California Court Rejects Managers’ Overtime Misclassification Class Action

Dailey v. Sears, Roebuck & Co., D061055 (March 20, 2013): In a recent decision, the California Court of Appeal affirmed the denial of class certification where there was not a predominant common question on a claim of misclassification of managers and assistant managers who were seeking overtime pay.

William Dailey worked as an assistant manager and manager for a Sears auto center from 2007 to 2009.  He brought a class action on behalf of managers and assistant managers from 16 Sears auto centers in the San Diego area who were classified as exempt from overtime. Dailey claimed that Sears’ uniform policies and procedures caused managers and assistant managers to regularly work 50 hours per week, with 75 to 90 percent of the work being nonexempt tasks, including assisting customers, checking customer vehicles, completing paperwork, driving vehicles into the service bays, gathering parts, and even performing some mechanical work. Dailey provided his declaration along with those of four other managers in support of the class claim. Dailey also asked the court to allow a representative sampling to be used for determining liability and damages.

In opposition, Sears provided the declarations and depositions of 21 class members and 6 corporate managers, which indicated that 1 to 40 percent of their working time was spent on nonexempt tasks.

The trial judge denied class certification because the individual facts and issues were more numerous than the common issues—not lending the case to a class action. The California Court of Appeal agreed with the trial judge’s finding that common questions did not predominate in this case. The court also noted that although random sampling has been accepted to prove damages, the random sampling offered here was “a generic proposal not tied specifically to the facts of this case.”

According to an of counsel in the Orange County and San Diego offices of Ogletree Deakins: “The Dailey decision carries on the trend of courts closely scrutinizing class certification issues. The decision not only highlights a strategy behind defeating class certification, but it provides a practical reminder to employers by reinforcing the importance of understanding—and being able to demonstrate credibly—the duties and responsibilities of exempt employees.”