Kizer v. Tristar Risk Management ( 2017 )

Filed 6/26/17 Modified and Certified for Pub. 7/26/17 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
VALERIE KIZER et al.,
Plaintiffs and Appellants, G052558
v. (Super. Ct. No. 30-2014-00707394)
TRISTAR RISK MANAGEMENT, OPINION
Defendant and Respondent.
Appeal from an order of the Superior Court of Orange County, Kim Garlin
Dunning, Judge. Affirmed.
Blumenthal, Nordrehaug & Bhowmik, Norman B. Blumenthal and Kyle R.
Nordrehaug for Plaintiffs and Appellants.
Seyfarth Shaw, Jon D. Meer, Sheryl L. Skibbe and Leo Q. Li for Defendant
and Respondent.
* * *
Plaintiffs and appellants Valerie Kizer and Sharal Williams (collectively,
Plaintiffs) filed this putative class action against their former employer, defendant and
respondent Tristar Risk Management (Tristar), alleging Tristar failed to pay Plaintiffs and
its other claims examiners overtime compensation because it misclassified them as
exempt from California‟s overtime laws.
After twice continuing the hearing for supplemental briefing and evidence,
the trial court denied Plaintiffs‟ class certification motion because they failed to present
substantial evidence showing their claims were typical of the proposed class and common
issues of law or fact predominated. The court found Tristar‟s alleged misclassification of
the proposed class members suitable for class treatment, but it denied the motion because
misclassification does not give rise to liability on an overtime claim unless the employees
first show they worked hours or days that required overtime compensation. The court
explained Plaintiffs failed to present evidence showing Tristar had a generally applicable
policy or practice that required employees to work overtime, and therefore Plaintiffs
failed to show they could establish Tristar‟s liability based on proof common to all class
members. Consequently, the court concluded class treatment of Plaintiffs‟ claims was
not appropriate.
Plaintiffs contend the trial court erred because the amount of overtime
worked by the individual class members is a damages issue, and the need for individual
proof of damages is not a proper basis for denying class certification. Plaintiffs,
however, misconstrue the governing legal standards and the basis for the court‟s ruling.
The trial court did not deny the motion based on Plaintiffs‟ failure to show
the amount of overtime worked by each putative class member. Rather, the court denied
the motion because Plaintiffs failed to show that whether the putative class members
worked any overtime at all was subject to common proof. To satisfy the commonality
requirement for class certification, Plaintiffs were required to show their liability theory
could be established on a classwide basis through common proof. Typically, in overtime
2
claims, plaintiffs show this by presenting evidence of an employer policy or practice that
generally required the class members to work overtime. Plaintiffs presented no evidence
of any such policy or practice.
Plaintiffs also contend the trial court erred in refusing class certification on
their claim under California‟s unfair competition law (UCL; Bus. & Prof. Code, § 17200
et seq.). According to Plaintiffs, the UCL authorizes restitution and other relief without a
showing that each class member individually suffered injury, and therefore Plaintiffs‟
were not required to present evidence of the amount of overtime each putative class
member worked. Plaintiffs again misconstrue the governing law. The cases Plaintiffs
cite address standing to bring a UCL claim; they do not address the showing required to
obtain class certification. As explained below, the governing case law makes clear that,
aside from standing, a plaintiff seeking class certification on a UCL claim still must
establish common issues of law or fact predominate, the representative‟s claim is typical
of the class, and all other elements required for class certification. Because substantial
evidence supports the court‟s decision Plaintiffs failed to make that showing, we affirm
the court‟s decision to deny class certification.
I
FACTS AND PROCEDURAL HISTORY
Tristar provides third party risk management services, including claims
adjusting and administrative services, with specialization in handling worker‟s
compensation and general liability claims. Tristar‟s California clients include privately
held, self-insured companies, publicly traded companies, and public entities, such as
cities and counties. Tristar maintains branch offices in nine cities throughout California.
Each branch typically is staffed with a branch manager, claims supervisors,
administrative staff, and claims examiners I, II, and III.
3
Under Tristar‟s standardized “Position Description,” the job duties and
responsibilities for its claims examiners include managing a caseload of 150 to 180
worker‟s compensation files, investigating and fixing claims, managing medical
treatment and billing, setting reserves, settling and finalizing claims, documenting all
actions, and communicating with clients and claimants. Claims examiners typically work
on claims for one client at a time, and the guidelines, protocols, rules, and expectations
for managing the claims vary from client to client. Claims supervisors review files and
supervise the work of claims examiners under standardized policies and procedures to
ensure the claims examiners follow the necessary procedures and meet deadlines.
Tristar‟s normal work schedule for claims examiners required them to work 7.5 hours per
day, but Tristar also offered several alternative work schedules that allowed claims
examiners to work 8.33 or 8.5 hours per day in exchange for receiving every other
Monday or Friday off. Most claims examiners elected to work under one of Tristar‟s
alternative work schedules.
Kizer worked for Tristar as a claims examiner III from February 2011 to
January 2014, and Williams worked for Tristar as a claims examiner II from April 2006
to January 2014. In February 2014, Plaintiffs filed this putative class action against
Tristar alleging it misclassified them and other similarly situated claims examiners as
exempt from California‟s overtime laws. According to Plaintiffs, Tristar required its
claims examiners to work more than eight hours a day and 40 hours per workweek, but
paid no overtime based on the exempt classification it applied to its claims examiners.
The complaint alleges claims for (1) UCL violations, (2) failure to pay overtime
compensation (Lab. Code, §§ 510, 1194, 1198), (3) failure to provide itemized wage
statements (Lab. Code, § 226), and (4) failure to provide wages when due (Lab. Code,
§§ 201, 202, 203). Tristar filed an answer denying liability and asserting an affirmative
defense based on the overtime exemption for administrative employees established by
4
Industrial Welfare Commission wage order No. 4-2001. (See Cal. Code Regs., tit. 8,
art. 4, § 11040, subd. 1(A)(2).)
In November 2014, Plaintiffs filed a motion to certify a class composed of
“„all individuals who are or previously were employed by [Tristar] as Claims
Examiner[s] II and Claims Examiner[s] III in [Tristar‟s] Workers‟ Compensation
1
Division between February 25, 2010 and December 31, 2014.‟” Plaintiffs argued class
certification was appropriate to determine their claim that Tristar had a uniform policy of
misclassifying its claims examiners as exempt under wage order No. 4-2001. According
to Plaintiffs, they planned to “bifurcate liability from damages such that a trial on the
propriety of the exemption can first proceed before damages are assessed.” In support,
Plaintiffs offered evidence describing the job duties of Tristar claims examiners and the
supervision Tristar imposed on them to show they could establish by proof common to
the entire class that the administrative employee exemption did not apply. Tristar
opposed the motion, arguing individual issues regarding how each claims examiner
performed his or her job predominated on several of the elements necessary to establish
the administrative employee exemption.
In April 2015, the trial court conducted a hearing on Plaintiffs‟ motion.
The court heard argument and continued the hearing for the parties to submit
supplemental briefing and evidence on whether each element of the administrative
employee exemption could be tried based on evidence common to the entire class, and if
so, how. After receiving supplemental briefing, the court conducted another hearing on
Plaintiffs‟ motion in June 2015.
1
In later briefing, Plaintiffs modified the class definition to include “all
individuals who are or previously were employed by [Tristar] as Claims Examiner II and
Claims Examiner III in [Tristar‟s] Workers‟ Compensation Division between
February 25, 2010 and December 31, 2014 who did not work as Return to Work
Coordinators, Backup Supervisors, or Hearing Representatives.” The modifications to
the class definition have no bearing on the trial court‟s ruling or this appeal.
5
The court issued a tentative ruling to deny the motion, explaining Plaintiffs
had shown that some elements of the administrative employee exemption may be subject
to common proof, but they failed to show that all of the elements could be established on
a classwide basis. The court further explained that even if the misclassification claim
could be tried on a classwide basis, Plaintiffs had failed to show a class action was
appropriate because “proof of misclassification is only part of the equation.
Misclassification itself does not result in automatic liability. Missing from [P]laintiffs‟
motion is any evidence that [Tristar] had a uniform policy of requiring putative class
members to work overtime and that putative class members in fact worked overtime.”
According to the trial court, “to establish liability at trial, Plaintiffs will bear the burden
of proving that they (and the members of any certified class) in fact worked sufficient
hours per day and/or week to be entitled to overtime compensation, which they did not
receive. The burden would then shift to [Tristar] to prove any affirmative defense (such
as exemption or the use of a properly-enacted alternative workweek schedule). . . . [¶]
. . . [¶] Even Plaintiffs‟ declarations omit any discussion of whether they worked
overtime. In the absence of such proof, certification of a class to pursue Plaintiffs‟
overtime claim is appropriately denied.” The court continued the hearing to provide
Plaintiffs an additional opportunity to correct these deficiencies.
In July 2015, the trial court conducted the third hearing on Plaintiffs‟
motion after receiving more supplemental briefing and evidence. Plaintiffs conceded all
elements of the administrative employee exemption except the general supervision
element because the exemption does not apply if one element is lacking. Plaintiffs
represented they could defeat the general supervision element by presenting classwide
evidence regarding Tristar‟s generally applicable policies and procedures governing
claims examiners and their work.
The trial court accepted those concessions and found the general
supervision element could be tried on a classwide basis. Nonetheless, the court denied
6
Plaintiffs‟ motion because it found they failed to present substantial evidence establishing
their claims were typical of the class or that common issues of law or fact predominated
on Plaintiffs‟ overtime claims.
The court explained Plaintiffs failed to present any evidence of a generally
applicable written or de facto policy that required claims examiners to work overtime.
According to the court, Plaintiffs presented evidence of the written job requirements and
Tristar‟s expectations for claims examiners, but the court could not infer those
requirements and expectations required claims examiners to work overtime without
evidence from an industry expert or other claims examiners explaining they could not
complete the workload Tristar assigned without working overtime. Although Plaintiffs‟
most recent declarations explained they had to work overtime to complete their assigned
files, the court explained those declarations were “anecdotal” and did not support class
certification because they failed to establish Plaintiffs‟ experiences were typical or
common to all claims examiners.
The court also found “there is no substantial evidence that any other
potential class members suffered the same injury.” “Without credible evidence that more
than two of the more than 450 Claims Examiner[s] II and III worked overtime,” the court
explained it “[could] not conclude that a common fact issue exists, much less
predominates.” Finally, the court explained these deficiencies in Plaintiffs‟ evidence
rendered class certification inappropriate on all of Plaintiffs‟ claims because they
acknowledged their claims derived from the overtime claim.
7
II
DISCUSSION
A. Governing Legal Principles
1. Overtime Pay Rules and Exemptions
“California‟s Labor Code generally requires overtime pay for employees
working more than [eight hours in one workday or] 40 hours in a given workweek.”
(Dailey v. Sears, Roebuck & Co. (2013) 214 Cal.App.4th 974, 978 (Dailey); see Lab.
Code, § 510, subd. (a).) The Legislature, however, authorized the Industrial Welfare
Commission to establish exemptions from the overtime pay requirements for “„executive,
administrative, and professional employees‟” when certain conditions are met. (Dailey,
at pp. 978-979; see Lab. Code, § 515, subd. (a).)
The exemption at issue here is the exemption for administrative employees.
Industrial Welfare Commission wage order No. 4-2001 governs this exemption and
establishes a five-part test to determine whether it applies. (Dailey, supra,
214 Cal.App.4th at p. 979; Eicher v. Advanced Business Integrators, Inc. (2007)
151 Cal.App.4th 1363, 1371; see Cal. Code Regs., tit. 8, art. 4, § 11040, subd. 1(A)(2).)
For the exemption to apply, “[t]he employee must (1) perform „office or non-manual
work directly related to management policies or general business operations‟ of the
employer or its customers, (2) „customarily and regularly exercise[] discretion and
independent judgment,‟ (3) „perform[] under only general supervision work along
specialized or technical lines requiring special training‟ or „execute [] under only general
supervision special assignments and tasks,‟ (4) be engaged in the activities meeting the
test for the exemption at least 50 percent of the time, and (5) earn twice the state‟s
minimum wage.” (Eicher, at p. 1371; see Cal. Code Regs., tit. 8, art. 4, § 11040,
subd. 1.(A)(2).) “[E]ach of the five elements must be satisfied to find the employee
exempt as an administrative employee.” (Eicher, at p. 1372.)
8
This and other “exemptions from statutory mandatory overtime provisions
are narrowly construed, and the employer bears the burden of proving the employee‟s
exemption as an affirmative defense.” (Walsh v. IKON Offices Solutions, Inc. (2007)
148 Cal.App.4th 1440, 1453, fn. 8; see Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th
785, 794-795.) The employee, however, bears the initial burden to show he or she
worked overtime hours without receiving overtime pay before the employer must
establish the applicability of any exemption. (Sotelo v. Medianews Group, Inc. (2012)
207 Cal.App.4th 639, 654 (Sotelo); see Bell v Farmers Ins. Exchange (2004)
115 Cal.App.4th 715, 747-748 (Bell).)
2. Class Action Requirements
“Originally creatures of equity, class actions have been statutorily
embraced by the Legislature whenever „the question [in a case] 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 . . . .‟” (Brinker Restaurant Corp. v.
Superior Court (2012) 53 Cal.4th 1004, 1021 (Brinker); see Code Civ. Proc., § 382.)
“The party advocating class treatment must demonstrate the existence of an
ascertainable and sufficiently numerous class, a well-defined community of interest, and
substantial benefits from certification that render proceeding as a class superior to the
alternatives. [Citations.] „In turn, the “community of interest requirement embodies
three factors: (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.”‟” (Brinker, supra, 53 Cal.4th at p. 1021.) The party
seeking class certification bears the “burden to support each of the above factors with a
factual showing.” (Sotelo, supra, 207 Cal.App.4th at p. 647; see Sav-On Drug Stores,
Inc. v. Superior Court (2004) 34 Cal.4th 319, 326 (Sav-On); Dailey, supra,
9
214 Cal.App.4th at p. 989 [party seeking class certification “required to present
substantial evidence” establishing propriety of class treatment].)
“„The certification question is “essentially a procedural one”‟ [citation] that
examines „whether the theory of recovery advanced by the proponents of certification is,
as an analytical matter, likely to prove amenable to class treatment.‟” (Martinez v. Joe’s
Crab Shack Holdings (2014) 231 Cal.App.4th 362, 372 (Martinez); see Sav-On, supra,34 Cal.4th at pp. 326-327.) “„“In determining the propriety of a class action, the question
is not whether the plaintiff or plaintiffs have stated a cause of action or will prevail on the
merits, but rather whether the requirements of [class certification] are met.”‟” (Brinker,
supra, 53 Cal.4th at p. 1023.) “[R]esolution of disputes over the merits of a case
generally must be postponed until after class certification has been decided [citation],
with the court assuming for purposes of the certification motion that any claims have
merit.” (Brinker, at p. 1023; Martinez, at p. 372 [“The court must assume the class
claims have merit and resolve disputes regarding the claims‟ merits only when necessary
to determine whether an element for class certification is satisfied”].)
Here, the trial court denied class certification because it found Plaintiffs
failed to establish their claims were typical of the proposed class and that common
questions of law or fact predominated over individual questions. “The typicality
requirement‟s purpose „“is to assure that the interest of the named representative aligns
with the interests of the class. [Citation.] „“Typicality refers to the nature of the claim or
defense of the class representative, and not to the specific facts from which it arose or the
relief sought.”‟ [Citations.] The test of typicality „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.‟”‟” (Martinez, supra, 231 Cal.App.4th at p. 375.)
“On the issue of whether common issues predominate in the litigation, a
court must „examine the plaintiff‟s theory of recovery‟ and „assess the nature of the legal
10
and factual disputes likely to be presented.‟” (Dailey, supra, 214 Cal.App.4th at p. 988.)
“The „ultimate question‟ . . . is whether „the issues which may be jointly tried, when
compared with those requiring separate adjudication, are so numerous or substantial that
the maintenance of a class action would be advantageous to the judicial process and to
the litigants.‟ . . . „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.‟” (Brinker, supra, 53 Cal.4th at pp. 1021-1022.)
The trial court “must determine whether the elements necessary to establish liability are
susceptible of common proof or, if not, whether there are ways to manage effectively
proof of any elements that may require individualized evidence.” (Id. at p. 1024.)
“Predominance is a factual question [for the trial court].” (Id. at p. 1022.)
“On review of a class certification order, an appellate court‟s inquiry is
narrowly circumscribed. „The decision to certify a class rests squarely within the
discretion of the trial court, and we afford that decision great deference on appeal,
reversing only for a manifest 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.” [Citation.] A certification
order generally will not be disturbed unless (1) it is unsupported by substantial evidence,
(2) it rests on improper criteria, or (3) it rests on erroneous legal assumptions.‟” (Brinker,
supra, 53 Cal.4th at p. 1022.)
“In determining whether the record contains substantial evidence
supporting the ruling, a reviewing court does not reweigh the evidence and must draw all
reasonable inferences supporting the court‟s order.” (Dailey, supra, 214 Cal.App.4th at
p. 988; see Sav-On, supra, 34 Cal.4th at p. 328.) “The reviewing court „must examine the
trial court‟s reasons for denying class certification.‟ [Citation.] When reviewing an order
denying class certification, appellate courts „consider only the reasons cited by the trial
court for the denial, and ignore other reasons that might support denial.‟” (Jaimez v.
11
Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286, 1297-1298.) “„“Any valid pertinent
reason stated will be sufficient to uphold the order.”‟” (Sav-On, at p. 327.)
B. The Trial Court Did Not Abuse Its Discretion in Denying Class Certification
Based on Plaintiffs’ Failure to Show Common Issues Predominated
2
1. The Overtime Claims
Plaintiffs contend the trial court erred by applying an improper legal
standard because it found Plaintiffs failed to show common questions of law or fact
predominated based on Plaintiffs‟ “purported failure to show the amount of overtime
worked by the class.” According to Plaintiffs, whether each class member worked
overtime and the amount they worked is a damages issue that the governing legal
standards prohibited the court from considering at the class certification stage. Plaintiffs
misconstrue both the governing legal standards and the court‟s order.
As explained above, the ultimate issue on the predominance factor is
whether the plaintiff‟s theory of liability is likely to prove amenable to class treatment.
(Brinker, supra, 53 Cal.4th at p. 1021.) “Ordinarily, class treatment of a claim is
appropriate if the facts necessary to establish liability are capable of common proof,
including the so-called „“fact of damage,”‟ that is, the existence of harm establishing an
entitlement to damages. [Citation.] If the defendant‟s liability can be determined „“„by
facts common to all members of the class,‟”‟ a class may be certified even though class
members must individually establish the amount of their [damages].” (Safeway, Inc. v.
Superior Court (2015) 238 Cal.App.4th 1138, 1154 (Safeway).) But “„“[t]here can be no
class certification unless it is determined by the trial court that similarly situated persons
2
Aside from the UCL claim, we consider all of Plaintiffs‟ claims collectively
because Plaintiffs conceded in the trial court all their claims were derivative of their
overtime claim, and, with the exception of the UCL claim, they do not treat any of the
claims separately on appeal.
12
have sustained damage. There can be no cognizable class unless it is first determined that
members who make up the class have sustained the same or similar damage.”‟” (Ali v.
U.S.A. Cab Ltd. (2009) 176 Cal.App.4th 1333, 1350.)
In the wage and hour context, courts routinely have found suitable for class
treatment a claim alleging an employer consistently applied a uniform policy that harmed
an identifiable class of employees when the policy and the harm it caused are subject to
common proof for all class members. (Brinker, supra, 53 Cal.4th at p. 1033.) To obtain
certification of such a class, the class proponent must “present substantial evidence that
proving both the existence of [the employer‟s] uniform policies and practices and the
alleged illegal effects of [the employer‟s] conduct could be accomplished efficiently and
manageably within a class setting.” (Dailey, supra, 214 Cal.App.4th at p. 989; see Duran
v. U.S. Bank National Assn. (2014) 59 Cal.4th 1, 29.) Establishing a uniform policy that
an employer consistently applied to misclassify a group of employees as exempt from
overtime requirements is not sufficient to support class certification because
misclassification alone does not establish liability for overtime violations. (Sotelo, supra,
207 Cal.App.4th at p. 655.)
In Sotelo, a group of newspaper delivery people sued a conglomerate of
newspapers, alleging they intentionally misclassified the plaintiffs as independent
contractors to avoid paying overtime compensation. (Sotelo, supra, 207 Cal.App.4th at
pp. 644-645.) The trial court denied the plaintiffs‟ motion for class certification because
they failed to demonstrate that overtime work by the potential class members could be
shown by common evidence regardless of whether the newspapers misclassified the class
members: “„Plaintiffs must prove that putative class members in fact worked sufficient
days and/or hours to be entitled to overtime . . . . These inquiries involve the examination
of different facts from the classification question; the motion, however, fails to discuss
whether there is common evidence on this issue.‟” (Id. at pp. 652-653.) The plaintiffs
13
appealed, arguing, as Plaintiffs do here, that whether they worked overtime “go[es] to
damages” and does not prevent class certification. (Id. at p. 653.)
The Court of Appeal rejected that argument and affirmed the trial court‟s
order because “simply having the status of an employee does not make the employer
liable for a claim for overtime compensation . . . . An individual employee establishes
liability by proving actual overtime hours worked without overtime pay . . . . A class, on
the other hand, . . . may establish liability by proving a uniform policy or practice by the
employer that has the effect on the group of making it likely that group members will
work overtime hours without overtime pay . . . . [¶] . . . [The plaintiffs‟] allegation that
[the newspapers] have misclassified putative class members as [independent contractors]
rather than employees is only part of the equation. . . . [The plaintiffs] have not alleged
that [the newspapers] have a uniform policy that requires putative class members to work
overtime.” (Sotelo, supra, 207 Cal.App.4th at p. 654.)
Here, the trial court found Plaintiffs failed to present substantial evidence
they could establish through proof common to all potential class members that Tristar
generally required all claims examiners to work overtime, and therefore Plaintiffs failed
to show “a common fact issue exists, much less predominates.” Citing Sotelo, the court
explained whether Tristar misclassified all claims examiners as exempt formed only part
of the liability equation because statutory exemptions from overtime requirements are
affirmative defenses on which the employer bears the burden of proof. Before any court
or jury may consider whether an employer‟s classification of a group of employees as
exempt subjects the employer to liability on an overtime claim, the employees must show
they worked overtime, which then would require the employer to show it either paid
overtime compensation or correctly applied an exemption. According to the court,
Plaintiffs focused on the classification issue, but failed to present any evidence showing
class treatment was appropriate on whether Tristar required claims examiners to work
overtime.
14
Contrary to Plaintiffs‟ contention, the court did not deny the motion
because Plaintiffs failed to show the amount of overtime each potential class member
worked. Rather, the court denied the motion because Plaintiffs failed to show that
whether the potential class members—other than Plaintiffs—worked any overtime at all
could be established through common proof. Plaintiffs‟ contention confuses the fact of
damage with the amount of damages. As explained above, the fact of damage is a
liability issue that focuses on the existence of harm establishing a plaintiff‟s entitlement
to damages; it is not concerned with the amount of damages. (Safeway, supra,
238 Cal.App.4th at p. 1154.) At the hearing on Plaintiffs‟ motion, the court made clear it
considered Plaintiffs‟ failure to show a classwide basis of establishing overtime work by
potential class members was a liability issue, not a damages issue.
Substantial evidence supports the trial court‟s findings, and therefore we
cannot say the court abused its discretion in denying Plaintiffs‟ motion. Plaintiffs
presented no evidence to show Tristar had a written or de facto policy requiring claims
examiners to work overtime, or that the performance of overtime by claims examiners
otherwise was subject to common proof. Plaintiffs presented their own declarations, but
no declarations or testimony from any claims examiners. In their final supplemental
declarations, Plaintiffs stated they routinely had to work significant overtime to keep up
with their assigned caseloads, but Plaintiffs failed to state their experience was typical of
other claims examiners or that they observed other claims examiners working overtime to
keep up with their caseloads. In contrast, Tristar presented declarations from several
claims examiners and supervisors explaining they worked their regular schedules and
everyone typically left at the end of their scheduled shift. The court acknowledged
Plaintiffs‟ declarations that they worked overtime to keep up, but the court found those
declarations failed to establish overtime work was subject to common proof because
Plaintiffs‟ declarations were merely “anecdotal” and did not show Plaintiffs‟ experience
was typical of other claims examiners. We must accept the court‟s assessment of the
15
evidence. (People ex rel. Harris v. Black Hawk Tobacco, Inc. (2011) 197 Cal.App.4th
1561, 1567 [“„In determining whether there has been [an abuse of discretion], we cannot
reweigh evidence or pass upon witness credibility. The trial court is the sole arbiter of
such conflicts. Our role is to interpret the facts and to make all reasonable inferences in
support of the order issued‟”].)
Plaintiffs presented evidence showing the standardized job description
Tristar applied to claims examiners and the standardized procedures Tristar used to
supervise its claims examiners. That evidence, however, is relevant to show whether the
general supervision element of the administrative employee exemption is subject to
common proof, not whether the existence of overtime work is subject to common proof.
Plaintiffs contend the caseload of 150 to 180 cases identified in the claims examiner job
description shows they had to work overtime to perform the job, but they presented no
evidence to support that contention. As the trial court found, it cannot infer overtime
work was required strictly from the number of cases assigned to claims examiners.
Rather, to make that inference, the court explained it needed testimony from an industry
expert opining that a claims examiner could not manage that number of cases without
working overtime, or at least testimony from other claims examiners explaining they
could not manage their caseloads without working overtime. As explained above,
Plaintiffs provided no declarations from any claims examiners other than their own, and
the court found their declarations were merely anecdotal with regard to overtime work.
Essentially, the court concluded that the fact two people invariably worked overtime does
not establish a class; we have no basis upon which to quarrel with that conclusion.
Plaintiffs argue the alternative work schedules for many of the claims
examiners demonstrated they routinely worked overtime by working more than eight
hours in a day. Plaintiffs point to the claims examiner and supervisor declarations Tristar
submitted stating that many claims examiners worked 8.33 or 8.5 hours each day under
an alternative work schedule that allowed them to take every other Monday or Friday off.
16
According to Plaintiffs, those alternative work schedules did not exempt Tristar from the
statutory overtime requirements because Tristar failed to present evidence showing it
followed the required procedures for establishing an exemption based on alternative work
schedules. This evidence does not show the existence of overtime work was subject to
common proof.
Plaintiffs forfeited this argument by failing to make it in the trial court, and
more importantly, their contention lacks merit because it relies on an entirely different
liability theory. Plaintiffs‟ asserted class certification was appropriate because the
caseload Tristar assigned all claims examiners generally required them to work overtime
to manage their cases and Tristar intentionally misclassified all claims examiners as
exempt administrative employees to avoid paying overtime compensation. Plaintiffs
below did not base their claims on voluntarily working more than eight hours in a day
under invalid alternative work schedules.
To support their contention the existence of overtime work by the potential
class members is a damages issue that may not prevent class certification, Plaintiffs cite
Bell. According to Plaintiffs, “[t]he Bell Court held that the purported variances in
overtime was [an] improper legal criteri[on] for denial of class certification, even where it
3
was undisputed that some of the class members did not work overtime.” Plaintiffs
misconstrue Bell.
3
Plaintiffs‟ choice of the word “variances” in this statement demonstrates
their misunderstanding of the court‟s ruling and the governing law. Simple variance in
the amount of overtime class members worked, including some class members working
no overtime, would be a damages issue that would not justify denying class certification.
The court, however, did not simply find a variance in the amount of overtime worked.
Rather, the court found Plaintiffs could not establish through evidence common to all
class members Tristar had a generally applicable policy or practice that required claims
examiners to work overtime. As explained above, such a generally applicable policy is
what makes class treatment appropriate in wage and hour cases. (See Brinker, supra,53 Cal.4th at p. 1033; Dailey, supra, 214 Cal.App.4th at p. 98.)
17
In Bell, the plaintiffs were claims representatives employed by Farmers
Insurance Exchange (Farmers). Like Plaintiffs, the plaintiffs in Bell claimed Farmers
misclassified them as exempt administrative employees to avoid paying them overtime.
After the trial court certified a class of claims representatives, Farmers moved to decertify
the class based on discovery that revealed nine percent of a random sample of 295 class
members did not claim they worked unpaid overtime. The trial court denied the motion
and Farmers appealed. (Bell, supra, 115 Cal.App.4th at pp. 720-721.)
In affirming the order, the Bell court concluded the existence of this
marginal number of class members who did not claim injury did not significantly reduce
the required community of interest because any individual adjudications these
nonclaimants required related solely to damages, and the need for individual
adjudications on damages did not prevent class certification. (Bell, supra,
115 Cal.App.4th at pp. 743-744.) The court further explained, “[I]f proof of individual
damages were required by all potentially affected parties as a condition for class
certification, it would go far toward barring all class actions.” (Id. at p. 744.)
Bell does not apply here because it did not address the issue on which the
trial court relied in denying Plaintiffs‟ class certification motion. As explained above, the
court did not deny Plaintiffs‟ motion because they failed to show the number of overtime
hours each potential class member worked; rather, the court denied the motion because
Plaintiffs failed to present any evidence showing the question whether Tristar generally
required all claims examiners to work overtime could be shown by common evidence
that made class treatment of Plaintiffs‟ overtime claim appropriate. Unlike here, it was
undisputed in Bell that the caseload Farmers assigned to its claim representatives
generally required them to work overtime. (Bell, supra, 115 Cal.App.4th at pp. 722-725.)
The existence of a small percentage that did not work overtime did not disprove the
existence of a generally applicable policy or practice, and therefore did not affect class
certification.
18
Moreover, the trial court in Bell certified the class and denied the motion
for class decertification based on its conclusion class treatment was appropriate. The
governing standard of review required the Bell court to affirm that ruling unless there was
a lack of substantial evidence to support it or a manifest abuse of discretion. (Bell, supra,
115 Cal.App.4th at pp. 741-742.) Here, the trial court denied class certification, and
therefore we must affirm that ruling if supported by substantial evidence. As explained
above, substantial evidence supports the court‟s decision.
Plaintiffs also cite Williams v. Superior Court (2013) 221 Cal.App.4th 1353to support their contention the need to make individual damages determinations does not
prevent class certification. Like Bell, Plaintiffs‟ reliance on Williams is misplaced
because Williams did not involve a dispute over whether the existence of a policy
requiring overtime work was subject to common proof. Unlike here, the evidence in
Williams included numerous declarations from class members explaining their workload
regularly required them to work more than eight hour a day and 40 hours a week.
(Williams, at p. 1357.)
Finally, Plaintiffs contend the trial court was required to grant their motion
because it found their theory of liability could be decided on a classwide basis. As
explained above, in deciding whether common issues predominate, the trial court was
required to consider whether plaintiff‟s theory of liability is likely to prove amenable to
class treatment. (Brinker, supra, 53 Cal.4th at p. 1021.) According to Plaintiffs, “[their]
theory of liability is that Plaintiffs and other class members were misclassified as
„exempt‟ because Tristar cannot prove the „general supervision‟ prong of the administrate
[employee] exemption.” Although the trial court found the general supervision prong of
the administrative employee exemption was appropriate for resolution on a classwide
basis, that determination did not require the court to grant Plaintiffs‟ motion.
Plaintiffs‟ purported theory of liability is not a theory of liability at all. As
explained above, exemptions from the statutory overtime requirements are affirmative
19
defenses on which the employer bears the burden of proof. The failure of an affirmative
defense may not give rise to liability unless the plaintiff first establishes an underlying
basis for liability. Here, the underlying basis for liability is Tristar‟s alleged failure to
pay class members for their overtime work. Only after Plaintiffs make that showing may
the court or jury reach the question whether Tristar misclassified the class members as
exempt. Plaintiffs‟ theory of liability therefore is actually a theory that Tristar‟s defense
fails, and the suitability of that defense to class treatment did not require the court to
grant Plaintiffs‟ motion without a showing there also was a liability theory that was
suitable to class treatment.
Based on our conclusion the trial court did not err in denying Plaintiffs‟
motion because Plaintiffs failed to establish that common issues predominated on their
overtime claims, we need not address the court‟s additional finding that class treatment
was inappropriate because Plaintiffs failed to show their claims were typical of the
proposed class. We simply note much of the foregoing analysis is applicable to the
court‟s typicality finding, and as explained above, typicality examines whether all class
members suffered the same or similar injuries, whether the class representatives‟ claims
are based on conduct that is not unique to them, and whether all class members have been
injured by the same course of conduct. (Martinez, supra, 231 Cal.App.4th at p. 375.)
2. The UCL Claim
Plaintiffs contend the trial court also erred by applying an improper legal
criterion in denying their class certification motion on the UCL claim. According to
Plaintiffs, their purported failure to present evidence showing the amount of overtime
worked by each putative class members was an improper basis for denying their motion
because “proof of injury as to the individual class members can never preclude [class]
certification of a UCL claim as a matter of settled California law.” Plaintiffs again
misconstrue the governing law and the trial court‟s ruling.
20
“„The UCL defines unfair competition as “any unlawful, unfair or
fraudulent business act or practice. . . .” [Citation.] Therefore, under the statute “there
are three varieties of unfair competition: practices which are unlawful, unfair or
fraudulent.” [Citation.]‟ [Citation.] If a defendant is found to have engaged in any of the
three varieties of unfair competition, „[t]he court may make such orders or judgments . . .
as may be necessary to prevent the use or employment by any person of any practice
which constitutes unfair competition, . . . or as may be necessary to restore to any person
in interest any money or property, real or personal, which may have been acquired by
means of such unfair competition.‟ [Citation.] The focus of the UCL is „on the
defendant‟s conduct, rather than the plaintiff‟s damages, in service of the statute‟s larger
purpose of protecting the general public against unscrupulous business practices.‟”
(Steroid Hormone Product Cases (2010) 181 Cal.App.4th 145, 154 (Steroid Cases).)
To advance that purpose, the UCL previously “„authorized any person
acting for the general public to sue for relief from unfair competition.‟” (In re Tobacco II
Cases (2009) 46 Cal.4th 298, 314 (Tobacco II).) Based on the UCL‟s broad language,
“California courts consistently held that liability for restitution under the UCL could be
imposed against a defendant without any individualized proof of causation or injury; the
plaintiff needed only to show that the defendant engaged in a practice that was unlawful,
unfair, or fraudulent and that the defendant may have acquired money or property by
means of that practice.” (Steroid Cases, supra, 181 Cal.App.4th at p. 154; see
Tobacco II, at p. 314 [“„Standing to bring such an action did not depend on a showing of
injury or damage‟”].)
In 2004, the electorate changed this broad standing rule under the UCL by
approving Proposition 64, which “amended the UCL to provide that a private action for
relief may be maintained only if the person bringing the action „has suffered injury in fact
and has lost money or property as a result of the unfair competition.‟” (Steroid Cases,
supra, 181 Cal.App.4th at p. 154.) Proposition 64 also amended the UCL to “explicitly
21
mandate[] that a representative UCL action [must] comply with Code of Civil Procedure
section 382[, the statutory provision governing class actions].” (Tobacco II, supra,46 Cal.4th at p. 314.)
“Questions arose as to the effect of the Proposition 64 amendments on UCL
class actions, particularly whether each class member must now establish that he or she
suffered injury in fact and lost money as a result of the unfair competition. The
California Supreme Court answered this question in Tobacco II, concluding that the
standing provision added by Proposition 64 „was not intended to have any effect at all on
unnamed members of UCL class actions.‟ [Citation.] Therefore, while a named plaintiff
in a UCL class action now must show that he or she suffered injury in fact and lost
money or property as a result of the unfair competition, once the named plaintiff meets
that burden, no further individualized proof of injury or causation is required to impose
restitution liability against the defendant in favor of absent class members.” (Steroid
Cases, supra, 181 Cal.App.4th at p. 154; see Tobacco II, supra, 46 Cal.4th at
pp. 320-321.)
Tobacco II, the Steroid Cases, and the other cases Plaintiffs cite address
standing requirements to bring an unfair competition claim under the UCL, including a
class action claim. (Tobacco II, supra, 46 Cal.4th at p. 306; Steroid Cases, supra,181 Cal.App.4th at pp. 154-155; see Bank of the West v. Superior Court (1992) 2 Cal.4th
1254, 1267; Prata v. Superior Court (2001) 91 Cal.App.4th 1128, 1144; State Farm Fire
& Casualty Co. v. Superior Court (1996) 45 Cal.App.4th 1093, 1105, disapproved on
other grounds in Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co.
(1999) 20 Cal.4th 163, 184-185.) Neither these cases nor Proposition 64, however,
changed what a class proponent must show to certify a class on a UCL claim.
(Tobacco II, at pp. 313, 319.) To bring a class action claim under the UCL, the
representative plaintiff must establish he or she has standing under the UCL, as amended
by Proposition 64, and that all of the foregoing requirements for a class action are
22
satisfied, including that common issues of fact or law predominate and that the
representative‟s claim is typical of the class. (Tobacco II, at p. 319.)
Indeed, subsequent appellate decisions have concluded Tobacco II is
“irrelevant” to a class certification motion “because the issue of „standing‟ simply is not
the same thing as the issue of „commonality.‟ Standing, generally speaking, is a matter
addressed to the trial court‟s jurisdiction because a plaintiff who lacks standing cannot
state a valid cause of action. [Citations.] Commonality, on the other hand, and in the
context of the class certification issue, is a matter addressed to the practicalities and
utilities of litigating a class action in the trial court. We see no language in Tobacco II
that suggests to us the Supreme Court intended our state‟s trial courts to dispatch with an
examination of commonality when addressing a motion for class certification. On the
contrary, the Supreme Court reiterated the requirements for maintenance of a class action,
including (1) an ascertainable class and (2) a „“community of interests”‟ shared by the
class members.” (Cohen v. DIRECTV, Inc. (2009) 178 Cal.App.4th 966, 981; see
Davis-Miller v. Automobile Club of Southern California (2011) 201 Cal.App.4th 106,
124; Steroid Cases, supra, 181 Cal.App.4th at p. 158.)
As explained above, and contrary to Plaintiffs‟ contention, the trial court
did not deny Plaintiffs‟ class certification motion based on their failure to present
individualized proof of injury by each potential class member. Rather, the court denied
the motion because Plaintiffs failed to satisfy the commonality requirement by presenting
evidence to show they could establish through common proof that Tristar required claims
examiners to work overtime. Substantial evidence supports that finding and it is
consistent with the governing legal standards.
23
III
DISPOSITION
The order is affirmed. Tristar shall recover its costs on appeal.
ARONSON, J.
WE CONCUR:
BEDSWORTH, ACTING P. J.
THOMPSON, J.
24
Filed 7/26/2017
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
VALERIE KIZER et al.,
Plaintiffs and Appellants, G052558
v. (Super. Ct. No. 30-2014-00707394)
TRISTAR RISK MANAGEMENT, ORDER MODIFYING OPINION
AND CERTIFYING OPINION FOR
Defendant and Respondent. PUBLICATION; NO CHANGE IN
JUDGMENT
It is ordered that the opinion filed in the above-entitled matter on June 26,
2017, is hereby MODIFIED as follows:
1. On page 2, the second sentence of the last paragraph, beginning with
“Rather, the court denied,” delete the word “that” between the words “failed to show”
and “whether the putative class members” so the sentence reads:
Rather, the court denied the motion because Plaintiffs failed to show
whether the putative class members worked any overtime at all was subject
to common proof.
2. On page 2, the third sentence of the last paragraph, beginning with
“To satisfy the commonality requirement,” insert the words “they could establish”
between the words “required to show” and “their liability theory,” and delete the words
“could be established” after the words “their liability theory” so the sentence reads:
To satisfy the commonality requirement for class certification, Plaintiffs
were required to show they could establish their liability theory on a
classwide basis through common proof.
3. On page 3, the second sentence of the first full paragraph, beginning
with “According to Plaintiffs,” delete the apostrophe from the word “Plaintiffs‟” found
between the words “therefore” and “were not required,” delete the words “of overtime”
between the words “amount” and “each putative class member,” and insert the word
“overtime” between the words “evidence of the” and “amount” so the sentence reads:
According to Plaintiffs, the UCL authorizes restitution and other relief
without a showing that each class member individually suffered injury, and
therefore Plaintiffs were not required to present evidence of the overtime
amount each putative class member worked.
4. On page 4, the third sentence of the second paragraph, beginning
with “According to Plaintiffs,” delete the words “based on the exempt classification it
applied to its claims examiners” at the end of the sentence and replace them with the
words “because it classified them as exempt under California law” so the sentence reads:
According to Plaintiffs, Tristar required its claims examiners to work more
than eight hours a day and 40 hours per workweek, but paid no overtime
because it classified them as exempt under California law.
5. On page 6, the third sentence of the second paragraph, beginning
with “Plaintiffs represented,” delete the word “represented” at the beginning of the
sentence and replace it with the word “asserted” so the sentence reads:
2
Plaintiffs asserted they could defeat the general supervision element by
presenting classwide evidence regarding Tristar‟s generally applicable
policies and procedures governing claims examiners and their work.
6. On page 7, the second sentence of the first full paragraph, beginning
with “According to the court,” delete the word “the” between the words “could not
complete” and “workload” and replace it with the word “Tristar‟s,” delete the word
“Tristar” following the word “workload,” and delete the word “assigned” and replace it
with the word “assignments” so the sentence reads:
According to the court, Plaintiffs presented evidence of the written job
requirements and Tristar‟s expectations for claims examiners, but the court
could not infer those requirements and expectations required claims
examiners to work overtime without evidence from an industry expert or
other claims examiners explaining they could not complete Tristar‟s
workload assignments without working overtime.
7. On page 13, the third sentence of the first full paragraph, beginning
with “Establishing a uniform policy,” delete the words “Establishing a” at the beginning
of the sentence and replace them with the words “Evidence of an employer‟s,” and delete
the words “that an employer consistently applied” following the words “uniform policy”
so the sentence reads:
Evidence of an employer‟s uniform policy to misclassify a group of
employees as exempt from overtime requirements is not sufficient to
support class certification because misclassification alone does not establish
liability for overtime violations.
8. On page 15, the second sentence of the first paragraph, beginning
with “Rather, the court denied,” delete the words “that whether” between the words
“failed to show” and “the potential class members” and replace them with the words
3
“they could establish through common proof that,” and delete the words “at all could be
established through common proof” at the end of the sentence so the sentence reads:
Rather, the court denied the motion because Plaintiffs failed to show they
could establish through common proof that the potential class members—
other than Plaintiffs—worked any overtime.
9. On page 15, third sentence of the second paragraph, beginning with
“Plaintiffs presented their own declarations,” insert the word “other” between the words
“testimony from any” and “claims examiners” so the sentence reads:
Plaintiffs presented their own declarations, but no declarations or testimony
from any other claims examiners.
10. On page 15, last sentence of the second paragraph, beginning with
“We must accept,” delete the words “must accept” at the beginning of the sentence and
replace them with the words “are in no position to second guess” so the sentence reads:
We are in no position to second guess the court‟s assessment of the
evidence.
11. On page 16, the sixth sentence of the first full paragraph, beginning
with “As explained above,” delete the words “with regard to overtime work” at the end of
the sentence so the sentence reads:
As explained above, Plaintiffs provided no declarations from any claims
examiners other than their own, and the court found their declarations were
merely anecdotal.
12. On page 18, the second sentence of the third paragraph, beginning
with “As explained above,” delete the words “denied the motion” between the words
“rather, the court” and “because Plaintiffs failed” and replace them with the words
“concluded class treatment was not appropriate,” delete the words “present any evidence
showing the question whether” following the words “Plaintiffs failed to” and replace
them with the words “show they could prove through common evidence that,” and delete
4
the words “could be shown by common evidence that made class treatment of Plaintiffs‟
overtime claim appropriate” at the end of the sentence so the sentence reads:
As explained above, the court did not deny Plaintiffs‟ motion because they
failed to show the number of overtime hours each potential class member
worked; rather, the court concluded class treatment was not appropriate
because Plaintiffs failed to show they could prove through common
evidence that Tristar generally required all claims examiners to work
overtime.
13. On page 19, the last sentence of the second paragraph, beginning
with “Unlike here,” delete the word “hour” between the words “more than eight” and “a
day” and replace it with the word “hours” so the sentence reads:
Unlike here, the evidence in Williams included numerous declarations from
class members explaining their workload regularly required them to work
more than eight hours a day and 40 hours a week.
14. On page 19, the second sentence of the third paragraph, beginning
with “As explained above,” delete the words “was required to” between the words “the
trial court” and “consider whether” and replace them with the word “must” so the
sentence reads:
As explained above, in deciding whether common issues predominate, the
trial court must consider whether plaintiff‟s theory of liability is likely to
prove amenable to class treatment.
15. On page 20, the first full sentence at the top of the page, beginning
with “The failure of an affirmative defense,” delete the entire sentence and replace it with
the following sentence:
A plaintiff must first establish an underlying basis for liability before
affirmative defenses are considered.
5
16. On page 20, the third full sentence at the top of the page, beginning
with “Only after plaintiffs make,” delete the words “court or jury” between the words
“showing may the” and “reach the question” and replace them with the words “fact
finder” so the sentence reads:
Only after Plaintiffs make that showing may the fact finder reach the
question whether Tristar misclassified the class members as exempt.
These modifications do not change the judgment.
The Employers Group and the California Employment Law Council have
requested that we certify our opinion for publication. It appears that our opinion meets
the standards set forth in California Rules of Court, rule 8.1105(c). The request is
GRANTED.
ARONSON, J.
WE CONCUR:
BEDSWORTH, ACTING P. J.
___________________________
THOMPSON, J.
6