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addressing commonality and predominance together
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Case No. 12cv1395 DMS (BGS)
07-29-2013
AMY COLLINS , et al., Plaintiffs, v. ITT EDUCATIONAL SERVICES, INC., Defendant.
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR CLASS CERTIFICATION
In this wages and hours action for violation of California labor laws, Plaintiffs move to certify a class action under Federal Rules of Civil Procedure 23(b)(2) and (3). Defendant filed an opposition and Plaintiffs replied. On June 28, 2013, the matter came on for hearing. David R. Markham and Janine Menhennet appeared on behalf of Plaintiffs. Evan R. Moses and Aaron Cole appeared on behalf of Defendant. For the reasons which follow, Plaintiffs' motion is granted in part and denied in part.
The parties filed extensive evidentiary objections. Unless specified otherwise herein, the objections are overruled.
I.
BACKGROUND
Defendant ITT Educational Services, Inc. is a for-profit college. Plaintiffs Amy Collins and Dean Riggott are Defendant's nonexempt employees who worked as student representatives in positions entitled "Representative, Master IV" and "Representative, Senior I," respectively. Their job was to contact, recruit and enroll potential students in Defendant's programs, and their duties included making telephone calls to leads provided by Defendant, meeting with potential or enrolled students in person, giving campus tours, responding to inquiries, and assisting students with enrollment and financial aid. In their second amended complaint, Plaintiffs allege Defendant (1) failed to pay overtime in violation of California Labor Code Sections 510, 1194 and 1198; (2) failed to provide meal periods and rest breaks in violation of sections 512 and 226.7; (3) failed to pay wages when due in violation of section 203; (4) failed to provide accurate itemized wage statements in violation of section 226; and (5) engaged in unfair and unlawful practices in violation of California Business and Professions Code Section 17200 et seq. by failing to comply with California wages and hours laws. Plaintiffs seek damages and injunctive relief.
Unless stated otherwise, all references are to the California Labor Code.
In their pending motion, Plaintiffs seek to certify a class with up to six subclasses, defined as:
All California residents who are current and former employees of ITT who held the positions of "Representative, Master IV" and "Representative, Senior I" at ITT's California campuses between April 17, 2008 and the present ("the Class Period"), and who:(Pls' Mot. at 9 (all emphases in original).) Plaintiffs request certification of the Injunctive Relief Class under Rule 23(b)(2), and the remaining classes under Rule 23(b)(3).
a) Were not paid for all hours worked as required by the applicable Labor Code and Industrial Welfare Commission ("IWC") Wage Order Requirements in any pay period that is within the Class Period ("The Off-the-Clock Class"); and/or
b) Were not provided with overtime pay as required by the applicable Labor Code and IWC Wage Order Requirements ("The Overtime Class") in any pay period that is within the Class Period. The Class includes only those employees who worked more the than eight (8) hours in any given day and/or more than forty (40) hours in any given week during the Class Period, and who were not paid overtime compensation pursuant to the applicable California Labor Code ("Labor Code") and IWC Wage Order Requirements; and/or
c) Were not provided with meal and rest periods as required by the applicable Labor Code and IWC Wage Order during the Class Period ("The Meal and Rest Period Class"); and/or
d) Were not provided with accurate itemized statements as required by the applicable Labor Code during the Class Period ("The Wage Statement Class"); and/or
e) Were not provided with all wages due and owing at the time of their termination as required by the applicable Labor Code during the Class Period ("The Waiting Time Period Class"); and/or
f) Those currently-employed Representatives who are subject to Defendant's policies regarding overtime, meal, and rest breaks ("The Injunctive Relief Class").
II.
DISCUSSION
"The class action is 'an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.'" Wal-Mart Stores, Inc. v. Dukes, ___U.S.___, 131 S.Ct. 2541, 2550 (2011). "A party seeking class certification must satisfy the requirements of Federal Rule of Civil Procedure 23(a) and the requirements of at least one of the categories under Rule 23(b)." Wang v. Chinese Daily News, Inc., 709 F.3d 829, 832 (9th Cir. 2013); United Steel, Paper & Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv. Workers Int'l Union v. ConocoPhillips Co., 593 F.3d 802, 806-07 (9th Cir. 2010) ("United Steel") (burden is on the moving party).
The district court must conduct a rigorous analysis to determine whether the prerequisites of Rule 23 have been met. Gen. Tel. Co. v. Falcon, 457 U.S. 147, 161 (1982). It is a well-recognized precept that "the class determination generally involves considerations that are 'enmeshed in the factual and legal issues comprising the plaintiff's cause of action."' Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 (1978) (quoting Mercantile Nat'l Bank v. Langdeau, 371 U.S. 555, 558 (1963)). However, "[a]lthough some inquiry into the substance of a case may be necessary to ascertain satisfaction of the commonality and typicality requirements of Rule 23(a), it is improper to advance a decision on the merits at the class certification stage." Moore v. Hughes Helicopters, Inc., 708 F.2d 475, 480 (9th Cir. 1983) (citation omitted). Rather, the Court's review of the merits is limited to those aspects relevant to making the certification decision on an informed basis. See Fed. R. Civ. P. 23 Advisory Committee Notes. If a court is not fully satisfied that the requirements of Rules 23(a) and (b) are met, certification should be denied. Falcon, 457 U.S. at 161. A. Rule 23(a) Requirements
"Rule 23(a) ensures that the named plaintiff is an appropriate representative of the class whose claims she wishes to litigate. The Rule's four requirements - numerosity, commonality, typicality, and adequate representation - effectively limit the class claims to those fairly encompassed by the named plaintiff's claims." Dukes, 131 S.Ct. at 2550-51 (internal quotation marks and citations omitted). "A party seeking class certification must affirmatively demonstrate his compliance with the Rule - that is, he must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc." Id. at 2551 (emphasis in original).
1. Commonality Under Rule 23(a) and Predominance Under Rule 23(b)(3)
For efficiency, commonality under Rule 23(a) is considered together with predominance under Rule 23(b)(3). See Amchem Prods, Inc. v. Windsor, 521 U.S. 591, 609 (1997) ("Rule 23(a)(2)'s 'commonality' requirement is subsumed under, or superseded by, the more stringent Rule 23(b)(3) requirement that questions common to the class 'predominate over' other questions.").
Rule 23(a) requires the existence of "questions of law or fact common to the class." Fed. R. Civ. P. 23(a)(2). This means that the putative class members' claims depend on a common contention, which
must be of such nature that it is capable of classwide 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. [¶] What matters to class certification ... is not the raising of common "questions" - even in droves - but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation. Dissimilarities within the proposed class are what have the potential to impede the generation of common answers.Dukes, 131 S.Ct. at 2551 (internal quotation marks and citation omitted). "The predominance inquiry [under Rule 23(b)(3)] focuses on the relationship between the common and individual issues and tests whether the proposed class [is] sufficiently cohesive to warrant adjudication by representation." Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, 944 (9th Cir. 2009) (internal quotation marks, footnote and citation omitted).
Plaintiffs argue the case meets the commonality and predominance requirements because Defendant implemented corporate policies that violate California labor laws. Alternatively, Plaintiffs contend Defendant's uniform corporate culture fostered labor law violations.
a. Overtime and Off-the-Clock Work
Plaintiffs contend they are discouraged from reporting overtime, and, as a result, they work off the clock to meet performance benchmarks. Defendant's policy regarding overtime compensation and reporting time worked has been reflected in its Policy Manual from the beginning of the Class Period through October 2010. It provides, in pertinent part:
All non-exempt overtime must be approved in writing in advance of the hours worked by the next two levels of management.(Markham Decl. Ex. G (emphasis added).) In October 2010, the policy was revised to remove the requirement of obtaining written pre-approval from two levels of management before working any overtime. It was revised to require pre-approval of only one supervisor, and it added a warning that failure to secure pre-approval could result in discipline, including termination:
By law, the company is required to pay for any overtime which we "Suffer or Permit" to occur. If a manager knows unauthorized overtime is being worked and does not stop it, the company must pay for the overtime. ...
Each manager is required to make sure the activities of their employees comply with Wage and Hours regulations. Careful attention and tracking of non-exempt hours must be made to ensure compliance. All overtime must be documented on the timecard and signed by the employee and the next level of supervision.
ITT/ESI will compensate its Nonexempt employees for all overtime worked in accordance with all applicable federal and state wage and hour laws and regulations. ... ITT/ESI prohibits the granting of compensatory time or "comp time" to Nonexempt employees who work overtime. Compliance with all state wage and hour laws with more stringent requirements is also required.(Id. Ex. J.) In connection with the revised policy, the managers were admonished: "This is why [it] is very important to consistently discipline those non-exempt employees who violate the Company's restriction on working unauthorized overtime." (Id. Ex. H.) The policy was incorporated into the employee handbook. (Id. Ex. B.)
Nonexempt employees must obtain their supervisor's prior approval to work overtime; however, all overtime worked must be paid, regardless of whether the overtime work was approved.
All Time Worked by a Nonexempt employee must be completely and accurately recorded on the ... time card ... and the Nonexempt employee must be paid for all time recorded. ... A Nonexempt employee will be subject to corrective action up to and including termination of employment, if the Nonexempt employee fails to: (a) accurately report all Time Worked ...; or (b) obtain his or her supervisor's prior approval to work overtime.
Plaintiffs contend they often worked uncompensated overtime. They argue, based on declarations from numerous representatives, that it is impossible to secure pre-approval of overtime because overtime is usually not planned and arises when a student appointment starts late or runs late. To obtain pre-approval, the representative would have to leave the appointment; but under Defendant's customer service policy, "if a student comes in and needs assistance, they will be taken care of," even if the student was late or the appointment ran late. (Masters Depo. at 35.) Plaintiffs point out that leaving a student to seek pre-approval would violate the customer service policy. Plaintiffs further argue that the overtime policy is unlawful because it provides no means to seek approval after the fact. Alternatively, they contend their performance benchmarks are impossible to meet without working overtime. (See Reali Decl. Ex. 14 (2010-11 Representative Compensation Plan at 10 & 12); see also Markham Decl. Exs. D & E (excerpts from the 2011-12 and 2012-13 Representative Performance Plans).) Plaintiffs submitted declarations indicating that when unauthorized overtime was reported on time cards, the time cards sometimes were returned with a direction to revise them so as to remove overtime entries, or the employee was instructed to work shorter days for the rest of the pay period to cancel out the overtime. In either case, the employees were strongly discouraged from reporting overtime. Some were afraid to ask for permission for fear of losing their job, so they chose instead to work for free.
Plaintiffs filed their own declarations, as well as declarations from ten putative class members and eight representatives who worked in categories other than Representative, Master IV, and Representative, Senior I. Defendant moved to strike the latter eight declarations, arguing the witnesses are not putative class members. The undisputed evidence shows there are six levels of representative positions (Representative; Representative, Senior I & II; and Representative, Master I through IV ). The principal difference among them is the increased performance expectations for each higher level and corresponding increase in hourly rate of pay. (Reali Decl. Ex. 14 (2010-11 Representative Compensation Plan); Mojtabai Decl. at 2.) Representatives' job duties were essentially the same (with the highest levels having some additional training duties), and the same pay policies applied to all levels. (Id.) Accordingly, representatives who are not putative class members are nonetheless percipient witnesses with relevant information regarding Defendant's employment policies and practices. Defendant's motion to strike is therefore denied.
Helena Masters was designated as Defendant's person most knowledgeable about overtime, meal period and rest break policies.
Representatives who do not meet the performance benchmarks for their category are demoted to a lower level representative position (and lower pay). (Reali Decl. Ex. 14 (2010-11 Representative Compensation Plan); Mojtabai Decl. at 2.)
Defendant argues overtime and off-the-clock violations are not amenable to classwide proof because Defendant has fifteen campuses throughout California, (Mojtabai Decl. at 2), and Plaintiffs did not present evidence from each campus and have not shown Defendant's policies are uniform across the campuses. Defendant submitted numerous declarations from putative class members and other representatives, showing their respective experiences with overtime differed. For example, some employees: (1) had no difficulty obtaining overtime approval either before or after the fact; (2) did not find it difficult to meet their performance benchmarks without working overtime; or (3) satisfied Defendant's customer service requirement of tending to students by having another representative assist students who were late for appointments.
Nader Mojtabai is Defendant's District Manager for Southern California campuses.
The proponent of class certification must not only come forth with a plausible argument why the commonality requirement of Rule 23(a)(2) has been met, but must support it with evidence. To meet their burden, Plaintiffs "must show significant proof" that Defendant "operated under a general policy of violating California labor laws." See Wang, 709 F.3d at 834 (internal quotation marks, citation and brackets omitted); see also Dukes, 131 S.Ct. at 2552-57 ("Because respondents provide no convincing proof of a companywide ... policy, we have concluded that they have not established the existence of any common question."). Although Plaintiffs argue Defendant has a uniform policy of discouraging representatives from reporting overtime and pressuring them to work off-the-clock, the evidence does not establish such a uniform practice.
A similar off-the-clock issue was addressed by the California Supreme Court in Brinker Restaurant Corp. v. Super. Ct. (Hohnbaum), 53 Cal.4th 1004 (2012). There, the plaintiff claimed he and the putative class members were forced to work off-the-clock without compensation because the employer required them to work while clocked out during their meal periods and altered meal break records. Id. at 1050. The Court noted the defendant's only formal off-the-clock policy disavowed off-the-clock work, thus requiring the plaintiff to present "substantial evidence of a systematic company policy to pressure or require employees to work off the clock." Id. at 1051. Moreover, the Court noted that the employees were clocked out during their meal periods, which "creates a presumption they are doing no work, a presumption [the plaintiff] and the putative class members have the burden to rebut." Id. The Court noted liability was contingent on proof the employer knew or should have known of off-the-clock work, yet the plaintiff presented only "anecdotal evidence of a handful of individual instances in which employees worked off the clock, with or without knowledge of awareness by [the] supervisors." Id. at 1052. Based on the foregoing, the Court ruled:
On a record such as this, where no substantial evidence points to a uniform, companywide policy, proof of off-the-clock liability would have had to continue in an
employee-by-employee fashion, demonstrating who worked off the clock, how long they worked, and whether [the employer] knew or should have known of their work.Id.
The record here is similar. As in Brinker, the only uniform policy Plaintiffs have shown is Defendant's written policy requiring employees to report all time worked (even if not pre-approved), and prohibiting off-the-clock work. In light of that policy, Plaintiffs must establish that they were uniformly required to work overtime and not report it. See Wang, 709 F.3d at 834; Brinker, 53 Cal.4th at 1051-52; In re Autozone, Inc. Wage and Hour Employment Practices Litig., ___ F.R.D. ___; 2012 WL 6679983 at *12 & 20 (N.D. Cal., Dec. 21, 2012) (written policy that differs from asserted practice "weigh[s] against, not for, certification").
Here, putative class members kept their own time by filling out time cards. Each time they turned in a time card, they certified:
I have carefully reviewed my time card. I have accurately recorded all my working time and absences, including any overtime, vacation, sick leave and meal breaks. I understand it would be a serious violation of Company policy for me to work "off-the-clock" (performing any work that is not reported on my time card), I have not been instructed to work off-the-clock or to incorrectly report my working time, absences or meal breaks.(Markham Decl. Ex. M.) These certifications create a presumption that the employee worked only the hours stated. Brinker, 53 Cal.4th at 1051. Plaintiffs have the burden to rebut the presumption. Id.
An employer is liable for wages, including overtime, when it knows or should know unreported work is occurring. Id.; see also Morillon v. Royal Packing Co., 22 Cal. 4th 575, 585 (2000) (applying fed. regulations). Plaintiffs have not shown the presumption that Plaintiffs worked only their stated hours can be overcome by common proof.
Contrary to Defendant's argument, the reason why an employee worked unpaid overtime is immaterial and does not raise individualized issues. See Chao v. Gotham Registry, 514 F.3d 280, 289-90 (2nd Cir. 2008) ("the reason an employee continues to work beyond his shift is immaterial; if the employer knows or has reason to believe that the employee continues to work, the additional hours must be counted."). On the other hand, warning employees they may be disciplined for failing to secure pre-approval does not prove that Defendant pressured them to work off-the-clock, as Plaintiffs urge. The employer who knows or should have known that overtime is being worked, is presumed to have the power to put a stop it, and a duty to do so, including by disciplinary measures. See 29 C.F.R. § 785.13 ("Management has the power to enforce the rule and must make every effort to do so."); Chao, 514 F.3d at 290-91 ("If [the employer] were serious about preventing unauthorized overtime, it could discipline [the employees] who violate the rule.").
Plaintiff's evidence provides an incomplete view of Defendant's practices because it touches on only five of fifteen campuses and presents the views of twenty employees, more than half of whom worked on only two of the five campuses. When all student representative declarations filed by both sides are taken together, they reflect overtime and off-the-clock practices of eleven out of fifteen campuses experienced by 46 employees. The declarations reveal the practices are far from uniform. Indeed, the practices at issue appear to vary from campus to campus. Plaintiffs have therefore failed to establish that Defendant had a uniform practice of requiring putative class members to work unreported overtime.
Alternatively, Plaintiffs contend liability for overtime and off-the-clock work can be proven on a classwide basis by comparing class members' time cards and Defendant's payroll records with the data in Defendant's TAPIT phone monitoring software or the computer log-in and log-off records. Plaintiffs anticipate these records will show class members were not paid for all the hours they worked. They rely on the testimony of Craig Bodkin, who was designated as Defendant's person most knowledgeable about its computer systems. He testified that TAPIT, in combination with the S3 and Congos databases, make available some basic data about telephone calls, including the time when the call was made or received, telephone extension in Defendant's telephone system, telephone number dialed out, telephone number of an answered inbound call (if caller ID is available), and duration of the call. (Bodkin Depo. at 8, 22, 39 & 41; see also Reali Decl. Ex. 7 (sample excerpts from TAPIT reports).)
Plaintiffs rely on Adoma v. University of Phoenix, Inc., 270 F.R.D. 543, 551 (E.D. Cal. 2010), in support of their position that these records enable classwide proof of liability. As in University of Phoenix, Defendant here filed numerous declarations showing that TAPIT reports and computer log-in and log-out records would not accurately reflect the time worked. For example, Defendant points out it is impossible to tell who was using an extension or computer because representatives sometimes used each other's desks, computers and/or phones; the report does not distinguish between personal and work calls; and the TAPIT report does not reflect the representatives' activities, such as meetings and campus tours. Computer log-in and log-off records are also unreliable for some of the same reasons, as well as that several representatives stated they used their work computers for personal matters and sometimes did not log-off for the day. Plaintiffs themselves testified at deposition that time worked could not be extrapolated accurately from Defendant's records. (Riggott Depo. at 201-02, 204-05, 296-97 (TAPIT and computer log-in and log-off would be unreliable indicators of time worked); Collins Depo. at 95-96 (to determine whether the time cards are accurate, the parties would have to ask each representative individually).)
According to Mr. Bodkin's testimony, personal and work calls potentially could be separated by referencing the Congos database. (Bodkin Depo. at 41-42.)
The court in University of Phoenix initially recognized that "any method of reconstructing records of hours worked ... will be imperfect. Recognition of these imperfections invites individualized inquiries into their scope." 270 F.R.D. at 550. Nevertheless, the court did not see the imperfections as an impediment to certification because it concluded it could assess the accuracy of the computer reports by "using a few representative inquiries whose results will be extrapolated to the class." Id. Citing Hilao v. Estate of Marcos, 103 F.3d 767 (9th Cir. 1996) and Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571 (9th Cir. 2010), the court reasoned that these precedents "permit a representative inquiry to determine the magnitude of" any inaccuracy. University of Phoenix, 270 F.R.D. at 551.
Since University of Phoenix was decided, however, the United States Supreme Court overturned the Ninth Circuit decision in Dukes and disapproved of the sampling approach sanctioned by Hilao and Dukes. Dukes, 131 S.Ct. at 2550. University of Phoenix therefore offers no support for Plaintiffs' argument that Defendant's records may be used to prove liability on a classwide basis.
After Dukes, the court in In re Autozone rejected the argument that computer records could be used as classwide proof of liability for off-the-clock work. 2012 WL 6679983 at *11. There, in light of the employer's uniform written policy that, like here, prohibited off-the-clock work, the court held that explaining the reasons for the discrepancy in the time worked and time paid would require an individualized inquiry. Id. Here, Plaintiffs conceded at oral argument that Defendant would have an opportunity to show why the time in question need not be paid, e.g., because employees were making personal phone calls or forgot to log-off for the day. Thus, computer records notwithstanding, an individualized inquiry into Defendant's liability for overtime and off-the-clock work would be necessary. See Wang, 709 F.3d at 836, quoting Dukes, 131 S.Ct. at 2561 ("Employers are ... entitled to litigate any individual affirmative defenses they may have to class members' claims."). Because Plaintiffs have failed to establish commonality under Rule 23(a)(2) and predominance under Rule 23(b)(3), their request to certify a class under Rule 23(b)(2) or (3) for overtime and off-the-clock work violations is denied.
b. Meal Periods
Plaintiffs also request to certify a class action for meal period violation claims. They allege they were often not able to take meal periods as provided by law, but were nevertheless required to report them on their time cards.
Under California Labor Code Section 512, an employer satisfies its obligation to provide a meal period "if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so." Brinker, 53 Cal.4th at 1040. "[A]bsent waiver, section 512 requires a first meal period no later than the end of an employee's fifth hour of work, and a second meal period no later than the end of an employee's 10th hour of work." Id. at 1041.
Prior to October 2011, Defendant had no written meal period policy. (Masters Depo. at 102.) Since that time, Defendant established a meal period policy. It is reflected in its Employee Handbook, as follows:
When a nonexempt employee is scheduled to work eight hours or more in a workday, the employee must set aside an unpaid meal period of at least 30 minutes. In some departments meal periods are scheduled by the supervisor while in other areas they may be taken at the employee's discretion.(Markham Ex. C; see also Ex. L.)
A nonexempt employee must not perform any job duties during any unpaid meal period lasting at least 30 minutes. A nonexempt employee must obtain his supervisor's prior approval to work during his or her meal period; however, all time worked during the meal period must be paid, regardless of whether the time worked was approved.
Plaintiffs argue Defendant had a uniform policy of not allowing or discouraging meal periods, while requiring class members to record a meal period on their time cards. They also contend that Defendant's policy was unlawful until October 2011 because it was not reduced to writing, and that the written policy remains unlawful because it does not state the meal period must be taken before the end of the fifth hour of work.
The express language of Defendant's written meal period policy belies Plaintiffs' assertion that they were discouraged from taking meal breaks and had to report such breaks, even if not taken. (Cf. Ex. C.) In addition, as with the overtime and off-the-clock claims, the numerous declarations filed by the parties do not reflect a uniform practice. Plaintiffs' declarations show that representatives were required to record meal periods on their time cards, they sometimes did not have time to take meal breaks and sometimes could take the break only after the fifth hour of work, and their meal periods were sometimes interrupted with calls to see a student needing assistance. In six declarations submitted by Plaintiffs, which represent only three of the fifteen campuses, employees stated they were not told they had to take their meal period before the fifth hour of work. On the other hand, Defendant filed declarations from representatives who always took work-free meal breaks, and were encouraged and reminded by their supervisors to do so. Many representative and supervisor declarations state employees were informed in training when they were hired and in weekly meetings thereafter that meal periods must be taken before the fifth hour of work. The declarations taken together show that implementation of the policy varied from campus to campus, and is not susceptible to classwide proof. Accordingly, Plaintiffs have not established commonality under Rule 23(a)(2) or predominance under Rule 23(b)(3) for meal period violations.
c. Rest Breaks
Plaintiffs also seek to certify a class for rest break violations. They claim they were not informed they were entitled to take rest breaks as provided by California law and often were unable to take such breaks due to the demands of work. Under California Labor Code Section 226.7, nonexempt employees are entitled to rest breaks, and "[a]n employer is required to authorize and permit" them. Brinker, 53 Cal.4th at 1033.
As with meal breaks, Defendant had no written rest break policy until October 2011. (Masters Depo. at 102.) The rest break policy, as reflected in the Employee Handbook since October 2011, states in pertinent part:
As operational requirements permit and working conditions warrant, an employee is encouraged to take up to a 15-minute paid break during any work period of four consecutive hours. ...(Markham Ex. C (updated Oct. 3, 2011); see also Ex. L.) Plaintiffs argue the Employee Handbook demonstrates a uniform policy that representatives were not authorized to take rest breaks because, before 2011, there was no written policy in place, and after 2011, the policy merely encouraged breaks if "operational requirements permit and working conditions warrant."
Defendant counters by citing declarations from various representatives and supervisors showing that supervisors received labor law training and each had their own means of informing employees of the rest break requirement, and that representatives were informed of their right to take rest breaks in training programs they received upon being hired. Many representatives stated they were encouraged and reminded by their supervisors take rest breaks. The declarations filed by Plaintiffs reflect a different policy, where representatives were not informed of their right to take rest breaks and often did not have time to take such breaks. Each side paints a different picture regarding how representatives were informed of the rest break policy and how the policy was applied. For the reasons stated regarding the meal period policy, Plaintiffs' evidence is insufficient to show a uniform practice by Defendant concerning rest breaks prior to publishing the written policy in 2011.
As an additional basis for certification, Plaintiff's claim the written rest break policy in effect since October 2011, is facially invalid because it impermissibly conditions such breaks on "operational requirements" and "working conditions." The written policy is consistent with Plaintiffs' claim that representatives were not authorized to take rest breaks and often were unable to take such breaks because of work-related demands.
Defendant argues, based on declarations it submitted, that Plaintiffs have failed to establish a uniformly applied rest break policy. The Court disagrees. It is undisputed Defendant's written policy applied to all putative class members. In addition, a purely legal issue is raised, that is, whether the written policy is sufficient under California law.
To the extent Defendant contends rest breaks can be waived by representatives who voluntarily chose to work, the argument is unavailing. "No issue of waiver ever arises for a rest break that was required by law but never authorized; if a break is not authorized, an employee has no opportunity to decline to take it." Brinker, 53 Cal.4th at 1033. To the extent Defendant claims the individual supervisors' encouragement and reminders to take rest breaks override the written policy, the argument presents a legal issue capable of class-wide resolution. Thus, to the extent the rest break claims are based on the legality of Defendant's written policy, the Court finds Plaintiffs have met their burden regarding commonality under Rule 23(a)(2) and predominance under Rule 23(b)(3).
d. Wage Statements and Waiting Time Penalties
Plaintiffs also allege Defendant failed to provide accurate wage statements, as Plaintiffs were discouraged from accurately reporting time they worked. Because this claim is derivative of the overtime, off-the-clock, and meal period claims, class certification is denied for the same reasons.
Plaintiffs' waiting time penalty claim applies only to terminated employees. It is based on the theory that time worked prior to termination was not accurately reported, and therefore terminated representatives were not paid all wages due upon their termination. Like the wage statement claim, this claim is derivative of the overtime, off-the-clock, and meal period claims. Certification of the waiting time class is therefore denied for the same reasons.
2. Numerosity, Typicality and Adequacy
Because the Court finds Plaintiffs have established commonality only with respect to the rest break violation claim, the requirements of numerosity, typicality and adequacy are addressed only as they relate to that claim. See Wang, 709 F.3d at 832 (all requirements of Rule 23(a) and one of the three requirements of Rule 23(b) must be shown).
a. Numerosity
Plaintiffs maintain there are 175 putative class members. Defendant does not dispute the class size, and does not contend the numerosity requirement is not met. The Court finds the putative class is sufficiently large to meet the numerosity requirement of Rule 23(a)(1).
b. Typicality
The typicality requirement of Rule 23(a)(3) focuses on the relationship of facts and issues between the class and its representatives. "[T]he commonality and typicality requirements of Rule 23(a) tend to merge. Both serve as guideposts 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." Dukes, 131 S.Ct. at 2551 n.5 (internal quotation marks and citation omitted). "[R]epresentative claims are 'typical' if they are reasonably co-extensive with those of absent class members; they need not be substantially identical." Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998). "The test of typicality is whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiffs, and whether other class members have been injured by the same course of conduct." Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992) (citation and internal quotation marks omitted).
Defendant presents several arguments why Plaintiffs are not typical. For example, they argue Ms. Collins is not typical of other Master IV representatives because no other Master IV representative has submitted a declaration on Plaintiffs' behalf, Plaintiffs are employed at only one campus location, both Plaintiffs are current employees and have not been terminated, neither Plaintiff testified he or she experienced a situation where they were forced to work overtime, and neither Plaintiff testified he or she was misled regarding meal and rest break policies. Given that only the written rest break policy subclass will be certified, Defendant's typicality arguments are moot. Plaintiffs' claims are sufficiently co-extensive with putative class members as to the asserted rest break violations. Thus, they meet the typicality requirement of Rule 23(b)(3).
This argument is based on an inaccurate premise. With their moving papers, Plaintiffs filed a declaration of Francine Lopez, a Representative, Master IV. (See Reply at 6.)
c. Adequacy
Rule 23(a)(4) requires a showing that "the representative parties will fairly and adequately protect the interests of the class." Fed. R. Civ. P. 23(a)(4). This requirement is grounded in constitutional due process concerns: "absent class members must be afforded adequate representation before entry of judgment which binds them." Hanlon, 150 F.3d at 1020. In reviewing this issue, courts must resolve two questions: "(1) do the named plaintiffs and their counsel have any conflicts of interest with other class members, and (2) will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the class?" Id. The named plaintiffs and their counsel must have sufficient "zeal and competence" to protect the interests of the rest of the class. Fendler v. Westgate-California Corp., 527 F.2d 1168, 1170 (9th Cir. 1975).
Plaintiffs filed declarations stating they understand their responsibilities as class representatives and are able and willing to carry them out. They also assert they have no conflicts of interest with putative class members. Both Plaintiffs have been extensively deposed during class certification discovery.
Defendant disputes that Plaintiffs are adequate. First, they point to Ms. Collins' deposition testimony that on occasion when no supervisor was available, the most senior representative working at the time was de facto in charge, which sometimes included approving overtime requests. (Collins Depo. at 104-07.) Defendants argue this places Ms. Collins in conflict with the putative class because she was carrying out the policies she claims were unlawful. The Court finds persuasive the reasoning of In re Autozone, where the same argument was raised. The court reasoned that where, as here, "the Plaintiffs' theory is that Defendant's policies, not the ... managers, are at fault," there is no conflict of interest if the class includes the managers. In re Autozone, 2012 WL 6679983 at *9. Alternatively, Defendant's argument is rejected as moot because only Plaintiffs' proposed rest break violation remains in contention, and the argument has no relevance to the facial validity of Defendant's rest break policy.
Ms. Collins testified when she was put in charge, she encouraged representatives to accurately record their time and granted requests for overtime approval. (Collins Depo. at 106.)
Defendant next argues Ms. Collins is inadequate because her vindictiveness toward Defendant would cloud her judgment. This argument is based on Ms. Collins' testimony about her psychological evaluation prepared in another action against Defendant. Ms. Collins stated in that examination she was angry at her supervisors. (See Collins Depo. at 275-76, 278, 281-82). The testimony, however, neither indicates Ms. Collins has a conflict with the putative class nor that she is unwilling or unable to vigorously prosecute this action. Accordingly, the argument is rejected.
Last, Defendant maintains both Plaintiffs are inadequate because each is pursuing a separate lawsuit against Defendant. While Ms. Collins has filed a sexual harassment lawsuit, Defendant has not identified any conflict of interest with the putative class or lack of zeal and competence. In addition, Defendant does not contend that class members will be prejudiced by Plaintiffs' other pending actions. The other lawsuits do not render Plaintiffs inadequate representatives.
Defendant does not dispute the adequacy of Plaintiffs' counsel. Based on the declarations of David Markham and Stephen Morris, including Exhibit N, the Court finds counsel adequate for purposes of Rule 23(a)(4) and (g)(1). B. Rule 23(b)(3) Requirements
Certification under Rule 23(b)(3) is proper when "the questions of law or fact common to class members predominate over any questions affecting only individual members, and ... a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. Proc. 23(b)(3). As discussed above, the rest break violation claim meets the predominance requirement of Rule 23(b)(3). The superiority requirement is satisfied as well.
The superiority requirement includes consideration of:
(A) the class members' interests in individually controlling the prosecution or defense of separate actions;Fed. R. Civ. Proc. 23(b)(3). This inquiry "requires the court to determine whether maintenance of this litigation as a class action is efficient and whether it is fair," such that the proposed class is superior to other methods for adjudicating the controversy. Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168, 1175-76 (9th Cir. 2010).
(B) the extent and nature of any litigation concerning the controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and
(D) the likely difficulties in managing a class action.
Neither party addressed the element of the class members' interest in individually controlling the prosecution of separate actions. Given the circumscribed scope of the rest break subclass, the class members' interest in this regard is likely not very strong. Neither party addressed the element of any litigation already begun by the class members. Although it appears that Plaintiffs have each filed individual actions against Defendant, Defendant does not indicate that those actions overlap in any way with this putative class action. And neither party addressed the element of desirability or undesirability of concentrating the rest break claim in this forum. Defendant has a campus in San Diego, and this action is limited to Defendant's California campuses. Furthermore, it is unlikely the class members would commence individual actions on their own, given the limited scope of the rest break claim. This factor therefore does not negate the superiority of a class action in this forum.
With respect to the likely difficulties of managing this case as a class action, Defendant first argues the classes are not ascertainable because the only way to determine membership is to adjudicate liability. This argument is rejected because the rest break violation is based on Defendant's written policy applicable to all putative class members. The class definition also uses objective criteria to define the class.
Finally, Defendant's argument that a class action is not superior is based primarily on the assumption that proof of damages is required to prove liability and damages will require an individualized inquiry. Because liability for rest break violations will be determined based on the written policy in question, common issues predominate and any individual determination of damages will not defeat class certification. See Leyva v. Medline Indus. Inc., ___ F.3d ___; 2013 WL 2306567 *3 (9th Cir. May 28, 2013); Yokoyama v. Midland Nat'l Life Ins. Co., 594 F.3d 1087, 1094 (9th Cir. 2010). Accordingly, as to Plaintiffs' rest break claim, a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. C. Rule 23(b)(2)
Rule 23(b)(2) allows for class certification when "the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole." Defendant does not dispute that Rule 23(b)(2) certification is proper. Because Plaintiffs' rest break claim is based on a written policy applicable to all putative class members, it meets the requirements of Rule 23(b)(2).
III.
CONCLUSION
For the foregoing reasons, Plaintiffs have met the requirements for certification of a class action under Rule 23(b)(2) and (3) with respect to the their rest break violation claim. Plaintiffs also have met their burden to be appointed as class representatives, and for their counsel to be appointed as counsel for the class. Accordingly, it is hereby ORDERED as follows:
1. Plaintiffs' motion for class certification is granted pursuant to Federal Rule of Civil Procedure Rule 23(b)(2) and (3) on the issue whether Defendant's written policy failed to authorize and permit rest breaks as required by California law and on the related claims of whether monetary and injunctive relief should be awarded. In all other respects, Plaintiffs' motion is denied.
2. The Court certifies a class defined as:
All California residents who are current and former employees of ITT Educational Services, Inc. ("ITT") who held the positions of "Representative, Master IV" and "Representative, Senior I" at ITT's California campuses between October 3, 2011 and the present ("the Class Period"), and who:Subclass a) is certified under Rule 23(b)(3), and subclass b) is certified under Rule 23(b)(2).
a) were not provided with rest breaks as required by the applicable provisions of the California Labor Code and the Industrial Welfare Commission ("IWC") Wage Orders during the Class Period; and/or
b) are currently-employed and are subject to ITT's rest break policy.
3. Plaintiffs Amy Collins and Dean Riggott are appointed as class representatives and their counsel David Markham and Stephen Morris are appointed as counsel for the class.
4. Class counsel shall give notice to the class of the pendency of this action. No later than August 21, 2013, the parties shall jointly file a motion for approval of their proposed form of notice, method of distributing it to the class members, and time for distributing it. The proposal shall comply with Rule 23(c)(2)(B).
IT IS SO ORDERED. DATED: July 29, 2013
/s/_________
HON. DANA M. SABRAW
United States District Judge