It’s easy to forget that cases to the Supreme Court are in many ways like any other case and their own histories following Supreme Court review.  Almost no-one, for example, could readily identify the individual appointed to the position sought by William Marbury after the Supreme Court’s Marbury v. Madison.pdf decision.  While almost anyone can describe, and even recite, the text of a “Miranda” warning, few know that Ernesto Miranda was still convicted after the Supreme Court’s suppressed the use of his confession in the case that bears his name. 

While not in the same league as either of those two cases, the case of Hertz v. Friend.pdf continues to limp along following the Supreme Court’s 2010 decision.  The Friend case is a relatively typical California wage and hour action in which a group of Hertz location managers contend that they were misclassified as exempt and seek lost overtime, penalties for missed meal and break periods, and other relief under California law.  They filed their claims in California state court, but Hertz removed the case to the United States District Court for the Northern District of California, claiming diversity jurisdiction under the Class Action Fairness Act (“CAFA”), 28  U.S.C. section 1332(d).  The plaintiffs were all citizens of California, and Hertz contended that its principal place of business was New Jersey  because that was the state where its headquarters and primary operations were centered. The district court, however, found that there was no diversity because it concluded that a plurality of Hertz’s business (about 18%, depending on how you measure it) was located in California and thus its California business “substantially predominated.”  The Ninth Circuit affirmed, but the Supreme Court held unanimously that removal was proper. Hertz Corp. v. Friend, Case No. 08-1107, 559 U.S. ___(Feb. 23, 2010).  In an opinion authored by Justice Breyer, the Court rejected the “substantially predominates” test applied by the district court and used a “nerve center” test to determine a corporation’s principal place of business.  Under that measure, the Supreme Court found, Hertz’s principal place of business was New Jersey and removal was proper.

On remand, the plaintiffs moved to certify the class under California law, but in an opinion one year and one day from the date of the Supreme Court’s decision the district court rejected their arguments.  First, it found that it could not certify the class under Rule 23(b)(2), because it provided only for equitable relief.  All of the named plaintiffs were no longer Hertz employees, and thus had no standing to seek any such relief or to represent a class seeking such relief.  Second, it found that the case could not be certified under Rule 23(b)(3), because class issues did not predominate.  After reviewing evidentiary submissions by the parties, the court concluded that the level of responsibility and the time spent performing various managerial and nonmanagerial tasks varied within the class and even from day-to-day. These duties reflected a host of responsibilities, including hiring and firing, moving cars, interviewing candidates, training, cleaning vehicles, and many other aspects of the operation of a rental car operation.  Given the required “fact-intensive inquiry into each potential plaintiff’s employment situation,” and the variation in the plaintiffs’ duties and the employer’s expectation as to those duties, the case would devolve into a series of minitrials.  Thus, the district court denied class certification.

The Bottom Line:  A trip to the Supreme Court doesn’t guarantee a big case.  Cases challenging the exempt status of managers often fail due to variations among duties by location and other business factors.