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Gibson Dunn - The Fashion Law and Business Report > Posts > Michaels Stores Wins Another Round in Wage & Hour Suits Against Retailers
5.29.14
Michaels Stores Wins Another Round in Wage & Hour Suits Against Retailers

This post was prepared by Jesse Cripps of Gibson Dunn’s Los Angeles office and Justin Goodwin of the firm’s Orange County office.

Earlier this month, a federal judge decertified a class of Store Managers in a wage and hour lawsuit that Gibson Dunn client Michaels Stores, Inc. is defending in the Central District of California.  The former Store Managers who filed the lawsuit allege that Michaels misclassified them as exempt from state and federal overtime requirements.  The recent decision is a significant victory for Michaels and a boon to other California retailers who have designated certain classes of employees as exempt.  While the individualized, fact-specific exemption inquiry—which requires the fact-finder to consider how a particular employee actually spends her time on the job—might seem ill-suited for class treatment, plaintiffs often try to overcome this limitation by arguing that an employer’s standard operating procedures can serve as common proof of misclassification.

That strategy proved effective, though only temporarily, last December when an Orange County Superior Court judge certified a class of Michaels Store Managers.  Shortly after that decision, however, Michaels secured a Ninth Circuit decision (available here and discussed here) sending the case to federal court, where District Judge George H. Wu revisited class certification under federal law.

Michaels offered declarations from more than forty Store Managers showing broad variation in the work that Store Managers performed from store to store and over time.  The plaintiffs sought to downplay the significance of those declarations, arguing that they were entitled to little weight because they were submitted by current Michaels employees—a tactic often employed by plaintiffs seeking to certify wage and hour actions.  Judge Wu soundly rejected that argument, finding that there is nothing inherently unreliable about employee declarations, especially when compared to the declarations of former employees who may “have an axe to grind.”

The District Court denied certification, holding that “any class proceeding in this case would almost necessarily devolve into individual mini-trials regarding whether each particular class member actually met the requirements for exempt status,” and no common policy could “diminish the need for individual inquiry.”

The full decision in Rea v. Michaels Stores, Inc., case number 8:13-cv-00455, in the United States District Court for the Central District of California (May 8, 2014) can be found here.  The Gibson Dunn team that represented Michaels Stores included Catherine A. Conway and Jesse A. Cripps, partners in Gibson Dunn’s Los Angeles Office, and Gibson Dunn associates Justin T. Goodwin and Tiffany Phan.

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