Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No. BC260702, Aurelio Munoz, Judge.
Marlin & Saltzman, Stanley D. Saltzman, Louis M. Marlin and Christina Humphry; Schwartz, Daniels & Bradley, Arnold W. Schwartz and Marcus J. Bradley; R. Rex Parris Law Firm and R. Rex Parris for Plaintiffs and Appellants.
Akin Gump Strauss Hauer & Feld, Phillip J. Eskenazi, Michael C. Small and Kevin D. Rising for Defendants and Respondents.
WOODS, J.
SUMMARY
This is an appeal from an order denying a motion for class certification. Because we find the trial court used improper criteria, we reverse.
FACTUAL AND PROCEDURAL SYNOPSIS
For himself and for a proposed class of Lowe’s employees from October 29, 1997, to the present, Willie Lopez filed suit against Lowe’s, alleging that he and most of his more than 25, 000 current and former hourly co-workers in California customarily and regularly worked numerous hours while not clocked in and were not paid for that “off the clock” (OTC) time as a result. Lopez alleged that Lowe’s departments were systematically understaffed, that employees were given too much work to complete during their shifts, that most employees were told that no overtime or only very restricted overtime would be permitted and were further informed that if they failed to complete their work in their scheduled shift, they would be “written up” and subject to termination. Consequently, members of the proposed class were required to work off the clock.
By stipulation Cynthia Parris was withdrawn as a representative plaintiff in 2005, but Lopez’s counsel erroneously used her name in the notice of appeal.
He sought back wages for the OTC time worked plus declaratory relief, an accounting, injunctive relief, restitution, penalties and attorney’s fees for violations of Labor Code section 1194 (failure to pay straight time and overtime compensation), Labor Code sections 201 through 203 (failure to pay wages at the time of termination) and Business and Professions Code section 17200 (unfair competition).
In support of his motion for class certification, Lopez presented 17 declarations plus deposition testimony from Lowe’s employees asserting they had worked off the clock on a regular basis. He also presented deposition testimony from Lowe’s management personnel to demonstrate that payroll is the largest controllable expense at individual Lowe’s stores; that store managers are entitled to bonuses from 50% of their salary for meeting their annual budget to as much as 150% for beating their budget by 10%; the bonus structure followed a sliding scale to various management employees below the store manager who earn bonuses from 30% of their base salary and can double this percentage twice for meeting and beating their goals; Lowe’s stores had either a no overtime policy or a severely restricted overtime policy for each of its California stores which required employees to finish their assignments off the clock—Lowe’s allocated approximately 8/10 of one hour overtime per week per employee; employee scheduling was created at Lowe’s corporate headquarters in North Carolina though its proprietary “Staff Works” program, with schedules set based on actual store sales and tasks done in all of the same departments in the nation; according to its Human Resources Director; Lowe’s stores are standardized, with the same number of departments (19 plus one miscellaneous department), same layout and same operations with the corporate goal of ensuring that nationwide, customers have the same shopping experience; stores keep the same hours, occupy a standard 12, 000 square feet and price merchandise in the same manner; and Lowe’s had never affirmatively investigated whether its employees were working off the clock.
Lopez argued that these facts demonstrated a community of interest for certification purposes because Lowe’s management had an incentive to limit overtime as much as possible resulting in its employees working OTC, and in light of its corporate policies, Lowe’s had to be constructively aware of this fact. Further, the predominate issues driving the litigation were whether employees worked OTC and whether Lowe’s had constructive knowledge of this fact under the test set forth in Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575. Moreover, the pervasive scope of the OTC problem and the damages owed the class could be determined thought statistical sampling evidence as contemplated and urged in Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715 and Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319 (Sav-On).
Lowe’s argued that individual issues predominated, Lopez was not typical of the proposed class and class action was not a superior method of adjudicating Lopez’s claims. More particularly, it argued a highly individualized inquiry was required to ascertain whether an employee worked off the clock, was granted overtime, or was assigned too much work to complete in a shift. It submitted 67 declarations including 40 from managers asserting that employees did not work OTC and that OTC varied depending on the store and department. Accordingly, Lowe’s argued, liability including its knowledge of each employee’s OTC work could not be tried through common proof and class adjudication was not a superior means of resolving such claims.
The trial court denied class certification: “Plaintiff has identified an ascertainable class in excess of 25, 000 people consisting of current or former employees who worked for Lowe’s during a specified period of time and an ascertainable class of terminated hourly employees in accordance with the criteria established in Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, 916. The Court acknowledges that employees may be working off the clock and that Lowe’s wage structure may invite that to happen, but that does not make this case susceptible to class action. Plaintiff failed to provide sufficient evidence to support his theory that common questions of law and fact predominate over individual questions, or, in the alternative, that Lowe’s liability could be determined by facts common to all members of the class. (Hicks v. Kaufman & Broad, supra.) For example, as the Court indicated in the hearing on the Motion, there are 70 different stores, each with 19 different departments and there are not consistent policies. Further, some stores allowed overtime and some stores did not. The declarations themselves indicate there is not a consistent practice. Accordingly class adjudication is not superior and the theory of recover advanced by plaintiff is not amenable to class treatment. (Sav-On Drug Stores Inc. v. Superior Court (2004) 34 Cal.4th 319, 326-327; Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906; Schneider v. Vennard (1986) 183 Cal.App.3d 1340, 1347.)”
Lopez had submitted a Proposed Class Action Case Management Plan. Because it was filed two days prior to the continued hearing date, the trial court found it untimely and did not consider it.
Lopez appeals.
DISCUSSION
As stated in Sav-On, 34 Cal.4th at pages 326-327, we review the trial court’s ruling on a motion for class certification 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 substantial evidence generally will not be disturbed “unless (1) improper criteria were used [citation]; or (2) erroneous legal assumptions were made [citation]” [citation] . . . .’” (Ibid.; italics added, citations omitted.)
“The appeal of an order denying class certification presents an exception to the general rule that a reviewing court will look to the trial court’s result, not its rationale. If the trial court failed to follow the correct legal analysis when deciding whether to certify a class action, ‘an appellate court is required to reverse an order denying class certification . . ., “even though there may be substantial evidence to support the court’s order.”’ [Citations.]” (Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 828-829.)
In this case, the trial court’s comments establish it was “scare[d]” by the class size and the fear that it meant a “mess.” “I’ll tell you what’s bothering me[--]the size of the class. . . . I don’t doubt that what is alleged is actually going on. The bonuses that are paid to the managers are too big not to encourage this type of thing. . . . The question is . . . how do I adjudicate 30, 000 claims? What’s common? Basically, is the class too big?” The court also expressed concern about “inconsistent policies, ” commenting that some stores allowed overtime will some did not.
However, in Sav-On, supra, 34 Cal.4th at page 339, italics added, our Supreme Court stated: “For decades, ‘[t]his court has urged trial courts to be procedurally innovative’ [citation] in managing class actions, and ‘the trial court has an obligation to consider the use of . . . innovative procedural tools proposed by a party to certify a manageable class.’ [Citations.]” In Bell, supra, 115 Cal.App.4th 715, and Sav-On, supra, 34 Cal.4th 319, the court specifically acknowledged the use of statistical evidence to prove classwide damages, including as a method to infer wages owed absent class members. The size of the employee group has no impact on the utility or reasonableness of the measure. (Bell, supra, 115 Cal.App.4th at p. 749.)
“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.” (Hicks v. Kaufman & Broad Home Corp., supra, 89 Cal.App.4th at p. 916, fn. omitted.) “In order to determine whether common questions of fact predominate the trial court must examine the issues framed by the pleadings and the law applicable to the causes of action.” (Ibid.)
“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. [Citations.]” (Sav-On, supra, 34 Cal.4th at p. 339.)
Because “hours worked” includes “all the time the employee is suffered or permitted to work, whether or not required to do so, ” (Morillion v. Royal Packing Co., supra, 22 Cal.4th at p. 582), Lowe’s argument that individualized mini-trials will be required to adjudicate its defense that it did not know whether a particular was working overtime is unavailing. “In reviewing the extent of an employer’s awareness, a court ‘need only inquire whether the circumstances . . . were such that the employer either had knowledge [of overtime hours being worked] or else had “the opportunity through reasonable diligence to acquire such knowledge.”’” (Reich v. Dept. of Conservation and Natural Resources (11th Cir. 1994) 28 F.3d 1076, 1078.)
Because the trial court was improperly swayed by the class size, its ruling was based on improper criteria resulting in erroneous legal assumptions. “The class action in California evolved from ‘the equitable doctrine of virtual representation which ‘“rests upon considerations of necessity and paramount convenience, and was adopted to prevent a failure of justice.”’” (Bell, supra, 115 Cal.App.4th at p. 739.) Claims such as this are precisely the sort proper for class adjudication.
DISPOSITION
The order denying the motion for class certification is reversed. The matter is remanded to the trial court with instructions to enter a new and different order granting the motion. Lopez is entitled to his costs of appeal.
We concur: JOHNSON, Acting P.J. ZELON, J.