Hunton Employment & Labor Perspectives

On July 8th, partially relying on the U.S. Supreme Court’s June 20th decision in Wal-Mart Stores, Inc. v. Dukes (for an analysis of the Dukes decision, see our previous blog entry), the United States District Court for the Northern District of California decertified a class of current and former store managers who alleged that Dollar Tree Stores Inc. had misclassified them as exempt employees and denied them overtime pay.  The case, Cruz v. Dollar Tree Stores, Inc., proves that although Dukes involved discrimination as opposed to wage and hour claims, the rationale in Dukes can also be used to defeat wage and hour class actions.

In initially certifying the class, the court had accepted the plaintiffs’ argument that Dollar Tree’s payroll certification forms, which store managers were required to fill out weekly and which asked them to indicate whether they spent more than 50% of their work time each week performing exempt managerial duties, provided common proof of how the store managers were spending their time and would obviate the need for much individual testimony.  However, in the court’s July 8th decision, Judge Samuel Conti explained that subsequent developments in the case and in the case law had persuaded the court that individualized issues predominated and that trial as a class action would present “unmanageable difficulties.”

With respect to developments in the case, Judge Conti observed that after the class was certified, briefings by both parties revealed that a majority of the class members had stated under oath that their payroll certification forms were not truthful or did not accurately reflect the time they actually spent performing managerial duties.  Thus, certification of the class could no longer be premised on the reliability of the forms as common proof of misclassification.  With respect to developments in the case law, Judge Conti explained that Dukes had “heightened” the court’s concerns and provided “a forceful affirmation of a class action plaintiff’s obligation to produce common proof of class-wide liability in order to justify class certification.”

Using language from the Dukes decision for support, Judge Conti found that the plaintiffs had “failed to provide common proof to serve as the ‘glue’ that would allow a class-wide determination of how class members spent their time on a weekly basis.”  Even though the plaintiffs had presented evidence of Dollar Tree’s centralized operational and human resources hierarchy and evidence that all store managers were given uniform training and training-related materials, received “daily planners” that required them to perform certain tasks, and were subject to other Dollar Tree policies that were intended to standardize the experiences of all store managers, Judge Conti observed that such evidence, although providing some proof that class members shared a number of common employment experiences, did not provide common proof of whether they were spending more than 50% of their time performing exempt tasks.

Although it is too early to tell whether this decision is the beginning of a trend among federal courts, it is a positive sign that the Dukes case can be used as a meaningful weapon against not just overbroad employment discrimination class actions, but also against overbroad wage and hour class actions.  Stay tuned for further developments.