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Martinez v. Joe's Crab Shack Holdings

California Court of Appeals, Second District, Seventh Division

November 12, 2013

ROBERTO MARTINEZ et al., Plaintiffs and Appellants,
JOE'S CRAB SHACK HOLDINGS et al., Defendants and Respondents.

12/4/13 (order attached).

APPEAL from an order of the Superior Court of Los Angeles County, No. BC377269 Charles F. Palmer, Judge.

Righetti Glugoski, Matthew Righetti and John Glugoski, for Plaintiffs and Appellants, Roberto Martinez, Lisa Saldana, Chanel Rankin-Stephens and Craig Eriksen.

Epstein Becker & Green, Michael S. Kun and Ted A. Gehring, for Defendants and Respondents Crab Addison, Inc. and Ignite Restaurant Group, Inc.

Law Offices of Mary E. Lynch and Mary E. Lynch; Sheppard, Mullin, Richter & Hampton and Charles F. Barker, for Defendant and Respondent Landry’s Restaurants, Inc.


Litigation by class action has long been recognized as a superior method of resolving wage and hour claims in California (see Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1033 (Brinker)), including those seeking redress for unpaid overtime wages. Nonetheless, when confronted with the myriad individual facts asserted by employers in support of the executive exemption as a defense to a wage claim, courts at all levels have struggled to answer the question central to certification of a class—that is, “whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment.” (Sav-on Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 327 (Sav-on); accord, Ghazaryan v. Diva Limousine, Ltd. (2008) 169 Cal.App.4th 1524, 1531.)[1] Here, the trial court, after wrestling with the factual issues raised by Defendants Crab Addison, Inc., Ignite Restaurant Group, Inc. and Landry’s Restaurants, Inc., [2] denied class certification to a putative class consisting of managerial employees allegedly misclassified as exempt on the grounds plaintiffs had failed to establish (a) their claims are typical of the class, (b) they can adequately represent the class, or (c) common questions predominate the class claims such that a class action is the superior means of resolving the litigation. (See Brinker, at p. 1021; Code Civ. Proc. § 382.) We reverse and remand for reconsideration in light of our recent decision in Benton v. Telecom Network Specialists, Inc. (2013) 220 Cal.App.4th 701 (Benton) and our discussion below.


Roberto Martinez, Lisa Saldana, Craig Eriksen and Chanel Rankin-Stephens are current or former employees of different Joe’s Crab Shack (JCS) restaurants in California. Martinez filed the original complaint in September 2007, seeking to represent a class of salaried managerial employees who worked at JCS restaurants in California on claims they had been misclassified as exempt employees and were entitled to overtime pay.[3] In March 2010 the trial court denied Martinez’s motion for class certification on the ground he was not an adequate class representative. Martinez did not appeal that order.

The trial court permitted Saldana, Eriksen and Rankin-Stephens to join the lawsuit as named plaintiffs. In June 2011 plaintiffs moved for certification of a class consisting of “[a]ll persons employed by Defendants in California as a salaried restaurant employee in a Joe’s Crab Shack restaurant at any time since September 7, 2003.” In support of their motion plaintiffs presented training and operations manuals, as well as deposition testimony from various witnesses employed by CAI and Landry’s. According to this evidence, JCS’s hiring and training practices are uniform throughout the chain; it utilizes an operations manual that applies to all restaurants and every employee; each restaurant offers the same menu; and managerial employees are evaluated using the same form and procedure. All managerial employees are classified as exempt employees and are expected to work a minimum of 50 hours per week.[4] Each restaurant is staffed with three to seven managerial employees, who are cross-trained in positions throughout the restaurant and perform the same general tasks.[5]

Plaintiffs also filed 22 declarations from current and former salaried employees who held managerial positions during the relevant time period.[6] The gist of these declarations is the same. Most of the declarants were employed in assistant managerial positions. Although they were told they would be working 50 to 55 hours per week, all stated they had routinely worked more than 55 hours per week; and some reported working more than 70 hours per week. JCS did not keep track of the hours worked by managerial employees. Because labor budgets were set by district or regional managers and, in general, did not provide adequate staffing, managerial employees were required to perform “utility” functions, filling in where needed as cooks, servers, bussers, hosts, stockers, bartenders or kitchen staff. Managerial employees were also required to fill in when hourly employees failed to show up and conduct inventory one night a week after the restaurant closed, which could take as long as three to four hours to complete. As a result, the declarants stated they had worked extended time in positions ordinarily occupied by hourly employees but had received no overtime compensation for those tasks. Each of the declarants estimated he or she had spent the majority of their time performing hourly tasks; estimates ranged from more than 50 percent to 95 percent. Several employees, some of whom had worked in more than one restaurant or under both Landry’s and CAI ownership, stated that these practices were common across the board.[7]

CAI and Landry submitted declarations from approximately 27 putative class members, each of whom reported significant variance among the duties associated with specific management positions, the amount of time they routinely spent on particular tasks and the total amount of time worked each week. More than half of the declarations were provided by general managers, most of whom had served in subordinate managerial positions in the past.[8] Many of the declarants had been hired when Landry’s owned the chain and had signed acknowledgements of the duties associated with their job and their exempt status.[9] These declarants uniformly described their duties as primarily managerial in nature and, with only a couple of exceptions, opted out of the putative class proposed by plaintiffs.[10] Many declarants estimated the amount of time they spent weekly performing discrete “primary” (that is, managerial) duties and “additional” (that is, nonexempt) duties and stated that, even when they were performing tasks ordinarily associated with hourly workers, they were monitoring the restaurant and supervising and directing employees.[11] James Kuhn, a senior vice president with CAI who oversees the 13 California JCS restaurants, stated the activities of managerial employees differed based on the sales volume, seating capacity, amenities and staffing of the particular restaurant, no two of which are the same. While CAI centralized management makes policy decisions affecting JCS restaurants across the board, “the day-to-day decision-making and daily running of the restaurants is left to each restaurant’s management team.”

CAI and Landry’s also submitted evidence impeaching the statements of the named plaintiffs. In deposition testimony the named plaintiffs each conceded he or she was unable to estimate the amount of time spent on exempt tasks as opposed to nonexempt tasks and that every day was different. Eriksen testified it would be “unrealistic” to guess how much time he spent on particular tasks and admitted there were weeks when he devoted more than 50 percent of his time to managerial tasks.[12] Former colleagues of Saldana and Martinez also contradicted statements each had made in declarations concerning hours worked and the time spent on hourly tasks.[13]

Presented with this evidence, the trial court denied the motion for class certification on the grounds plaintiffs had failed to establish (1) their claims were typical of the class, (2) they could adequately represent the class, (3) common questions predominated the claims, and (4) a class action is the superior means of resolving the litigation. The first two findings were based on plaintiffs’ inability to estimate the number of hours spent on individual exempt and nonexempt tasks and their admission the amount of time spent on particular tasks varied from day to day. As to the third and fourth findings, the court acknowledged the existence of common questions of law and fact, [14] but concluded there remained significant individual disputed issues of fact relating to the amount of time spent by individual class members on particular tasks. The variability among individual members of the putative class would require adjudication of the affirmative defense of exemption for each class member, “a time- and resource-consuming process.” The court rejected as unfair plaintiffs’ proffered trial plan, under which their expert, Richard Drogin, proposed to assess the rate at which managerial employees are engaged in nonexempt tasks through statistical sampling methods. (See In re Wells Fargo Home Mortgage Overtime Pay Litigation (N.D.Cal. 2010) 268 F.R.D. 604, 612 [ÔÇťAssume that the court permitted proof through random sampling of class members, and ...

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