Cases & Deals

Verizon obtains California Court of Appeal affirmation of trial court decision denying class certification in AirTouch Cellular store manager misclassification case

Client(s) Verizon Wireless, Inc.

On July 28, 2017, the California Court of Appeal affirmed the trial court's ruling denying class certification in a store manager misclassification case filed against Jones Day client AirTouch Cellular dba Verizon Wireless, Inc. ("AirTouch"). The Court of Appeal held that the trial court was well within its discretion in concluding that class certification was not appropriate, because individual issues would predominate over classwide issues.

The plaintiffs alleged that AirTouch misclassifies its Store Managers as exempt from California's overtime and meal and rest break requirements, and that as a result, putative class members are owed unpaid overtime compensation and premium payments for missed meal and rest breaks, along with additional penalties under California law. The plaintiffs sought to represent all individuals who worked as Store Managers of AirTouch retail stores in Southern California from August 2007 to present – approximately 350 individuals. In its opposition to the plaintiffs' bid for class certification, AirTouch argued that allowing the matters to proceed as a class action would be inappropriate because individual issues would predominate. In addition, AirTouch demonstrated that the Store Managers at issue meet both California's executive and administrative exemptions under. The trial court denied plaintiffs' motion for class certification, and the plaintiffs appealed.

On appeal, the plaintiffs' primary contention was that the trial court erred by concluding that individualized, rather than common, issues and proof predominate. AirTouch Store Managers, according to plaintiffs, do not qualify for the administrative or executive exemptions because many of their tasks are non-managerial and because AirTouch's policies uniformly disallowed them from exercising discretion or independent judgment when completing any task.

The Court of Appeal disagreed, finding that substantial evidence supports the trial court's decision that individual issues predominate. Citing the California Court of Appeal's decision in Dailey v. Sears, Roebuck & Co. (2013) 214 Cal.App.4th 974, the court explained that an examination of the work actually done by the Store Managers, and not only the employer's expectations regarding how its managerial employees perform their duties, was necessary to determine whether the exemptions applied. AirTouch presented evidence of wide variations in the amount of time Store Managers spent on given tasks during the workday, which depended on various factors, "including the size and location of the store, the experience level and performance of the [manager's] subordinates, store demographics, and the [manager's] personal preferences, among other things." The observational study provided by AirTouch's expert further evidenced that Store Managers vary widely in tasks performed and in the amount of time spent on tasks.

The Court of Appeal also highlighted the plaintiffs' "incorrect" assertion that the trial court erred by failing to consider that Store Managers could not customarily and regularly exercise discretion and independent judgment on matters of significance "because due to centralized control and store standardization, they perform virtually no exempt tasks." The trial court expressly considered the nature of the Store Managers' work, and the Court of Appeal agreed that most of the duties ascribed to Store Managers, such as interviewing, hiring, disciplining, training, and directing work are not nonexempt as a matter of law. Further, the trial court could reasonably conclude that the plaintiffs' theory – that AirTouch's standardized control over Store Managers converted managerial duties into nonexempt ones – "could only be adjudicated by examining how Store Managers actually performed their jobs and how the policies played out in practice," defeating commonality. The panel distinguished the matter from several other California Supreme Court and Court of Appeal cases cited by plaintiffs because, among other things, the evidence in the action demonstrated that AirTouch's Store Managers regularly exercise independent judgment and discretion, and spend most of their time on managerial tasks. For all these reasons, the Court of Appeal held that the trial court did not err by concluding that the plaintiffs' claims were unsuitable for class certification.

Crawley v. AirTouch Cellular, No. B264042 (Cal. App.)