Second Circuit Overturns Class Certification Order in Assistant Branch Manager Overtime Case

by Sheppard Mullin Richter & Hampton LLP

On May 29, 2013, the United States Court of Appeals for the Second Circuit issued its opinion in Cuevas v. Citizens Financial Group, Inc. and RBS Citizens, N.A., Case No. 12-2832, reversing the Eastern District of New York’s grant of Rule 23 class certification to a putative class of Assistant Branch Managers (“ABMs”) alleging that they were denied overtime. In a summary order, the Court held that the District Court failed to resolve factual disputes concerning the duties performed by putative class members, which were material to its ability to issue a ruling concerning commonality under Rule 23(a) and predominance under Rule 23(b)(3).

The plaintiff commenced an action in the Eastern District of New York alleging that he and other ABMs were misclassified as exempt and denied overtime in violation of the New York Labor Law. The plaintiff moved pursuant to Rule 23 of the Federal Rules of Civil Procedure for an order certifying the class. The District Court granted the motion, rejecting the defendant’s reliance on declarations demonstrating a significant variance in the duties performed from one ABM to the next in favor of “company-wide policy documents” that contemplated the performance of uniform duties. According to the Hon. Frederic Block, the variations did not preclude the plaintiff from establishing commonality or predominance because of the existence of uniform job descriptions, performance expectation guidelines, and performance evaluations.

The Second Circuit vacated the judgment and remanded the case for further proceedings. Relying on the Supreme Court’s decisions in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) and Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), the Court explained that a class may not be certified unless a “rigorous analysis” demonstrates that each prerequisite to maintaining a class action has been satisfied. Moreover, such determinations cannot be made without resolving factual disputes relevant to each prerequisite.

More specifically, the Court first reviewed the District Court’s determination as to commonality and held that, prior to analyzing commonality, the District Court should have resolved factual disputes concerning the primary duties of the ABMs because they “are relevant to the determination whether Cuevas has presented a claim that is capable of classwide resolution.” For similar reasons, the Court vacated the District Court’s determination as to Rule 23(b)(3) predominance because it failed to resolve “material factual disputes arising from the conflicting declarations” prior to a rigorous application of the predominance inquiry. That is, the Court held that factual disputes concerning the violations alleged must be resolved prior to the Rule 23 analysis instead of merely being a factor as to whether the certification requirements are met.

Notably, while vacating the district court’s certification order and remanding for further consideration, the Second Circuit also reaffirmed its dicta in Myers v. Hertz Corp. stating that exemption is not an “inherently individualized inquiry, such that class treatment will never be appropriate in exemption cases.” Nonetheless, before certifying a class in such cases, the court explained that district courts must “rigorously analyze[] the record, weigh[] the conflicting evidence, resolve[] material factual disputes, and determine[]that subsidiary questions involved in resolving exemption will be answerable through evidence generally applicable to the class.”

The Second Circuit’s decision to vacate the district court’s certification order for failing to sufficiently analyze the evidence is a positive development for employers faced with wage and hour claims premised on misclassification. In particular, the Court’s reliance on Dukes and Comcast indicates a growing receptiveness among the Courts to the utility of such cases in defeating certification. Accordingly, an appropriate discovery strategy that accounts for these developments can equip an employer to either defend against Rule 23 certification motions or to offensively move to deny Rule 23 certification.

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Sheppard Mullin Richter & Hampton LLP

Sheppard Mullin Richter & Hampton LLP on:

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