Jimenez v. Allstate Ins. Co.

• Decision Date: 03 September 2014
• Docket Number: No. 12–56112.,12–56112.
• Citation: 765 F.3d 1161
• Parties: Jack JIMENEZ, individually and on behalf of other members of the general public similarly situated, Plaintiff–Appellee, v. ALLSTATE INSURANCE COMPANY, an Illinois corporation, Defendant–Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

765 F.3d 1161

Jack JIMENEZ, individually and on behalf of other members of the general public similarly situated, Plaintiff–Appellee,

v.ALLSTATE INSURANCE COMPANY, an Illinois corporation, Defendant–Appellant.

No. 12–56112.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 4, 2014.

Filed Sept. 3, 2014.

James M. Harris (argued), Andrew M. Paley, Sheryl L. Skibbe, John R. Giovannone, and Kiran Aftab Seldon, Seyfarth Shaw LLP, Los Angeles, CA, for Defendant–Appellant.

Alexander R. Wheeler (argued), R. Rex Parris, Kitty Szeto, Jacob L. Karczewski, and John M. Bickford, R. Rex Parris Law Firm, Lancaster, CA, for Plaintiff–Appellee.

Gretchen M. Nelson, Kreindler & Kreindler LLP, Los Angeles, CA; and David M. Arbogast, Arbogast Bowen LLP, Los Angeles, CA, for Amici Curiae The Consumer Attorneys of California, California Employment Lawyers Association, and The Impact Fund.

Appeal from the United States District Court for the Central District of California, John A. Kronstadt, District Judge, Presiding. D.C. No. 2:10–cv–08486–JAK–FFM.

Before: Ronald M. Gould and N.R. Smith, Circuit Judges, and Edward R. Korman, Senior District Judge.^*

OPINION

GOULD, Circuit Judge:

Allstate appeals from the district court's grant of class certification to Jack Jimenez and about 800 other Allstate employees in California who allege that Allstate has a practice or unofficial policy of requiring its claims adjusters to work unpaid off-the-clock overtime in violation of California law. We have jurisdiction under 28 U.S.C. § 1292(e), and we affirm.

I

Allstate has 13 local offices in California, which are individually managed but under centralized leadership.¹ At those 13 offices, Allstate employs five categories of claims adjusters: Auto, Liability Determination, Casualty, Property, and a Special Investigation Unit. Some adjusters spend most of their work day in a particular office (“inside” adjusters), while others, although they are officially assigned to a particular office, spend most of their time in the field (“outside” adjusters). The amount and type of work, as well as the level and quality of claims adjusters' interaction with managers, varies between offices, between categories of adjusters, and between inside and outside adjusters.

In 2005, Allstate shifted all of its California-based claims adjusters to hourly status from exempt, or salaried, positions. Before that reclassification, claims adjusters often worked more than 8 hours per day or 40 hours per week. Since the reclassification, claims adjusters' workload has been substantially the same as it was before the reclassification, their compensation is still referred to as an annual salary, and hourly payment rates are not shared with current or prospective employees.

Claims adjusters do not keep time records. Rather, the manager of each local office has the power to file a timekeeping “exception” or “deviation” from the default expectation of 8 hours per day and 40 hours per week. This adjustment takes place when a claims adjuster's request for overtime or early leave is approved. Managers do not adjust time cards based on either their own observations of work habits or on the technological records contained in computer and telephone systems. Each local office has a non-negotiable compensation budget, which creates a functional limit on the amount of overtime a manager may approve.

Jimenez filed a class action suit alleging that Allstate had not paid overtime to current and former California-based claims adjusters in violation of California Labor Code §§ 510 and 1198 and had not paid adjusters for missed meal breaks in violation of California Labor Code §§ 226.7 and 512(a). The complaint also made derivative claims that Allstate had not timely paid wages upon termination in violation of California Labor Code §§ 201 and 202, had issued noncompliant wage statements in violation of California Labor Code § 226(a), and had engaged in unfair competition in violation of California Business and Professions Code § 17200.

The district court certified the class with respect to the unpaid overtime, timely payment, and unfair competition claims.² It found that Jimenez had presented sufficient evidence to establish the following common questions under Federal Rule of Civil Procedure 23(a)(2): ³

(i) whether class members generally worked overtime without receiving compensation as a result of Defendant's unofficial policy of discouraging reporting of such overtime, Defendant's failure to reduce class members' workload after the reclassification, and Defendant's policy of treating their pay as salaries for which overtime was an “exception”; (ii) whether Defendant knew or should have known that class members did so; and (iii) whether Defendant stood idly by without compensating class members for such overtime.

Under Rule 23(b)(3), the district court held that the common question of whether Allstate had an “unofficial policy” of denying overtime payments while requiring overtime work predominated over any individualized issues regarding the specific amount of damages a particular class member may be able to prove. Finally, it held that class treatment was a superior method of adjudication because statistical sampling of class members could accurately and efficiently resolve the question of liability, while leaving the potentially difficult issue of individualized damage assessments for a later day.

We granted permission for an interlocutory appeal under Federal Rule of Civil Procedure 23(f). See Chamberlan v. Ford Motor Co., 402 F.3d 952, 959 (9th Cir.2005). Allstate timely perfected its appeal, and this proceeding followed.

II

We review a district court's class certification order for abuse of discretion. Berger, 741 F.3d at 1066–67. A class certification order is an abuse of discretion if the district court applied an incorrect legal rule or if its application of the correct legal rule was based on a “factual finding that was illogical, implausible, or without support in inferences that may be drawn from the facts in the record.” Leyva v. Medline Indus. Inc., 716 F.3d 510, 513 (9th Cir.2013) (quoting United States v. Hinkson, 585 F.3d 1247, 1263 (9th Cir.2009) (en banc)).

III

Allstate raises two substantial legal challenges to the district court's class certification order. First, it argues that the order does not comply with Rule 23 because the common questions it identified will not resolve class-wide liability issues. Second, it argues that the district court's approval of statistical modeling violates Allstate's due process rights and conflicts with Wal–Mart Stores, Inc. v. Dukes, ––– U.S. ––––, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011). For the reasons given below, we affirm the ruling of the district court.

A

Allstate's first argument is that the district court's class certification order misapplied Rule 23(a)(2)'s commonality requirement.⁴ “The Supreme Court has recently emphasized that commonality requires that the class members' claims ‘depend upon a common contention’ such that ‘determination of its truth or falsity will resolve an issue that is central to the validity of each claim in one stroke.’ ” Mazza v. Am. Honda Motor Co., 666 F.3d 581, 588 (9th Cir.2012) (quoting Dukes, 131 S.Ct at 2551) (internal alteration omitted). These common questions may center on “shared legal issues with divergent factual predicates [or] a common core of salient facts coupled with disparate legal remedies.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir.1998). We agree with the district court's determination that the three common questions identified in this case have that capacity because of their close relationship with the three prongs of the underlying substantive legal test.

This analysis does not turn on the number of common questions, but on their relevance to the factual and legal issues at the core of the purported class' claims. Compare Dukes, 131 S.Ct. at 2556 (“We quite agree that for purposes of Rule 23(a)(2), even a single common question will do.”) (internal quotation marks omitted), Wang v. Chinese Daily News, 737 F.3d 538, 544 (9th Cir.2013) (“Plaintiffs need not show that every question in the case, or even a preponderance of questions, is capable of classwide resolution.”), Mazza, 666 F.3d at 589 (“[C]ommonality only requires a single significant question of law or fact.”), with Dukes, 131 S.Ct. at 2551 (“What matters to class certification is not the raising of common ‘questions'—even in droves.”) (quoting Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L.Rev. 97, 132 (2009) (alteration omitted)). As Dukes and all of our subsequent caselaw have made clear, a class meets Rule 23(a)(2)'s commonality requirement when the common questions it has raised are “apt to drive the resolution of the litigation,” no matter their number. Abdullah, 731 F.3d at 962 (quoting Dukes, 131 S.Ct. at 2551.)

Whether a question will drive the resolution of the litigation necessarily depends on the nature of the underlying legal claims that the class members have raised. Parsons v. Ryan, 754 F.3d 657, 676 (9th Cir.2014) ( “commonality cannot be determined without a precise understanding of the nature of the underlying claims.”); see also Abdullah, 731 F.3d at 958–63 (comparing a common question to the elements of California's “nature of the work” standard in an employment classification class action). Under California law, there are three elements of an off-the-clock claim of the type raised by the class here: “[A] plaintiff may establish liability for an off-the-clock claim by proving that (1) he performed work for which he did not receive compensation; (2) that defendants knew or should have known that plaintiff did so; but that (3) the defendants stood idly by.” Adoma v. Univ. of Phoenix, Inc., 270 F.R.D. 543, 548 (E.D.Cal.2010) (internal quotation marks omitted).

Each of the three common questions recognized by the district court will...