Court Of Appeal Affirms Denial Of Class Certification In Wage And Hour Case Brought By Accountants

In another of several recent decisions in class action cases issued by California appellate courts, the Second District Court of Appeal last week upheld the denial of class certification in a case brought on behalf of accountants for unpaid overtime. (Soderstedt v. CBIZ, July 7, 2011).  The court found that because the responsibilities of each of the alleged class members differed with their levels of experience, the particular engagements they worked on, the clients and clients’ industries, and the other accountants they worked with, common questions of law and fact did not predominate and the proposed class could not be certified.

The plaintiffs who brought the suit were employed by an accounting and financial services firm that provided tax, attest, and litigation support in the greater Southern California area. The firm maintained an office with 55 accountants in Los Angeles who mainly performed audits for public companies, a Bakersfield office of 43 accountants who served a diverse client base including non-profits and government clients, and an Oxnard office of 21 accountants who mainly performed services for construction industry clients. The firm submitted 38 declarations establishing that each assignment was different and required the accountants to utilize their accounting knowledge and judgment in performing the services required for the engagement. Evidence was also submitted demonstrating how the level of client contact differed based on the accountants’ ability and experience, and establishing that their level of supervision normally decreased with each further engagement.

The firm relied upon the administrative exemption to justify the non-payment of overtime, based on the assertion that they performed “under only general supervision work along specialized or technical lines requiring special training, experience, or knowledge.” The appeals court stated that if the issues presented by this defense predominated over common issues, class certification could be defeated on this basis. Finding that the evidence presented on the motion for class certification showed a wide degree of variance in the amount of independent judgment and discretion exercised by the accountants on any given assignment, the court held that class treatment was not appropriate because of the individualized inquiries that would be required to determine if the exemption applied on a case-by-case basis.

Although not essential to its decision, the court also found that class certification was properly denied because the plaintiffs had submitted absolutely no evidence as to how numerous the class was or how they qualified as adequate class representatives.As to the latter point, the court noted that there was no statement by the plaintiffs that they understood the obligations of being a class representative, or any recognition of the “substantial burden that they would be undertaking” to represent absent class members.These findings will also likely prove helpful to employers in defending future class certification motions in wage and hour cases.

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