In a decision that proves class actions are still alive and well in California, the California Supreme Court issued its long-awaited decision in Sav-On Drug Stores, Inc. v. The Superior Court of Los Angeles County and held that misclassification cases can be maintained as class actions. The suit was filed by Robert Rocher and Connie Dahlin on behalf of themselves and other management-level employees of the Sav-on drugstore chain. According to the complaint, the drugstore chain allegedly failed to pay overtime to 1,400 managers who worked at about 300 stores throughout the State of California.
In 2002, a California appellate court held that the case was not suitable for class treatment because the named plaintiffs failed to establish that the common questions of law and fact predominated over the individual issues that were unique to each member of the proposed class. In so ruling, the appellate court found that the range of tasks performed by the managers and the amount of time spent on those tasks varied significantly from store to store and manager to manager, thus making the case inappropriate for class treatment.
The California Supreme Court reversed the appellate court's decision, holding that the trial judge had established by a preponderance of the evidence that common issues predominated. In revisiting the trial judge's decision, the supreme court noted that "a class action is not inappropriate simply because each member of the class may at some point be required to make an individual showing as to his or her eligibility for recovery or as to the amount of his or her damages." The justices further noted that courts can and have, in a variety of contexts, "considered pattern and practice evidence, statistical evidence, sampling evidence, expert testimony and other indicators of a defendant's centralized practices in order to evaluate whether common behavior towards similarly situated plaintiffs makes class certification appropriate."
The supreme court went on to hold that neither variations in the mix of actual work activities by individual employees, nor differences in the total unpaid overtime owed each class member bars class certification as a matter of law. In its ruling, the supreme court also dismissed Sav-on's argument that its prior decision in Ramirez v. Yosemite Water, Inc. bars class certification in cases such as this one as the court held that "Ramirez is no authority for constraining the trial courts' great discretion in granting or denying certification."
Employer Notes: This much-anticipated case shows that it makes sense for employers to audit their payroll practices, not only in light of this class-action suit, but also with an eye to recent FLSA changes.
Should you have any questions about the impact of this ruling or other employment law related issues, please contact Ogletree Deakins Client Services Department at 404-881-1300 or via e-mail at clientservices@ogletreedeakins.com.
This article appears in Council’s September 2004 Preventing Employment Law Problems in the California Workplace newsletter. Look for in-depth analysis of this important case in the October issue. Click here to subscribe or order a free trial.
It’s not too early to start thinking about attending the third annual HR & the Law Forum, presented as part of Complete HR, in Palm Springs, CA, February 16-18, 2005. Council’s 2005 Forum includes an entire conference track on the unique twists and turns of California employment law. Click on either of the links above for a detailed agenda.