reviewing the evidence in the record in light of the relevant law, I conclude that there is substantial evidence to support the trial court’s finding.
As an initial matter, the issue of whether defendant intentionally misclassified its managers as exempt employees is an issue common to both the AM and OM classes. This issue is not, by itself, sufficient to support the trial court’s finding that the common issues predominate, because plaintiffs would still have to prove both liability and damages subsequent to the class judgment. (See City of San Jose v. Superior Court, supra,
A review of the record then provides the additional evidence needed to substantiate the trial court’s finding. With respect to the AM class, the declarations from individual AM’s and OM’s submitted by plaintiffs constitute substantial evidence that the common issues predominate. According to these declarants, defendant consistently required AM’s to work over 40 hours a week. A former general manager and OM further averred that, based on
The same reasoning does not, however, apply to the OM class. While plaintiffs submitted multiple declarations attesting to the work and duties of AM’s, they submitted no declarations attesting to the work and duties of OM’s. Indeed, the only evidence in the record demonstrating that all OM’s spend the same amount of time performing the same types of tasks comes from the special interrogatory responses of Rocher. But these statements are not sufficient to support the trial court’s findings as to the OM class. Rocher merely states that he—and no other OM—spent over 50 percent of his time on nonexempt activities. And although Rocher asserts that “[defendant has an expressed policy and practice of requiring [OM’s] to . . . spend a majority of their time performing nonexempt tasks,” he provides no foundation or evidentiary support for this assertion. As such, his interrogatory responses are too qualified and conclusory to support the trial court’s finding that plaintiffs will be able to establish defendant’s liability for overtime compensation to the OM’s by common evidence. (See Lockheed Martin Corp. v. Superior Court (2003)
Nonetheless, a careful review of the record reveals substantial evidence to support the trial court’s finding with respect to the OM class. In Ramirez, we suggested that the classification of tasks as exempt or nonexempt may be susceptible to common proof. (See Ramirez, supra,
Defining the precise contours of their disagreement is somewhat difficult due to the vagueness of the parties’ descriptions of the tasks regularly performed by OM’s. But, at a minimum, the parties appear to disagree over whether the following tasks should be classified as exempt or nonexempt: merchandising, the unloading/movement of inventory, customer service, cash handling, finance-related activities, and the opening/closing of the store.
The same reasoning applies to the AM class as well.