Opinion
CASE NO. 13-CV-1565-BAS (PCL)
04-06-2016
NAOMI TAPIA, individually and on behalf of other members of the general public similarly situated, Plaintiff, v. ZALE DELAWARE INC., Defendant.
ORDER GRANTING MOTION FOR CLASS CERTIFICATION [Doc. No. 44]
Plaintiff Naomi Tapia moves to certify two classes of hourly employees in her lawsuit against Defendant Zale Delaware Inc. for alleged violations of California's labor laws and the federal Fair Labor Standards Act (FLSA). The Court finds this motion suitable for determination on the papers submitted and without oral argument. See Civ. L.R. 7.1(d)(1). Having considered the briefs, evidence, and controlling law, the Court grants the motion. The Court finds that Plaintiff has demonstrated that common questions of law and fact predominate over individual issues, such that a class action is a superior method for adjudicating the State law claims. Plaintiff has also met the standard to conditionally certify a class under the FLSA.
The Court considered all the arguments. To the extent that this Order does not discuss every point raised by counsel, the Court concluded that it was unpersuasive or immaterial at this time. For example, the Court declines to rule on the parties list of evidentiary objections. "Since a motion to certify a class is a preliminary procedure, courts do not require strict adherence to the . . . Federal Rules of Evidence." Arredondo v. Delano Farms Co., 301 F.R.D. 493, 505 (E.D. Cal. 2014) (citing Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974)).
I. Background
Plaintiff Tapia was a sales representative for Defendant Zale, a jewelry store, between May and November 2012. Tapia Decl. ¶ 3 (ECF 44-3). She worked at the Imperial Valley Mall location in El Centro. Compl. ¶ 29.
Plaintiff's First Amended Complaint alleges that Defendant violated several provisions of the California Labor Code by failing to issue complete and accurate wage statements, pay overtime compensation, and provide meal and rest breaks. She also seeks relief under the FLSA. Plaintiff further alleges that these failures violate California's Unfair Competition Law and Private Attorneys General Act.
The Sullivan Law Group, APC, filed the action as a potential class action. The parties conducted limited discovery on the class certification issue. In addition to taking the depositions of the Plaintiff and two of Defendant's corporate representatives, both sides hired experts to analyze a sample of payroll statements. Defendant filed declarations from several store managers to contradict Plaintiff's testimony.
Plaintiff seeks to certify a California class of 1,600 current and former hourly, nonexempt employees. Plaintiff identifies six issues: (1) failure to pay overtime compensation; (2) failure to provide wage statements that accurately state the overtime rate; (3) failure to provide a timely meal period, alteration of records, and failure to pay the statutory penalty; (4) unlawful meal period policy; (5) unlawful rest period policy; and (6) a derivative claim for former employees.
Plaintiff also seeks to certify a nationwide class of 20,000 retail workers, based on her allegation that Defendant failed to pay overtime wages in violation of the FLSA.
II. Standard for Class Certification Pursuant to Rule 23
The "class action device was designed to allow an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only." Califano v. Yamasaki, 442 U.S. 682, 700-01 (1979). "[A] class action[] may only be certified if the trial court is satisfied, after a rigorous analysis," that Plaintiff has established the four requirements of Federal Rule of Civil Procedure 23(a) and one of the subdivisions of Rule 23(b). Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 614 (1997); Gen. Tel. Co. of the SW v. Falcon, 457 U.S. 147, 161 (1982).
The four prerequisites of Rule 23(a) are that "(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law of fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interest of the class."
As relevant to this case, Plaintiff must also demonstrate that her action is appropriate under Rule 23(b)(3). This subdivision permits a class action when "the court finds that the questions of law or fact common to the class members predominate over any questions affecting only individual members" and "that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. Rule Civ. P. 23(b)(3).
"The class determination generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff's causes of action." Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551-52 (2011) (internal quotation marks and citation omitted). But "Rule 23 grants courts no license to engage in free-ranging merits inquiries at the certification stage." Amgen, Inc. v. Conn. Ret. Plans & Trust Funds, 133 S. Ct. 1184, 1194-95 (2013).
III. Analysis of Rule 23 Requirements for the California Class
A. Number of Potential Class Members
Plaintiff reports that there are 1,660 employees in the proposed class. Defendant does not dispute that joinder of all members would be impractical.
The Court finds that the number of employees involved satisfies Rule 23(a)(1). Ikonen v. Hartz Mountain Corp., 122 F.R.D. 258, 261-62 (S.D. Cal. 1988) (threshold number is forty members) (citations omitted).
B. Common Issues
To satisfy Rule 23(a)(2), Plaintiff must show that there are common questions of law or fact. The claims "must depend upon a common contention . . . that is capable of class resolution - which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke." Wal-Mart, 131 S. Ct. at 2551; Abdullah v. U.S. Sec. Assocs., 731 F.3d 952, 957 (9th Cir. 2013).
As noted, Plaintiff lists six common issues. Defendant's opposition brief combined the issues to five. The Court agrees with Defendant's reorganization of Plaintiff's list, but concludes that Plaintiff's claims meet the commonality requirement of Rule 23(a)(2). Mazza v. Am. Honda Motor Co., Inc., 666 F.3d 581, 589 (9th Cir. 2012) ("commonality only requires a single significant question of law or fact").
1. Failure to Pay Overtime Compensation
Plaintiff asserts that Defendant has a standard policy that deducts time from its employees' records before it pays wages. Plaintiff alleges that by shaving minutes from the time records, Defendant fails to pay overtime wages in violation of State law. California Labor Code § 510(a) provides: "Eight hours of labor constitutes a day's work. Any work in excess of eight hours in one workday . . . shall be compensated at the rate of no less than one and one-half times the regular rate of pay for an employee." See also Cal. Code Regs. tit. 8, § 11040(7)(A) (2016) (requiring employer to keep "accurate information," including "when the employee begins and ends each work period" and "total daily hours worked") (hereinafter IWC Wage Order 4).
The Industrial Welfare Commission (IWC) formulates employment regulations called "Wage Orders." Morillion v. Royal Packing Co., 22 Cal. 4th 575, 581 (2000). "The IWC's wage orders are to be accorded the same dignity as statutes." Brinker Restaurant Corp. v. Super. Ct., 53 Cal. 4th 1004, 1027 (2013). Both must be liberally interpreted to give effect to purpose of protecting and benefitting employees. Id. at 1026-27.
The Court finds that Plaintiff's overtime compensation claim presents a common issue suitable for class resolution. Namely, whether Defendant fails to provide overtime compensation for employees who work more than 8 hours a day or 40 hours a week.
First, Plaintiff established that Defendant uses the same "Point of Sale" computer system to record the time its hourly employees work at the stores. See Martin Depo. 20-21 (ECF 44-6). Defendant's Timekeeping manual confirms that all employees must use the Point of Sale computer to clock in and clock out to record the "actual time worked." Engleson Decl. Ex. G (on page 2, the manual instructs employees to clock in at the start of and end of their shifts, as well as during eligible meal breaks) (ECF 44-11). Thus, Plaintiff is able to determine from Defendant's time records - to the minute - the time every employee in the class clocked in and clocked out. Engleson Decl. ¶ 14 (ECF 44-4).
Next, Plaintiff relies on the Itemized Wage Statements produced by Defendant. These Itemized Wage Statements show the amount of regular and overtime compensation that Defendant paid to each employee for each pay period. Id. ¶ 13. By matching the employee's identification number on the wage statement to the time records, Plaintiff is able to evaluate whether each employee lost overtime compensation. Id. ¶ 12. A single forensic expert can create an algorithm to analyze every time and wage record to ascertain which specific employee lost regular or overtime pay due to Defendant's uniform compensation policy. Id. ¶¶ 14-15.
Plaintiff uses Tapia's payroll records to illustrate how the standard timekeeping system operates to deprive hourly employees of overtime pay. Id. ¶¶ 7-10, 31. On October 14, 2012, Tapia worked nine hours and three minutes. Id. ¶ 9 (citing Ex. C) (Tapia's time record). Under California law, Tapia was entitled to earn time and a half for the one hour and three minutes she worked over the eight-hour day. Cal. Labor Code § 510. Turning to her corresponding wage statement Defendant "shaved" the time to nine hours, thereby depriving Plaintiff of three minutes of overtime pay on that day. Engleson Decl. ¶¶ 9-10 (citing Ex. F).
The Court concludes Plaintiff has shown that Defendant's uniform payroll policy and practice is suitable for class certification. Plaintiff has fulfilled the commonality element of Rule 23(a)(2) by establishing that "the class members' claims 'depend upon a common contention' such that 'determination of its truth or falsity will resolve an issue that is central to the validity of each claim in one stroke.'" Jimenez v. Allstate Ins. Co., 765 F.3d 1161, 1164-65 (9th Cir. 2014) (citations omitted).
In an effort to persuade the Court not to certify a class, Defendant argues the merits of its liability. Defendant raises the affirmative defense that its "rounding" practice is legal. See's Candy Shops, Inc. v. Super. Ct., 210 Cal. App. 4th 889 (2012). The argument fails for two reasons.
First, this is not the time to conduct "an in-depth examination of the underlying merits" or "to determine whether class members could actually prevail on the merits of their claims." Ellis v. Costco Wholesale Corp., 657 F.3d 970, 983 n.8 (9th Cir. 2011). "To hold otherwise would turn class certification into a mini-trial." Id.; Jimenez, 765 F.3d at 1166 n.5 ("Whether any of these common questions are ultimately resolved in favor of either side is immaterial at this class certification stage") (citing In re Whirlpool Corp. Front-Loading Washer Prods. Liab. Litig., 722 F.3d 838, 857 (6th Cir. 2013) (noting that if a defendant has a strong argument against classwide liability, it "should welcome class certification" as that allows it the opportunity to resolve claims of all class members at once.")).
Second, it is a question of fact whether an employer's method of rounding "on average, favors neither overpayment nor underpayment." See's Candy, 210 Cal. App. 4th at 902 (citations omitted). Even if it were necessary for the Court to analyze the rounding issue to decide the class certification motion, the parties have presented conflicting evidence about the long-term impact of Defendant's practice on the hourly workers. The record shows that this fact question can be resolved in the instant class action.
California adopted the federal standard for rounding. Id. at 902 (citing 29 C.F.R. 785.48 (2011)). "As long interpreted by the federal courts, this 'regulation permits employers to use a rounding policy for recording and compensating employee time as long as the employer's rounding policy does not 'consistently result[] in a failure to pay employees for time worked.'" Id. (quoting Alonzo v. Maximus, Inc., 832 F. Supp. 2d 1122, 1126 (C.D. Cal. 2011)) (emphasis added). If the evidence shows that an employer's rounding policy "systematically undercompensate[s] employees," then the employer will have failed "to compensate the employees properly for all the time they have actually worked." Id.
Defendant argues that its payroll policy is neutral on its face and in practice. Defendant points to testimony by its corporate representative explaining the Point of Sale computer system. Martin Depo. 20-21 (ECF 44-6); id. 67 ("punches are rounded" and "[b]oth [the old and new software] systems use the same approach towards rounding."). Defendant's Timekeeping manual confirms that "[d]uring the system calculation to add the hours worked for the day, the system rounds time to the nearest quarter hour." Engleson Decl. Ex. G at 3 (ECF 44-11).
Nonetheless, the parties presented competing expert reports on the impact of on hourly employees. The statistical analysis of the wage and time evidence demonstrates that Plaintiff has raised a common question that will produce a common answer to a crucial issue. Wal-Mart, 131 S. Ct. at 2552. By going beyond the allegations in her complaint, Plaintiff has "affirmatively established" that the overtime compensation claim meets the commonality requirement.
Defendant's expert concludes that both systems have a neutral impact because, on average, the employees in the sample gained from two to twenty seconds per day. Aukstikalnis Decl. ¶¶ 13-14 (ECF 49-17). Dr. Aukstikalnis analyzed the Plaintiff's personnel records and found that Tapia gained two minutes of compensable time due to the time-rounding system. Id. ¶ 16.
Plaintiff's expert analyzed a sample of wage statements and found that employees were not being fully compensated. Fountain Decl. ¶¶ 818 (ECF 503). Dr. Fountain's analysis showed that 56% of the employees were disadvantaged by the Defendant's method and that employees lost eightythree hours of overtime compensation. Id. ¶ 17. In his opinion, neither of the Defendant's two computer systems have a neutral effect. Id. ¶ 18.
In sum, Plaintiff identified a common question of California labor law and presented sufficient evidence to support a finding that other employees may have suffered a similar loss. Wal-Mart, 131 S. Ct. at 2551; Jimenez, 765 F.3d at 1164-65.
2. Inaccurate Wage Statement
Plaintiff asserts that the accuracy and completeness of Defendant's wage statements presents another common issue suitable for class treatment. Specifically, Plaintiff alleges that employees cannot ascertain from the face of their paychecks the total hours worked and the overtime rate of pay.
California law requires an employer to list "all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee." Cal. Lab. Code § 226(a)(9).
In 2002, the Division of Labor Standards Enforcement (DLSE) issued an opinion letter concerning the "explicit requirements" of the itemized wage statement statute. Dept. of Industrial Relations, DLSE, Acting Chief Counsel Anne Stevason, Op. Letter No. 2002.05.17, at 2, Lab. Code § 226 (May 17, 2002), http://www.dir.ca.gov/dlse/opinions/2002-05-17.pdf. That letter states: "As a general rule, the obligation to list the total hours worked during the pay period can only be satisfied by listing the precise, actual number of hours worked." Id. at 3 (emphasis added); id. at 5 ("total hours worked necessarily includes all actual non-overtime hours and all overtime hours worked") (emphasis in original). The DLSE explained that "[t]he reason for this requirement is simple enough - it is designed to provide the employee with a record of hours worked, and to assist the employee in determining whether he [or she] has been compensated properly for all of his or her hours worked." Id. at 3. "The failure to list the precise number of hours worked during the pay period conflicts with the express language of the statute and stands in the way of the statutory purpose." Id.
This agency enforces California's labor laws. "'The DLSE's opinion letters, while not controlling upon the courts by reason of their authority, do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance.'" Abdullah, 731 F.3d at 958 (quoting Brinker, 53 Cal. 4th at 1029 n.11).
The Court is persuaded that Plaintiff's claim that Defendant violated § 226(a)(9) is a legal issue that can be determined on a class basis. Boyd v. Bank of Am. Corp., 300 F.R.D. 431, 440-41 (C.D. Cal. 2014).
Defendant does not dispute that the company uses the same format for all hourly workers' paychecks. See Peek Depo. 99 (ECF 44-5). This provides Plaintiff with a common means of proof.
Defendant uses decimals, rather hours and minutes to reflect time. For example, Tapia's August 9, 2012 statement listed her hours as "17.25." Id. 102-04; Engleson Decl. Ex. E (ECF 44-9). Defendant's corporate representative was uncertain whether that meant seventeen hours and twenty-five minutes or seventeen hours and one quarter of an hour (fifteen minutes). Peek Depo. 102-04. Consequently, this uniform policy and practice presents a common question.
As to the second alleged flaw, "hourly rate of pay," Defendant does not dispute that its standard wage statement does not expressly list the overtime rate. Engleson Decl. ¶ 16 & Ex. F (ECF 44-4 & 44-10). Instead, Defendant suggests that its statements implicitly comply because the employee can calculate the overtime rate by using simple math.
The parties devote large parts of their briefs to the relative merits of this position. The Court, however, declines to resolve the ultimate question of whether Defendant's policy is lawful or unlawful. Jimenez, 765 F.3d at 1166 n.5; Ellis, 657 F.3d at 983 n.8; Faulkinbury v. Boyd & Assocs. Inc., 216 Cal. App. 4th 220, 233-34 (2013). For purposes of Rule 23(a)(2), the Court finds that the action raises common questions of fact and law about the accuracy and completeness of Defendant's wage statements. Boyd, 300 F.R.D. at 440-41.
3. Meal Period Policy
Plaintiff next alleges that Defendant's policy on when an employee may take her thirty minute meal break violates California law. Cal. Lab. Code § 226.7(b) (incorporating the rule set by the applicable IWC Wage Order). Plaintiff further alleges that Defendant fails to inform its employees of their right to a penalty, equal to one additional hour of pay, for each day that the meal period is not provided. Id. § 226.7(c); IWC Wage Order 4 ¶ D. She contends that both issues center on common questions of law.
(a) Timing of First Meal Break
IWC Wage Order 4 applies to salespersons. It states that "[n]o employer shall employ any person for a work period of more than five (5) hours without a meal period of not less than 30 minutes." Id. ¶ A. In Brinker, the California Supreme Court analyzed similar language in Labor Code § 512(a) and held that it "requires a first meal period no later than the start of an employee's sixth hour of work." 53 Cal. 4th at 1041; id. at 1042 ("first meal periods must start after no more than five hours") (footnote omitted).
Plaintiff contends that Defendant's policy does not provide a meal break until after five hours of work, instead of before the end of the fifth hour. Plaintiff cites a Timekeeping: Meal and Rest Breaks handout, which states that "[h]ourly employees may be eligible for meal and rest breaks based on their scheduled hours and the state/provincial requirements for their store location." Engleson Decl. Ex. M. at 1 (ECF 44-4). "Unless otherwise required by state/provincial law, employees are generally provided an uninterrupted, unpaid 30-minute meal period after 5 consecutive scheduled hours of work depending on business needs, security and adequate coverage." Id. (emphasis added). A chart summarizes the specific rules of the various States and requires store managers to adhere to it. The listing for California states "30 minutes after 5 hours." Id. at 2 (emphasis added). Plaintiff contends this uniform, written policy is unlawful, and therefore eminently suited to class treatment. Brinker, 53 Cal. 4th at 1032-33.
Defendant accuses Plaintiff of ignoring other passages in the written policies showing it complies with the meal period law. For example, the Timekeeping manual also instructs store managers to "[s]chedule meal breaks between the 3rd and 5th hour of work or as close as possible to the middle of an employee's shift." Id. at 2.
Defendant cites to three additional documents, however, it does not point the Court to any specific language. The Court reviewed the documents attached to Peek's deposition. Long Decl. Ex.2 (ECF 49-3 at 22, 29, 30). --------
Having reviewed the evidence, the Court agrees with Plaintiff that class certification is appropriate on her claim that Defendant's written policy violates the law governing the timing of the first meal period. The Court emphasizes that this is not the time to decide the merits of whether Defendant's policy complies with California's labor laws. Eisen, 417 U.S. at 178 ("In determining the propriety of a class action, the question is not whether the plaintiff . . . will prevail on the merits.") (citation omitted). For the purpose certifying a class, it is sufficient that Defendant has a single policy. Plaintiff relies on a "common contention . . . that is capable of classwide resolution - which means that determination of its truth or falsity will resolve an issue central to the validity of each of the claims in one stroke." Wal-Mart, 131 S. Ct. at 2551 (citing a law review for proposition that there be "common answers" driving the resolution of the litigation).
(b) Information about Meal Period Penalty Payment
Plaintiff raises a related claim, namely, that Defendant never informs the employees of their rights to a meal period penalty payment.
California Labor Code § 226.7(c) states that if the employer fails to provide an employee with a meal period in accordance with State law, "the employer shall pay the employee one additional hour of pay at the employee's regular rate of compensation for each workday that the meal or rest or recovery period is not provided."
Plaintiff analyzed the sample of payroll records and cites three examples when an employee worked more than five hours, yet the corresponding wage statements do not show payment of the statutory penalty. Engleson Decl. ¶¶ 24-25 & Exs. I, J, K (ECF 44-4 & 44-13 to 44-15); see Peek Depo. 101-02 (explaining where penalty payment would appear on wage statement) (ECF 44-5).
Defendant contends that it is not required to educate employees about penalty payments. In addition, Defendant challenges Plaintiff's evidence with declarations by two managers. Long Decl. Exs. 7 & 11 (ECF 49-8 & 49-12). The Modesto store manager states that, "to my knowledge" employees "who were not able to take a lunch break or took a late lunch . . . received a meal period penalty of one hour's pay." Harmon Decl. ¶ 15 (ECF 49-8). A manager at the Sherman Oaks store testifies that if one of her employees is unable to take a timely break, she "will call Human Resources and make sure the employee is compensated with a meal period penalty payment for missing their break." Melecio Decl. ¶ 23 (ECF 49-11).
The Court concludes that this issue raises common issues that can be jointly tried. Whether or not the Plaintiff will prevail on the theory of liability, she alleges a uniform policy, or lack thereof, that is consistently applied. Conversely, Defendant might ultimately prevail on its theory that it has no legal duty to inform its employees. Regardless, this is the type of question that is "routinely and properly" found suitable for class certification. Brinker, 53 Cal. at 1033; Faulkinbury, 216 Cal. App. 4th at 234 (court does not decide if policy violates the law, but whether defendant's liability can be determined by facts common to all class members).
4. Rest Period Policy and Practice
Plaintiff alleges that Defendant's standard policy and practice deprives its employees of their statutory right to paid rest periods.
California law prohibits an employer from requiring an employee to work during a rest period. Cal. Lab. Code § 226.7(b). The statute incorporates the standards of the applicable Wage Order to determine the length and timing of the breaks. Id. Here, IWC Wage Order 4 dictates that the "authorized rest period time shall be based on the total hours worked daily at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof." Cal. Code Regs. tit. 8, § 11040(12)(A) (2016) (emphasis added); Faulkinbury, 216 Cal. App. 4th at 236. An employee who works less than three and one-half hours, however, is not entitled to a rest break. Cal. Code Regs. tit. 8, § 11040(12)(A).
The phrase "'major fraction' long has been understood - legally, mathematically, and linguistically - to mean a fraction greater than one-half." Brinker, 53 Cal. 4th at 1028 (footnote omitted). The California Supreme Court restated the complete rule as follows: "Employees are entitled to 10 minutes rest for shifts from three and one-half hours to six hours in length, 20 minutes for shifts of more than six hours up to 10 hours," and so on. Id.
The Brinker decision also held that the employer must authorize and permit rest breaks, but is not obligated to police breaks or to prevent an employee from working through a break. 53 Cal. 4th at 1028, 1038.
If an employer violates the rest period statute, it must pay the employee a penalty equal to one hour regular pay. Cal. Lab. Code § 226.7(c); Cal. Code Regs. tit. 8, § 11040(12)(B).
Plaintiff contends that Defendant's written policy does not comply because it omits the qualifying phrase "major fraction thereof." Plaintiff cites the Defendant's U.S. Employee Handbook which states under the heading "TAKING A BREAK": "You will generally receive a paid 10-minute rest period for every four hours worked, or as required by state or local law." Engleson Decl. Ex. H (ECF 44-12).
Defendant contends that its complete rest break policy is covered in the Operations Manual. Although that document is not distributed to employees, it is available online. Long Decl. Ex. 2 (Peek Depo. 75-86) (ECF 49-3). Defendant uses the Operations Manual to train its managers (who are members of the proposed class). Page 5 of that document states that company policy is "abide by applicable rest period laws." Long Decl. Ex. 2 (ECF 49-3 at 42). It lists California's requirement as "10 minutes for each 4 hours worked, or major fraction thereof, and as close to the middle of the work period as possible. Not required if shift is less than 3½ hours." Id. (emphasis added).
In Brinker, 53 Cal. 4th at 1032, the California Supreme Court affirmed the trial court's decision to certify a rest break class because the employer had a uniform policy that failed "to give full effect to the 'major fraction' language." Applying that principle to the instant motion, the Court finds that Plaintiff's rest break claim meets the commonality requirement. Defendant's statements of the rule may well comply with the IWC Wage Order. Nonetheless, that question and its answer can be litigated by common proof in a single action.
In a further attempt to defeat the motion, Defendant points to the declarations of several of store managers. Overall, the managers testify that they know the official rule and instruct the retail workers to take rest breaks. E.g., Jensen Decl. ¶ 4 (ECF 49-9). Defendant argues that Tapia's testimony that she did not know the rule and was not permitted to take rest breaks raises an issue individual to her. Brinker, 53 Cal. 4th at 1052 (absent a uniform policy, class action could not proceed on basis of "anecdotal evidence of a handful of individual instances").
This argument essentially asks the Court to weigh fact evidence. After Brinker, however, testimony that some employees regularly took rest breaks while others did not bears on the issue of individual damages. Faulkinbury, 216 Cal. App. 4th at 237. "Damage calculations alone cannot defeat certification." Leyva v. Medline Inds. Inc., 716 F.3d 510, 513 (9th Cir. 2013). When deciding the procedural motion of whether to certify a class, the Court focuses on whether the lawfulness of an employer's policy can be determined on a classwide basis. "Claims alleging that a uniform policy consistently applied to a group of employees is in violation of the wage and hour laws are the sort routinely, and properly, found suitable for class treatment." Brinker, 53 Cal. 4th at 1033 (citations omitted).
5. Former Employees
California law also provides a penalty payment when an employer wilfully fails to pay the final wages of an employee at the time he is discharged or quits. Cal. Lab. Code § 203. Known as a "waiting time" penalty, courts treat this class claim as derivative of a plaintiff's other labor law claims. McCowen v. Trimac Transp. Servs. (Western), Inc., 311 F.R.D. 579, 586 (N.D. Cal. 2015).
Plaintiff argues that the Court should certify this claim to the extent that any other claim is certified. Pl.'s Br. 24 (citing Seckler v. Kindred Healthcare Operating Grp., Inc., No. 10-1188, 2013 WL 812656, at *7 (N.D. Cal. Mar. 5, 2013)). Defendant does not quarrel with this rule.
C. Typicality
Courts evaluate the typicality requirement of Rule 23(a)(3) by considering whether the named representative and the class members have similar injuries and whether those injuries arise from the same course of conduct. Hanon v. Dataprods. Corp., 976 F.2d 497, 508 (9th Cir. 1992); Weinberger v. Thorton, 114 F.R.D. 599, 603 (S.D. Cal. 1986) (citing Schwartz v. Harp, 108 F.R.D. 279, 282 (C.D. Cal. 1985)).
Defendant argues that Plaintiff has not met her burden to show that her experience is similar to those of her co-workers or any member of the California class. Defendant relies on Tapia's deposition testimony that her manager was often too busy to train her and that she did not receive or read training materials. Tapia Depo. 17, 21-26 (ECF 49-4). Several managers describe their customary procedures to train new employees and explain that the store's manuals are available online. Defendant argues this evidence shows that Tapia's situation was "isolated and anomalous." Def.'s Opp'n Br. 5.
The Court is not persuaded. The minor variations in Tapia's experience at the Imperial Valley Mall do not rise to the level that would prevent her from protecting the interests of workers at Defendant's other retail stores. See Hanon, 976 F.2d at 508 (citing cases denying certification because representative would be preoccupied with unique defenses); Cholakyan v. Mercedes-Benz USA, LLC, 281 F.R.D. 534, 556-57 (C.D. Cal. 2012) (typicality requirement not met when plaintiff's need to devote significant resources to proving he had standing would be detrimental to the class as a whole). Although the managers used various approaches to supervise employees, these small, personal idiosyncracies do not preclude class certification. Jensen Decl. ¶ 16 (manager reminds employees to take breaks within general time frames) (ECF 49-9); Tingleff Decl. ¶ 8 (she prepares a written schedule with specific times for meal and rest breaks) (ECF 49-13); Wepprecht Decl. ¶ 12 (she strictly enforces daily schedule and requires employees to initial it) (ECF 49-14). "To be sure, [s]ome degree of individuality is to be expected in all cases, but that specificity does not necessarily defeat typicality." Norris-Wilson v. Delta-T Grp., Inc., 270 F.R.D. 596, 605 (S.D. Cal. 2010) (citation omitted).
Moreover, Defendant's argument is off the mark. "Typicality turns on the nature of the claims or defenses asserted, not the facts from which they arise." Pena v. Taylor Farms Pac, Inc., 305 F.R.D. 197, 213-14 (E.D. Cal. 2015) (citation omitted). Typicality "does not mean that all claims must be identical." Weinberger, 114 F.R.D. at 603. When the entire class asserts they were "denied a panoply of work-related benefits," such as unpaid overtime compensation and penalty payments, based upon uniform policies and practices, class certification is warranted. Norris-Wilson, 270 F.R.D. at 605. The nature of Tapia's claims - incorrect and confusing wage statements and unlawful payroll practices - is the same for all hourly workers in the proposed class. She alleges injuries - lost wages and unpaid penalty payments - experienced by other members of the potential class. Id.
The purpose of Rule 23(a)(3) is to "serve as [a] guidepost[] for determining whether under the particular circumstances maintenance of a class action is economical and whether the named plaintiff's claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence." Falcon, 457 U.S. at 157 n.13. The Court is satisfied that Tapia meets that requirement.
D. Adequacy of Named Representative and Counsel
The class representative must be able to "fairly and adequately protect the interests of the class." Fed. R. Civ. P. 23(a)(4).
Defendant does not dispute this factor.
The Court agrees with Plaintiff that the record shows that Tapia and her counsel are able to vigorously prosecute the action on behalf of the absent class members. Tapia Decl. ¶¶ 12-17 (ECF 44-3); Sullivan Decl. (ECF 44-2); Hanlon v. Edwards, 150 F.3d 1011, 1020 (9th Cir. 1998). The Court discerns no conflict of interest with the class. Id.
E. Predominance of Common Issues
"The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation." Anchem Prods., Inc. v. Windsor, 521 U.S. 591, 622 (1997) (citing 7A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 1777 at 518-19 (2d ed. 1986)) (footnote omitted); Hanlon, 150 F.3d at 1022.
Defendant contends that individualized issues predominate Plaintiff's meal and rest break claims. It contends that Tapia's experience was unique to her. Defendant contends that each worker will have their own personal reason for skipping a rest break to finish a sale or choosing to end a lunch break early. Kenny v. Supercuts, Inc., 252 F.R.D. 641, 646 (N.D. Cal. 2008).
The Court rejects this analysis for the reasons stated by the Brinker and Faulkinbury decisions discussed above. The reason an employee missed a break bears on the amount of damages he is entitled to recover. 53 Cal. 4th at 1040; 216 Cal. App. 4th at 235-37; accord Bradley v. Networkers Int'l, LLC, 211 Cal. App. 4th 1129, 1151-52 (2012). Issues of individualized damages do not preclude certification. Leyva, 716 F.3d at 513-14.
3. Superiority of Class
Plaintiff contends, and the Court agrees, that class resolution is "superior to other available methods for the fair and efficient adjudication of the controversy." Fed. R. Civ. P. 23(b)(3); e.g., Moore v. Ulta Salon, Cosmetics & Fragrance, Inc., 311 F.R.D. 590, 622-23 (C.D. Cal. 2015) ("Where recovery on an individual basis would be dwarfed by the cost of litigating on an individual basis, this factor weighs in favor of class certification.") (citation omitted); Millan v. Cascade Water Servs., Inc., 310 F.R.D. 593, 606 (E.D. Cal. 2015) (superiority element met in overtime and meal break claims when employees would likely recover an average of $7,000, which would not motivate them to file separate action). Class resolution will be efficient and manageable. For example, Plaintiff will be able to analyze all of the payroll statements in a single expert report. Engleson Decl. ¶¶ 14-15 (ECF 44-4). Borrowing language from the Hanlon decision, the Court finds that "[f]rom either a judicial or litigant viewpoint, there is no advantage in individual members controlling the prosecution of separate actions. There would be less litigation or settlement leverage, significantly reduced resources and no greater prospect for recovery." 150 F.3d at 1023.
Defendant suggests that employees can file complaints with the Labor Commissioner or bring their own actions. Cal. Lab. Code § 98; Hanlon, 150 F.3d at 1023 ("This [superiority] determination necessarily involves a comparative evaluation of alternative mechanisms of dispute resolution.").
The administrative hearing is a quick procedure. On balance, however, the class mechanism offers advantages to workers asserting wage and hour claims. Moore, 311 F.R.D. at 622-24 (collecting cases and stating reasons retail workers benefit from class action); Bell v. Farmers Ins. Exch., 115 Cal. App. 4th 715, 745 (2004) (employees often lack access to detailed records and may hesitate to jeopardize their current position or chance for advancement; small recovery may deter individuals from pursuing individual actions; separate administrative claims can result in "random and fragmentary enforcement" of the employer's duty to comply with California labor laws). In this instance, a class action will "'achieve economies of time, effort, and expense and promote . . . uniformity of decision as to persons similarly situated.'" Amchem, 521 U.S. at 615 (quoting Rule 23(b)(3) advisory committee notes to 1966 amendment).
IV. Analysis of Nationwide Class under the FLSA
The FLSA requires employers to pay their employees all minimum and overtime wages. 29 U.S.C. §§ 206, 207(a)(1). It permits an employee to bring a collective action on behalf of "other employees similarly situated" to recover unpaid wages, penalties, and attorneys' fees. 29 U.S.C. § 216(b).
Plaintiff's FLSA claim is based upon the same facts as her "failure to pay all overtime compensation," which the Court found suitable for class treatment under the Federal Rules of Civil Procedure.
The analysis of whether to certify a FLSA claim does not rely on Rule 23. Instead, most courts follow a two-stage process to determine whether a collection action is appropriate. Adams v. Inter-Con Sec. Sys., 242 F.R.D. 530, 536 & n.4 (N.D. Cal. 2007) (noting that Ninth Circuit has not addressed issue but adopting test used by three Circuits and the majority of district courts).
At the first stage, the court determines whether the proposed class should be notified of the action. This decision is based on the pleadings, affidavits, and any available evidence. Id. at 536 (citing Leuthold v. Destination Am., 224 F.R.D. 462, 467 (N.D. Cal. 2004)). It is a "fairly lenient standard due to the limited amount of evidence" and the "usual result is conditional class certification." Id. Potential members are then notified of the pending action and given the opportunity to participate. Lusardi v. Xerox Corp., 99 F.R.D. 89, 91-93 (D. N.J. 1983) ("the FLSA describes an 'opt in' class action").
"Once discovery is complete and the case is ready to be tried, the party opposing class certification may move to decertify the class." Leuthold, 224 F.R.D. at 467 (citations omitted). At that time, the court applies a "stricter standard." Thiessen v. Gen. Elec. Capital Corp, 267 F.3d 1095, 1102-03 (10th Cir. 2001) (citation omitted). The court examines the full factual record to assess the "propriety and scope of the class." Leuthold, 224 F.R.D. at 467. Relevant factors include whether individual defenses predominate and whether other matters of fairness and procedure support the maintenance of a collective action. Reeves v. Alliant Techsystems, Inc, 77 F. Supp. 2d 242, 247 (D. R.I. 1999). "If the record facts reveal that the claimants are not 'similarly-situated,' then the court may decertify the class, and dismiss the opt-in plaintiffs without prejudice." Id.
Defendant asks the Court to follow the minority approach. Def.'s Opp'n Br. 22-23 & nn.48-52. These courts first require the plaintiff to demonstrate that other employees want to "opt-in." E.g., Dybach v. Fla. Dep't of Corrections, 942 F.2d 1562, 1567-68 (11th Cir. 1991).
The Court adopts the majority view. The suggestion that a plaintiff must provide declarations from other employees is at odds with the purpose of giving notice to potential plaintiffs. Leuthold, 224 F.R.D. at 468. "Bypassing the notice stage" deprives others "of a meaningful opportunity to participate" in the litigation. Id. It also deprives the court of useful information, such as the number and type of employees who choose to opt-in, which will help the court make a fair and just decision at the second stage. Id. The two-stage approach is "the most equitable means of proceeding." Id. If the court conditionally certifies a collection action at the notice stage, the consequences to the employer "are not unduly burdensome" and it can "move for decertification once the factual record has been finalized." Id.
Defendant's concern whether there are other employees who want to join the FLSA lawsuit can be addressed during the second stage. See id.
Turning to the merits of Plaintiff's certification motion, conditional certification is appropriate for the same reasons the Court certified the unpaid overtime compensation claim under Rule 23. Plaintiff has shown that there are other similarly-situated employees because Defendant uses the same payroll procedures at all of its stores. Adams, 242 F.R.D. at 535-56 (plaintiff bears burden of showing "that the putative class members were subject to a single illegal policy" with some evidence beyond the pleadings). Plaintiff has also presented evidence - Tapia's time and wage records and Dr. Fountain's expert report - to support her allegations that Defendant's practice results in unpaid overtime. Millan, 310 F.R.D. at 607. The Court grants the motion.
Conclusion
Upon due consideration of the briefs and evidence, and for the reasons stated above, the Court GRANTS the motion. [Doc. No. 44] The Court certifies two classes: (1) All current and former hourly employees of Zale Delaware Inc. d/b/a Zale Corporation who were designated by Zale as nonexempt and who worked in California any time between July 3, 2009 and the trial of this matter; and (2) All current and former hourly employees of Zale Delaware Inc. d/b/a Zale Corporation who were designated by Zale as nonexempt and who worked in the United States any time between July 3, 2010 and the trial of this matter. The Court appoints Naomi Tapia as the representative and the Sullivan Law Group, APC as class counsel.
The Court denies as moot Plaintiff's motion to file a notice of supplemental authority and to submit a copy of the expert's resume. [Doc. No. 55]
IT IS SO ORDERED. DATED: April 6, 2015
/s/ _________
Hon. Cynthia Bashant
United States District Judge