Many wage and hour claims in California are brought as class actions. Section 382 of the California Code of Civil Procedure authorizes a case to proceed as a class action when it meets certain requirements. The first is that: “a party must establish the existence of both an ascertainable class and a well-defined community of interest among the class members.” This requires a party to show: (1) common questions of law or fact predominate over individualized questions; (2) the proposed class representatives’ claims are typical of the class; and (3) the proposed class representatives can adequately represent the class. Because complaints often fail to specify facts to demonstrate these elements, defendants have sought to dismiss some complaints at the outset by filing a demurrer.

On August 2, 2010, in Gutierrez. v. California Commerce Club, Inc., the California Court of Appeal reversed the trial court’s order sustaining a demurrer dismissing class action allegations, without leave to amend. The court ruled that “in the vast majority of wage and hour disputes, class suitability should not be determined on demurrer.”

The plaintiffs, Gutierrez and Salazar, brought a purported class action against their employer, California Commerce Club (“Club”). The plaintiffs alleged that they and other similarly situated members of the putative class were injured by the Club’s policy and practice of denying meal and rest breaks to certain hourly employees. After a series of amended pleadings, the trial court sustained the Club’s demurrer to the class action allegations of the complaint, without leave to amend. The court found that the plaintiffs failed to “allege facts sufficient to show the existence of a class” by failing to “notify the court who is in the class, what they do, how they are related and why plaintiffs are the proper persons to represent this all-inclusive class.”

The Court of Appeal reversed, holding that “[a]s long as the lead plaintiff alleges institutional practices . . . that affected all of the members of the potential class in the same manner, and it appears from the complaint that all liability issues can be determined on a class-wide basis, no more is required at the pleading stage.” The Court of Appeal distinguished the cases upon which the trial court relied by noting that the majority of those cases involved mass torts or other actions in which individual issues predominate, whereas in Gutierrez the Club’s liability “[could] be determined by reviewing a single set of facts common to all.”

Quoting the earlier case of Prince v. CLS Transportation, Inc., the Court of Appeal stated the principle that “only in mass tort action (or other actions equally unsuited to class action treatment) [should] class suitability . . . be determined at the pleading stage. In other cases, particularly those involving wage and hour claims, class suitability should not be determined by demurrer.”

This decision makes clear that in certain respects the pleading standard in California state court is much lower than it is in federal court. Consequently, employers should expect more class actions – particularly for alleged wage and hour violations – to be filed in California state courts as opposed to federal court, and employers should expect heightened resistance to such cases being removed to federal court.