California Second District Court Of Appeal Affirms Denial Of Class Certification In Retail Store Manager Exemption Case

On April 18, 2011, the California Second District Court of Appeal issued a published decision in Mora v. Big Lots Stores, Inc. affirming an order denying certification of a class of retail store managers, alleging they were misclassified as exempt employees. The Court of Appeal concluded that the trial court did not abuse its discretion in denying class certification where the evidence submitted by the parties established that there was wide variance in how putative class members performed their duties and significant differences among the stores they managed.

Case Background

Big Lots is a closeout retailer that operates 178 stores in California. The four named plaintiffs were former Big Lots store managers in California. Plaintiffs filed a complaint against Big Lots, alleging causes of action for unpaid overtime compensation, failure to provide meal and rest periods, unfair business practices, and related wage-hour claims. Plaintiffs alleged that they were improperly classified as exempt employees and sought to represent a class of approximately 400 Big Lots store managers in California.

The Motion for Class Certification and the Trial Court’s Decision

Plaintiffs moved for class certification on the theory that Big Lots had a common policy of classifying store managers exempt, that all the stores were run in a uniform and standardized manner, and that store managers spent the majority of their time engaged in non-exempt tasks such as physical labor and clerical tasks. In support of their motion for class certification, plaintiffs submitted 44 putative class member declarations claiming that store managers typically spend the vast majority of their time on the same physical labor and clerical tasks as other non-managerial employees, such as stocking shelves, moving merchandise, cashiering, etc. Plaintiffs also submitted a declaration from a purported expert in “labor force behavior and survey research” who opined that the class claims could be proven through common survey evidence.

In opposition to plaintiffs’ motion for class certification, Big Lots submitted 141 putative class member declarations, deposition testimony from 23 of plaintiffs’ 44 declarants, and expert testimony based on in-store observations (time and motion studies) of 40 randomly selected store managers. Big Lots contended that this evidence showed that store managers’ work experiences and the time spent on exempt activities varied widely depending on the individual, store, season, and other factors.

The trial court analyzed the evidence submitted by the parties and concluded that many individualized factors affected how the store managers did their jobs. The trial court found that the activities performed by store managers varied substantially depending on the size of the store, the merchandise carried, the number of employees who work at the store, the time of the year, and several other factors. Because these factors varied from manager to manager, the trial court concluded that common questions did not predominate and denied the motion to certify the class.

The Court of Appeal’s Decision

The Court of Appeal, reviewing the trial court’s ruling for abuse of discretion, affirmed the denial of class certification. The court analyzed the trial court’s weighing of the evidence and concluded that the trial court did not abuse its discretion in denying class certification.

With respect to Big Lots’ evidence, the court agreed that it established that there was “no uniform corporate policy requiring store managers to primarily engage in non-managerial duties.” The evidence also showed there was “wide store-to-store variation…in the types of work performed and amounts of time per workweek spent by managers on different activities.” The court agreed with the trial judge that Big Lots’ declarations were “persuasive” because they were “specific and supported by individual detail” showing the variances among members of the putative class, whereas the plaintiffs’ declarations were “identical and undetailed” and, in many cases, contradicted by the declarants’ later deposition testimony. The court rejected plaintiffs’ contention that the trial court improperly weighed the evidence and held that the trial court reasonably concluded the plaintiffs’ theory of recovery, namely operational standardization at each store, was not supported by the evidence or amendable to class treatment.

Finally, the court rejected the plaintiffs’ attack on the qualifications, methodology, and opinions of Big Lots’ expert witnesses related to observational studies of a sampling of store managers. The Court of Appeal concluded that the trial judge properly overruled plaintiffs’ objections and the testimony was admissible.

What This Case Means for Employers

This is another favorable, published decision for retail employers facing manager misclassification cases. This adds to a list of recent retail manager misclassification cases in which class certification has been denied or a class decertified (e.g., Arenas v. El Torito Resturants, Keller v. Tuesday Morning, Inc., and Sepulveda v. Wal-Mart). Employers would do well to review these decisions and assess how they may impact pending litigation, including the methodology of gathering evidence to oppose class certification.

For more information, please contact the Seyfarth attorney with whom you work or any Labor & Employment attorney on our website.