Marlo v. United Parcel Service, Inc.

Citations: 639 F.3d 942; 2011 WL 1651234Docket: 09-56196, 09-56206, 09-56451

Court: Court of Appeals for the Ninth Circuit; April 28, 2011; Federal Appellate Court

Original Court Document: View Document

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Michael Marlo, the plaintiff-appellee, and United Parcel Service, Inc. (UPS), the defendant-appellant, are involved in an appeal concerning a jury verdict that awarded Marlo unpaid overtime and meal and rest-period wages. UPS classified Marlo as an executive and administrative employee under California’s IWC Wage Order No. 9, claiming he was exempt from the California Labor Code’s overtime-pay requirements. The district court initially certified a class of full-time supervisors employed by UPS from 2000 to 2004, appointing Marlo as the representative. However, in 2008, the court decertified the class, stating Marlo failed to prove that common legal or factual issues predominated over individual ones. The court's decision was upheld on appeal, as it did not abuse its discretion in decertifying the class.

Throughout his employment from May 6, 1999, to November 12, 2008, Marlo worked as a hub supervisor, preload supervisor, and on-road supervisor, regularly exceeding forty hours per week without proper meal breaks, rest breaks, or overtime compensation. His responsibilities included supervising and training employees, assigning tasks, and coordinating package delivery. Marlo filed his lawsuit against UPS on May 6, 2003, and the district court initially certified the class on June 10, 2004, believing that the job duties were sufficiently similar and that a class action was preferable due to potential reprisals against employees filing individual claims.

The class action comprised FTS employed by UPS from 2000 to 2004. After the district court granted summary judgment to UPS on August 22, 2005, Marlo appealed, leading to a reversal and remand in Marlo v. United Parcel Serv. Inc., where it was determined that Marlo raised significant factual questions regarding whether FTS exercised discretion and independent judgment. On remand, the district court decertified the class, expressing doubts about the class-wide applicability of the evidence. The court noted that Marlo failed to demonstrate predominance, citing a lack of reliable, representative evidence and insufficient proof regarding the “primarily engaged” element of exemptions under IWC Wage Order No. 9. It concluded that Marlo's evidence was largely individual testimony and an exemption policy, which did not allow for extrapolation to class-wide judgment. The court stated that individual issues outweighed common ones, rendering a class action unsuitable. Following a nine-day trial, the jury partially ruled in favor of Marlo, finding that UPS did not meet the executive or administrative exemptions for his roles as hub and preload supervisor but did for his role as on-road supervisor, resulting in an award for unpaid wages. The district court denied UPS's motions for judgment as a matter of law and a new trial while granting Marlo's requests for restitution and attorneys' fees. UPS appealed, and Marlo cross-appealed. Marlo argued that the district court erred in decertifying the class due to a failure to establish the predominance element under Rule 23(b)(3). The appellate review determined that the district court did not err and that the requirements for maintaining a class action, including numerosity, commonality, typicality, and adequate representation, were not met.

Key considerations for the findings include: (A) class members' desire for individual control over separate legal actions; (B) existing litigation related to the controversy involving class members; (C) the appropriateness of concentrating claims in a specific forum; and (D) potential challenges in managing a class action, as outlined in Fed. R. Civ. P. 23(b)(3). The district court found that Marlo did not provide common proof that FTS class members performed nonexempt work. According to IWC Wage Order No. 9, which governs California's transportation sector, exemptions from overtime pay apply to those in administrative, executive, or professional roles, as defined in Cal. Code Regs. tit. 8. 11090(1)(A). The exemptions require that employees primarily perform exempt duties, regularly exercise discretion, and earn at least twice the state minimum wage for full-time work.

The executive exemption includes criteria such as managing an enterprise, directing the work of other employees, having hiring or firing authority, exercising independent judgment, and engaging primarily in exempt duties. The administrative exemption encompasses employees performing non-manual work linked to management policies, exercising discretion, assisting executives, and working under general supervision, among other requirements.

Marlo claims the district court incorrectly shifted the burden of proof regarding misclassification. However, this misinterpretation conflates the employer's burden of proof on the merits with the employee's burden concerning class certification. California law places the onus on employers to prove that an employee is exempt from overtime regulations, as established in Nordquist v. McGraw-Hill Broad. Co. Consequently, UPS must prove that Marlo and other class members were correctly classified as exempt under California law. Nonetheless, class certification is governed by Federal Rule 23, which applies regardless of the state law context, as affirmed in Shady Grove Orthopedic Assocs. P.A. v. Allstate Ins. Co. The critical issue is whether the lawsuit can proceed as a class action, and Rule 23 provides the relevant framework for this determination.

Marlo, seeking class certification, must demonstrate compliance with Rules 23(a) and (b) as per the precedent established in United Steel Workers v. ConocoPhillips Co. The district court's decision to decertify the class acknowledged this burden, assessing whether common questions of law or fact predominated over individual issues and whether a class action was the best method for resolving the dispute. The court concluded that Marlo needed to show that misclassification was prevalent rather than exceptional. 

The court noted that since the initial certification, Marlo had failed to provide common proof supporting a class-wide determination of liability, leading to the finding that individualized issues outweighed common ones. Marlo claimed he established predominance through evidence of UPS's centralized control and uniform policies, but the existence of a blanket exemption policy does not negate the need for factual determination about the actual duties performed by class members.

The court clarified that while UPS's policies may apply to all FTS, they do not prove that all FTS were misclassified as exempt, as some could be accurately classified under the policy. Marlo's assertion that UPS's documents demonstrated predominance was insufficient; the expectation of certain tasks did not confirm that employees were primarily engaged in exempt activities. Furthermore, the court upheld the requirement for a week-by-week analysis of exempt status, emphasizing that actual work performed during the workweek must be evaluated to determine whether employees spend more than 51% of their time on managerial tasks, as mandated by California law.

The district court correctly applied California law by requiring a week-by-week demonstration of work performed by the FTS (Field Technical Specialists). Marlo's evidence failed to establish predominance for class certification. His reliance on an annual UPS employee survey was flawed, as he did not prove its methodology was reliable or that it specifically addressed FTS. Additionally, he did not clarify whether those identifying as "supervisors" were indeed FTS. A telephone survey of 160 FTS was also deemed inadequate; the survey's designer admitted she could not confirm its representativeness. The court concluded that the survey was unrepresentative and lacked probative value. Furthermore, testimony indicated significant variations in job duties among FTS due to differing work environments. Consequently, the district court did not err in finding that individual issues would predominate. Marlo’s assertion that the court improperly weighed case merits was incorrect; the court compared claims and necessary evidence for class-wide findings, in line with legal standards. The evaluation was not a merits determination but rather an assessment of the evidence's capability to support certification. The district court did not abuse its discretion in decertifying the class, and each party is responsible for its own appellate costs. Affirmed.