Joe’s Crab Shack Managers Move Forward with Class Action Wage and Hour Misclassification Suit Despite Plaintiffs’ Inability to Establish Number of Hours Worked

Last week, the California Court of Appeal for the Second Appellate District reversed a trial court’s class certification denial in a proposed overtime class action brought by Joe’s Crab Shack managers against the restaurant chain.  The court ruled that a class action was the best method of resolving the employees’ wage and hour claims, even though the facts appeared to present difficult issues of proof. (Martinez et al., v. Joe’s Crab Shack Holdings et al., —Cal.Rptr.3d—, Cal.App. 2d Dist. November 10, 2014.)

The plaintiffs brought suit on behalf of all managers, including general managers, senior kitchen managers, and front managers, of Joe’s Crab Shack restaurants in California.  They claimed they had been misclassified as exempt employees and were entitled to overtime pay.  The managers alleged they spent a majority of their working time performing hourly, non-exempt tasks, and thus, were improperly classified as exempt.

In May 2012, the trial court denied plaintiffs’ motion for class certification, holding that a class action was not the best way to resolve the case because of the need for individual inquiries.  The court pointed to depositions in which the plaintiffs had admitted they were unable to estimate the number of hours spent on exempt versus non-exempt tasks.  Without such an estimate, the court ruled that each class member would need to be evaluated and adjudicated individually, which would be a “‘time- and resource- consuming process.’”  It also concluded plaintiffs’ claims were not typical of the class and that common issues did not predominate.  Thus, the court held class treatment was not the best vehicle for resolving the dispute.

Although the appeals court reversed the trial court’s ruling once prior to the instant decision, it reconsidered the issue following the California Supreme Court’s decision in Duran v. U.S. Bank National Assn. (2014) 59 Cal.4th 1.  In Duran, the California Supreme Court addressed the reluctance of California courts to certify class actions in cases involving misclassification claims because of the potential for individual questions.   It concluded, however, that individual issues will not necessarily overwhelm common issues where the case involves exemptions premised on how employees spend their workdays.

Applying Duran to the Joe’s Crab Shack managers’ claims upon reconsideration, the Court of Appeals again reversed the trial court’s order denying class certification.  The Court reasoned that class adjudication was appropriate because the chain of restaurants was governed by the same policies and procedures, the jobs performed were highly standardized, and exempt employees at all locations were expected to work a minimum of 50 hours per week – ten hours more than the threshold at which non-exempt employees must begin to receive overtime. 

Although some of the plaintiffs could not accurately account for the exact amount of time spent performing non-exempt tasks, the court noted that “courts in overtime exemption cases must proceed through an analysis of the employer’s realistic expectations and classification of tasks rather than asking the employee to identify in retrospect whether, at a particular time, he or she was engaged in an exempt or nonexempt tasks.”  It stated that “[b]y refocusing its analysis on the policies and practices of the employer and the effect those policies and practices have on the putative class, as well as narrowing the class if appropriate, the trial court may in fact find class analysis a more efficient and effective means of resolving plaintiffs’ overtime claims.”


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