Opinion
A153962
02-26-2020
JOSE F. ANDINO, Plaintiff and Appellant, v. KAISER FOUNDATION HOSPITALS, Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Alameda County Super. Ct. No. RG11580548)
The trial court granted Kaiser Foundation Hospitals' (Kaiser or company) motion to decertify a class of hourly employees who alleged they were not compensated for all time worked because the company rounded their time entries. The court determined plaintiff Jose F. Andino (plaintiff) proposed no manageable plan for proving Kaiser's timekeeping system violated California law.
We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Kaiser operates hundreds of medical facilities in California. It employs thousands of hourly employees in numerous positions across many departments, from pharmacies to landscaping. These employees clock in and out for shifts and meal periods using a phone-based timekeeping system. "Shift tolerance windows" are a feature of the company's timekeeping system, and the product of negotiation with employee unions. Shift tolerance windows allow employees to clock in and out during six-minute windows before and after shift start and end times; employees who clock in or out during these windows are paid based on the scheduled shift. For example, an employee would be considered to have started his shift at 9:00 a.m. as long as he clocked in between 8:54 a.m. and 9:06 a.m.
Kaiser refers to shift tolerance windows as a grace period; plaintiff uses the term rounding windows. Because the characterization of the timekeeping policy is disputed, we use the terms shift tolerance windows, or windows. Before December 2008, the shift tolerance window was seven minutes in some locations.
There is significant variation in how shift tolerance windows are implemented across the company, i.e., which phones employees use to clock in and out, and the proximity from the phones to the employees' workplace. When work begins and ends also varies from department to department. In some departments, such as housekeeping or nursing, work cannot begin until the shift commences. In certain departments, work winds down before the shift ends.
Complaint and Class Certification
Plaintiff worked at Kaiser for two and a half years. In 2011, he filed a putative class action lawsuit against Kaiser, alleging he was underpaid due to the company's practice of rounding time. The operative second amended complaint alleged several causes of action, including claims for underpayment of hourly and overtime wages. As pertinent here, plaintiff's theory was Kaiser allowed and encouraged hourly employees to work during shift tolerance windows but paid them only for their scheduled shifts. According to plaintiff, this rounding policy "benefitted the company . . . $113 [million] to the detriment of employees."
The court certified a class of approximately 99,000 current and former hourly employees over a eight-year, nine-month period, premised on the predominant issues of (1) whether Kaiser's timekeeping policy operated as a grace period or a rounding policy, and (2) if so, whether that policy disproportionately favored Kaiser. In concluding the predominant question was whether the timekeeping policy was facially neutral, the court stated certification of a rounding claim was "not contingent on a showing by Plaintiff that the putative class members were actually performing work during the clocked-in time that was deleted for pay purposes." The court cautioned, however, that calling "class member by class member at different facilities" could "open the door to decertifying the class." Plaintiff's counsel assured the court: "to prove our case we don't need necessarily class members."
Plaintiff's Trial Plan
Plaintiff's trial plan urged the court to assume employees were working during shift tolerance windows, and to require Kaiser to establish otherwise. According to plaintiff, liability was presumptively established if Kaiser failed to prove employees were not working during the windows. As plaintiff explained, "Kaiser's rounding system violates California's labor laws. Individualized testimony from class members is simply not necessary to make this determination. [Plaintiff's] primary evidence consists of objective data, including timekeeping and payroll records, Kaiser corporate documents, rounding, tardiness, and attendance policies, and PMK testimony. [Plaintiff] will also submit deposition testimony from class members . . . who attested . . . they worked when clocked-in (including during rounding windows when Kaiser deleted that time)."
The court bifurcated liability and damages, and plaintiff moved for summary adjudication on several claims, including for unpaid wages and overtime. The court denied the motion. It concluded plaintiff failed to "raise, let alone favorably resolve, the threshold issue of whether the shift tolerance windows constitute grace periods."
Plaintiff continued: "[t]hough this evidence will establish Kaiser's liability in and of itself, [plaintiff is] also conducting a random, sampled, survey of class members to provide additional evidence that Kaiser cannot claim no work . . . was performed during at least a portion of the 2.5 million hours, which would be required to disprove liability." Plaintiff relied on the report of economist and statistician Dwight Steward, Ph.D., who described a methodology he intended to use to determine the existence of wage and hour violations.
Kaiser identified several problems with the trial plan. First, it argued the plan was premised on a misapplication of the law and the parties' respective burdens of proof. According to Kaiser, plaintiff's theory—that liability could be established by assuming all class members were working during shift tolerance windows—would deny Kaiser due process. Second, Kaiser argued the evidence established the timekeeping policy was a grace period, not a rounding policy.
Third, the company highlighted the individualized inquiries necessary to adjudicate liability, irrespective of whether the timekeeping system was characterized as a grace period or a rounding policy. These inquiries, according to Kaiser, would include the circumstances of each class member's employment, the timekeeping practices in that employee's department, the employee's work and clocking patterns, and whether it was possible to work during shift tolerance windows. The company argued plaintiff had presented no workable plan for addressing these individualized inquiries.
Decertification Motion
Kaiser moved to decertify the class, raising arguments similar to those in its trial plan response. The company argued liability could not be established on a class-wide basis because the threshold issue—whether the timekeeping policy was a grace period or a rounding policy—could not be decided without determining whether employees were working during shift tolerance windows. Kaiser urged the court not to presume employees were working; to do so, according to Kaiser, would deny the company due process by exempting plaintiff and class members from proving they worked without compensation. The company argued liability was not subject to common proof because of wide variation in how shift tolerance windows were implemented.
Relying on the certification order, plaintiff argued he did not have to show class members worked during shift tolerance windows. In the alternative, plaintiff claimed he could establish class members were working "with common evidence," which included (1) data showing the timekeeping system deleted more hours than it added; (2) corporate witness testimony regarding company-wide rounding, tardiness, and absence policies, including the absence of a policy prohibiting work during shift tolerance windows; (3) plaintiff and class member testimony that employees worked during shift tolerance windows; (4) expert testimony regarding the features of legal timekeeping policies; and (5) expert survey testimony. Plaintiff offered declarations from 22 class members who averred they routinely clocked in before their scheduled shift, that they performed work before their shift began, and that they were not told they could not work before their shift start time.
Accountant and consultant Kevin Taylor offered a report comparing class members' clocked-in time to their paystubs. He determined approximately 81 percent of the class experienced an overall net detrimental effect. Taylor based his analysis on the assumption that class members were working during shift tolerance windows. Steward offered a rebuttal report asserting that liability could be established with a survey asking approximately 390 class members " 'yes' or 'no' " questions about whether they worked during shift tolerance windows, whether they understood they were prohibited from working outside their scheduled shifts, and whether they were prohibited from performing such work. Plaintiff suggested Kaiser could challenge individual survey responses on cross-examination.
In reply, Kaiser argued plaintiff offered no manageable plan for determining liability. According to Kaiser, Taylor's report was based on a flawed assumption that class members were working during shift tolerance windows. Kaiser also criticized plaintiff's proposed survey, noting the results could not be extrapolated to establish liability, and that the survey would generate hundreds of "mini-trials . . . for the parties to present evidence regarding the accuracy of the survey responses."
Order Decertifying the Class
The court granted Kaiser's motion to decertify the class, concluding plaintiff's trial plan was unmanageable. First, the court determined plaintiff erred by relying on the statement in the certification order that plaintiff need not show class members were working during shift tolerance windows. It explained: "the court's statement was expressly limited to 'certification of a rounding claim.' It says nothing about what Plaintiff will ultimately be required to prove in order to prevail in the liability phase of a court trial . . . . It will be Plaintiff's burden at trial to prove his claim that the class members were not fully compensated." The court rejected plaintiff's argument that the court could assume class members were working during shift tolerance windows.
Next, the court concluded plaintiff's method for establishing liability necessitated individualized evidence on "what the class members were doing during the [shift tolerance] windows." While acknowledging plaintiff could prove Kaiser failed to pay for time worked "without examining each individual class member's experience," the court observed plaintiff had proposed no method "for doing so." The court also determined plaintiff's proposed survey would not "aid in the management of individual issues." As it explained, plaintiff intended to use the survey evidence "as 'an adjunct' to his liability showing," but "would only do so if [survey responses] could be extrapolated." The court agreed with Kaiser that the survey data could not be extrapolated and would not "yield evidence of sufficient quality."
DISCUSSION
I.
General Principles
" ' " 'Class actions serve an important function in our judicial system. By establishing a technique whereby the claims of many individuals can be resolved at the same time, the class suit both eliminates the possibility of repetitious litigation and provides small claimants with a method of obtaining redress. . . .' " [Citations.] . . . However, "because group action . . . has the potential to create injustice, trial courts are required to ' "carefully weigh respective benefits and burdens and to allow maintenance of the class action only where substantial benefits accrue both to litigants and the courts." ' " [Citations.]' [Citation.] 'The proponent must show the "class action is superior to individual lawsuits or alternative procedures for resolving the controversy." [Citations.]' [Citation.]
"The party seeking certification must establish a ' "well-defined community of interest," ' including that common questions of law or fact will predominate in the litigation. [Citation.] On the predominance issue, 'the "ultimate question" . . . is whether "the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants." [Citations.] "The answer hinges on 'whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment.' [Citation.] . . . 'As a general rule if the defendant's liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages.' [Citations.]" [Citations.]' [Citation.] Although a court may properly certify a class even if individual issues need to be considered at trial, 'class treatment is not appropriate "if every member of the alleged class would be required to litigate numerous and substantial questions determining his individual right to recover following the 'class judgment' " on common issues.' [Citation.]
"After certification, a trial court retains flexibility to manage the class action, including to decertify a class if 'the court subsequently discovers that a class action is not appropriate.' [Citations.] . . . [¶] A party moving for decertification generally has the burden to show that certification is no longer warranted, and courts have broad discretion in ruling on this issue. Trial courts ' " 'are ideally situated to evaluate the efficiencies and practicalities of permitting group action' " ' and therefore are ' " 'afforded great discretion' " ' in evaluating the relevant factors. [Citation.] However, '[d]ecertification resting on improper legal criteria or an incorrect assumption is an abuse of discretion. [Citations.] . . . We thus review only the reasons the court stated for its order, and we reverse if those reasons do not support the order.' " (Kight v. CashCall, Inc. (2014) 231 Cal.App.4th 112, 125-126.)
II.
No Abuse of Discretion in Decertifying the Class
"Generally, employees must be paid for the time they are working or are 'subject to the control of' an employer." (Silva v. See's Candy Shops, Inc. (2016) 7 Cal.App.5th 235, 253.) Two methods used by employers for computing and paying wages are relevant here. (See's Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th 889, 892, 900.) The first is a grace period. "[A] grace period (the time during which an employee punches in before his or her compensable pay is triggered) is allowed if the employee is not working or is not under the employer's control." A claim that an employee was not paid for the time during which he punched in before his compensable pay is triggered "raises factual questions involving whether the employee was in fact working and/or . . . was under the employer's control during the grace period." (Id. at p. 909.)
Plaintiff does not appear to allege a control theory of liability.
The second is a rounding policy. An " 'employer is entitled to use a rounding policy "if [it] is fair and neutral on its face and 'it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.' " ' " (Ferra v. Loews Hollywood Hotel, LLC (2019) 40 Cal.App.5th 1239, 1253, review granted Jan. 22, 2020, S259172; Troester v. Starbucks Corp. (2018) 5 Cal.5th 829, 847.) "[T]ime rounding is a practical method for calculating work time and can be used to ensure all workers are fully compensated for their work for a relevant time period. [Citation.] . . . 'Assuming a rounding-over-time policy is neutral, both facially and as applied, the practice is proper under California law because its net effect is to permit employers to efficiently calculate hours worked without imposing any burden on employees.' " (Silva v. See's Candy Shops, Inc., supra, 7 Cal.App.5th at p. 249.)
To prevail on his claims for unpaid wages, plaintiff must show class members worked during shift tolerance windows. Employees carry the "initial burden of proving they have performed work that was not compensated." (Duran v. U.S. Bank National Assn. (2014) 59 Cal.4th 1, 41.) In the trial court, plaintiff argued he was not required to prove class members worked during shift tolerance windows. The court rejected that argument, as do we.
When deciding Kaiser's decertification motion, the issue before the trial court was whether plaintiff proposed a manageable plan for establishing class members were not compensated for time worked. The court determined plaintiff's trial plan was unmanageable because it necessitated examining each individual class member. To be sure, individual issues do not render class certification inappropriate so long as such issues may effectively be managed. (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319.) But if "unmanageable individual issues do arise, the trial court retains the option of decertification." (Id. at p. 335.) Our high court has "cautioned that class treatment is not appropriate 'if every member of the alleged class would be required to litigate numerous and substantial questions determining his individual right to recover following the "class judgment" ' on common issues." (Duran v. U.S. Bank National Assn., supra, 59 Cal.4th at p. 28.) If individual issues prove unmanageable, the trial court has an obligation to decertify the class. (Id. at p. 29.) That is what happened here. The lower court decertified the class because it determined individual issues were unmanageable.
The court did not, as plaintiff claims, impose an "incorrect standard" when decertifying the class, and we reject plaintiff's characterization of the court's ruling as requiring plaintiff to proffer individualized evidence. After reviewing plaintiff's trial plan, the court determined individual issues rendered the case unsuitable for class treatment because plaintiff offered no alternative—other than presenting individualized evidence—on the issue of liability. (Dunbar v. Albertson's, Inc. (2006) 141 Cal.App.4th 1422, 1431 [no error in denying certification where court determined "particularized individual liability determinations would be necessary"].) The court considered the evidence offered by both parties and concluded plaintiff offered no manageable way of answering the essential question of what employees did during shift tolerance windows. The court did not err.
Federal district court decisions support our conclusion that the court did not err by decertifying the class. For example, in Shiferaw v. Sunrise Senior Living Mgmt., Inc. (C.D.Cal. Mar. 21, 2016, No. LA CV13-02171-JAK (PLAx)) 2016 U.S.Dist. Lexis 187548), the district court declined to certify a rounding claim because the employer demonstrated variation in what employees did after they clocked in and before their shift started. (Id. at p. *17.) Certification was improper, the court held, because "individualized inquiries" were necessary to determine whether employees were actually working or were under the employer's control "during those times when they clocked in early or clocked out late." (Ibid.)
Other district courts have ruled similarly. (See Forrand v. Fed. Express Corp. (C.D.Cal. Apr. 25, 2013, No. CV 08-1360 DSF (PJWx)) 2013 U.S.Dist. Lexis 62252 [individual factual inquiries predominated regarding whether employees were working or under the employer's control before or after their shifts]; Angeles v. U.S. Airways, Inc. (N.D.Cal Feb. 13, 2017, No. C 12-05860 CRB) 2017 U.S.Dist. Lexis 20161 *10) [decertifying grace period subclass because individualized questions predominated; noting absence of "common evidence to determine who was working, how long they were working, . . . and whether they were not paid for working"].) Here, as in Shiferaw, Forrand, and Angeles, individualized inquiries predominate.
Plaintiff agues he offered sufficient class-wide data to prove the timekeeping system was illegal. But the question before us is not whether plaintiff's evidence supports a different result, but whether substantial evidence supports the court's manageability finding. (Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1022.) " '[W]here a certification order turns on inferences to be drawn from the facts, " 'the reviewing court has no authority to substitute its decision for that of the trial court.' " ' " (Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th at p. 328.)
We do not believe plaintiff's evidence undermines the trial court's manageability finding. Relying on AHMC Healthcare, Inc. v. Superior Court (2018) 24 Cal.App.5th 1016, 1028, plaintiff suggests "timekeeping data" is dispositive on the issue of liability, because "employees were 'on the clock' " during shift tolerance windows and were not paid. The first problem with this argument is that it assumes employees were working during shift tolerance windows, an assumption unsupported by the law. (Silva v. See's Candy Shops, Inc., supra, 7 Cal.App.5th at p. 249 [expert opinion based on "unsupported assumption that employees worked during the grace periods" did not show rounding policy was unlawful]; See's Candy Shops, Inc. v. Superior Court, supra, 210 Cal.App.4th at pp. 907-908 [claim for unlawful rounding requires foundational evidence showing employees worked when they were clocked in but were not paid].) The second flaw with this argument is that AHMC does not stand for the proposition that time entries, by themselves, demonstrate class members must be paid for time spent between the clock-in time and the shift start time.
Relying on a single page of deposition testimony, plaintiff claims Kaiser "understands that the employee is working during deleted time windows." We read the deposition testimony differently. The deponent testified Kaiser would pay overtime "clocked" by the employee; the deponent did not suggest Kaiser had an understanding that employees were working during shift tolerance windows.
Plaintiff's reliance on proposed survey data does not establish the court's manageability finding was erroneous. As discussed above, plaintiff's survey proposed asking a small fraction of the 99,000 class members " 'yes' or 'no' " questions about whether they worked during shift tolerance windows, whether they understood they were prohibited from working outside their scheduled shifts, and whether they in fact were prohibited from performing such work. The court did not err by concluding the proposed survey did not offer a manageable way to determine whether class members worked during shift tolerance windows. "It is not sufficient . . . simply to mention a procedural tool; the party seeking class certification must explain how the procedure will effectively manage the issues in question." (Dunbar v. Albertson's, Inc., supra, 141 Cal.App.4th at p. 1432.)
Plaintiff did not satisfy this burden. He vaguely suggested the survey would be used "as 'an adjunct' to his liability showing," and he did not explain how the data could be extrapolated to the remainder of the class. (Dunbar v. Albertson's, Inc., supra, 141 Cal.App.4th at p. 1432 [findings as to one grocery manager could not be extrapolated to others given the variation in managers' work].) Importantly, plaintiff suggested Kaiser could challenge individual survey responses on cross-examination, rendering the survey unhelpful as a means of managing individualized inquiries. (Kight v. CashCall, Inc., supra, 231 Cal.App.4th at p. 130 [individual issues could not be resolved by questionnaire or survey where "plaintiff's factual circumstances must be considered, and cross-examination must be permitted"].)
Well after briefing was complete, plaintiff filed a letter pursuant to California Rules of Court, rule 8.254(a) stating his intention to rely on Moen v. Regents of University of California (2018) 25 Cal.App.5th 845, 853. We reject plaintiff's reliance on this case for two reasons. First, Moen was published before plaintiff filed his opening brief. Second, Moen's holding has little, if any, application to this wage and hour litigation. (Id. at pp. 856-857, 863-864.)
Plaintiff also relies on purported companywide policies permitting employees to work during shift tolerance windows. We fail to see how such policies offer a manageable plan for determining liability. To decide whether the timekeeping policy violated California law, plaintiff will need to show how the timekeeping policy was applied, which in turn entails proof of what employees were doing during shift tolerance windows. (Utne v. Home Depot U.S.A., Inc. (N.D.Cal. July 11, 2019, No. 16-cv-01854-RS) 2019 U.S.Dist. Lexis 115648 at p. *18) ["theory of liability rests upon factual findings about the practical effect of [the] . . . policy rather than upon a facial analysis of the policy"].) And at oral argument, plaintiff's counsel acknowledged some employees did not work during shift tolerance windows.
To the extent plaintiff suggests the court conflated damages and liability, we are not persuaded. Plaintiff is correct that "[d]efenses that raise individual questions about the calculation of damages generally do not defeat certification," but our high court has noted that "a defense in which liability itself is predicated on factual questions specific to individual claimants poses a much greater challenge to manageability." (Duran v. U.S. Bank National Assn., supra, 59 Cal.4th at p. 30.) Here, Kaiser's defense to liability—that the timekeeping policy is a grace period because class members were not working during shift tolerance windows—is predicated on "factual questions specific to individual claimants." (Id. at p. 30; Utne v. Home Depot U.S.A., Inc., supra, 2019 U.S.Dist. Lexis 115648 at p. *11. [nature of employees' pre-shift activities was not a "damages issue"].)
Plaintiff's reliance on Hall v. Rite Aid Corp. (2014) 226 Cal.App.4th 278 is misplaced. In Hall, the trial court decertified the class based on an improper assessment of the merits of the plaintiff's theory rather than on whether the theory was amenable to class treatment. (Id. at p. 282.) Here, the court did not conclude plaintiff's liability theory was "unmeritorious." (Id. at p. 292.) Rather, it determined—based on a thorough examination of the evidence and of plaintiff's trial plan—that plaintiff offered no manageable way of proving liability at trial. Plaintiff's reliance on other cases, including Donohue v. AMN Services, LLC (2018) 29 Cal.App.5th 1068, review granted March 27, 2019, S253677, does not alter our conclusion.
We decline to consider plaintiff's argument that the decertification motion was procedurally improper. That argument is not set out under a distinct heading. (Provost v. Regents of University of California (2011) 201 Cal.App.4th 1289, 1294.) Plaintiff's remaining arguments have been considered and merit no further discussion, including his argument that the court should have given him an opportunity to submit a new trial plan rather than decertifying the class.
DISPOSITION
The decertification order is affirmed. Kaiser is awarded costs on appeal. (Cal. Rules of Court, rule 8.278(a)(2).)
/s/_________
Jones, P. J. WE CONCUR: /s/_________
Needham, J. /s/_________
Burns, J.