Continuing to Troll the Ninth Circuit Class Certification Waters – Will the Supreme Court Join In?

In September 2021 and again in June of this year, we wrote about the Ninth Circuit’s opinion in Olean Wholesale Grocery v. Bumble Bee Foods and the court’s opinion following rehearing en banc. The defendants in Olean obtained a extension to file a certiorari petition with the Supreme Court through August 8, 2022, so the last word may not have been written in Olean.

On July 5, 2022, the Ninth Circuit issued another notable class certification decision in a case captioned Bowerman v. Field Asset Services, Inc., 39 F.4th 652 (9th Cir. 2022). While Olean is troubling to those opposing class certification, Bowerman offers more arguments for defendants.

In Bowerman, the District Court certified a class of 156 people who worked for vendors providing services to Field Asset Services, Inc. (“FAS”), a company in the business of “pre-foreclosure property preservation” for lenders. The workers alleged that they were employees of FAS and should have been paid overtime, and sought Rule 23(b)(3) damages class certification. The district court certified the class, holding that a need for individualized damages hearings did not preclude certification, and granted summary judgment to the class after determining that they had been misclassified as independent contractors by FAS. The district court then proceeded with a “bellwether” trial on damages for ten class members. The trial lasted eight weeks. FAS appealed, asserting that the district court should not have certified a class because all plaintiffs could not prove, through common evidence, that class members worked overtime hours or that claimed expenses were reimbursable. FAS also argued that the district court had made other errors.

The Ninth Circuit reversed the class certification order, holding in pertinent part that:

We need not decide whether common evidence can prove that FAS has a uniform policy of misclassifying its vendors.  FAS’s liability to any class member for failing to pay them overtime wages or to reimburse their business expenses would implicate highly individualized inquiries on whether that particular class member ever worked overtime or ever incurred any “necessary” business expenses.  Cal. Lab. Code § 2802(a).  Under such circumstances, class certification is improper.  Cf. Sotelo v. MediaNews Grp., Inc., 143 Cal. Rptr. 3d 293, 303–06 (Ct. App. 2012) (affirming denial of class certification because there was no common evidence that individual plaintiffs worked overtime), disapproved of on other grounds by Noel v. Thrifty Payless, Inc., 445 P.3d 626 (Cal. 2019); Wilson v. La Jolla Grp., 276 Cal. Rptr. 3d 118, 134–35 (Ct. App. 2021)

****

[U]niform evidence that FAS won’t pay overtime wages or reimburse business expenses if any are owed does not amount to evidence that FAS had a uniform policy that required the class to work overtime or incur reimbursable expenses.  See Sotelo v. MediaNews Grp., Inc., 143 Cal. Rptr. 3d 293, 305 (Ct. App. 2012) (explaining that a class may establish liability by proving that an alleged employer has “a uniform policy that requires putative class members to work overtime” (emphasis added)).

The Ninth Circuit panel in Bowerman explained that “even if the class members needed to prove only that they were misclassified as independent contractors to establish FAS’s liability by common evidence, class certification would still be improper under Rule 23(b)(3) for yet another reason—the class members’ failure to show ‘that ‘damages are capable of measurement on a classwide basis,’ in the sense that the whole class suffered damages traceable to the same injurious course of conduct underlying the plaintiffs’ legal theory.’ ”  Just Film, Inc. v. Buono, 847 F.3d 1108, 1120 (9th Cir. 2017) (quoting Comcast Corp. v. Behrend, 569 U.S. 27, 34 (2013)).

The panel characterized Olean as a decision holding that Rule 23(b)(3) permits “ ‘the certification of a class that potentially includes more than a de minimis number of uninjured class members’ because it ‘requires only that the district court determine after rigorous analysis whether the common question predominates over any individual questions, including individualized questions about injury or entitlement to damages.’ Thus, ‘a district court is not precluded from certifying a class even if plaintiffs may have to prove individualized damages at trial, a conclusion implicitly based on the determination that such individualized issues do not predominate over common ones.’ ” Bowerman, 39 F.4th at 663 (citation omitted) (quoting Olean, 31 F.4th at 669).

Rejecting the plaintiffs’ arguments based on Olean, the panel explained that even under its “narrow interpretation” of Comcast, “the class members cannot establish predominance [because they] cannot show by common evidence that individual class members would be entitled to overtime wages or to expense reimbursement if found to be employees [and thus] cannot show that the whole class suffered damages traceable to their alleged misclassification as independent contractors.”

It is difficult to reconcile Olean and Bowerman. Perhaps the Bowerman panel was influenced by the eight week jury trial that was necessary for the district court to determine individualized damages. Nonetheless, the Olean panel arguably sidestepped the issue of individualized damages by holding that the district court in that case could properly accept a disputed statistical model that purported to determine injury on a classwide basis.

If the Olean decision stands, it is unclear how, in a class trial, a defendant could effectively challenge claims of individual class members other than mounting a wholesale attack on the statistical model of plaintiffs. It would be helpful for the Supreme Court to grant review in Olean and provide clarity concerning the application of Comcast and Rule 23 in cases where injury and damages present individualized issues.