In an action for unpaid overtime arising out of the alleged misclassification of restaurant managers as exempt, a California Court of Appeal recently held that the trial court properly ruled the action was not suitable for class treatment because common questions of law and fact did not predominate over individualized issues.  Arenas v. El Torito Restaurants, Inc., No. B211301 (Cal. Ct. App. Apr. 8, 2010).  Specifically, the employees failed to demonstrate common proof on the issue of misclassification.  Rather, as the evidence showed that the employees’ job duties differed greatly, the trial court did not abuse its discretion in denying class certification to a group of restaurant managers allegedly misclassified as exempt employees.

Hermilo Arenas and six others (collectively, “Arenas”) were employed as managers at the employers’ three restaurants.  Arenas alleged that he was misclassified as exempt and, among other things, improperly not paid overtime in violation of the California Labor Code.  Arenas asserted that he routinely spent more than half his time performing non-exempt duties (including cooking, preparing drinks, tending bar, waiting and bussing tables, stocking shelves, unloading trucks, cleaning, and dishwashing) and less than half his time on managerial work that required discretion and independent judgment.

Arenas moved to certify a class that included kitchen managers, department managers, and general managers.  The motion was opposed and the defense presented evidence that the managers’ job duties and the time they spent on particular tasks varied from one restaurant to another.  The trial court denied class certification, finding Arenas failed to show common proof on the issue of misclassification.  The court said the case was “replete” with factual issues requiring mini-trials regarding the circumstances of the managers’ job duties.  Arenas appealed, arguing that the trial court incorrectly denied class certification because it found he could not prove the class as a whole was misclassified — an ultimate determination on the case’s merits.  The Court rejected Arenas’ characterization of the trial court’s ruling and held that the trial court did not require Arenas to prove that he would prevail on the merits of his claim. Rather, the trial court properly considered whether the misclassification claim was amenable to class treatment.  Based on the evidence presented of the differences in duties at the various restaurants, the Court found no error with the trial court’s determination. 

This case underscores that the California Court of Appeal will be reluctant to second guess a trial court’s determination regarding whether plaintiffs have satisfied the requirements for a class action.  A more extensive Jackson Lewis analysis of this decision is available here.