Hobbs v. Roth Staffing Companies

Filed 1/30/07 Hobbs v. Roth Staffing Companies CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeal from an order of the Superior Court of Orange County, Jonathan H. Cannon, Judge. Affirmed.

Law Office of Joseph Antonelli, Joseph Antonelli and Janelle Carney for Plaintiff and Appellant.

Carlton DiSante & Freudenberger, Timothy M. Freudenberger and Chris Robertson for Defendants and Respondents.

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April Hobbs filed a complaint against her former employer, Roth Staffing Companies, Inc., seeking compensation for overtime wages based on her alleged misclassification as an employee exempt from overtime. She sought to certify a class of all Roth employees similarly situated to her. The trial court denied class certification, finding that common issues did not predominate. On appeal from the denial, Hobbs contends the trial court abused its discretion. We find no abuse and affirm.

FACTS

Roth Staffing Companies, Inc. employs temporary workers, which it calls staffing associates, to work for its clients. Roth places temporary clerical and light industrial workers under its fictitious business name Ultimate Staffing Services LP and temporary accounting personnel under its fictitious business name Abacus Staffing Services LP. Roth employs service managers to hire and supervise the staffing associates.

April Hobbs was employed by Roth as a service manager from February 2001 through September 2002. Following the cessation of her employment, she filed a putative class action against Roth, alleging it had improperly classified her and all other service managers as exempt from California overtime laws in violation of Labor Code sections 510 and 1194. She sought damages for overtime compensation, claiming the service managers regularly worked more than 40 hours per week.

Hobbs filed a motion to certify a class of [a]ll California-based salaried exempt employees with the titles Service Manager, or other similar title, improperly misclassified as exempt and who worked overtime for defendant Roth dba Ultimate Staffing and Abacus Staffing from October 17, 1998 through the date of judgment for this matter; in excess of eight (8) hours per workday; and/or in excess of forty (40) hours per workweek without receiving straight time or premium overtime compensation for the overtime hours worked . . . . In support of her motion, Hobbs introduced the deposition testimony of Ben Roth, Roths founder and CEO. He testified that the service manager was the one primarily responsible for placing service associates with clients and that all service managers were classified as exempt employees.

Hobbs also introduced excerpts from various training materials Roth provides to its service managers, detailing the application hiring process for service associates, phone etiquette, bill rate and pay rate calculations, communication skills with both the service associates and the clients, and employee benefits. The evaluation form for the service manager position describes its function as to service customers, help build additional business and expand the staffing associate pool for the branch. The position recruits and hires candidates, secures job order requirements for customers, matches candidates to job orders, actively promotes highly qualified candidates, consistently carries out three inches of service standards, acknowledge[s] and administer[s] rewards programs for staffing associates, etc. etc.

Hobbss declaration stated she was hired as a service manager, which she characterized as a clerical position. She claimed she did not participate in management meetings or the setting of policy or procedure; rather, she was required to follow Roths uniform policies and procedures. She did not supervise any other employee. She regularly worked over 8 hours in a day and/or 40 in a week and received no overtime, but her pay was deducted when she missed work. Judy Staats declared she had been employed by Roth as a service manager for one year, after which she was promoted to Area Service Manager and Partner. As a service manager, Staats supervised no one and followed the expected uniform policy and procedure. She regularly worked 55-60 hours per week, and her wages were subjected to deductions for any partial day absences.

Roth submitted declarations from 38 former service managers, three corporate officers, and four clients in opposition to the motion to certify the class. Linda Beck, the Director of Administration for Roth, declared Roth has in California approximately 27 branch offices for Ultimate (clerical and light industrial), 11 branch offices for Abacus (the accounting division), and 20 on-site locations at clients. Alicia Corona, an Area Manager, has been responsible for services managers at three Ultimate branch offices and four on-site locations. She claimed the duties of the service managers vary depending on whether they work in a branch office or on-site, and whether they have an assistant. The light industrial branch focuses on technical skills and safety and attendance issues because they are crucial to the production environments where the Staffing Associates work. Service Managers at that branch rely more on referrals to find candidates, perform background checks and drug-screens more frequently on candidates they are considering hiring, perform walk-throughs with clients Safety Officers, and provide safety training to the candidates they hire. The clerical branch, on the other hand, relies more on ads to find candidates, and focuses more on software skills and personality traits because they are crucial to the office environments where the Staffing Associates work. The Service Managers at the clerical branch tend to utilize on-line applications, have longer interviews, and rely more on testing in making their placement decisions. A clerical Staffing Associate tends to require a greater time commitment by a Service Manager than a light industrial Staffing Associate. As a result, the clerical branch normally has a total of less than 70 Staffing Associates placed at any one time, whereas the light industrial branch currently has approximately 70 Staffing Associates placed at a single client.

Marcela Toro was placed in the Cerritos branch office of Ultimate Staffing, where there was another service manager who was her supervisor. Toro handled light industrial placements, for which many of the candidates were Spanish speaking. Toro used her bilingual skills to perform her job. After several years, Toro became the on-site service manager for one of her three major clients. Accordingly, she became knowledgeable about the clients business and job requirements, and the client relied on her judgment in staffing open positions. After the service associates were placed, Toro monitored their performance by having direct contact with the Staffing Associates and with [the clients] managers on a daily basis. She was solely responsible for the service associates discipline and termination, if necessary. Her hours were flexible; she submitted a form requesting vacation or personal time if she took a whole day off.

Barbara Addington was a service manager for Ultimate in the Laguna Niguel branch office from 1997 to 2003. When she began, most of her placements were for direct hire by the clients, while the other service manager in the office did temp to hire. Direct hire placements were different from placing staffing associates. Direct hire placements were usually for high level executive administrators. The recruiting and candidate screening process for direct hires could take up to three weeks. From 2000 to 2003, Addington primarily worked with staffing associates. In 2003, Addington became an on-site service manager for one of her clients. Since she has been there, she has perfected ways to screen and test candidates so that Clients human resources department now does no screening or interviewing at all for the positions I place. She also devised a pay plan which successfully addressed her clients problem of retaining employees during training. Addington gives a group orientation about her clients requirements to all staffing associates that she places there and counsels staffing associates about ongoing job performance.

Jennifer Allan declared she is a service manager for Abacus Staffing, having worked in the Pleasanton office since 2000. Her clients include manufacturers, law firms, high-technology companies, construction firms, and C.P.A. firms. Most of her placements are temporary to permanent employees. Allan chooses the medium in which to place her ads for staffing associates, depending on the required level of sophistication. She negotiates pay rates with staffing associates and bill rates with the clients. She educates herself about each client so as to understand its staffing needs and the job requirements. She has complete discretion in discipline of staffing associates and can resolve client dissatisfaction with staffing associates in a variety of ways. She is responsible for handling unemployment and workers compensation claims filed by staffing associates.

Jennifer Bainbridge is an on-site service manager with a client who manufactures reverse osmosis filters in the San Diego area. About 90 percent of the placements are for light industrial (production) positions and the other 10 percent . . . are for administrative and technician level employees. Before her current assignment, Bainbridge was a service manager in the La Jolla branch office.

Roth also submitted Hobbs performance review, which scored her overall performance as below average. Specifically, she was rated below average in time management, hiring sufficient candidates, and failure to exercise creativity and innovation.

The trial courts tentative ruling was to deny the motion to certify the class. The analysis section of the tentative ruling explained, Plaintiff has not met her burden showing a well defined community of interest among the class members. Plaintiff argues defendants policy of classifying all [Service Managers] as exempt supports the commonality prong necessary for certification. In some situations, such a blanket policy may support a motion for class certification. For example, the court in Sav-on Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319 held determination of class certification was proper where a defendant had a policy and practice of deliberately misclassifying exempt employees or a classification based on the job descriptions alone resulting in widespread de facto misclassification. Sav-On is distinguishable from the facts here. Unlike the plaintiff in Sav-On, the record here does not contain substantial, if disputed, evidence that deliberate misclassification was defendants policy and practice, or the classification resulted in de facto misclassification. The evidence submitted by plaintiff in support of her argument is minimal. [] If plaintiffs claims were taken individually, she may or may not prevail on the merits with regard to the misclassification. However, the declarations and evidence submitted by defendant show her claims are not typical of those of the class. Evidence presented by defendant shows the detail of the duties and responsibilities of the [Service Mangers] varied widely depending on location, type of client, etc.

At the hearing, the trial court said, I had a very serious problem with commonality in the case, as you can tell from my tentative. . . .  [] . . . [] And, also, that slops over onto . . . typicality because if you dont find commonality, then the problems which the plaintiff complains about of necessity means that she isnt typical. When Hobbs asked about the courts typicality finding, it explained, I think the defendants words were underperformer. They had a job classification. They had people that were expected to work within that range of what was expected of people holding that job and that she underperformed. Returning to the commonality issue, the court commented, They [Roth] have 35 declarations, . . . describing all sorts of different things that those people did. Hobbs asked if the court would allow her additional time to locate another plaintiff if the court felt she was not typical. The court responded, If it were on typicality alone, your [request] would be meritorious, but it is not. It is on commonality, as well as typicality.

After vigorous argument from both sides, the court stated, The tentative will be the final, and asked Roth to prepare the order. Roth did so, including the analysis section from the tentative ruling. When the court signed the order, it crossed out the entire analysis section. Hobbs then submitted an amended order which merely stated that the motion for class certification was denied and that each objection filed by Hobbs was overruled. The court signed and filed the amended order.

DISCUSSION

Class actions are authorized in California by Code of Civil Procedure section 382: [W]hen the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court, one or more may sue or defend for the benefit of all. The party seeking to obtain certification of a class action must establish the existence of both an ascertainable class and a well-defined community of interest among the class members. [Citations.] The community of interest requirement involves three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class. [Citation.] (Linder v. Thrifty Oil, (2000) 23 Cal.4th 429, 435.)

Because trial courts are ideally situated to evaluate the efficiencies and practicalities of permitting group action, they are afforded great discretion in granting or denying certification. (Linder v. Thrifty Oil Co., supra, 23 Cal.4th at p. 435.) When reviewing an order denying class certification, we look for substantial evidence to support it. If such evidence is present in the record, the order will stand unless (1) improper criteria were used [citation]; or (2) erroneous legal assumptions were made [citation]. (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470.) This standard of review presents an exception to the general rule that a reviewing court will look to the trial courts result, not its rationale. (Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 828.) Rather than searching the record for substantial evidence to support the ruling on any ground, we must examine the trial courts reasons for its ruling. If the reasoning is based on improper criteria or erroneous assumptions, we must reverse even if the result is supported by substantial evidence. (Linder v. Thrifty Oil Co., supra, 23 Cal.4th at pp. 435-436; Clothesrigger, Inc. v. GTE Corp. (1987) 191 Cal.App.3d 605, 611-612.) The right result is an inadequate substitute for an incorrect process. (Id. at p. 612.)

Hobbs contends the trial court employed improper legal criteria in finding that common questions of law or fact did not predominate. Pointing to the trial courts tentative ruling, she argues its findings are based on her failure to show that Roth deliberately misclassified the service managers or its classification resulted in a de facto misclassification; she argues neither of these showings is a proper criterion for class action certification.

We cannot use the tentative ruling as an expression of the trial courts reasons for denying class certification because it struck the reasoning in the tentative from its final order. The record does not reveal why the trial court struck the reasoning, but we must infer it no longer wanted the reasoning as the basis for its final order. This it had every right to do. [A] court is not bound by its statement of intended decision and may enter a wholly different judgment than that announced. (In re Marriage of Ditto (1988) 206 Cal.App.3d 643, 648, quoting Canal-Randolph Anaheim, Inc. v. Wilkoski (1978) 78 Cal.App.3d 477, 494.)

Although the trial court did not express its reasons for denying class certification in its final order, it clearly expressed them during the hearing. The trial courts denial of the certification motion was based on Hobbs failure to prove that common issues would predominate in the litigation. Any valid reason stated, whether written or oral, will be sufficient to uphold the order. (Sav-On v. Drug Stores v. Superior Court, supra, 34 Cal.4th at p. 332; Linder v. Thrifty Oil Co., supra, 23 Cal.4th at p. 436.)

Hobbs contends the trial court erred as a matter of law in finding a lack of commonality, claiming a different result is compelled by the Supreme Courts decision in Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th 319. Sav-On involved a class certification motion in a case where store managers asserted they had been improperly classified as employees exempt from overtime. The trial court certified the class; the store petitioned for writ relief, and the appellate court vacated the certification order. The managers sought review in the Supreme Court, which was granted. The Supreme Court affirmed the trial court order.

The Sav-On court explained, [T]he focus in a certification dispute is on what type of questions common or individual are likely to arise in the action, rather than on the merits of the case. (Id. at p. 327.) The managers presented job descriptions, the performance review forms, memoranda detailing scheduling, compensation and training programs, depositions, interrogatory responses, and declarations detailing the managers work and the stores policy and procedures. This evidence, although disputed by the store, was substantial evidence that deliberate misclassification was the stores policy. It also constituted substantial evidence that, owing in part to operational standardization and perhaps contrary to what defendant expected, classification based on job descriptions alone resulted in widespread de facto misclassification. Either theory is amenable to class treatment. (Id. at p. 329.) The court recognized that the predominant issue in dispute is how the various tasks in which [the managers] actually engaged should be classified as exempt or nonexempt. (Id. at p. 330.) But both parties put forth similar lists of tasks performed by the managers. The dispute was over their characterization as managerial or non-managerial, which could be easily resolved on a class-wide basis. (Id. at p. 331.)

Throughout the opinion, the court repeatedly emphasized that the issue before it was whether the trial court abused its discretion in concluding that common issues predominated. Acknowledging the substantial evidence presented by the store that contradicted the managers evidence, the court stated, [T]he trial court was within its discretion to credit plaintiffs evidence on these points over defendants, and we have no authority to substitute our own judgment for the trial courts respecting this or any other conflict in the evidence. [Citation.] . . . [] The trial court was not deciding nor are we  the merits of plaintiffs case. . . .  We need not conclude that plaintiffs evidence is compelling, or even that the trial court would have abused its discretion if it had credited defendants evidence instead. (Id. at p. 331.)

Hobbs argues Sav-On is on all fours with this case, requiring us to reverse the trial courts denial of the certification motion. But unlike Sav-On, the trial court here denied the certification motion, finding Hobbs had not established the commonality element of a class action. This was not an abuse of discretion. Roth presented evidence from 35 people that described the varied tasks and duties among the service managers, leading the court to conclude that the individual issues of classification would predominate over any common issues. This constitutes substantial evidence to support the trial courts finding that Hobbs had not established a well-defined community of interest among the class members. (See Dunbar v. Albertsons, Inc. (2006) 141 Cal.App.4th 1422 [In a proposed class action of grocery store managers for unpaid overtime wages, certification was denied because the question of whether each grocery managers tasks were exempt or non-exempt would predominate over common issues].)

Hobbs also contends California labor law presumes that all employees are not exempt from the overtime laws and places the burden of proving otherwise on the employer. (Ramirez v. Yosemite Water Co., Inc. (1999) 20 Cal.4th 785, 794-795.) Hobbs argues that Roth did not submit evidence rebutting that presumption. But Hobbs confuses disproving the predominance of common issues for purposes of class certification with rebutting a presumption when defending on the merits. Roth submitted evidence showing that proof of exemption would be individual as to each service manager, not a class-wide determination.

DISPOSITION

The order denying certification of the proposed class is affirmed. Respondent is entitled to costs on appeal.

SILLS, P. J.

WE CONCUR:

RYLAARSDAM, J.

FYBEL, J.

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