MICHAEL J. SENG, Magistrate Judge.
On January 10, 2014, plaintiff Amie Holak ("Plainitff") filed the instant motion seeking class certification pursuant to Rule 23 of the Federal Rules of Civil Procedure against defendant Kmart Corporation ("Defendant"). (ECF No. 85.) Both parties have filed cross-motions to strike declarations provided in support and defense of the certification motion. (ECF Nos. 95, 104.) Additionally, on March 3, 2014, Plaintiff filed a motion to modify the scheduling order and reopen discovery to allow further briefing in support of the certification motion. (ECF Nos. 113.)
The matters have been fully briefed, and on March 17, 2014, the Court deemed the matters submitted on the pleadings. (ECF No. 124.)
Plaintiff filed the instant action on January 23, 2012 in Fresno County Superior Court alleging California wage and hour violations against Defendant. Plaintiff presents these claims on behalf of herself and "[a]ll non-exempt or hourly paid employees who worked for Defendants in a California Kmart store within four years prior to the filing of this complaint until the date of certification." (2nd Am. Compl. ¶ 16.)
On February 29, 2012, Defendant removed the matter to federal court based on the Class Action Fairness Act. Plaintiff sought remand for lack of subject matter jurisdiction on March 30, 2012. (ECF No. 12.) The Court denied the remand motion on May 4, 2012. (ECF No. 20.)
Defendant filed a motion to dismiss and a motion to strike on March 7, 2012. (ECF Nos. 8, 10.) In the motion to dismiss, Defendant moved to dismiss claims alleged against an employee of Defendant and a subsidiary company of Defendant. In the motion to strike, Defendant moved to strike the class allegations as overbroad, by including employees that were not subject to the alleged wage violations. Prior to adjudication of the motions, Plaintiff dismissed the defendant employee from the matter. (ECF No. 31.)
On December 12, 2012, the Court granted Defendant's motion to dismiss with leave to amend, and granted in part and denied in part Defendant's motion to strike. (ECF No. 41.) The Court granted the motion to dismiss regarding naming a subsidiary company as a defendant without sufficient factual basis to support the contention, but provided Plaintiff leave to amend. (
On January 22, 2013, Plaintiff filed a second amended complaint. (ECF No. 52.) In the complaint, Plaintiff only named defendant Kmart Corporation, and did not include wage claims regarding penalties arising from the use of the payroll debit card system. (
With regard to discovery, while the motions to dismiss and strike were still pending, the parties filed a joint scheduling report on July 26, 2012. (ECF No. 33.) The parties also exchanged initial disclosures under Fed. R. Civ. P. 26(a)(1) on the same date.
In the joint scheduling report, Plaintiff proposed the date of June 7, 2013 for the deadline for filing a motion for class certification, whereas Defendant proposed a deadline roughly six months earlier on January 21, 2013. In light of the pending motions, the scheduling conference was continued several times, and ultimately held on March 28, 2013. (ECF No. 70.) In the parties' second joint scheduling report filed on March 27, 2013, Plaintiff proposed that the motion for class certification be filed in roughly nine months, on January 10, 2014. (ECF No. 69.) Defendant again proposed a much shorter period, and requested that the certification motion be ordered due in three months, on June 26, 2013. (
On March 29, 2013, the Court issued its scheduling order, and adopted the later dates proposed by Plaintiff. (ECF No. 70.) Accordingly, the class certification motion was due on January 10, 2014. (
On July 15, 2013, the parties requested a telephonic discovery dispute conference which was held before the Magistrate Judge on July 17, 2013. (ECF No. 76, 81.) The issues raised were not resolved during the telephonic conference. (ECF No. 77.) The parties disputed the scope of discovery — Defendant asserted that Plaintiff was not entitled to class-wide discovery without making a prima facie showing that discovery was likely to produce substantiation of the class allegations. (ECF No. 78.) Defendant provided Plaintiff information regarding the employees that worked at Plaintiff's store, but refused to provide further discovery of possible class members from other stores in California. (
In support of her showing of the need for discovery of all employees of Defendant in California, Plaintiff provided her deposition testimony and a store closing bulletin. (ECF No. 78, Exs. C-D.) During a second telephonic discovery dispute conference on July 30, 2013, the Magistrate Judge told the parties that based on the evidence presented by Plaintiff at that time, it was not appropriate to require Defendant to provide discovery regarding employees from other California stores. Plaintiff explained to the Court that she had further evidence in support of certification. In light of such representations, the Court instructed Plaintiff to provide the additional information to Defendant and for the parties to discuss and attempt to reach a resolution regarding the scope of discovery without Court intervention. However, if that was not possible, Plaintiff was authorized to file a motion to compel the discovery of the additional employee information. The Court issued a minute order summarizing the telephonic conference:
(ECF No. 81.) Plaintiff did not thereafter file a motion to compel or seek further Court intervention before the end of the period for certification discovery. Accordingly, the discovery period ended as scheduled on October 10, 2013. Three months later, on January 10, 2014, Plaintiff filed the present class certification motion. (ECF No. 82.)
On February 10, 2014, Defendant filed an opposition to the class certification motion. (ECF No. 88.) In response to the opposition to the class certification motion, Plaintiff requested the Court conduct a telephonic discovery dispute conference. The Court held a dispute conference on February 21, 2014. (ECF No. 105.) Plaintiff argued that in light of the evidence provided by Defendant in its opposition to the class certification motion, that discovery should be re-opened to allow Plaintiff to depose various witnesses, and that Plaintiff be provided further time to file a reply to the opposition to class certification. (
On March 3, 2014, Plaintiff filed a reply with regard to the class certification motion. On the same date, Plaintiff filed a motion to modify the scheduling order, permit Plaintiff to conduct discovery, and to grant Plaintiff the opportunity to file a sur-reply to the class certification motion. (ECF No. 113.) On March 6, 2014, Defendant filed an opposition to the discovery motion, and on March 13, 2014, Plaintiff filed a reply. (ECF Nos. 118, 123.) On March 17, 2014, the Court took both Plaintiff's motion for certification and motion to reopen discovery under submission. (ECF No. 124.) Accordingly, the matter stands ready for adjudication.
Prior to determining whether certification is proper the Court must determine what, if any, evidence should be excluded, and if discovery should be reopened to permit further discovery. As described above, the parties have both filed motions to strike portions of the opposing parties' evidence, and Plaintiff has filed a motion to modify the scheduling order to reopen discovery. The Court shall address the motions below.
In support of her motion for class certification, Plaintiff presents several documents. Plaintiff provides documents from Kmart including Kmart's opening and closing procedure checklists and portions of Kmart's overtime policy. (Decl. of Raul Perez, Exs. A, D, ECF No. 82-1.) Plaintiff provides copies of her deposition transcript and written declaration, the deposition transcript of Aimee Grabau, corporate designee for Kmart, and Kmart's Supplemental Responses to Plaintiff's Interrogatories, Set One. (
In opposition of the motion for class certification, Defendant presents several documents. Defendant provides portions of the deposition transcripts of both Plaintiff and Aimee Grabau. (Decl. of Jeffrey Wohl, Exs E-F, ECF No. 89.) Defendant includes the declaration of Aimee Grabau, to which she attaches copies of relevant sections of Kmart's employees handbook and other policy documents. (Decl. of Aimee Grabau, ECF No. 90.) Finally, Defendant provides the declarations of forty-nine (49) Kmart assistant managers, and ninety-two (92) Kmart hourly associates. (ECF Nos. 91-92.)
Both parties dispute the right of the opposing party to present the declarations prepared in support and opposition of the class certification motion. Concurrent with its opposition to the class certification motion, Defendant moved to strike the declarations of the six hourly Kmart associates Plaintiff provided in support of the motion for certification. (ECF No. 95.) Defendant alleges that the declarants were not disclosed before the October 10, 2013 discovery deadline and that Plaintiff did not move to modify the scheduling order to allow for discovery after the deadline. In response to Defendant's motion to strike, Plaintiff filed a motion to modify the scheduling order to re-open certification discovery and allow for further discovery to use support Plaintiff's reply to the certification motion. (ECF No. 113.)
Plaintiff also moves to strike Defendant's evidence. Specifically, Plaintiff moves to strike the declarations of Kmart assistant managers and hourly associates provided by Defendant in opposition to the motion for certification because Defendant did not disclose the declarants in a timely fashion as to provide Plaintiff a meaningful opportunity to depose them. (ECF No. 104.)
Plaintiff provides the declarations of six hourly associates in support of her certification motion. (
As described above, the instant case was filed on January 23, 2012. On July 12, 2012, the parties conferred as required under Fed. R. Civ. P. 26(f)(1) in preparation for filing the joint scheduling report, which was filed two weeks later on July 26, 2012. (ECF No. 33.) Accordingly, the parties were able to commence discovery on July 12, 2012, and proceeded to exchange initial disclosures shortly thereafter on July 26, 2012. (Fed. R. Civ. P. 26(d)(1).
While the parties were entitled to engage in discovery, the scheduling conference was continued for nearly six months because of pending motions before the Court. The conference was held on March 28, 2013, at which time the Court provided another six months for certification discovery, in addition to the nine months during which the parties had already been free to conduct discovery. (ECF No. 70.) In sum, the parties had nearly fifteen months to conduct certification discovery. The parties engaged in a discovery dispute conference in July, 2013, but took no further action until after the filing of the class certification motion.
Defendant contends that the Court, in the March 29, 2013 scheduling order, specifically set a discovery deadline for class certification issues on October 10, 2013, and that no "information or documents discovered or produced" after that date would be considered by the court. (ECF No. 70 at 2.) Further, the Court informed the parties that the duty to provide supplemental disclosures under Fed. R. Civ. P. 26(e) would be "strictly enforced." (
Despite the duty to provide disclosure of potential witnesses, Defendant argues that Plaintiff did not disclose the names of the six declarants. In her initial disclosures, Plaintiff only discloses witnesses besides herself as "putative class members" and "supervisory and managerial" employees of Kmart. (Wohl Decl., Ex. G.) Despite having the duty to provide relevant discovery and supplement discovery, Plaintiff did not disclose the witness. Further, Defendant asserts that the discovery was conducted after the discovery deadline imposed by the Court on October 10, 2013.
In response, Plaintiff asserts that Defendant was not prejudiced by the delay in disclosing the witnesses because Plaintiff was willing to make the declarants available for deposition and that, in any event, Defendant had access to contact information for all of its employees. Finally, Plaintiff asserts that the Court's scheduling order does not require Plaintiff to disclose declarants that were used in support of the class certification motion.
First, the Court must determine if the declarations were other than authorized by the Court's scheduling order. Plaintiff asserts that the March 29, 2013 scheduling order referred to information and documents, but not witnesses. Therefore Plaintiff believes that it was permissible to use the declarations signed after the October 10, 2013 discovery deadline.
The Court's Scheduling Order states that "all information and documents" used for purposes of certification must have been discovered or produced by October 10, 2013. "Information" and "documents" are very expansive terms. One would expect the term "information" reasonably to include the name and identity of any witnesses whose testimony is offered in support or opposition of certification.
Any doubt should have been put to rest by the language of the scheduling order. The court directed the parties to "complete Discovery related to [class certification issues] on or before October 10, 2013." and explained that "[a]bsent contrary agreement between the parties or further order of this Court,
District courts enter scheduling orders in actions to "limit the time to join other parties, amend the pleadings, complete discovery, and file motions." Fed. R. Civ. P. 16(b)(3). In addition, scheduling orders may "modify the timing of disclosures" and "modify the extent of discovery."
Defendant correctly asserts that Plaintiff failed to timely disclose the declarants. "If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless." Fed. R. Civ. P. 37 (c)(1). Plaintiff has provided no evidence that the declarants were disclosed to Defendant prior to the filing of Plaintiff's certification motion. As such, the witnesses were not disclosed to Defendant prior to the close of class certification discovery on October 10, 2013.
Plaintiff argues that her failure to disclose the declarants was substantially justified or harmless because: (1) Defendant was aware that putative class members may present evidence even though no putative class members were named in Plaintiff's disclosures; (2) Defendant had information and access to putative class members, and (3) Defendant had been given the opportunity to depose the declarants.
First, Plaintiff argues that she provided in her initial disclosures that putative class members may have discoverable information and that "Defendant was clearly on notice that putative class members may submit evidence in support of Plaintiff's claims." (ECF No. 118 at 5.) Further, Plaintiff argues that Defendant, as the putative class members' employer, had the names and addresses of the putative class members from its employment records. (
Plaintiff did not however provide the name of any putative class members. Rule 26 requires parties to provide "the name and, if known, the address and telephone number" of relevant witnesses in the initial disclosures and supplements to the disclosures. Fed. R. Civ. P. 26(a)(1)(A)(i), 26(e)(1). Plaintiff's reference to "putative class members, as alleged in the operative complaint" is insufficient disclosure under Rule 26 and clearly so in the factual context of this case. Regardless whether Defendant possessed contact information for all of them, there are a staggering number of employees from the relevant time period. In her certification motion, Plaintiff asserts that there are more than 38,396 putative class members. (Mot. for Cert., p. 13; Perez Decl. ¶, Ex. E at 5.) Without providing the names of the six declarants to Defendant, it would have been practically impossible for Defendant to determine which, among the 38,396 putative class members, Plaintiff intended to use to support her allegations for class certification. Just because Defendant may have had payroll records that indicated putative class members, it does not mean it was not surprised or harmed by the failure to disclose the declarants from the thousands of other putative class members. Plaintiff's first two arguments are without merit.
Finally, Plaintiff argues that Defendant was not prejudiced because it had the opportunity to depose the declarants. This argument fails for multiple reasons as well. First, the class certification discovery deadline had passed over three months before these declarants were disclosed. Defendants were not entitled to conduct discovery at that time without court approval. Secondly, Plaintiff made the offer to depose the declarants on January 31, 2014, only ten days before Defendant's opposition was due. It is unrealistic to suggest that Defendant would have had the ability to depose the declarants and prepare arguments in opposition based on the evidence elicited from the declarations in ten days.
Plaintiff cites cases for the proposition that failure to disclose declarants may be excused if the opportunity to depose them is made available.
In
Here, Plaintiff's claims did not substantially change during the discovery period. Plaintiff did not provide Defendant with witness names initially or at any time during the fifteen month class certification discovery period ending on October 10, 2013. Plaintiff's failure to timely disclose the declarants created undue surprise and prejudice to Defendant. Plaintiff's offer to allow Defendant to depose the declarants shortly before its opposition brief was due and well after the discovery deadline was not a practical means to avoid prejudice in this matter.
In each of the other cases relied upon, prejudice arose because the disclosure of the discovery was untimely and prevented the opposing party from the opportunity to depose the witnesses. In one matter,
Plaintiff failed to timely disclose the names and contact of information of the other witnesses before the discovery deadline. Accordingly, declarations of the others are untimely and hereby stricken.
Plaintiff contends that the Defendant's 141 witnesses were untimely disclosed. As noted above, Defendant provided supplemental disclosures providing the names and contact information of the 141 witnesses on the last day of the class discovery period. Defendant explains that declarations of forty-nine (49) Kmart assistant managers were obtained in late September and early October, 2013, and disclosed to Plaintiff less than a couple weeks later.
All parties have a duty to provide supplemental disclosures "in a timely manner." Fed. R. Civ. P. 26(e)(1)(A). In this case, Defendant disclosed the assistant store manager witnesses within a short period of time after obtaining the declarations. Accordingly, the supplemental disclosures with regard to the assistant managers were timely made. The Court is cognizant that even though the disclosure met the deadline, disclosure on the last day of discovery certainly had the potential to prejudice Plaintiff. If Plaintiff had sought to depose the witnesses, she would have had to solicit a stipulation from Defendant or seek Court approval to modify the discovery deadline. Setting the discovery deadline three months before briefing left time for further limited discovery. However, Plaintiff took no action for
While the assistant manager witnesses were timely disclosed, the hourly associate witnesses were not. Defendant obtained the majority of the hourly associate declarations in May and June, 2013, but waited until the last day of the discovery period, October 10, 2013, to provide Plaintiff supplemental disclosures. By waiting over four months and until the last day of the discovery, Defendant did not provide Plaintiff an opportunity to depose the witnesses. Defendant argues that disclosure of the witnesses was not required because Plaintiff did not place her state wide claims at issue. (ECF No. 114 at 11-12.) Admittedly, Plaintiff presented Defendant with little discovery supporting her state wide class claims. But Plaintiff never withdrew or said she intended to withdraw her state wide claims. While Defendant may have been reticent to provide Plaintiff names of Kmart associates at other stores in light of her apparent failure to pursue discovery, its actions were evasive and inappropriate.
For the foregoing reasons, the court finds that the declarations of hourly associates that were not timely disclosed (i.e. all hourly associates except those from the Coalinga store
Plaintiff also moves to modify the scheduling order to permit discovery regarding the 141 witness declarations provided by Defendant. As the ninety-two (92) Kmart hourly associates declarations have been stricken, the request is only pertinent to the remaining assistant manager declarations.
Plaintiff brought this motion upon receipt of Defendant's opposition to the motion for certification with the supporting declarations. Plaintiff contends that she could not have known of the declarations or their contents until that time. (ECF No. 113 at 1-2.) In her motion, Plaintiff asserts that the witnesses' declarations were not disclosed. She does not assert that Defendants failed to disclose the names and contact information of the witnesses.
The Court has broad discretion in supervising the pretrial phase of litigation.
Rule 16(b)'s "good cause" standard primarily considers the diligence of the party seeking the amendment.
Plaintiff asserts that there is good cause to reopen discovery because she did not have an opportunity to conduct adequate discovery regarding certification. The Court fails to find merit in this argument. The Court provided the parties over a year to conduct discovery relating to class certification. Nothing before the Courts suggests that one year was less than ample time for Plaintiff to conduct discovery related to class certification. Plaintiff asserts that she is prejudiced as she has not been able to depose the witnesses and provide rebuttal evidence. Plaintiff's position is facially reasonable. In this case, Defendant did not disclose the witnesses until the last day of the discovery period, leaving Plaintiff no time within the discovery period to depose them or otherwise conduct discovery regarding them. However, Plaintiff then delayed over four months after receiving the disclosures to request relief and modification of the scheduling order. In fact, Plaintiff only sought relief upon realizing that Defendant used the evidence obtained from the disclosed witnesses to support its opposition to the class certification motion.
The Court finds that Plaintiff's said four month delay is wholly inconsistent with diligence in requesting relief.
Plaintiff argues the delay was justified because she could not have deposed the witnesses regarding the contents of their declarations until she had received the declarations. (ECF No. 113 at 6-9.)
Plaintiff's argument is without merit. The assistant manager witnesses were timely disclosed, albeit at the end of the discovery period. Furthermore, Defendant did not have a duty to provide Plaintiff the witness declarations. "The Federal Rules of Civil Procedure do not require a party who has disclosed potential witnesses to reveal the declarations signed by said witnesses for use in an impending summary judgment motion."
Plaintiff was not diligent in seeking a modification of the scheduling order, and therefore has not provided good cause as required under Rule 16. Accordingly, the motion to modify the scheduling order is denied.
To summarize the evidentiary rulings:
Plaintiff's six witness declarations were not timely obtained or disclosed, and are therefore stricken. Defendant's store manager declarations were timely disclosed, but the hourly employee declarations were not. Accordingly, the hourly store employee declarations, notwithstanding the hourly employees from the Coalinga store that were disclosed earlier, are stricken. Finally, since Plaintiff has not presented good cause to modify the scheduling order, the modification motion is denied.
To obtain class certification, Plaintiff bears the burden of showing she meets each of the four requirements of Federal Rule of Civil Procedure 23(a), together with at least one of the requirements of Rule 23(b).
The four Rule 23(a) requirements are numerosity, commonality, typicality, and adequacy, i.e., (1) the class is so large that joinder of all members is impracticable; (2) there are one or more questions of law or fact common to the class; (3) the named parties' claims are typical of the class; and (4) the class representatives will fairly and adequately protect the interests of other members of the class. Fed. R. Civ. P. 23(a);
The Court must perform "a rigorous analysis [to ensure] that the prerequisites of Rule 23(a) have been satisfied."
As for Rule 23(b), Plaintiff contends the proposed class satisfies the third prong because "the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. P. 23(b). "While Rule 23(a)(2) asks whether there are issues common to the class, Rule 23(b)(3) asks whether these common questions predominate. Though there is substantial overlap between the two tests, the 23(b)(3) test is `far more demanding,' and asks `whether proposed classes are sufficiently cohesive to warrant adjudication by representation.'"
A class must be "so numerous that joinder of all members is impracticable." Fed. R. Civ. P. 23(a)(1). This requires the Court to consider "specific facts of each case and imposes no absolute limitations."
Rule 23(a) requires "questions of law or fact common to the class." Fed. R. Civ. P. 23(a)(2). This requirement has been construed permissively; not all questions of law and fact need to be common.
In
"[T]he key inquiry is not whether the plaintiffs have raised common questions, `even in droves,' but rather, whether class treatment will `generate common answers apt to drive the resolution of the litigation.'"
The typicality requirement demands that the "claims or defenses of the representative parties are typical of the claims or defenses of the class." Fed. R. Civ. P. 23(a)(3). Under Rule 23(a)(3)'s permissive standard, "representative claims are typical if they are reasonably co-extensive with those of absent class members; they need not be substantially identical."
Furthermore "[t]he commonality and typicality requirements of Rule 23(a) tend to merge."
Absentee class members must be adequately represented for judgment to be binding upon them.
If an action meets the prerequisites of Rule 23(a), the party seeking class certification must show the action is appropriate under Rule 23(b).
Class certification under Rule 23(b)(3) is an "adventuresome innovation," and allows for class certification in cases "in which class-action treatment is not clearly called for as it is in Rule 23(b)(1) and (b)(2) situations."
Parties seeking class certification bear the burden of demonstrating that each element of Rule 23 is satisfied, and "must affirmatively demonstrate . . . compliance with the Rule."
While the Court may need to delve into the merits, the inquiry is solely for the purpose of determining if certification is proper under Rule 23.
In this vein, each party has attacked the credibility of the declarants provided by the other party. Defendant asserts that statements in Plaintiff Amie Holak's declaration contradict her sworn deposition testimony, are speculative and lack foundation, are vague and ambiguous, and are irrelevant. (ECF No. 98.) Most of the objections relate to contents of the declaration that contradict her deposition testimony or provide insufficient detail regarding how she allegedly performed unpaid work during closing shifts. Defendant objects to the declarations of Plaintiff's other witnesses for the same reasons. (
Since a motion to certify a class is a preliminary procedure, courts do not require strict adherence to the Federal Rules of Civil Procedure or the Federal Rules of Evidence.
Plaintiff presents evidence in support of two subclasses of non-exempt hourly employees. The first subclass involves workers who were not paid for all hours worked based on either being required to (1) work after clocking out of closing shifts or (2) wait, after having clocked out, for someone to unlock the door so they could leave the store. The second subclass involves Kmart workers that were not provided compliant wage statements. Specifically, Plaintiff alleges that Defendant overstated the overtime rate on some wage statements.
In support of certification, Plaintiff provides several of Kmart's policy documents. (
Plaintiff provides relevant parts of her deposition testimony. (Perez Decl., Ex. B.) In her declaration she states that: "generally everybody" remained after the store closed and that after clocking out she was forced to wait until everyone was ready to leave before she could leave (
Plaintiff also provides a declaration in support of her claims. (Holak Decl., ECF No. 82-2.) She explains that she worked as an hourly employee at the Coalinga Kmart store from July 2008 to February 2010, and from December 2010 to September 2011. (
(
Finally, Plaintiff asserts that her "wage statements did not include all applicable hourly rates for overtime in effect during the pay periods when [she] earned a service commission." (
Defendant provides several sources of evidence in opposition to summary judgment.
First, Defendant provides portions of Plaintiff Holak's declaration. (Wohl Decl., Ex. F.) In the deposition, Plaintiff stated that she worked one closing shift a week for the last three months of her employment. (
Plaintiff explained that she observed other employees waiting on those occasions on which she worked late, but did not know if employees waited or worked off the clock when she was not working. (Wohl Decl., Ex. F at 140.) She also had no knowledge if this occurred at other Kmart stores. (
With regard to her wage statements, Plaintiff explained that Kmart had moved to an electronic wage statement while she was working. (
Defendant also presented the declaration of Aimee Grabau, the Format Leader of Human Resources for Kmart Corporation. (Grabau Decl., ¶ 1, ECF No. 90.) She is responsible for human resources and employment functions for Kmart throughout California. (
Grabau also described the method that Kmart employees clocked in and out of work. Kmart associates used cash registers, and since at least January 1, 2008, associates could ask their managers or human resources to make a correction. (
Grabau explained that Kmart's timekeeping policies were listed in the associate handbook available to associates in physical copy and online. (
In addition to Grabau's declaration, Defendant presents portions of Grabau's deposition. (
Defendant supports its contentions with several declarations of employees of the Coalinga Kmart store. William Watts, an assistant manager of the Coalinga store since 2002 explained that to ensure accurate timekeeping, Kmart has strictly enforced a policy of not allowing employees to work off the clock. (Watts Decl., ECF No 91-2 at 174-78, ¶ 6.) He stated that if an employee believes that his or her clock records are incorrect, an employee must make a time correction so that they are accurately paid. (
In discussing the closing procedures for the Coalinga store, Watts explained that four cash registers and the service desk may be used as time clocks for employee use in clocking in and out. (
In general, some closing shift employees finish work and leave before the store is closed. (
When the store is closed and locked, Watts would account for and secure the money in the safe while hourly associates straightened up the store for the next day. (
After all the employees leave, the loss prevention employee then clocks out as Watts sets the store alarm, and then he and the loss prevention employee exit the store together and lock the door from the exterior using a key. (
While the above process was normally followed, sometimes an employee was instructed to exit before the rest of the employees. (
In addition to the declaration of Watts, Defendant presented the declarations of eight hourly associates either employed or formerly employed at the Coalinga Kmart store. (
Specifically, hourly associate Estephanie Garcia indicated that she did not have to wait because "[a]t the end of the night, the manager calls the employees to the front of the store, I punch out, and then I leave." (Garcia Decl., ECF No. 92, Ex. 32.) Hourly associate James Milstead explained that "[t]he doors were not locked on the inside of the store and I could let myself out." (Milstead Decl., ECF No. 92, Ex. 56.) Hourly associate Audra Mitchell indicated that she "could open the locked door [her]self and simply leave." (Mitchell Decl., ECF No. 92, Ex. 57.) Hourly associate Marcella Stevens described the closing procedure consistently with the description given by assistant manager Watts. She explained, "[a]ll employees gather at the front of the store at the end of the night, the manager holds a brief meeting, I clock out, and the manager or another employee unlocks the door, and I walk out." (Stevens Decl., ECF No. 92, Ex. 80.) Hourly associate Sheila Todd explained that "[s]ecurity is by the door to let me out." (Todd Decl., ECF No. 92, Ex. 82.)
Plaintiff asserts that the class consists of 38,396 employees that worked for Defendants as hourly or non-exempt employees from 2008 to 2012. (See Perez Decl., Ex. E.) Defendants do not dispute numerosity. As the potential class consists of tens of thousands of employees, the Court holds that the numerosity requirement is met.
Plaintiff asserts that the subclass presents a common factual question, namely "whether employees worked off-the-clock after their shift ended." (Mot. for Certification, ECF No. 82 at 8.) While Defendant's policies clearly required employees to accurately record their time, and that all time worked is paid, Plaintiff contends that Defendant had a policy of forcing employees who were clocked out to remain either working or waiting in the locked store until management released all employees. (
Under California law, an employer must pay an employee for all "hours worked," which is defined as "the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so."
The Court holds that the subclass, on its face, presents "a common contention such that determination of its truth or falsity will resolve an issue that is central to the validity of [the] claim in one stroke" as required under
Plaintiff contends that Kmart's uniform policy required employees, at the end of a shift, to clock out and remain in the store under the control of Kmart until a manager gave them permission to leave. (ECF No. 82 at 7.) Specifically, Plaintiff describes the alleged uniform polies of Kmart that led to uncompensated work being performed:
(ECF No. 109 at 1.) Plaintiff further asserts that it is "Kmart's lack of a uniform class-wide closing policy requiring employees to be permitted to leave store premises immediately after clocking-out that violates California minimum wage laws." (
Plaintiff provides an opening and closing checklist for store managers and directors. (Perez Decl., Ex. A, ECF No. 82-1.) In pertinent part, the checklist instructs managers to "lock all perimeter doors," "lock the front door," ensuring that all customers have left the store, and that the money is placed in safe. (
Defendants' employee handbook explains that employees must record all work performed, regardless of failure to obtain prior approval:
(
None of the evidence provided shows that Kmart had a policy, as Plaintiff asserts, of requiring closing-shift employees to remain in the store after clocking-out and until permitted to leave by a supervisor. The manager opening and closing checklist clearly explains that managers should lock the store doors upon the closing of the store, and that the manager should at some unspecified time later let the associates leave. (Perez Decl., Ex. A.) However, the checklist provides no guidance and is silent regarding when managers should allow employees to clock out, and whether the associates should remain in the store after clocking out. Accordingly, the checklist does not provide favorable support for Plaintiff's position regarding the alleged policy of requiring off-the-clock work.
Plaintiff attaches to her reply further documentation regarding Kmart's policies regarding timekeeping. (
Plaintiff argues that despite having a policy prohibiting off-the-clock work, a class can still be certified if it is shown that Defendants acted inconsistently with the stated policies and allowed off-the-clock work to be performed. (
As described above, Plaintiff states in her declaration that she was required to clock out at the end of her scheduled shift or when finished with her job duties. (Holak Decl. at ¶ 8, ECF No. 82-2.) After clocking out, she had to either wait or help other employees finish their job duties before leaving the store. (
Despite her testimony regarding uncompensated work, Holak explained that she understood that it was a company policy for employees to accurately record the time worked, and that work off the clock was not permitted. (Wohl. Decl., Ex. F at 55-56, ECF No. 89.) She also revealed that she had only worked approximately twelve closing shifts during her employment. (
Defendant provides anecdotal evidence in the form of declarations from one assistant manager and eight employees; they provide different accounts of the closing procedures. (
In marked contrast to Holak's claim, Watts explained that the front doors of the Coalinga Kmart store had a twist lock on the inside of the store, allowing anyone in the store to unlock the doors from the inside. (
In addition, Defendant presents the declarations of eight hourly associates employed at the Coalinga Kmart during the relevant period who did not share the Plaintiff's experiences regarding off-the-clock work during closing shifts. (
In viewing the declarations of the employees of the Coalinga Kmart, the Court is presented with Plaintiff's declaration stating that she performed off the clock work, and the declarations of one assistant manager and eight hourly associates that uniformly state that employees were not kept in the store performing uncompensated work during closing shifts.
Plaintiff has provided no testimony, besides her own, that the practice or polices at the Coalinga Kmart store required hourly associates to perform off-the-clock work during closing shifts. Her testimony alone is not substantial proof that the purported class of hourly associates performed uncompensated work.
Plaintiff attempts to argue that the fact that members of the class may have not engaged in uncompensated work does not defeat certification because the presence of individualized damage inquires alone is not a basis to defeat certification.
Plaintiff provides several cases in which claims were certified based on strong evidence of uniform policy, despite declarations from defendants describing otherwise.
Plaintiff has failed to present substantial evidence of commonality with regard to the uncompensated work subclass. The evidence shows that to the extent post-shift work was performed at all, many hourly employees in the Coalinga Store did not engage in it. Moreover, Plaintiff has not provided admissible evidence of such practices occurring at other Kmart stores. The rather detailed declaration of the closing procedure of the Coalinga Kmart store by assistant manager William Watts is persuasive in showing that there are individual questions regarding liability to potential class members. Plaintiff has not established that uncompensated work is a common issue affecting an entire sub-class. As Plaintiff has not shown that common issues affect the class, the Court need not address the other requirements for class certification under Rule 23. Accordingly, the Court shall deny Plaintiff's motion to certify this subclass.
Plaintiff contends that Defendant's wage statements do not state the correct overtime rates and therefore violate California Labor Code § 226(a)(9). Specifically, Plaintiff contends that her pay statements do not accurately state her overtime rate in weeks in which she earned both overtime and service commissions. Plaintiff provides in her declaration copies of four of her wage statements for the weeks ending on July 11 and November 28, 2009 and February 26 and April 23, 2011. (ECF No. 82-2 at 7-11.) The wage statements list Plaintiff's overtime wage rate as $9.28, $9.34, $9.31, and $13.85. As Plaintiff's regular wage rate was $9.25, the first three wage statements incorrectly state Plaintiff's overtime wage rate as only a few cents higher than her regular wage. However, if simple calculations are made, it is apparent from the information contained on the pay stubs that the overtime rate listed was incorrect.
For example, on Plaintiff's July 11, 2009 pay stub, it states that Plaintiff's overtime pay rate was $9.28, and that she worked 7.5 overtime hours, and was paid $104.16 for that time. When the amount of pay is divided by the hours worked, it shows that Petitioner was paid $13.89 per hour for overtime work for that time period, not $9.28. Additionally, when calculated, the overtime pay rate for the November 28, 2009 pay period was $13.92, and the overtime pay rate for the February 26, 2011 pay period was $14.00 per hour. The final pay stub for the April 23, 2011 period accurately stated Plaintiff's overtime pay rate as $13.85 per hour. In her pleadings, Plaintiff admits that while the overtime rate listed was incorrect, the amount of actual overtime paid may have been correct.
California Labor Code Section 226(a)(9) states, in relevant part: "Every employer shall... furnish each of his or her employees... an accurate itemized statement in writing showing... (9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee." Section 226(e) grants payment of a penalty to an employee "suffering injury as a result of a knowing and intentional failure by an employer to comply with subdivision (a)." Finally, section 226(e) describes that an employee has suffered an injury in the following manner:
Cal. Labor Code § 226(e)(2)(b).
Labor Code Section 226 requires the employer to keep accurate and itemized pay statements setting forth gross wages, the actual number of hours and minutes worked, and all applicable hourly rates of pay. Plainitiff has shown that some of her wage statements inaccurately state her overtime rate.
Plaintiff must also be able to prove that she suffered an injury as a result of the improper wage statements.
However, the parties disagree about the type of injury that is necessary in order to state a claim under section 226. Plaintiffs assert that the injury requirement is minimal.
Defendant argues the contrary, but this Court agrees that "the injury requirement should be interpreted as minimal in order to effectuate the purpose of the wage statement statute; if the injury requirement were more than minimal, it would nullify the impact of the requirements of the statute."
Furthermore, a recent statutory amendment to Section 226 provides a statutory definition for injury:
Accordingly, the Court finds that Plaintiff's inability to determine her hourly wage meets the minimal-injury requirement of Section 226. Determining whether an incorrect overtime rate was present on pay records is not an individualized inquiry as the facts can easily be derived through pay records.
Defendant first asserts that Plaintiff is not entitled to certification based on the wage statement claim because Plaintiff only asserted a derivative wage statement claim in the second amended complaint. Specifically, Defendant asserts that Plaintiff's claim is based on the alleged failure of Defendant to state the hours and wage worked based on the lack of compensation for post-shift work time. Instead, Plaintiff moves to certify a wage statement claim based on the failure to properly state the overtime rate on some pay statements.
Plaintiff has filed two amended complaints, however throughout this litigation, Plaintiff's fourth cause of action for non-complaint wage statements has remained the same. (
(Second Amended Complaint ["SAC"] at ¶ 65.) Plaintiff further explains in the SAC the basis for the claim:
(SAC at ¶ 67.)
Defendant relies upon several district court cases for the proposition that courts should not certify claims not pled in the operative complaint.
Plaintiff focuses on the fact that she first set forth the generic language of a non-complaint wage claim in stating in the complaint that "Defendants have intentionally and willfully failed to provide employees with complete and accurate wage statements. The deficiencies include, among other things, the failure to accurately list the total hours worked by Plaintiff and class members and the applicable hourly rates..." On the other hand, Defendant correctly notes that Plaintiff continues the description to state that the reason for the non-compliant wage statements was the failure to record off-the-clock work. Defendant's argument carries more weight. In the complaint, Plaintiff explained that the non-complaint wage statements were "a result of Defendants' failure to capture the hours Plaintiff and class members worked off the clock while waiting to be let out of Defendants' stores after a closing shift." The manner in which the complaint was phrased gave Defendant no notice of claims that the overtime rate was incorrectly stated separate and apart from incidents relating to failure to account for hours worked after clocking out. As Plaintiff did not plead the claim in her complaint, it would be inappropriate to certify a class based on the claim.
Alternatively, Plaintiff's motion to certify the instant claim is not appropriate as Plaintiff has not presented sufficient evidence of commonality or that those common questions predominate the inquiry. In support of her motion for certification, Plaintiff provides only several of her pay statements indicating that the overtime rate was incorrect. In response, Plaintiff provides declarations of eight Kmart employees from the Coalinga store that stated that they were provided pay statements that accurately stated both the hours worked and the hourly wage rate. (ECF No. 92, Exs. 25, 32, 46, 56-57, 76, 80, 82.) While Plaintiff claims that the wage statements errors were "systematic," Plaintiff fails to provide admissible evidence from any other employees to support the claim that the injury was common to all class members. Plaintiff had access to all the employees of the Coalinga Kmart store, but failed to provide evidence from other putative class members of inaccurate wage statements.
Plaintiff relies upon several cases to show that courts have certified classes based on inaccurate wage statement claims.
For the foregoing reasons, the Court RECOMMENDS the following:
These findings and recommendations are submitted to the United States District Court Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636 (b)(1)(B) and Rule 304 of the Local Rules of Practice for the United States District Court, Eastern District of California. Within fourteen (14) days after being served with a copy, any party may file written objections with the Court and serve a copy on all parties. Such a document should be captioned "Objections to Magistrate Judge's Findings and Recommendations." Replies to the objections shall be served and filed within fourteen (14) days after service of the objections. The Court will then review the Magistrate Judge's ruling pursuant to 28 U.S.C. § 636 (b)(1)(c). The parties are advised that failure to file objections within the specified time may waive the right to appeal the District Court's order.
