Co-authored by Catherine M. Dacre, Tamara Fisher, and Simon L. Yang

When an employer has a denial of class certification remanded by an appellate court, it has a reason to worry. And while the employer might breathe a sigh of relief when the district court on remand again denies class certification, nothing is certain when that decision also is appealed. But FedEx might finally relax now that the Ninth Circuit earlier this week affirmed the Central District of California’s second refusal to certify a class of employees who alleged that they were not paid for off-the-clock work before shifts or during meal breaks.

After previously remanding the district court’s denial of class certification and instructing it to reconsider class certification in light of California law applicable to the plaintiffs’ claims, the Ninth Circuit blessed the lower court’s conclusion that individual issues predominated over both claims. As to pre-shift work, the Ninth Circuit found that the district court had properly considered whether common evidence demonstrated that FedEx exerted control over employees who had clocked in but were not paid for time prior to the start of their scheduled shifts and determined that “absent a policy that prevents the FedEx employees from using that time for their own benefit,” no common questions existed.  The mistaken belief of a few employees that they were not free to leave after clocking in did not equate to a policy of control, and the fact that employees would be paid for time worked prior to the scheduled start of shift, if reported, defeated the plaintiffs’ argument that common questions predominated.

Next, on the issue of off-the-clock work during meal breaks, the Ninth Circuit confirmed that California law requires an employer to pay for work during meal breaks only when it knew or reasonably should have known about the work.  It then explained the district court properly concluded that individual issues would predominate because FedEx did not know or have reason to believe employees worked through provided meal breaks.  Even though the plaintiffs argued that FedEx could have reviewed electronic data showing when packages were scanned to determine whether scans occurred during meal breaks, the Ninth Circuit confirmed this evidence wouldn’t establish liability.  Because employers are not required “to police employees’ meal breaks … FedEx had no obligation to sift through the volumes of electronic data produced by the scanning devices to determine whether its employees were actually taking their authorized breaks.”  In sum, even though employer data may have demonstrated that employees were working during meal breaks, the existence of such data did not support a finding that an employer knew or reasonably should have known about the work or provide common evidence supporting class certification.

At least on these facts, ignorance was bliss for the employer, but not for the employees. Because FedEx properly provided meal breaks, the fact that it maintained electronic data did not mean it knew or should have known employees performed work during their meal breaks.  By contrast, employees’ ignorance of their ability to do as they pleased during pre-shift time did not save their claims for off-the-clock pay where no company policy exerted control over them.

Co-authored by Coby M. Turner and Adam J. Vergne

In the Central District of California—often known as a magical kingdom for plaintiffs in wage-hour lawsuits—Judge Fernando Olguin brought everyone back to reality by denying class certification. Plaintiff Aladdin Zackaria alleged Wal-Mart incorrectly classified its Asset Protection Coordinators (“APC”) as exempt and moved to certify a class of all APCs that worked in California. After a close inspection of the evidence presented by Wal-Mart, however, Judge Olguin found the disparate experiences of APCs at different Wal-Mart stores prevented the case from being resolved by “common proof on a class-wide basis.”

Despite finding that APCs operated under uniform corporate guidelines, had identical training, and had the same pro forma job responsibilities, the court noted the “touchstone” of analysis under the executive and administrative exemptions is the way in which employees actually spend their time at work. Based on detailed statements in declarations from putative class members gathered by Wal-Mart, Judge Olguin concluded the day-to-day activities and level of discretion exercised by employees varied greatly from one APC to the next. With such individualized experiences, the court held there was no showing of common proof to support trying the case as a class action. Although it may be too early to say it’s a whole new world for employers in California facing misclassification class actions, employers presenting evidence employees’ experiences are varied can position themselves to defeat class certification.

Beyond California, the standard applied to motions for class certification continues to vary somewhat from jurisdiction to jurisdiction and even judge to judge. But as courts gain experience in wage-hour matters, the granting of class certification is not a forgone conclusion as some had treated it. Even when applying the two-step certification analysis for collective actions under the FLSA, courts have shown a willingness to consider testimony in the form of declarations from putative class members in order to defeat evidence in the form of self-serving declarations submitted by named plaintiffs. Employers should take note. By spending the time to gather evidence early, a substantive opposition to class certification can be made—as opposed to mere hypothetical arguments. Although the costs of mounting such an opposition can be substantial, the value of defeating class certification makes such a challenge worthwhile … even in California.

Authored by Brian P. Long

A seemingly never ending wave of call center class actions has been leveled against employers in recent years.  The hallmark of these suits invariably includes allegations of purportedly homogenous “drones” working off-the-clock when they are not helping customers.  Companies are left with few options other than shout into the wind that their policies prohibit such uncompensated work by their varied customer focused workforce.  Unfortunately, too frequently, courts are deaf to the employer’s concerns and certify collective and class actions with little regard to whether the named plaintiffs are “typical,” “adequate,” or even whether there is evidence of common issues among the putative class, other than the well-worn self-serving theories common to each of these suits.  Often enough, with little chance of legitimate policies and genuine differences among their workers carrying the day, companies are forced into expense settlements.

But there is hope, and the waters may be receding.  Bucking the trend, a Maryland federal judge just denied certification of two related putative class action lawsuits brought against Comcast Cable Communications Management, LLC on behalf of Customer Account Executives (“CAEs”) working at two separate locations in Maryland.  CAEs, like most call center employees, provide service and support over the phone to Comcast’s current and prospective customers.  Predictably, the main theory of liability in these cases hinged entirely on an unsupported theory: CAEs needed to perform various tasks including booting up their computers, opening software applications, and reviewing company e-mails off-the-clock so that they would be ready to take calls from customers at the start of their shifts.

Rather than submit and settle following the conditional certification of an FLSA collective action, Comcast kept fighting.  As it turns out, for good reason.  One of the named plaintiffs worked in a position where he did not actually take inbound calls from customers.  The Court found this difference critical: “Thus, plaintiffs’ whole theory of CAEs needing to log in and be ready to receive telephone calls as soon as their shift begins would not be applicable to Faust in the same way as other CAEs.”  But the differences among the purported drones and named plaintiffs did not end there.  A separate named plaintiff only worked 30 hours per week and, thus, would not be due additional overtime even if his allegations were true.  Once again, the Court correctly found that the plaintiffs’ claims failed to meet even the threshold issue of typicality.  Also, the named plaintiffs abandoned related unpaid meal period and off-the-clock post-shift claims without explanation.  The lack of explanation led the Court to conclude that the named plaintiffs were not adequate representatives of the putative class.

Importantly, the Court did not stop its analysis with typicality and adequacy.  Rather than simply accept as true the plaintiffs’ unsupported theory that every CAEs’ claims were the same, the Court held that class-wide issues do not predominate.  In doing so, the Court noted that off-the-clock claims typical to call center actions raise at least four distinct questions: (1) did the employee work overtime?; (2) was the employee paid for that work?; (3) if the employee was not paid, did the employer know, or should it have known that the overtime was worked?; and (4) was the amount of time de minimis?

In addressing these questions, the Court noted that Comcast maintained strict policies forbidding off-the-clock work, and it was not enough for plaintiffs to simply allege employees worked off-the-clock under a recycled theory of liability.  Instead, plaintiffs actually need evidence that Comcast “had some unofficial policy or practice of permitting CAEs to act in contravention of that official policy . . .this unofficial policy must be capable of being demonstrated on a class-wide basis.”  The Court rejected plaintiffs’ contention that once a CAE logged into their computer, Comcast was required to pay them for a continuous workday, noting that several CAEs testified that they would log-in and then get coffee, review personal e-mails, or perform other personal tasks.  Whether the time between the initial log in and the start of the CAE’s shift was actually compensable required an inherently individualized inquiry.  In short, the CAEs are not homogenous drones, but individuals with unique habits and defenses.  Further, the Court noted that uncompensated time under 10 minutes may be de minimis.  As the amount of alleged off-the-clock time worked by CAEs could not be shown by simple reference to the log-in times, there was no way of determining liability on a class-wide basis.  Because Plaintiffs could not show CAEs worked off-the-clock under some nonexistent unofficial policy (let alone the amount of alleged unpaid time), the Court held that the CAEs’ claims were not subject to common proof and certification was inappropriate.  Comcast was heard.

Not stopping there, the Court also took issue with declarations submitted by the plaintiffs’ attorneys purportedly summarizing putative class data that would warrant class treatment.  Rather than retain an expert statistician, the plaintiffs’ attorneys instead took it upon themselves to conduct an analysis of the CAEs’ computer log-in times.  The plaintiffs also submitted an “irrelevant” expert report from another class action pending in a different state.  The Court rejected this approach, as it rejected the unsupported theory of liability, and struck each of the declarations.

The decisions in these cases may signal a sea change.  Companies facing similar suits are not destined to settle simply because mere allegations of a common practice of off-the-clock work are leveled against them.  Lawful policies and legitimate variations between putative class members are not only relevant, but may carry the day.