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Ana Mora, et al v. Big Lots Stores

April 18, 2011


APPEAL from an order of the Superior Court of Los Angeles County, Ann I Jones, Judge. (Los Angeles County Super. Ct. No. JCCP4541)

The opinion of the court was delivered by: Perluss, P. J.

Appendices not available electronically



Putative class representatives Ana Mora, David Seals, Timothy Luddington and Richard Handrich filed a consolidated amended complaint on behalf of themselves and others similarly situated against their former employer, Big Lots Stores, Inc., and its affiliate, PNS Stores, Inc. (collectively Big Lots), operators of 178 closeout retail stores in California, asserting a cause of action for failure to pay overtime compensation and various other wage-and-hour, meal and rest-time claims, as well as a claim for unfair business practices. The plaintiffs assert Big Lots uniformly misclassifies its store managers as exempt employees based on their job description alone rather than on consideration of actual work performed, which involves a significant amount of time on nonexempt tasks. The trial court denied their motion to certify a class of present and former Big Lots store managers finding, the company does not operate its stores in a standardized manner and has no systematic practice of misclassification of managers. In light of the great latitude properly afforded the trial court in granting or denying class certification, we affirm, finding no abuse of discretion.


1. The Consolidated Amended Complaint

In a consolidated amended complaint filed on March 2, 2007,*fn1 Seals, Mora, Luddington and Handrich, on behalf of themselves and others similarly situated, allege Big Lots, an Ohio corporation that owns and operates large, closeout retail stores in California, has intentionally and improperly designated certain employees as "exempt" store managers in order to avoid payment of overtime wages and other benefits required by the Labor Code and Industrial Welfare Commission (IWC) wage orders.*fn2 Plaintiffs allege, notwithstanding their designation as exempt, store managers spend the majority of their time during each workweek on nonexempt, non-managerial duties and do not exercise discretion and independent judgment in the performance of those managerial duties they do perform. They further allege store managers are required to work in excess of eight hours per day and more than 40 hours per week--"working overtime hours was and is required of all store managers to perform the tasks or meet the goals assigned to them"--yet they receive no payment for overtime wages or other required benefits. The complaint asserts causes of action for unpaid overtime, unpaid minimum wages, wages not paid upon termination, improper wage statements, missed rest breaks, missed meal breaks, reimbursement of expenses, loss of unused vacation time, failure to maintain required payroll records and unfair business practices.

The consolidated amended complaint defines a proposed class of "[a]ll persons who are or have been employed as Store Managers in Big Lots Stores in the State of California from September 1, 2002 until final disposition of this lawsuit," excluding for the period prior to February 4, 2004 individuals who had been class members in a prior overtime compensation action and who did not opt-out from the settlement in that matter. The complaint alleges common questions of law and fact, including whether Big Lots misclassified class members as exempt from overtime laws and consequently failed to pay required overtime compensation, predominate over questions affecting only individual class members.

2. The Motion for Class Certification and Big Lots' Opposition

Following substantial discovery the putative class representatives moved to certify the class. In support of their motion the putative class representatives presented deposition testimony from Big Lots' designated corporate representative that the company has classified all its store managers in California as falling within the "executive exemption" of the governing IWC wage order, an exemption applicable to individuals who are "primarily engaged" in duties involving the management of a recognized subdivision of the business enterprise and who regularly direct the work of two or more other employees. (See IWC Wage Order 7, § 1(a)-(f).) Relying on declarations from 44 putative class members,*fn3 the putative class representatives argued the evidence demonstrated that the basic job duties of store managers in California are the same regardless of location and that Big Lots runs all its stores in the state in a uniform and standardized manner. Strict compliance with corporate manuals and actions plans, which set forth state-wide policies and procedures, is required; and such compliance is ensured by district managers, who supervise all store managers. In addition, training of store managers is standardized, and their job performance is evaluated on the same basis and on the same form regardless of purported store-to-store differences.

The putative class member declarations also averred that store managers are primarily engaged in nonexempt activities and routinely work more than 40 hours per week. As summarized in the memorandum filed in support of the motion for class certification, these declarations established managers "typically spend more than 75% of their time performing the same physical labor and routine clerical tasks [as other, non-managerial "associates" or employees], including stocking shelves, moving merchandise, working the cash register, building displays of merchandise, receiving and unloading trucks, ensuring that the store room is organized, and that Big Lots' shelves, bathrooms, aisles, and floors are clean."

The declaration of Andre Lark is illustrative. Lark, a store manager in Upland, California from June 2004 to January 2006, declared, "I spent a significant majority of my time engaged in the same, non-managerial tasks as my non-management co-workers. That is, a significant majority of my time was spent performing such tasks as: Stocking shelves, unloading delivery trucks, unpacking boxes, assembling merchandise, displaying merchandise, responding to customers' inquiries regarding the location, availability and/or pricing of merchandise, returning dropped or discharged merchandise to its appropriate display location, cleaning the store, 'marking' or pricing the merchandise, and cashiering. I estimate that at least seventy-five percent of my time was spent in these non-managerial tasks. For the most part, when I was engaged in these non-managerial tasks I was not directing the work of other employees." Lark's declaration also explained that, throughout his employment, "I was required to perform my job duties in accordance with procedures and requirements dictated by Big Lots, such as those procedures and requirements listed in the Big Lots company manual and in Big Lots' training programs and materials. . . . I was occasionally allowed to deviate from these procedures, but only under unusual circumstances and only if I could justify such deviation." The declarations of the other store managers submitted in support of the certification motion were substantially similar to Lark's.

The putative class representatives also submitted the declaration of Carl C. Hoffman, Ph.D., an expert in labor force behavior and survey research. Dr. Hoffman explained that survey research techniques can be used to measure the proportion of time employees spend on individual components of their job. He expressed confidence that, "if a qualified researcher were provided with access to the appropriate personnel information and information on store operations, a survey could be constructed to collect meaningful and reliable date on 1) how many overtime hours Big Lots Store Managers worked, and 2) what percentage of their overall work time the Big Lots Store Managers spend on tasks that are classified as 'exempt' managerial tasks, versus tasks that are classified as 'non-exempt' non-managerial tasks."

In opposition to the motion for class certification Big Lots submitted declarations from 141 putative class members, a number of district managers, deposition testimony from 23 of the 44 witnesses whose declarations had been submitted in support of the motion and expert opinion testimony based on in-store observations of 44 store managers.*fn4 This evidence, Big Lots contended, demonstrated a manager's duties at each Big Lot store and his or her experience as a store manager vary widely, notwithstanding they all share a job title and the same general job description. According to Big Lots' submission, store managers are the only exempt employees in each of the 178 retail stores in California. The stores range in size from 20,000 square feet to 60,000 square feet and employ from 20 to 60 sales associates depending on the store and the season. Each store manager performs different activities and spends different amounts of time on those activities depending on the needs of the store. Big Lots asserted the evidence showed it expects its store managers to be primarily engaged in exempt work and argued there is no evidence of any common policy or practice requiring managers to spend more than half their time on nonexempt activities. Whether particular managers are performing contrary to that expectation--that is, whether any individual manager has been misclassified as exempt--Big Lots contended, requires an individualized inquiry into the activities that were actually performed in each workweek (what they were and how much time was spent on them). As summarized by Big Lots, "[t]he actual time spent on exempt activities, depending on individual, store, season, and other factors, varies from 40% to 100%."

The deposition testimony from witnesses whose declarations had been submitted by the moving parties confirmed many individualized factors affect how the store manager does his or her job. Andre Lark, for example, when asked if a manager in a high volume store would have to be more hands on than he was at a lower volume store, responded. "No, it's relative. It depends on the total situation. It depends on volume. It depends on store location. It depends on store size. It depends on the staff you have. . . . So, it's a mixture of everything."

Big Lots also presented an expert report and observation study conducted by Robert W. Crandall and a report by Lloyd W. Aubry, Jr. (a former California State Labor Commissioner) based on his observations of store managers. Crandall described his work as "a direct observation study that captured the work activities of 40 randomly selected [store managers] over the course of a full workweek."*fn5 Crandall's opinion, based on his review of the data collected, was "there is wide variability in terms of where managers spend their time in the store, the percentage of time spent on various tasks, and the percentage of time allocated to performing managerial duties." Crandall also concluded, "the data demonstrates that approximately 2/3 of the 40 managers observed spent more than 50% of their time performing managerial tasks."*fn6 Based on his review of materials provided by Big Lots' counsel ...

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