RestaurantIn Martinez v. Joe’s Crab Shack Holdings, et al., ___ Cal.App.4th ___  (November 10, 2014), the California Court of Appeal (Second Appellate District, Division Seven) reversed the order of the Los Angeles County Superior Court (Judge Palmer) denying class certification to managerial employees who were claimed they were misclassified as exempt and therefore entitled to unpaid overtime wages.

Plaintiffs were salaried managerial employees of defendant employers who claimed that they were improperly classified as exempt employees.  Consequently, they argued, defendants had failed to pay them overtime wages, since they were expected to work a minimum of 50, and as much as 70, hours per week.  Accordingly, they filed a class action lawsuit on behalf of themselves and “[a]ll persons employed by Defendants in California as a salaried restaurant employee . . . .”  In support of their motion for class certification, plaintiffs presented training and operations manuals, as well as deposition testimony from various witnesses employed by defendants. According to this evidence, defendants’ hiring and training practices were uniform throughout the chain; it utilized an operations manual that applies to all restaurants and every employee; each restaurant offered the same menu; and managerial employees were evaluated using the same form and procedure. Plaintiffs also filed 22 declarations from current and former salaried managerial employees which stated that they had spent the majority (between 50 and 90 percent) of their time performing hourly tasks and were required to perform “utility” functions, filling in where needed as cooks, servers, bussers, hosts, stockers, bartenders or kitchen staff. Managerial employees were also required to fill in when hourly employees failed to show up and conduct inventory one night a week after the restaurant closed, which could take as long as three to four hours to complete.

In response, defendants submitted 27 declarations from the same group who claimed that they had performed managerial duties most of the time.  In addition, defendants pointed out that in deposition, the named plaintiffs each conceded he or she was unable to estimate the amount of time spent on exempt tasks as opposed to nonexempt tasks and that every day was different and contradicted statements each had made in declarations concerning hours worked and the time spent on hourly tasks.  Consequently, the trial court denied the motion for class certification on the grounds that, because of plaintiffs’ inability to estimate the number of hours spent on individual exempt and nonexempt tasks and their admission the amount of time spent on particular tasks varied from day to day, plaintiffs could not establish that their claims were typical of the class or that they could adequately represent the class.  Further, the trial court held, although there were common questions of law and fact, there remained significant individual disputed issues of fact relating to the amount of time spent by individual class members on particular tasks.  The variability among individual members of the putative class, the court held, would require adjudication of the affirmative defense of exemption for each class member, a “time- and resource-consuming process.” The court rejected as unfair plaintiffs’ proffered trial plan, under which their expert proposed to assess the rate at which managerial employees are engaged in nonexempt tasks through statistical sampling methods. Plaintiffs appealed.

The appellate court disagreed with the trial court. As to typicality, the court found that “the inability of the witnesses to specify time spent on particular tasks is hardly surprising . . . and does not create an issue that must be resolved on a motion for class certification. What was common to plaintiffs, in addition to the standard policies implemented by [defendants] at each of their restaurants, was their assertions their tasks did not change once they became managers; they performed a utility function and routinely filled in for hourly workers in performing nonexempt tasks; and they worked far in excess of 40 hours per week without being paid overtime wages. Their claims—and the defense of executive exemption to those claims—are thus typical of the class.”

As to adequacy, the court acknowledged this “comes into play when the party opposing certification brings forth evidence indicating widespread antagonism to the class suit.”  In this case, that antagonism was voiced by general managers, “who overwhelmingly opposed the litigation.     *     *     *     This apparent conflict, however, is not fatal. In the interest of preserving the claims of subordinate managerial employees, the trial court may on remand exercise its discretion to create a general managers subclass or to exclude general managers entirely from the class definition.”

As to commonality, the court noted that “courts in overtime exemption cases must proceed through analysis of the employer’s realistic expectations and classification of tasks rather than asking the employee to identify in retrospect whether, at a particular time, he or she was engaged in an exempt or nonexempt task.” Recognizing the likelihood that some evidence would be required relating to how individual employees spent their time, the court held that “statistical sampling may provide assistance in identifying the realistic demands of the job and illuminating whether the typical employee was able to meet those expectations,” so long as the proposed sampling plan accords the employer an opportunity to prove its affirmative defenses.