This case involved all salaried employees of Joe's Crab Shack, including the general managers and assistant managers. The plaintiffs submitted evidence that class members performed non-exempt work, and that they lacked sufficient discretion and independent judgment. They relied on corporate policies, as well as declarations from 27 of the management employees. However, named plaintiffs could not testify how much time they spent on exempt or non-exempt tasks, and admitted that their time spent on different tasks varied from day to day. The employer put on evidence showing that management employees uniformly spent more than 50% on exempt duties.
The way class certification has appeared to work in the past is that courts certify a class if common questions predominate over individual ones. In an exemption classification, if the proof shows that a common issue does not determine the liability to the entire class, then individual issues predominate over common ones. Thus, it may be that an employer classifies all managers as exempt. That uniform policy and a uniform job description are some evidence of commonality. If that job description said "all managers are exempt and earn less than 2X minimum wage" then that would be a predominant common question. Why? Because the salary is too low to qualify for exempt treatment. Similarly, if a job description requires employees to perform non-exempt work > 50% of the time, that's an issue that potentially could lead to liability in favor of everyone covered by the job description.
In a case like this one, though, the evidence before the trial court seemed to demonstrate that there would be too many individual issues pertaining to how the managers spent their time, such that it would be impossible to say that all managers in the class were mis-classified as non-exempt. Only mis-classification is illegal. Uniform classification is not.
I wasn't on the panel, though. The court of appeal appeared to reject this analysis. The court did not cite to the case law that says a common issue must decide liability for the entire class, or that common questions must predominate in a way that affects liability.
In fact, the court seems to say that it is appropriate to certify a class action even if there are putative class members who were properly, lawfully deemed exempt:
even if there were individual managerial employees whose work remained more than 50 percent managerial in nature, if CAI’s and Landry’s policies as implemented across California resulted in managerial employees being undercompensated for performing exempt work, class relief is appropriate.Well, that just doesn't make any sense. The lawsuit asserts the company unlawfully classified a class of managers as exempt. The class, therefore, should not include people who were lawfully classified. If you cannot discern the lawful from the unlawful, you do not have a liability issue that is common to the entire class. As the court noted, “‘As a general rule if the defendant’s liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages.’”
The court of appeal seemed to say that Brinker v. Superior Court requires courts to "prefer" class treatment for nearly all wage-hour issues:
We have not ignored the substantial case authority, including our own, upholding trial court decisions not to certify class actions for claims similar to those raised here (see, e.g., Dailey v. Sears, Roebuck & Co. (2013) 214 Cal.App.4th 974; Mora v. Big Lots Stores, Inc., supra, 194 Cal.App.4th 496; Arenas v. El Torito Restaurants, Inc. (2010) 183 Cal.App.4th 723); nor do we express any disagreement with the outcome of those cases. However, we understand from Brinker, supra, 53 Cal.4th 1004, a renewed direction that class-wide relief remains the preferred method of resolving wage and hour claims, even those in which the facts appear to present difficult issues of proof.So, despite the evidence that there is no common proof of liability, the Court sent the case back to superior court.
Perhaps the Supreme Court will once again review class certification standards. Brinker does not require certification of a class action if there are "any" common questions. In every case involving one employer, there are common issues - whether all employees worked for the same corporation, whether they all wore the company logo, whether they worked at a restaurant. The key issue is whether the plaintiff presents a common issue that is dispositive of liability. And that's not the analysis that the court of appeal has presented in this case.
If this trend continues, there will be many more class actions certified. Employers will have to try their cases as class actions or settle. Settlements of class actions often occur because of fear of class wide liability. Settlement of a class action like this means paying managers who were not mis-classified. Therefore, making it easy to certify class actions simply encourages payouts to undeserving putative class members. At least for now, the courts do not seem to be losing sleep over this injustice. Have a nice day!
This decision is Martinez v. Joe's Crab Shack Holdings and the opinion is here.
