On November 21, 2016, the California Court of Appeal for the 2nd Appellate District determined that it was improper for a trial court to grant an employer's motion for decertification of class claims that it failed to provide employees proper meal and rest periods and related wage statements.

The appellate court found that the employer didn't establish a change in either circumstances or case law in its decertification motion, and the trial court used improper criteria in granting the motion.

Background

Wackenhut Corporation is a global security solutions company that employs thousands of private security officers, including some in California. Three former Wackenhut security officers alleged that the company implemented policies and procedures that resulted in a failure to provide proper off-duty meal periods, authorize and permit rest breaks, and provide accurate itemized wage statements, in violation of the California Labor Code.

The security officers filed a proposed class action lawsuit seeking to represent more than 10,000 fellow nonexempt security officers in California who may also have been harmed by Wackenhut's practices.

During the litigation, the three security officers filed a motion to certify a class of all nonexempt security officers in California who were not provided proper meal periods, rest periods, and/or wage statements. Class treatment is appropriate under specific circumstances. Relevant to this case, there must be "predominance," which means that there must be common questions of law or fact.

The three security officers claimed that Wackenhut had its nonexempt security officers sign improper off-duty meal period agreements, did not have a rest period policy, and later had a policy requiring security officers to be on call during rest breaks, and those policies and practices resulted in employees receiving inaccurate wage statements. Their motion for class certification was granted in March 2010.

Wackenhut's Motion to Decertify the Class

In September 2011, Wackenhut filed a motion to decertify the class. In support of its motion, the company claimed that a recent U.S. Supreme Court case, Wal-Mart Stores, Inc. v. Dukes, constituted a change in the law that justified the court's reconsideration of class certification of the security officers' claims. The trial court granted Wackenhut's motion to decertify the class.

In granting the motion, the trial court looked at whether the security officers actually received meal periods, rest periods, and proper wage statements (i.e., the court performed an individual analysis of damages). The order identified two main reasons for the court's decertification ruling:

1. Individual issues predominated.
2. There was no way to conduct a manageable trial of the security officers' claims.

The security officers challenged the trial court's ruling.

Security Officers Successfully Appeal Trial Court's Order

Case law has held that a class should be decertified only when it is clear that changed circumstances make continued class treatment improper. Changed circumstances include new law, newly discovered evidence, or unanticipated or unmanageable issues arising. The appellate court held that the Dukes case did not significantly change existing case law applicable to the issue of predominance. It then turned to the question of predominance itself.

The security officers argued that in deciding whether predominance exists and class certification is appropriate, the court shouldn't analyze whether liability (i.e., damages) actually exists but should consider the theory of liability (e.g., whether Wackenhut failed to provide proper meal periods, rest periods, and wage statements).

The appellate court agreed, noting that the "ultimate question" to determine predominance is whether the issues that may be tried jointly are more substantial than the issues that may be tried separately, making a class action the best method to try the claims.

The court pointed out that there are reliable statistical methods (e.g., statistical sampling) to prove or disprove the elements of a claim and establish liability on a classwide basis. The court also noted that the common question for class certification in this case was whether the security officers' theories of liability "have merit." Lubin v. Wackenhut Corp. (California Court of Appeal, 11/21/16).

Bottom Line

This case illustrates that in general, if a theory of liability can be determined by alleged facts common to all class members, a class will be certified even if the members have to prove their damages individually. Thus, employers should be sure that their policies are current and comply fully with all applicable laws and ordinances because an imperfect policy can result in classwide liability even when only some employees suffer damages.

Elizabeth J. Boca is an associate in the labor and employment practice, in the San Francisco office of Epstein, Becker & Green. She is also a contributor to the California Employment Law Letter. Ms. Boca can be reached at eboca@ebglaw.com.