A class action over socks?!

Employers operating in California are subject many state-law employment regulations and the resulting ever-present threat of class action litigation. Suits over employment practice seem to come in waves based on industry and type of employee (e.g. insurance claims adjusters, retail managers) or specific policies (such as the current spate over meal and rest periods). Many lawyers monitor lawsuits filed in the state to watch for the next trend.

A recent case suggests that it may very well NOT be minor apparel items. California Labor Code section 2802 provides that “[a]n employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties as such, or of his or her obedience to the directions of the employer.”

In Gallardo v. United Parcel Service, Inc.pdf., Case no. 2:10-cv-08624 (C.D. Cal. Aug. 22, 2011), the plaintiff claimed that UPS required its drivers wearing shorts to purchase and use socks in UPS brown and with the UPS logo. She contended that this policy violated Labor Code section 2802, because such a purchase constituted an “expenditure” required by the employer, and she sought to represent a proposed class of over 10,000 employees to recover their cost.

The plaintiff argued that the issue of certification was simple. She contended that there was a state-wide policy of requiring the logo socks and that, in any case, it was “obvious” that if drivers bought and wore the UPS socks it must have been because they were told to do so.

As is true in many of these cases, the real facts were not quite so simple. UPS was able to demonstrate that each of its 150 or so locations operated differently. It had different policies at different locations and supervisors had discretion regarding how they interpreted and enforced the company’s requirements over uniforms. Some permitted merely brown socks; while others expressed a preference for the logo socks. UPS argued that these variations undermined the elements of commonality and typicality under Rule 23(a) and those of predominance and superiority under Rule 23(b)(3).

With issues as to commonality and typicality being raised, one would naturally expect the Supreme Court’s recent decision in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. ___ (June 20, 2011), to be discussed. Interestingly, however, the District Court’s decision cited and relied upon the Ninth Circuit’s Dukes decision, one that was overruled by the Supreme Court as being too lenient. Even under that standard, though, the court found that the plaintiffs had failed to demonstrate the necessary commonality and typicality. It also agreed with the defendant that the 23(b) requirements of predominance and typicality had not been met. The court thus denied certification and set the case for a trial on the plaintiff’s individual claims, which could not have amounted to more than a few dollars, later in the fall.

The Bottom Line: Plaintiff’s attorneys are experimenting with new theories to drive employment class action in California. Variations in the application of employment policies will still serve to defeat class certification even for large employers.