Duran v. U.S. Bank Nat'l Ass'n
| Decision Date | 06 March 2012 |
| Docket Number | A126827.,Nos. A125557,s. A125557 |
| Citation | 2012 Daily Journal D.A.R. 1613,12 Cal. Daily Op. Serv. 1601,203 Cal.App.4th 212,162 Lab.Cas. P 61226,137 Cal.Rptr.3d 391,18 Wage & Hour Cas.2d (BNA) 1368 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Sam DURAN et al, Plaintiffs and Respondents, v. U.S. BANK NATIONAL ASSOCIATION, Defendant and Appellant. |
OPINION TEXT STARTS HERE
See Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2011) ¶ 6:603 (CACIVP Ch. 14-C); 4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 313; Cal. Jur. 3d, Appellate Review, § 306; Cal. Jur. 3d, Parties, §§ 39, 42.
Carothers DiSante & Freudenberger, Irvine, Timothy M. Freudenberger, Esq., Alison L. Tsao, Esq., Kent J. Sprinkle, Esq., for Defendant and Appellant.
Ellen Lake, Esq., Oakland, Wynne Law Firm, Greenbrae, Edward J. Wynne, Esq., J.E.B. Pickett, Esq., for Plaintiffs and Respondents.DONDERO, J.
Following a bifurcated bench trial, defendant U.S. Bank National Association (USB) has appealed the resulting $15 million judgment in this wage and hour class action brought under Business and Professions Code section 17200 (section 17200). The plaintiffs in the class action are 260 current and former business banking officers (BBO's) who claimed they were misclassified by USB as outside sales personnel exempt from California's overtime laws, and were thus unlawfully denied overtime pay. In addition to arguing the case should not have been certified as a class action, USB contends the trial court's trial management plan deprived it of its constitutional due process rights in that the plan prevented it from defending against the individual claims for over 90 percent of the class. We agree the trial management plan was fatally flawed and reverse the judgment. We also conclude the case must be decertified, and reverse an order awarding certain expert witness fees to plaintiffs.1 We remand the two named plaintiffs' meal and rest break period violation claims for reconsideration in light of the California Supreme Court's ruling in Brinker Restaurant Corp. v. Superior Court (2008) 165 Cal.App.4th 25, 80 Cal.Rptr.3d 781, review granted October 22, 2008 (S166350).2
FACTUAL BACKGROUND
In January 2005, when plaintiffs moved to certify this case as a class action, USB reportedly operated over 130 traditional bank branches in California with approximately 40 persons then currently employed as BBO's. Each BBO was typically assigned to work with one to four bank branches. BBO's report to sales managers who in turn report to regional managers. Regional managers report to a division manager who then reports to the executive vice president.
USB applies a uniform wage exemption to BBO's, categorizing them as exempt outside salespersons to whom USB is not obligated to pay overtime and related wages.3 The outside salesperson exemption is set forth in Labor Code section 1171, which states: “The provisions of this chapter [including Labor Code section 1194] 4 shall apply to and include men, women and minors employed in any occupation, trade, or industry, whether compensation is measured by time, piece, or otherwise, but shall not include any individual employed as an outside salesman....” California Industrial Wage Commission Wage Order No. 4–2001 (Wage Order No. 4) (codified at Cal.Code Regs., tit. 8, § 11040) defines an “outside salesperson” as a person “who customarily and regularly works more than half the working time away from the employer's place of business selling tangible or intangible items or obtaining orders or contracts for products, services or use of facilities.” 5 ( caL.coDE regs., tit. 8, § 11040, subd. 2(M), italics added.)
The BBO classification was created after USB merged with another bank in 2001, when an existing small business banker (SBB) position was redesignated with the BBO title. A May 1997 job description states that SBB's were responsible for “developing and managing small business banking customer relationships by advising on and selling a wide range of financial services to include: credit, deposit, cash management and other applicable bank products and services.” Persons in this classification were also responsible for “growing the business through prospecting, networking, cross-selling and relationship management in order to develop and expand the relations with [USB].” SBB's were encouraged to “build strong customer relationships and analyze data to determine the customer's business needs and financial condition.” This job description was essentially retained when the BBO position was created in 2001.6 However, a 2002 job description specifies that more than 80 percent of a BBO's time should be spent on “Outside Sales Activity.” 7 Of the five functions listed in the job description under this heading, several are required to take place outside branch offices.8
PROCEDURAL HISTORY
On December 26, 2001, Amina Rafiqzada, acting on behalf of herself and other similarly situated current and former USB employees, filed a class action complaint against USB. The complaint alleges Rafiqzada had been employed as an SBB, and that USB improperly classified her and other SBB's as “exempt” thereby denying them compensation for overtime hours in violation of Labor Code section 1194. The complaint contains three causes of action: (1) violation of the Labor Code for misclassification and failure to pay overtime, (2) violation of Business and Professions Code section 17200, and (3) conversion.
On February 26, 2003, a first amended complaint (FAC) was filed, removing Rafiqzada as the named plaintiff, and substituting Vanessa Haven, Abby Karavani, and Parham Shekarlab as the named plaintiffs. The amended complaint alleges the same causes of action as the prior complaint.
On March 28, 2003, USB filed its answer to the FAC. USB generally denied the allegations of the complaint and asserted 31 affirmative defenses. As its seventh affirmative defense, USB claimed the proposed class members were, at all relevant times, properly classified as exempt employees for overtime purposes under California law.9
On January 6, 2005, plaintiffs filed a motion to certify the case as a class action.10 The motion was supported by declarations from 34 current and former BBO's who indicated they regularly worked overtime hours and spent less than half their work time engaged in sales-related activities outside of branch offices.
That same day, USB filed a motion seeking to deny class certification. As part of its motion, USB claimed class certification should be denied because plaintiffs could not establish that common issues predominate. USB also contended the named plaintiffs were not typical of the class because all four of the current and former named plaintiffs had admitted, at depositions or in interviews, facts establishing they were properly classified as exempt employees under the outside salesperson exemption. In its motion, USB included declarations signed by 83 putative class members who described their job duties. Of these declarants, 75 stated they regularly spent more than half their time engaged in sales activities outside USB branch offices.
On March 14, 2005, plaintiffs' counsel filed a second amended complaint (SAC), substituting two new class representatives, Sam Duran and Matt Fitzsimmons, in place of the previously named plaintiffs. The SAC contains the same causes of action as the prior complaints, and adds new allegations asserting Labor Code violations for failure to provide meal and rest break periods. (See Lab.Code, § 226.7.)
On March 16, 2005, the trial court granted plaintiffs' motion for class certification and denied USB's motion to deny class certification.11
On April 29, 2005, the trial court filed an amended and corrected order after hearing regarding its certification rulings. The order defines the class as “ ‘all current and former California-based salaried employees with the title “small-business banker” (SBB's) and/or “business banking officers” (BBO's) employed by defendant any time between December 26, 1997 and April 28, 2005.’ ” 12 The order states the court found the proposed class to be both ascertainable and numerous, and that common questions of law and fact predominated over individual legal or factual disputes.13
On September 30, 2005, plaintiffs filed a motion for summary adjudication on USB's affirmative defenses that the BBO's were exempt from overtime laws under the administrative and the commissioned salesperson exemptions.14
On February 17, 2006, the trial court filed its order granting plaintiffs' motion for summary adjudication as to the commissioned salesperson exemption. The court deferred ruling on the administrative exemption to allow USB an opportunity to conduct a limited amount of discovery relevant to its opposition.
On May 23, 2006, the trial court granted plaintiffs' motion for summary adjudication as to the administrative exemption, finding the evidence showed the performance of administratively exempt duties was atypical for BBO's.
IV. Pretrial ProceedingsA. The Trial Management Plan Is Selected
On June 22, 2006, plaintiffs submitted a trial setting conference brief. In response to USB's pretrial proposal to assign all class members to groups of 20 to 30 in order to conduct individualized evidentiary hearings before special masters, plaintiffs, citing to Sav–On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 337, 17 Cal.Rptr.3d 906, 96 P.3d 194 ( Sav–On ), asserted that USB “has no due process right to assert its affirmative defense against every class member in a class action.” 15 Instead, plaintiffs proposed a “phased trial plan using surveys and random sampling.”
Under plaintiffs' plan, the trial would have proceeded in three phases: (1) Task identification and classification, (2) use of a class-wide...
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