APPEAL from order of the Superior Court of San Diego County, Robert P. Dahlquist, Judge. (Super. Ct. No. 37-2009-00054168-CU-OE-NC)
The opinion of the court was delivered by: Irion, J.
CERTIFIED FOR PUBLICATION
William Dailey (Dailey), individually and on behalf of a proposed class of similarly situated individuals, sued Sears, Roebuck and Co. (Sears), alleging several causes of action arising from Dailey's core contention that Sears violated California's wage and hour laws, including those governing overtime pay and rest and meal breaks, with respect to its auto center "Managers" and "Assistant Managers" (collectively, the proposed class members). Dailey sought to certify the proposed class, arguing that his theory of liability is particularly well suited to class treatment. His alleged theory is that although Managers and Assistant Managers are categorically classified as exempt from overtime and meal/rest break requirements, Sears implemented uniform policies and practices that have the effect of requiring the proposed class members to work at least 50 hours per week and spend the majority of their time working on nonexempt activities. Sears opposed Dailey's motion on the ground that determining how the class members actually spend their time requires individualized evidence and cannot be proven on a classwide basis. Earlier, Sears had filed its own motion to preclude class certification, asserting the same principal challenge that individual inquiries predominated in the case.
In a brief order, the trial court granted Sears's motion to preclude and denied Dailey's motion to certify the class, concluding that "the individual facts and issues unique to each member of the alleged class and requiring separate adjudication are more numerous and significant than the common issues." The court found that class certification is also inappropriate because bringing all individual class members' claims before the court in one action is "not impracticable," and Dailey is not a suitable class representative.
On appeal, Dailey principally contends the trial court abused its discretion in concluding commonality is lacking and that a class action is not the superior method for resolving his claims. Dailey also complains that the trial court erred in failing to provide a more detailed explanation for its ruling, in failing to deny the motion to preclude class certification as moot, and in refusing to continue the class certification hearing to permit more time for discovery. We conclude these contentions are without merit. We further conclude the trial court did not abuse its discretion in denying Dailey's motion to certify the class and granting Sears's motion to preclude certification. The record before us contains substantial evidence that Dailey's theory of liability -- i.e., that Sears acted in a uniform manner toward the proposed class members, resulting in their widespread misclassification as exempt employees -- is not amenable to proof on a classwide basis. In light of the wide latitude properly afforded the trial court in determining the propriety of class certification, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. California Law Regarding Exempt Employees
California's Labor Code generally requires overtime pay for employees working more than 40 hours in a given workweek. (Lab. Code, § 510, subd. (a).) However, the Legislature authorized the Industrial Welfare Commission to establish exemptions from the overtime pay requirement for "executive, administrative, and professional employees, if the employee is primarily engaged in the duties that meet the test of the exemption, [and] customarily and regularly exercises discretion and independent judgment in performing those duties." (Lab. Code, § 515, subd. (a).) Industrial Welfare Commission (IWC) wage order No. 4-2001 governs exemptions for professional, technical, clerical, mechanical and other similar occupations. (See Cal. Code Regs., tit. 8, art. 4, § 11040, subd. 2(O) [this exemption includes those involved in "professional, semiprofessional, managerial, supervisorial . . . clerical, office work, and mechanical occupations"].) IWC wage order No. 7-2001 governs exemptions for the mercantile industry. (See Cal.Code Regs., tit. 8, art. 7, § 11070, subd. 2(H) [defining "mercantile industry" as including any business "operated for the purpose of purchasing, selling, or distributing goods or commodities at wholesale or retail; or for the purpose of renting goods or commodities"].)*fn1
The IWC regulations regarding overtime pay, as well as rest and meal periods, apply to all employees except those employed in an executive, administrative or professional capacity. (See Cal.Code Regs., tit. 8, art. 7, § 11070, subd. 1(A).) They provide that a person employed in an executive capacity includes "any employee: ¶ (a) Whose duties and responsibilities involve the management of the enterprise in which he/she is employed . . . ; and ¶ (b) Who customarily and regularly directs the work of two or more other employees therein; and ¶ (c) Who has the authority to hire or fire other employees . . . ; and ¶ (d) Who customarily and regularly exercises discretion and independent judgment; and ¶ (e) Who is primarily engaged in duties which meet the test of the exemption. . . ." (Cal.Code Regs., tit. 8, art. 7, § 11070, subd. 1(A)(1).)
B. The Classification of Sears Auto Center Managers and Assistant Managers
During the alleged class period, Sears provided automotive and tire maintenance and repair services, and also sold automotive products, at up to 16 auto centers located in Sears' San Diego Auto Center District -- the area encompassed within Dailey's modified class definition that included stores in the California cities of El Cajon, Chula Vista, La Jolla, Carlsbad, Escondido, El Centro, Temecula, Hemet, Corona, Clairemont Mesa, San Bernardino, Riverside, Moreno Valley, Victorville, Palm Desert, and in Yuma, Arizona.*fn2 Depending on its sales volume, each auto center may be managed by one Manager, or one Manager and one or more Assistant Managers. Generally, auto centers do not have an Assistant Manager until they have close to $1.5 million or more in annual sales. Auto centers are also staffed with customer service advisors and technicians who handle sales and technical vehicle work, and possibly one or more store support representatives, who assist with inventory and picking up product at other stores.
Between late 2002 and mid-2007 (a time span falling partly within the alleged class period), Managers and Assistant Managers had very similar job descriptions. In about May 2007 (within the alleged class period), new job descriptions were put in place which reorganized the Manager position into different levels -- "Auto Center Coach I, II and III." After the reorganization, those employed at the Auto Center Coach I and II levels were placed in charge of smaller stores with less than $500,000 in sales, were expected to spend more than 50 percent of their time selling and installing products and services, and were classified as salaried, nonexempt employees. In contrast, those filling the Auto Center Coach III position generally were "responsible for managing the entire Auto Center and Associates . . . .in Auto Centers with sales volume of $500,000 or more." Managers with the Auto Center Coach III designation, along with all Assistant Managers, were "expected to spend well over 50 percent of [their] time on management duties on a daily and weekly basis" and were categorically classified as salaried, exempt employees who are not paid overtime.*fn3 (See Cal.Code Regs., tit. 8, art. 7, § 11070, subd. 1(A)(1).)
Plaintiff Dailey worked in the Carlsbad Auto Center as an Assistant Manager from October 2007 to February 2008, and then as a Manager until January 2009. In April 2009, he filed a lawsuit against Sears alleging violations of labor laws and regulations regarding overtime pay and rest and meal periods, as well as related claims for unfair business practices under Business and Professions Code sections 17200 et seq., and failure to provide properly itemized wage statements, as required by Labor Code sections 226, subdivisions (a) and (e), and Labor Code section 1174. Dailey filed the action on behalf of himself and a proposed class of all "Automotive Managers" (including subclasses of Assistant Managers and Managers) who worked at Sears retail stores in the state of California during the prior four years. In December 2009, Dailey amended his complaint to add a claim under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, §§ 2698-2699.5).
The complaint alleged that, notwithstanding their classification as exempt employees, the Managers and Assistant Managers regularly spend more than 50 percent of their time performing nonexempt work, and do not regularly exercise discretion and independent judgment. It further alleged that although the proposed class members routinely work in excess of 40 hours per week, they are paid no overtime. The complaint sought class certification, alleging that Sears uniformly administers policies and procedures that effectively require Managers and Assistant Managers to spend the majority of their time on nonmanagerial, nonexempt work. Dailey also alleged that the duties of the Managers and Assistant Managers are "virtually identical" from store to store and from region to region. Finally, the complaint alleged that Sears routinely fails to provide the proposed class members with "off duty" (i.e., uninterrupted) rest and meal periods.
D. The Motion to Preclude Class Certification
Sears removed the action in February 2010, but the federal court remanded the case one year later. At a May 2011 case management conference, the trial court scheduled Dailey's class certification motion for hearing in October 2011 (although Sears had requested an earlier date). During the conference, counsel for Sears informed the trial court of Sears's intent to file a motion to preclude class certification, and the court directed Sears to file its motion on "statutory notice," meaning that it could be filed and heard before Dailey's motion for class certification. Sears thereafter filed its motion to preclude class certification, with a hearing date in September 2011. Sears principally argued in its motion both that individual issues predominated in this case, rendering class certification inappropriate, and that certification was collaterally estopped by virtue of an order denying class certification in a prior case against Sears -- Jimenez v. Sears, Roebuck and Co. (Super. Ct. L.A. County, 2010, No. BC383006) (Jimenez action) -- involving similar allegations and a proposed class that purportedly included Dailey.
During the pendency of Dailey's action (except during the one-year period of removal), the parties engaged in discovery, and continued to do so after the action was remanded from federal court. In August 2011, Dailey sought ex parte an order continuing Sears's motion to preclude class certification to permit additional time for discovery, and shortening time for a hearing on Dailey's motion seeking leave to file a Second Amended Complaint (SAC). The trial court granted Dailey's request to file the SAC, which Sears did not oppose, but it denied his request to continue the hearing on Sears's motion.*fn4
On August 19, 2011, Dailey filed the operative SAC, which narrowed the scope of the proposed class from all retail stores in the state of California to those located "within the district of San Diego," but otherwise realleged the same factual allegations and causes of action. Thereafter, Dailey filed a response to Sears's motion to preclude class certification that only partly addressed the merits of the motion, and instead, principally asserted the motion had been rendered "moot" by the narrowing of the scope of the proposed class.
E. Dailey's Motion for Class Certification
On September 30, 2011, Dailey filed his motion for class certification. Two weeks later, Dailey appeared ex parte requesting a continuance of the hearing on that motion so that additional discovery could be completed. Sears opposed the application, and the trial court denied it.
In support of his class certification motion, Dailey submitted his own declaration as well as the substantially similar declarations of five other proposed class members; counsel's declarations; Sears's job descriptions; the deposition testimony of Dailey, several Sears corporate managers, and four of the proposed class members who submitted declarations on Sears's behalf; and the expert declaration of Richard Drogin, Ph.D., proposing a sampling methodology to assist in determining the Managers' and Assistant Managers' work duties, the hours they worked, and damages. In opposition, Sears also submitted the deposition testimony of Dailey and several Sears corporate managers; the declarations of corporate managers as well as 21 proposed class members; and the declaration of its own expert, Joseph A. Krock, Ph.D., responding to Dr. Drogin's declaration.
The parties' evidence generally is not in conflict with respect to the Manager and Assistant Manager job descriptions and Sears's general expectations of how these employees will spend their time. Thus, there is no dispute that the Manager's designated duties include managing the workflow of the Auto Center, prioritizing and assigning tasks, setting work schedules, analyzing sales reports and developing sales goals and strategies. A Manager is also responsible for recruiting, hiring, coaching/training, disciplining and terminating other employees. Assistant Managers share in the performance of the Manager's functions. It is also essentially undisputed that these job descriptions and responsibilities apply at all auto centers.
By about 2005, Sears had phased in a new role called the "Customer Experience Manager" or "CEM." This was not a new position and does not have a job description. Rather, the role is either assumed by the Managers and Assistant Managers, or filled by someone they designate. The parties' evidentiary submissions diverge significantly as to the nature of the CEM role. Dailey's declarations submitted in support of class certification describe the CEM role generally as being responsible for customer service, and involving much of the same work as hourly employees, including checking in customers' vehicles, filling out paperwork, driving vehicles into the bays for service, gathering parts and even performing some mechanical work. In contrast, the Sears declarants describe the CEM's role as a managerial one focused on managing the workflow of the auto center, "especially between the 'front shop' where customers come in, and the 'back shop' where technicians work on customers' vehicles." The Sears declarants also state the CEM is responsible for "determining and coordinating who works on what jobs and making sure that resources and staff are allocated in the most efficient manner possible."
Although the parties' declarants characterize the CEM role differently, they agree that it constitutes a significant portion of the work performed by Managers and Assistant Managers. Both Dailey's and Sears's declarations also demonstrate that Managers and Assistant Managers, whether acting in the CEM role or otherwise, to some extent perform functions normally assigned to hourly, nonexempt employees, such as customer service, sales, inventory work and mechanical work. The parties' declarants fundamentally disagree, however, as to amount of time these employees actually spend performing these nonexempt, nonmanagerial functions. Sears's declarants attest to spending in the range of 1 percent to 40 percent of their time on such tasks, while Dailey's declarations state they routinely spend in the range of 75 percent to 90 percent of their time performing nonexempt work.*fn5
Dailey emphasized in his motion that "[t]he work performed by [Managers and Assistant Managers is] the same from store to store," and that a finite list of tasks performed by members of the proposed class can be created. He contended that Sears auto centers "are operated as a chain store with a centralized operation that places strict controls over design, layout, merchandising, pricing, staffing and day-to-day operations." Managers and Assistant Managers are required to use, and not deviate from, virtually identical "planograms" in designing the physical layout of each store, and to ...