Vinole v. Countrywide Home ( 2009 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
RAYMOND VINOLE, on behalf of 
himself and all others similarly
situated; KEN YODER, No. 08-55223
Plaintiffs-Appellants,
v.  D.C. No.
CV-07-00127-DMS
COUNTRYWIDE HOME LOANS, INC., a OPINION
New York corporation,
Defendant-Appellee.

Appeal from the United States District Court
for the Southern District of California
Dana M. Sabraw, District Judge, Presiding
Argued and Submitted
February 5, 2009—Pasadena, California
Filed July 7, 2009
Before: Barry G. Silverman and Consuelo M. Callahan,
Circuit Judges, and Richard Mills,* Senior District Judge.
Opinion by Judge Callahan
*The Honorable Richard Mills, Senior United States District Judge for
the Central District of Illinois, sitting by designation.
8299
8302 VINOLE v. COUNTRYWIDE HOME LOANS
COUNSEL
Michael D. Singer, Cohelan, Khoury & Singer, on behalf of
appellants Raymond Vinole and Ken Yoder.
VINOLE v. COUNTRYWIDE HOME LOANS 8303
Thomas R. Kaufman, Seyfarth Shaw LLP, on behalf of appel-
lee Countrywide Home Loans, Inc.
OPINION
CALLAHAN, Circuit Judge:
Plaintiffs-Appellants Raymond Vinole and Ken Yoder
(“Plaintiffs”) appeal the district court’s order granting
Defendant-Appellee Countrywide Home Loans, Inc.’s
(“Countrywide”) motion to deny class certification. In this
wage-and-hour dispute, Plaintiffs seek to represent a proposed
class of current and former Countrywide employees who are
or were employed as External Home Loan Consultants
(“HLCs”). They allege that Countrywide mis-classified HLCs
as “exempt” outside sales employees and, as a result, Coun-
trywide impermissibly failed to pay premium overtime and
other wages. In a procedural wrinkle, Countrywide filed its
motion to deny certification before Plaintiffs filed a motion
for certification pursuant to Federal Rule of Civil Procedure
23 (“Rule 23”) and prior to the pretrial motion deadline and
discovery cutoff.
On appeal, we consider whether the district court abused its
discretion by (1) considering Countrywide’s motion to deny
class certification before Plaintiffs had filed a motion to cer-
tify and prior to the pretrial and discovery cutoffs, and (2)
denying class certification based on its reasoning that individ-
ual issues predominate over common issues. See Fed. R. Civ.
P. 23(b)(3). We affirm. First, no rule or decisional authority
prohibited Countrywide from filing its motion to deny certifi-
cation before Plaintiffs filed their motion to certify, and Plain-
tiffs had ample time to prepare and present their certification
argument. Second, the district court did not abuse its discre-
tion by denying certification under Rule 23(b)(3) because the
record supports its conclusion that individual issues predomi-
nate over common issues.
8304 VINOLE v. COUNTRYWIDE HOME LOANS
I
Countrywide is a corporation that provides mortgages to
homeowners and home purchasers. It employs roughly 1,140
HLCs, like Plaintiffs Vinole and Yoder, in small satellite
offices throughout California to sell loan products on its
behalf. HLCs are focused on outside sales and “represent
Countrywide in local communities, and specifically work with
realtors, builders, and other potential business partners in
order to develop business relationships and obtain referral
business.” They are paid entirely on commission, based on
loan production.1 Countrywide declares that it “has no control
over what HLCs actually do during the day” and does not
monitor how HLCs perform their work activities. It further
states that “[i]t is immaterial how much, or how little time
HLCs spend in the office, or working overall” and that “[i]t
is up to each HLC to decide how much time they want to
spend doing this, how they want to market themselves, and
how much money they want to make.” HLCs can earn several
hundreds of thousands of dollars, and the average annual
compensation of Countrywide’s HLCs during the relevant
period was over $100,000.
Countrywide applies a uniform wage exemption to HLCs,
categorizing them as “exempt” outside salespeople to whom
Countrywide is not obligated to pay overtime and related
wages. It relies on the “outside salesperson” exemption found
in the California Industrial Wage Commission’s (“I.W.C.”)
Wage Order 4-2001, § 1(C), codified at Cal. Code Regs., tit.
8, § 11040, and a similar exemption in the Fair Labor Stan-
dards Act (“FLSA”), 29 U.S.C. § 213(a)(1). I.W.C. Wage
Order 4-2001, § 2(M) defines an outside salesperson as a per-
son “who customarily and regularly works more than half the
1
Countrywide also employs Internal Home Loan Consultants, who per-
form inside loan origination work based on phone calls and walk-ins.
Countrywide classifies these employees as non-exempt workers who are
paid on an hourly basis.
VINOLE v. COUNTRYWIDE HOME LOANS 8305
working time away from the employer’s place of business
selling tangible or intangible items or obtaining orders or con-
tracts for products, services, or use of facilities.”
Evidence in the record, in the form of declarations from
HLCs regarding the amount of time individual HLCs spent
inside and outside the office, suggests that the time spent in
or out of the office varies greatly. Countrywide does not keep
records reflecting whether any particular HLC qualifies for
the exemption and does not monitor any possible change in an
HLC’s exemption eligibility—it apparently only tracks the
number and value of loans that HLCs close each month.
In October 2006, Plaintiffs filed a complaint in California
state court, which Countrywide removed to federal court in
January 2007. The First Amended Class Action Complaint
(“Complaint”) alleges twelve causes of action against Coun-
trywide on the theory that Countrywide impermissibly classi-
fied all HLCs as exempt despite the fact that most HLCs
primarily engaged in non-exempt activities inside the office.2
Plaintiffs seek to represent a putative class defined as follows:
All current and former California-based employees
having a title of Loan Consultant and/or other simi-
larly designated titles, who have worked for Defen-
dant COUNTRYWIDE HOME LOANS, INC.
within the last four (4) years from the filing of the
Complaint up to and including the time of trial for
this matter (“Loan Consultants”)[.]
The Complaint also proposes eight sub-classes within the
larger class.
2
Plaintiffs allege claims for restitution of overtime wages, failure to pay
overtime wages, failure to pay minimum wages, failure to provide meal
periods, failure to provide rest periods, illegal record keeping, unfair busi-
ness practices, conversion, and declaratory relief. They seek back pay with
interest, declaratory relief, injunctive relief, punitive damages, penalties,
and attorneys’ fees.
8306 VINOLE v. COUNTRYWIDE HOME LOANS
On August 7, 2007, before the discovery cutoff and pretrial
motion cutoff, Countrywide filed a motion to deny certifica-
tion. The discovery cutoff was scheduled for November 9,
2007, and the pretrial motion cutoff was scheduled for
December 3, 2007. Plaintiffs had not yet filed an affirmative
motion for class certification. Plaintiffs opposed the motion,
arguing that (1) the motion was “not ‘ripe’ ” and was proce-
durally improper because Plaintiffs had yet to file a motion
for class certification; and (2) class certification was substan-
tively warranted based on the evidence they presented, which
included nine declarations from HLCs that served as a “pre-
view” of the motion for class certification that Plaintiffs’
intended to file.
On November 15, 2007, the district court granted Country-
wide’s motion. First, the district court held that it was permit-
ted to decide the question of certification on Countrywide’s
motion under Rule 23 notwithstanding the fact that Country-
wide had filed its motion before the pretrial motion and dis-
covery cutoff dates. Second, the district court held that class
certification was not substantively proper because Plaintiffs
had not met their burden to demonstrate the applicability of
one of the Rule 23(b) certification grounds. Specifically, it
concluded that individual issues predominated over common
issues because determining the propriety of a HLC’s exempt
status would require an individualized analysis of how each
HLC spent his or her time, and that Countrywide had “no
common scheme or policy that would diminish the need for
individual inquiry.” (Order at 5, Nov. 15, 2007.)
After entry of the district court’s order, Plaintiffs success-
fully petitioned this court for permission to file an interlocu-
tory appeal pursuant to Federal Rule of Civil Procedure 23(f).3
3
We ordered that this case be calendered with In re Wells Fargo Home
Mortgage Overtime Pay Litigation, No. 08-15355, also decided today,
because the cases involve similar issues as to the certification of a class
of loan consultants.
VINOLE v. COUNTRYWIDE HOME LOANS 8307
II
We review a district court’s order denying class certifica-
tion for an abuse of discretion. Zinser v. Accufix Research
Inst., Inc., 253 F.3d 1180, 1186 (9th Cir. 2001). As we stated
in Parra v. Bashas’, Inc.,
[w]e limit our review to whether the district court
correctly selected and applied Rule 23’s criteria. An
abuse of discretion occurs when the district court, in
making a discretionary ruling, relies upon an
improper factor, omits consideration of a factor enti-
tled to substantial weight, or mulls the correct mix of
factors but makes a clear error of judgment in assay-
ing them.
536 F.3d 975, 977-78 (9th Cir. 2008) (citation and internal
quotation marks omitted).
III
A
[1] We first address Plaintiffs’ argument that a defense
motion to deny class certification “brought outside the context
of a plaintiff’s motion actually seeking certification is proce-
durally improper per se.” Although we have not previously
addressed this argument directly, we conclude that Rule 23
does not preclude a defendant from bringing a “preemptive”
motion to deny certification.
[2] Rule 23(c)(1)(A) addresses the timing of a district
court’s class certification determination, and states: “Time to
Issue: At an early practicable time after a person sues or is
sued as a class representative, the court must determine by
order whether to certify the action as a class action.” Fed. R.
Civ. P. 23(c)(1)(A). Nothing in the plain language of Rule
23(c)(1)(A) either vests plaintiffs with the exclusive right to
8308 VINOLE v. COUNTRYWIDE HOME LOANS
put the class certification issue before the district court or pro-
hibits a defendant from seeking early resolution of the class
certification question. The only requirement is that the certifi-
cation question be resolved “[a]t an early practicable time.”
The plain language of Rule 23(c)(1)(A) alone defeats Plain-
tiffs’ argument that there is some sort of “per se rule” that
precludes defense motions to deny certification, and Plaintiffs
have produced no authority to the contrary.
[3] In addition, contrary to Plaintiffs’ assertion that the dis-
trict court here charted “troubling new territory” by entertain-
ing Countrywide’s motion to deny certification, federal courts
have repeatedly considered defendants’ motions to deny class
certification. In Rutledge v. Electric Hose & Rubber Co., we
affirmed the district court’s order granting defendants’ motion
to deny certification under Rule 23, albeit without expressly
addressing any challenge to the defendants’ ability to bring
such a motion before plaintiffs moved for certification. 511
F.2d 668, 673 (9th Cir. 1975). In Cook County College Teach-
ers Union, Local 1600 v. Byrd, the Seventh Circuit also con-
cluded that it was proper for the district court to consider the
defendants’ motions to deny certification where the plaintiffs
had not yet moved to certify a class. See 456 F.2d 882, 884-85
(7th Cir. 1972) (“One opposing a class action may move for
an order determining that the action may not be maintained as
a class suit.”), cert. denied, 409 U.S. 848 (1972); see also
Parker v. Time Warner Entm’t. Co., 331 F.3d 13, 21-22 (2d
Cir. 2003) (reviewing a district court’s order granting defen-
dant’s motion to deny class certification but vacating that
order because the district court had not permitted plaintiffs to
conduct limited discovery).
Plaintiffs’ proposed rule is also contrary to the fact that dis-
trict courts throughout the nation have considered defendants’
“preemptive” motions to deny certification. See, e.g., Fedotov
v. Peter T. Roach & Assocs., P.C., 354 F. Supp. 2d 471, 478
(S.D.N.Y. 2005) (stating that “defendant’s Motion for Denial
of Class Certification—a procedural ‘preemptive strike’
VINOLE v. COUNTRYWIDE HOME LOANS 8309
against this purported class action—is properly before this
court”); Chevron USA, Inc. v. Vermillion Parish Sch. Bd., 215
F.R.D. 511, 515-16 (W.D. La. 2003) (granting defendants’
motion to deny class certification), aff’d, 377 F.3d 459, 464
(5th Cir. 2004); Bryant v. Food-Lion, Inc., 774 F. Supp. 1484,
1495 (D.S.C. 1991) (denying on the merits defendant’s
motion to deny class certification brought before start of dis-
covery); Osborn v. Pennsylvania-Delaware Serv. Station
Dealers Ass’n, 499 F. Supp. 553, 560 (D. Del. 1980)
(“Plaintiff’s briefing appears to incorrectly assume that defen-
dants to purported class actions may only raise issues regard-
ing the appropriateness of this procedure in response to class
certification motions.”); Brown v. Milwaukee Spring Co., 82
F.R.D. 103, 104 (E.D. Wis. 1979) (“While the plaintiff has
the burden of establishing her right to maintain a class action,
the defendants may test the propriety of the action by means
of a motion for denial of class certification.”).4
Plaintiffs rely on three district court cases for their pur-
ported “per se rule” prohibiting defendants from moving to
deny class certification prior to the plaintiffs’ filing of a
motion to certify: In re Wal-Mart Stores, Inc. Wage and Hour
Litigation, 505 F. Supp. 2d 609 (N.D. Cal. 2007); Baas v.
Dollar Tree Stores, Inc., No. C 07-03108 JSW, 2007 WL
2462150 (N.D. Cal. Aug. 27, 2007) (unpublished); and Beau-
4
Several secondary sources also recognize that either plaintiffs or defen-
dants may put class certification at issue and that defendants may move
to deny class certification before plaintiffs file a motion to certify a class.
See, e.g., James Wm. Moore, 5 MOORE’S FED. PRACTICE, § 23.82[1] (Mat-
thew Bender 3d ed. 2009) (“The defendant need not wait for the plaintiff
to act, however. The defendant may move for an order denying class certi-
fication.”); William B. Rubenstein, Alba Conte & Herbert B. Newberg, 3
NEWBERG ON CLASS ACTIONS, § 7:6 (4th ed. June 2009) (“Not infrequently,
however, the defendants may initially move for an order denying the
class.”); Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, 7AA
FED. PRAC. & PROC. CIV. 3D, § 1785 (2008) (“Either plaintiff or defendant
may move for a determination of whether the action may be certified
under Rule 23(c)(1).”).
8310 VINOLE v. COUNTRYWIDE HOME LOANS
perthuy v. 24 Hour Fitness USA, Inc., No. 06-0715 SC, 2006
WL 3422198 (N.D. Cal. Nov. 28, 2006) (unpublished). These
cases do not support Plaintiffs’ proposed rule.
In In re Wal-Mart Stores, the district court did not have
before it a Rule 23 motion to deny class certification—
instead, and unlike the present case, the district court was con-
sidering the defendant’s motions to dismiss and strike class
allegations pursuant to Federal Rule of Civil Procedure 12,
when the defendant had not yet answered the complaint, dis-
covery had not yet commenced, and no motion to certify a
class had been filed. See 505 F. Supp. 2d at 614-16. The dis-
trict court exercised its discretion and denied the motions in
order to allow plaintiffs time to conduct discovery prior to
considering the propriety of the class allegations. Id. at
615-16. However, it in no way set forth an absolute prohibi-
tion on defense motions to deny certification.5
Plaintiffs’ reliance on Baas is similarly unfounded because
that case involved a defendant’s motions to dismiss and strike
class allegations on vagueness grounds and was decided in
nearly the same procedural posture as In re Wal-Mart Stores.
See Baas, 2007 WL 2462150 at *2-3 (distinguishing a Rule
23 motion and holding that defendant’s attempt to dismiss
class allegations under Rule 12 was premature). As in In re
Wal-Mart Stores, Baas did not adopt the per se rule urged by
Plaintiffs here.
Finally, the Plaintiffs misread Beauperthuy as supporting a
per se prohibition on preemptive motions to deny class certifi-
cation. In that case, the district court denied defendants’
motion under Rule 23(d)(4) to compel amendment of the
pleadings to eliminate class allegations on the grounds that
such a motion was “procedurally inseparable” from the ques-
5
In our case, during the hearing on Countrywide’s motion to deny certi-
fication, the district court specifically recognized the Countrywide’s
motion was brought pursuant to Rule 23, not Rule 12(b).
VINOLE v. COUNTRYWIDE HOME LOANS 8311
tion of class certification, and that the plaintiffs had not yet
filed a motion to certify. Beauperthuy, 2006 WL 3422198, at
*3. The district court held only that it was procedurally
improper to consider a motion to compel an amendment of the
pleadings in a class action case where the question of certifi-
cation was not yet before the court and discovery was ongo-
ing. Id. Again, the district court did not announce the rule
forwarded by Plaintiffs here.
[4] In short, Plaintiffs have read into Rule 23 a per se pro-
hibition against defendants filing of a motion to deny class
certification where none exists. A defendant may move to
deny class certification before a plaintiff files a motion to cer-
tify a class. Accordingly, the district court did not err by con-
sidering Countrywide’s motion.
B
Having determined that Countrywide filed its motion to
deny class certification at a permissible point in the proceed-
ings, we next consider whether the district court abused its
discretion in granting Countrywide’s motion before the pre-
trial motion cutoff and the discovery cutoff. The district court
held that (1) it was not obligated to wait for the pretrial
motion deadline before considering the class certification
issue, and (2) Plaintiffs had “sufficient time to prepare for
Defendant’s motion” despite the fact that the discovery cutoff
was three weeks away. Plaintiffs argue that the district court’s
consideration of the motion was “fundamentally unfair”
because they were deprived of the opportunity to present their
argument based on a full record.
[5] Plaintiffs offer virtually no factual assertions in support
of their claim that the district court abused its discretion by
considering Countrywide’s motion to deny certification
before the December 3, 2007 pretrial motion deadline. They
essentially argue that it was unfair for the district court to con-
sider Countrywide’s motion when it did. However, the opera-
8312 VINOLE v. COUNTRYWIDE HOME LOANS
tive scheduling order simply states that “[a]ll other pretrial
motions must be filed on or before December 3, 2007.” As the
district court noted in its order, “the scheduling order neither
provides Plaintiffs an exclusive right nor a specifically desig-
nated period of time to address the issue of class certifica-
tion.” (Order at 3.) In addition, Plaintiffs have not offered any
authority, and we have found none, for the proposition that a
district court either abuses its discretion or errs as a matter of
law by considering the issue of class certification before expi-
ration of a pretrial motion deadline. Plaintiffs’ argument is
essentially a re-packaged version of their argument that plain-
tiffs are entitled to complete control over the timing of a dis-
trict court’s consideration of the class certification issue, an
argument which we have already rejected.
[6] We also conclude that Plaintiffs were provided with
adequate time in which to conduct discovery related to the
question of class certification such that the district court did
not abuse its discretion by considering Countrywide’s motion.
District courts have broad discretion to control the class certi-
fication process, and “[w]hether or not discovery will be per-
mitted . . . lies within the sound discretion of the trial court.”
Kamm v. Cal. City Dev. Co., 509 F.2d 205, 209 (9th Cir.
1975); accord Armstrong v. Davis, 275 F.3d 849, 871 n.28
(9th Cir. 2001). Although a party seeking class certification is
not always entitled to discovery on the class certification
issue, we have stated that “[t]he propriety of a class action
cannot be determined in some cases without discovery,”
Kamm, 509 F.2d at 210, and that “the better and more advis-
able practice for a District Court to follow is to afford the liti-
gants an opportunity to present evidence as to whether a class
action was maintainable.” Doninger v. Pac. Nw. Bell, Inc.,
564 F.2d 1304, 1313 (9th Cir. 1977) (holding, however, that
class certification was properly denied without discovery
where plaintiffs could not make a prima facie showing of
Rule 23’s prerequisites or that discovery measures were
“likely to produce persuasive information substantiating the
class action allegations”); accord Mantolete v. Bolger, 767
VINOLE v. COUNTRYWIDE HOME LOANS 8313
F.2d 1416, 1424-25 (9th Cir. 1985). Our cases stand for the
unremarkable proposition that often the pleadings alone will
not resolve the question of class certification and that some
discovery will be warranted.6
Here, however, considerably more information was avail-
able to the district court when it ruled on the motion to deny
certification than just the pleadings. Although the district
court considered Countrywide’s motion roughly three weeks
before the November 2007 discovery cutoff, Plaintiffs had
nearly ten months to conduct informal and formal discovery
between the time Plaintiffs filed their original class action
complaint and their opposition to Countrywide’s motion. Tell-
ingly, Plaintiffs’ counsel and Judge Sabraw had the following
exchange at the hearing on Countrywide’s motion to deny
class certification:
[Counsel]: The complaint was filed October 20th,
2006.
The Court: Okay. So tomorrow will be one year.
[Counsel]: Yes.
The Court: And here there has been — it has been
in the federal court for . . . about 10 months. And . . .
discovery closes in two or three weeks?
6
The Eleventh Circuit recently stated that “the parties’ pleadings alone
are often not sufficient to establish whether class certification is proper,
and the district court will need to go beyond the pleadings and permit
some discovery and/or an evidentiary hearing to determine whether a class
may be certified.” Mills v. Foremost Ins. Co., 511 F.3d 1300, 1309 & n.14
(11th Cir. 2008); see also In Re Am. Med. Sys., Inc., 75 F.3d 1069, 1086
(6th Cir. 1996) (“The court should defer decision on certification pending
discovery if the existing record is inadequate for resolving the relevant
issues.”) (citation and quotation marks omitted).
8314 VINOLE v. COUNTRYWIDE HOME LOANS
[Counsel]: Right. We are — I would say, your
honor, that we are anticipating being able to file a
Rule 23 motion within about four weeks.
The Court: What more discovery would you do?
[Counsel]: We are not going to conduct any more
discovery in terms of obtaining information from the
defense or taking depositions and so forth, but we
are compiling additional declarations from putative
class members.
As I mentioned in the briefing, we provided a pre-
view of those declarations, because we didn’t want
to be on defendants’ schedule forced into putting
forth our Rule 23 motion in opposition to a proce-
durally improper motion to deny class certification.
[7] Several things are apparent from this colloquy. First, at
the time of the hearing Plaintiffs had conducted significant
discovery and did not intend to propound any additional dis-
covery seeking information from Countrywide regarding the
propriety of class certification. Second, it is evident that
Plaintiffs had made a strategic choice to limit the amount of
evidence it presented to the district court in opposition to
Countrywide’s motion; they proffered their class certification
arguments through their “preview” declarations. Third, Plain-
tiffs’ real complaint is not that they were deprived of adequate
time in which to complete discovery, but that they “didn’t
want to be on defendants’ schedule.” But, again, this is just
a variation on Plaintiffs argument in favor of a per se rule.
Plaintiffs, in a strategic gamble, relied on their position that
Countrywide’s motion was procedurally improper—an argu-
ment we have rejected—to avoid having the district court
decide the motion on the merits. Nothing in the record sug-
gests that Plaintiffs could not have more diligently prepared
their certification argument in the months between the date
VINOLE v. COUNTRYWIDE HOME LOANS 8315
Countrywide filed its motion and the date Plaintiffs’ opposi-
tion brief was due.
Moreover, the record indicates that Plaintiffs did not
request a continuance or an extension of time in which to
respond to Countrywide’s motion. If Plaintiffs truly were not
prepared to present their position on class certification, it
seems reasonable that they would have requested an extension
or continuance as soon as possible after Countrywide filed its
motion to deny class certification.7
[8] We have decided that Countrywide could properly file
its motion to deny class certification before the close of dis-
covery and before the pretrial motion deadline. Accordingly,
the district court’s consideration of the motion would only be
improper if Plaintiffs could show some procedural prejudice
from the timing of the consideration. Plaintiffs have failed to
do so on the record presented, and, thus, the district court did
not abuse its discretion.
IV
Next, we review the merits of the district court’s denial of
class certification for an abuse of discretion. Zinser, 253 F.3d
at 1186. Plaintiffs’ claim that the district abused its discretion
by not certifying a class in accordance with Wang v. Chinese
Daily News, Inc., 231 F.R.D. 602 (C.D. Cal. 2005), which
certified a Rule 23(b)(3) class on the basis of an employer’s
uniform classification of a group of its employees as exempt.
7
Plaintiffs argue that they asked the district court to “belay its ruling on
the motion to deny certification until [they] brought their substantive
motion,” which Plaintiffs contend was essentially a request for a continu-
ance. Plaintiffs have not cited to evidence in the record substantiating any
such formal request, and the district court’s docket does not reflect as
much.
8316 VINOLE v. COUNTRYWIDE HOME LOANS
A
Under Rule 23(b)(3), a class may be certified if the district
court “finds that the questions of law or fact common to class
members predominate over any questions affecting only indi-
vidual members, and that a class action is superior to other
available methods for fairly and efficiently adjudicating the con-
troversy.”8 Fed. R. Civ. P. 23(b)(3). The predominance
inquiry focuses on “the relationship between the common and
individual issues” and “tests whether proposed classes are suf-
ficiently cohesive to warrant adjudication by representation.”9
Hanlon v. Chrysler Corp., 150 F.3d 1011, 1022 (9th Cir.
1998) (citation and quotation marks omitted). Rule 23(b)(3)’s
predominance and superiority requirements were added “to
cover cases ‘in which a class action would achieve economies
of time, effort, and expense, and promote . . . uniformity of
decision as to persons similarly situated, without sacrificing
procedural fairness or bringing about other undesirable
results.’ ” Anchem Prods., Inc. v. Windsor, 521 U.S. 591, 615
(1997) (quoting Fed. R. Civ. P. 23(b)(3) Adv. Comm. Notes
to 1966 Amendment). Accordingly, a central concern of the
Rule 23(b)(3) predominance test is whether “adjudication of
common issues will help achieve judicial economy.” Zinser,
253 F.3d at 1189 (citation and quotation marks omitted).
Keeping the requirements and purpose of Rule 23(b)(3) in
mind, our assessment of whether the district court abused its
discretion also implicates the analytical framework within
which courts review application of an exemption to an
employee. Here, the district court held that analysis of the out-
side salesperson exemption precluded certification because
that analysis would require an individualized inquiry into the
8
On appeal, the parties do not dispute whether Plaintiffs have satisfied
the requirements of Rule 23(a), which is a prerequisite to class certifica-
tion. See Parra, 536 F.3d at 978.
9
The party seeking certification bears the burden of demonstrating that
he has met the requirements of Rule 23(b). Zinser, 253 F.3d at 1186.
VINOLE v. COUNTRYWIDE HOME LOANS 8317
manner in which each HLC actually carried out his or her
work, and that this burden was not lessened by the presence
of other issues susceptible to common proof. (See Order at
4-7.)
Federal law and California law provide exemptions for
“outside salespersons.”10 The California exemption from over-
time and other wages applies to an employee “who customar-
ily and regularly works more than half the working time away
from the employer’s place of business selling tangible or
intangible items or obtaining orders or contracts for products,
services, or use of facilities.” Cal. Code Regs. tit. 8,
§§ 11040(1)(C), (2)(M). Under California law, a court evalu-
ating the applicability of the outside salesperson exemption
must conduct an individualized analysis of the way each
employee actually spends his or her time, and not simply
review the employer’s job description. Ramirez v. Yosemite
Water Co., 978 P.2d 2, 9 (Cal. 1999). This entails a two-step
inquiry. See, e.g., Campbell v. PriceWaterHouseCoopers,
LLP, 253 F.R.D. 586, 600 (E.D. Cal. 2008). First, the court
examines in an individualized fashion the work actually per-
formed by the employee to determine how much of that work
is exempt. Id. Second, the court determines whether the
10
The Tenth Circuit summarized the rationale underlying these exemp-
tions as follows:
The reasons for excluding an outside salesman are fairly appar-
ent. Such salesmen, to a great extent, works individually. There
are no restrictions respecting the time he shall work and he can
earn as much or as little, within the range of his ability, as his
ambition dictates. In lieu of overtime, he ordinarily receives com-
missions as extra compensation. He works away from his
employer’s place of business, is not subject to the personal super-
vision of his employer, and his employer has no way of knowing
the number of hours he works per day. To apply hourly standards
primarily devised for an employee on a fixed hourly wage is
incompatible with the individual character of the work of an out-
side salesman.
Jewel Tea Co. v. Williams, 118 F.2d 202, 207-08 (10th Cir. 1941).
8318 VINOLE v. COUNTRYWIDE HOME LOANS
employee’s work was consistent with the employer’s expecta-
tion and whether those expectations were realistic.11 Id.;
accord Sepulveda v. Wal-Mart Stores, Inc., 237 F.R.D. 229,
246 (C.D. Cal. 2006), aff’d in relevant part, 275 F. App’x 672
(9th Cir. 2008).
Under federal law, the FLSA’s exemption found in 29
U.S.C. § 213(a)(1) exempts employees whose “primary duty”
is making sales or “obtaining orders or contracts for services
or for the use of facilities for which a consideration will be
paid by the client or customer,” and “[w]ho is customarily and
regularly engaged away from the employer’s place or places
of business in performing such primary duty.” 29 C.F.R.
§ 541.500(a).12 Similar to the California exemption, analysis
of the FLSA exemption is a fact-intensive inquiry. See, e.g.,
Tumminelo v. United States, 14 Cl. Ct. 693, 697 (1988) (“The
determination of whether an exemption applies to a given
individual . . . is a very fact-specific exercise.”).
B
Plaintiffs ask us to follow the Wang decision and adopt a
rule that class certification is warranted under Rule 23(b)(3)
whenever an employer uniformly classifies a group of
employees as exempt, notwithstanding the requirement that
the district court conduct an individualized analysis of each
employee’s actual work activity. See 231 F.R.D. at 612-13;
see also Wiegele v. FedEx Ground Package Sys., Inc., No.
11
The California Supreme Court has cautioned that a defendant cannot
defeat class certification simply by raising an exemption as an affirmative
defense, Sav-On Drug Stores, Inc. v. Superior Court, 96 P.3d 194, 207
(Cal. 2004), but has also stated that “[a]ny dispute over how the employee
actually spends his or her time, of course, has the potential to generate
individual issues.” Id. at 206 (internal citations and quotation marks omit-
ted).
12
The term “primary duty” includes “work performed incidental to and
in conjunction with the employee’s own outside sales.” 29 U.S.C.
§ 541.500(b).
VINOLE v. COUNTRYWIDE HOME LOANS 8319
06cv1330, 2008 WL 410691, *7-10 (S.D. Cal. Feb. 12, 2008)
(relying on Wang and certifying class of former FedEx man-
agers based on application of exemption). This is essentially
the approach adopted by the district court in In re Wells
Fargo Home Mortgage Overtime Pay Litigation, 527 F. Supp.
2d 1053, 1068 (N.D. Cal. 2007), which is also before us on
appeal.
[9] We decline to adopt such an approach because—as set
forth in greater length in our opinion in In re Wells Fargo—
we hold that a district court abuses its discretion in relying on
an internal uniform exemption policy to the near exclusion of
other factors relevant to the predominance inquiry. See In re
Wells Fargo Home Mortgage Overtime Pay Litig., No. 08-
15355, slip. op. at 8335-36. As we stated there, focusing on
a uniform exemption policy alone does little to further the
purpose of Rule 23(b)(3)’s predominance inquiry, which
requires an assessment of the relationship between individual
and common issues. Id. Instead of adopting what would
essentially be a bright-line presumption in favor of class certi-
fication, we favor an approach that takes into consideration all
factors that militate in favor of, or against, class certification.
Id. at 8334. The overarching focus remains whether trial by
class representation would further the goals of efficiency and
judicial economy. See Zinser, 253 F.3d at 1189.
Our approach is consistent with that taken by several dis-
trict courts with respect to evaluating class certification in the
wage exemption context.13 These courts acknowledged the
employer’s uniform application of an exemption to employ-
ees, but focused on whether the employer exercised some
13
However, as is apparent from the Wang and In re Wells Fargo deci-
sions, no consensus has developed. See Heffelfinger v. Elec. Data Sys.,
Inc., No. CV 07-00101 MMM (Ex), 2008 U.S. Dist. LEXIS 5296, *75-92
(C.D. Cal. Jan. 7, 2008); Steven B. Katz, A Flurry of Recent Court Deci-
sions Have Refined the Contours of California’s Wage and Hour Laws,
Los Angeles Lawyer, June 2008, at 29-30.
8320 VINOLE v. COUNTRYWIDE HOME LOANS
level of centralized control in the form of standardized hierar-
chy, standardized corporate policies and procedures govern-
ing employees, uniform training programs, and other factors
susceptible to common proof. See, e.g., Sepulveda, 237
F.R.D. at 247-49 (denying class certification), aff’d in rele-
vant part, 275 F. App’x at 672; Alba v. Papa John’s USA,
Inc., No. CV 05-7487 GAF, 2007 WL 953849, *10-13 (certi-
fying sub-classes); Tierno v. Rite Aid Corp., No. C 05-02520
TEH, 2006 WL 2535056, *5-10 (N.D. Cal. Aug. 31, 2006)
(certifying class); see also Damassia v. Duane Reade, Inc.,
250 F.R.D. 152 (S.D.N.Y. 2008) (“Where . . . there is evi-
dence that the duties of the job are largely defined by compre-
hensive corporate procedures and policies, district courts have
routinely certified classes of employees challenging their clas-
sification as exempt, despite arguments about ‘individualized’
differences in job responsibilities.”).14
[10] Here, the district court weighed the relevant consider-
ations and properly focused on whether class certification
would enhance efficiency and further judicial economy. It
stated that “in cases where exempt status depends upon an
individualized determination of an employee’s work, and
where plaintiffs allege no standard policy governing how
employees spend their time, common issues of law and fact
may not predominate.” (Order at 5 & n.2.) The district court
further acknowledged that federal courts have permitted class
actions in exemption mis-classification cases and that in such
cases “the plaintiffs generally have alleged facts regarding (a)
company-wide policies governing how employees spend their
time, or (b) uniformity in work duties and experiences that
diminish the need for individualized inquiry.” (Id. at 4-5 &
14
We cite the Tierno and Alba decisions for their respective discussions
of the presence of centralized corporate policies detailing employees’ job
duties and responsibilities that reflect the realities of the workplace. Con-
sistent with our holding in In re Wells Fargo, we do not embrace any dis-
positive reliance in those decisions on the rule from Wang. See In re Wells
Fargo Home Mortgage Overtime Pay Litig., slip. op. at 8334-36.
VINOLE v. COUNTRYWIDE HOME LOANS 8321
n.1.) It did not suggest that the lack of a common policy nec-
essarily defeats certification as a matter of law, but that the
lack of that type of evidence in this case reduced the number
of issues susceptible to common proof. Plaintiffs seek to mini-
mize the district court’s main concern—that although there
are common issues, including uniform classification, the
inquiry into each HLC’s exempt status would burden the
court. (Id. at 6 (“The principal factor in determining whether
common issues of fact predominate is whether the uniform
classification, right or wrong, eases the burden of the individ-
ual inquiry.”).) But this is a legitimate concern. Plaintiffs’
claims will require inquiries into how much time each indi-
vidual HLC spent in or out of the office and how the HLC
performed his or her job; all of this where the HLC was
granted almost unfettered autonomy to do his or her job. This
must be considered along with the lack of issues subject to
common proof that would actually ameliorate the need to hold
several hundred mini-trials with respect to each HLC’s actual
work performance.
Plaintiffs argue that these trial burdens could be mitigated
through the use of “innovative procedural tools” such as ques-
tionnaires, statistical or sampling evidence, representative tes-
timony, separate judicial or administrative mini-proceedings,
expert testimony, etc. They also argue that the district court
could have certified the entire class subject to later modifica-
tion of the class, redefine the class, or certify subclasses.
These arguments are not persuasive in light of our determina-
tion that Plaintiffs’ claims require a fact-intensive, individual
analysis of each employee’s exempt status. Moreover, Plain-
tiffs have not provided authority for the proposition that the
district court abused its discretion by not certifying a class and
using these tools. It is not certain that these tools would actu-
ally assist the court, and the decision to use such tools is
8322 VINOLE v. COUNTRYWIDE HOME LOANS
within the discretion of the district court.15
[11] Here, the district court correctly selected and applied
Rule 23’s criteria, and there is no persuasive evidence in the
record that it relied on an improper factor, failed to consider
a factor entitled to substantial weight, or mulled the correct
mix of factors but made a “clear error of judgment in assaying
them.” Parra, 536 F.3d at 977-78. Accordingly, the district
court did not abuse its discretion.
V
We decline to adopt Plaintiffs’ proposed rule that a defen-
dant may not move to deny class certification under Rule
23(b)(3) unless and until the plaintiffs have affirmatively
moved to certify a class. In addition, we conclude that the dis-
trict court did not abuse its discretion by considering Country-
wide’s motion where Plaintiffs had a sufficient opportunity to
present its case in favor of class certification. Finally, consis-
tent with our decision in In re Wells Fargo Home Mortgage
Overtime Pay Litigation, issued today, we decline to adopt a
rule that a Rule 23(b)(3) class is presumptively proper where
an employer uniformly classifies a group of employees as
15
Plaintiffs also argue that the district court abused its discretion by
improperly analyzing the merits of the underlying claims when it noted
that Plaintiffs’ proposed class includes HLCs who, through their own dec-
larations, are admittedly exempt. (Order at 7 (“[I]f the Court were to cer-
tify this proposed class, it would allow putative class members who, by
their own admission do not qualify for relief, to litigate inherently merit-
less claims through a representative action.”).) Plaintiffs characterize the
district court as denying certification based on the taint of a few putative
class members. Plaintiffs’ argument is not persuasive. The district court
may consider the merits of the claims to the extent that it is related to the
Rule 23 analysis, see Hanon v. Dataproducts Corp., 976 F.2d 497, 509
(9th Cir. 1992); Moore v. Hughes Helicopters, Inc., 708 F.2d 475, 480
(9th Cir. 1983), and the court’s discussion of Plaintiff’s inclusion of
exempt employees in the putative class focuses on whether it militates
against use of a representative action, which is within the district court’s
purview.
VINOLE v. COUNTRYWIDE HOME LOANS 8323
exempt. Here, the district court conducted a proper inquiry
considering the relevant factors and, accordingly, its order
denying class certification is AFFIRMED.