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Ninth Circuit Denies Class Certification Where Common Claim Does Not Predominate

Author: Orlando Arellano

Guest Editors: Sean McGah, Ashley Kaye

December 17, 2020 8:15am

In a recent ruling by the United States Court of Appeals for the Ninth Circuit, the Court upheld a trial court order denying class certification on the basis that although common issues existed, they did not “predominate.”  It is basically the class action equivalent of having your home run caught just over the wall, but it is also a good lesson for class action litigators that predominance matters, at least when the plaintiff only seeks to certify via 23b(3).

In Castillo v. Bank of America, NA (9th Cir., Nov. 18, 2020, No. 19-56228) 2020 WL 6759104 (“Castillo”), plaintiff was a Bank of America call center employee who sought to certify a class of over 5,000 call center employees.  Although plaintiff made numerous wage claims, the most relevant was his claim for unpaid overtime wages.  The call center employees sometimes received flat-sum monthly and non-discretionary bonuses.  As they were hourly employees, these bonuses needed to be factored into the employees’ regular rates, and thus overtime rates.  The legal issue was whether Bank of America was doing the math correctly.

Bank of America calculated the regular rates using two different methods during two different time periods.  Using the first method, it divided the bonus by the number of total hours worked in the previous two pay periods, even if those two pay periods did not coincide with the month the incentive pay compensated.  It then multiplied that amount by the overtime hours worked in those pay periods.  Using the second method, Bank of America divided the month’s bonus by the weekdays in the month (regardless of how many days were actually worked) and then multiplied that number by five (for each day of the week).  It then divided that amount by the total number of hours worked (including overtime hours), then multiplied that by two to get the new overtime “half-rate.”  Bank of America then multiplied that number by the amount of overtime hours in the month to make up for the unpaid overtime on the bonus.  Simple, right?

United States District Court Judge David O. Carter denied class certification, finding commonality was present but predominance was not.  The Ninth Circuit’s decision further explained these two separate requirements under Federal Rule of Civil Procedure 23b(3).

Commonality “means that the class members’ claims ‘must depend upon a common contention’ and that the ‘common contention, moreover, must be of such a nature that it is capable of class wide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.’ Even a single common question of law or fact that resolves a central issue will be sufficient to satisfy this mandatory requirement for all class actions.”  (Castillo at p. 3 (internal citations omitted)).   Here, the trial court correctly found plaintiff established commonality. All of the hourly call center employees were subject to either one or both of Bank of America’s overtime calculation methods, and there was at least one common issue: whether those overtime calculation methods complied with overtime law.

Next, the Ninth Circuit discussed predominance. “Under Rule 23(b)(3), a plaintiff must demonstrate the superiority of maintaining a class action and show ‘that the questions of law or fact common to class members predominate over any questions affecting only individual members.’” “[T]he focus of the predominance inquiry” is whether “a proposed class is ‘sufficiently cohesive to warrant adjudication by representation.’” However, the rule “does not require a plaintiff seeking class certification to prove that each element of their claim is susceptible to class wide proof,” so long as one or more common questions predominate.  Individual differences in calculating the amount of damages will not defeat class certification where common issues otherwise predominate. However, “[i]f the plaintiffs cannot prove that damages resulted from the defendant’s conduct, then the plaintiffs cannot establish predominance.” This general rule goes to the crux of the issue on appeal.  To ensure common questions predominate over individual ones, the court must “ensure that the class is not defined so broadly as to include a great number of members who for some reason could not have been harmed by the defendant’s allegedly unlawful conduct.” If many class members have no claim whatsoever because they “were never exposed to the challenged conduct to begin with,” the class does not satisfy Rule 23(b)(3).  (Castillo at p. 5).

In this case, plaintiffs did not establish predominance was not established because Castillo was unable to show that a large number of call center employees worked overtime during the same pay period in which he or she qualified for the bonus. Although there was a theoretical common issue, the practical reality was that the common issue did not matter to most of the employees’ wages.

Takeaway

Although there may be a common legal issue that exists, if the common issue has no practical application to the class at large, there is no predominance. Predominance effectively acts as the last gatekeeper in certifying a class action.  It precludes having a class certified when the reality is the identified issue is of little or no importance to most of the class.

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