Class Cert in Allstate Overtime Case Upheld
(CN) - The 9th Circuit refused Wednesday to decertify a class of workers who say that Allstate Insurance required California claim adjustors to work unpaid overtime.
Allstate shifted all of its California-based claims adjusters from salaried positions to hourly status in 2005.
Instead of having the adjusters keep time records, however, Allstate empowers the manager of each of the 13 local offices "to file a timekeeping 'exception' or 'deviation' from the default expectation of 8 hours per day and 40 hours per week," lead plaintiff Jack Jimenez claimed.
Each office has a non-negotiable compensation budget, however, so the amount of overtime a manager may approve is allegedly functionally limited.
Jimenez wanted to represent a class alleging that Allstate did not pay overtime to current and former California-based claims adjusters, did not pay adjusters for missed meal breaks, and did not timely pay wages upon termination. He also alleged that Allstate committed acts of unfair competition.
U.S. District Court Judge John Kronstadt certified the class with respect to the unpaid overtime, timely payment and unfair competition claims.
He found that the question of whether Allstate had an "unofficial policy" of denying overtime while requiring overtime work was common among potential class members, and that the issue predominated over any individualized matters, such as damages a particular class member might be able to prove.
Affirming Wednesday, a three-judge panel with the 9th Circuit said the three common questions identified here have the capacity to drive the resolution of the litigation.
"First, the District Court found that the plaintiffs' arguments had raised the common question of whether the class had worked unpaid overtime as a result of 'defendant's unofficial policy of discouraging reporting of such overtime, defendant's failure to reduce class members' workload after the reclassification, and defendant's policy of treating their pay as salaries for which overtime was an 'exception," Judge Ronald Gould wrote for the court in Pasadena.
Resolving whether Allstate knew that the class was working unpaid overtime could also show whether Allstate is liable, and the third common question is whether "defendants stood idly by."
"The District Court did not abuse its discretion in determining that these three common questions contained the 'glue' necessary to say that 'examination of all the class members' claim for relief will produce a common answer to the crucial question[s]' raised by the plaintiffs' complaint," Gould wrote.
Relying on statistical-sampling testimony to show classwide liability also does not contradict the U.S. Supreme Court's 2011 ruling in Wal-Mart Stores Inc. v. Duke, which entitles employers "to individualized determination of each employee's eligibility for backpay," the panel found.
Since that decision, "circuit courts including this one have consistently held that statistical sampling and representative testimony are acceptable ways to determine liability so long as the use of these techniques is not expanded into the realm of damages," Gould wrote.
In this case, "the District Court was careful to preserve Allstate's opportunity to raise any individualized defense it might have at the damages phase of the proceedings," he added. "It rejected the plaintiffs' motion to use representative testimony and sampling at the damages phase, and bifurcated the proceedings. This split preserved both Allstate's due process right to present individualized defenses to damages claims and the plaintiffs' ability to pursue class certification on liability issues based on the common questions of whether Allstate's practices or informal policies violated California labor law."