Sav-On Drug Stores, Inc. v. Superior Court

• Decision Date: 26 August 2004
• Docket Number: No. S106718.,S106718.
• Citation: 96 P.3d 194,34 Cal.4th 319,17 Cal.Rptr.3d 906
• Court: California Supreme Court
• Parties: SAV-ON DRUG STORES, INC., Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent. Robert Rocher, et al., Real Parties in Interest.

17 Cal.Rptr.3d 906

96 P.3d 194

34 Cal.4th 319

SAV-ON DRUG STORES, INC., Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent.

Robert Rocher, et al., Real Parties in Interest.

No. S106718.

Supreme Court of California.

August 26, 2004.

Akin Gump Strauss Hauer & Feld, W. Randolph Teslik, Joel M. Cohn, Washington, DC, William A. Norris, Rex S. Heinke, L. Rachel Helyar, Los Angeles, and Sandra M. Lee, San Francisco, for Petitioner.

Deborah J. La Fetra, Sacramento, for Pacific Legal Foundation as Amicus Curiae on behalf of Petitioner.

Sheppard, Mullin, Richter & Hampton, Richard J. Simmons, Kelly L. Hensley and Douglas R. Hart, Los Angeles, for California Retailers Association and National Retail Federation as Amici Curiae on behalf of Petitioner.

Law Offices of Steven Drapkin and Steven Drapkin, Los Angeles, for Employers Group as Amicus Curiae on behalf of Petitioner.

Seyfarth Shaw and Steven B. Katz, Los Angeles, for Costco Wholesale Corp., Earl Scheib, Inc., Staples, Inc., and Tuneup Masters, Inc., as Amici Curiae on behalf of Petitioner.

Paul, Hastings, Janofsky & Walker, Paul Grossman and Patricia M. Berry, Los Angeles, for California Employment Law Council as Amicus Curiae on behalf of Petitioner.

Fred J. Hiestand, Sacramento, for Civil Justice Association of California as Amicus Curiae on behalf of Petitioner.

No appearance for Respondent.

Riordan & Horgan, Dennis P. Riordan, Donald M. Horgan, San Francisco; Righetti Wynne, Matthew Righetti, Edward J. Wynne, San Francisco, John J. Glugoski, J.E.B. Pickett; Daniels, Fine, Israel & Schonbuch, Paul R. Fine, Scott A. Brooks, Craig S. Momita, Los Angeles; Kumetz & Glick, Fred J. Kumetz, Stephen Glick, Los Angeles; Law Offices of Ian Herzog, Ian Herzog, Santa Monica, and Evan D. Marshall for Real Parties in Interest.

Brad Seligman, Berkeley; Saperstein, Goldstein, Demchak & Baller, Goldstein, Demchak, Baller, Borgen & Dardarian, David Borgen, Laura L. Ho, Joshua Konecky and Darci E. Burrell, Oakland, for The Impact Fund, California Rural Legal Assistance Foundation, the Legal Aid Society-Employment Law Center, Mexican American Legal Defense and Educational Fund, Asian Law Caucus, Asian Pacific American Legal Center of Southern California, La Raza Centro Legal, Inc., Women's Employment Rights Clinic of Golden Gate University School of Law, Bet Tzedek Legal Services, East San Jose Community Law Center, Professor Gary Blasi, University of California, Los Angeles School of Law and Professor Joseph Grodin, University of California, Hastings College of Law as Amici Curiae on behalf of Real Parties in Interest.

Jeffery K. Winikow, Los Angeles; Van Bourg, Weinberg, Roger & Rosenfeld, Ellyn Moscowitz, Oakland, Sandra Rae Benson, Los Angeles; Spiro, Moss, Barness, Harrison & Barge, Dennis F. Moss, Steven M. Harrison, Ira Spiro, Los Angeles, and Rene L. Barge, Tustin, for California Employment Lawyers Association, California Teamsters Public Affairs Council, Los Angeles/Orange County Building and Construction Trades Council, AFL-CIO, Alameda County Building and Construction Trades Council, AFL-CIO and Contra Costa County Building and Construction Trades Council, AFL-CIO as Amici Curiae on behalf of Real Parties in Interest.

WERDEGAR, J.

The question presented is whether the trial court abused its discretion in certifying as a class action this suit for recovery of unpaid overtime compensation. We conclude it did not and accordingly reverse the judgment of the Court of Appeal.

Background

Plaintiffs Robert Rocher and Connie Dahlin, on behalf of themselves and others similarly situated, brought this action against defendant Sav-on Drug Stores, Inc., a drugstore chain. The operative second amended complaint alleges violation of the overtime statutes (Lab.Code, § 1194 et seq.) and the unfair competition law (Bus. & Prof.Code, § 17200 et seq.), as well as conversion, for which plaintiffs seek damages and injunctive and declaratory relief. Underlying each cause of action are factual allegations that defendant misclassified as exempt from the overtime laws and failed to pay overtime compensation owed to plaintiffs and similarly situated employees who worked during the relevant period at defendant's retail stores in California.

The Legislature has commanded that "[a]ny work in excess of eight hours in one workday and any work in excess of 40 hours in any one workweek . . . shall be compensated at the rate of no less than one and one-half times the regular rate of pay for an employee." (Lab.Code, § 510, subd. (a).) The Industrial Welfare Commission (IWC), however, is statutorily authorized to "establish exemptions from the requirement that an overtime rate of compensation be paid . . . for executive, administrative, and professional employees, provided [inter alia] that the employee is primarily engaged in duties that meet the test of the exemption, [and] customarily and regularly exercises discretion and independent judgment in performing those duties. . . ." (Id., § 515, subd. (a).)

During the period covered by the complaint, defendant compensated plaintiffs as salaried managers, exempt from the overtime wage laws. Wage orders relating to the mercantile industry promulgated by the IWC and codified at California Code of Regulations, title 8, section 11070 provided during that same period an exemption from the overtime requirements for "persons employed in administrative, executive, or professional capacities." The original IWC Wage Order No. 7-98 defined this as one "engaged in work which is primarily intellectual, managerial, or creative, and which requires exercise of discretion and independent judgment."¹ The underlying merits of this litigation concern whether or not plaintiffs and those similarly situated properly were classified and paid under this exemption.

Our present inquiry concerns the trial court's granting of plaintiffs' motion for class certification. In support of their motion, plaintiffs argued that class members (i.e., defendant's operating managers, hereafter sometimes OM's, and assistant managers, hereafter sometimes AM's) had, on the basis of their title and job descriptions and without reference to their actual work, uniformly been misclassified by defendant as exempt employees. In fact, defendant's OM's and AM's were non managerial, non exempt employees under relevant law. Moreover, defendant's store operations were "standardized." Accordingly, the duties and responsibilities of defendant's OM's and AM's were similar in critical respects from region to region, area to area, and store to store. Class members generally performed nonexempt work in excess of 50 percent of the time in their workday, and their workday routinely included work in excess of eight hours per day and/or 40 hours per week. Notwithstanding these facts, plaintiffs contended, class members were not paid statutorily mandated overtime compensation.

In opposing certification, defendant argued that whether any individual member of the class is exempt or nonexempt from the overtime requirements depends on which tasks that person actually performed and the amount of time he or she actually spent on which tasks. The actual activities performed by its OM's and AM's, and the amount of time spent by each OM and AM on exempt activities, defendant contended, varied significantly from store to store and individual to individual, based on multiple factors including store location and size, physical layout, sales volume, hours of operation, management structure and style, experience level of managers, and number of hourly employees requiring supervision. For this reason, defendant argued, no meaningful generalizations about the employment circumstances of its managers could be made.

The trial court granted the certification motion, appointing plaintiffs to represent a class defined as "all current and former salaried [OM's] and current and former salaried [AM's] employed by defendant . . . in California at any time between April 3, 1996 and June 22, 2001, inclusive." The parties have estimated that the class has between 600 and 1,400 members.

Defendant petitioned for writ relief. The Court of Appeal issued a writ of mandate commanding the trial court to vacate its order granting class certification and to enter a new and different order denying class certification. We granted plaintiffs' petition for review.

Discussion

We quite recently reviewed the established standards for class certification generally. (Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1106, 131 Cal.Rptr.2d 1, 63 P.3d 913 (Lockheed).) Code of Civil Procedure section 382 authorizes class actions "when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court. . . ." The party seeking certification has the burden to establish the existence of both an ascertainable class and a well-defined community of interest among class members. (Lockheed, supra, at p. 1104, 131 Cal.Rptr.2d 1, 63 P.3d 913, citing Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906, 913, 103 Cal.Rptr.2d 320, 15 P.3d 1071 (Washington Mutual).) The "community of interest" requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class. (Lockheed, supra, at p. 1104, 131 Cal.Rptr.2d 1, 63 P.3d 913.)

The certification question is "essentially a procedural one that does not ask whether an action is legally or factually meritorious." (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 439-440, 97 Cal. Rptr.2d 179, 2 P.3d 27 (Linder).) A trial court ruling on a certification motion determines "whether . . . the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the...