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Employers got bad news Thursday when the California Supreme Court ruled unanimously that class certification was appropriate for hundreds of wage-and-hour suits. The much-awaited decision says that Los Angeles County Superior Court Judge Irving Feffer didn’t abuse his discretion by certifying a class action for 600 to 1,400 employees of a national drugstore chain who claim they were deliberately mislabeled as salaried managers to exempt them from overtime pay. “The record contains substantial, if disputed, evidence that deliberate misclassification was defendant’s policy and practice,” Justice Kathryn Mickle Werdegar wrote. “The record also contains substantial evidence that, owing in part to operational standardization and perhaps contrary to what defendant expected, classification based on job descriptions alone resulted in widespread de facto misclassification. “Either theory,” she added, “is amenable to class treatment.” Brad Seligman, who represented the disgruntled employees of Sav-on Drug Stores Inc. and argued the case before the Supreme Court in June, called the ruling “critically important.” “The employers’ argument was that overtime cases could only be proven on a person-by-person basis,” said Seligman, executive director of The Impact Fund in Berkeley, Calif. “And if that had been accepted, you’d never be able to do an overtime case.” Steven Zieff, a Rudy, Exelrod & Zieff partner who’s an expert on wage-and-hour issues, said the decision gives employees equal footing with their bosses. “Oftentimes, it’s not practical for individual workers to bring cases against large national employers and multinational corporations,” he said. “The only way to justice is through these class actions.” Kenneth Sulzer, whose firm represented Costco Wholesale Corp., Earl Scheib Inc., Staples Inc. and Tuneup Masters Inc. as amici curiae, fretted that the ruling gives trial court judges very wide discretion in certifying or denying class status. “It makes it less likely that a court of appeal will reverse or unwind a certified class,” said Sulzer, a Los Angeles partner and head of the California class action group for Seyfarth Shaw. “It doesn’t make it more or less likely that a trial judge will certify,” he added. “It just means [his or her] decision is going to require an abuse of discretion with a capital A” before it will be overturned. Rex Heinke, a partner at Akin Gump Strauss Hauer & Feld, who represented Sav-on, declined to comment on the case. Robert Rocher and Connie Dahlin filed the suit on behalf of themselves and others who had been designated as operating managers or assistant managers. As such, they were exempt from state laws requiring overtime pay for anyone who works more than eight hours a day or 40 hours a week. They claimed they had been “uniformly misclassified” because their jobs required them to perform non-managerial tasks — helping customers at checkouts, stocking shelves and cleaning the stores -� for more than 50 percent of their work hours. Sav-on had defended by arguing that managerial duties varied significantly from person to person and store to store and that no meaningful generalizations could be made about the individual employment circumstances. The trial court judge found, however, that the employees had established by a preponderance of the evidence that common issues predominated and declared a class action for the period of April 3, 1996 to June 22, 2001. In reversing, Los Angeles’ 2nd District Court of Appeal held in 2002 that the employees’ job descriptions were so different, regardless of their titles, that there could be no class. It was the first time that a California appeal court had ruled that class certification was not appropriate in a wage-and-hour case. The Supreme Court disagreed, saying that a “reasonable court” could conclude that the proper legal classification of the employees’ activities would be handled better in a class action than individually. “Individual issues do not render class certification inappropriate so long as such issues may effectively be managed,” Werdegar wrote. “Nor is it a bar to certification that individual class members may ultimately need to itemize their damages. “We have recognized that the need for individualized proof of damages is not per se an obstacle to class treatment,” she added, “and ‘that each member of the class must prove his separate claim to a portion of any recovery by the class is only one factor to be considered in determining whether a class action is proper.’” In a separate concurring opinion, Justice Janice Rogers Brown wrote that while she felt Sav-on’s assistant managers had presented substantial evidence to support their claims, the operating managers hadn’t. “They submitted no declarations attesting to the work and duties of OMs,” she wrote. Nonetheless, Brown said a “careful review” of the record reveals sufficient evidence to support the trial court’s class certification. Sulzer predicted that the ruling would place great importance on who sits as trial judge in such wage-and-hour cases. “Statistically, there are some judges who tend to certify classes more than some others,” he said. “There are lawyers on both sides of the aisle who have gut feelings about judges’ proclivity to certify, and they will act on those.” The case is Sav-on Drug Stores Inc. v. Superior Court (Rocher), 04 C.D.O.S. 7902.

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