Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_08-cv-03404/USCOURTS-cand-5_08-cv-03404-5/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 29:201 Fair Labor Standards Act

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United States District Court

For the Northern District of California

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ORDER GRANTING MOTION TO DECERTIFY CONDITIONAL FLSA CLASS—No. C-08-03404 RMW

JAS

United States District Court

For the Northern District of California

E-FILED on 4/2/10

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

SANTIAGO HERNANDEZ, et al.,

individually and on behalf of all others

similarly situated, and on behalf of the general

public,

Plaintiffs,

v.

UNITED AUTO CREDIT CORPORATION,

and DOES 1-50, inclusive,

Defendants.

No. C-08-03404 RMW

ORDER GRANTING MOTION TO

DECERTIFY CONDITIONAL FLSA CLASS

[Re Docket Nos. 114, 115, 116, 121]

Plaintiffs contend that defendant United Auto Credit Corporation ("UACC") inappropriately

classified them as exempt employees under state and federal law and thereby deprived them of

overtime pay. On March 20, 2009, this court granted plaintiffs' motion to conditionally certify a

collective action under the Fair Labor Standards Act ("FLSA"). UACC now moves to decertify the

conditional class. Plaintiffs move for partial summary judgment, seeking, among other things, an

adjudication that plaintiffs are not exempt employees. Plaintiffs also seek leave to file a second

amended complaint whereby plaintiffs could individually assert their state law claims in this action. 

Finally, UACC submits that plaintiffs' partial summary judgment motion is premature and should be

denied or at least continued. For the reasons stated below, the court grants the motion to decertify

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ORDER GRANTING MOTION TO DECERTIFY CONDITIONAL FLSA CLASS—No. C-08-03404 RMW

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the collective action. The court denies plaintiffs' motion to file a second amended complaint and

motion for summary judgment as moot.

I. BACKGROUND

UACC is an automobile financing company. Radrigan Dep. 13:5-12 , Jan. 13, 2009. UACC

has car-dealer clients who forward applications of customers who need financing to purchase a car. 

Id. at 13:13-19. In 1996, UACC had a total of four branch offices, and as of January 2009, it had

approximately 60 branch offices. Id. at 16:1-9. At its maximum in mid-2007, UACC had 146

branch offices. Id.

UACC's goal in each branch was to have eight employees with the following job titles:

1. Branch Manager

 2. Assistant Branch Manager 

 3. Collections Supervisor (also called a "Senior Account Representative" or "Senior

Collector")

 4. Administrative Supervisor (also called a "Senior Customer Service Representative")

 5. Account Representative 1 (also called a "Collector")

 6. Account Representative 2

7. Administrative Coordinator 1 (also called a "CSR")

8. Administrative Coordinator 2

See Def.'s Mot. Decertify 2. In 1996, when the branches were set up, Branch Managers, Assistant

Branch Managers, Collections Supervisors, and Administrative Supervisors were all classified as

exempt under the FLSA. Radrigan Dep. 72:1-13. These classifications have not changed since

1996. Id. at 77:6-10. Job descriptions were drafted at UACC's corporate headquarters and are the

same nationwide. Ekizian Dep. 94:17-23, 188:3-12, Jan. 27, 2009. Plaintiffs are a group of past and

present UACC employees who contend that they were improperly classified as exempt and deprived

of overtime compensation and other benefits. Compl. ¶ 1. 

The court conditionally certified the following class: "All persons who are or have been

employed by Defendant United Auto Credit Corporation as 'Collections Supervisors,' 'Senior

Collectors,' 'Senior Account Representatives,' 'Senior Customer Service Representatives,' and/or

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ORDER GRANTING MOTION TO DECERTIFY CONDITIONAL FLSA CLASS—No. C-08-03404 RMW

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'Administrative Supervisors,' at any time [from] three years prior to the filing of this Complaint, to

the final disposition of the case." UACC now moves to decertify the class, contending that the

duties of the Collections and Administrative Supervisors differ too significantly for class

certification to be appropriate under FLSA. 

II. ANALYSIS

A. Legal Standard for Conditional Certification and Decertification of Collective

Actions under FLSA

An action for violation of the FLSA may be maintained "by any one or more employees for

and in behalf of himself or themselves and other employees similarly situated." 29 U.S.C. § 216(b). 

Section 216(b) of the FSLA also requires that an employee wishing to be a plaintiff must opt-in and

file a consent with the court. Id. The statute does not define the term "similarly situated," and the

Ninth Circuit has yet to interpret this phrase. See Leuthold v. Destination America, 224 F.R.D. 462,

467 (N.D.Cal. 2004). But most courts interpreting Section 216(b) have used a two-step approach. 

See Hipp v. Liberty Nat'l Life Ins. Co., 252 F.3d 1208, 1218-19 (11th Cir. 2001) ("The two-tiered

approach to certification of § 216(b) opt-in classes . . . appears to be an effective tool for district

courts to use in managing these often complex cases, and we suggest that district courts in this

circuit adopt it in future cases."); Wynn v. Nat'l Broad. Co., Inc., 234 F. Supp. 2d 1067, 1082

(C.D.Cal. 2002) (citing Thiessen v. General Electric Capital Corp., 267 F.3d 1095, 1102-03 (10th

Cir. 2001) and Bayles v. American Med. Response of Colo., Inc., 950 F. Supp. 1053, 1067 (D.Colo.

1996)); NEWBERG ON CLASS ACTIONS § 24:3 (4th ed. 2008). 

Under the two-step approach, the court first considers whether to certify a collective action

and permit notice to be distributed to the putative class members. See Thiessen, 267 F.3d at 1102; 

Russell v. Wells Fargo & Co., 2008 WL 4104212, at *2-3 (N.D.Cal. Sept. 3, 2008). At this first

stage, the standard for certification is fairly easy to satisfy. Courts have required only "substantial

allegations, supported by declarations or discovery, that the putative class members were together

the victims of a single decision, policy, or plan." Russell, 2008 WL 4104212, at *2. 

At the second stage, after discovery has been taken, the court may decertify the class if it

concludes that the class members are not similarly situated. Id. at *3. The court can consider a

number of factors in deciding whether an action should ultimately proceed collectively, including:

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1

 "Generally, 'management' includes, but is not limited to, activities such as interviewing, selecting,

and training of employees; setting and adjusting their rates of pay and hours of work; directing the

work of employees; maintaining production or sales records for use in supervision or control;

appraising employees' productivity and efficiency for the purpose of recommending promotions or

other changes in status; handling employee complaints and grievances; disciplining employees;

planning the work; determining the techniques to be used; apportioning the work among the

employees; determining the type of materials, supplies, machinery, equipment or tools to be used or

merchandise to be bought, stocked and sold; controlling the flow and distribution of materials or

merchandise and supplies; providing for the safety and security of the employees or the property;

planning and controlling the budget; and monitoring or implementing legal compliance measures." 

29 C.F.R. § 102. 

ORDER GRANTING MOTION TO DECERTIFY CONDITIONAL FLSA CLASS—No. C-08-03404 RMW

JAS 4

(1) the disparate factual and employment settings of the individual plaintiffs; (2) the various

defenses available to the defendant and whether they appear to be individual to each plaintiff; (3)

fairness and procedural considerations; and (4) whether plaintiffs made the required filings before

filing suit. Thiessen, 267 F.3d at 1103. However, a requirement that the class members be identical

would be inconsistent with the intent of FLSA's provision that a case can proceed as a collective

action. Pendlebury v. Starbucks Coffee Co., 518 F. Supp. 2d 1345, 1361 (S.D.Fla. 2007). 

B. Decertification of Plaintiffs' Collective Action

1. Exempt Employees

The FLSA specifies that its minimum wage and overtime provisions do not apply to

employees "employed in a bona fide executive capacity." 29 U.S.C. § 213(a)(1). Employees fall

within this executive exception when they are:

(1) Compensated on a salary basis at a rate of not less than $455

per week . . . ;

(2) Whose primary duty is management of the enterprise in which

the employee is employed or of a customarily recognized

department or subdivision thereof;

(3) Who customarily and regularly directs the work of two or more

other employees; and

(4) Who has the authority to hire or fire other employees or whose

suggestions and recommendations as to the hiring, firing,

advancement, promotion or any other change of status of other

employees are given particular weight. 

29 C.F.R. § 541.100(a). With respect to the requirement that the employee's primary duty be

management, the regulations provide a lengthy, non-exhaustive list of managerial activities.1

 For

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ORDER GRANTING MOTION TO DECERTIFY CONDITIONAL FLSA CLASS—No. C-08-03404 RMW

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those activities to constitute an employee's "primary duty," they must be "the principal, main, major

or most important duty that the employee performs." 29 C.F.R. § 700. 

Determination of an employee's primary duty must be based on all the

facts in a particular case, with the major emphasis on the character of

the employee's job as a whole. Factors to consider when determining

the primary duty of an employee include, but are not limited to, the

relative importance of the exempt duties as compared with other types

of duties; the amount of time spent performing exempt work; the

employee's relative freedom from direct supervision; and the

relationship between the employee's salary and the wages paid to other

employees for the kind of nonexempt work performed by the

employee.

Id. As is apparent from the above factors, the assessment of whether an employee falls into the

executive exception is an individual and fact-intensive inquiry and necessitates a careful factual

analysis of the full range of the employee's job duties and responsibilities. See Mike v. Safeco Ins.

Co. of America, 274 F. Supp. 2d 216, 220 (D.Conn. 2003).

2. The "Ratio Requirement"

Before considering the factors relevant to the substantive merits of the motion to decertify,

the court briefly deals with an argument made by plaintiffs at oral argument regarding the FLSA's

purported requirement that there be a "ratio between executives and workers." Rough Tr. 4. Under

the FLSA, plaintiffs stated, "at a minimum you need to have two workers for every executive. 

They're on the wrong side of the ratio, and they're not even close. They have a five – they have five

executives for three or four workers, and they need to have two workers for every one executive." 

Id.

Plaintiffs' argument overstates the requirement of the pertinent FSLA regulation. Plaintiffs

are correct that in order to qualify for the executive exemption, an employee must "customarily and

regularly direct[ ] the work of two or more other employees." 29 C.F.R. § 541.100(a)(3). The

language of the regulation, however, does not require a strict mathematical ratio between an

"employee employed in a bona fide executive capacity" and "other employees." All the regulation

requires is that an employee customarily or regularly direct the work of two or more other

employees. The other employees whose work the executive directs may or may not themselves be

executives. Thus, the FLSA does not create a "ratio requirement." Whether the present conditional

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 UACC says that there have been several hundred Collections and Administrative Supervisors over

the past three years. Def.'s Mot. Decertify 1. 

ORDER GRANTING MOTION TO DECERTIFY CONDITIONAL FLSA CLASS—No. C-08-03404 RMW

JAS 6

class should be decertified, then, depends on the individualized assessment of whether the class

members are "similarly situated." The court now turns to that inquiry.

3. The Conditional Class Members Are Not "Similarly Situated"

a. Disparate Factual and Employment Settings of Individual Plaintiffs

In its motion to decertify, UACC offers evidence of the variety of job responsibilities that

Collections Supervisors and Administrative Supervisors have had at UACC branches. Def.'s Mot.

Decertify 3-12. Approximately 120 Collections Supervisors and Administrative Supervisors from

77 different branches have opted in to the present action.2

 UACC describes the practices of thirteen

Collections Supervisors and six Administrative Supervisors in its motion to decertify, and among

those that UACC presents, there is a fairly wide variety of managerial responsibilities. Id.

Collections Supervisors Santiago Hernandez, Jesus Romero, and Amber Brown, for example, do not

appear to have had many, if any, supervisory duties. Id. at 3, 6. On the other hand, Carlos Zavala,

Sharon McNair, and Dorian Lanier do supervise collectors, review and advise the work of

subordinates, and have some say in hiring and promotion decisions. Id. at 6-9. 

Plaintiffs respond that common evidence can establish that management was not the primary

duty of class members. Plaintiffs' opposition, however, focuses not on the job responsibilities of

class members, but on the duties of the Branch Manager and Assistant Branch Manager. The

Branch Manager and Assistant Branch Manager, plaintiffs argue, "manage" all of the employees in

the office while the employees at issue – the Collections and Administrative Supervisors – only

"supervise" subordinate employees. Opp'n Mot. Decertify 2-14. Plaintiffs offer significant

evidence, in the form of job description documents and testimonial descriptions, that the Branch

Managers and Assistant Branch Managers have substantial managerial responsibilities. But the

exempt status of the Branch and Assistant Managers is not the dispositive issue in this suit; the

exempt status of the Collections and Administrative Supervisors is. Plaintiffs' argument appears to

rely on the inference that if Branch Managers and Assistant Branch Managers "manage" employees,

then Collections and Administrative Supervisors must not. However, plaintiffs provide no basis for

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drawing such an inference and provide no support for their contention that supervisors "supervise"

and do not "manage." In fact, the balance of UACC's evidence in support of decertification is

directed at establishing that in many cases the supervisors did in fact engage in activities defined

under FLSA as "managerial." See Def.'s Mot. Decertify 3-12. Although job descriptions come from

corporate headquarters and are used nationwide, the actual work performed by employees varies

significantly from branch to branch. This variation appears to result from the fact that UACC has

experienced significant employee turnover and numerous mergers and closures of branches. See

Radrigan Dep. 15:1-16:9.

In response to the evidence of the lack of uniformity of the duties of Collections and

Administrative Supervisors, plaintiffs point out that, in the same branches where supervisors are

alleged to have significant managerial responsibilities, the Branch and Assistant Managers manage

employees. Opp'n Mot. Decertify 19-22. In short, the only evidence that plaintiffs offer to rebut the

specific testimony that supervisors had managerial responsibility is that their managers also had

supervisory responsibility. Id. Plaintiffs state that "[a]pparently, there is quite a bit of supervising

happening in that one department." Id. at 19. Ultimately, plaintiffs provide the court with little

more than skepticism that four out of eight employees would perform primarily managerial duties. 

Plaintiffs point to the fact that defendants' job descriptions are drafted at its corporate

headquarters in a collaborative effort among its officers, that the job descriptions are the same for

each branch, Ekizian Dep. 94:17-23, 188:3-12, and that UACC treats all Collections Supervisors and

Administrative Supervisors as exempt. However, the recent decision of In re Wells Fargo Homes

Mortg. Overtime Litig., 571 F. 3d 953 (9th Cir. 2009), which involved certification under Federal

Rule of Civil Procedure 23(b)(3), cautions against placing too much weight on an internal policy of

classifying all members of a particular class of employees as exempt. The Ninth Circuit reversed the

district court's class certification because the court placed too much weight on Wells Fargo's uniform

policy rather than examining what duties the class members actually performed. Id. at 959. 

b. Defenses Available Against Individual Plaintiffs

Defendant UACC argues that its statute of limitations defense will apply differently to the

various plaintiffs. Although there might be disputes as to when a particular employee worked for

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ORDER GRANTING MOTION TO DECERTIFY CONDITIONAL FLSA CLASS—No. C-08-03404 RMW

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UACC or whether any FSLA violation was willful as to a particular plaintiff (thus resulting in a

three year limitation as opposed to two), such disputes would not be a major impediment to a

collective action. The periods of employment in most cases would likely be subject to agreement or

easily verifiable proof. The willfulness question would probably, in most cases, be capable of

resolution on a class-wide basis. Therefore, the limited risk of having to deal with individualized

defenses does not weigh against a collective action in this case.

c. Fairness and Procedural Considerations

The court cannot overlook the fact that a primary goal of Section 216 of the FLSA is to

implement the broad remedial purposes of the FSLA. If the parties agreed as to the duties performed

by plaintiffs, or reliable evidence showed that employees performed substantially similar work, a

collective action under Section 216 would clearly be appropriate. However, here, where there

appears to be substantially different employment experiences among the various Collections and

Administrative Supervisors, the procedural advantages of a collective action cannot be realized. It

appears that many supervisors did have significant managerial duties, such that case by case

determinations as to the propriety of their exempt status will be necessary. It is difficult to see how a

class action could proceed fairly and efficiently, given that each plaintiff's work situation will have

to be examined to see what duties he or she performed. The potential for a class-wide ruling on

liability seems slim. And even if liability could be determined on a class-wide basis, the court

would still face the prospect of having to determine individualized damages. 

4. Conclusion

The court concludes that this action should not proceed collectively and therefore grants

UACC's motion to decertify the conditional class.

C. Other Motions 

Plaintiffs also move for leave to file a second amended complaint and for partial summary

judgment. UACC moves to deny or continue plaintiffs' motion for summary judgment pursuant to

Federal Rule of Civil Procedure 56(f). Because plaintiffs' summary judgment motion seeks

summary judgment that UACC cannot prove an affirmative defense on a class-wide basis, the court's

conclusion that the class should be decertified renders the summary judgment motion moot.

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Furthermore, plaintiffs apparently do not wish to amend their complaint if the collective

action is decertified. Plaintiffs' counsel has stated in an email that: "If the Court decertifies,

California Plaintiffs will assert their state claims in the district in which they file." Decl. Chad

Anderton Supp. Opp'n Mot. Amend Ex. 2. 

III. ORDER

For the foregoing reasons, the court grants UACC's motion to decertify the conditional class. 

This order does not preclude possible joinder of parties, such as Administrative Supervisors at a

particular branch, in individual actions. The court denies plaintiffs' motion for partial summary

judgment and motion to file a second amended complaint as moot. UACC's 56(f) motion is also

denied as moot.

DATED: 3/31/10

RONALD M. WHYTE

United States District Judge

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ORDER GRANTING MOTION TO DECERTIFY CONDITIONAL FLSA CLASS—No. C-08-03404 RMW

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Notice of this document has been electronically sent to:

Counsel for Plaintiffs:

Matthew C Helland helland@nka.com

Donald H. Nichols nichols@nka.com 

Jodi Lynn Collova collova@nka.com 

Michelle R. Fisher fisher@nka.com

Paul J. Lukas lukas@nka.com

Counsel for Defendant:

Maria R. Harrington mharrington@littler.com

Daniel Chad Anderton canderton@littler.com 

Counsel are responsible for distributing copies of this document to co-counsel that have not

registered for e-filing under the court's CM/ECF program.

Dated: 4/2/10 CCL

Chambers of Judge Whyte

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