Stephen Eldard vs. Hewlett-Packard Company

Motion Other

Cal. Super. - 4th Dist.January 17, 2012

AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STEVEN R. YOUNG (96258) LAW OFFICES OF STEVEN R. YOUNG Civil Justice Attorneys 600 Anton Boulevard, Suite 650 Costa Mesa, CA 92626 Telephone: (714) 673-6500 Facsimile: (714) 545-0355 FRANKLIN D. AZAR (pro hac vice) KEITH R. SCRANTON (pro hac vice) JONATHAN PARROTT (248652) FRANKLIN D. AZAR & ASSOCIATES, P.C. 14426 East Evans Avenue Aurora, CO 80014 Telephone: (303) 757-3300 Facsimile: (303) 759-5203 azarf @fdazar.com scrantonk @fdazar.com JASON M. FRANK (190957) SCOTT SIMS (234148) EAGAN AVENATTI, LLP 520 Newport Center Drive, Suite 1400 Newport Beach, CA 92660 Telephone: (949) 706-7000 Facsimile: (949) 706-7050 Attorneys for Plaintiff SUPERIOR COURT OF ELECTRONICALLY FILED Superior Court of California, County of Orange 12/21/2015 at 04:27:00 Pi Clerk of the Superior Court By Sarah Loose Deputy Clerk JAMES O’CALLAHAN (126975) GIRARDI | KEESE, LLP 1126 Wilshire Boulevard Los Angeles, CA 90017 Telephone: (213) 977-0211 Facsimile: (213) 481-1554 PATRICK MCNICHOLAS (125868) PHILIP SHAKHNIS (199461) MCNICHOLAS & MCNICHOLAS, LLP 10866 Wilshire Blvd., Suite 1400 Los Angeles, CA 90024 Telephone: (310) 474-1582 Facsimile: (310) 475-7871 THE STATE OF CALIFORNIA FOR THE COUNTY OF ORANGE CIVIL COMPLEX CENTER STEPHEN ELDARD, on behalf of himself and others similarly situated, JEFFREY WALL, on behalf of himself and others similarly situated, Plaintiffs, VS. HEWLETT-PACKARD COMPANY, a Delaware Corporation; and DOES 1 - 100, inclusive, Defendants. Case No.: 30-2012-00537897-CU-BT-CXC PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR AN ORDER CERTIFYING A CLASS, APPOINTING CLASS REPRESENTATIVE(S), AND APPOINTING CLASS COUNSEL Date: January 29, 2016 Time: 10:30 a.m. Judge: Hon. Thierry P. Colaw Location: Dept. CX-105, Civil Complex Center 751 West Santa Ana Blvd. Santa Ana, CA 92701 Action Filed: January 17, 2012 Trial Date: None set 1 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that, on January 29, 2016, at 10:30 a.m., or as soon thereafter as the matter may be heard, in Department CX 105 of the above-entitled Court located at 751 West Santa Ana Blvd., Santa Ana, CA 92701, Plaintiff Jeffrey Wall will, and hereby does, pursuant to Cal. Code of Civil Procedure Section 382, move the Court for an order certifying a class of plaintiffs entitled to pursue all damages and statutory and common law remedies for unpaid and untimely commission payments by Defendant Hewlett-Packard Company. Plaintiff's proposed class definition is as follows: All current and former commissioned sales employees of Hewlett-Packard Company (“HP”) in California who sold equipment, products, or services on behalf of HP, whose sales compensation payments were processed and calculated by HP’s computerized sales compensation system, and who were not paid their commissions in compliance with Cal. Labor Code §§ 202, 203, and 204. The proposed class may be further divided into the following subclasses: (a) All current and former sales employees as defined above and whose employment with HP terminated at some time, but were not paid their commissions upon termination in a timely manner pursuant to Labor Code §§ 202, 203; and (b) All current and former sales employees as defined above and who did not receive commission payments in a timely manner pursuant to Labor Code § 204 at any time during their employment with HP. Plaintiff also moves the Court for an order appointing him as Class Representative, and further appointing the firms of the Law Offices of Steven R. Young, Franklin D. Azar & Associates, P.C., Girardi Keese, LLP, Eagan Avenatti, LLP, and McNicholas & McNicholas, LLP, as Class Counsel. The legal bases for this Motion are the Cal. Labor Code §§ 202, 203, and 204, and Cal. Code of Civil Procedure § 382, as well as all authorities set forth in the Memorandum of Points and Authorities below. This Motion is based on this Notice of Motion and Motion, the accompanying Memorandum of Points and Authorities, the Declaration of Jonathan Parrott and accompanying exhibits, the 2 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Declaration of Steven R. Young, the pleadings and records on file, and such other and further argument and evidence as may be presented at the time of the hearing and all matters which this Court may take judicial notice. Dated: December 21, 2015 /s/Jonathan Parrott FRANKLIN D. AZAR (pro hac vice) KEITH R. SCRANTON (pro hac vice) JONATHAN PARROTT (248652) FRANKLIN D. AZAR & ASSOCIATES, P.C. 14426 East Evans Avenue Aurora, CO 80014 Telephone: ~~ (303) 757-3300 Facsimile: (303) 759-5203 azarf@fdazar.com scrantonk @fdazar.com Attorneys for Plaintiff 3 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS PAGE: TABLE OF AUTHORITIES « : : comssves s 15 55 smn s v's 5.5 ssmsore 45 55 stuns 54 55 5 Smee § 3 5 § Swen £93 55 5550 65 iii MEMORANDUM OF POINTS AND AUTHORITIES. .....cooiiiiii eee, 1 LL INTRODUCTION. . «cette eee eee eee eee eee eee ee eee 1 I. BACTTIAT. SUMMARY «i: 5 samme ss 55 saiseaiss s 55 paumsnsss § 5 5 Amos s5 §5 oAas00401 5 § 5 RARGHREA § 155 555 2 A. Plaintiff’s Evidence Proves That Sales Representatives Were Systemically Paid Sales Commissions In an Untimely Manner........................... 2 1. Plaintiff’s Claims for Untimely Commission Payments........................... 2 2. Plaintiff and Class Members Could Wait 3-6 Months Or More After a Sale To Receive Payment. ..............cooooiiiiiiiiiiiiiie, 2 3 Complaints About Late Payments Were Common at HP......................... 3 4. Plaintiff’s Independent Survey Found Significant Numbers of Potential Class Members Who Complained of Late Commission Payments. ..........oovuiiiiiiiii iii 4 5. HP’s Own Internal Metrics Show Systematic Delays of Commission Payments. ...........ocooiiiiiiiiiiiiiiii iin 5 6. HP’s Payroll Policies Apply Uniformly To All Sales Reps and Guarantee That Commissions Are Not Paid For At Least SD Days Afier Cretliting, comes :« 5 s sommes s 0s 5 5 smmsmes s 1: 5 somsens 1s 55 samen 15 5 55 6 7. HP Knew About Delays In Commission Payments.............................. 7 B. HP’s Sales Compensation System Frequently Delayed Commission Payments On 8 SYSIETIE Baise « «5 s sommes o ss 5 ssnommes i 5s 5 sumanmss ¢ 5 5 5mm s £5 5 65650 8 1. INtrodUCHION. «oe 8 2. HP’s Sales Compensation Policies Apply Uniformly TO All Sales REPS... uu 9 3. All Sales Plans Are Loaded Into the QUEST Program............................ 9 4. AMIDs Are Required To Process Transactions and Calculate Commissions Based on Those Transactions. ......................... 10 i PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5. All Transactions Are Processed and Enriched by SIQP, and Missing Information May Cause Transactions To Get “Stuck” In SIQP. oii 11 6. Further Delays Can Occur In Omega, Which Calculates Commission Payments Based On Transactional Data Provided by SIQP.......ooii 12 IIL LEGAL ARGUMENT .....o titi eee eee eee 14 A. IRFOAUGHION : « ; « : sasmmniss sss samsmmnss ss 6 5 sanmunass 353 Rossman ss § 5 SAREASS § 353 BARNDRASS § § § BRASH: 14 B. Standards for Class CertifiCation...............ocoouiiiiiniiiiiii iirc 15 C. Plaintiff’s Evidence Meets All the Requirements for Class Certification............... 17 I. There Is an Ascertainable Class of Sales Representatives Who Did Not Receive All their Commission Payments InaTimely Manner. .........oouiiiiiiiiii ieee eee 17 2. There Is a Community of Interest Among All Class Members Because Common Questions of Fact and Law Predominate..................... 18 3. Individual Damages Questions Are Not Unmanageable and Do Not Prevent Certification.............c..cooiiiiiiiiiiiiiiiiiii ene. 19 4. The Class’ Damages Are Susceptible To Common Proof Based on Statistical Sampling, and Plaintiff Has Already Begun the Sampling Process. .........coooiiiiiiiii iii, 20 = Plaintiff’s Claims Are Typical of the Class and He Will Adeguately Represent the Classes: « 5 s sssmumss «55 s sommns ¢ 65 5 smn ¢ £3 5 55mm 21 6. Class Counsel Will Competently Represent the Class........................... 22 D. A Class Action Is a Fair and Efficient Means of Resolving the Issues, and Will Result in Substantial Benefits to the Class amid] 16 Other Ermplavees Of HP. os sanswnis oss sanmwnis sss 5 asmennss ss 5 sanmantss 55 bammoassss 22 E. This Motion Was Filed As Soon As Practicable.................cooooiiiiiiiiiiiiininn, 24 V. CONCLITSION: conn 5 5c s ome 225 c5 spmasnn s 5 5 ¢ emo 536 § SERRE 23 § HBSS £15 § § SIR 25 ii PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC ~N O N n e A W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES PAGE: Case Law: Amaral v. Cintas Corp. No. 2 (2008) 163 Cal. App.4th 1157... 15 Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946).......cc.oiiiiiiiiiiiii iii, 21 Atari, Inc. v. Superior Court (1985) 166 Cal. App.3d 867......covvviiiiiiiiiiiiiiiiiiiiiiieieerineenneenne 25 Bartold v. Glendale Federal Bank (2000) 81 Cal. App.4th 816.........cccoviiiiiiiiiiiiiiiiiien, 16, 24 Bell v. Farmers Ins. Exchange (2004) 115 Cal. App.4th 715.................ooo..l. 15,16, 18, 20, 21, 23 Bufil v. Dollar Fin’l Group, Inc., (2008) 162 Cal.App.4th 1193... cco 15,23 Cal Pak Delivery, Inc. v. United Parcel Service, Inc. (1997) 52 Cal. App.4th 1........................ 22 City of San Jose v. Superior Court (1974) 12 Cal.3d 447........ooiiirriiiiii i i i eeieaeeas 21,24 Collins v. Rocha (1972) 7 Cal.3d 232... eee eee 16 Crown Cork & Seal Co., Inc. v. Parker, 462 U.S. 345 (1983).....civiiiii i i eee 23 Daarv. Yellow Cab Co. (1967) 67 Cal.2d 695........ooiiiiii ieee 16 Duran v. U.S. Bank, N.A. (2014) 59 Cal.dth 1... 4, 17-21 Employment Development Dept. v. Superior Court, (1981) 30 Cal.3d 256.............ccccvviiiinn.... 15 Global Minerals & Metals Corp. v. Superior Court (2003) 113 Cal. App.4th 836...................... 18 Harper v. 24 Hour Fitness, Inc. (2008) 167 Cal. App.4th 966.........c.ccoiiiiiiiiiiiiiiiiiiiiiiias 17 Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th908..............ccooiiiiiiiiin. 18, 19 Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103... oii eee 23 Lazar v. Hertz Corp. (1983) 143 Cal. App.3d 128... oii 17 Linder v. Thrifty Oi Co. (2000) 23 Cal Ah 42. cuiics i +5 snmmmoiis is 5 sammmnis ss 5 5 samsmim saws £555 pas 16, 23 Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096...........ccooiiiiiiiiiiiiiiiiiann.. 16 Pineda v. Bank of America, N.A. 50 Cal.4th 1389... eee, 23 il PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360................coooeviienn.. 24 Reese v. Wal-Mart Stores, Inc. (1999) 73 Cal. App.4th 1225... 24 Reyes v. San Diego County Board of Supervisors (1987) 196 Cal.App.3d 1263...............ce..o. 17 Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462. ..... cocoa 18 Rose v. City of Hayward (1981) 126 Cal.App.3d 926......coniiiniiiii iii, 17 Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319................... 15, 16, 18, 19, 21 Simons v. Horowitz (1984) 151 Cal. App.3d 834... oie 22 Stewart v. Abraham, 275 F.3d 220, 226-27 (3d Cir. 2001).......oviiiiiiiiiiiiceee, 17 Vasquez v. Superior Court (1971) 4 Cal.3d 800........couiiiiiiiiii ieee 17,21 Walsh v. IKON Office Solutions, Inc. (2007) 148 Cal. App.4th 1440...........cooiiiiiiiiiiiiiiinn.n. 22 Statutes: Cal. Code of Civil Procedure § B38 2. ..co vuitton 15,17 Cal. Labor Code § 2002... oii eee eee aaa 1,2,21 Cal. LAbBT Coe: § 205 sans sss sammenssss 5 5 aa uamnss ss 55 asamnss s 55 3 sassesis s £53 SAAmsnass § 55 sARTHSRES § § 43 SAK 1,2,21 Cal. Labor Code § 204... o.oo ea 1,2,19,21 Cal. Labor Code § 210... uri eee eee eens 20 iv PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION. This is a class action against Defendant Hewlett-Packard (“HP”) for damages and statutory and civil penalties for failure to pay sales representatives appropriately pursuant to Cal. Labor Code §§ 202, 203, and 204. These statutes require payment of earned wages within specific time frames both during employment and upon termination of employment. Plaintiff alleges, on behalf of himself and all others similarly situated, that HP failed to pay sales representatives within these required statutory time frames, and Plaintiff submits proof below that sales representatives did not get paid sales commissions for months, sometimes three to six months or more, after a sale. Plaintiff now requests that the Court certify a class of California sales representatives whose commission payments were delayed due to HP’s sales compensation system. Class certification is appropriate because factual and legal issues concerning the untimely commission payments are common to the class and predominate over any individualized questions. Specifically, the following issues are common to all proposed class members: . The legal question of when sales representatives are entitled to payment for sales they have made for HP; . The legal and factual question of the application of HP’s standard sales compensation policies to all sales representatives; . The factual question of why sales compensation payments were delayed. HP’s sales compensation policies and procedures are common to all members of the proposed class, and raise an identical legal question for each sales representative. These common legal and factual questions warrant certification of a class. The specifics of each late payment are questions of damages, not a question of commonality or predominance that would prevent certification. 1 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff will demonstrate below that all the requirements for certification of a class are met, so Plaintiff respectfully requests that the Court certify the proposed class in this action. II. FACTUAL SUMMARY. A. Plaintiff’s Evidence Proves That Sales Representatives Were Systemically Paid Sales Commissions In an Untimely Manner. 1. Plaintiffs Claims for Untimely Commission Payments. Plaintiff worked as an HP sales representative from June 2007 to July 2011 (see Exhibit 1 to the Declaration of Jonathan Parrott, Plaintiff's Fourth Amended Complaint (“FAC”), 9 1; Exhibit 2, Dec. Parrott, Depo. Plaintiff, p. 11: 14-18), in different divisions, selling different products. Exhibit 1, Iq 37, 38; Exhibit 2, p. 13: 2-18. Throughout his employment, part of Plaintiffs wages included commissions on sales. Exhibit 1, 9, 37, 38; Exhibit 2, pp. 12: 19-13: 1. Plaintiff earned commission on a sale as of the date of shipment of a product or order of a service. Exhibit 1, | 14; Exhibit 2, pp. 20: 4-10; 63: 15-20. Plaintiff has alleged and testified that his and the class’s commission payments were untimely paid in compliance with Cal. Labor Code §§ 201, 202, and 204. Exhibit 1, | 8, 27; Exhibit 2, pp. 74: 21-75: 3; 81: 19-82: 4; 149: 24-152: 8; 164: 8-165: 6. Plaintiff testified that, if he was not paid a commission within 30 days of sale, it was late. Id. at p. 152: 5-8. Plaintiff has also alleged that he, and other class members, did not receive their final pay until well outside the 72 hour window required by law. Exhibit 1, {{8(1) & (ii); 26-27; 30(i)-(ii1); 38-40; 44-46. 2. Plaintiff and Class Members Could Wait 3-6 Months Or More After a Sale To Receive Payment. Other than Plaintiff’s testimony, documents show that Plaintiff was not paid timely commissions. The delays in Plaintiff’s commission payments are illustrated in a spreadsheet prepared by HP for this litigation, and which reflects transactions shipped in November 2009, but 2 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 not paid until February 2010, a delay of at least 2-3 months. Exhibit 5, Dec. Parrott, Bates Number HP-ELD 0003317; Exhibit 32, Dec. Parrott. Untimely payments were not limited to Plaintiff. Another spreadsheet produced by HP, concerning the manual claims process, shows that many sales representatives did not receive payment for sales for months after products were shipped, sometimes six months. Exhibit 6, Dec. Parrott, HP-ELD 0016954. A supervisor of the manual claims process testified that this time frame was “normal” because “an investigation has to be made in order to complete this information, and it sometimes can take a long time.” Exhibit 28, Dec. Parrott, Depo. Rico, pp. 64: 15-67: 25. 3. Complaints About Late Payments Were Common at HP. Plaintiff is not the only sales rep to complain about the lack of timely commission payments. HP’s own internal “Voice of the Workforce” (“VOW”) survey reflects the widespread delays in commission payments. For example, the VOW for 2008 included the finding that it was “[t]ypically up to 3 months to recognize payments.” Exhibit 7, Dec. Parrott, HP-ELD 0058974. In the Sales Compensation Perception Survey in 2009, approximately 43% of respondents across different business units responded that their pay was “sometimes/never” timely. Exhibit 8, Dec. Parrott, HP-ELD 29718. In another “Voice of the Workforce” survey, one of the “majority” of the complaints focused on the category of “[t]imely pay, delays in quota assignment and crediting are unacceptable.” Exhibit 9, Dec. Parrott, HP-ELD 28228. The 2009 results also raised some of the same problems with “Delayed Compensation” as in 2008, including: a Typically up to 3 months to recognize payments . Reseller compensation delays 6-9 months.” Exhibit 9, HP-ELD 28233. HP’s own management recognized that the problems with the sales compensation system were ongoing in 2009. Exhibit 10, Dec. Parrott, HP-ELD 0003688 (“HP’s long-lasting Sales Compensation problems have not yet been resolved.”). 3 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The exact same concerns about late payments continued in 2010 (Exhibit 11, Dec. Parrott) and 2011 (Exhibit 12, Dec. Parrott). Comments from sales representatives complaining about untimely commissions payments could take up this entire Memorandum, but some of them are included in the exhibits attached to the Declaration of Jonathan Parrott, and are notable for the widespread frustration that HP’s sales compensation system causes among sales representatives. See Dec. Parrott, {[ 11, 14. It is also interesting that, as one of the comments pointed out, “No questions on this survey were related to pay is that the HR method to avoid showing results in the analysis keep pay discussions to unstructured subjective data.” Exhibit 12, HP-ELD 29290. 4. Plaintiff’s Independent Survey Found Significant Numbers of Potential Class Members Who Complained of Late Commission Payments. Pursuant to the Court’s Order, HP provided lists of putative class members with nearly 3,000 names. Pursuant to the mandates of Duran v. U.S. Bank, N.A. (2014) 59 Cal.4th 1, Plaintiff commissioned an independent survey of potential class members in order to ensure that any sampling procedures used in this matter would have an appropriate basis. The survey was conducted by the Zogby firm, an internationally respected polling group. See Dec. Zogby, 2. Zogby surveyed 226 class members, out of a list of 2,224 current and former sales representatives who worked for HP in California during the appropriate time frame." Dec.Zogby, q 6. Of the 226 polled, 122 responded “Yes” to the question “Were you ever paid your commission late?” Exhibit 2, Dec. Zogby. That is 54% of the respondents who stated that they received a late commission payment at some point during their employment with HP. Dec. Zogby, q 8. Over 83% of this 54% responded that late payments occurred more than once. Almost 83% of the ' As explained in more detail in the Declaration of John Zogby, the total number includes only the number of records for which HP provided both a name and telephone number, and who were not supervisors. Dec. Zogby, 5. 4 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 54% who complained of late payments also responded that their commissions were paid 30 or more days late. Exhibit 2, Dec. Zogby. 5. HP’s Own Internal Metrics Show Systematic Delays of Commission Payments. HP acknowledges that there is no guarantee that a transaction will even be credited within 30 days of a sale, and that it has occurred that transactions were not credited for more than 30 days after a product was shipped, or even 60 days, because “there could be situations where data is missing or inaccurate.” Exhibit 3, Dec. Parrott, Depo. Thiel, pp. 155: 21-158: 24; see also Exhibit 4, Dec. Parrott, Depo. Kirk, pp. 22: 5-8 (HP receives transactions submitted by partners that are over 30 days old); Exhibit 27, Dec. Parrott, Depo. Ramirez, pp. 137: 19-138: 2 (crediting may take more than 30 days after shipment if that is when partner reports it). First, it must be noted that “crediting” is not the same as payment. Rather, crediting is merely one of the steps in the path of a transaction toward a commission payment. Exhibit 3, pp. 82: 20-85: 21; 88: 2-90: 18; 146: 17-25. As will be explained further below, even after a transaction is credited to a sales rep, it will take at least another 30 days for an actual commission payment. But HP’s own data shows that it can take more than 30 days just for a transaction to credit to a sales rep. HP has measured crediting with a metric called “Credit Turn-around Time” or “TAT.” The credit TAT metric measures the time between a “creditable event,” which can include shipment of a product or execution of a services contract, and when the credit appears in Omega, the program that actually calculates commissions. Exhibit 13, Depo. Thiel (3/28/2014), pp. 240: 18-241: 7. It does not measure when a sales rep actually received payment. Exhibit 14, Depo. Thiel (7/9/14), p. 468: 20-23. 5 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The average credit TAT in the Americas for FY2008 was 41 days for direct transactions and 37 days for indirect transactions. Exhibit 15, HP-ELD 0003713.” The TAT for the first quarter of FY2009 was 41 days. Exhibit 16, HP-ELD 0003714. Monthly TATs from April 2009 through October 2010 were as high as 51 days for direct, and 47 days for indirect transactions. Exhibit 16, HP-ELD 0009143. In FY2011, the TATs for direct transactions varied per month from 26 to 11 days. Indirect transactions varied from 27 to 14 days. Exhibit 17, HP-ELD 0009166. In FY2012, direct transaction TATs per month varied from 46 to 12 days. Indirect transactions varied from 36 to 13 days. Exhibit 18, HP-ELD 0009182. Plaintiff has obtained and analyzed data concerning his own transactions, and determined that there is an average of Again, these numbers do not represent the time frame after a sale that the sales representatives actually got paid. Even after crediting, there will still be a number of days or weeks until a sales rep receives a commission payment based on that transaction (Exhibit 14, p. 469: 16- 20), because commissions are only calculated and paid once per month. Exhibit 3, pp. 91: 21-92: 8. 6. HP’s Payroll Policies Apply Uniformly To All Sales Reps and Guarantee That Commissions Are Not Paid For At Least 30 Days After Crediting. First, HP’s own “Global Sales Compensation Policy” provides that HP’s policies are intended to be uniform and apply across the board. As stated in each version produced to Plaintiff (versions from Fiscal Years 2009, 2010, and 2011): “Purpose: The purpose of the HP Global Sales Compensation Policy is to represent the standard treatment of sales credit and incentive pay administration within HP Sales Compensation. . . . * “Direct” transactions are sales made directly through HP; “indirect” sales are made by resellers, or “partners.” See Exhibit 21, Response No. 1, p. 8 n. 4. 6 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Scope: This policy applies to all HP employees assigned to a sales compensation plan (Sales Plan) in each business group . . .” See, e.g., Exhibit 22, Dec. Parrott, HP-ELD 0001785 (emphases added). HP’s policy states also that “[i]ncentive payments occur in the month following sales crediting.” Exhibit 22, HP-ELD 0001800. Since commissions are processed and sent to payroll on a monthly basis, and commissions were only paid at the end of the month after crediting, in practice, virtually no commission will be paid within 30 days of crediting, much less within 30 days of earning. Exhibit 3, Depo. Thiel, pp. 91: 25-92: 8; Exhibit 31, Dec. Parrott, HP-ELD 0000176-180. For example, if a sale is reported and comes into HP’s system at midnight on July 1, but the transactions in the system were processed for payments ending on June 30, the July 1 transaction would not get paid until the end of August. Exhibit 3, pp. 165: 11-167: 25. Thus, even when the system was processing correctly, the majority of commission payments will not be made for more than 30 days after a transaction is credited to a sales rep because “crediting occurs when we have the data to credit, and the payment then occurs on the next pay cycle.” Exhibit 3, pp. 171: 3-173: 6. However, HP’s sales compensation system does not always process transactions correctly, as will be set forth in more detail below. 7 HP Knew About Delays In Commission Payments. There is no question HP knew about the delays in commission payments. In 2009, HP’s Internal Audit Department (IA) conducted an audit of the sales compensation system and produced a report (the “Audit Report”). The Audit Report identified ten “Significant Issues,” including “Incompleteness of the crediting process for sales orders that fall into the suspense process . ..”, and ? In connection with cross motions for summary judgment/adjudication filed by the parties, HP has admitted that no transaction will be paid within 30 days due to this processing time. 7 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 nine “Reportable Issues,” including “Incentive payments delayed in the U.S.” Exhibit 19, Dec. Parrott, p. 2. One of the more significant findings of the audit for Plaintiff’s claims was as follows: “As a result of incomplete transaction data, a significant number of transactions are in the HOLD status, totaling over $815 million; 36% is aged a year or more. The testing only validated that these transactions had not been processed through to Omega and did not investigate whether any of these transaction amounts had been credited, per policy, in Omega through the manual claim or other process.” Exhibit 19, p. 11. This finding will be addressed more below due to its highly technical nature. But this finding by HP’s own internal audit department is, first and foremost, evidence of systemic untimely commission payments. If over a third of the transactions in HOLD had been there a year or more, they could not possibly have been paid out within one month, as required for wage payments, including commission payments. B. HP’s Sales Compensation System Frequently Delayed Commission Payments To All Sales Reps On a Systemic Basis. 1. Introduction. Plaintiff alleges that HP’s sales compensation system prevented HP from paying its sales representatives in a timely or accurate manner, and that HP knew of the problems with its sales compensation system. Exhibit 1, 32. Thus, to understand why it takes so long for sales representatives to get paid their sales commission, it is necessary to understand some of the basics of HP’s computerized sales compensation system. A schematic diagram of the system is found in Exhibit 20, Dec. Parrott. The diagram shows the applications that feed data about transactions into the system, that store and process the information, and that ultimately calculate sales compensation for all sales representatives. See also Exhibit 21, Dec. Parrott, HP’s Responses to Plaintiff’s Special Interrogatories, Set No. One, Response No. 1. 8 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The following will demonstrate that commission payments were calculated in the same way for virtually all HP sales reps because this complicated system is designed to process many types of sales and sales plans using the same tools. However, it is this very complexity that inevitably results in significant delays in commission payments. 2 HP’s Sales Compensation Policies Apply Uniformly To All Sales Reps. As noted above, HP’s sales compensation policies apply uniformly to all sales reps. Sales representatives receive sales compensation payments based on the number and amount of sales they make of HP products or services. Exhibit 22, HP-ELD 0001801 (“[S]ales credit is based on net price”); 0001802 (“Sales employees receive sales credit for HP products or services that are sold directly or indirectly to end-user customers and channel partners.”). The dollar amount of products or services sold by a sales representative in a given time period (“sales credit”) is compared to the quota assigned to the sales representative (“Total Incentive Attainment” or TIA) in order to calculate a monthly commission payment. Exhibit 21, Response No. 1, pp. 12, 13 n. 7. Once data about a sale is fed into the system and assigned to the appropriate sales representative, it is calculated using a standard methodology. Exhibit 22, HP-ELD 001792. Many of HP’s products are actually sold to customers by re-sellers, which HP refers to as “partners.” Such transactions are referred to as “indirect transactions,” as opposed to “direct transactions,” in which a sale is made and shipped directly through HP. Exhibit 21, Response No. 1, p- 8 n. 4. Indirect transactions make up approximately 70% of HP’s total transactions. Exhibit 24, Dec. Parrott, Depo. Landolt, p. 27: 17-21. 3. All Sales Plans Are Loaded Into the QUEST Program. Sales plan data is loaded into the QUEST application in the upper middle portion of Exhibit 20. Exhibit 3, p. 46: 2-11. QuEST produces “sales letters” based on the data loaded into it. Exhibit 21, Response No. 1, pp. 7-8; Exhibit 3, p. 56: 18-19. 9 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 QuEST is designed to process many different types of sales plan. Exhibit 3, pp. 54: 4-6; 83: 1-25; 88: 18-22. It does not matter that each sales representative may have different customers or territories to which they sell, their pay is processed through the same mostly automated system. In fact, QUEST was implemented because HP sought to create a tool “to use globally . . . and get everybody across the regions on the same set of tools . . .” Exhibit 3, p. 65: 4-10. Once the data is loaded in QUEST and the sales letters are generated, the data is exported to Omega, which calculates the actual commission payments, and which is represented on Exhibit 20 by several boxes labeled “Omega” and with references to different regions, including “Omega US.” In addition, HP sets up structures in Omega that permit it to calculate sales compensation, including the accounts that collect transactions for particular customers or territories, and to which sales representatives are affiliated based on their sales plan so they will receive credit for the appropriate transactions. Exhibit 3, p. 84: 10-19; Exhibit 4, pp. 12: 2-19; 37: 18-38: 3. This process applies to all sales representatives paid on a quota, with the minor exception of sales reps paid on “Pass through Pay.” Exhibit 3, pp. 80: 21-82: 11. 4. AMIDs Are Required To Process Transactions and Calculate Commissions Based on Those Transactions. One of the category of data points loaded into QUEST is the Account Management Identifiers, or “AMIDs.” As will be demonstrated below, the necessity of attaching the appropriate AMID to a transaction creates several pinch points where a transaction can be held up as it is processed through the sales compensation system. The sales plans are essentially the “rules” for how sales representatives will be paid on sales transactions. To actually calculate and pay sales reps, the system must process the “raw material,” or transactional data. Once the “rules” for crediting transactions to sales representatives are set in the system, it can process the data about transactions. Exhibit 4, pp. 29: 25-31: 21. 10 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 If an AMID is not loaded into a sales representative’s plan, the rep will not receive credit for sales on that account, which has occurred. See Exhibit 23, Dec. Parrott. Data about transactions comes through various order management systems, which are represented in Exhibit 20 by the various boxes in the middle and upper left hand side, such as Velocity, Compass, Fusion, and Vista. Exhibit 20; Exhibit 21, Response No. 1, pp. 8-9; Exhibit 3, pp. 106: 9-107: 4. The “common thread” among these applications is that “they are the systems of record for the transactional activity between HP and our general partners in between HP and our end customers.” Exhibit 3, p. 108: 17-20. Regardless of whether a transaction is direct or indirect, it must be assigned an AMID to proceed to Omega. Exhibit 4, pp. 51: 14-52: 2. The AMID is what permits Omega to identify the appropriate account, or “chair,” to which a transaction should be assigned. Exhibit 3, pp. 87: 2-23. 3 All Transactions Are Processed and Enriched by SIQP, and Missing Information May Cause Transactions To Get “Stuck” In SIQP. Once the data is received by a reporting application, it goes into SIQP, the large rectangle in the middle of Exhibit 20. SIQP is a data store that collects data from upstream systems; stores, validates, and enriches the data; and maps the data to the standard format that is sent to Omega. Exhibit 21, Response No. 1, pp. 8-12; Exhibit 25, Dec. Parrott, Depo. Jing, pp. 20: 11-19. All transactions must have an AMID assigned in SIQP before they can leave SIQP. Exhibit 26, Dec. Parrott, Depo. Duryea, p. 30: 1-23. If an AMID cannot be matched immediately, the transaction will go into a “HOLD” status, also known as becoming “stuck” in SIQP. Exhibit 26, pp. 30: 25-31: 6. The primary reason transactions go into HOLD and remain there for any period of time is missing customer information. Exhibit 26, pp. 25: 21-26: 13. Transactions arrive with several possible forms of customer IDs (such as an address). Exhibit 21, Response No. 1, p. 10; Exhibit 25, pp. 38: 20-44: 24; Exhibit 26, pp. 28: 18-29: 1. The customer ID is then used to link the AMID. If SIQP cannot immediately obtain the AMID, it will send the 11 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 customer information to another application called IVC.* If IVC cannot match the AMID, the information will be sent to yet another program, NCRF, for matching. Exhibit 25, p. 44: 3-21; Exhibit 26, pp. 28: 18-29: 12. If there is no problem with a transaction, it may be processed and sent to Omega within a day or so. However, if the customer ID must be located or fixed, it takes longer. It can take up to 21 days if the customer is new to HP. Exhibit 26, p. 49: 1-14. Approximately 5-10% of US transactions go into the HOLD status, minus previously excluded transactions. Exhibit 25, pp. 82: 4-83: 15. If the customer ID cannot be located, an indirect transaction stays in HOLD and is not released to Omega. Direct transactions can stay in SIQP for up to 21 days. Exhibit 25, pp. 91: 12-92: 23. The 2009 Audit Report addressed transactions stuck in HOLD, noting a “significant number of transactions” in HOLD. Exhibit 19, p. 11. HP also assigns some transactions a “default” AMID, known as “AUDefault,” which is also recognized by SIQP and permits the transaction to go to Omega. Exhibit 25, p. 130: 2-12. However, this default AMID leads to another potential delay in Omega. 6. Further Delays Can Occur In Omega, Which Calculates Commission Payments Based On Transactional Data Provided by SIQP. Omega processes the data and calculates the actual commission payments to sales representatives. Exhibit 3, p. 85: 5-21; Exhibit 4, p. 14: 14-17, 29: 25-31: 21. Omega is designed to process payments to many different kinds of sales reps. Exhibit 3, p. 83: 1-25. Sales compensation is processed and sent to payroll once per month (Exhibit 3, pp. 91: 21- 92: 8; Exhibit 4, pp. 14: 25-15: 2), so it can be 30 days or more after crediting that a sales rep actually gets paid for a sale. Exhibit 3, pp. 172: 25-173: 6. After Omega does the calculations, a file is sent to payroll for further processing, including tax and other deductions. Exhibit 3, p. 98: 17-25. * Another program, ECIT, performed a similar function before IVC was implemented in 2011. Exhibit 26, 34: 20-35: 4. 12 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 However, even once transactional data is sent to Omega, it will not necessarily automatically credit to the correct sales representative. Exhibit 14, pp. 476: 10-477: 7. There are separate “suspense” accounts in Omega that hold transactions that may eventually be credited to another sales rep. Transactions have been paid out to sales representatives that were in suspense for well over 30 days. Exhibit 13, p. 232: 17-233: 1. One of the suspense accounts is a chair or account where transactions go that have been assigned the “AUDefault” AMID described above. A transaction may be assigned the AUDefault AMID if the customer is identified as “SMB” (small-medium business), or there is not enough information to assign another AMID. Exhibit 28, Dec. Parrott, Depo. Rico, pp. 56: 18-59: 12; Exhibit 29, Depo. Alonso, pp. 22: 20-23: 22. “SMB” refers to a customer that purchases a relatively low volume of HP products or services, which are credited to sales representatives on territory plans. Exhibit 29, pp. 33: 17-34: 7. It is HP’s responsibility to review the transactions in suspense to determine if there is an additional or different sales rep entitled to credit on a transaction based on a “more proper identification of the customer.” Exhibit 14, pp. 358: 21-359: 3. HP has created a regular process to review these transactions, which is called AMR after “AMID Mismatch Reports,” the reports that detail the transactions. A team of HP employees in Guadalajara then manually tries to identify end users for the transactions so the transactions can flow through for crediting to the appropriate sales representative. Exhibit 13, p. 226: 2-227: 10; Exhibit 28, pp. 18: 9-21: 23, 24: 22-25: 7. Reports are pulled once per week and typically extract 5,000 to 10,000 transactions, each of which must be reviewed by the six people on the AMR team. Exhibit 29, pp. 27: 14-29: 14. It takes approximately two weeks to find a match and move a “cleaned” transaction to the appropriate account through the AMR process. Exhibit 28, pp. 63: 5-25. However, in addition to the review process by the AMR team, the finance teams of the different business units also review the 13 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 AMR reports for transactions to which they are entitled, because they know their customers better and have “additional information to identify customers that are missing information to be considered something different than AUDefault.” Exhibit 29, pp. 66: 23-67: 20. Currently, the AMR team sends the information about transactions they have confirmed as AUDefault (in other words, the transactions left after “cleaning”) to the finance teams on a monthly basis, and it usually takes the finance teams two weeks to review the transactions and report back any further changes to the AMR team. Exhibit 29, pp. 69: 3-73: 5. In other words, it could be six weeks from the time a transactions ends up in the AMR chair to the time it is actually sent to Omega for processing. Exhibit 29, pp. 78: 12-79: 11. The amount of transactions removed from the AMR chair and assigned to other accounts is substantial. Summaries of the AMR process for Fiscal Years 2011 and 2012 reveal millions of dollars in AMR for each business unit. The summaries also show that there were thousands of transactions found by the finance teams rather than the AMR team in Guadalajara. Exhibit 30, Dec. Parrott, HP-ELD 024496. In 2011, the total value of cleaned transactions was $781,100,706.02; in 2012, $388, 684,636.37. Exhibit 30; Exhibit 29, pp. 55: 15-58: 11, 59: 24-60: 25, 66: 12-75: 21. III. LEGAL ARGUMENT. A. Introduction. HP’s sales compensation system processes and calculates commission payments for all different types of sales representatives using the same system. That system is designed to implement HP’s sales compensation policies, which expressly represent the “standard treatment” of sales compensation. The complexity of the system invariably causes delays in commission payments. HP’s sales compensation policies and procedures are the common cause of delayed commission 14 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 payments to the potential class members. Thus, there are factual questions common to all potential class members. Further, the common facts raise a common legal question: in what time frame was HP legally obligated to pay commissions to its sales representatives? That legal question is common to all members of the proposed class, and thus a common question of law predominates over all other issues. This legal question is currently pending before the Court in the form of the parties’ cross motions for summary judgment/adjudication. As set forth below, all the requirements for class certification are met, and Plaintiff requests that the Court certify the class proposed in the Notice above. B. Standards for Class Certification. Cal. Code of Civil Procedure (“CCP”) Section 382 provides the authority for filing a class action. It states, in relevant part, as follows: “[WThen the question is one of common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court, one or more may sue or defend for the benefit of all.” The California Supreme Court has noted that “this state has a public policy which encourages the use of the class action device.” Sav-On Drug Stores, Inc. v. Superior Court, (2004) 34 Cal.4th 319, 340 (citations and internal quotation marks omitted). Classes of plaintiffs with wage and hour claims are regularly certified, even though each plaintiff must show eligibility for recovery, and each plaintiff’s individual damages will vary. See, e.g., Sav-On Drug Stores, Inc., supra; Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1173; Bufil v. Dollar Fin’l Group, Inc., (2008) 162 Cal.App.4th 1193, 1208; Bell v. Farmers Ins. Exchange (2004) 115 Cal. App.4th 715, 720; Employment Development Dept. v. Superior Court, (1981) 30 Cal.3d 256, 266. A class action is particularly appropriate when there are many class members who have suffered relatively small damages, such that individually maintaining an independent lawsuit would 15 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 not be economical. Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 715. That is the case here, where there are thousands of potential class members, but their individual damages may be relatively small. In such situations, individual recoveries are unlikely absent a class action, and a “procedure that would permit the allegedly injured parties to recover” is preferable to permitting Defendant to “retain the benefits from its alleged wrongs.” Id. However, the potential for larger recovery by some class members does not weigh against certification. See, e.g., Collins v. Rocha (1972) 7 Cal.3d 232, 238; see also Bell, supra, at 744. Plaintiff, who is seeking class certification, has the burden of demonstrating that the requirements for certification are met. Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1103-1104. However, certification is essentially a “procedural” question, and a court may not consider the merits of class claims on a motion for class certification (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 436-440; Sav-On Drug Stores, Inc., supra, at 326), although, “when the merits of the claim are enmeshed with class action requirements, the trial court must consider evidence bearing on the factual elements necessary to determine whether to certify a class.” Bartold v. Glendale Federal Bank (2000) 81 Cal. App.4th 816, 829 (superseded by statute on other grounds). Further, while certification must be supported by substantial evidence, the evidence need not even be “compelling.” Sav-On Drug Stores, Inc., supra, at 328, 331. The California Supreme Court has reiterated that, because the inquiry on a motion for class certification is not based on the merits, the courts should “consider whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment. . . . Reviewing courts consistently look to the allegations of the complaint and the declarations of attorneys representing the plaintiff class to resolve this question.” Sav-On Drug Stores, Inc., supra, 34 Cal.4th at 327 (citations and internal quotation marks omitted). 16 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 There are two basic requirements for class certification: (1) an ascertainable class; and (2) a well-defined community of interests. Vasquez v. Superior Court (1971) 4 Cal.3d 800, 809; Duran, supra, 59 Cal.4th at 28. The evidence submitted in support of this Motion meets these requirements. C. Plaintiff’s Evidence Meets All the Requirements for Class Certification. 1. There Is an Ascertainable Class of Sales Representatives Who Did Not Receive All their Commission Payments In a Timely Manner. In the broadest terms, a “class is ascertainable if it identifies a group of unnamed plaintiffs by describing a set of common characteristics sufficient to allow a member of that group to identify himself as having a right to recover based on the description.” Harper v. 24 Hour Fitness, Inc. (2008) 167 Cal. App.4th 966, 977 (citations and internal quotation marks omitted). Ascertainability depends on an examination of the following: “(1) the class definition; (2) the size of the class; and (3) the means available for identifying the class members.” Reyes v. San Diego County Board of Supervisors (1987) 196 Cal.App.3d 1263, 1271. There is no minimum number required to maintain a class action in California (Rose v. City of Hayward (1981) 126 Cal.App.3d 926, 934), but under federal law, “numerosity” is generally presumed satisfied if there are more than 40 potential class members. See, e.g., Stewart v. Abraham, 275 F.3d 220, 226-27 (3d Cir. 2001). It should be noted that ascertainability does not mean that each class member must be immediately identifiable. California courts have approved class definitions embracing thousands or millions of unidentified customers of defendants. See, e.g., Lazar v. Hertz Corp. (1983) 143 Cal.App.3d 128, 138. However, Plaintiff is not proposing such a diffuse class in this case. The first two elements of ascertainability are easily met in the case before the Court. HP has already identified the class and has produced a class list and a supplemental class list, which contain almost 3,000 individuals. Thus, the class is easily ascertainable, and the size of the class justifies proceeding as a class because it would be impracticable to have all the class members before the Court individually. CCP § 382. 17 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The class definition should be “precise, objective and presently ascertainable,” sufficient to enable potential class members hearing it “to determine whether they are members of the class plaintiffs wish to represent.” Global Minerals & Metals Corp. v. Superior Court (2003) 113 Cal.App.4th 836, 858. It should be defined in terms of objective characteristics and common transactional facts. Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal. App4th 908, 915. Plaintiff’s proposed definition meets these criteria. 2, There Is a Community of Interest Among All Class Members Because Common Questions of Fact and Law Predominate. There are three factors to consider in determining the existence of a community of interest: namely, whether there are (1) “predominant common questions of law or fact” (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470); (2) class representatives with claims typical of the class; and (3) class representatives who can adequately represent the class. Id.; see also Duran, supra, 59 Cal.4th at 28; Sav-On Drug Stores, Inc., supra, 34 Cal.4th at 326; Bell, supra, 115 Cal.App.4th at 740. “[Clommon issues may be present when a defendant’s tortious acts, as here, allegedly are the same with regard to each plaintiff.” Sav-On Drug Stores, Inc., supra, at 331 (citations and internal quotation marks omitted). The facts concerning HP’s sales compensation system are common to all the proposed class members, and those facts give rise to the common legal question about when HP was obligated to pay commissions to sales representatives, so HP’s liability can be determined by facts common to all class members. That is a single legal issue of liability applicable to the entire class, just as in Sav-On Drug Stores, Inc. supra. “[ T]he ultimate question for predominance 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.” Duran, supra, at 28 (citations and internal quotation marks omitted). 18 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Group issues clearly predominate in this case. The factual questions all involve HP’s sales compensation system, which is designed to process commission payments for all sales representatives in a standard way. The legal question common to the class is when sales representatives are entitled to commission payments. Once both of these issues are resolved on a class-wide basis, only the individual class members’ damages will need to be determined, which will be a simple function of how many commission payments were untimely. 3. Individual Damages Questions Are Not Unmanageable and Do Not Prevent Certification. HP will doubtless argue that the specifics of how many transactions were delayed for each class member and for how long preclude certification. These are damages questions, which do not preclude class certification, especially in the wage and hour context. “As a general rule, if the defendant’s liability can be determined by facts common to all members, a class will be certified even if the members must individually prove their damages.” Hicks, supra, 89 Cal.App.4th at 916; see also Duran, supra, 59 Cal.4th at 30. Individual damages will not be so unmanageable as to preclude class certification in this case. This case is not like Duran, in which the plaintiffs alleged that they were misclassified, which required a factual inquiry into whether each individual was misclassified. In this case, HP has applied a uniform set of policies and procedures to all sales representatives, such as in Sav-On, supra, 34 Cal.4th at 327-328. Once the common legal question (when are sales representatives entitled to commission payments) is resolved, the only factual inquiry necessary will be how many payments were untimely. In fact, depending on the outcome of the Court’s ruling on the parties’ motions for summary judgment/adjudication, the damages calculations may become much simpler. HP has acknowledged that virtually no transaction will be paid within 30 days. Thus, if the Court finds that Labor Code Section 204 applies, every commission payment will be late. 19 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Nor do affirmative defenses preclude certification. “Defenses that raise individual questions about the calculation of damages generally do not defeat certification.” Duran, supra, at 30 (emphasis in original). Only when a defense in which “liability itself is predicated on factual questions specific to individual claimants” is manageability a threat to certification.” Id. (emphasis in original). That is not the case here. HP has not asserted numerous individual defenses. Its defenses apply equally to all potential class members because HP relies on its own policies and procedures for its argument that sales reps were paid appropriately. 4. The Class’ Damages Are Susceptible To Common Proof Based on Statistical Sampling, and Plaintiff Has Already Begun the Sampling Process. HP’s liability to the class is based on a legal question common to all class members. Once that question is answered, the only evidence necessary will be proof of the class’ damages, which may be proved by statistical sampling, which the Supreme Court has expressly indicated may be used to manage individual questions. Duran, supra, 59 Cal.4th at 31; Bell, supra, 115 Cal. App.4th at 750. As noted above, depending on how the legal question is answered, calculating damages may be as simple as determining the number and dollar amount of each class members’ transactions because the penalties provided for by Cal. Labor Code Section 210 which provides for a $100 penalty for “any initial violation,” $200 for “each subsequent violation . . . for each failure to pay each employee, plus 25 percent of the amount unlawfully withheld.” Cal. Labor Code § 210(a). Thus, calculating damages would be simple, if time-consuming for thousands of class members. However, statistical sampling would be ideal for proving damages in this case because the calculations would be straightforward. 20 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC ~N O N n e A W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Statistical sampling has been approved to prove damages, in large part due to the relaxed standard of proof for damages applied in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946). Duran, supra, at 40 (“Uncertainty of the fact whether any damages were sustained is fatal to recovery, but uncertainty as to the amount is not.” (citations and internal quotation marks omitted)(emphases in original)); see also Bell, supra, 115 Cal. App.4th at 750. Again, this case is not like Duran, in which sampling was both (1) used improperly, and (2) used to prove liability. While sampling to prove liability is more controversial, there is no question that sampling is appropriate solely to prove damages, as in Bell. Duran, supra, at 39-40. Plaintiff has already begun the process necessary to conduct appropriate sampling by obtaining a survey of potential class members to determine representativeness and variability, consistent with Duran’s requirements. Duran, supra, at 33, 38. This survey will provide a basis for further discovery and evidence of damages based on sampling, which comports with Duran’s requirement that such evidence be considered at the certification stage. Duran, supra, at 31-32. 5: Plaintiff’s Claims Are Typical of the Class and He Will Adequately Represent the Class. The “typicality” aspect of the community of interest test requires that the Plaintiff have claims that are “typical” of the rest of the class, but does not require that all the claims be identical. Sav-On Drug Stores, Inc., supra, 34 Cal.4th at 338; Vasquez, supra, 4 Cal.3d at 809. Plaintiff in fact has essentially identical claims with the potential class members. He alleges claims under Labor Code Section 202, 203, and 204. While some potential class members may have some of these claims, but not others, Plaintiff’s claims are typical of the class as a whole, because he has both types of claims. In fact, Plaintiff is obligated to assert all potential claims that might be reasonably expected to be raised by the class in order to meet the “adequacy of representation” requirement. City of San 21 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Jose v. Superior Court (1974) 12 Cal.3d 447, 464. To meet this requirement, the class representative must be capable, through its counsel, of “vigorously and tenaciously” protecting the interests of the class. Simons v. Horowitz (1984) 151 Cal. App.3d 834, 846. Plaintiff has claims that are identical to the proposed class members, and he has demonstrated that he is willing and able to protect the interests of the proposed class members. 6. Class Counsel Will Competently Represent the Class. Similarly, another requirement for class certification is that the Court determine that proposed class counsel is competent to represent the class. Cal Pak Delivery, Inc. v. United Parcel Service, Inc. (1997) 52 Cal.App.4th 1, 12. The litigation thus far has demonstrated that Plaintiff, through his attorneys, has vigorously pursued and protected the interests of the proposed class members. Further, Plaintiff submits that his attorneys are well-qualified to represent him and the class. Further details of the qualifications of Plaintiff’s attorneys are set forth in the Declarations of Jonathan Parrott, 2; and the Declaration of Steven R. Young. D. A Class Action Is a Fair and Efficient Means of Resolving the Issues, and Will Result in Substantial Benefits to the Class and to Other Employees of HP. In addition to meeting the requirements for class certification, the proposed class would be a superior method of adjudicating the controversy at issue than any other method, and would result in substantial benefits to both the class and other employees of HP. Class certification is appropriate if common questions predominate and the class action mechanism would be superior to other methods of adjudication. See, e.g., Walsh v. IKON Office Solutions, Inc. (2007) 148 Cal. App.4th 1440, 1450. Specifically, a certification proponent must show, by a preponderance of the evidence, that proceeding as a class action is “superior to alternate means for a fair and efficient adjudication of the litigation.” Sav-On Drug Stores, Inc., supra, 34 Cal.4th at 332. 22 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Given the evidence concerning HP’s standard policies and procedures for paying sales commissions, as well as the many potential class members, a class action is by far the most efficient method of adjudicating the claims in this action. California courts have identified other factors to weigh in determining whether a class should be certified, including the likelihood of “substantial benefits” due to the class action. Linder, supra, 23 Cal.4th at 435. Wage and hour claims are regularly certified precisely because “the class action mechanism allows claims of many individuals to be resolved at the same time, eliminates the possibility of repetitious litigation and affords small claimants with a method of obtaining redress for claims which otherwise would be too insignificant to warrant individual litigation.” Bufil, supra, 162 Cal. App.4th at 1208. In addition, there would be substantial prejudice to potential class members if class certification is denied because Defendant could seek dismissal of individual claims by class members based on the statute of limitations. The statute of limitations period for Labor Code claims is three years. Pineda v. Bank of America, N.A. 50 Cal.4th 1389. Plaintiff filed this action on January 17, 2012. Thus, if the proposed class were not certified, many class members who may have relied on the filing of this action, or who were unaware of it, would lose their claims. See, e.g., Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1122; see also Crown Cork & Seal Co., Inc. v. Parker, 462 U.S. 345, 353-54 (1983). Nor can Defendant argue that each of the thousands of sales representatives affected could obtain recovery in individual or other administrative proceedings. The courts have held that a class action to enforce Labor Code violations may still be superior to Labor Commission proceedings. See, e.g., Bell, supra, 115 Cal. App.4th at 745-46. 23 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Other factors include: (1) “redress for numerous aggrieved parties who could not otherwise maintain individual actions; [2] the avoidance of the possibility of multiple actions; [3] and the disgorging of the wrongdoer’s unjust enrichment.” Reese v. Wal-Mart Stores, Inc. (1999) 73 Cal. App.4th 1225, 1235-1236. Each of these factors weighs in favor of certifying a class. The first is especially relevant because it would likely be impractical for many sales reps to bring individual actions, and thus class certification would benefit both the class and the courts, because individual suits would be avoided. The third factor is also important. Delays in paying sales reps benefited HP because it had extended use of the money that should have been paid to its employees. HP should not receive interest-free loans on the backs of its employees. E. This Motion Was Filed As Soon As Practicable. Consistent with case law, Plaintiff has filed this Motion as soon as practicable. See, e.g., City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 453. The Court has not even set a deadline to file this Motion, but Plaintiff has nevertheless filed it as soon as reasonably possible in order to keep this case moving expeditiously. The delays in this case have been mostly attributable to HP. HP filed multiple demurrers and did not even file an Answer for more than a year after the case was filed. Further, due to Defendant’s intransigence in responding to discovery, Plaintiff had to file multiple motions simply to obtain basic facts to support his class allegations, despite the fact that California law clearly permits class discovery precisely in order to permit a party to determine if class certification is warranted. See, e.g., Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360, 373; Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 836 (superseded by statute on other grounds). In fact, a plaintiff is entitled to conduct investigation and discovery prior to a certification hearing, precisely because such a determination “cannot realistically be made 24 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC AN nn Bs W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 until the parties have had a chance to conduct reasonable investigation.” Atari, Inc. v. Superior Court (1985) 166 Cal.App.3d 867, 870. While Plaintiff is not satisfied with HP’s responses to discovery thus far, and discovery disputes remain outstanding (see Dec. Parrott, 35), Plaintiff has determined that it is in the best interests of the class, and judicial efficiency, to move this case forward with class certification at this time. V. CONCLUSION. For all the foregoing reasons, Plaintiff respectfully requests that the Court grant the relief requested in the Notice of Motion, and certify a class, appoint Plaintiff as Class Representative, and appoint Plaintiff’s counsel as Class Counsel. Dated: December 21, 2015 /s/ Jonathan Parrott FRANKLIN D. AZAR (pro hac vice) KEITH R. SCRANTON (pro hac vice) JONATHAN PARROTT (248652) FRANKLIN D. AZAR & ASSOCIATES, P.C. 14426 East Evans Avenue Aurora, CO 80014 Telephone: ~~ (303) 757-3300 Facsimile: (303) 759-5203 azarf@fdazar.com scrantonk @fdazar.com Attorneys for Plaintiff 25 PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION Case No.: 30-2012-00537897-CU-BT-CXC