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finding in purported class action alleging overtime claims that commonality only existed as to class members who shared the job positions actually held by the plaintiff.
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No. 97-CV-2729 CW
November 18, 1998
AMENDED ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT AND GRANTING PLAINTIFFS' MOTION FOR CLASS CERTIFICATION
The Court hereby amends this Order as follows: the word "by" at page 35, line 13 is replaced with the word "against."
AMENDED ORDER
Plaintiffs move for class certification. Defendant opposes and moves for summary judgment. The matter was heard on September 25, 1998. Having considered all of the papers filed by the parties and oral argument on the motion, the Court GRANTS in part Defendants' motion for summary judgment and DENIES it in part, and GRANTS Plaintiffs' motion for class certification.
BACKGROUND
Plaintiffs John Kelley, Craig Asmus, and Donna Critzer are former employees of Defendants Pacific Telesis Group (PTG) and its subsidiaries, its successor, SBC, Inc., or Pacific Bell (hereinafter referred to as Defendants). Plaintiffs were first level engineering managers who supported the installation and removal of facility equipment in Pacific Bell's central offices, and the installation and maintenance of Pacific Bell's outside plant wiring. Outside plant wiring work involved either the wiring from one Pacific Bell facility to another (such as central office to central office), or from a Pacific Bell facility to a cable termination point at or near a customer's premises. Plaintiffs were employed by Defendants in the period between January, 1992 and July, 1997, in various positions.
Plaintiffs assert that their positions, and those of other first level managers whose jobs involved similar duties, were improperly classified as exempt from overtime wages. Plaintiffs bring claims for overtime they accrued between 1993 and 1995, when their employment terminated as part of a management force adjustment program. Specifically, John Kelley brings claims for his positions as a Loop Electronics Coordinator (LEC), which he held through April, 1994; Facilities Engineer which he held from April, 1994 until his termination in 1995; and Building Industry Consultant (BIC), which he held as a dual position, from February, 1995 until his termination. Asmus brings claims from his job as a Joint Pole Agreement (JPA) Engineer, which he held in the period of 1993 to 1995. Critzer's claims arise from her employment between June, 1990 and April, 1994 as a Facilities Equipment Engineer (FEE).
Plaintiffs assert that although they were classified as managers, they neither supervised other employees, spent more than a small portion of their time doing substantive work related to Defendants' management policies or general business operations, nor regularly exercised discretion or independent judgment. Plaintiffs further contend that their jobs did not require that they be highly skilled, and that none of them held a State of California certification or professional license to perform these services.
In contrast, Defendants assert that Plaintiffs were highly compensated employees, whose work pertained to Defendants' business operations. Defendants further assert that Plaintiffs' work involved specialized telecommunications engineering skills and required that they regularly exercise discretion and independent judgment. Defendants claim that Plaintiffs are minimizing their job duties for the purposes of this action and assert that the scope and nature of their employment duties fall squarely within the administrative exemption.
a. Plaintiffs' Positions
Because the Court finds below that Critzer's claims in connection with her job as an FEE and Kelley's claims in connection with his position as an LEC are barred by the statute of limitations, those positions are not discussed here.
1. Kelley: Facilities Engineer Position
Kelley became a Facilities Engineer in Simi Valley in 1994.
Facilities Engineers are responsible for the replacement and repair of telephone cables. Once they receive a notice that a customer needs assistance, or that a cable requires repair or replacement, they examine architectural blueprints to determine where the cable is located. The Facilities Engineers then create a "work print," technical maps depicting lines from the terminal point of the larger cable to the property line where service is needed. Work prints are the technical orders describing how to address the job. Facilities Engineers then write up the work order specifying what is to be done and what size cable is to be used. Defendants have numerous employees in Facilities Engineer positions. Facilities Engineers set their own schedules and themselves determine when to go into the field. Kelley spent approximately 80 percent of his time in the office and 20 percent of his time interacting with customers.
Defendants describe the Facilities Engineer position as involving significant technical skill and responsibility and calling for discretion. Based on generic job descriptions, the descriptions of other Facilities Engineers, and Defendants' interpretation of Kelley's deposition testimony, Defendants assert that Kelley's major job responsibilities included the following:
(1) planning and designing the cable distribution network, including researching and analyzing Pacific Bell business data;
(2) allocating resources within his assigned wire center;
(3) projecting potential facilities shortages;
(4) determining the size and type of distribution facilities;
(5) preparing work prints detailing sizing, gauging, placing, splicing, estimations, property record input and justifications of facilities for a project;
(6) writing work orders following site inspections;
(7) evaluating the rate of near-term growth for the area;
(8) advising construction and maintenance supervisors; and
(9) dealing with issues involving the timing and scheduling of construction.
Kelley acknowledges that he performed some of the above described tasks but disputes Defendants' characterization of his job duties and their significance. Kelley asserts that although the activities may have sounded complex, they were in fact routine. Although Kelley acknowledges that his tasks involved the technical infrastructure of the telephone lines, he asserts that his activities were extremely limited in their scope, and neither involved Pacific Bell's policies nor impacted Pacific Bell's management or general business operations.
According to Kelley, once he was notified that a customer needed assistance (or that a cable needed repairing or replacing), he would look at the blueprint to determine the location of the cable. Kelley asserts that he then created a work print depicting lines from the terminal point of the larger cable to the property line where service was needed. Kelley Decl., ¶ 12. Kelley asserts that creating work prints was like drawing a simple map, and that he created the work prints according to the Engineering Guidelines, which "spelled out" how employees should respond to different problems. Id. at ¶ 13-14.
According to Kelley, this task left no room for individual discretion, id. at ¶ 17, and did not require calculation, estimation, or detailed analysis. Id. at ¶ 14.
Kelley further disputes the significance of the limited planning and designing that he did perform. According to Kelley, the planner did the planning and then passed tasks along; estimators determined the job costs and then either approved the work print (if it was under $25,000) or re-directed the job to the planner. Id. at ¶ 16. He similarly disputes the characterization of his job as requiring that he project potential facilities shortages, asserting that shortages were a matter on which he recommended action by others, and did not address himself. Kelley Depo., 196:15-24. Finally, Kelley asserts that the job rarely required that he exercise discretion, and that the sole independent decision that he made on a regular basis was to select from four standard cable sizes.
Kelley Decl., ¶ 20. Kelley contends that in a commercial structure this usually involved selecting the largest size to allow for future growth. Id. Kelley asserts that he did not supervise employees, nor advise construction or maintenance workers.
2. Kelley: BIC Position
In February, 1995, Kelley transferred to Palmdale, California, where he worked both as a Facilities Engineer and as a BIC. A BIC's position is similar to that of a Facilities Engineer, in that a BIC creates work prints showing where new telephone cable is to be laid between a point of entry (a manhole or telephone pole) and a new building, or an old building that needs a new telephone line.
Defendants assert that, in his role as a BIC, Kelley was the central point of contact for the building industry in his region. Defendants acknowledge that this position involved less technical skill, but claim that it required that Kelley exercise discretion on a regular basis when he represented the company in negotiations pertaining to billing and job construction with outside contractors and developers.
According to Defendants, the BIC position involved:
(1) acting as the single point of contact at Pacific Bell for the building industry within a geographical area;
(2) implementing, designing, and coordinating necessary activities so that customers receive service in a timely manner; and
(3) determining the placement of communications "facilities" (cables) for commercial or multi-residential building sites.
Defendants assert that this requires that the BIC engineer analyze a builder's blueprints to determine the type of building, size of cable and location of the terminal room and write up a work print detailing the job. According to Defendants, this requires both that the BICs interact and negotiate with developers and that they make on-the-spot decisions without supervisory approval.
Kelley also disputes Defendants' depiction of the BIC position. Kelley asserts that the work prints he created as a BIC merely diagramed where new telephone cable was to be laid between a building and the closest point of entry. Kelley Decl., ¶ 8. According to Kelley, the extent of his "analysis" of architectural blueprints was limited to finding out where the terminal or utility room was located, marking it on the work print, Kelley Depo. 97:5-12, and then drawing a line from that point to the closest point of entry outside the building.
Kelley Decl., ¶ 10-11. Kelley also asserts, as he does in regard to his Facilities Engineer position, that developing BIC work prints was almost entirely formulaic, involving little or no discretion. Id. at ¶¶ 8-11. He further asserts that his job was responsive, and that he had no discretion to determine, or "negotiate," the location of the cables. Id., ¶ 9. Kelley claims he mainly produced work orders, and that any discretionary advice or guidance that he provided to employees was provided in an "indirect way," through recommendations made to supervisors. See Kelley Decl., ¶ 21; Kelley Depo., 193:21-194:21.
3. Asmus: JPA Position
Asmus was employed as a Joint Pole Agreement (JPA) engineer in 1993 through 1995. JPAs deal with replacing telephone poles, determining their placement and overseeing the transfer of the facilities (wires) from the old to the new pole. The utility company has a sixty percent ownership interest in the poles and Pacific Bell has a forty percent interest.
Defendants assert that JPA engineers are Pacific Bell's representatives in negotiating for pole space, and that they coordinate space utilization on jointly owned poles, organize pole replacement and modification, and ensure proper transfer of equipment from the old to new poles. According to Defendants, Asmus was the single point of contact for pole replacements or modifications in his geographical area, and carried out the majority of his JPA duties without conferring with his supervisor.
Defendants assert that Asmus reviewed and analyzed applications for the utility companies, and negotiated with the utility company to obtain the best pole placement and design for Pacific Bell. Defendants contend that Asmus spent sixty to seventy percent of his time in contact with the utility companies regarding joint pole applications. Defendants further assert that this work required that Asmus research and analyze Pacific Bell business data, evaluate possible courses of conduct, and assess whether the power company's pole placement complied with the joint pole agreement. Defendants argue that, as the person responsible for proper pole placement, Asmus' job required that he exercise substantial discretion and personal judgment.
Defendants also assert that Asmus also negotiated with cable television companies. Asmus contends that his job did not include contact with cable television representatives.
Plaintiffs dispute Defendants' characterization of the JPA position. According to Asmus, the utility company makes the initial decision as to which poles are to be replaced and then sends a one page work order to Pacific Bell's JPA engineer informing the engineer whether the new pole is being placed to the right or the left of the old pole. Asmus Decl., ¶ 7. Asmus asserts that the time he spent "in contact" with the utility companies primarily involved driving to pole sites to check on pole placement. See Asmus Depo., 69:7-19; Asmus Decl. at ¶¶ 7, 13. According to Asmus, this involved little analysis beyond deciding whether he agreed with the utility company about the new pole's placement. Asmus Decl. at ¶ 9. Asmus asserts that he did not perform any calculations when making pole placement decisions. Id. at ¶ 14. He further asserts that he rarely "negotiated" with utility companies over pole placement. Id. at ¶ 12-13, and that when he did, he only recommended that a new pole be moved to the other side of the existing pole. Id. at ¶ 13. Once he confirmed that the pole's location matched the application, and that he agreed with the new pole placement, Asmus would send a work order to the scheduler to distribute to employees who would then move the Pacific Bell lines from the old pole to the new pole. Finally, Asmus asserts that the position involved minimal trouble-shooting, and what trouble-shooting it did involve required little thought, discretion, or independent judgment.
4. Plaintiffs' Causes of Action
Plaintiffs assert that Defendants have misclassified their jobs as exempt and that they are entitled to back wages they accrued through overtime service. Plaintiffs bring two causes of action, one under the federal Fair Labor Standards Act (FLSA), 29 U.S.C. § 216 et seq., and one under California Labor Code § 1194. Under the FLSA, non-exempt employees are entitled to be paid one and one-half times their regular rate for all hours worked in excess of forty hours per week. Under the California Labor Code, non-exempt employees must be paid an overtime premium for all hours worked in excess of eight during the work day, in excess of forty during the work week, and for work performed on the seventh day in a work week. Plaintiffs additionally allege a violation of the California Business and Professions Code § 17200 for unfair business practice in connection with the alleged misclassification of their positions. Plaintiffs also seek class certification of their pendent State law claims pursuant to Rule 23. According to Plaintiffs, they represent a class of approximately 450 first level engineering managers.
Based on Plaintiffs' FLSA claims, Defendants removed this action to federal court. Defendants oppose class certification, in part on the grounds that it is inappropriate to certify a class of Plaintiffs in pendent claims in an action that also includes a claim under the FLSA. Defendants further assert that Plaintiffs were properly classified under the administrative exemption, and move for summary judgment on all of Plaintiffs' claims on the grounds that Plaintiffs were properly classified as a matter of law.
DISCUSSION
I. Legal Standards
A. Summary Judgment
Summary judgment is properly granted when no genuine and disputed issues of material fact remain, and when, viewing the evidence most favorably to the non-moving party, the movant is clearly entitled to prevail as a matter of law. Fed.R.Civ.P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Eisenberg v. Insurance Co. of North America, 815 F.2d 1285, 1288-89 (9th Cir. 1987).
The moving party bears the burden of showing that there is no material factual dispute. Therefore, the Court must regard as true the opposing party's evidence, if supported by affidavits or other evidentiary material. Celotex, 477 U.S. at 324; Eisenberg, 815 F.2d at 1289. The Court must draw all reasonable inferences in favor of the party against whom summary judgment is sought. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Intel Corp. v. Hartford Accident and Indem. Co., 952 F.2d 1551, 1558 (9th Cir. 1991).
Material facts which would preclude entry of summary judgment are those which, under applicable substantive law, may affect the outcome of the case. The substantive law will identify which facts are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
B. Federal Fair Labor Standards Act
Under the FLSA, employees must ordinarily be paid overtime compensation if they work more than forty hours in one week. 29 U.S.C. § 207(a)(1). The FLSA exempts from this rule "any employee employed in a bona fide executive, administrative, or professional capacity." 29 U.S.C. § 213(a)(1). Administrative or executive positions are properly considered exempt under the FLSA where they meet both a "duties" test and a "salary" test. Barner v. City of Novato, 17 F.3d 1256, 1259-60 (9th Cir. 1994). Under the FLSA, employees who earn more than $250 per week are exempt if they: (a) performed office or non-manual work directly related to management policies or general business operations of their employer or their employer's customers more than fifty percent of the time; and (b) customarily and regularly exercised discretion and independent judgment. 29 U.S.C. § 213(a)(1); 29 C.F.R. § 541.2(e)(2).
Section 1194 of the California Labor Code entitles non-exempt employees to recover unpaid overtime compensation. As interpreted by the California Industrial Welfare Commission (IWC) Order No. 4-89, an employee is properly classified as exempt under § 1194 if he or she: (1) is engaged in work that is primarily intellectual; (2) exercises "discretion and independent judgment;" and (3) earns more than $1,150 per month. As interpreted, this test closely resembles that under the FLSA.
According to the IWC Order No. 4-89 and the Division of Labor Standards and Enforcement (DLSE) Manual, "primarily" means more than one half of an employee's work time is spent on the activity, in this case intellectual work. See IWC Order No. 4-89(2)(K). "Intellectual work" means office or non-manual work directly related to the management policies or general business operations of the employer. See DLSE Manual § 10.62(a) (1989).
II. Overtime Claims Under the FLSA and the California Labor Code
Plaintiffs claim overtime for Kelley in his capacity as an LEC, Facilities Engineer, and BIC, and for Asmus in his capacity as a JPA, and for Critzer in her capacity as an FEE. Defendants assert that Plaintiffs, and others similarly situated, were properly classified as exempt from both federal and State overtime requirements in these positions. Defendants further argue that Kelley's overtime claims for the time he worked as an LEC and Critzer's claims for the time she worked as an FEE must be dismissed because the statutes of limitation had run by the time Plaintiffs filed their complaint.
Plaintiffs make clear that no claim is made on behalf of Critzer in her capacity as a Technical Quality Consultant; the Court thus does not address Defendants' arguments as to this claim.
To prevail on summary judgment, Defendants must show that, taking all facts in the light most favorable to the Plaintiffs, Plaintiffs' jobs required that they spend more than fifty percent of their time doing office or non-manual work directly related to management policies or general business operations of either their employer or their employer's customers, and that they regularly and customarily exercised discretion and independent judgment. 29 U.S.C. § 213(a)(1); 29 C.F.R. § 541.2(e)(2). The Court finds that two of the claims asserted by Plaintiffs are barred by the statute of limitations. As to the remaining claims, the Court finds that disputed issues of material fact exist with regard to Plaintiffs' duties, and the significance of those duties, and that Defendants have not met their burden under the FLSA or § 1194.
A. Claims Barred by the Statute of Limitations
The parties agree that the statute of limitations under the FLSA is two years, except where a violation is willful, in which case the statute is three years. 29 U.S.C. § 255(a). The California Labor Code § 1194 similarly sets the statute of limitations at three years. Cal. Code Civ. Proc. § 338(a); Aubry v. Goldhor, 201 Cal.App.3d 399, 404 (1988) (applying the code to an overtime claim). Plaintiffs acknowledge that the statute has run on Kelley's claims for the time he worked as an LEC and Critzer's claims for the time she worked as an FEE, but argue that they are entitled to restitution of the unpaid overtime wages that they were denied, as a result of their claim under California Business and Professions Code § 17200 et. seq, which has a four year statute of limitations.
As the Court explains in greater detail below, Plaintiffs are foreclosed from asserting a claim under § 17200 et seq. because, under California law, unpaid wages are presently considered to be damages and not restitution or other equitable relief. Kelley's overtime claims for the time he worked as an LEC and Critzer's claims for the time she worked as an FEE must be dismissed accordingly, because the applicable statute of limitations period had run by the time they filed their Complaint. The Court thus grants Defendants' motion for summary judgment as to Plaintiff Kelley's claims in connection with his employment as an LEC and Critzer's claims for her employment as an FEE. Critzer thus has no claims remaining in this action.
B. Exemption Classification
The remaining claims are Kelley's claims for the period of time he was employed as a BIC and Facilities Engineer, and Asmus' claim for his work between 1993 and 1995 as a JPA. As other courts have noted, the FLSA's exemptions are to be narrowly construed, and employers claiming the right to such exemptions have the burden of proving their entitlement. See Martin v. Malcolm Pirnie, Inc., 949 F.2d 611, 614 (2nd Cir. 1991) ("an employer bears the burden of proving that its employees fall within an exempted category of the Act"); Reich v. John Alden Life Ins. Co., 126 F.3d 1, 7 (1st Cir. 1997) ("the remedial nature of the statute requires that FLSA exemptions be `narrowly construed against the employers seeking to assert them . . .'"). In determining whether employees are properly classified as exempt, disputes over the actual duties performed by the parties and disputes over the significance of those duties raise triable issues of fact. See McGrath v. City of Philadelphia, 864 F. Supp. 466, 489-490 (E.D. Penn. 1994) (finding summary judgment on damages issue premature in suit under FLSA brought by city police department employees seeking overtime compensation). Where the evidence of the relative importance of the employee's duties is in dispute, summary judgment in favor of either party is inappropriate. Id.
Defendants therefore must establish that no material issue of fact exists as to Plaintiffs' employment; that their jobs required that they spend more than fifty percent of their time performing work directly related to their employer's management policies or its general business operations, and that they customarily and regularly exercised independent judgment and discretion.
This showing must be based on the actual nature of the duties performed by employee, not by the employee's title or job description. See Reich, 126 F.3d at 10-11 ("the particular title given to an employee is not determinative, as an employee's exempt status must instead be predicated on whether his or her job duties and responsibilities meet all of the applicable regulatory requirements"); 29 C.F.R. § 541.201(b).
Plaintiffs argue that any such analysis must distinguish between employees whose primary duties involve the administration of corporate business and those whose work produces the materials or products to be marketed by the company. Defendants assert that Pacific Bell's business is to produce telephone calls within the infrastructure that Plaintiffs helped to create and maintain and that, as such, Plaintiffs' activities were directly related to Pacific Bell's management and business operations. Defendants cite a variety of cases for the proposition that work directly related to a company's business operations may include, among other activities, planning, negotiation, promotion, research and analysis, and customer interaction. See Reich v. Haemonetics Corp., 907 F. Supp. 512, 513-514 (D.Mass. 1995) (business analyst who sold medical equipment and was responsible for negotiating deals with customers was administrative employee); Levie v. ATT Communications, Inc., 114 Lab. Cas. (CCH) ¶ 25,328, 1990 WL 61174 (N.D.Ga. 1990), aff'd 929 F.2d 706 (11th Cir. 1991) (first-level telecommunications manager who spent the vast majority of time designing, coordinating, and implementing internal telecommunications projects found administratively exempt); Reich v. John Alden Life Ins. Co., 126 F.3d 1 (1st Cir. 1997) (marketing representatives who supervised marketing agents and helped them develop sales proposals found to be administrative employees); Orphanos v. Charles Industries, Ltd., 1996 WL 437380 (N.D.Ill. 1996) (technical support engineer for telecommunications equipment manufacturer found administratively exempt where she assisted customers in installing and troubleshooting equipment and completed repairs on and off site).
Plaintiffs dispute the characterization of Pacific Bell's product as the production of telephone calls, and assert that by this definition the vast majority of low-level employees working at the company, including repair staff, technicians, and installers, would be administrative workers. Plaintiffs further contend that unlike the employees in Haemonetics, John Alden Life Ins. Co., Levie, and Orphanos, their jobs did not involve comparable management responsibility (such as managing a staff), sales activities (such as structuring sales deals on the company's behalf), independent scheduling, nor project development or implementation functions. Instead, Plaintiffs assert, their jobs primarily involved the repetitive use of a limited set of basic, non-transferable technical skills related to the day-to-day maintenance of the infrastructure, not to the management or general operations of Pacific Bell. Plaintiffs raise disputed issues of material fact as to whether their jobs involved primarily production activities, as opposed to the type of independent discretion, judgment, and administrative planning present in Levie, Haemonetics, John Alden Life Ins. Co., and Orphanos.
Any analysis of Plaintiffs' job duties must also distinguish between the exercise of independent judgment and the mere application of technical skills or knowledge. In defining this distinction, Plaintiffs refer to the DLSE Informational Guidelines, § 152.05, which indicates that "[a]n employee who merely applies his or her knowledge in following prescribed procedures or in determining which procedures to follow . . . is not exercising discretion and judgment of the independent sort associated with administrative work." Id.; see also 29 C.F.R. § 541.207(c)(1). Although a continuum exists between the rote application of a technical skill and the exercise of meaningful independent judgment, even non-routine decisions requiring specialized skills do not automatically qualify an employee for administrative exemption.
1. Kelley's Positions as Facilities Engineer and BIC
Defendants contend that Kelley's job duties as a Facilities Engineer and a BIC are the hallmarks of jobs that are directly related to management and business operations. See Wells v. Radio Corp. of Am., 77 F. Supp. 964, 970-71 (S.D.N.Y. 1948) (process engineers who determined the most economical way to manufacture devices and specified the exact sequence of operations to be performed found to be exempt employees); Shaw v. Prentice Hall, 977 F. Supp. 909, 915 (S.D.Ind. 1997) (production editor, whose primary responsibility was to manage and coordinate book projects, fell within administrative exemption). See also 29 C.F.R. § 541.205(b).
Plaintiffs argue that Defendants' descriptions of Kelley's job duties make those duties sound more significant, and discretionary, than they were in fact. Plaintiffs assert that, unlike the process engineers in Wells, Kelley's work did not relate to Pacific Bell's business operations, because they were limited to the development of the company's infrastructure.
Plaintiffs further assert that Kelley's job activities rarely required the exercise of independent judgment and offered little opportunity to exercise discretion.
In a motion for summary judgment, the Court is required to take the non-movant's evidence as true. Given the discrepancies between Plaintiffs' and Defendants' interpretation of the scope and importance of Kelley's job duties, the Court finds that issues of disputed material fact remain. These issues include the scope of Kelley's job duties, the extent to which Defendants' guidelines (such as the Engineering Manual) prescribed the duties of a Facilities Engineer, the extent to which Kelley was required to conduct any but the most superficial negotiation as a BIC, and the extent to which the Facilities Engineer and BIC positions required Kelley to exercise discretion and independent judgment.
2. Asmus' Position as a JPA
The parties agree that Asmus was the single point of contact for pole replacements or modifications in his geographical area. They similarly agree that he was responsible for ensuring that problems related to pole replacement were addressed, and that he carried out the majority of his JPA duties without conferring with his supervisor. The parties disagree, however, on what substantive duties were required in Asmus' position.
Defendants assert that Asmus spent the majority of his time "in contact" with the utility companies, and that such contact involved negotiating with the companies over pole placement.
Defendants further contend that the JPA position required that Asmus research and analyze business data, and evaluate possible courses of conduct. Defendants assert that Asmus' activities are similar to those of the field inspector in O'Dell v. Alyeska Pipeline Service Co., 856 F.2d 1452, 1453 (9th Cir. 1988). In O'Dell, the court found that a field inspector, who worked in remote areas without supervision, was properly classified under the administrative exemption. The court based this holding on the fact that the employee customarily and regularly exercised independent judgment at a level that qualified him for the exemption. Id. at 1454. This discretion included rejecting work if it was deemed unacceptable, making recommendations for waivers of specifications, reviewing and overriding the decisions of quality control inspectors, and helping to develop guidelines for inspection procedures. Id.
Plaintiffs contend that Defendants are using expansive terms to describe routine functions, and that Asmus had considerably less discretion than the inspector in O'Dell. Asmus asserts that he performed a limited range of activities as a JPA, that those activities did not relate to Pacific Bell's management or general business operations, and that he was not vested with any discretion except the authority to recommend that the utility company change its pole placement.
The Court thus finds that material questions of fact remain as to what proportion of Asmus' work involved "real and substantial significance to the policies or general operations of the business of the employer or the employers' customers," as is required by the DLSE Informational Guidelines, § 152.05. The Court similarly questions whether Asmus' work required that he exercise the discretion and judgment of the field inspector in O'Dell, as opposed to merely applying his knowledge within a narrow and limited set of options.
III. Admissibility of Evidence
Defendants argue that Plaintiffs' declarations contradict their deposition testimony, and that Plaintiffs cannot create triable issues of fact simply by contradicting themselves.
Kennedy v. Allied Mutual Ins. Co., 952 F.2d 262, 266 (9th Cir. 1991); Radobenko v. Automated Equip. Corp., 520 F.2d 540, 544 (9th Cir. 1995). The Court finds, however, that any inconsistencies in Plaintiffs' deposition testimony and their later declarations reflect different interpretations of deposition material. The disparities to which Defendants refer are in large part the result of the way the depositions were conducted. Defendants asked Plaintiffs whether they agreed with various aspects of generic job descriptions, without asking Plaintiffs to describe what activities their jobs entailed.
That the parties had different definitions of what constituted "negotiation" or "analysis," and that those different definitions have lead to inconsistent interpretations of the deposition testimony, is therefore not surprising. The Court finds that such inconsistencies are not the type of direct contradictions or "sham" testimony prohibited under Kennedy and Radobenko.
The Court thus finds that disputed issues of material fact exist as to what activities Plaintiffs' jobs entailed, whether and to what extent these jobs involved activities directly related to management policies or general business operations, and whether and how often Plaintiffs exercised discretion and independent judgment. Given this factual dispute, the Court denies Defendants' motion for summary judgment as to Kelley's claim for overtime in his positions as a Facilities Engineer and BIC and Asmus' claims for overtime for his position as a JPA.
IV. Unlawful Business Practices
Plaintiffs also allege that their misclassification as exempt constituted a false and fraudulent business practice under the California Business and Professions Code §§ 17200 et seq. The code prohibits unfair competition, including "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising . . ." Cal. Bus. Prof. Code § 17200. Section 17200 authorizes restitution or injunctive relief for acts in violation of the law.
Defendants claim that Plaintiffs' cause of action for unlawful business practice fails because: (1) Plaintiffs seek only damages, not restitution or injunctive relief as authorized by the Act; (2) Plaintiffs do not show that the public is likely to be deceived by Pacific Bell's employment practices; and (3) Plaintiffs released any right they had to bring such a claim.
Because the Court finds that back wages are damages, and thus are not authorized by the Act, the Court does not reach Defendants' other arguments. Defendants argue that Plaintiffs are barred from bringing a claim under § 17200 because the act authorizes only restitution or injunctive relief and Plaintiffs seek damages. Under § 17203, private litigants have no independent cause of action for damages; rather, their remedies are strictly limited to injunctive relief and restitution, which may include disgorgement. MAI Systems Corp. v. UIPS, 856 F. Supp. 538 (N.D. Cal. 1994).
A federal court interpreting State law must follow the decisions of the State's highest court. Absent such a decision, a federal court must predict how the highest State court would decide the issue, using intermediate appellate court decisions, decisions from other jurisdictions, statutes, treatises, and restatements as guidance. See Arizona Elec. Power Coop., Inc. v. Berkeley, 59 F.3d 988, 991 (9th Cir. 1995) (quoting In re Kirkland, 915 F.2d 1236, 1239 (9th Cir. 1990)). When no convincing evidence exists that the State supreme court would decide differently, "a federal court is obligated to follow the decisions of the state's intermediate appellate courts." Kirkland, 915 F.2d at 1239.
Two California courts of appeal cases have found that unpaid wages are economic damages and, as such, are unavailable in a § 17203 action. See California Population Stabilization v. Hewlett Packard Co., 58 Cal.App.4th 273, 295 (1997) ("unpaid wages are economic damages which are unavailable in a section 17200 action"); Tippett v. Terich, 37 Cal.App.4th 1517, 1537 (1995) (section 17200 cause of action "does not support a claim for damages based on the difference between the wages paid and the prevailing wage").
Plaintiffs argue that their overtime claims for unpaid wages seek restitution, not damages, and thus are properly within the scope of § 17203 under Cortez v. Purolator Air Filtration Products, Co., 64 Cal.App.4th 882, 895-96 (1998), op'n. mod. on denial of reh'g., 1998 WL 372898 (Jul. 7, 1998); review granted and op. superseded, 78 Cal.Rptr.2d 702 (1998). Because review of Cortez is currently pending, the Court cannot apply Cortez to this case. As such, there is no split of California intermediate appellate court authority on this issue. Plaintiffs further argue that ABC Int'l Traders, Inc. v. Matsushita Elec. Corp. of America specified that § 17203 authorizes a trial court to order restitution of money lost through acts of unfair competition, as defined in section 17200. 14 Cal.4th 1247, 1268-70 (1997). As Defendants correctly point out, however, ABC did not involve a wage and hour claim, nor did it address the question of whether back wages are restitution or damages.
Cortez involved an action for the failure to pay overtime wages that accrued as the result of a company's changing its workers' schedules from five eight-hour days to four ten-hour days per week. Cortez looked to federal law, and to the objectives of § 17200, concluding that unpaid wages are just one method by which to measure the disgorgement of a wrongful benefit. Because the wages in Cortez were sought to redress the defendant's illegal conduct, the court found the remedy equitable in nature and appropriately recoverable under § 17203.
The Court finds that the unpaid wages Plaintiffs seek are damages, not restitution, and are not recoverable under § 17203.
The Court thus grants summary judgment for Defendants as to Plaintiffs' right to relief under the California Business and Professions Code § 17200 et seq.
IV. Class Certification
Plaintiffs request certification of a class pursuant to Rule 23 to pursue their pendent State law claims. Plaintiffs propose a class consisting of employees and former employees of Defendants Pacific Bell and Pacific Telesis Group, called First Level Management Engineers, also referred to as Field or Outside Plant Engineers, including the following specific job titles: facilities engineers, loop electronic engineers, underground plant administrators, and Central Office Engineers, including the specific job title of Facility Equipment Engineer.
Plaintiffs assert that the class meets the threshold requirements of Rule 23(a) and is suitable for classification as either a 23(b)(1), (b)(2), or (b)(3) action.
Defendants oppose Plaintiffs' motion for class certification on the grounds that: (1) Rule 23 certification is inappropriate in a class action under the FLSA, and (2) Plaintiffs do not meet the requirements of Rule 23.
A. Legal Standard
To justify class certification, Plaintiffs must satisfy both the threshold requirements of Rule 23(a) as well as the requirements for certification under one of the subsections of Rule 23(b).
Rule 23(a) permits district courts to certify class action lawsuits if: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.
The party seeking class certification bears the burden of demonstrating that each element of Rule 23(a) is satisfied.
Doninger v. Pacific Northwest Bell, Inc., 564 F.2d 1304, 1308 (9th Cir. 1977). A district court may certify a class only if, after "rigorous analysis," it determines that the party seeking certification has borne its burden. General Telephone Co. v. Falcon, 457 U.S. 147, 158-61 (1982). This determination, however, is committed to the district court's discretion. Califano v. Yamasaki, 442 U.S. 682, 703 (1979).
In determining whether Plaintiffs have carried their burden, the Court may not consider the merits of Plaintiffs' claims. See Burkhalter Travel Agency v. MacFarms Intern., Inc., 141 F.R.D. 144, 152 (N.D.Cal. 1991). Instead, the Court must take the substantive allegations of the complaint as true. See Blackie v. Barrack, 524 F.2d 891, 901 (9th Cir. 1975).
Nevertheless, the Court need not accept conclusory or generic allegations regarding the suitability of the litigation for resolution through class action. Burkhalter, 141 F.R.D. at 152.
B. Applicability of Rule 23
Defendants contend that Rule 23 is inapplicable to actions under the FLSA because Rule 23 contains opt-out provisions while the FLSA specifies an opt-in provision. Defendants cite a string of cases for the proposition that Rule 23 type class actions are incompatible with the opt-in provisions of the FLSA and ADEA. See Kinney Shoe v. Vorhes, 564 F.2d 859 (9th Cir. 1977) (finding Rule 23 inapplicable to claims brought under § 216(b) of the FLSA and holding that notice to absent class members was not compelled by due process); LaChapelle v. Owens-Ill., 513 F.2d 286, 288 (5th Cir. 1975) (denying Rule 23 certification for ADEA action); Groshek v. Babcock Wilcox Tubular Prod., 425 F. Supp. 232 (E.D.Wis. 1977) (Rule 23 class certification denied in overtime wage action brought by production workers under the FLSA); Wyatt v. Pride Offshore, 1996 WL 509654 (E.D.La. 1996) (denying Rule 23 certification for action under the FLSA). These cases do not address the question currently before the Court, however, because each involved only FLSA or ADEA claims. In contrast, Plaintiffs in this case assert both FLSA and pendent State law claims.
The FLSA opt-in provision specifies that "[n]o employee shall be a party Plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought." 29 U.S.C. § 216(b).
The ADEA, at 29 U.S.C. § 626(b), adopts the FLSA's opt-in provision, as codified in 29 U.S.C. § 216(b).
The opt-in provisions of the FLSA do not act as a complete bar to class certification under Rule 23 where pendent State law claims are involved. In Sperling v. Hoffman-LaRoche, for example, employees brought ADEA, State anti-discrimination, and State common law contracts claims following a work force reduction by their employer. See Sperling v. Hoffman-LaRoche, 118 F.R.D. 392 (D.N.J. 1988), aff'd in part, reversed in part, Sperling v. Hoffman-LaRoche, Inc., 862 F.2d 439 (3rd Cir. 1988), aff'd, Hoffman-LaRoche, Inc. v. Sperling, 493 U.S. 165 (1989).
The district court concluded that the principles of pendent jurisdiction did not preclude class certification of the pendent State law discrimination claims under Rule 23. Sperling, 118 F.R.D. at 413. To avoid the potential problem of manufacturing federal jurisdiction, however, and to avoid confusion among potential class members among opt-in and opt-out choices, the district court delayed considering Rule 23 certification of the State claims until after the § 216(b) ADEA opt-in class was determined. Id. at 412-413.
To do otherwise, Defendants warn, risks creating pendent-plaintiff jurisdiction. See Zelaya v. Macias, 999 F. Supp. 778 (E.D.N.C. 1988). In Zelaya, the plaintiffs brought an original proceeding in federal court alleging violations of State and federal wage and hour laws. The district court in that case dismissed the State law claims, to prevent the exercise of pendent-plaintiff jurisdiction and avoid the creation of two classes. Unlike Zelaya, however, this case was removed to federal court by Defendants, after Plaintiffs first filed their claims in State court. As such, the concerns about manufactured jurisdiction that animated Zelaya are not present in this case. The Court further finds that the risk of creating two separate classes on the State and federal causes of action neither requires nor justifies the dismissal of Plaintiffs' State law claims. The elements of Plaintiffs' causes of action under the FLSA and the California Labor Code are similar. Even if two classes are created, this will neither alter the substance of the litigation nor unduly complicate the process.
The hardship to Plaintiffs and to the efficient administration of justice outweighs any complications of proceeding with two classes in this case. To hold otherwise would create two parallel proceedings, in State and federal court, concerning virtually identical issues. If for some reason the Court's holding leads to the creation of two dissimilar classes, or if the maintenance of two classes frustrates efficient case management, the Court can consider decertification at that time.
The Court therefore finds that the opt-in provision of the FLSA is not a bar to class certification of Plaintiffs' pendent State law claims under Rule 23.
C. Rule 23(a) Requirements
1. Numerosity
Given the number of employees classified as Facilities Engineers, JPAs, and BICs, the Court find that Plaintiffs have met Rule 23(a)'s numerosity requirement.
2. Commonality
Rule 23 does not require that the named plaintiffs be identically situated with other class members. It is sufficient if the situations of the members share a common issue of law or fact and are "`sufficiently parallel to insure a vigorous and full presentation of all claims for relief.'" California Rural Legal Assistance, Inc. v. Legal Servs. Corp., 917 F.2d 1171, 1175 (9th Cir. 1990) (quoting Sullivan v. Chase Inc. Serv., 79 F.R.D. 246, 257 (N.D.Cal. 1978)), modified, 937 F.2d 465 (1991).
Defendants assert that the commonality requirement is not met in this case because the jobs held by named Plaintiffs differed significantly in their duties, both by position and location. Rule 23(a)(2) does not require that the actions of the defendant affect each member of the class in the same manner, nor that "all questions of law and fact involved in the dispute be common to all members of the class." Arnold v. United Artists Theatre Circuit, Inc., 158 F.R.D. 439, 448-49 (N.D.Cal. 1994) (quoting Walthall v. Blue Shield, 16 Fair Empl. Prac. Cas. (BNA) 626, 628 (N.D.Cal. 1977), and Kraszewski v. State Farm Ins. Co., 27 Fair. Empl. Prac. Cas. (BNA) 27, 29 (N.D.Cal. 1981)). Nevertheless, where jobs held by potential class members may involve substantially different duties (as is indicated by the record in this case), the question of commonality of law and fact may present a bar to certification.
The Court thus finds that Plaintiffs have established that commonality exists among other employees who share Plaintiffs' job positions, namely Facilities Engineer, JPA, and BIC.
Employees who held these positions share a question of fact as to what these jobs entailed and a question of law as to whether these positions were properly classified as exempt.
3. Typicality
The typicality requirement pertains to the nature of the claims and defenses of the class representatives, not the specific facts from which those claims or defenses arose. Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992). The test 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.'" Id. (quoting Schwartz v. Harp, 108 F.R.D. 279, 282 (C.D.Cal. 1985)).
Defendants assert that Plaintiffs have not met the typicality requirement because the job duties that named Plaintiffs performed differed from those their colleagues performed. Defendants argue that regional differences in job activities, changing job descriptions, and the influence of individual supervisors all contribute to the diversity of responsibilities between employees who hold the same job title in different locations. The Court finds, however, that Plaintiffs' positions are sufficiently similar to those of their colleagues to meet the typicality requirement. However, the typicality requirement is not met for a class that would include both employees in Plaintiffs' positions, in which there is substantial diversity, and other positions that named Plaintiffs do not hold. The Court thus finds that Plaintiffs meet the typicality requirement only as to a class comprised of the positions that they held: Facilities Engineer, JPA, and BIC.
4. Adequacy
Representation of class interests is adequate if the named representatives are able to prosecute the action vigorously on behalf of the class through qualified counsel and if the representatives do not have interests antagonistic to or conflicting with those of the unnamed members of the class. Lerwill v. Inflight Motion Pictures, Inc., 582 F.2d 507, 512 (9th Cir. 1978). Factual differences in the merits of the named plaintiffs' underlying claims does not necessarily affect the plaintiffs' ability vigorously to represent the class. Walters v. Reno, 145 F.3d 1032, 1046 (9th Cir. 1997).
The motion for class certification is affected by the Court's findings in Defendants' motion for summary judgment.
Because the Court finds that the statute of limitations has run on Critzer's claim in connection with her position as an FEE, and she is not bringing a claim with regard to her position as a Technical Quality Consultant, she is not an adequate representative. Kelley's claims in his dual capacity as a Facilities Engineer and BIC, and Asmus' claims in his position as a JPA, represent other first level managers in similar positions. The Court finds that Kelley and Asmus adequately represent a class of Plaintiffs comprised of employees who are or have been in those positions.
Because Plaintiffs must meet all the Rule 23(a) requirements in order to obtain class certification, Rutledge v. Electric Hose Rubber, 511 F.2d 668, 673 (9th Cir. 1975), the Court finds that certification is appropriate in this case only as to the positions held by named Plaintiffs, namely the Facilities Engineer, JPA, and BIC positions.
D. Rule 23(b)
Plaintiffs assert that their action can be filed under either Rule 23(b)(1), (b)(2), or (b)(3). As Defendants correctly note, the Ninth Circuit has explicitly limited 23(b)(1) actions to those cases where either: (1) ruling in separate actions would subject the defendants to incompatible judgments requiring inconsistent conduct to comply with the judgment or (2) a ruling in the first of a series of separate actions will inescapably alter the substance of the rights of others having similar claims. McDonnell Douglas Corp. v. U.S.
District Court, Central District of California, 523 F.2d 1083, 1086 (9th Cir. 1975). In adopting this conservative interpretation of 23(b)(1) actions, the Ninth Circuit has established that where plaintiffs seek damages, as in this case, there is no possibility of judgments posing inconsistent standards. Id., at 1086. Nor is there a likelihood that the ruling in the first of a series of separate actions will inescapably alter the substance of rights of others with similar claims, given that the class has a variety of claims based on the unique factual situations in their particular jobs or set of job duties. Nor are the provisions of Rule 23(b)(2) applicable to this case, because Plaintiffs do not seek injunctive relief.
If Plaintiffs' action is to qualify for class treatment, it must do so under Rule 23(b)(3). Rule 23(b)(3) actions require that: (1) questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and (2) class action is superior to other available methods for the fair and efficient adjudication of the controversy.
Common questions of law and fact clearly exist among the named Plaintiffs as to substance of their job duties and the propriety of classifying those positions as exempt. Not every issue need be common to the class in order to justify certification under Rule 23(b)(3). See In re School Asbestos Litigation, 789 F.2d 996, 1010 (3rd Cir. 1980). In this case, class members who held the same job title as named Plaintiffs share questions of law and fact as to what their jobs entailed, what level of independent judgment they exercised, and whether, given the demands of their jobs, they were properly classified as exempt. Common questions thus predominate over individual questions in this case.
The Court also finds that class treatment is superior as to the claims of employees in the Facilities Engineer, JPA, and BIC positions. As Plaintiffs point out, members of this class share not only the same employment classification and job titles, they were also classified as exempt under the same policy. Given the commonality of questions of law and fact, class treatment is superior to the individual resolution of claims by employees similarly situated with named Plaintiffs. The Court thus determines that Plaintiffs meet the requirements for certification under Rule 23(a) and Rule 23(b)(3) for the following class:
All individuals who were employed by Defendants as first level engineering managers in the positions of Facilities Engineer, Joint Pole Agreement (JPA) engineers, or Building Industry Consultant (BIC) engineers during the limitations period.
CONCLUSION
For the foregoing reasons, the Court GRANTS Defendants' motion for summary judgment (Docket No. 66) as to Critzer's claims in connection with her job as an FEE and Kelley's claims in connection with his position as an LEC, and DENIES the motion as to Kelley's claims in connection with his position as a Facilities Engineer and BIC, and Asmus' claims in connection with his position as a JPA. The Court also GRANTS Defendants' motion as to all Plaintiffs' claims under California Business Professions Code § 17200. Finally, the Court GRANTS Plaintiffs' motion (Docket No. 21) for class certification as to the Facilities Engineer, JPA, and BIC engineering positions.The prior motions for summary judgment submitted against individual Plaintiffs (Docket Nos. 27, 46, and 52) are stricken.
IT IS SO ORDERED.