Opinion
B230565
12-21-2011
BRIAN STEPP, Plaintiff and Appellant, v. FARMERS GROUP, INC., et al., Defendants and Respondents.
Meuser Law Group and Mark P. Meuser for Plaintiff and Appellant. Seyfarth Shaw, George E. Preonas, Dean A. Martoccia and Candace S. Bertoldi for Defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC422817)
APPEAL from a judgment of the Superior Court of Los Angeles County, Amy D. Hogue, Judge. Affirmed.
Meuser Law Group and Mark P. Meuser for Plaintiff and Appellant.
Seyfarth Shaw, George E. Preonas, Dean A. Martoccia and Candace S. Bertoldi for Defendants and Respondents.
Appellant Brian Stepp (Stepp) brought suit against respondents Farmers Group, Inc. and Farmers Insurance Exchange (Farmers), alleging numerous violations of California's wage and hour laws. Stepp was employed by Farmers as a coordinator, and later as a consultant, overseeing Farmers' Circle of Dependability (COD) facilities in California from August 2006 to June 2009. On September 20, 2010, Stepp filed a motion for class certification with the Los Angeles Superior Court, seeking to represent every COD coordinator and consultant employed by Farmers since September 2005. The trial court denied the motion, finding that Stepp had failed to meet the requirements for class certification set forth in California Code of Civil Procedure section 382. Stepp subsequently filed this appeal, alleging that the trial court abused its discretion in denying his motion for class certification. We disagree; accordingly, we affirm.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
Farmers provides insurance to consumers throughout California. Its "COD Program" gives insured clients the option to have physical damage to their automobiles repaired by one of Farmers' COD auto body repair facilities. Farmers' COD Program includes approximately 373 repair facilities across California. Farmers' relationship with COD facilities is managed by Farmers' Auto Physical Damage Direct Repair Facility Consultants, who oversee their assigned COD facilities, and ensure that they perform according to Farmers' expectations. Consultants report to their regional COD supervisors, and make recommendations for the addition or removal of COD facilities. Farmers classifies both coordinators and consultants as administrative employees exempted from California's overtime regulations.
Prior to the implementation of the consultant position in 2007, COD facilities were overseen by coordinators who basically performed the same primary job functions. When the coordinator position was replaced by the consultant position, coordinators were given the opportunity to become consultants if they passed a written test and an interview.
Farmers employed Stepp from August 21, 2006 to June 11, 2009, initially as a COD coordinator, then as a COD consultant starting in April 2007. Stepp first managed various COD facilities in the San Diego/Inland Empire region. In 2007, Stepp was transferred to the Los Angeles/Orange County region, where he worked until his termination in June 2009. Over the course of his employment with Farmers, Stepp worked under four different supervisors, all of whom Stepp described as having very different management styles and expectations. Stepp further testified that COD facilities vary greatly in size, sophistication, and performance, and that, as a coordinator, he was often required to use his independent judgment to meet Farmers' expectations. Stepp also testified that the amount of discretion and independent judgment exercised by other COD coordinators and consultants varied greatly depending on the individualized needs of their respective COD facilities. Specifically, Stepp stated that coordinators and consultants are encouraged to "think outside the box," and to come up with "different approach[es]" and "different way[s] to handle things" in order to meet Farmers' expectations. Finally, the record before the trial court included substantial evidence that the number of hours worked by coordinators and consultants varied greatly on an individual basis.
Stepp's employment with Farmers was terminated on June 11, 2009, for violation of Farmers' ethical guidelines. On September 29, 2009, Stepp filed a complaint with the Los Angeles Superior Court, alleging that Farmers had violated California Wage and Hours laws by improperly classifying its coordinators and consultants as exempt administrative employees under California Code of Regulations, title 8, section 11040. On September 20, 2010, Stepp filed a motion for class certification, seeking to represent all coordinators and consultants employed by Farmers since September 29, 2005. The motion alleged that the proposed plaintiff class was easily ascertainable, that common issues of law and fact predominated as to whether Farmers properly classified coordinators and consultants as exempt administrative employees, and that Stepp was an adequate class representative. On October 22, 2010, Farmers filed an opposition to Stepp's motion, arguing that Stepp had failed to demonstrate that common issues predominated, that Stepp had provided no methodology for the court to try the case on a class-action basis, and that Stepp was an inadequate class representative.
Specifically, Stepp was terminated for accepting money from an auto body shop that wanted to become a COD facility.
On November 16, 2010, after hearing oral arguments and considering the parties' evidence, the trial court denied Stepp's motion for class certification. On December 10, 2010, the trial court issued a written order reiterating its denial of Stepp's motion, holding that Stepp had failed to meet the requirements for class certification set forth in California Code of Civil Procedure, section 382. Specifically, the court concluded that common questions of fact and law did not predominate over individualized inquiries, that Stepp's claims were not typical of those of the purported class, and that a class action was not the superior method of adjudication in this case. Stepp filed a notice of appeal on January 28, 2011.
DISCUSSION
Stepp claims that the trial court abused its discretion when it denied his motion for class certification. Specifically, Stepp alleges that the trial court abused its discretion in (1) treating the motion for class certification as a de facto motion for summary judgment, (2) denying class certification on the basis of improper legal criteria, and (3) interpreting the administrative exception on the basis of improper legal criteria. We disagree.
1. Standard of Review
A trial court's order denying class certification is reviewed for abuse of discretion. (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326 (Sav-On); Fireside Bank v. Superior Court (2007) 40 Cal.4th 1069, 1089.) Accordingly, a trial court's ruling generally will not be disturbed on appeal, "'unless (1) improper criteria were used [citation]; or (2) erroneous legal assumptions were made [citation].'" (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435-436.) Furthermore, "'[a]ny valid pertinent reason stated will be sufficient to uphold the [trial court's] order.'" (Id. at p. 436.)
2. The Trial Court's Denial of the Motion for Class Certification
The trial court did not abuse its discretion in denying Stepp's motion for class certification. Based on the evidence in the record, the trial court reasonably concluded that common issues of law or fact did not predominate as to whether Farmers properly classified coordinators and consultants as exempt administrative employees, and that a class action was not the superior method of adjudication in this case. Therefore, we affirm the trial court's decision.
Code of Civil Procedure section 382 authorizes class actions "'when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court . . . .' The party seeking certification bears the burden of establishing the existence of both an ascertainable class and a well-defined community of interest among class members." (Sav-On, supra, 34 Cal.4th at p. 326, citing Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1103-1104 (Lockheed).)
Further, in order to establish a "well-defined community of interests," a plaintiff seeking certification must demonstrate, by a preponderance of the evidence, the presence of: "'(1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class.'" (Lockheed, supra, 29 Cal.4th at p. 1104.) With regard to the first prong of the test, the moving party's burden is not "merely to show that some common issues exist, but, rather, to place substantial evidence in the record that common issues predominate." (Id. at p. 1108.)
Moreover, in wage and hour claims such as this one, while certification could be proper even though each employee may have to establish the amount of his or her damages, class certification is not adequate if individualized inquiries into job duties or other issues would predominate. (Arenas v. El Torito Restaurants, Inc. (2010) 183 Cal.App.4th 723, 734-735 (Arenas).)
In Arenas, restaurant employees claimed that their employer violated California's wage and hour laws by unlawfully classifying them as exempt employees under California Code of Regulations, title 8, section 11040. (183 Cal.App.4th at pp. 727-728.) The plaintiffs filed a motion for class certification seeking to represent other employees they alleged had been similarly misclassified. (Id. at pp. 728-729.) The trial court rejected the motion, and the court of appeal affirmed. The court of appeal concluded that it was within the trial court's discretion to deny the motion given the ample evidence in the record indicating that employees' duties and time spent on individual tasks varied widely from one restaurant to another. (Id. at p. 734.) The court of appeal further held that the trial court's decision "did not improperly require plaintiffs to prove they could prevail on the merits of their claim [but] simply considered whether plaintiffs' theory of recovery . . . was, as an analytical matter, amenable to class treatment." (Ibid.)
Here, Stepp's original complaint alleged that Farmers improperly and unlawfully classified COD coordinators and consultants as exempt administrative employees, thus avoiding certain overtime and meal-break requirements under California wage and hour laws. California Code of Regulations, title 8, section 11040, subdivision (A)(2) exempts administrative employees from California's overtime and meal-break requirements.
In relevant part, California Code of Regulations, title 8, section 11040, subdivision (A)(2) defines an administrative employee as an employee "(a) [w]hose duties and responsibilities involve . . . [¶] [t]he performance of office or non-manual work directly related to management policies or general business operations of his/her employer . . . ; [¶] (b) [w]ho customarily and regularly exercises discretion and independent judgment; and [¶] (c) [w]ho regularly and directly assists a proprietor, or an employee employed in a bona fide executive or administrative capacity . . . ; or (d) [w]ho performs under only general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (e) [w]ho executes under only general supervision special assignments and tasks; and (f) [w]ho is primarily engaged in duties that meet the test of the exemption."
In order to meet the requirements for class certification set forth in Code of Civil Procedure section 382, Stepp did not need to prove that his claim was likely to succeed on the merits, but, he did, however, have to establish, by a preponderance of the evidence, that common issues were likely to predominate in the action. (Sav-On, supra, 34 Cal.4th at pp. 326-327; see also Arenas, supra, 183 Cal.App.4th at p. 734.) In other words, Stepp had to demonstrate that the issue of whether Farmers improperly classified COD coordinators and consultants as exempt administrative employees was amenable to common proof. (Arenas, supra, 183 Cal.App.4th at p. 734.)
Like the court in Arenas, the trial court here did not abuse its discretion when it denied Stepp's motion for class certification. As the trial court correctly noted, Stepp himself admitted in his deposition that there were great variations in the way coordinators and consultants interacted with their respective supervisors and managed their respective facilities, as well as in the size and nature of the COD facilities they oversaw. There was also substantial evidence in the record that the amount of hours worked by coordinators and consultants varied significantly from one to the other. Moreover, it was reasonable for the trial court to conclude, on the basis of Stepp's own testimony, that the amount of discretion and independent judgment afforded to Farmers' coordinators and consultants, as well as the great variations with which they exercised such discretion, rendered Stepp's theory of recovery not amenable to class treatment. As the trial judge correctly noted that "there was so much evidence coming out of the plaintiff's own mouth about the lack of commonality that I don't think the Court can certify the class, certainly not on the record before me." Given that Stepp bore the burden of showing, not merely that common issues existed, but that they in fact predominated as to whether Farmers improperly classified its COD coordinators and consultants as exempt administrative employees, the court was well within its discretion when it denied Stepp's motion for class certification.
Stepp argues that the trial court abused its discretion because it based its denial on the fact that COD coordinators and consultants "were customarily and regularly exercising discretion and independent judgment." Stepp alleges that the trial court, in doing so, reached the merits of his claim, thus improperly treating his motion for class certification as a de facto motion for summary judgment. Stepp's argument, however, is meritless, and based on an incorrect and incomplete reading of the trial court's order.
A closer look at the reporter's transcript reveals the actual nature of the court's inquiry, which stated: "the plaintiff in his deposition basically admitted that there were great variations in the extent to which these employees were customarily and regularly exercising discretion and independent judgment." The language used here clearly indicates that the trial court did not reach the issue of whether the second prong of the administrative exemption was met (namely, whether COD consultants customarily and regularly exercised discretion and independent judgment), but instead properly concluded that because of the great disparity in whether consultants exercised such discretion and judgment, Stepp's claim that they were misclassified as administrative employees could not be properly adjudicated as a class action. Stepp's allegation is without merit, as it confused the trial court's proper analysis on his motion for class certification with a ruling on the merits.
Stepp's claim is not only incorrect; it is also inconsistent with another of his arguments. Indeed, Stepp, after attacking the trial court's decision as a decision on the merits, later argues that the trial court should have discussed every other prong of the administrative exception, thus seemingly calling for the court to reach the merits of his underlying claim.
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Stepp's argument that the trial court applied incorrect legal criteria in denying class certification is equally meritless. Stepp argues that the trial court erred by "refusing to consider the first prong" of the administrative exemption test, and instead focusing on the second prong regarding "'discretion and independent judgment,'" thus applying improper legal criteria to its analysis. Stepp claims that the trial court was required to determine whether common questions predominated as to every prong of the administrative exemption test. Stepp's claim fails. The court was well within its discretion when it concluded that the fact that individualized issues would largely predominate in the analysis of the administrative exemption's second prong rendered the entirety of Stepp's misclassification not amenable to class treatment.
Additionally, Stepp alleges that the trial court erred in interpreting the administrative exemption by misapplying the "'discretion and independent judgment'" prong to matters of "'little significance.'" Stepp argues that the discrepancies among coordinators and consultants relied upon by the trial court were insufficient to meet the administrative exemption's first prong, and therefore could not be the basis of the trial court's denial of Stepp's motion for class certification. Again, Stepp's argument fails because it fundamentally misunderstands the nature of the trial court's inquiry. While Stepp's argument assumes that the trial court denied his motion because it concluded that Stepp's claim would fail on the merits, it is nevertheless clear, as discussed above, that the trial court only considered the "great variations in the extent to which [Farmers'] employees were customarily and regularly exercising discretion and independent judgment" in order to determine whether Stepp's misclassification claim was "amenable to common proof." (Arenas, supra, 183 Cal.App.4th at p. 734.)
As previously noted, there was substantial evidence in the record supporting the trial court's conclusion that individualized issues predominated as to whether Farmers improperly misclassified COD coordinators and consultants as exempt administrative employees. Stepp has failed to show that the trial court abused its discretion when it denied his motion for class certification. Accordingly, we affirm.
DISPOSITION
The judgment is affirmed. Respondents are to recover their costs on appeal.
NOT TO BE PUBLISHED.
JOHNSON, J. We concur:
MALLANO, P. J.
ROTHSCHILD, J.