Tuesday, January 19, 2010

Northern District Denies Renewed Motion For Certification of Misclassification Class in In re Wells Fargo Home Mortg. Overtime Pay Litig.

On January 12, 2010, Judge Marilyn Patel issued an opinion denying plaintiff’s renewed motion for class certification in In re Wells Fargo Home Mortg. Overtime Pay Litig., 2010 U.S. Dist. LEXIS 3132 (N.D. Cal. Jan. 12, 2010). The proposed class consisted of all California Home Mortgage Consultants (“HMC”), and sought certification of overtime claims arising out of Wells Fargo’s alleged misclassification of HMC employees as exempt. The Court’s decision comes on the heels of the Ninth Circuit’s opinion in In re Wells Fargo Home Mortgage Overtime Pay Litig., 571 F.3d 953, 959 (9th Cir. 2009), wherein the Court’s prior order granting certification was reversed. As held by the Ninth Circuit, the Court erred by presuming the element of predominance to be satisfied based solely on Wells Fargo’s categorical exemption policy without evaluating other factors which bear directly on whether individualized issues will present problems with class wide adjudication.

In ruling on the plaintiff’s renewed motion, the Court revisited the element of predominance and concluded that plaintiff could establish its burden that common issues would predominate. While the Court acknowledged the existence of substantial evidence of standardization, the Court concluded that individual issues would nonetheless predominate because plaintiff failed to identify common proof that would absolve the court from inquiring into how each HMC spent their working day:
In light of these principles, the court cannot see and plaintiff has not presented any viable method for certifying this action as a class action. To be certain, there are a number of common issues in this case. Wells Fargo does not dispute that all HMCs were uniformly classified as exempt. All class members had common job descriptions, uniform training, the same primary goal (to sell mortgages), uniform job expectations, similar compensation plans, and standardized employee evaluation standards. The record before the court indicates that all HMCs operated without supervision. However, this court has already held that analysis of five of the seven exemptions asserted by Wells Fargo would require fact-intensive inquiries into how individual HMCs performed their job. Under In re Wells Fargo and Vinole, the complexity of those inquiries must factor into this court's predominance analysis. In re Wells Fargo and Vinole also make clear that a plaintiff could satisfy the predominance requirement by coming forward with some form of common proof that would absolve this court from inquiring into how each HMC spent their working day. Plaintiff has not, however, done so. She has not produced (or even alleged the existence of) any policy that requires HMCs to spend a specified amount of time in or out of the office. At the very least, to determine if each HMC qualified for the outside sales exemption the court would need to conduct "inquiries into how much time each individual [HMC] spent in or out of the office and how the [HMC] performed his or her job; all of this where the [HMC] was granted almost unfettered autonomy to do his or her job." Vinole, 571 F.3d at 947. Those inquiries would inevitably consume the majority of a trial, and overwhelm the adjudication of common issues.
See In re Wells Fargo, 2010 U.S. Dist. LEXIS 3132, 20-21.

While the Court was well within its discretion to conclude that it believed such individualized inquiry would predominate on such grounds in this case, it is important to note that the fact that issues relating to actual working time must be resolved on an individualized basis does not require denial of certification. See Sav-On Drug Stores, Inc. v. Superior Court, 34 Cal. 4th 319, 336-37 (Cal. 2004) (concluding that “[p]resence in a particular overtime class action of the considerations reviewed in Ramirez does not necessarily preclude class certification” as “[a]ny dispute over ‘how the employee actually spends his or her time’ [], of course, has the potential to generate individual issues.”).

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