Vinole v. Countrywide Home Loans, Inc.

571 F.3d 935, 14 Wage & Hour Cas.2d (BNA) 1797, 2009 U.S. App. LEXIS 14771, 2009 WL 1926444
CourtCourt of Appeals for the Ninth Circuit
DecidedJuly 7, 2009
Docket08-55223
StatusPublished
Cited by291 cases

This text of 571 F.3d 935 (Vinole v. Countrywide Home Loans, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, 14 Wage & Hour Cas.2d (BNA) 1797, 2009 U.S. App. LEXIS 14771, 2009 WL 1926444 (9th Cir. 2009).

Opinion

CALLAHAN, Circuit Judge:

Plaintiffs-Appellants Raymond Vínole and Ken Yoder (“Plaintiffs”) appeal the district court’s order granting DefendantAppellee Countrywide Home Loans, Inc.’s (“Countrywide”) motion to deny class certification. In this wage-and-hour dispute, Plaintiffs seek to represent a proposed class of current and former Countrywide employees who are or were employed as External Home Loan Consultants (“HLCs”). They allege that Countrywide mis-classified HLCs as “exempt” outside sales employees and, as a result, Countrywide impermissibly failed to pay premium overtime and other wages. In a procedural wrinkle, Countrywide filed its motion to deny certification before Plaintiffs filed a motion for certification pursuant to Federal Rule of Civil Procedure 23 (“Rule 23”) and prior to the pretrial motion deadline and discovery cutoff.

On appeal, we consider whether the district court abused its discretion by (1) considering Countrywide’s motion to deny class certification before Plaintiffs had filed a motion to certify and prior to the pretrial and discovery cutoffs, and (2) denying class certification based on its reasoning that individual issues predominate over common issues. See Fed.R.Civ.P. 23(b)(3). We affirm. First, no rule or decisional authority prohibited Countrywide from filing its motion to deny certification before Plaintiffs filed their motion to certify, and Plaintiffs had ample time to prepare and present their certification argument. Second, the district court did not abuse its discretion by denying certification under Rule 23(b)(3) because the record supports its conclusion that individual issues predominate over common issues.

I

Countrywide is a corporation that provides mortgages to homeowners and home purchasers. It employs roughly 1,140 HLCs, like Plaintiffs Vínole and Yoder, in small satellite offices throughout California to sell loan products on its behalf. HLCs are focused on outside sales and “represent Countrywide in local communities, and specifically work with realtors, builders, and other potential business partners in order to develop business relationships *938 and obtain referral business.” They are paid entirely on commission, based on loan production. 1 Countrywide declares that it “has no control over what HLCs actually do during the day” and does not monitor how HLCs perform their work activities. It further states that “[i]t is immaterial how much, or how little time HLCs spend in the office, or working overall” and that “[i]t is up to each HLC to decide how much time they want to spend doing this, how they want to market themselves, and how much money they want to make.” HLCs can earn several hundreds of thousands of dollars, and the average annual compensation of Countrywide’s HLCs during the relevant period was over $100,000.

Countrywide applies a uniform wage exemption to HLCs, categorizing them as “exempt” outside salespeople to whom Countrywide is not obligated to pay overtime and related wages. It relies on the “outside salesperson” exemption found in the California Industrial Wage Commission’s (“I.W.C.”) Wage Order 4-2001, § 1(C), codified at Cal.Code Regs., tit. 8, § 11040, and a similar exemption in the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 213(a)(1). I.W.C. Wage Order 4-2001, § 2(M) defines an outside salesperson as a person “who customarily and regularly works more than half the working time away from the employer’s place of business selling tangible or intangible items or obtaining orders or contracts for products, services,, or use of facilities.”

Evidence in the record, in the form of declarations from HLCs regarding the amount of time individual HLCs spent inside and outside the office, suggests that the time spent in or out of the office varies greatly. Countrywide does not keep records reflecting whether any particular HLC qualifies for the exemption and does not monitor any possible change in an HLC’s exemption eligibility-it apparently only tracks the number and value of loans that HLCs close each month.

In October 2006, Plaintiffs filed a complaint in California state court, which Countrywide removed to federal court in January 2007. The First Amended Class Action Complaint (“Complaint”) alleges twelve causes of action against Countrywide on the theory that Countrywide impermissibly classified all HLCs as exempt despite the fact that most HLCs primarily engaged in non-exempt activities inside the office. 2 Plaintiffs seek to represent a putative class defined as follows:

All current and former California-based employees having a title of Loan Consultant and/or other similarly designated titles, who have worked for Defendant COUNTRYWIDE HOME LOANS, INC. within the last four (4) years from the filing of the Complaint up to and including the time of trial for this matter (“Loan Consultants”)!.]

The Complaint also proposes eight subclasses within the larger class.

On August 7, 2007, before the discovery cutoff and pretrial motion cutoff, Countrywide filed a motion to deny certification. The discovery cutoff was scheduled for November 9, 2007, and the pretrial motion *939 cutoff was scheduled for December 3, 2007. Plaintiffs had not yet filed an affirmative motion for class certification. Plaintiffs opposed the motion, arguing that (1) the motion was “not ‘ripe’ ” and was procedurally improper because Plaintiffs had yet to file a motion for class certification; and (2) class certification was substantively warranted based on the evidence they presented, which included nine declarations from HLCs that served as a “preview” of the motion for class certification that Plaintiffs’ intended to file.

On November 15, 2007, the district court granted Countrywide’s motion. First, the district court held that it was permitted to decide the question of certification on Countrywide’s motion under Rule 23 notwithstanding the fact that Countrywide had filed its motion before the pretrial motion and discovery cutoff dates. Second, the district court held that class certification was not substantively proper because Plaintiffs had not met their burden to demonstrate the applicability of one of the Rule 23(b) certification grounds. Specifically, it concluded that individual issues predominated over common issues because determining the propriety of a HLC’s exempt status would require an individualized analysis of how each HLC spent his or her time, and that Countrywide had “no common scheme or policy that would diminish the need for individual inquiry.” (Order at 5, Nov. 15, 2007.)

After entry of the district court’s order, Plaintiffs successfully petitioned this court for permission to file an interlocutory appeal pursuant to Federal Rule of Civil Procedure 23(f). 3

II

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571 F.3d 935, 14 Wage & Hour Cas.2d (BNA) 1797, 2009 U.S. App. LEXIS 14771, 2009 WL 1926444, Counsel Stack Legal Research, https://law.counselstack.com/opinion/vinole-v-countrywide-home-loans-inc-ca9-2009.