The Supreme Court's recent decision in Dukes v. Wal-Mart Stores, Inc. has already made its mark in the wage-and-hour context. In Cruz, et al. v. Dollar Tree Stores, Inc., Case No. 3:07-CV-04012-SC (N.D. Cal. July 8, 2011), the Northern District of California relied heavily on Dukes in decertifying a class of Dollar Tree store managers who claimed that they were misclassified as exempt from overtime under California law.
The Dollar Tree court hinged its initial class certification order on a Dollar Tree payroll "certification" form that required store managers to certify whether they spent more than fifty percent of their time performing specified "managerial" duties. As the parties moved closer to trial, however, the court requested further briefing on the class certification issue in light of new developments in the law, including the Ninth Circuit's decision in Marlo v. United Parcel Serv., No. 09-56196, 2011 U.S. App. LEXIS 8664 (9th Cir. Apr. 28, 2011) ("Marlo II").
Following additional briefing, the court ordered the decertification of the class. The court based its order in part on new facts that had come to light, including (1) the fact that the majority of the class members testified that they had not been truthful in executing their payroll verification forms; and (2) the fact that Plaintiffs admitted that the verification forms did not accurately reflect how class members spent their time. The Court also relied heavily on Wal-Mart in this context, highlighting its emphasis on the requirement that the "glue" of a class action – its common evidence – must not only give rise to common questions, but also must allow for the common resolution of the claims at issue. The verification forms no longer met this requirement.
Though Plaintiffs argued that the class could nonetheless be sustained based on the testimony of individual representative class members, the court rejected this contention, holding that (1) under Marlo II, representative testimony alone cannot be the basis for class certification without a reliable basis for extrapolating the testimony to the broader class; and (2) Plaintiffs had no reliable basis for doing so, particularly given the newfound unreliability of the certification forms. The court further rejected Plaintiffs' claim that sufficient common proof could be found in the various standardized materials—such as training materials—applicable to the store managers.
Dollar Tree is a major decision for employers facing wage-and-hour class actions. It strongly suggests that, following Wal-Mart, courts are likely to apply the class action requirements of Rule 23 much more rigidly than before. This is perhaps most evident in the court's rejection of Dollar Tree's standardized materials as common evidence supporting class treatment. Whereas courts often relied on common policies and procedures as evidence of commonality pre-Wal-Mart, the court in Dollar Tree suggested that in the post-Wal-Mart world, no policy or procedure can be common evidence sufficient to sustain a wage-and-hour class action because the ultimate inquiry is what the employees at issue actually do in their jobs. While the law is certain to further develop in this area, the Dollar Tree decision is a valuable tool for employers in the meantime.