California Federal Court Holds that Evidence Presented in Connection with Plaintiffs’ Motion for Certification of Class Action Established that Individual Questions as to Whether Employees were Misclassified Predominate over Common Questions of Fact, Thus Rendering Litigation Unsuitable for Class Action Treatment
Plaintiffs filed a putative class action in California state court against their former employer, Domino’s Pizza, for violations of California’s labor laws and unfair competition laws alleging failure to pay overtime and to provide rest and meal periods to its general managers by misclassifying them as exempt employees. Plaintiffs assert they were not exempt because most of their work consisted of making pizzas and cleaning stores, and that only about 20% of their workday was spent “performing their actual general manager duties.” Jimenez v. Domino’s Pizza, Inc., 238 F.R.D. 241, 245-46 (C.D. Cal. 2006). The defense removed the action to federal court, id., at 246, and plaintiffs moved the court to certify the lawsuit as a class action. The district court first addressed the requirements of Rule 23(a). Id., at 247. The court found that each of Rule 23(a)’s prerequisites – numerosity, commonality, typicality, and adequacy of representation – had been satisfied. Id., at 247-49. However, the district court agreed with defense attorneys that plaintiffs had not established the elements required by Rule 23(b), and so denied the motion.
Plaintiffs asserted that the putative class action satisfied each prong of Rule 23(b), so the court addressed each in turn., Jimenez, at 249. With respect to Rule 23(b)(1), the district court agreed with defense attorneys that plaintiffs misperceived the statute’s purpose. Rule 23(b)(1) authorizing class action treatment when separate lawsuits “create a risk of imposing incompatible standards of conduct on the defendant,” id. In this case, while it is possible that different courts may reach different conclusions in separate lawsuits as to whether a particular general manager is exempt or non-exempt, the fact remained that Domino’s “would not be incapable of fulfilling various judgments,” so certification under Rule 23(b)(1). Id., at 250.
Under Rule 23(b)(2), class action treatment is appropriate if “the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole” (italics added). Rule 23(b)(2) does not apply if the class action complaint seeks “exclusively or predominantly” monetary relief. Jimenez, at 250 (quoting Nelsen v. King County, 895 F.2d 1248, 1255 (9th Cir. 1990)). Here, the federal court agreed with the defense that plaintiffs predominantly sought monetary relief, rendering class certification under Rule 23(b)(2) inappropriate. Id.
Finally, the district court turned to Rule 23(b)(3), which authorizes class action treatment “where common questions of law and fact predominate over questions affecting individual members and where a class action is superior to other means to adjudicate the controversy.” Jimenez, at 250. With respect to “predominance,” the district court agreed with Domino’s that individual questions will predominate because the relevant inquiry is not whether general managers performed non-exempt tasks but rather what percentage of time was involved in performing non-exempt tasks and why such tasks were performed. Id., at 251. “In other words, to determine which employees are entitled to overtime because of improper classification is an ‘individual, fact-specific analysis’ of each general manager’s performance of the managerial and non-managerial tasks.” Id. (citation omitted). The federal court concluded at page 253:
In sum, this is not the typical case where a case can be certified because the class members’ duties are, or can be determined to be, roughly identical, despite the need for individual damage determinations based on the number of hours worked. Here, the variability goes to whether an individual class member has any claim at all for misclassification.
With respect to the superiority aspect of Rule 23(b)(3), the district court rejected plaintiffs’ claims that “repetitive litigation will be avoided” and that “surveying and representative testimony” will suffice for trial purposes. Jimenez, at 253. As the court explained at page 253, “Representative testimony will not avoid the problem that the inquiry needs to be individualized.” The federal court agreed with Domino’s that the action would be unmanageable in light of the “individualized inquiries required.” Id. Accordingly, the court denied plaintiffs’ motion for class certification.
NOTE: We do not here discuss the district court’s consideration of the evidentiary objections raised by the parties. Jimenez, at 246. Nor do we detail the various individual inquiries identified by the court. See id., at 250-52.