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New California Supreme Court Decision Promotes Employment Dispute Class Actions

  • August 26, 2004

The California Supreme Court has issued an opinion certain to encourage more class action lawsuits. The long-awaited decision in Sav-On Drugs v. Superior Court (Rocher) overruled a court of appeal decision and found the trial court had not abused its discretion in certifying a class of operating managers and assistant managers employed by the drug store chain in California.

The managers contended they had been improperly classified as exempt from overtime pay under the California Labor Code. They claimed they were entitled to recover unpaid overtime premium wages for the period of time they were misclassified, and they requested their claims be certified as a class action.

Opposing their request, Sav-On contended the exemption issues could not be determined on a class-wide basis. Instead, the employer argued that the actual work of each of the operating managers and assistant managers needed individual review to determine whether they had been misclassified.

Emphasizing that on a motion for class certification it is the trial court's role to weigh the evidence, and observing that appellate courts should not do so, six of the seven California Supreme Court justices (with the seventh concurring separately) found the following:

The [trial court] record contains substantial, if disputed, evidence that deliberate misclassification was defendant's policy and practice. The record also contains substantial evidence that, owing in part to operational standardization and perhaps contrary to what defendant expected, classification based on job descriptions alone resulted in widespread de facto misclassification. Either theory is amenable to class treatment.  

 * * *  

A reasonable court could conclude that issues respecting the proper legal classification of AM's and OM's actual activities, along with issues respecting defendant's policies and practices and issues respecting operational standardization, are likely to predominate in a class proceeding over any individualized calculations of actual overtime hours that might ultimately prove necessary.  

* * *  

[N]either variation in the mix of actual work activities undertaken during the class period by individual AM's and OM's, nor differences in the total unpaid overtime compensation owed each class member, bars class certification as a matter of law.

Sav-On's arguments relied heavily on language from an earlier California Supreme Court case, Ramirez v. Yosemite Water Co. In that case, the court said that determining whether an employee is exempt requires an examination of how the employee "actually spends his or her time." In Sav-On, the court rather dismissively said this question does not preclude class certification. Thus:  

Contrary to defendant's implication, our observation in Ramirez that whether the employee is [exempt] depends "first and foremost, [on] how the employee actually spends his or her time" (Ramirez, supra, at p. 802) did not create or imply a requirement that courts assess an employer's affirmative exemption defense against every class member's claim before certifying an overtime class action.  

The court also spoke to the possibility of multiple lawsuits if wage-hour claims were not pursued through the class action process:

Many of the issues likely to be most vigorously contested in this dispute, as noted, are common ones. Absent class treatment, each individual plaintiff would present in separate, duplicative proceedings the same or essentially the same arguments and evidence, including expert testimony. The result would be a multiplicity of trials conducted at enormous expense to both the judicial system and the litigants.

The Sav-On decision notes, as the California Supreme Court has said in other cases, that "this state has a public policy which encourages the use of the class action device."  Sav-On undoubtedly will provide plaintiffs' attorneys more encouragement to seek class certification in litigating California employment disputes -- encouragement they really did not need.

©2004 Jackson Lewis P.C. This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between Jackson Lewis and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.

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