On August 26, 2004, the California Supreme Court decided Sav-On Drugstores vs. Superior Court—a decision that will likely increase the number of overtime class actions pursued in California. The Sav-On decision reversed an appellate decision that had made it more difficult for the plaintiffs’ lawyers to have overtime exemption cases certified as class actions. The practical effect of Sav-On is its confirmation that overtime class actions may, on an appropriate evidentiary record, more readily be certified—a realization that will require employers and their counsel to rethink their strategy for opposing class certification.
The Sav-On plaintiffs claimed that Sav-On had misclassified operating managers (OMs) and assistant managers (AMs) as exempt from the overtime laws. The trial court granted the plaintiffs’ motion for class certification, finding there were predominant common questions of fact and law. The Court of Appeal reversed, holding that, because the actual activities performed by the OMs and AMs and the amount of time spent by each on exempt activities varied significantly from individual to individual and store to store, no meaningful generalizations about the purported class could be made.
The Supreme Court agreed with the trial court and rejected Sav-On’s argument that whether class members were misclassified depended on individual determinations concerning each class member’s job responsibilities. The court accepted the trial court’s conclusion that the common issues of which responsibilities were managerial and which were not managerial predominated. Applying an abuse of discretion standard, the court held that "[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."
The court also expressed that normally class actions should be allowed to proceed, with the understanding that if unanticipated or unmanageable individual issues arise, the trial court retains the option of decertification, and recognized that evidence of such common behavior could be established through statistical evidence, sampling evidence, expert testimony, and any other potential indicators of a defendant’s centralized practices. The court ultimately stated that class actions are a tool to preserve efficiency, and that trial courts are encouraged to be procedurally inventive in order to permit the certification of class actions in order to avoid multiple trials on common issues.
Although the Sav-On decision may be viewed as a victory for the plaintiffs’ class action bar, the Supreme Court did not purport to decide that all overtime exemption cases should be certified as class actions. The plaintiffs had presented evidence, credited by the trial court, that Sav-On’s practices did not vary from store to store or from employee to employee. By applying an abuse of discretion standard, the court held only that the trial court could reasonably have credited this evidence over the contrary evidence presented by Sav-On. The court stated, "[w]e need not conclude that plaintiffs’ evidence is compelling, or even that the trial court would have abused its discretion if it had credited defendant’s evidence instead." Although the decision may lower the bar for a finding of predominance in overtime exemption cases, it nevertheless allows trial courts substantial discretion in making the certification decision based on the specific facts of each case.
The Sav-On decision also demonstrates the importance of correctly classifying employees. Employers should take particular note that both the trial court and the Supreme Court considered the evidence that Sav-On had reclassified all assistant managers from exempt to non-exempt during the class period with "no change in the job descriptions or job duties" to be evidence that the employees had been misclassified as exempt. It is prudent for employers who are considering making any changes in such classifications to consult with labor counsel.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
