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Conley v. Pacific Gas & Electric Co.

Court of Appeal of California, First District
Jul 21, 2005
131 Cal.App.4th 260 (Cal. Ct. App. 2005)

Summary

analyzing "salary basis" test by examining the effect of partial day absences on pay

Summary of this case from Ugorji v. Cnty. of Lake

Opinion

No. A105832

July 21, 2005 [CERTIFIED FOR PARTIAL PUBLICATION]

Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for publication with the exception of part II.C.

Appeal from the Superior Court of the City and County of San Francisco, No. 310938, Patrick J. Mahoney, Judge.

Siegel LeWitter, Jonathan H. Siegel, Jody I. LeWitter, Daria Dimitroff and Jonathan D. Yank for Plaintiffs and Appellants.

Thelen, Reid Priest, Thomas E. Hill, Thomas M. McInerney and Seth L. Neulight for Defendant and Respondent.




OPINION


Respondent Pacific Gas and Electric Company (PGE) classifies some of its employees as exempt from the federal and California laws requiring overtime pay. Appellants are PGE employees who dispute PGE's classification of them as exempt. Appellants seek to pursue claims for unpaid overtime on behalf of several classes of PGE employees who they assert have been improperly treated as exempt: a salary basis class, consisting of all PGE employees who have been classified as exempt, and various job duties classes, each consisting of employees who hold jobs in specific categories. The trial court denied appellants' motion for class certification in its entirety, and this appeal ensued.

As to the proposed salary basis class, appellants allege that PGE's policy of charging its exempt employees' vacation leave banks for partial-day absences from work renders all of those employees nonexempt as a matter of California law. Because the trial court rejected this argument, it concluded that the class members did not share a plausible cause of action, and accordingly ruled that certification of the proposed class would be inappropriate.

(1) Class certification normally should not be denied on the basis of a perceived lack of merit in the claims asserted on behalf of the proposed class. In this case, however, appellants have invited us to address the merits of their claim. Moreover, in the present posture of this case, the exemption issue presents a pure question of law, which is one of first impression under California law. We therefore deem it appropriate to resolve it on this appeal. Accordingly, in the published portion of this opinion, we conclude that nothing in California law precludes an employer from following the established federal policy permitting employers to deduct from exempt employees' vacation leave, when available, on account of partial-day absences from work. We therefore affirm the order denying certification of the salary basis subclass.

As to the job duties classes, appellants allege that the nature of the duties performed by employees in these classes does not qualify them as exempt. The trial court denied certification of these classes on two grounds: first, that due to individual differences in the actual tasks performed by each specific member of the proposed classes, common issues did not predominate; and second, that due to the availability of alternative relief through administrative proceedings, a class action would not be a superior method of adjudicating the claims of the proposed class members. Appellants argue that developments in the case law since the trial court issued its ruling, particularly Sav-on Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319 [17 Cal.Rptr.3d 906, 96 P.3d 194] ( Sav-on Drugs), have called into question the key premises of the trial court's legal analysis. For the reasons explained in the unpublished portion of this opinion, we agree, and accordingly remand in order to give the trial court an opportunity to reconsider its ruling as to the job duties classes in light of more recent case law.

I. FACTS AND PROCEDURAL BACKGROUND

PGE is a utility company that supplies energy, in the form of electricity and natural gas, to customers in many areas of Northern California. Appellants are PGE employees who have been classified by PGE as exempt from the requirements of the federal and California statutes requiring overtime pay. Two of them are senior new business representatives (SNBR's), one is an electric distribution engineer (EDE), and one is a gas distribution engineer (GDE).

Appellants filed this action on March 23, 2000, alleging that they and the other members of the proposed classes do not meet the legal requirements for exempt status, and are therefore entitled to overtime pay. On August 8, 2003, appellants moved for certification of a salary basis class, consisting of all exempt PGE employees, and two job duties classes, one (the SNBR/IPE class) consisting of about 97 SNBR's and 41 industrial power engineers (IPE's), and another (the EGE/GDE class) consisting of about 66 EDE's and 15 GDE's.

None of the named plaintiffs is an IPE. We leave it to the trial court on remand to assess the significance of this fact, if any, for appellants' class certification motion.

The parties conducted discovery on the class certification issues and on the issues presented by a motion for summary adjudication filed by PGE, and submitted extensive evidence and briefing. On January 5, 2004, the trial court filed a 21-page written order denying both appellants' class certification motion, in its entirety, and PGE's summary adjudication motion. Appellants then timely filed this appeal from the denial of their class certification motion.

An order denying a class certification motion in its entirety is appealable. ( Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470 [ 74 Cal.Rptr. 515, 629 P.2d 23].)

II. DISCUSSION A. Standard of Review

(2) The law governing a trial court's decision on a motion for class certification, and the standards applicable to our review of such a decision, were recently summarized by our Supreme Court as follows: "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. [Citations.] 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. [Citation.] [¶] The certification question is `essentially a procedural one that does not ask whether an action is legally or factually meritorious.' [Citation.] 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 maintenance of a class action would be advantageous to the judicial process and to the litigants.' [Citations.] . . .

(3) "We review the trial court's ruling [on a motion for class certification] for abuse of discretion. `Because trial courts are ideally situated to evaluate the efficiencies and practicalities of permitting group action, they are afforded great discretion in granting or denying certification. . . . [Accordingly,] a trial court ruling supported by substantial evidence generally will not be disturbed "unless (1) improper criteria were used [citation]; or (2) erroneous legal assumptions were made [citation]" [citation]. . . . "Any valid pertinent reason stated will be sufficient to uphold the order."' [Citations.]" [¶] . . . [¶]

(4) "As the focus in a certification dispute is on what type of questions — common or individual — are likely to arise in the action, rather than on the merits of the case [citations], in determining whether there is substantial evidence to support a trial court's certification order, we consider whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment. [Citations.] `Reviewing courts consistently look to the allegations of the complaint and the declarations of attorneys representing the plaintiff class to resolve this question.' [Citations.]" ( Sav-on Drugs, supra, 34 Cal.4th at pp. 326-327.)

B. Salary Basis Class

(5) As PGE acknowledges, its employees are entitled to overtime pay under the federal Fair Labor Standards Act of 1938 (FLSA) ( 29 U.S.C. §§ 201- 219) and under the California overtime statutes (Lab. Code, §§ 510, 515) unless PGE affirmatively establishes that the employees in question qualify for an exemption to that requirement under both federal and state law. (See generally Sav-on Drugs, supra, 34 Cal.4th at pp. 324-325; Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785, 794-795 [ 85 Cal.Rptr.2d 844, 978 P.2d 2].) In the present case, the parties agree that in order to justify its treatment of the members of the proposed plaintiff classes as exempt, PGE would be required to demonstrate that those employees meet both a salary basis test and a job duties test. (See generally Barner v. City of Novato (9th Cir. 1994) 17 F.3d 1256, 1259-1260.)

Appellants' complaint does not allege that any PGE employees have been misclassified as exempt under the job duties test other than those in the proposed job duties classes. We therefore defer our discussion of the job duties test to the parts of our opinion addressing certification of appellants' proposed job duties classes.

Under the federal regulations implementing the FLSA, "[a]n employee will be considered to be paid on a `salary basis' . . . if the employee regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee's compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed." (29 C.F.R. § 541.602(a) (2004).) The regulations also provide that "[d]eductions from pay may be made when an exempt employee is absent from work for one or more full days for personal reasons, other than sickness or disability." (29 C.F.R. § 541.602(b)(1) (2004).)

We note that on April 23, 2004, after the trial court issued its order denying class certification, the applicable federal regulations were revised and renumbered, effective August 23, 2004. (29 C.F.R. §§ 541.0-541.710; 69 Fed.Reg. 22122, 22260-22274 (Apr. 23, 2004).) Neither party has argued that the amendments affect the issues in this case with respect to the proposed salary basis class. We leave it to the trial court on remand to consider their effect, if any, on the proposed job duties classes.

Employees must also be paid a specified minimum salary in order to qualify as exempt. (See generally Barner v. City of Novato, supra, 17 F.3d at pp. 1259-1260.) It is not disputed that all the members of the proposed salary class in the present case receive at least the minimum salary required for exempt status.

It is undisputed that the combined effect of these provisions of federal law is to preclude employers from docking the pay of an employee for an absence of less than a day (a partial-day absence). If they do, then the involved employees do not meet the salary basis test, and are nonexempt for purposes of overtime pay. When this litigation was first filed, and in their opposition to PGE's motion for summary adjudication, appellants contended that PGE had a practice of doing just that. Appellants were unable to establish a factual basis for this claim through discovery, however, and they have abandoned it on appeal.

The term "partial-day absence" is overbroad in the context of this case, because appellants do not contend, and the record does not indicate, that PGE imposes either pay or leave bank deductions on exempt employees for absences lasting less than four hours in a single work day. We use the term only for convenience, and do not intend it to include an absence of less than four hours.

Appellants have raised another issue, however. While PGE does not deduct from exempt employees' pay for partial-day absences, it does acknowledge that it has an express policy (PGE's vacation leave policy) of making deductions from exempt employees' vacation leave banks for partial-day absences. Appellants contend that PGE's vacation leave policy constitutes a reduction in the amount of compensation they receive based on the quantity of work they perform. Thus, they aver, none of PGE's employees meets the salary basis test, and therefore none of them are exempt. Based on this legal argument, appellants sought to certify a salary basis class consisting of all PGE employees classified as exempt.

The trial court ruled that there was "an overriding common factual and legal question presented by [the overtime claims of the proposed] salary basis class," but nonetheless denied certification on the basis of American Suzuki Motor Corp. v. Superior Court (1995) 37 Cal.App.4th 1291 [ 44 Cal.Rptr.2d 526] ( American Suzuki), which held that "[f]or a class to be considered ascertainable [for the purpose of class certification], its members must have a plausible cause of action against the defendant. [Citation.]" ( Id. at pp. 1294-1295.) The trial court's order made clear that the holding in American Suzuki "requiring a viable cause of action is the only basis for denying class certification of the salary basis class." (Italics added.)

(6) Appellants argue in passing that the trial court erred in relying on American Suzuki, supra, 37 Cal.App.4th 1291, because it was disapproved by our Supreme Court in Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 442-443 [ 97 Cal.Rptr.2d 179, 2 P.3d 27] ( Linder). They nonetheless ask this court to address the merits of the claim they have asserted on behalf of the proposed salary basis class. We agree that the holding in American Suzuki on which the trial court relied has been placed in serious question, if not overruled, by Linder's holding that class certification generally should not be "conditioned upon a showing that class claims for relief are likely to prevail." ( Linder, supra, 23 Cal.4th at p. 443.) Nonetheless, we address the merits of appellants' claim both because the parties have requested that we do so for their further guidance, and because the issue raised is one of continuing importance in wage and hour litigation in this state. We are also influenced by the Linder court's observation that there is "nothing to prevent a court from considering the legal sufficiency of claims when ruling on certification where both sides jointly request such action." ( Ibid.)

In addition, the Supreme Court in Linder expressly declined to "foreclose the possibility that, in the exceptional case where the defense has no other reasonable pretrial means to challenge the merits of a claim to be asserted by a proposed class, the trial court may, after giving the parties notice and an opportunity to brief the merits question, refuse class certification because the claim lacks merit as a matter of law." ( Linder, supra, 23 Cal.4th at p. 443.) This case appears to be an "exceptional case" of the type referred to in Linder. PGE attempted to use a summary adjudication motion to raise its defense to the salary basis claim, but was unable for purely procedural reasons to secure an adjudication of that issue prior to the class certification ruling. As required by Linder, the trial court permitted discovery and ample briefing on the merits of the issue prior to adjudicating it in connection with the class certification motion.

The court denied PGE's motion for summary adjudication only on the ground that it failed to meet the statutory requirement that a "motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty." (Code Civ. Proc., § 437c, subd. (f).)

Accordingly, we turn to the question whether appellants have a viable legal theory to support the claims of their proposed salary basis class. Appellants' argument on that point relies primarily on a 1982 decision by the California Supreme Court, Suastez v. Plastic Dress-Up Co. (1982) 31 Cal.3d 774 [ 183 Cal.Rptr. 846, 647 P.2d 122] ( Suastez). Because Suastez is so central to appellants' position, we will describe its rationale and holding in some detail.

Suastez, supra, 31 Cal.3d 774, involved the interpretation of Labor Code section 227.3 (section 227.3), which provides that "whenever a contract of employment or employer policy provides for paid vacations, and an employee is terminated without having taken off his vested vacation time, all vested vacation shall be paid to him as wages . . ." and that "an employment contract or employer policy shall not provide for forfeiture of vested vacation time upon termination." The opinion in Suastez expressly noted that "[t]he only issue raised by this appeal is when vacation time becomes `vested' under section 227.3." ( 31 Cal.3d at p. 778.)

The employer in Suastez, Plastic Dress-Up, had declined to pay any vacation pay to an employee who was terminated prior to the anniversary date of his employment. Plastic Dress-Up contended that this action did not violate section 227.3 because under its vacation policy, its employees' right to vacation pay did not vest until the end of the year in which the vacation was accrued, or in other words, that completing a year of service was a condition precedent to the vesting of the right to vacation pay. ( Suastez, supra, 31 Cal.3d at pp. 778, 781-782.)

(7) In rejecting this argument, our Supreme Court began with the principle that "vacation pay is not a gratuity or a gift, but is, in effect, additional wages for services performed. [Citations.]" ( Suastez, supra, 31 Cal.3d at p. 779.) Analogizing vacation pay to pension benefits, the court held that "[t]he right to some share of vacation pay vests, like pension rights, on acceptance of employment. Nonperformance of a condition subsequent, such as Plastic Dress-Up's requirement that employees remain until their anniversary, can, at most, result in a forfeiture of the right to a vacation; it cannot prevent that right from vesting." ( Id. at p. 781.) The court went on to hold, however, that a forfeiture of the right to vacation upon an employee's termination was barred by the clear mandate of section 227.3. ( Id. at pp. 781-782.)

As already noted, PGE concedes that compliance with the federal salary basis test requires PGE to allow exempt employees who have exhausted their vacation leave to take partial-day absences without a corresponding loss in pay. But appellants argue by extension that employers who require their employees who have not exhausted their vacation leave to apply that leave to partial-day absences violate the employees' vested right to vacation pay under Suastez. This argument reads the holding of Suastez far too broadly.

Even if we construe Suastez to require pro rata vesting and preclude forfeitures of earned vacation pay under circumstances other than termination, we still would not accept appellants' contention that PGE's vacation leave policy violates the principle announced in that case. Although the federal salary basis test may require PGE to give exempt employees additional time off for partial-day absences after they exhaust their vacation leave banks, under PGE's vacation leave policy, PGE's exempt employees do in fact receive all of the paid time off they have earned — they must simply use that accrued vacation time to make up for partial-day absences. In other words, because the deductions made from vacation leave banks of exempt employees represent days on which those employees have, in fact, taken at least four hours off work, PGE's vacation leave policy neither imposes a forfeiture nor operates to prevent vacation pay from vesting as it is earned. All it does do is regulate the timing of exempt employees' use of their vacation time, by requiring them to use it when they want or need to be absent from work for four or more hours in a single day.

This is entirely consistent with Suastez, in which the Supreme Court expressly noted that "[s]ection 227.3 . . . does not purport to limit an employer's right to control the scheduling of its employees' vacations. [Citations.]" ( Suastez, supra, 31 Cal.3d at pp. 778-779, fn. 7, italics added.) Clearly, therefore, Suastez does not preclude PGE from requiring its exempt employees to use their vacation leave, if available, when they want or need to take a partial-day absence.

(8) Appellants argue that their interpretation of Suastez has been adopted by the Department of Labor Standards Enforcement (DLSE) in several interpretive advice letters. Advice letters of this type are properly considered by the courts, and may be entitled to some weight, but they do not have the force of law and are not controlling on us. ( Bell v. Farmers Ins. Exchange (2001) 87 Cal.App.4th 805, 815 [ 105 Cal.Rptr.2d 59]; see Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 571 [ 59 Cal.Rptr.2d 186, 927 P.2d 296] [DLSE advice letters to private parties are not regulations, and thus are not subject to statutes governing agency rulemaking, but are not binding on courts when reviewing agency proceedings]; see generally Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 10-15 [ 78 Cal.Rptr.2d 1, 960 P.2d 1031].) Thus, to the extent that the DLSE advice letters support appellants' interpretation of Suastez, we respectfully disagree with their analysis for the reasons we have already explained.

Because we disagree with the DLSE advice letters on their merits, we need not decide what weight, if any, should be given to an internal DLSE memorandum dated May 31, 2005, cited to us by PGE's counsel at oral argument, which withdraws one of the DLSE advice letters on which appellants rely.

In sum, we find nothing in California law that precludes employers from following the federal rule that permits them to require the use of vacation leave for partial-day absences without causing otherwise exempt employees to become nonexempt under the salary basis test. (See Webster v. Public School Employees of Washington (9th Cir. 2001) 247 F.3d 910, 917-918; Barner v. City of Novato, supra, 17 F.3d at pp. 1261-1263.) Accordingly, we agree with the trial court that the proposed salary basis class does not share a plausible cause of action.

In Webster v. Public School Employees of Washington, the Ninth Circuit acknowledged the possibility that Washington state law might be more protective of employees than the FLSA on this question, and remanded the case to the district court for further proceedings on that issue. ( Webster v. Public School Employees of Washington, supra, 247 F.3d at pp. 918-920.) On remand, the district court certified the question to the Washington Supreme Court. That court held that "in the absence of docking from an employee's pay, requiring `make up' through additional hours or deductions from leave time does not per se violate the `salary basis' test under [the applicable Washington state statute]." ( Webster v. Pub. Sch. Employees (2003) 148 Wn.2d 383 [ 60 P.3d 1183, 1191], italics added.) The court went on to state, however, that the practice of deducting from leave time is "a factor to consider" in determining whether an employee is exempt as a bona fide executive, administrative, or professional employee. ( Ibid.) As the court explained, this is because under Washington law, courts are permitted to consider "the entire context of the employment relationship" in determining whether an employee is exempt. ( Id. at p. 1192.) This is not the test under California law, and appellants have not argued otherwise.

C. Job Duties Classes

See footnote, ante, page 260.

As already noted, in order to treat employees as exempt from the overtime laws, employers must establish that the employees meet not only the salary basis test, but also the job duties test. The parties here agree that the job duties test applicable to the employees in appellants' proposed job duties classes is set forth in a wage order (Wage Order 4) promulgated by California's Industrial Welfare Commission (IWC) and codified in the California Code of Regulations, title 8, section 11040. Wage Order 4 expressly incorporates federal regulations adopted under the Fair Labor Standards Act. (See generally Bell II, supra, 87 Cal.App.4th at pp. 809-815 [discussing substance and history of Wage Order 4].) Subdivision 1(A) of Wage Order 4 exempts employees who are employed in administrative, executive, or professional capacities, and defines those terms by reference to the nature of the tasks the employees perform, and (as to professional capacity) in terms of the qualifications required for the position. Appellants challenge PGE's position that (1) the employees in both the SNBR/IPE and EDE/GDE classes are exempt because they are employed in an administrative capacity, and (2) the employees in the EDE/GDE class are exempt for the additional reason that they are employed in a professional capacity as engineers. Appellants argued to the trial court, and reiterate on this appeal, that the issue whether the PGE employees in the SNBR/IPE and EDE/GDE classes meet the job duties test is susceptible of adjudication on a class-wide basis because the job descriptions and duties of the employees in those classes, which are collectively bargained, are sufficiently similar to permit assessment of their exempt or non-exempt status on a classwide basis. In its discussion of the two proposed job duties classes, the trial court accepted appellants' position that the job duties of the GDEs and EDEs on the one hand, and the SNBRs and IPEs on the other hand, were sufficiently similar that the definitions of the two proposed classes were appropriate; that there were enough employees in each pair of categories to meet the numerosity requirement for certification of the two proposed classes; and that the individual plaintiffs met the typicality and (with their counsel) adequacy of representation requirements. On this appeal, PGE does not argue that the trial court erred on these points, but instead contends that there is so much variation among individual employees with respect to the amount of time each one spends on exempt tasks that individual issues predominate over common ones, and class-based adjudication would be infeasible. The trial court declined to certify the proposed job duties classes, giving two reasons for its decision. First, the court rejected appellants' position that the question whether the employees in each class could be answered simply by determining whether they were engaged in production as opposed to administration. Rather, apparently accepting PGE's argument, the court found that it would be necessary "to make detailed factual inquiries of the employees' actual duties" in order to determine the exempt status of each proposed class member, and "the inquiry would involve an examination of each employee's work over seven years." Citing Ramirez, supra, 20 Cal.4th 785, the court reasoned that determining exempt status would require the court to consider, as to each individual employee, "how time is actually spent; the average time per task; whether the employee's practice diverges from the employer's expectations; and whether the employer expressed dissatisfaction with the employee's substandard performance." (Fn. omitted.) The court also noted that with respect to the EDE/GDE class, the court would, in addition, have to determine whether the employees were exempt under the professional exemption test. Based on this analysis, the trial court opined that trying the case would inevitably involve allowing PGE to introduce "detailed evidence as to each of the 219 class members," and that variations as to "each employee's experience and/or qualifications over the course of seven years" would preclude the court from limiting the scope of that evidence by characterizing it as purely cumulative. Accordingly, the trial court's order concluded that "given the nature of the claims that [appellants] seek to certify and the law to be applied in litigating those claims, it cannot be said that common questions of law and fact predominate over the myriad of individual questions applicable to each employee's job over [the relevant] seven-year period. For that reason, [class] certification is inappropriate. [Citations.]" During the pendency of this appeal, prior to the filing of PGE's respondent's brief, our Supreme Court issued an opinion in which it discusses Ramirez in the context of class action certification. In Sav-On Drugs, supra, 34 Cal.4th 319, the court affirmed a trial court order certifying a plaintiff class in an action for unpaid overtime brought on behalf of drugstore employees who, like appellants here, contended that their employer had improperly classified them as exempt based on their job duties. (See id. at pp. 324-325.) The "issue in dispute" in Sav-On Drugs was "whether the trial court abused its discretion in concluding that common issues predominate[d]" over individual issues. ( Sav-On Drugs, supra, 34 Cal.4th at p. 327.) The employer argued, as PGE does here, that the issue whether an employee's job duties meet the test for exempt status requires too much individualized proof to be susceptible of adjudication on a class basis. In rejecting this argument, the Supreme Court stated that "even if some individualized proof of . . . facts [regarding the actual work of specific employees] ultimately is required to parse class members' claims, that such will predominate in the action does not necessarily follow." ( Id. at p. 334.) The court noted that "[i]ndividual issues do not render class certification inappropriate so long as such issues may effectively be managed. [Citations.]" ( Ibid.) "Accordingly, neither variation in the mix of actual work activities undertaken during the class period by individual [employees], nor differences in the total unpaid overtime compensation owed each class member, bar class certification as a matter of law. [Citations.]" ( Id. at p. 335.) As the trial court did here, the employer in Sav-On Drugs relied on language from Ramirez characterizing the determination of exempt status as requiring a detailed inquiry into how employees spend their time, and whether their activities comport with their employer's expectations. The Supreme Court opined that this argument "both misstates and overstates the significance of Ramirez." ( Sav-On Drugs, supra, 34 Cal.4th at p. 335.) The court pointed out that where the members of a group of employees with identical job descriptions all engage in "a reasonably definite and finite list" of tasks, the question "`whether certain identical work tasks are [exempt] or [non-exempt] . . . can easily be resolved on a class-wide basis by assigning each task to one side of the "ledger". . . .'" ( Id. at p. 331 [quoting argument by plaintiffs held properly accepted by trial court].) Moreover, as PGE acknowledges, the job duties test requires that in order to be exempt, the employee need only be "primarily" engaged in the duties that meet the exemption test relied upon. (Lab. Code, § 515, subd. (a); Cal. Code Regs., tit. 8, § 11040, subds. (1)(A)(2)(f), 3(b).) The term "primarily" is defined as "more than one-half the employee's work time." (Cal. Code Regs., tit. 8, § 11040, subd. 2(N).) The trial court in the present case concluded that simply characterizing the members of the proposed job duties classes as being engaged in production rather than administration does not in and of itself mean they are non-exempt, and that a further inquiry into the employees' specific tasks is necessary. Even accepting the validity of this determination, Sav-On Drugs demonstrates that this does not compel the conclusion that common issues do not predominate over individual ones. Thus, for example, a court adjudicating the present case as a class action might well be able to determine on a class-wide basis that, out of the given set of tasks which the parties agree are performed by employees in a given job class, tasks A, B, and C are exempt, and tasks D and E are non-exempt. Once this determination was made, it would follow that all employees in that job class who spend more than 50 percent of their time doing tasks D and E combined are non-exempt. Significantly, this would not require taking detailed evidence as to the different percentages of time spent by each individual employee in performing each of the five specific tasks. The only determination that would need to be made on an individual basis would be whether a specific employee spends more than half of his or her time doing all of the non-exempt tasks combined. This is a far cry from the trial court's perception that certification this case as a class action would require the court to allow PGE to "put in detailed evidence as to each of the 219 class members," covering a seven-year period, regarding "how time is actually spent; the average time per task; whether the employee's practice diverges from the employer's expectations; and [if so,] whether the employer expressed dissatisfaction with the employee's substandard performance." (Fn. omitted.) Because Sav-On Drugs stresses that we must defer to the trial court's discretion in matters of class certification, it would not be appropriate for us to engage in a detailed analysis of the evidence in this case in an effort to determine whether or not class certification is appropriate given the principles just discussed. It is clear to us from the summaries of the evidence that are set forth in the parties' briefs on appeal, however, that if the trial court in this case had had the benefit of the Supreme Court's opinion in Sav-On Drugs, it might not have reached the same conclusions as to the predominance of common questions over individual ones. This brings us to the trial court's second reason for declining to certify the job duties classes, which was that the proposed class action would not be a superior method of adjudicating the class members' claims because "all members of the class have a reasonable alternative to this litigation," to wit, filing individual claims with the DLSE. After the trial court ruled, however, our colleagues in Division One issued an opinion rejecting the argument that individual administrative wage claim proceedings before the DLSE were necessarily an adequate substitute for a class action in an overtime case. ( Bell III, supra, 115 Cal.App.4th at pp. 745-746.) It would be incorrect to read Bell III as holding that the availability of DLSE proceedings can never be relied upon as a basis for denying class certification in a wage claim case. Nonetheless, when the trial court in the present case declined to certify appellants' proposed job duties classes, it is not clear to us that it gave sufficient weight to the limitations of individual DLSE wage claim proceedings, as identified by the Bell III court ( ibid.), or that it adequately took into account "the costs to the courts of repetitious litigation and the public interest in effective enforcement of [the] overtime laws." ( Id. at p. 746.) An order denying a motion for class certification may be reversed if the trial court made an erroneous legal assumption. ( Sav-On Drugs, supra, 34 Cal.4th at pp. 326-327.) In the present case, the trial court did not have the benefit of either Sav-On Drugs or Bell III when it ruled on appellants' class certification motion. It expressly rested its decision on legal assumptions that have since been called into question by those decisions. We therefore reverse the trial court's order to the extent that it declined to certify the proposed job duties classes, and remand to give that court an opportunity to reconsider its ruling in light of subsequent developments in the law. In so doing, we stress that nothing we have said in this opinion should be read as determinative of the outcome on remand. The trial court retains the discretion either to certify all, some, or none of the proposed job duties classes, or to decline to do so, based on its view of the facts and the applicable law, as clarified by the authorities cited above.

Federal courts considering overtime claims under the FLSA have also held that "it is appropriate to bring an FLSA exemption claim as a class action with regard to employees who perform similar, but not identical, duties, notwithstanding the highly fact-specific nature of the exemption inquiry. [Citations.]" ( Scott v. Aetna Services, Inc. (D.Conn. 2002) 210 F.R.D. 261, 265 [declining to decertify class action brought on behalf of "systems engineers," even though class members spent time on "somewhat different specific assignments," where all class members were in the same job category and their "actual job duties" were "quite similar"].)

In Bell II, supra, 87 Cal.App.4th 805, our colleagues in Division One held that the exemption in Wage Order 4 for persons employed in administrative capacities does not extend to workers involved in production, even if their job duties fall within Wage Order 4's definition of exempt tasks. In a later opinion in the same case, Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715 ( Bell III), which was issued after the trial court's order in the instant case, our colleagues adhered to their prior holding, though reiterating their "observations in Bell II that `the administrative/production worker dichotomy is a somewhat gross distinction that may not be dispositive in many cases.' [Citation.]" ( Id. at p. 731, quoting Bell II, supra, 87 Cal.App.4th at p. 826.) The trial court in this case declined to apply Bell II's administrative/production distinction on the ground that it was factually inapposite. On remand, we encourage the trial court to revisit this issue in light of the additional light shed on Bell II by the subsequent discussion in Bell III, supra, 115 Cal.App.4th at pp. 728-739.

Bell III must, of course, be read in light of its procedural posture. The trial court in that case had allowed the plaintiffs to pursue a class action, and our colleagues held only that this decision was not an abuse of discretion on the facts of that particular case. ( Bell III, supra, 115 Cal.App.4th at pp. 739-746.)

III. DISPOSITION

We affirm the trial court's order denying class certification with respect to the proposed salary basis class. With regard to the proposed job duties classes, we remand for further proceedings consistent with this opinion. In the interests of justice, appellants and respondent shall each bear their own costs on this appeal.

Kline, P.J., and Haerle, J., concurred.


Summaries of

Conley v. Pacific Gas & Electric Co.

Court of Appeal of California, First District
Jul 21, 2005
131 Cal.App.4th 260 (Cal. Ct. App. 2005)

analyzing "salary basis" test by examining the effect of partial day absences on pay

Summary of this case from Ugorji v. Cnty. of Lake

In Conley, the employer's policy required deductions from vacation leave banks for partial-day absences only when the employee was absent for at least four hours. (Conley, supra, 131 Cal.App.4th at p. 267, fn. 6, 31 Cal.Rptr.3d 719.)

Summary of this case from Rhea v. General Atomics
Case details for

Conley v. Pacific Gas & Electric Co.

Case Details

Full title:JOHN CONLEY et al., Plaintiffs and Appellants, v. PACIFIC GAS AND ELECTRIC…

Court:Court of Appeal of California, First District

Date published: Jul 21, 2005

Citations

131 Cal.App.4th 260 (Cal. Ct. App. 2005)
31 Cal. Rptr. 3d 719

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