Authored by Dana Fleming

The Ninth Circuit recently affirmed a district court decision to decertify a class of full-time supervisors employed by United Parcel Service, Inc. (“UPS”) where the only basis for class-wide treatment was UPS’s uniform policy treating all of its supervisors as exempt from overtime pay and meal- and rest-break requirements.  A common strategy of plaintiffs’ counsel is to base their class certification argument on the argument that the mere existence of a uniform policy or practice treating a challenged job in a misclassification case as exempt suffices to obtain class certification for Rule 23 purposes.  In Marlo v. UPS, a case decided recently by the Ninth Circuit, the court rejected that argument.

Marlo sued UPS in 2003 on a class basis, claiming that UPS misclassified its full-time supervisors as exempt under California law.  The district court initially certified a class of approximately 1,200 full-time supervisors.  The following year, the district court granted summary judgment for UPS, but Marlo appealed, and the Ninth Circuit reversed and remanded. 

On remand, the district court decertified the class, concluding that the existence of a uniform policy classifying all supervisors as exempt was insufficient to proceed on a class-wide basis.  The court also concluded that California law requires a week-by-week showing that the work actually performed by employees will qualify them for exemption. 

Marlo proceeded to trial on an individual basis, and the jury returned a partial verdict in his favor. UPS and Marlo both appealed.

The Ninth Circuit affirmed both the district court’s decision to decertify the class and (unfortunately for UPS) the $1.4 million jury verdict for Marlo.  After reviewing the district court’s reasoning in the case, the Ninth Circuit found no abuse of discretion and concurred that Marlo had failed to satisfy his burden to establish predominance because he had only submitted evidence of UPS’s centralized control and its uniform policies and practices.  In the Ninth Circuit’s own words:  “The fact that UPS expects supervisors to follow certain procedures or perform certain tasks does not establish whether they actually are ‘primarily engaged’ in exempt activities during the course of the workweek.”

To maintain class certification, the court ruled, Marlo had to do more than point to a few general corporate policies about the exempt status or general duties of UPS supervisors.  He had to provide some “common proof” that all full-time supervisors at the company were actually engaged in nonexempt work.  This, the Ninth Circuit concluded, Marlo had failed to do. 

The Ninth’s Circuit decision in Marlo is consistent with recent rulings from the U.S. Supreme Court and Circuit Courts, which suggest closer scrutiny of certification decisions and a possible trend away from large-scale class action treatment.  Of course, the much anticipated Supreme Court decision in Dukes v. Wal-Mart will provide further guidance on this issue. (See Seyfarth Shaw’s March 29, 2011 Management Alert for additional information in Dukes v. Wal-Mart.)