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They are the bane of employers everywhere. Wage-and-hour class actions, in which hordes of employees sue for unpaid overtime, have spread through California like wildfire over the past few years. For many employers, the damages have been in the tens of millions of dollars. But a recent appellate court ruling in Los Angeles has raised speculation that the employment bar’s most popular suit may have run its course. “It’s a signal that the heyday of the wage-and-hour class action may be waning,” said M. Kirby Wilcox, a partner in the employment group at Los Angeles-based Paul, Hastings, Janofsky & Walker. According to the unanimous decision in Sav-On Drug Stores v. Superior Court (Rocher), a trial court erred in granting class certification to some 1,400 employees of the retail chain. The decision marked the first time a state appellate court has weighed in on the appropriateness of the class action format in wage-and-hour claims, and employment lawyers were abuzz over the implications. “News of its publication has raced through the employment law community,” said Wilcox. While the opinion was originally unpublished, the court changed its mind two weeks later. “It deals with a very important issue that’s been a bone of contention in these class actions,” said Steven Katz, an employment attorney at Chicago-based Seyfarth Shaw. “It made me change my view on all of my cases and what I think they’re worth to settle.” Plaintiffs’ lawyers in the Sav-On case argued that the company’s standardized policies and regulations meant that any assistant manager or operating manager could automatically be grouped together into a class. But the appeals court ruling maintains that such companywide policies aren’t enough to justify a class. “A trial court abuses its discretion by certifying a class action if numerous and substantial questions relating to each member individually must be litigated and these predominate over the common questions that may be jointly tried,” wrote 2nd District Court of Appeal Justice Charles Vogel. He was joined by Justices Daniel Curry and James Hastings. According to the appeals court, individual issues like a store’s size, location, physical layout and sales volume have more of an impact on each manager’s specific job duties than generic companywide job descriptions. Edward Wynne, who represented the plaintiffs, said he plans to petition the California Supreme Court for review.If allowed to stand, said Wynne, the decision would significantly curtail wage-and-hour class actions. And without the benefit of the class action format, wage-and-hour cases in general will fall out of favor with plaintiffs’ lawyers.”Attorneys won’t have the resources or the economic incentive to prosecute these kind of cases,” on an individual basis, Wynne said. Not all lawyers shared this sense of fatalism. “I don’t see it affecting any case that we have in our office right now,” said Alan Exelrod, name partner at San Francisco’s Rudy, Exelrod & Zieff, the firm whose $90 million jury verdict against Farmers Insurance Exchange is the current record holder for wage-and-hour class actions. According to Exelrod, the Sav-On decision was so fact-intensive and narrow that it won’t have much bearing on other wage-and-hour cases. The main impact, Exelrod said, is that in retail cases plaintiffs will have to present more evidence than was shown in Sav-On to survive. In any case, say most lawyers, until there’s a final, determinative ruling — such as at the state supreme court level — or some other published appellate decisions, wage-and-hour class actions aren’t going to disappear. “It does not signal the end of wage-and-hour class actions,” said Paul Hastings’ Wilcox, “but I believe that it will cause the plaintiffs’ bar to select wage-and-hour cases more carefully.”

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