PAEZ, Circuit Judge:
The district court certified a class of former and current employees of U.S. Security Associates, Inc. ("USSA"), who allege that USSA committed numerous violations of California labor law. USSA filed a petition to appeal the district court's certification order, which we granted. See Fed.R.Civ.P. 23(f). On appeal, USSA argues that the court erred in certifying the meal break sub-class, because the plaintiffs failed to establish "questions of law or fact common to the class" that "predominate" over questions affecting only individual members. Fed.R.Civ.P. 23(a)(2), (b)(3). We hold that the district court did not abuse its discretion by certifying the meal break sub-class. Accordingly, we affirm.
Plaintiff Muhammed Abdullah is a former employee of USSA, a private security guard company.
As a condition of employment, all of USSA's employees are required to sign "on-duty meal period agreements." The record contains two versions of such agreements. The first, which was used prior to 2007, provides:
The second, which USSA has used since mid-2007, provides:
After five (5) hours worked, the following waiver becomes relevant:
Flury testified that if an employee refuses to sign the "on-duty meal period agreement," he or she "won't work for us." He further testified that one of the "requirements" of the job, as evidenced by the meal-period "waiver," was for USSA employees to eat meals on the job.
The plaintiffs sought to maintain a class action on behalf of themselves and all others similarly situated, alleging that USSA committed numerous violations of California labor laws, including, inter alia, requiring them to work through their meal periods. Of note here, they allege that USSA has a "policy of requiring employees to work through their legally mandated meal periods," and is therefore liable for "paying premium compensation for missed meal periods ... pursuant to California Labor Code § 226.7 and the applicable
The district court certified the class and seven sub-classes, pursuant to Rule 23(b)(3). One of the sub-classes is the meal break sub-class, which is defined as:
The district court determined that certifying this sub-class was appropriate, "[g]iven [USSA's] uniform policy of requiring the putative subclass members to sign the on-duty meal break agreement," as well as the "evidence that, in the vast majority of cases, this policy was implemented to require on-duty meal breaks be taken." A few months later, the court reached the same conclusion in an order denying USSA's motion for reconsideration. Having been granted leave to appeal, USSA challenges the district court's certification of the meal break sub-class on the grounds that the plaintiffs have not established "commonality," as required under Federal Rule of Civil Procedure 23(a)(2), or "predominance," as required under Rule 23(b)(3).
We review a district court's decision to certify a class under Rule 23 for abuse of discretion. In re Wells Fargo Home Mortg. Overtime Pay Litig., 571 F.3d 953, 957 (9th Cir.2009) (hereinafter "In re Wells Fargo"). "When reviewing a grant of class certification, we accord the district court noticeably more deference than when we review a denial of class certification." Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168, 1171 (9th Cir.2010) (quoting In re Salomon Analyst Metromedia Litig., 544 F.3d 474, 480 (2d Cir.2008)) (internal quotation marks omitted). A district court abuses its discretion if it (1) relies on an improper factor, (2) omits a substantial factor, or (3) commits a clear error of judgment in weighing the correct mix of factors. In re Wells Fargo, 571 F.3d at 957. In addition, an error of law is a per se abuse of discretion. Yokoyama v. Midland Nat. Life Ins. Co., 594 F.3d 1087, 1091 (9th Cir.2010). We review the district court's findings of fact under the clearly erroneous standard, meaning we will reverse them only if they are (1) illogical, (2) implausible, or (3) without "support in inferences that may be drawn from the record." United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir.2009).
We are concerned here with two overlapping requirements for class certification. First, a party seeking class certification must always show that "there are questions of law or fact common to the class." Fed.R.Civ.P. 23(a)(2).
"The Supreme Court has recently emphasized that commonality requires that the class members' claims `depend upon a common contention' such that `determination of its truth or falsity will resolve an issue that is central to the validity of each claim in one stroke.'" Mazza v. Am. Honda Motor Co., 666 F.3d 581, 588 (9th Cir.2012) (quoting Wal-Mart, 131 S.Ct. at 2551) (internal alteration omitted). Put another way, the 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." Wal-Mart, 131 S.Ct. at 2551 (quoting Richard A. Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L.Rev. 97, 132 (2009)) (emphasis added) (internal quotation marks and alteration omitted). This does not, however, mean that every question of law or fact must be common to the class; all that Rule 23(a)(2) requires is "a single significant question of law or fact." Mazza, 666 F.3d at 589 (emphasis added); see also Meyer v. Portfolio Recovery Assocs., 707 F.3d 1036, 1041-42 (9th Cir. 2012), cert. denied, ___ U.S. ___, 133 S.Ct. 2361, 185 L.Ed.2d 1068 (2013).
Here, the district court concluded that "a common legal question that is presented and susceptible to class-wide determination" is whether California's "nature of the work" exception to Industrial Welfare Commission ("IWC") wage order No. 4-2001 ("Wage Order No. 4-2001") — which governs meal periods — "applies to [USSA]'s single guard post staffing model."
Under California law, an employer may not "require any employee to work during any meal ... period mandated by an applicable order of the Industrial Welfare Commission." Cal. Lab.Code § 226.7(a).
Cal.Code Regs., tit. 8, § 11040, subd. 11(A). The parties do not dispute that the putative class members all signed a written agreement which provided that it could be revoked; their disagreement turns on whether USSA can defeat class certification by invoking the "nature of the work" exception to the off-duty meal period requirement. We first consider the substantive scope of duties that may qualify for the "nature of the work" exception, and we then consider two recent state court decisions addressing policies similar to the one in this case.
The California state courts have not addressed the substantive scope of the "nature of the work" exception.
First, DLSE has emphasized that the "on-duty" meal period is a "limited[] alternative" to the off-duty meal period requirement. DLSE Opinion Letter 2009.06.09 at 8. Critically, it is "not described or defined as a waiver of an off-duty meal period," id. (emphasis added), but rather as "a type of meal period that can be lawfully provided only in those circumstances in which the three express conditions set forth in [the regulation] are satisfied."
DLSE Opinion Letter 2002.09.04 at 2. The employer has the burden to "establish[] the facts that would justify an on-duty meal period." Id. at 2-3; see also DLSE Opinion Letter 2009.06.09 at 7; DLSE Opinion Letter 1994.09.28 at 4 ("In the view of the Division, the onus is on the employer to show that the work involved prevents the employee from being relieved of duty.").
Second, we can characterize the instances in which DLSE has found that the "nature of the work" exception applies into two categories: (1) where the work has some particular, external force that requires the employee to be on duty at all times, and (2) where the employee is the sole employee of a particular employer.
Id. DLSE further allowed for the possibility that another employee might be able to cover the driver, explaining.
Id.
In addition to these jobs, which by their nature require the employee to be present at all times, DLSE has also found that the "nature of the work" exception would apply to an "isolated" gas station "in which only a single employee is present," but only if there was not "another employee employed at the worksite." DLSE Opinion Letter 2003.11.03 at 3; see also DLSE Opinion Letter 1994.09.28 (noting that "the nature of the work" exception might apply where "the employee is the only person employed in the establishment and closing the business would work an undue hardship on the employer"). Cf. DLSE Opinion Letter 2002.09.04 at 2-3 (concluding that the "nature of the work" exception does not apply to late-night shift managers at fast-food restaurants, in part because other employees are on duty and could cover for the manager).
With this understanding of the "nature of the work" defense, we turn to two recent state court decisions that guide our analysis of Rule 23(a)(2)'s commonality requirement. First, in Brinker, the California Supreme Court clarified multiple "issues of significance to class actions generally and to meal and rest break class actions in particular." 139 Cal.Rptr.3d 315, 273 P.3d at 520. Of particular importance here, the court in Brinker held that the California Court of Appeal had erred in reversing the superior court's certification of a class of plaintiffs who alleged that their employer uniformly denied them rest breaks. Although the court's analysis arose in the context of a representative action under California Code of Civil Procedure § 382, it also spoke to the liability that would arise under such a scenario:
Id., 139 Cal.Rptr.3d 315, 273 P.3d at 531-32 (emphasis added).
The California Court of Appeal subsequently interpreted and applied Brinker in a case with strikingly similar facts to the case before us. See Faulkinbury v. Boyd & Assocs., 216 Cal.App.4th 220, 156 Cal.Rptr.3d 632 (2013). In Faulkinbury, the putative class was made up of private security guards whose employer "had a uniform policy of requiring all security guard employees to take paid, on-duty meal breaks and to sign an agreement by which the employee agreed" to such on-duty meal breaks. Id. at 233, 156 Cal.Rptr.3d 632. The court of appeal concluded that the employee's liability turned on "the issue [of] whether Boyd's policy requiring all security guard employees to sign blanket waivers of off-duty meal breaks is lawful," id. at 234, 156 Cal.Rptr.3d 632, explaining,
Id. at 235, 156 Cal.Rptr.3d 632 (emphasis added).
In light of these state authorities, we conclude that the plaintiffs' claims will yield a common answer that is "apt to drive the resolution of the litigation," as required by Rule 23(a)(2). Wal-Mart, 131 S.Ct. at 2551. First, as the district court explained, the DLSE letters make clear that "the showing necessary to establish the `nature of the work' exception is a high one." In order to make such a showing, USSA had to demonstrate not just that its employees' duties varied, but that they varied to an extent that some posts would qualify for the "nature of the work" exception, while others would not. It failed to do so. Indeed, USSA's sole explanation for why it requires on-duty meal periods is that its guards are staffed at single-guard locations. It does not argue that any particular posts would qualify for the "nature of the work" exception absent the single-guard staffing model. In fact, when asked if he could think of "examples" where "the
Consider, for example, the illustrative list of duties that USSA has provided to demonstrate the variety of its employees duties:
These duties are undoubtedly distinct from one another, but the only reason any of them "prevent" the employee from taking a meal period is because USSA has chosen to adopt a single-guard staffing model. See Cal.Code Regs., tit. 8, § 11040, subd. 11(A) (stating that an "on-duty" meal period is permitted "only when the nature of the work prevents an employee from being relieved of all duty" (emphasis added)).
On this basis, we conclude that the merits inquiry will turn on whether USSA is permitted to adopt a single-guard staffing model that does not allow for off-duty meal periods — namely, whether it can invoke a "nature of the work" defense on a class-wide basis, where the need for onduty meal periods results from its own staffing decisions. Such an inquiry is permissible under Brinker and Faulkinbury; the latter clarified that an employer may be held liable under state law "upon a determination that [its] uniform on-duty meal break policy [is] unlawful," with the "nature of the work" defense being relevant only to damages. Faulkinbury, 216 Cal.App.4th at 235, 156 Cal.Rptr.3d 632. Thus, the legality of USSA's policy is a "significant question of law," Mazza, 666 F.3d at 589, that is "apt to drive the resolution of the litigation" in this case, Wal-Mart, 131 S.Ct. at 2551. We therefore hold that the district court did not abuse its discretion in concluding that Rule 23(a)(2) was satisfied.
We next turn to Rule 23(b)(3), which asks if "the questions of law or fact common to class members predominate over any questions affecting only individual members." Fed.R.Civ.P. 23(b)(3) (emphasis added). Although there may be "some variation" among individual plaintiffs' claims, Local Joint Exec. Bd. of Culinary/Bartender Trust Fund v. Las Vegas Sands, Inc., 244 F.3d 1152, 1163 (9th Cir. 2001) (emphasis added), "Rule 23(b)(3)'s predominance criterion is even more demanding than Rule 23(a)," Comcast Corp. v. Behrend, ___ U.S. ___, 133 S.Ct. 1426, 1432, 185 L.Ed.2d 515 (2013). "A principal
First, our analysis of the "nature of the work" exception, supra, drives our conclusion that Rule 23(b)(3) is satisfied here. Cf. Erica P. John Fund, Inc. v. Halliburton Co., ___ U.S. ___, 131 S.Ct. 2179, 2184, 180 L.Ed.2d 24 (2011) ("Considering whether `questions of law or fact common to class members predominate' begins, of course, with the elements of the underlying cause of action."). We have concluded that the "nature of the work" defense can, and will, be applied on a class-wide basis in this case. We offer no opinion on whether USSA's "single-guard" staffing model will qualify for the "nature of the work" exception.
We are mindful that it is an abuse of discretion for the district court to rely on uniform policies "to the near exclusion of other relevant factors touching on predominance." In re Wells Fargo, 571 F.3d at 955; see also Wang, ___ F.3d at ___, 2013 WL 4712728 at *5; Vinole v. Countrywide
This case is not like In re Wells Fargo, Wang, or Vinole. First, unlike in those cases, federal or state exemption classifications — which may sometimes be fact-intensive — are not at issue here. Cf. In re Wells Fargo, 571 F.3d at 959 (explaining that the "federal outside salesperson exemption" often "requires `a fact-intensive inquiry into each potential plaintiff's employment situation'" (quoting the district court)); Vinole, 571 F.3d at 945 (explaining that under California law, "a court evaluating the applicability of the outside salesperson exemption must conduct an individualized analysis of the way each employee actually spends his or her time," and the court's "analysis of the FLSA exemption" is likewise "a fact-intensive inquiry" (emphasis added)).
Second, unlike in Wells Fargo and Vinole, the district court did not rely on the existence of USSA's uniform on-duty meal period policy to the exclusion of other factors. To the contrary, the district court found that nearly all of the evidence in the record — including Flury's testimony about USSA's actual business practices, as well as the declarations of USSA's employees — supports a finding that common questions would predominate. For example, the court found that Flury's testimony described "more than a policy," since he also explained how USSA's "policies and practices are implemented on the ground." In considering the employee declarations, the court found that "[n]one of these declarations establishes that the declarant was categorically given off-duty meal breaks." And, "[g]iven the uniform policy of requiring... the on-duty meal break agreement," the court further found that, "in the vast majority of cases, this policy was implemented
USSA nevertheless challenges the district court's factual findings, particularly with regard to the employee declarations. USSA argues that it staffs its guards in groups "ranging from one guard per shift to up to 30 guards per shift and practically everything in between." It further argues that "at many locations, `off-duty' meal periods were provided." But these arguments directly contradict the statements that Flury made during his deposition. Flury testified to three critical facts. First, he initially testified that 99.9% of employees work at single guard posts (he later changed his answer to say that "a large majority" of employees work at such posts).
We agree with the district court that although USSA "may wish to distance itself from Flury's statements, his admissions were material and [are] properly before us." Furthermore, to the extent the employee declarations submitted by USSA are not entirely consistent with Flury's testimony, we defer to the district court's decision to weigh his testimony over the employee declarations. We cannot say, in light of all the evidence, that the district court's findings of fact were "illogical," "implausible," or "without support in inferences that may be drawn from the facts in the record." See Hinkson, 585 F.3d at 1262. The district court here did not abuse its discretion by finding, on the record before it, that common issues of law or fact would predominate.
Finally, USSA argues that individual issues will predominate because USSA's "time records will not dispositively show which meal periods were `off duty' meal periods" for any given employee. As a factual matter, however, USSA's argument is again belied by the record. Many of the employee declarations describe keeping records of their time worked. And, as the district court noted, "given Flury's admission that those staffed at single guard posts were required to take on-duty meals, Defendant's records of each employee's clock-in and clock-out times, how much he was paid, and whether he was staffed at a single guard post, can be used to extrapolate whether his meal break was on- or off-duty." For example, Flury testified that "for on-duty meal breaks, the sign-in sheets would just have a start time and end time." In light of these records, it would not be difficult to determine USSA's
For the foregoing reasons, we conclude that the plaintiffs' claims "will prevail or fail in unison," as required by Rule 23(b)(3). See Amgen Inc., 133 S.Ct. at 1191. The district court did not abuse its discretion in concluding that Rule 23(b)(3) was satisfied.
In sum, we conclude that the district court did not abuse its discretion by certifying the meal break sub-class.
DLSE Opinion Letter 2009.06.09 at 7. Thus, we make this observation solely to note the broad types of positions that DLSE has determined qualify for the "nature of the work" exception, as part of our limited inquiry into the merits of the plaintiffs' claims.
Id. at 9 (emphasis added). Although not dispositive of any issue, DLSE's response supports the plaintiffs' argument that it is unlawful for USSA to impose a uniform policy of requiring "on-duty" meal periods, given USSA's own admission that, "beyond the variation in general duties by post," the guards' day-to-day responsibilities also vary.
We disagree that the district court applied the wrong legal standard. As an initial matter, the district court did not "apply" any legal standard; it merely looked to the DLSE opinion letters as part of its preliminary inquiry into the merits, to determine whether class certification was appropriate. Furthermore, the district court clarified its initial ruling when it denied USSA's motion for reconsideration, explaining that its previous citation to the "virtually impossible" standard "was not determinative in [its] analysis," and that the "analytical role" it played "was merely to express that the showing necessary to establish the `nature of the work' exception is a high one." We are therefore satisfied that the district court applied the correct legal standard.
