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Ross v. RBS Citizens, N.A., No. 10-3848 (7th Cir. Jan. 27, 2012)

The defense bar has been so high on its success in defeating the Wal-Mart Stores v. Dukes class action last spring that its lawyers fanned out across the county, trying to persuade judges everywhere that the era of employment class actions was over. Yet the Seventh Circuit held against this tide, affirming certification of an Illinois state-law Rule 23 class action in a wage-and-hour case, finding that the conditions of Rule 23(c)(1)(B) were met.

Ross v. RBS Citizens, N.A., No. 10-3848 (7th Cir. Jan. 27, 2012): A group of current and former assistant managers ("ABMs") at more than 100 bank branches challenged their classification as "exempt" under federal and state law. Other plaintiffs who were hourly employees (such as tellers) also challenged other bank policies, including "that Charter One has an unofficial policy of denying overtime pay to its non-exempt employees by: (1) instructing them not to record hours worked per week over forty; (2) erasing or modifying recorded overtime hours; (3) giving them 'comp time' instead of paying overtime; and (4) requiring them to perform work during unpaid breaks."

The district court certified two classes (the ABMs and the hourly employees) for damages under Rule 23(b)(3), and the Seventh Circuit affirms. The case, before the panel on a Rule 23(f) interlocutory appeal, was limited by the Court to "the sole issue of whether the district court complied with Rule 23(c)(1)(B)," which requires that the district court "define the class and the class claims, issues, or defenses, and . . . appoint class counsel under Rule 23(g)."

The panel adopts the holdings of the Third and First Circuits (Wachtel ex rel. Jesse v. Guardian Life Ins. Co. of Am., 453 F.3d 179 (3d Cir. 2006), and In re Pharm. Indus. Average Wholesale Price Litig., 558 F.3d 24 (1st Cir. 2009)), requiring that the district court articulate two elements in its class certification orders to meet the rule's requirements: "(1) a readily discernible, clear, and precise statement of the parameters defining the class or classes to be certified, and (2) a readily discernible, clear, and complete list of the claims, issues or defenses to be treated on a class basis."

The panel holds on the first element that the district court did not err in defining the class as including those bank employees "subject to defendants' unlawful compensation policies," even if the certification precedes that actual finding of liability. Here, the district court "found that all current and former employees who have worked at an Illinois Charter One location within the last three years were subject to an unlawful overtime policy, and as such, qualify as class members." Thus all current and former employees in these job classes were on notice that their rights were subject to adjudication in this case.

The panel also holds on the second element that the certification of just two claims for trial was sufficient to meet this condition: whether the hourly wage employees were subject to a company policy that intentionally failed to pay lawfully earned overtime, and what the ABM's primary duties were (bearing on the issue of whether they were exempt or non-exempt).

The panel addition ally affirms Rule 23(a)(2) commonality, distinguishing the Dukes decision on both the size of the class (1,129 vs. 1.5 million) and the type of proof (the challenged wage and hour practices of misclassification and abuse of the hourly workers "requires no proof of individual discriminatory intent," as under Title VII). "Ultimately, the glue holding together the Hourly and ABM classes is based on the common question of whether an unlawful overtime policy prevented employees from collecting lawfully earned overtime compensation."

The court finally rejects an argument based on Dukes that is was broadly entitled to raised individual defenses as to each class member: "Misreading Dukes, Charter One also contends that it has a statutory right to present its affirmative exemption defenses on an individualized basis, and thus, there is no commonality. However, the Dukes passage the defendant cites in support of its argument discusses how the Ninth Circuit improperly certified a Rule 23(b)(2) class that sought equitable relief. In so ruling, the Court struck down the Ninth Circuit's attempt to circumvent 42 U.S.C. § 2000e-5(g)(2)(A) by holding that Wal-Mart had a statutory right to avoid equitable damages by showing that 'it took an adverse employment action for any reason other than discrimination.' Dukes, 131 S. Ct. at 2560-61 (emphasis added). Charter One has no such statutory right because both classes are seeking only monetary relief through a Rule 23(b)(3) class."

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