Kudatsky v. Tyler Technologies

Background

Aaron Kudatsky worked for Tyler Technologies as an ERP Implementation Consultant from July 2016 through March 2019. He alleged that Tyler treated implementation consultants as salaried employees exempt from overtime, even though they worked overtime. His complaint asserted claims under the Fair Labor Standards Act, California overtime law, California waiting-time and wage-statement statutes, and California’s unfair-competition law.

The court had previously conditionally certified a group under the Fair Labor Standards Act. Kudatsky then sought certification under Federal Rule of Civil Procedure 23 of a California class consisting of ERP Implementation Consultants and people with similar job duties or titles who worked in California at any time during the four years before the case was filed.

Class-certification analysis

Class certification allows a representative plaintiff to litigate specified issues on behalf of a defined group. The court focused the certification decision on one issue: whether Tyler properly classified ERP Implementation Consultants as administratively exempt from overtime and other California labor laws.

The administrative exemption generally applies when an employee performs qualifying office or non-manual work related to business operations, regularly uses discretion and independent judgment, performs specialized work under general supervision, spends more than half of working time on exempt tasks under California law, and earns the required minimum salary. The federal and California standards were described as nearly identical, except that California law includes the more-than-half-of-working-time requirement.

The court found that common proof could address the exemption issue for regular implementation consultants. Tyler acknowledged that software implementation made up most of these consultants’ work. The consultants generally used Tyler’s structured tools, scripts, forms, agendas, training materials, and sample data while assessing client needs, configuring software, testing it, and training clients. The court concluded that variations in customers, software modules, supervision, and consultant experience did not fundamentally change the consultants’ primary duties.

The court also found that common evidence could address whether the consultants’ work was directly related to management policies or general business operations and whether they exercised discretion and independent judgment. A fact finder could determine, using common evidence, whether the consultants assisted clients with core administrative operations or instead primarily installed, troubleshot, and maintained Tyler’s products.

The court reached a different conclusion for senior consultants. Their additional duties included mentoring newer consultants and independently creating and distributing training materials for consultants and clients. The court considered those responsibilities materially different because they involved greater autonomy, leadership, and discretion. Senior consultants therefore could not be certified in the same class as regular implementation consultants.

Other Rule 23 requirements

The court found that Kudatsky’s claims were typical because he worked in California as an ERP Implementation Consultant during the class period and alleged injuries from the same source as the other class members. It also found no conflict between his interests and those of the proposed class and no indication that he or his counsel would fail to prosecute the case vigorously.

The court found class treatment superior for the exemption issue because individual litigation would be inefficient and resource-intensive, and few other California individual actions appeared likely. It found the proposed class sufficiently numerous based on the alleged 200 consultants who worked in California while living elsewhere and 27 additional people who lived and worked at least part of the time in California. Tyler’s records could identify the class members.

Disposition

The court granted the motion to certify a class of regular ERP Implementation Consultants who worked in California during the class period on the issue of whether they were properly classified as exempt. It denied the request to include senior consultants in that class. It held certification of the other claims—the overtime, wage-statement, waiting-time, and unfair-competition claims—in abeyance pending a trial on the certified exemption issue. The court granted approval of the class notice and appointed Nichols Kaster, LLP, as class counsel.