McCleery v. Allstate Ins. Co.

Filed 12/14/18
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
TIMOTHY MCCLEERY et al., B282851
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. BC410865)
v.
ALLSTATE INSURANCE
COMPANY et al.,
Defendants and Respondents.
APPEAL from an order of the Superior Court of Los
Angeles County, Teresa Sanchez-Gordon, Judge. Affirmed.
Shenoi Koes, Allan A. Shenoi, Daniel J. Koes, Nneka
Egbujiobi; The Law Offices of Stephen M. Benardo, Stephen M.
Benardo; Appell Shapiro, Barry Appell and Scott E. Shapiro for
Plaintiffs and Appellants.
Seyfarth Shaw, Andrew M. Paley, James M. Harris, Sheryl
L. Skibbe, Joshua A. Rodine and Kiran Aftab Seldon for
Defendant and Respondent Allstate Insurance Company.
Bononi Law Group, Michael J. Bononi and Christy W.
Granieri for Defendant and Respondent Capital Personnel
Services, Inc.
Nelson Mullins Riley & Scarborough and Cory E. Manning
for Defendant and Respondent Advanced Field Services, Inc.
Epstein Becker & Green, Michael S. Kun and Kevin D.
Sullivan for Defendant and Respondent Farmers Group, Inc.
Robie & Matthai and Kyle Kveton for Defendants and
Respondents CIS Group LLC and North American Compass
Insurance Services Group LLC.
___________________________________
In this putative class action, property inspectors allege they
were engaged by three “service” companies to perform inspections
for two major insurers. The inspectors allege they were in fact
employees of the insurers and service companies jointly, and were
entitled to but deprived of minimum wages, overtime, meal and
rest breaks, reimbursement of expenses, and accurate wage
statements.
The inspectors moved for class certification, supported by
their expert’s declaration that liability could be determined and
damages calculated classwide by way of statistical analyses of
results obtained from an anonymous, double-blind survey of a
sampling of class members.
The trial court summarily rejected the expert’s plan and
denied certification on the ground that the inspectors had failed
to show that their status as employees (as opposed to
independent contractors) could be established on predominately
common proof.
We reversed the order and remanded the matter with a
direction, as pertinent here, to evaluate plaintiffs’ proposed
sampling plan. (McCleery v. Allstate Ins. Co. (Feb. 5, 2016,
B256374) [nonpub. opn.].) On remand, plaintiffs offered a trial
plan describing their proposal to establish liability and damages
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by way of an anonymous survey of all class members. The trial
court found common issues existed as to the class members’
employment status. It further found that plaintiffs’ survey
method, although flawed in some respects, was carefully crafted
for accuracy. However, the court found plaintiffs’ trial plan to be
unworkable because it failed to address individualized issues and
deprived defendants of the ability to assert defenses. The court
therefore again denied certification.
Plaintiffs appeal, contending the trial court applied
improper criteria and made incorrect legal assumptions.
We conclude that under the analytic framework
promulgated by Brinker Restaurant Corp. v. Superior Court
(2012) 53 Cal.4th 1004 (Brinker) and Duran v. U.S. Bank
National Assn. (2014) 59 Cal.4th 1 (Duran), the trial court acted
within its discretion in denying certification.
BACKGROUND
A. Procedural Posture Up To the First Appeal
We take the facts and much of the procedural posture from
our prior opinion.
Property inspectors Timothy McCleery, Yvonne Beckner,
Terry Quimby and April Boyles Jackson filed this action on
behalf of themselves and similarly situated persons, alleging
defendants Allstate Insurance Company and Farmers Group,
insurers for whom the plaintiffs provided property inspection
services, and CIS Group LLC/North American Compass
Insurance Services Group (CIS), Advanced Field Services, Inc.
(AFS), and Capital Personnel Services, Inc. (PMG), service
companies contracting to provide inspection services, concocted a
scheme to insulate themselves from labor laws by nominally
employing plaintiffs as independent contractors while retaining
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control over all aspects of their work. Plaintiffs purport to
represent a putative class of approximately 1,550 property
inspectors in California.
Plaintiffs allege the insurers and service companies were in
fact their joint employers, and all defendants failed to pay
minimum wages and overtime (Lab. Code, § 1194), furnish timely
or accurate wage statements (Lab. Code, § 226, subd. (e)),
establish a policy for meal or rest breaks, or reimburse them for
employment expenses (Lab. Code, § 2802), and in so doing
violated the Unfair Competition Law (Bus. & Prof. Code, § 17200
et seq.; UCL).
In 2013, plaintiffs filed five class certification motions, one
for each employer, designating one subclass per employer and a
sixth subclass for CIS employees who had suffered retaliation for
cooperating with plaintiffs in this litigation. Plaintiffs contended
defendants’ liability or lack thereof could be determined on
common proof regarding defendants’ status as joint employers
and their uniform employment policies, or lack thereof.
Defendants opposed the motions, arguing, as pertinent
here, that few if any inspectors provided services for only the
defendant insurers, but in fact freelanced for any insurer that
would hire them, and wide variation existed in their work
practices, as some worked part-time and some full-time, some
long hours on any given day and some short, and some with the
assistance of subcontractors.
The trial court tentatively concluded that plaintiffs had
demonstrated the requisite ascertainability and numerosity for
class certification (at least with respect to some subclasses), as
well as the suitability of class counsel and diligence and typicality
of the class representatives. The court also tentatively concluded
4
that liability issues could be divided into, as pertinent here, two
phases, the first to determine whether the defendants were
plaintiffs’ joint employers and the second to determine whether
plaintiffs had been deprived of legally mandated wage and hour
benefits. But the court requested further briefing on the
commonality of proof of deprivation of wage and hour benefits.
In response, plaintiffs submitted the supplemental
declaration of Dr. John Krosnick, their survey expert, setting
forth his plan to use established survey methods and statistical
analyses to accurately determine and measure the extent of
variations in the inspectors’ work. Dr. Krosnick acknowledged
that variations in the inspectors’ work practices might not be
amenable to classwide proof—for example, as to overtime,
minimum wages, and expenses—but represented that his
methodology for the design and implementation of a survey of
representative samples of the plaintiffs’ class would result in
reliable evidence on issues for which common proof was
unavailable, such as wage-statement violations, amounts owed to
compensate inspectors for earned and unpaid overtime,
differences between earned wages and the minimum wage,
compensation for mileage and other earned and unpaid work
expenses, and compensation for retaliation. Dr. Krosnick
declared that his methodology would account for variations in
work practices and would be manageable, scientifically based,
and fair, using “well-established methodology of random
sampling . . . designed expressly to gauge the amount of variation
in an attribute within a population, and well-established
statistical procedures for analyzing randomly sampled data,”
thereby accurately measuring the degree to which variations in
the inspectors’ work affects the plaintiffs’ entitlement to the
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various employee benefits, “no matter how much variation there
is within the population.”
The trial court summarily rejected Dr. Krosnick’s plan, and
concluded that defendants’ employment practices as to each class
member would necessitate individualized determinations.
We reversed the order denying certification and directed
the trial court to evaluate the extent to which Dr. Krosnick’s
proposed sampling and statistical methods might render proof of
some or all of the liability issues manageable.
B. Post-Appeal Proceedings
On remand, Dr. Krosnick elaborated on his plan. He
explained he was in the midst of conducting survey research of all
people who performed inspections for Allstate, Farmers, CIS,
AFS, and PMG to gather evidence for both liability and damages
determinations as to unpaid overtime, missed meal and/or rest
breaks, unpaid minimum wage, unreimbursed miles driven, and
other business expenses. After gathering this evidence he
intended to compute penalties and pre-judgment interest.
Dr. Krosnick explained his research involved “(1) drawing a
sample of respondents to represent a population, (2) collecting
data from those respondents, and (3) analyzing the data
generated to answer the questions of interest.” He and his team
of researchers had obtained from plaintiffs’ attorneys “the
constructs to be measured in the survey,” which he described as
“(1) the amount of overtime worked, (2) the numbers of meal and
rest breaks to which inspectors were entitled to take under
California law but did not take (assuming that law applied to
these individuals), (3) the amount of time inspectors spent
performing specific tasks of relevance to the claimed minimum
wage violations, (4) the number of miles that inspectors drove to
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do their work, [and] (5) the amount of money that inspectors
spent for other business expenses incurred in connection with
their work.”
The researchers designed questions to “gauge the target
constructs.” Dr. Krosnick explained that “[t]he questions were
drafted according to the principles of optimal questionnaire
measurement identified in the published peer reviewed academic
literature on survey methodology and related fields, drawing on
[his] expertise and years of experience in the field.” Each
interview would take approximately 45 minutes, and respondents
would be told their answers and participation were confidential.
After ethics approval by IntegReview, an Institutional
Review Board providing ethical review services to scientists
conducting human subjects research, and some pretesting, Dr.
Krosnick retained SSRS, a telephone survey research firm, to
conduct the actual interviews. He sent letters to all potential
class members explaining the survey, inviting them to
participate, and informing them they would be contacted by
phone. Each letter contained a “small financial pre-incentive to
thank each respondent for reading it,” as well as the offer of $100
for their participation and an added $10 if they initiated
telephone contact with the research team.
C. The Interview
Each interview was conducted by telephone by an SSRS
employee who read questions from a computer monitor and
entered responses by computer into a flowchart program
designed by Dr. Krosnick. The flowchart updated both itself and
the interviewer’s script according to answers received. For
example, if a respondent stated he or she had worked as an
inspector for AFS from 2005 to 2008, the program calculated the
7
maximum number of months the respondent could have worked
and inserted that number, those years, and the vendor’s name
into later questions, obtaining, for example, the following
question: “The maximum number of months you could have
worked with AFS between 2005 and 2008 is 42 months. For how
many of those months did you work with AFS?”
Aside from some initial monitoring, neither Dr. Krosnick
nor his research team participated in the interviews.
Respondents were asked preliminary questions to establish
whether they had worked for CIS, AFS, PMG, or Allstate, and
when and for how long. A respondent giving an answer outside
known parameters was coached to give an in-range response. For
example, it was known that AFS performed inspections from
2005 to 2008. If a respondent stated he or she had worked for
AFS after 2008, the interviewer was instructed to say, “I think I
might have misheard you. Let me read the question again.” If
the respondent repeated the out-of-range year, the interviewer
was instructed to say, “I’ve been told AFS stopped doing
inspections in 2008. Let me read this question again.” If the
respondent persisted in an invalid answer, the interviewer wrote
“9998” as the response, which was treated in Dr. Krosnick’s
algorithm as “Don’t know.”
Respondents were asked whether and how often they had
received training required for work, attended required meetings,
completed inspections that were or were not paid for, worked on
inspections that were or were not completed, engaged in work-
related planning activities, purchased supplies needed for work,
communicated with supervisors about issues unrelated to a
particular inspection, kept their own books to ensure accurate
8
payment, traveled for work to places other than where
inspections occurred, and took breaks lasting 10 to 29 minutes.
The interviewers advised respondents that activity spent
“doing inspections you completed and were paid for” and “doing
inspections you completed but were not paid for” included “time
spent getting instructions from a company to do those
inspections, determining how much you would be paid for each
inspection, making appointments for each inspection, mapping
your route to each inspection, traveling to the site, inspecting the
property, taking photographs, preparing photographs for
submission, completing the inspection report, and submitting the
completed report.” Respondents were advised that activity spent
“attempting to complete inspections that you were not able to
complete” included “time spent getting instructions from a
company to do those inspections, determining how much you will
be paid for each inspection, making appointments for each
inspection, mapping your route to each inspection, traveling to
the site, and attempting to do the inspection.”
Respondents were asked to recall what time they spent in
all of these activities, the number of days per week worked
beginning in 2005, and the number of hours worked, divided into
the following categories: fewer than three hours; three to five;
five to six; six to eight; eight to 10; 10 to 12, and greater than 12
hours. Respondents were asked to recall what percentage of their
work fell into each category, when during the workday they took
30-minute breaks, when they took breaks lasting between 10 and
30 minutes, when their breaks were longer than 30 minutes, and
what percentage of their breaks fell into each time span.
Respondents were directed to a Web site during the
interview, where possible work-related activities were listed,
9
such as performing inspections that either were or were not
completed, and for which they had or had not been paid; planning
work activities other than inspections; and purchasing supplies;
and were asked what percent of their time was spent doing each
activity. Before answering, respondents were repeatedly
reminded about their prior answers. For example, the
interviewer would state, “Before you answer, I’d like to tell you
that you already told me that you spent [a specified] percent of
your time taking breaks lasting 10 to 29 minutes. So that means
that you spent [a computer-calculated] percent of your time doing
all of your other things for work. Now, how many of the
[calculated] percent did you spend doing the three things . . . ,
combined? You can answer with any number between zero
percent and [the calculated] percent.”
As before, if a respondent’s answer fell outside parameters
established by prior answers, the interviewer would say, “I think
I might have misheard you. Let me read this question again.” If
the answer was out of range a second time, the interviewer would
say, “I need to type a number between 0 and [the calculated
percent] as your answer to this question. Let me read these
questions again.” A persistently wrong answer was coded as
“998” for “Don’t know” or “999” for “Refused.”
Respondents were asked whether they had incurred
expenses beginning in 2005 for necessary work items such as
Internet access, cell phones, landlines, fax machines, “printer,
computer, ink, map, book, paper, [or] software,” and were asked
how sure they were of their responses on a scale of one to five.
Interviewers asked what respondents had read or heard
about the lawsuit, and were instructed to “probe repeatedly” with
the question, “What else do you remember about the purpose of
10
any lawsuit involving Allstate, Farmers, CIS, AFS, or PMG,”
until the respondent finally said, “nothing.”
Finally, respondents were tested on their ability to
estimate time. The interviewer stated, “First, please close your
eyes and keep them closed until I ask you to open them. . . . Are
your eyes closed? [¶] Thank you. Now, with your eyes closed,
when I say ‘go,’ please think back, silently to yourself, to the
beginning of your day today, when you got up this morning.
Then think silently to yourself about everything you did, in the
order you did it, who you saw, where you went, and everything
that happened. Take your time to go slowly, keep your eyes
closed, try to remember as many little details as you can, and
don’t stop thinking about those things until I say ‘stop.’ Please
don’t say anything out loud about what you’re thinking—just
think silently to yourself. OK?” When the respondent was ready,
the interviewer would say “go” and start a clock. After a random
period ranging from 20 to 40 seconds, the interviewer would say
“stop” and ask how many seconds had just elapsed. Respondents
were then asked to estimate how long the interview had taken
overall.
SSRS personnel recorded the respondents’ answers by
computer and forwarded them to Dr. Krosnick. Dr. Krosnick’s
research team analyzed the data and mailed $100 incentive
checks to each respondent who had elected to receive one.
D. Survey Analysis
In his third trial plan report, dated January 16, 2017, Dr.
Krosnick explained that he made computations “to generate
estimates of totals of the [tested] quantities for each of the
subclasses (AFS inspectors, PMG inspectors, and CIS
inspectors),” apportioned separately for inspections done for
11
Farmers and Allstate. For each of the quantities, he would
compute a margin of error and “confidence intervals at various
different confidence levels” separately for each of the three
vendors (AFS, CIS, and PMG) and two insurers “using data from
all respondents who reported on their experiences doing
inspections for each company,” and would conduct a separate
statistical analysis comparing the companies to determine if the
results could be pooled.
Once he computed the various quantities, he would
apportion each quantity to Farmers and Allstate. To do so, he
would rely on defendants’ records “to determine the number of
inspections done by each inspector for Allstate and the number of
inspections done by each inspector for Farmers during a specific
time period. Post-certification, [he would] use this same
approach for all survey respondents and apportion the quantities
computed with the survey data proportionally for each
respondent in proportion to his/her ratio of inspections done for
Farmers vs. Allstate.”
Interim estimates of the relative margins of error for the
target quantities (average overtime hours worked per respondent
per week; missed rest and meal breaks, hours spent on minimum
wage tasks, hours owed as penalties, and reimbursement owed
per respondent per month for mileage and business expenses)
ranged from 10.6 to 25.5 percent if a 95 percent confidence
interval was used, and from 7.8 to 18.7 percent using an 85
percent confidence interval.
Dr. Krosnick explained that to minimize bias due to
nonresponses, statistical analyses would be conducted “to gauge
the match of the participating individuals with the [proposed
class]. If discrepancies [were] found, results [would] be obtained
12
after weighting the survey data to maximize resemblance of the
participating sample to the population.”
Dr. Krosnick explained that additional analyses would be
conducted “to explore systematic non-response.” This would be
done “by exploring systematic differences between responses of
people who were easy to contact vs. those who were difficult to
contact, as indicated by whether the respondent had a telephone
number listed in a phone book, how often the respondent had
moved from living at one address to another, and how many call
attempts were made to reach the respondent.” If systematic
differences were observed, he would “explore the robustness of
conclusions depending upon whether adjustments are made
based on the assumption that hard to reach respondents
answered the questions similarly to the ways the uninterviewed
individuals would have answered if they had been interviewed.”
He explained he would “also explore unit non-response by
comparing the interviewed people to people who were not
interviewed but were on the list to be interviewed in terms of a
range of characteristics that can be observed from the contact
information, such as the gender of the person, the region of
California in which they resided, the region of the state in which
their telephone area code was located, and other such
characteristics.” If systematic differences were observed, he
would “assess the robustness of conclusions if adjustments are
made to eliminate discrepancies between interviewed individuals
and individuals not interviewed.”
In his first trial plan report, dated January 27, 2014, Dr.
Krosnick had declared: “It might seem that survey respondents
should be viewed as witnesses providing testimony. But in fact,
that is not so. Respondents are not testifying witnesses. Instead,
13
survey respondents participate in a scientific measurement
procedure overseen by a qualified expert and conducted according
to a set of rules designed to assure accuracy to allow the expert to
provide testimony. It is the expert who will offer opinions
generated using scientific methodology to produce statistical
calculations of damages class-wide, and the expert can be cross-
examined.”
E. Defendants’ Objections
In opposition to plaintiffs’ trial plan, defendants offered the
declaration of Robert W. Crandall, a labor studies expert.
Crandall declared Dr. Krosnick’s survey asked no liability
questions related to the employee/independent contractor
distinction, and in fact avoided questions about the degree of
independence inspectors enjoyed. (Crandall speculated that Dr.
Krosnick purposefully avoided these questions because cognitive
pre-testing revealed that the inspectors reported high degrees of
independence.) This deficit not only left the independent
contractor question unanswered but potentially skewed the
survey results by artificially narrowing variances. If the range of
experience is narrow, Crandall explained, the average experience
obtained by Dr. Krosnick through his statistical analyses would
more closely represent the experience of the whole. But “if the
data were to show that everyone is different because experiences
vary widely, then the average may not be representative of the
actual experiences of many members of the underlying
population.”
Crandall explained that Dr. Krosnick asked no questions
pertaining to joint employment by Farmers, and in fact appeared
not to understand that a joint employment issue existed in this
litigation. In his deposition, Dr. Krosnick testified, “There’s no
14
question in my survey that asks about how many hours a day an
individual did work for Farmers.” When asked why his survey
included no questions about how often, if ever, an inspector
worked five hours or more in a day for Farmers, how often they
ever worked at least four hours for Farmers, or what business
expenses they incurred while working for Farmers, Dr. Krosnick
answered, “I wasn’t asked to do that.”
Dr. Krosnick’s survey similarly asked no questions
regarding Farmers’ knowledge or control of any facet of an
inspector’s workday, e.g., how many hours the inspector worked,
what breaks were or could have been taken, or what meetings
were attended or expenses incurred. Dr. Krosnick notably asked
no question regarding “why” a given break outcome occurred. He
simply asked for counts of shifts of various durations and break
lengths, eschewing questions about whether employers provided
meal or rest breaks that inspectors declined to take.
Crandall explained that the very precise recall required by
Dr. Krosnick’s survey questions about events stretching back 10
years invited significant error. “For example,” he stated,
“estimating shifts that were greater than 5 but less than 6 hours
in duration with breaks between 10 and 29 minutes and breaks
30 minutes or greater” presented a significant recall burden to
survey respondents. Crandall related that when Dr. Krosnick
was asked in deposition how accurate he believed the inspectors’
responses were, he testified, “I’m not here to testify to the
accuracy of the survey respondents’ memories.” When asked his
opinion about whether an inspector could “tell us years after the
fact whether they took a 25-minute meal period or a 35-minute
meal period,” Dr. Krosnick testified, “I don’t have an opinion of
the accuracy of the respondents’ responses.”
15
Crandall related that when Dr. Krosnick returned from a
break during his own deposition he was unable to recall how long
the break had lasted. And when asked about a deposition session
that had occurred a few weeks earlier, he could not recall how
many breaks had been taken or how long they lasted.
Crandall observed that Dr. Krosnick’s survey failed to
account for the fact that an inspector could work for multiple
entities—including those not party to this case—during a given
day or week. So if an inspector worked 4.5 hours for Farmers and
4.5 for Allstate on a given day, for a total of 9 hours, survey
answers would indicate one hour of overtime was owed, when in
reality none was owed. Dr. Krosnick further failed to ask about
whether any respondents subcontracted out any inspections, even
though his original survey plan explicitly called for
subcontracting to be taken into account.
Finally, although Dr. Krosnick proposed to mesh a
summary of responses with data obtained from defendants
indicating how many inspections had been performed and on
what dates, in reality that data failed to indicate on what dates
inspections took place, as the inspection date was always the
upload date, not the performance date. The data also failed to
indicate in what order multiple inspections on a given date
occurred or how long each took. There was therefore no way to
know how an inspector had apportioned his or her day between
either inspections or employers, especially given that all
responses were anonymous.
In the end, Crandall declared, the anonymous nature of Dr.
Krosnick’s survey led to inaccurate and unverifiable results.
16
F. Trial Court Ruling
The trial court found that inspectors fell into several
subgroups: those who essentially worked full-time for
defendants; those who worked part-time—either because they
performed inspections only part-time or sometimes worked for
nonparty companies; those who worked with others to perform
the assigned inspections; and those who interspersed inspections
with other activities, such as school or parenting. The court
nevertheless found that common issues predominated over
individual ones “as to the employee/independent contractor issues
and joint employer issues.”
The court further found that Dr. Krosnick’s survey was
“carefully crafted to verify appropriate respondents and accuracy
in the responses.” However, the court found that plaintiffs’
statistical sampling alone did not render their claims
manageable. It found that Dr. Krosnick’s survey results failed to
specify for which insurers inspections were performed, or to
explain whether the inspectors’ failure to take meal or rest
breaks was due to preference or to the exigencies of the job. Also,
the survey’s anonymity foreclosed the defendants from cross-
examining witnesses to verify responses or test them for accuracy
or bias.
The trial court found that plaintiffs’ trial plan failed to
address the wide work-practice variations among inspectors and
offered no way to manage individualized issues, but simply
ignored them.
In the end, the trial court concluded that plaintiffs’
proposed class action would not be superior to individual actions
because their survey failed to address “all of the information
needed for an accurate determination of liability,” and the trial
17
plan “deprive[d] defendants of the right of cross-examination and
the ability to present their affirmative defenses.”
Finding plaintiffs’ trial plan to be “unworkable,” the court
denied certification.
Plaintiffs appealed.
DISCUSSION
Plaintiffs contend that in denying certification the trial
court relied on improper criteria and made incorrect legal
assumptions. We disagree.
A. Standard of Review
Code of Civil Procedure section 382 authorizes a suit to be
tried as a class action “when 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.” (Code Civ. Proc., § 382.) Class certification requires
demonstration of an ascertainable and sufficiently numerous
class, a well-defined community of interest, and the superiority of
proceeding as a class. (Brinker, supra, 53 Cal.4th at p. 1021.)
The “community of interest” requirement has 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.
(Brinker, supra, 53 Cal.4th at p. 1021; Ayala v. Antelope Valley
Newspapers, Inc. (2014) 59 Cal.4th 522, 529-530 (Ayala).)
Generally, “ ‘if the defendant’s liability can be determined by
facts common to all members of the class, a class will be certified
even if the members must individually prove their damages.’ ”
(Brinker, at p. 1022; Cochran v. Schwan’s Home Service, Inc.
(2014) 228 Cal.App.4th 1137, 1142 (Cochran).)
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In reviewing a trial court’s denial of class certification we
examine “whether the operative legal principles, as applied to the
facts of the case, render the claims susceptible to resolution on a
common basis.” (Ayala, supra, 59 Cal.4th at p. 530; Brinker,
supra, 53 Cal.4th at pp. 1023-1025.) “ ‘The certification question
is “essentially a procedural one that does not ask whether an
action is legally or factually meritorious.” ’ ” (Brinker, at p. 1023.)
Courts focus instead on what type of questions—common or
individual—are likely to arise, and whether proceeding as a class
action, as compared to other forms of action, is a superior method
of resolving these questions. (Sav-On Drug Stores, Inc. v.
Superior Court (2004) 34 Cal.4th 319, 327, 339 & fn. 10 (Sav-
On).) A class action may be certified even if it is unlikely the
class will eventually prevail on the merits, as certification in such
a situation allows a defendant to obtain a favorable judgment
binding all class members. “It is far better from a fairness
perspective to determine class certification independent of
threshold questions disposing of the merits, and thus permit
defendants who prevail on those merits, equally with those who
lose on the merits, to obtain the preclusive benefits of such
victories against an entire class and not just a named plaintiff.”
(Brinker, at p. 1034.)
“Although predominance of common issues is often a major
factor in a certification analysis, it is not the only consideration.
In certifying a class action, the court must also conclude that
litigation of individual issues, including those arising from
affirmative defenses, can be managed fairly and efficiently.
[Citation.] ‘[W]hether in a given case affirmative defenses should
lead a court to approve or reject certification will hinge on the
manageability of any individual issues. [Citation.]’ In wage and
19
hour cases where a party seeks class certification based on
allegations that the employer consistently imposed a uniform
policy or de facto practice on class members, the party must still
demonstrate that the illegal effects of this conduct can be proven
efficiently and manageably within a class setting.” (Duran,
supra, 59 Cal.4th at pp. 28-29.) “ ‘Individual issues do not render
class certification inappropriate so long as such issues may
effectively be managed.’ ” (Id. at p. 29.) “Trial courts must pay
careful attention to manageability when deciding whether to
certify a class action. In considering whether a class action is a
superior device for resolving a controversy, the manageability of
individual issues is just as important as the existence of common
questions uniting the proposed class. If the court makes a
reasoned, informed decision about manageability at the
certification stage, the litigants can plan accordingly and the
court will have less need to intervene later to control the
proceedings.” (Ibid.)
“We review the trial court’s ruling for abuse of discretion
and generally will not disturb it, ‘ “unless (1) it is unsupported by
substantial evidence, (2) it rests on improper criteria, or (3) it
rests on erroneous legal assumptions.” ’ ” (Ayala, supra, 59
Cal.4th at p. 530.) If the court’s “reasons for granting or denying
certification . . . are erroneous, we must reverse, whether or not
other reasons [could have been] relied upon [to] support[] the
ruling.” (Ibid.; Cochran, supra, 228 Cal.App.4th at p. 1143.) In
this respect, “ ‘appellate review of orders denying class
certification differs from ordinary appellate review. Under
ordinary appellate review, we do not address the trial court’s
reasoning and consider only whether the result was correct.
[Citation.] But when denying class certification, the trial court
20
must state its reasons, and we must review those reasons for
correctness. [Citation.] We may only consider the reasons stated
by the trial court and must ignore any unexpressed reason that
might support the ruling.’ ” (Cochran, at p. 1143.) “In other
words, we review only the reasons given by the trial court for
denial of class certification, and ignore any other grounds that
might support denial.” (Bartold v. Glendale Federal Bank (2000)
81 Cal.App.4th 816, 829, overturned on other grounds due to
Legislative Action in 2001 Cal. Legis. Serv. Ch. 560.)
Because trial courts “ ‘are ideally situated to evaluate the
efficiencies and practicalities of permitting group action,’ ” they
are “ ‘afforded great discretion’ ” in evaluating the relevant
factors and ruling on a class certification motion. (Sav-On, supra,
34 Cal.4th at p. 326.)
B. Plaintiffs’ Trial Plan is Inadequate and Unfair
Here, the trial court’s only statement about predominance
of common issues favored plaintiffs. The court stated that
defendants’ status as employers could be established by common
factors showing the degree of control they reserved over the
inspectors’ work. Although the court discussed disparate
individual issues at several points in its order, it did so only from
the perspective of manageability, and made no finding that
individual issues predominated over common ones. The court
denied certification notwithstanding its finding (at least
impliedly) that a community of interest existed, because it found
litigation of individual issues, including those arising from
affirmative defenses, could not be managed fairly and efficiently
using only Dr. Krosnick’s survey.
Plaintiffs defend Dr. Krosnick’s survey at length, arguing it
was methodologically correct and scientifically valid, captured all
21
pertinent variations in hours worked among inspectors, eschewed
irrelevant questions, and produced reliable and accurate results.
But this misses the point, as the trial court apparently agreed
with these propositions, finding the survey “was carefully crafted
to verify appropriate respondents and accuracy in the responses.”
The problem is not that Dr. Krosnick’s survey fails as a
scientific measurement procedure, but that it fails as a trial plan.
“Class certification is appropriate only if . . . individual
questions can be managed with an appropriate trial plan.”
(Duran, supra, 59 Cal.4th at p. 27.) Here, the trial court
reasonably concluded plaintiffs’ trial plan failed to address how
they could fairly establish defendants’ liability on a classwide
basis as to any claim.
With respect to overtime and meal and rest breaks, “simply
having the status of an employee does not make the employer
liable for a claim for overtime compensation or denial of breaks.
An individual employee establishes liability by proving actual
overtime hours worked without overtime pay, or by proving that
he or she was denied rest or meal breaks.” (Sotelo v. Media News
Group, Inc. (2012) 207 Cal.App.4th 639, 654 (Sotelo).) Here, Dr.
Krosnick admitted in his deposition that his survey asked no
question identifying for which insurer class members performed
inspections. It is thus unclear how plaintiffs could establish the
liability of Farmers, for example, without considering whether
any inspector worked for Farmers more than eight hours in a day
or 40 in a week. (Lab. Code, § 510.) Nor could the information be
extrapolated from Farmers’ records of inspections actually
performed, because nothing in those records indicated the dates
on which they were performed (only the upload date was known),
which inspectors performed them (inspectors sometimes had
22
subcontractors perform them), how long they took or would
typically take, or whether the inspector did other work on that
day for nonparties.
Plaintiffs’ plan similarly failed with respect to their
minimum wage claim (Lab. Code, § 1194), as the inspectors were
paid a piece rate for each inspection performed, and plaintiffs
offered no explanation how they could establish, by their survey
alone, the number of inspections performed for Farmers, how long
they took, or what Farmers paid for them.
Regarding meal and rest period claims, inspectors
performed inspections for a number of insurance companies,
including nonparties, often in the same day, but Dr. Krosnick’s
survey failed to ask if anyone ever worked long enough in a day
for either Farmers or Allstate to be entitled to a meal or rest
period from that insurer or any of its three co-employers.
Plaintiffs argue the mere fact that defendants failed to
adopt affirmative meal or rest period policies suffices to establish
their liability, with damages to be calculated only as a measure of
restitution under the unfair competition law. (See Benton v.
Telecom Network Specialists, Inc. (2013) 220 Cal.App.4th 701,
726 [theory that defendant violated wage and hour requirements
by failing to adopt meal and rest break policies is amenable to
class treatment; whether employee was able to take required
breaks goes to damages].) Our Supreme Court has not yet ruled
on this point of law (see Duran, supra, 59 Cal.4th at p. 31, fn. 28
[“We express no opinion on this question”]), but even if correct,
plaintiffs’ survey offered no way even to guess which of the
inspectors’ employers, if any, deprived them of meal or rest
breaks—even if the only use of the information would be to
23
calculate the amount of restitution owed. (See Cal. Code Regs.,
tit. 8, § 11040, subds. 11(A), 12(A).)
Plaintiffs argue damages need not be apportioned
separately for any insurer defendant because both Farmers and
Allstate are vicariously liable as coconspirators for the
misconduct of the service companies, which undeniably employed
the inspectors. But this ignores the fact that inspectors also
worked for nonparties. No authority of which we are aware
would make Farmers liable to an inspector who worked as a joint
employee of CIS and a nonparty insurer.
And because plaintiffs made no effort to explain how they
could establish through common proof what expenses, if any,
inspectors incurred for any particular insurer, or how they were
deprived of wage statements, the trial court could reasonably
conclude these claims were unmanageable as well under the trial
plan. (See Lab. Code, § 226, subd. (e); Cal. Code Regs., tit. 8, §
13520.)
The trial court also reasonably concluded that by
anonymizing responses plaintiffs unfairly insulated their survey
from any meaningful examination. Even Dr. Krosnick, their only
witness regarding the survey, did not know who the survey
respondents were or why any class member had chosen not to
participate. (Dr. Krosnick’s analysis of nonresponse bias did not
consider whether any class members may have declined to
participate due to their personal lack of any claim.) He declared
respondents should not be thought of as witnesses, and he
testified he had no opinion as to their reliability.
In fact, plaintiffs expressly admit they intend to answer the
ultimate question in this case based solely on expert testimony—
testimony founded on multiple hearsay that defendants could
24
never challenge. As Dr. Krosnick declared, “Respondents are not
testifying witnesses. Instead, . . . . [i]t is the expert who will offer
opinions . . . , and the expert can be cross-examined.” But
“[a]lthough an expert ‘may rely on inadmissible hearsay in
forming his or her opinion [citation], and may state on direct
examination the matters on which he or she relied, the expert
may not testify as to the details of those matters if they are
otherwise inadmissible.’ ” (Korsak v. Atlas Hotels, Inc. (1992) 2
Cal.App.4th 1516, 1525.)
Plaintiffs argue defendants need no access to Dr. Krosnick’s
data, as they are free to conduct their own survey and present
contrary conclusions to the jury. This again misses the point.
Defendants have the right to defend against plaintiffs’ claims by
impeaching the evidence supporting them. (Goldberg v. Kelly
(1970) 397 U.S. 254, 269-270 [“due process requires an
opportunity to confront and cross-examine adverse witnesses”].)
Plaintiffs’ proposed procedure forestalls defendants’ exercise of
this important right.
“A class . . . may establish liability by proving a uniform
policy or practice by the employer that has the effect on the group
of making it likely that group members will work overtime hours
without overtime pay, or to miss rest/meal breaks.” (Sotelo,
supra, 207 Cal.App.4th at p. 654.) And “California courts and
others have in a wide variety of contexts considered pattern and
practice evidence, statistical evidence, sampling evidence, expert
testimony, and other indicators of a defendant’s centralized
practices in order to evaluate whether common behavior towards
similarly situated plaintiffs makes class certification
appropriate.” (Sav-On, supra, 34 Cal.4th at p. 333.) But no case
of which we are aware, and plaintiffs refer us to none, suggests a
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trial may be conducted solely on the evidence of an expert witness
relying on an anonymous double-blind survey, no matter how
1
scientific the survey may be.
For the foregoing reasons, we conclude the trial court acted
within its discretion in denying class certification.
DISPOSITION
2
The order denying certification is affirmed. Respondents
are to receive their costs on appeal.
CERTIFIED FOR PUBLICATION
CHANEY, Acting P. J.
We concur:
BENDIX, J.
*
CURREY, J.
1
We express no opinion on the scientific validity of Dr.
Krosnick’s survey qua survey, and nothing in our opinion is
intended to limit the trial court’s ability to examine Dr. Krosnick
concerning the matter upon which his opinion is based. (Evid.
Code, §§ 801, 802; Sargon Enterprises, Inc. v. University of
Southern California (2012) 55 Cal.4th 747, 771.)
2
The motion of PMG to dismiss plaintiffs’ appeal is denied.
*
Judge of the Los Angeles Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California
Constitution.
26