Individualized Damages Insufficient to Defeat Commonality for Class Certification

The plaintiff in Jimenez v. Allstate Ins. Co. (2014 WL 4338841) brought a putative class action suit against Allstate, alleging the insurer had unofficially required claims adjusters to work unpaid off-the-clock overtime in violation of California law. In 2005, Allstate reclassified all California-based claims adjusters from salary to hourly positions.  They still typically worked over 40 hours weekly and Allstate continued referring to their compensation as salary.  The adjusters kept no time records, but managers could file timekeeping “exceptions” or “deviations” for overtime if the adjusters requested it.  Time cards, personal observations, nor work records were used to calculate exceptions.

Jimenez filed suit in 2012, alleging violations of California Labor code §§510, 1198, 226.7, 512(a), 201, 202, 226(a) for unpaid overtime, missed meal breaks, untimely paid termination wages, wage statement violations and unfair competition under §17200.  The district court certified class claims for the unpaid overtime, timely payment, and unfair competition under Fed. R. Civ. P. 23(a)(2).  The court also held, under Fed. R. Civ. P. 23(b)(3), the common question of whether adjusters were required to work overtime but denied compensation predominated individualized damages and that class liability could be determined through statistical sampling.  Allstate filed an interlocutory appeal to the Ninth Circuit.

Allstate argued the order violated Rule 23 and statistical sampling violated due process.  Rule 23(a)(2) requires common questions germane to the resolution of the litigation, which are necessarily dependent on the nature of the underlying legal claims.  Here the underlying legal claims required proving (1) work performed with no compensation, (2) the defendant knew or should have known, and (3) the defendant stood idly by.  The Ninth Circuit found the allegations sufficient to question whether the adjusters’ worked overtime unpaid as a result of an unofficial policy, the failure to reduce class members’ workloads after reclassification, and treating the adjuster’s pay as salaries and overtime as an exception.  The plaintiffs also sufficiently pled the second and third prongs, claiming the evidence could be established through manager testimony or company records.

Allstate also contended the use of statistical sampling violated due process and contradicted Wal-Mart Stores, Inc. v. Dukes (131 S.Ct. 2541).  The Ninth Circuit held statistical sampling acceptable to determine liability but not damages.  Although damages may be individualized, a single, central common issue of liability is sufficient to support class certification and satisfies Rule 23, Dukes, and due process.  The order also preserved Allstate’s right to raise individual defenses at the damages stage and the district court carefully analyzed the statistical methodology proposed by the plaintiffs.  The district court order did not err.

The Ninth Circuit affirmed class certification and remanded the case.