Thursday, August 4, 2014
Court Upholds Class Action Status for Overtime Lawsuit
Plaintiff’s Lawyers Say Recovery Could Run to Hundreds of Millions
By a MetNews Staff Writer
A lawsuit brought on behalf of 800 insurance adjusters who claim they were forced to work unpaid off-the-clock overtime may proceed as a class action, the Ninth U.S. Circuit Court of Appeals ruled yesterday.
The court affirmed U.S. District Judge John Kronstadt’s decision to certify a class of adjustors over the objection of their employer, Allstate Insurance Company. Kronstad said the question of whether Allstate had an “unofficial policy” of denying overtime payments while requiring overtime work predominated over any individualized issues regarding the specific amount of damages a particular class member might be able to prove.
The district judge held that class treatment was a superior method of adjudication because statistical sampling of class members could accurately and efficiently resolve the question of liability, leaving individualized damage assessments for later proceedings. The Ninth Circuit agreed to hear an interlocutory appeal from the class certification order.
The plaintiff, casualty Jack Jimenez, filed suit in 2010 on behalf of all adjusters employed by Allstate in California since Sept. 29, 2006. Jimenez alleged after the company reclassified its adjusters as hourly, rather than salaried, workers in 2005, no time records were kept, except that adjusters were required to work eight hours per day, five days per week, and paid accordingly, in the absence of an approved deviation.
He further alleged that the company required the managers of its 13 offices in the state to operate within non-negotiable budgets that forced them to disapprove overtime requests, and to ignore instances in which adjusters whom they knew were working unreported overtime hours.
The plaintiffs’ attorneys have said the class recovery in the case could be in the hundreds of millions of dollars.
Judge Ronald Gould, writing for the Ninth Circuit, said the district judge did not abuse his discretion in concluding that a class action was a superior means of determining common questions, particularly whether the company knew the managers were routinely allowing, and even encouraging, off-the-clock work.
Gould also rejected the company’s contentions that class certification violated its due process rights by preventing it from litigating affirmative defenses and by approving the use of statistical sampling to determine how common off-the-clock work was.
The judge noted that “circuit courts including this one have consistently held that statistical sampling and representative testimony are acceptable ways to determine liability so long as the use of these techniques is not expanded into the realm of damages.”
He went on to say that the district judge had been “careful to preserve Allstate’s opportunity to raise any individualized defense it might have at the damages phase of the proceedings.” By bifurcating the proceedings and allowing sampling and representative testimony in the liability phase only, Gould said, Kronstadt “preserved both Allstate’s due process right to present individualized defenses to damages claims and the plaintiffs’ ability to pursue class certification on liability issues based on the common questions of whether Allstate’s practices or informal policies violated California labor law.”
Gould’s opinion was joined by Judge N. Randy Smith, and Senior District Judge Edward R. Korman of the Eastern District of New York, sitting by designation.
The appeal was argued by James M. Harris of Seyfarth Shaw LLP for Allstate and Alexander R. Wheeler of the R. Rex Parris Law Firm for the plaintiffs.
The case is Jimenez v. Allstate Insurance Company, 12-56112.
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