It has been an eventful couple of weeks in the development of California class action jurisprudence. Jones v. Farmers was published on November 26, 2013; Hendleman v. Los Altos Apartments was depublished on the same day; and Martinez v. Joe's Crab Shack was published on December 4, 2013.
Then, last Friday, came Williams v. Superior Court (Allstate Ins. Co.), ___ Cal.App.4th ___ (Dec. 6, 2013). In Williams, the Court of Appeal (Second Appellate District, Division Eight) reversed an order granting the defendant's motion for decertification, which the trial court had issued in the wake of Dukes.
The case asserted overtime claims on behalf of non-exempt field insurance adjusters who were not compensated for time worked at the beginning and the end of the day. Instead of tracking and paying for this time, Allstate's uniform policy was to assume that the adjusters did not begin working until the start time of the day's first field appointment. Slip op. at 2-4.
Initially, in June 2010, the trial court granted class certification. In June 2011, the U.S. Supreme Court handed down Dukes. In July 2012, the trial court granted Allstate's motion to decertify the class. Slip op. at 5-6. The order reasoned that Dukes "has changed the law," and that "[a]fter Dukes, Allstate is entitled to litigate its defenses to each individual class member," including the defense that certain adjusters never worked unpaid overtime despite Allstate's uniform policy, as well as the defense that overtime worked by certain adjusters was de minimis. Id. at 5 (quoting order at 1, 2).
The plaintiff filed a writ petition, which the Court of Appeal summarily denied in October 2012. Undiscouraged, he filed a review petition with the California Supreme Court, and in December 2012, that court issued a "grant and transfer" order, directing the Court of Appeal to consider the writ petition on the merits. Williams v. Superior Court (Allstate Ins. Co.), No. S206441.
As an initial matter, the Court of Appeal opinion summarizes the standards governing motions for decertification of a certified class, stressing the defendant's burden to show "a significant change in circumstances":
Decertification requires new law or newly discovered evidence showing changed circumstances. (Weinstat v. Dentsply Internat., Inc. (2010) 180 Cal.App.4th 1213, 1225.) A motion for decertification is not an opportunity for a disgruntled class defendant to seek a do-over of its previously unsuccessful opposition to certification. “Modifications of an original class ruling, including decertifications, typically occur in response to a significant change in circumstances, and ‘[i]n the absence of materially changed or clarified circumstances . . . courts should not condone a series of rearguments on the class issues.’ [Citation.].” (Driver v. AppleIllinois, LLC (N.D. Ill., Mar. 2, 2012, No. 06 C 6149) 2012 WL 689169, *1 (Driver).) “A class should be decertified ‘only where it is clear there exist changed circumstances making continued class action treatment improper.’ ” (Green v. Obledo (1981) 29 Cal.3d 126, 147.)
Slip op. at 7 (emphasis added).
Because the trial court relied wholly on Dukes in decertifying the class, the opinion discusses Dukes at length. It is the first California appellate-level court to correctly acknowledge that the infamous "trial by formula" language of Dukes appeared in a section of Dukes addressing, first of all, Rule 23(b)(2) class actions (not (b)(3) cases), and, secondly, the unique statutory procedures of Title VII cases. On the latter point, the opinion explains:
The Supreme Court’s second area of focus in Part III of Dukes involved the statutory affirmative defenses in the anti-discrimination statute Title VII. Because the affirmative defenses were statutory, Dukes concluded a class proceeding could not deprive Wal-Mart of its right to present those defenses. (Dukes, supra, 131 S.Ct. at pp. 2560-2561.) As those affirmative defenses required individualized evidence, Dukes disapproved a “Trial by Formula” of Wal-Mart’s affirmative defenses because it prevented Wal-Mart from offering its individualized evidence. (Id. at p. 2561.)
Slip op. at 11 (emphasis added).
This aspect of Dukes is something that I, and many other members of the plaintiffs' class action bar, have been trying to emphasize since Dukes was first handed down. See, e.g., Kimberly A. Kralowec, “Dukes and Common Proof in California Class Actions,” 21 Competition 9, 11-12 (Summer 2012); Brief for Amicus Curiae National Employment Lawyers Association in Support of Appellees' Petition for Panel Rehearing, Wang v. Chinese Daily News, Inc., Nos. 08-55483 & 08-56740 (9th Cir. Mar. 28, 2013); Brief of Amicus Curiae California Employment Lawyers Association in Support of Respondents Sam Duran et al., Duran v. U.S. Bank Nat'l Assn., No. S200923 (Cal. May 8, 2013).
The panel then explained that the claim for unpaid overtime was properly certified for class treatment under the framework of Dukes itself, and that the claim should not have been decertified:
At the certification stage, the concern is whether class members have raised a justiciable question applicable to all class members. Although Allstate may have presented evidence that its official policies are lawful, “this showing does not end the inquiry.” (Jimenez, supra, 2012 WL 1366052, *8.) Here, the question is whether Allstate had a practice of not paying adjusters for off-the-clock time. (Ibid.) The answer to that question will apply to the entire class of adjusters. If the answer to that question is “yes” – which is the answer the trial court initially assumed when it first certified the Off-the-Clock class, and is the answer we must presume in reviewing decertification (Brinker, supra, 53 Cal.4th at p. 1023) – then, in Duke’s [sic] phrase, that answer is the “glue” that binds all the class members. (Dukes, supra, 131 S.Ct. at p. 2552 [a class requires the “glue” of a single answer for a question applicable to all class members].)
Slip op. at 12 (emphasis added).
The panel then turned to, and rejected, Allstate's argument that certification should be denied because Allstate could show that some adjusters may not have worked any unpaid overtime:
An unlawful practice may create commonality even if the practice affects class members differently. “[C]lass treatment does not require that all class members have been equally affected by the challenged practices—it suffices that the issue of whether the practice itself was unlawful is common to all.” (Jacks v. DirectSat USA, LLC (N.D. Ill. 2012) 2012 WL 2374444, *6 ....) It may be true that some adjusters never worked off the clock, and such adjusters were thus not injured by Allstate’s practice of adjusters working off the clock. But the existence of individuality as to damages does not defeat class certification. (Jimenez, supra, 2012 WL 1366052, *19 [“[O]vertime claims may present a number of individualized questions, including whether individual employees worked off-the-clock. [Citation.] Nonetheless, courts have certified classes and allowed collective actions to proceed notwithstanding such circumstances. . . . [¶] Here, Plaintiffs allege a company-wide policy of discouraging and limiting overtime.”]; Espinoza v. 953 Assocs. LLC, supra, 280 F.R.D. at p. 130 [“Plaintiffs allege that Defendants failed to pay minimum wages and overtime compensation as a result of certain policies and practices. Although plaintiffs’ claims may raise individualized questions regarding the number of hours worked and how much each employee was entitled to be paid, those differences go to the damages that each employee is owed, not to the common question of Defendants’ liability.”].)
Slip op. at 18-19 (emphasis added).
Achieving this result required some top-flight legal work by plaintiff's counsel. Sparking the interest of the California Supreme Court after the Court of Appeal summarily denied their writ petition was an especially impressive accomplishment. Congratulations to Kevin Barnes, Gregg Lander and Jim Trush. A copy of their successful petition for review can be downloaded at this link.