Avon categorizes all of its district service managers (DSMs) under the “administrative” exception of California law that requires employers to pay overtime wages. DSMs are the Avon employees who recruit and train the independent retail contractors Avon uses to sell its products to the consuming public. Plaintiffs – 19 former or current Avon DSMs – claimed Avon improperly treated them as exempt and sought to represent a Rule 23(b)(3) class. Relying on the California labor code’s five-part test for the administrative exception, plaintiffs proffered several questions of law or fact that they contended could be adjudicated on a class-wide basis including:
- Whether DSMs’ duties and responsibilities involve work directly related to management policies or general business operations;
- Whether DSMs customarily and regularly exercise discretion and independent judgment; and
- Whether DSMs work under only general supervision.
Avon opposed certification arguing that while the DSMs all have the same job description, the manner in which they actually performed their jobs varies too widely for class treatment. Avon relied on a report it commissioned in which the author observed 30 DSMs and listed 153 discrete tasks grouped into 19 “task areas” they each performed. Based on the study, Avon challenged the Rule 23 elements of commonality, predominance and superiority. At oral argument on their motion to certify, plaintiffs admitted the 19 task areas identified in the Avon-commissioned report accurately described the DSMs’ job.
The district court for the Northern District of California rejected Avon’s arguments and certified the class. Citing Wal-Mart Stores, Inc. v. Dukes, the court found that three of the questions plaintiffs’ proffered were capable of generating common answers apt to drive the resolution of the litigation and that these common questions predominated over individualized inquiries. The court relied heavily on Avon’s uniform treatment of DSMs for purposes of exempting them from overtime compensation and plaintiffs’ agreement that the “task areas” were shared by all DSMs.
With regard to superiority, the court provided two reasons supporting its conclusion that class treatment would be superior to individual lawsuits. First, because some class members were still employed by Avon, allowing their claims to proceed as part of a class would “ensure that all class members receive their day in court without requiring current employees of Avon to risk their employment to receive that right.” Second, the court reasoned that if individual lawsuits proceeded, Avon would face issue preclusion based on one plaintiff prevailing on her or his claims. However, if Avon prevailed in one such suit, it could not correspondingly use that victory against the remaining plaintiffs because they would not have been parties to the individual action and, thus, could not (consistent with due process) be bound by the determination in a lawsuit in which they were not participating. Therefore, according to the court, “allowing a class action … w[ould] ensure that the finality of judgment in this action is a two-way street, not one that adheres only to the benefit of the Plaintiffs and non-party members of an uncertified class.”