The Ninth Circuit Court of Appeals has rejected a California employer’s challenges to class certification in a wage and hour class action lawsuit brought on behalf of 600 sales employees. At issue in the case was whether differences in the damages allegedly suffered by the sales employees made the claims too disparate to satisfy the legal requirements for class certification under Rule 23 of the Federal Rules of Civil Procedure. The employer argued that substantial differences in the alleged damages meant that the employees’ claims were not common to the whole group and that those differences were more dominate than the alleged common issues in the case.
If the damages suffered by the employees (unpaid wages) would require individualized proof, the defendant argued, then the employees should not permitted to proceed on a classwide basis. They should be required to prove their claims on an individual basis in separate lawsuits.
Rule 23 permits a plaintiff to sue as a class representative only if “there are questions of law or fact common to the class.” That means that the plaintiff can only proceed on a class basis if there exists a common factual or legal contention that is capable of classwide resolution. In other words, is it possible to reach a common answer to a question that is common to all members of the class?
In Vaquero the employees alleged they were paid on a commission basis for sales but were not paid any wages for work they performed that was unrelated to sales (cleaning the stores, attending meetings and moving furniture). Under California law, they alleged, Ashley Furniture was required to pay them at least minimum wage for this additional work.
The employees argued that Ashley Furniture’s failure to pay them for this extra work raised a common issue of fact and law that was easily capable of classwide resolution. The Ninth Circuit agreed:
“If the company required sales associates to do work not “directly involved in selling” and failed to compensate the sales associates for such work, then it violated California’s minimum wage laws for all such employees.”
As such, the Court determined, the claims satisfied Rule 23(a)(2). The issue was common to the class.
Rule 23(b)(3) states that a class may only be certified if “questions of law or fact common to class members predominate over any questions affecting only individual members.” The employer argued that because the plaintiff would be required to prove how much non-sales time was incurred by each of the 600 employees, major differences and not commonality dominated the case. The Ninth Circuit disagreed.
In a wage and hour case […] the employer-defendant’s actions necessarily caused the class members’ injury. Defendants either paid or did not pay their sales associates for work performed. No other factor could have contributed to the alleged injury. Therefore, even if the measure of damages proposed here is imperfect, it cannot be disputed that the damages (if any are proved) stemmed from Defendants’ actions.
Thus, the Court concluded, the common issue relating to the defendant’s wage policies and practices was the predominate issue in the case, not the differences in the financial damages flowing from the company’s conduct.
Rules Enabling Act
Finally, the Ninth Circuit rejected the employer’s claim that the use of representative evidence based on data sampling violated the Rules Enabling Act (28 U.S.C. § 2072(b), which prohibits any rule that would “abridge, enlarge or modify any substantive right.” Ashley Furniture argued that unless it was permitted to cross examine every single one of the 600 employees, its substantive rights would be adversely affected. Relying on the United States Supreme Court’s decision in Tyson Foods, Inc. v. Bouaphakeo, 136 S.Ct. 1036 (2016), the Ninth Circuit panel concluded that the admissibility of statistical or representative evidence in class actions must be judged on whether the evidence is reliable in proving or disproving the claim. In other words, there is no broadly defined rule barring the use of statistical evidence to prove damages in employment class actions.
Implications for Wage and Hour Class Actions in California
The need to establish individual damages in wage and hour class actions does not, alone, defeat class certification under either federal civil procedure or California civil procedure.
The central issue is not whether alleged damages differ among class members in substantial ways. The primary issue is “the degree to which the evidence is reliable in proving or disproving the elements of the relevant cause of action.” If the amount of unpaid, off-the-clock work can be proved through statistical sampling methods, surveys, employees’ testimony or other reliable evidence of unpaid work time, then class certification is appropriate.
Whether prosecuting or defending wage and hour claims on a classwide basis, the quality of the representative evidence is crucial. Reliance on qualified expert witnesses, including wage and hour economists, statisticians and survey experts, will often determine whether the employees’ evidence can be used to prove all elements of their claims.