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Ninth Circuit Decertifies Chinese Daily News Class, Confirming That The Tough Dukes Standard Applies To Wage-Hour Cases

By Michael Kun

The Ninth Circuit has just issued an important new opinion that not only makes clear that the Supreme Court’s landmark Dukes v. Wal-Mart decision in fact applies to wage-hour claims, but also provides some very strong language for employers to rely upon in opposing class certification motions in wage-hour cases.

The Ninth Circuit decision decertifying the class that had been certified on overtime and meal break claims in Wang v. Chinese Daily News may be found here

The history of Chinese Daily News is a long and torturous one that could only be of interest to those employment lawyers who are already familiar with that history or people who have run out of reading material at the doctor’s office.  What is significant is that a class was certified and judgment entered in favor of the plaintiffs following a jury trial. The Ninth Circuit subsequently affirmed the district court’s rulings.  However, the Supreme Court vacated that decision and remanded it for reconsideration in light of Dukes.  Now, the Ninth Circuit has decertified the class, remanding it to the district court for reconsideration in light of Dukes.

The decision makes clear that Dukes applies to wage-hour actions brought under Rule 23, contrary to the assertions made by a multitude of plaintiffs’ counsel in pending wage-hour actions that Dukes was somehow limited to its facts or only applied to discrimination class actions.

Addressing the propriety of certification under Rule 23(b)(2), where equitable relief is sought, the Court relied upon Dukes for the proposition that the claims of the proposed class must “depend upon a common contention . .. of such a nature that it is capable of classwide resolution – which means that determination of its truth or falsity will resolve an issue that is central to the validity of each of the claims in one stroke.”  (Emphasis added.)  That will be difficult to establish in a great many wage-hour class actions where individualized analyses would require many “strokes,” not just one.

Turning to the propriety of certification under Rule 23(b)(3) in the context of claims that Chinese Daily News employees had been misclassified as exempt, the Court also noted that the conclusion that common questions predominated “rested on the fact … that plaintiffs are challenging CDN’s uniform policy of classifying all reporters and account executives as exempt employees . . . .  In two recent decisions we criticized he nature of the  district court’s Rule 23(b)(3) predominance inquiry in this case….  We observed that the district court in this case ‘essentially create[d] a presumption that class certification is proper when an employer’s internal exemption policies are applied uniformly to the employees.’”  The Court then cited to its prior decisions in  In re Wells Fargo Home Mortg. Overtime Pay Litig. and Vinole v. Countrywide Home Loans, Inc.

Finally, the court cited to Dukes for the proposition that “Trial by Formula” is not permitted in determining damages.

While the Ninth Circuit’s ruling by no means forestalls the possibility that the district court will determine  on remand that a class in fact should be certified under the Dukes analysis, the road would appear to be a much tougher one for the plaintiffs than the one they faced several years ago when the class was originally certified.

Employers in the Ninth Circuit and elsewhere will likely cite to this decision — and Dukes, Wells Fargo, and Vinole — early and often in opposing class cert motions.