9th Circuit Taketh Away in an Amended Opinion

We posted about the Ninth Circuit's post-Wal-Mart v. Dukes decision in Wang v. Chinese Daily News here.   This was an overtime class action involving newspaper employees. The Court of Appeals in the earlier opinion remanded the case to the district court for reconsideration of its class certification decision after Wal-Mart v. Dukes.

The plaintiffs apparently sought a rehearing. The Court issued an amended opinion instead.  The Court softened some of its language in the first opinion.  For example, it removed this line, quoted from its own precedent, addressing the plaintiffs' burden of proof on a motion for class certification:

Plaintiffs must show “significant proof that [CDN] operated under a general policy of [violating California labor laws].” Ellis, 657 F.3d at 983 (quoting Wal-Mart, 131 S. Ct. at 2553 (alteration omitted)).

The Court in the first opinion foreclosed class certification for injunctive relief Fed. R. Civ. Pro. 23(b)(2)

Further, it appears that none of the named plaintiffs has standing to pursue injunctive relief on behalf of the class, as none of them is a current CDN employee. See Wang, 623 F.3d at 756. We therefore reverse the district court’s class certification under Rule 23(b)(2).

In the new opinion, the Court opened the door to injunctive relief:

It appears that none of the named  plaintiffs has standing to pursue injunctive relief on behalf of the class, as none of them is a current CDN employee. See Wang, 623 F.3d at 756. However, because the Rule 23(b)(2) class was certified by the district court while they were current employees, the class certification with respect to injunctive relief may survive if there are identifiable class members who are still employed by CDN.

The Court's new opinion also deletes the section of the prior opinion called "Damages."  In the first opinion the Court wrote this, which could have been helpful to defense lawyers in class action cases:

in Wal-Mart, the Supreme Court disapproved what it called “Trial by Formula,” wherein damages are determined for a sample set of class members and then applied by extrapolation to the rest of the class “without further individualized proceedings.” Wal-Mart, 131 S. Ct. at 2561. Employers are “entitled to individualized determinations of each employee’s eligibility” for monetary relief. Id. at 2560. Employers are also entitled to litigate any individual affirmative defenses they may have to class members’ claims. Id. at 2561. 

Poof. That language is gone from the amended opinion. The Court mentions in the new opinion that it expresses no opinion regarding damages.
The case is Wang v. Chinese Daily News and the amended opinion is here. 

Court of Appeal: On-Call and Sleep Time

CPS guards construction sites.  Some of the security guard employees sleep in on-site trailers.  CPS compensated them for the time they were required to investigate potential problems at the sites, such as break ins.  Otherwise, the employees were considered "on call," but were uncompensated.

On weekday shifts, employees actively worked 8 hours and were "on-call" for eight hours.  On weekends, employees worked 16 hours and were "on call" for eight.  During weekday periods when the construction crews were working, the live-in employees were free to do as they pleased, leave the facility, etc.

The employees who lived in trailers could keep personal items and could have visitors as the client permitted. But families were not permitted to live within the trailers. The trailers were basically small, self-contained, mobile apartments with cleaning facilities, etc.

The live-in employees signed on-call agreements, which provided for circumstances under which the employees could leave the trailers during on-call time:

if a trailer guard wished to leave the jobsite during on-call hours, he or she was required to (1) notify a dispatcher, (2) provide information as to where the guard would be and for how long, and (3) wait for the reliever to arrive.6 After leaving the jobsite, the guard was required to remain within a 30-minute radius and carry a pager or radio telephone. If called during that time, the guard was required to respond immediately. The trailer guards were not allowed to leave a jobsite before a reliever arrived. If no reliever was available, CPS had the right to order a trailer guard to remain at the jobsite, even if the trailer guard had an emergency.

The company did not consider on-call time to be hours worked, but paid employees for time they waited for a reliever or were denied a reliever, as well as when they have to investigate alarms or noises.

Employees sued, claiming they should have been paid for all on-call time, not just the time actually working. The parties agreed that Wage Order 4-2001 applied.

The trial court issued a preliminary injunction, ordering CPS to pay for on-call time pending the resolution of the lawsuit. CPS appealed.  Interestingly, one of the class reps lost a DLSE hearing on the same issue.  Additionally, CPS had sought guidance from the DLSE and U.S. DOL, and conformed its practices based on the opinions received.  Nevertheless, the lawsuits continued and the trial court granted summary adjudication in favor of the plaintiff, holding that the employees should be paid for all on-call time.

So, the issue on review was whether the time employees spent in their trailers should count as "hours worked" under Wage Order 4.  "Hours worked" are “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.” 

The court thoroughly reviewed what it means to be subject to the employer's control, and cited this seven-factor test for on-call situations:

In resolving the degree to which employees are able to engage in private pursuits during on-call time, courts generally apply seven factors: “„(1) whether there was an on-premises living requirement; (2) whether there were excessive geographical restrictions on [the] employee‟s movements; (3) whether the frequency of calls was unduly restrictive; (4) whether a fixed time limit for response was unduly restrictive; (5) whether the on-call employee could easily trade on-call responsibilities; (6) whether use of a pager could ease restrictions; and (7) whether the employee had actually engaged in personal activities during call-in time.‟”

Applying this and other legal principles discussed in the opinion, the court concluded that the weekday on call time should have been paid as hours worked:

By their presence on site during the on-call hours, the guards perform an important function for their employer and its clients: they deter theft and vandalism. CPS promises its clients security services throughout the night and for 24 hours on Saturday and Sunday, and would be in breach if no security guards were present between 9:00 p.m. and 5:00 a.m. The parties‟ On-Call Agreements designate that period as “free time,” but it is clear from the Agreements and the stipulated facts that trailer guards are not free to leave at will. A guard may leave only when and if a reliever is available. From this, it can reasonably be said that the restrictions on the on-call time are “primarily directed toward the fulfillment of the employer‟s requirements,” and the guards are “substantially restricted” in their ability to engage in private pursuits.



* * *


They are required to live on the jobsite. They are expected to respond immediately, in uniform, when an alarm sounds or they hear suspicious noise or activity. During the relevant hours, they are geographically limited to the trailer and/or the jobsite unless a reliever arrives; even then, they are required to take a pager or radio telephone so they may be called back; and they are required to remain within 30 minutes of the site unless other arrangements have been made. They may not easily trade their responsibilities, but can only call for a reliever and hope one will be found.24

Most important, the trailer guards do not enjoy the normal freedoms of a typical off-duty worker, as they are forbidden to have children, pets or alcohol in the trailers and cannot entertain or visit with adult friends or family without special permission. On this record, we conclude the degree of control exercised by the employer compels the conclusion that the trailer guards‟ on-call time falls under the definition of “hours worked” under California law.

However, the court then decided that the on-call time during the weekend, 24-hour shifts was not hours worked. The court relied on decisions holding that employers may deduct 8 hours of sleep time from employees' work time when they are engaged in 24-hour shifts.  The ruled the following standard would apply to 24-hour shifts:

There are sound reasons for permitting an employer who engages an employee to work a 24-hour shift and compensates him or her for 16 of those hours to exclude the remaining eight hours for sleep time, as long as the time is uninterrupted, a comfortable place is provided, and the parties enter into an agreement covering the period. Most employees would be sleeping for a similar period every day, whether on duty or not, and the compensation provided for the other 16 hours, which should generally include considerable overtime, ensures that the employees receive an adequate wage

So, employers seeking to avoid payment for 24-hour "live in" shifts under Wage Order 4 should ensure: there is an agreement to exclude sleep time, there is a comfortable place to sleep, and the sleep time generally is interrupted.  If the sleep period is interrupted, the agreement should provide for compensation for time worked, and for the entire period if there are frequent or considerable interruptions.


The case is Mendiola v. CPS Security Solutions, Inc. and the opinion is here.

9th Circuit: California Wage Hour Class Action Should Be Certified

Employees of Medline Industries brought a wage and hour class actions, which Medline removed to federal court.  The claims included "rounding," improper calculation of the "regular rate" for overtime purposes, waiting time penalties, and inadequate wage statements. 

The district court refused to certify the class because, although there were common questions, the individualized assessments of which employees were entitled to damages, and how much, outweighed the common issues.

The Ninth Circuit held the district court abused its discretion.  The court explained that individual damage assessments do not defeat class certification if liability can be determined via common proof.

Of note, the court distinguished the U.S. Supreme Court's recent decision in Comcast Corp. v.Behrend, 133 S. Ct. 1426, 1435 (2013):

In Comcast, the Supreme Court reversed an order granting class certification because the plaintiffs relied on a regression model that “did not isolate damages resulting from any one theory of antitrust impact.” Id. at 1431. The Court concluded that “a model purporting to serve as evidence of damages in this class action must measure only those damages attributable to that theory.” Id. at 1433.

Here, unlike in Comcast, if putative class members prove Medline’s liability, damages will be calculated based on the wages each employee lost due to Medline’s unlawful testimony of Medline’s director of payroll operations, andMedline’s Notice of Removal. Those documents show that

Medline’s computerized payroll and time-keeping database would enable the court to accurately calculate damages and related penalties for each claim.

So, this case will proceed as a class action, and the Comcast decision does not preclude class certification when there are individual damages issues, when there is a reliable way of establishing each class member's damages.

This case is Leyva v. Medline Industries, Inc. and the opinion is here.

Court of Appeal: Meal/Rest/Wage Statement Class Action Should Be Certified

Safeway compensated truck drivers based on a compensation formula rather than a straight hourly rate: 

The collective bargaining agreements also obligated Safeway to utilize what it calls an activity based compensation system to determine the drivers‟ wages. Pay was calculated based on (1) mileage rates applied according to the number of miles driven, the time of day the trips were taken, and the locations where the trips began and ended; (2) fixed rates for certain tasks (e.g., rates for number of pallets delivered and picked up); (3) an hourly rate for a predetermined amount of minutes for certain tasks (e.g., paid for 10 minutes at hourly rate for set-up time at each store); and (4) an hourly rate for delays (e.g., breakdowns, impassable highways, time spent at scales, or other causes beyond the driver‟s control).

Drivers logged their mileage and activities for each trip manually on trip sheets. They also logged their activities into an onboard computer system known as the XATA system. Through XATA, Safeway tracked the drivers' moves, including their stops. The drivers input codes into XATA to record specific reasons for delays. Neither the trip sheets nor the XATA system, however, provided a place or means to record meal or rest periods.

 
So, the compensation system did not include separate payment for contractually and legally required rest periods.  Safeway argued that the paid rest periods were included in its compensation formula, presumably because the payment for miles and tasks assumed the rest periods would be taken during these activities.  Safeway also had drivers sign time cards to acknolwedge they were authorized and permitted to take rest periods. 
The trial court refused to certify a sub-class of rest period claims.  But the court of appeal reversed.  The court held Safeway's system of compensation was akin to a piece rate method of compensation.  And, the court decided, California law does not allow paid rest periods to be included in piece rates because it was an improper averaging of compensation: 

under the rule of Armenta v. Osmose, Inc. (2005) 135 Cal.App.4th 314, 323 (Armenta), rest periods must be separately compensated in a piece-rate system. Rest periods are considered hours worked and must be compensated. (Cal. Code Regs., tit. 8, §§ 11070, subd. 12; 11090, subd. 12.) Under the California minimum wage law, employees must be compensated for each hour worked at either the legal minimum wage or the contractual hourly rate, and compliance cannot be determined by averaging hourly compensation.

The court expressly held that there was a common issue for determining liability - that the compensation system did not compensate employees for paid rest periods separately. The court did so by holding that piece rates may not include payment for rest periods. That is another way of saying that there was no payment for rest periods as a matter of law.

With all respect to the court of appeal, this decision seems to over-analyze the merits of the case.  The court seems to be saying the common proof is that all rest periods were paid incorrectly as a matter of law.  Without saying so, therefore, the court essentially granted summary judgment for the plaintiff rather than just class certification. 

While we're talking about the merits, I am not sure I understand why the piece rate payment cannot include implied payment for rest periods, as Safeway testified it did. An hourly pay rate does not expressly include payment for rest periods either.  During the hour that an employee takes a rest period, he is paid the same hourly rate, but simply works less.  During the hour that an employee does not take a rest period, she receives the same rate as if she did take one. Employers likely set their hourly rates under the assumption that the employee will take a rest period during one of every four hours worked.  The hourly rate therefore "averages" compensation, which the cout said could not be done.   Anyway, I don't get a vote.  So, I descend from my soap box, dejected.

The court also certified a meal period sub-class class on the basis that there was a common issue regarding whether Safeway adequately provided second meal periods before 2006, which is when the case was filed.  The court did not reach the plaintiff's argument that Safeway did not do enough to ensure drivers were relieved of duty, because the one common issue was enough for class certification.  This part of the decision may not be all that significant to employers who adequately provide for both meal periods per Brinker.  Safeway changed practices in 2006.

Finally, the court of appeal decided the wage statement sub-class should be certified.  The court agreed that the wage statement did not adequately spell out wage rates applicable to miles driven, such that the employees would have to refer to their own trip sheets to verify whether they received adequate compensation and engage in mathematical calculations:

Plaintiff‟s argument goes to the structure of the wage statements. As a result, his and the other drivers‟ claims of injury on account of the wage statements will be resolved by means of common proof. The structural omissions in the wage statements, and their alleged violation of Labor Code section 226, are, like employer policies, the types of matters best resolved by class adjudication.

There have been other decisions regarding  piece rates lately. See, e.g., here.  Employers should review their compensation plans to ensure compliance with minimum wage, overtime, meal and rest period laws.

This case is Bluford v. Safeway Stores, Inc. and the opinion is here.

Court of Appeal: Union Contracts Must Clearly and Unmistakably Waive Rights Under California Vacation Law

It's California employment law 101 that employers must pay out all "vested" vacation time when an employee's employment ends.  No "use it or lose it" and no limits on "carry over" are allowed under Labor Code Section 227.3.  There's an exception in the statute though, which says the statute applies "[u]nless otherwise provided by a collective-bargaining agreement."

What does "otherwise provided" mean?  Well employer Celite had a collective bargaining relationship, and their agreement provided as follows, according to the Court of Appeal:

Celite granted its employees between one and five weeks of vacation annually. Each January, Celite calculated a yearly "vacation allotment" based on each employee's length of employment and the number of hours they worked the year before. [The] employees terminated from Celite were entitled to "receive whatever vacation allotment is due them upon separation."[fn] For 25 years, both Celite and the Union understood this provision to refer to the "vacation allotment" as defined above. Accordingly, Celite paid terminated employees for the vacation time already allotted to them for the year of their termination, but did not pay them the vacation time they had accrued toward the next year's allotment.

The description above suggests that the contract required payment of whatever vacation balance the employee had, but did not take into account "accrual" of vacation during the current year.  Pretty clear to me.

 

Not clear enough for the Court of Appeal, though, and I don't get a vote.  The Court decided that because vacation pay is a significant state-law right, any waiver of 227.3's requirements had to be "clear and unmistakable." Here's what the Court said:

To be clear and unmistakable, a waiver must do more than speak in "'[b]road, general language." (Vasquez, supra, 80 Cal.App.4th at p. 435.) It must be specific, and mention either the statutory protection being waived or, at a minimum, the statute itself. (Accord, Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1208.) The Agreements here neither mention pro rata vacation pay nor cite section 227.3. Celite points out that the Agreements "affirmatively address" vacation payments upon termination. But discussing a topic while at the same time saying nothing about the statutory right at issue does not affect a clear and unmistakable waiver of that right.

So, please check your union contracts and either negotiate a clear provision that waives Section 227.3 expressly and, preferably, quotes the statute.  This is why California release agreements quote Civil Code Section 1542, in case you've ever wondered about that.

On the bright side, the Court of Appeal decided the employer did not act "willfully" by following the collective bargaining agreement and, therefore, was not on the hook for "waiting time" penalties.  The court said that this was the first opinion deciding the standard for waivers under Section 227.3, and so the employer's mistake of law was not "willful."

Some times I wonder what all those class action plaintiff lawyers are doing after Brinker and Dukes v. Walmart put a damper on things.  (Ok, not really).  Well, here is the Court of Appeal riding to the rescue. 

It may be that the California or even U.S. Supreme Court may review this case, but the odds are long. If this case stays on the books, all union contracts prescribing a vacation payout provision that is less generous than Section 227.3 are subject to attack.  Make with the bargaining, employers.

The case is Choate v. Celite Corporation, and the opinion is here.

U.S. Supreme Court Holds Settlement Offer Thwarted FLSA Collective Action

Laura Symczyk, a nurse, challenged her employer's policy of "auto-deducting" a half hour for meal breaks, claiming that she and others "similarly situated" worked "off the clock."  She brought a "collective action" under the federal Fair Labor Standards Act, which is essentially an "opt-in" class action. That is, the other employees are given a chance to "opt in" to the action. In a class action, once certified, the unnamed class members are given a chance to "opt out" or they are bound by the judgment or settlement.

The courts never reached the auto-deduct issue.  The employer answered the complaint and simultaneously made an "offer of judgment" under Federal Rule of Civil Procedure 68. The offer was for $7500 plus attorneys fees and costs as determined by the court.  (Because it was the very beginning of the case, the employer must have figured the attorney's fees would be low).

The plaintiff ignored the Rule 68 offer.  The employer then brought a motion to dismiss the case, arguing that the Rule 68 offer completely compensated the plaintiff for her claims, and rendered it "moot" because she no longer had a stake in the case.  Therefore, she had no basis for leading the collective action against the employer.

The lower courts agreed that the settlement offer would have given the plaintiff complete relief. The district court dismissed the claim, but the Third Circuit Court of Appeals held the class action could proceed because the employer was trying to "pick off" the name plaintiff.

The Supreme Court assumed without deciding that an unaccepted Rule 68 offer would "moot" a claim if it offered complete relief. The Court did so because the plaintiff conceded that point in the courts below.

Based on that assumption and the plaintiff's concession, the Court decided that the claim could not proceed:  Justice Thomas, writing for 5 justices, wrote:

In the absence of any claimant’s opting in, respondent’s suit became moot when her individual claim became moot, because she lacked any personal interest in representing others in this action. While the FLSA authorizes an aggrieved employee to bring an action on behalf ofhimself and “other employees similarly situated,” 29 U. S. C. §216(b), the mere presence of collective-action allegations in the complaint cannot save the suit frommootness once the individual claim is satisfied
***
[W]e conclude that respondent has no personal interest inrepresenting putative, unnamed claimants, nor any other continuing interest that would preserve her suit from mootness. Respondent’s suit was, therefore, appropriatelydismissed for lack of subject-matter jurisdiction.

Justice Kagan wrote for 4 dissenters.  She in essence argues that an unaccepted offer does not moot the case, which the majority did not decide because the plaintiff conceded the point and the lower courts so held.  Justice Kagan in essence "yelled" at the lower courts that this approach was "wrong, wrong, and wrong again."  (We'll see if those who criticize Justice Scalia when he gets sassy objects to her rather caustic opinion, which I enjoyed reading a lot by the way).

To me, the plaintiff should be able to reject an offer and continue litigating, hoping to do better than the offer of judgment.  The issue here is that the plaintiff agreed she could not have obtained a more favorable result on her individual claim.  Plaintiffs in future cases may not make that concession which, as Justice Kagan predicts, will render this case inapplicable to most future claims.

Anyway, it remains to be seen how this case will affect future FLSA collective actions.  California law regarding offers to compromise is governed by Code of Civil Procedure Section 998, so state-law cases are not directly affected.  But we will have to stay tuned to see whether California courts follow the federal approach.

The opinion is Genesis Healthcare Corp. v. Symczyk and you can read it (and the dissent) here.

Court of Appeal Affirms Denial of Class Certification

The court of appeal decided in a retail exemption case that the trial court ruled within its discretion to de-certify or preclude class action status.  The  case involved Sears automotive center managers and a dispute over whether they were correctly classified as exempt. The trial court issued a brief order denying certification, which the plaintiff appealed.

The appellate court's analysis focused on a few issues of interest. First, the trial court has discretion to credit one party's evidence over the other party's conflicting evidence. Second, the appellate court defers to the trial court's discretion by inquiring only whether there is substantial evidence supporting the trial court's ruling.  It does not matter if the other side also offered enough evidence to support a contrary ruling. 

Third, the court emphasized that an employer's uniform policy or classification of a group of employees as exempt is not going to suffice as a "predominating" common issue to warrant class action treatment. Rather, the trial court is supposed to determine whether the actual work performed by the potential class members is susceptible to common questions and answers.

And that brings us to the important part of the opinion. The court rejected the plaintiff's attempt to offer a statistician's opinion that one could "sample" a small group of managers to predict whether all class members were exempt or non-exempt.

To obtain class certification, Dailey was required to demonstrate the predominance of common questions of law or fact. . . . We have found no case, and Dailey has cited none, where a court has deemed a mere proposal for statistical sampling to be an adequate evidentiary substitute or demonstrating the requisite commonality, or suggested that statistical sampling may be used to manufacture predominate common issues where the factual record indicates none exist. If the commonality requirement could be satisfied merely on the basis of a sampling methodology proposal such as the one before us, it is hard to imagine that any proposed class action would not be certified.
***
[C]ourts have held that when the class action proponent fails to satisfy the threshold requirement of commonality, as occurred here, the trial court does not err in rejecting the use of statistical sampling or other methodologies to establish liability as to the whole proposed class. (See, e.g., Mora, supra, 194 Cal.App.4th at pp. 501, 509-510 [rejecting argument that trial court erred in failing to consider survey methodology proposed by plaintiffs' expert to measure the amount of time employees spent on exempt versus nonexempt tasks, in light of that court's reasonable conclusion that common questions of fact or law did not predominate over individual ones]; Dunbar v. Albertson's Inc. (2006) 141 Cal.App.4th 1422, 1432 (Dunbar) [no error in court's conclusion — and in its implicit rejection of the use of surveys and exemplar evidence — that the "findings as to one grocery manager could not reasonably be extrapolated to others given the variation in their work"].)

 The court of appeal also rejected the notion that the absence of a formal policy regarding meals and breaks for exempt employees supports class certification:

Dailey also is not helped by evidence that Sears does not have formal written policies regarding rest breaks and meal periods for salaried managers, does not ensure that breaks are taken, and does not keep records of breaks these employees take. First, such evidence is consistent with Sears's contention that Managers and Assistant Managers are exempt employees. Second, to the extent this evidence relates to whether Managers and Assistant Managers actually take uninterrupted breaks, or to whether Sears enforces meal and rest periods, that evidence is not directly relevant after Brinker. (Brinker, supra, 53 Cal.4th at pp. 1034, 1040-1041.) Finally, the absence of a formal written policy explaining salaried managers' rights to meal and rest periods does not necessarily imply the existence of a uniform policy or widespread practice of either depriving these employees of meal and rest periods or requiring them to work during those periods. Sears presented substantial evidence that no one prevents Managers and Assistant Managers from taking meal and rest breaks, and they are free to do so as they deem appropriate. As explained previously, the trial court was entitled to credit this testimony over contrary inferences suggested by Dailey's evidence. (See, e.g., Sav-On, supra, 34 Cal.4th at p. 331.)

The case is Dailey v. Sears, Roebuck & Co. and the opinion is here.

Ninth Circuit: Class Action Erroneously Certified Given Wal-Mart v. Dukes

Back in 2004, employees of the Chinese Daily News started a class action, claiming mis-classification, unpaid overtime and denied meals and breaks.  The trial court eventually certified a class, and the employees won summary judgment on whether reporters for the newspaper qualified under the professional exemption.  The employees won millions of dollars after trial, which the Ninth Circuit affirmed.

Not so fast, said the Supreme Court.  Following the Supreme Court's Wal-Mart Stores v. Dukes decision (discussed here), the Supreme Court vacated the Ninth Circuit's decision in this case.  The Ninth Circuit decided that Wal-Mart requires reconsideration of the decision and sent it back to the district court.

Why? The trial court did not apply the proper analysis (after Wal-Mart) to determine whether there is sufficient commonality to certify the class.  As explained by the Court:

On remand, the district court must determine whether the  claims of the proposed class “depend upon a common contention . . . of such a nature that it is capable of classwide resolution — which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Wal-Mart, 131 S. Ct. at 2551.

So, it's not enough that there are "common questions" in the abstract, because, as the Ninth Circuit stated (quoting Wal-Mart and its own later decision in Ellis v. Costco):

"any competently crafted class complaint literally raises common questions.” Wang [sic], 131 S. Ct. at 2551 (alteration and internal quotation marks omitted). “What matters to class certification is not the raising of common questions — even in droves — but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation.” Id. (alteration and internal quotation marks omitted). Dissimilarities within the proposed class may “impede the generation of common answers.” Id. “If there is no evidence that the entire class was subject to the same allegedly
discriminatory practice, there is no question common to the class.” Ellis v. Costco Wholesale Corp., 657 F.3d 970, 983 (9th Cir. 2011).

The Ninth Circuit also decided that the district court would have to reconsider whether certification is appropriate under Federal Rule of Civil Procedure 23(b)(3).  That rule permits monetary recovery in class action cases when

the court finds that the questions of law or fact  common to class members predominate over any questions affecting only individual  members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.

First, the district court over-relied on the employer's policies applicable to all employees, but without considering whether issues pertaining to individual claims and defenses would "predominate" over the common policy.  Second, the district court did not have the California Supreme Court's Brinker decision (you've heard of it, right?) to assess whether certification of a meal / rest claim was appropriate. 

Of note, the Ninth Circuit also wrote this, which will likely be of interest to class action litigators:

In Wal-Mart, the Supreme Court disapproved what it called “Trial by Formula,” wherein damages are determined for a sample set of class members and then applied by extrapolation to the rest of the class “without further individualized proceedings.” Wal-Mart, 131 S. Ct. at 2561. Employers are “entitled to individualized determinations of each employee’s eligibility” for monetary relief. Id. at 2560.
Employers are also entitled to litigate any individual affirmative defenses they may have to class members’ claims. Id. at 2561. 

The case is Wang v. Chinese Daily News and the opinion is here.

Court of Appeal: No Dress Code Class Action

Wet Seal is a retailer.   Here are various dress code policies the Company maintained for store employees:

“**Store Employees:

“The Wet Seal, Inc. store employees represent our Company and are required to dress in accordance with the current Company Dress Code guidelines. All employees are required to dress in a manner that is both respectful of our Customers and consistent with the current fashion attire that is reflected in the stores.

“The current Field Dress Code Guidelines can be found in the Store Operations Policies & Procedures Manual. Inappropriate dress will not be tolerated. Any violations of this policy may result in a disciplinary action up to and including termination. . . .”
***

“Wet Seal Employees represent Wet Seal to our Customers. Our Employees must exemplify the fashionable image we want to portray to our Customer. The Employee discount is a benefit that is offered to Employees to purchase and wear current store fashion merchandise. Employees are encouraged to wear Wet Seal merchandise at all times. It is essential that the Employees reflect Wet Seal style during working hours.*

“. . .

“*If an Employee does not have Wet Seal merchandise the Employee should wear clothing consistent with Wet Seal’s brand.”

***

“The Wet Seal and Arden B store Employees represent our Company and are required to dress in accordance with the current Company Dress Code Guidelines. All Employees are required to dress in a manner that is both respectful of our Customers and consistent with the current fashion style that is reflected in the stores. Employees are not required to wear the Company’s clothing.

“Those employees interested in purchasing company merchandise are eligible for an employee discount. . . . Employees are invited to wear Wet Seal or Arden B clothing during work hours, but are not required to do so.”

***

***“Wet Seal team members represent Wet Seal to ‘OUR GIRL.’ Our team members must exemplify the fashionable image we want to portray to ‘OUR GIRL.’ The employee discount is a benefit offered to employees to encourage them to purchase and wear current store fashion. Team members are required to dress in a manner that is both respectful of ‘OUR GIRL’ and consistent with the current fashion trends that are reflected in our stores.”


***

“As a Fashionista on the sales floor, you must represent the Arden B brand, current fashion trends and current color stories presented on the sales floor. [¶] Team members are required to dress in a manner that is both respectful to our customer, professional and consistent with the current fashion trends that are reflected in our stores.” ***

The plaintiffs claimed that the above policies constituted a "uniform," or that the company was mandating that employees buy the company's product, such that the employees should be reimbursed for dressing in the Company's clothing. 

None of this sounds like a uniform / mandatory purchase policy to me.  But what do I  know, I'm just a defense lawyer.   That said,  the plaintiffs in a class action lawsuit alleged "they were told by their managers that the 'Company' required employees to dress in Wet Seal merchandise 'at all times.'" And, "when she was hired her manager told her that the Company required all store employees to dress in Arden B clothing and that the dress code was 'all Wet Seal clothing and accessories.'"

The trial court, though, denied class certification, in part because the above policies did not create a blanket requirement to buy the company's product, or a "uniform," i.e., clothes of a distinctive design or color, and did not mandate purchase of the company's product.

The court of appeal agreed:

First, the written policies do not state that employees were “required” to purchase Wet Seal clothing as a condition of employment. Thus, answering the “central” liability question whether Wet Seal employees were required to wear Wet Seal clothing as a condition of employment or otherwise compelled to purchase Wet Seal merchandise would require several individualized inquiries including “(1) what, if anything, the employee was told by his or her store manager regarding purchasing Wet Seal clothing or wearing Wet Seal clothing to work; (2) if such a discussion occurred, when and with whom the employee had that discussion; (3) how the employee interpreted that discussion; (4) whether the employee’s interpretation was reasonable; and (5) whether the employee then purchased Wet Seal clothing to wear to work pursuant to that discussion.”

Second, the written policies do not “explain with any specificity” what employees are required to wear, but instead use broad and vague standards like requiring employees to dress in a manner “ ‘consistent with the current fashion style that is reflected in the stores’ . . . .” Thus, for example, determining whether the attire allegedly required by Wet Seal constitutes a uniform within the meaning of Wage Order 7 would require several individualized inquiries, including “(1) what was the current fashion style reflected in each store at a given period of time; (2) whether that style was of a distinctive color or design; (3) how each store manager interpreted the phrase ‘Wet Seal style’ or ‘consistent with the current fashion style that is reflected in the stores’; (3) whether each manager required the employees to wear clothing of a distinctive design or color; and (4) whether each manager required the employees to wear clothing that is usual or generally usable in the occupation.”

Third, because the written policy does not describe what an employee is supposedly required to wear, the court found that individualized inquiries would be necessary in order to determine whether any given purchase by an employee constituted a “necessary expenditure” within the meaning of section 2802. For example, individualized inquiries would be necessary to address “(1) what, if anything, the manager told the employee regarding the required wardrobe; (2) assuming the employee purchased certain wardrobe items to wear to work, where the employee purchased those items; and (3) the particular wardrobe items actually purchased.”

The trial court also found that the evidence submitted by both sides demonstrates that the plaintiffs’ theory of liability regarding its dress code claim is not “reasonably susceptible to common proof but rather would require individualized inquiries into a myriad of circumstances depending on the particular direction of individual store managers and supervisors at numerous stores in widely varying locations and over the course of many years.” In reaching this conclusion, the court expressly found that the plaintiffs’ evidence, particularly the 55 employee declarations, demonstrate that “the common written dress code policy did not lead to common dress code practices.”

So, two things - a mushy dress code policy that suggests purchasing company clothing, but does not require it, and that does not mandate a particular color or article of clothing, will not support a uniform / mandatory purchase lawsuit on a class wide basis.  Second, local managers' local policies can still result in significant liability on an individual employee basis, even if class certification is not approved.  So, as always, the devil is in the details.

The case is Morgan v. Wet Seal and the opinion is here.