The Ninth Circuit recently affirmed certification of a class of an estimated 800 current and former California-based Allstate Insurance Company adjusters who allege that Allstate has a practice or unofficial policy of requiring its hourly claims adjusters to work unpaid off-the-clock overtime in violation of California law. In certifying the class, the district court found that the question of whether Allstate had an unofficial policy of denying overtime payments while requiring overtime work predominated over individualized issues regarding the specific amount of damages a class member may be able to prove, as required by Rule 23(b)(3), and, despite despite Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011), that class treatment was a superior method of adjudication because statistical sampling of class members could accurately and efficiently resolve the question of liability, while leaving individualized damages assessments for another day.

The district court found sufficient evidence to establish three common questions under Rule 23(a)(2): (1) whether class members generally worked overtime without receiving compensation as a result of Allstate's unofficial policy discouraging reporting of overtime, Allstate's failure to reduce class members' workload, and Allstate's policy of treating their pay as salaries for which overtime was an exception, (2) whether Allstate knew or should have known that class members did so, and (3) whether Allstate stood idly by without compensating class members for overtime. Allstate challenged the certification order, arguing that those common questions will not resolve classwide liability issues. The Ninth Circuit disagreed, and held that the "close connection" between those common questions and the elements of an off-the-clock claim as set forth in Adoma v. Univ. of Phoenix, Inc., 270 F.R.D. 543, 548 (E.D. Cal. 2010) "means that these are precisely the kind of common questions the Rule 23(a)(2) and Dukes require."

Allstate further challenged the district court’s approval of statistical modeling, arguing that it violates due process and conflicts with Dukes. The Ninth Circuit again disagreed, and distinguished Dukes by stating that none of the problems identified in Dukes exist in the district court’s certification order, and that since Dukes circuit courts 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." The Ninth Circuit noted that the district court "was careful to preserve Allstate's opportunity to raise any individualized defenses it might have at the damages phase of the proceedings" and that it had also "carefully analyzed the specific statistical methods proposed by plaintiffs" and "struck some of the expert testimony offered by plaintiffs as insufficiently empirically supported and took pains to ensure that the statistical analysis it did accept conformed to the legal questions to which the analysis as being applied." It characterized the statistical analysis the district court had accepted as "capable of leading to fair determination of Allstate's liability."

Jiminez v. Allstate Ins. Co., No. 12-56112 (9th Cir. Sept. 3, 2014).