LEFKOW, Senior District Judge:
Joséluis Alcantar wishes to represent a class of service technicians in his suit against his employer, Hobart Service ("Hobart"), and its parent company, ITW Food Equipment Group ("ITW"). Alcantar alleges that Hobart did not compensate its technicians for the time they spent commuting in Hobart's service vehicles from their homes to their job sites and from those job sites back home. Alcantar also alleges that Hobart failed to provide its technicians with meal and rest breaks.
Alcantar appeals from the district court's denial of class certification and its grant of partial summary judgment, as well as its determination that Alcantar did not comply with the notice requirements of California's Private Attorneys General Act ("PAGA"). We have jurisdiction under 28 U.S.C. § 1291. We affirm the judgment in part and reverse and remand in part.
ITW, Hobart's parent company, designs and manufactures commercial food equipment.
Alcantar and other service technicians provide most services on-site. They drive to and from customer locations in vehicles Hobart provides, carrying the tools and replacement parts necessary to make repairs. Although they spend most of their time at customer locations, each technician is assigned to one of Hobart's thirteen California branch offices.
As hourly employees, the technicians are compensated for the time they spend fixing equipment and the time they spend driving to and from different assignments. If they commute in the service vehicles, they are also compensated for the time spent driving from their homes to their first assignments and from their last assignments back home, but only to the extent it falls outside their "normal commute."
A normal commute is the time it takes a technician to drive from his home to his branch location. Thus, if a job site is farther from a technician's home than his branch office, the technician is compensated for the extra time it takes him to reach the job site. But if a job site is the same distance or closer to a technician's home than his branch office, the technician is not compensated for time spent driving to the job site. Alcantar claims that California law requires Hobart to compensate technicians for their normal commute. The crux of this claim is the allegation that, while commuting to and from work in Hobart's vehicles, the service technicians are under Hobart's control.
As a condition of their employment, Hobart's service technicians must sign an agreement governing their use of the vehicles. The agreement states that the technicians have the option either to commute in their vehicles or leave the vehicles at their branch offices:
Alcantar maintains this choice is illusory. The branch offices do not have enough secured parking spaces for technicians' vehicles. Because the technicians are responsible for the tools and parts inside the vehicles, they risk having to pay for any stolen tools and parts if the vehicles are burglarized at the branch offices.
The agreement also places numerous restrictions on the service technicians' use of the vehicles, including prohibiting personal use without prior approval:
The agreement also prohibits service technicians from carrying passengers without prior approval. Transporting or storing alcohol is also forbidden, and the agreement does not give service technicians the option to seek permission from management to do so. By signing the agreement, the technicians acknowledge that "any infraction of these rules will result in disciplinary action up to and including termination." Hobart's personnel manual echoes the agreement, listing the "[o]peration of a service vehicle for personal use" as grounds for termination. In addition to these limitations, Hobart also expects service
As hourly employees, the technicians are also required to take meal and rest breaks throughout the day. Alcantar alleges that Hobart failed to provide these breaks.
Alcantar's complaint, filed October 5, 2011, alleges violations of California Labor Code § 1194. The complaint also alleges derivative claims under the Unfair Competition Law ("UCL"), Cal. Bus. & Prof.Code §§ 17200 et seq., and PAGA, Cal. Lab. Code §§ 2698 et seq. Alcantar sought certification of a class of service technicians employed by Hobart in the four years preceding the filing of the lawsuit.
The district court denied Alcantar's motion for class certification, explaining that Alcantar failed to satisfy the commonality requirement of Federal Rule of Procedure 23(a)(2) and the predominance requirement of Federal Rule of Procedure 23(b)(3). The court then granted the motion for summary judgment as to Alcantar's overtime claim for commute time but held that there was a genuine issue of material fact as to whether Hobart complied with California's meal- and rest-break requirements. The district court concluded that the derivative UCL and PAGA claims survived to the same extent as the overtime claim.
Hobart and ITW moved for summary judgment a second time, arguing that Alcantar had not complied with PAGA's notice requirements. The district court agreed. The parties stipulated to dismissal of the § 1194 claim and the UCL claim and Alcantar timely appealed, challenging the district court's orders denying certification, granting in part the first motion for summary judgment, and granting the second motion for summary judgment.
We review de novo the district court's decision to grant or deny summary judgment, viewing the facts in the light most favorable to the non-moving party. Alexander v. FedEx Ground Package Sys., 765 F.3d 981, 987 (9th Cir.2014). "[S]ummary judgment is appropriate when `there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'" Albino v. Baca, 747 F.3d 1162, 1168 (9th Cir.2014) (en banc) (quoting Fed.R.Civ.P. 56(a)).
We review orders granting or denying class certification for abuse of discretion. Parra v. Bashas', Inc., 536 F.3d 975, 977 (9th Cir.2008). "An abuse of discretion occurs when the district court, `in making a discretionary ruling, relies upon an improper factor, omits consideration of a factor entitled to substantial weight, or mulls the correct mix of factors but makes
Alcantar contends that the district court improperly reached the merits of his claims in denying class certification under Rule 23(a)(2) and Rule 23(b)(3).
"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, 180 L.Ed.2d 374 (2011) (quoting Califano v. Yamasaki, 442 U.S. 682, 700-01, 99 S.Ct. 2545, 61 L.Ed.2d 176 (1979)). This exception is justified where the class members and the class representative possess the same interest and have suffered the same injury. Id. Rule 23(a) seeks to ensure that the class claims are limited to those "`fairly encompassed by the named plaintiff's claims.'" Id. (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 156, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982)). To that end, Rule 23(a) conditions certification on a demonstration that
Fed.R.Civ.P. 23(a).
Courts must perform a "rigorous analysis" of these prerequisities before concluding that Rule 23(a) is satisfied. Wal-Mart, 131 S.Ct. at 2551 (quoting Falcon, 457 U.S. at 161, 102 S.Ct. 2364). The analysis may "entail some overlap with the merits of the plaintiff's underlying claim," id., but Rule 23 "grants courts no license to engage in free-ranging merits inquiries at the certification stage." Amgen Inc. v. Conn. Ret. Plans & Trust Funds, ___ U.S. ___, 133 S.Ct. 1184, 1194-95, 185 L.Ed.2d 308 (2013). Instead, "[m]erits questions may be considered to the extent — but only to the extent — that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied." Id. at 1195. Once these prerequisites are satisfied, the proposed class must meet at least one of the three requirements set forth in Rule 23(b).
Although Rule 23(a)(2) refers to common "questions of law or fact" in the plural, even a single common question will do. Wal-Mart, 131 S.Ct. at 2556. But because "`[a]ny competently crafted class complaint literally raises common questions,'" id. at 2551 (alteration in original) (quoting Richard A. Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L. REV. 97, 131-32 (2009)), courts should look for a "common contention" in determining whether putative class members' claims can be litigated together. Id. "That common contention, moreover, must be of such a 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." Id. Thus, it is not just the common contention, but the answer to that contention, that is important: "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." Id. (alterations in original) (quoting Nagareda, supra, at 132).
In denying certification, the district court observed that Alcantar had not offered any evidence demonstrating that Hobart had a uniform policy requiring technicians to commute in the service vehicles and stated, "Absent proof of a company-wide policy, the commonality requirement is not met." The court then concluded that, "because there is no evidence to suggest that technicians were required to drive the service vehicles to their homes, the lack of a potential legal argument precludes a common issue of fact or law for purposes of Rule 23(a)(2)."
The district court's conclusion is incorrect for two reasons. First, as explained below, there is a question of fact as to whether Hobart requires technicians to use its vehicles for their commute. See infra Part II. Second, it asks too much of Alcantar, who need only show that there is a common contention capable of classwide resolution — not that there is a common contention that "will be answered, on the merits, in favor of the class." See Amgen, 133 S.Ct. at 1191. His contention is that service technicians, by virtue of their inability to park at Hobart's facilities, must drive Hobart's vehicles to work and, as a result of the rules applicable to their use of the vehicles, are sufficiently controlled during that commute to render the time compensable under California law. If it should ultimately be determined that Hobart did not exercise sufficient control over the technicians, that determination would not amount to "`some fatal dissimilarity'" among class members that would make use of the class action device inefficient or unfair. Id. at 1197 (quoting Nagareda, supra, at 107). Instead, it would generate "a fatal similarity — failure of proof as to an element of the plaintiff's [claim]." Id. (alteration in original) (emphasis added) (quoting Nagareda, supra, at 107). A determination either way is inappropriate at the certification stage.
We conclude that the district court erred in denying class certification because it evaluated the merits rather than focusing on whether the questions presented — meritorious or not — were common to the class. By doing so, the district court made an error of law, thereby abusing its discretion.
Alcantar contends that the district court also improperly evaluated the merits in denying certification of the meal- and rest-break claim. We need not reach this issue, however, because we conclude that the district court did not abuse its discretion
In addition to Rule 23(a)'s four prerequisites, a proposed class must satisfy at least one of the requirements listed in Rule 23(b). Fed.R.Civ.P. 23(b). Alcantar moved for certification under Rule 23(b)(3), which requires a court find that "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)(3). The district court held that even if the class met Rule 23(a)'s prerequisites, the class would still fail under Rule 23(b)(3) because questions as to why service technicians missed their meal and rest breaks, whether because of their employer's failure to provide them or their own choice to forgo them, would predominate over questions common to the class. This conclusion is well within the district court's discretion.
Alcantar challenges the district court's decision to grant summary judgment in favor of Hobart on Alcantar's commute-time claim. The district court's decision was based on its conclusion that § 1194 does not require Hobart to compensate Alcantar for commute time where there is no dispute that Hobart does not expressly require the technicians to commute in its vehicles.
An employee's commute is not typically compensable under California labor law, even "when the employee commutes in a vehicle that is owned, leased, or subsidized by the employer." Cal. Lab.Code § 510(b). The time may be compensable, however, if the employee can classify it as "hours worked." The Industrial Welfare Commission has defined "hours worked" as "the time during which an employee is subject to the control of an employer," including "all the time the employee is suffered or permitted to work, whether or not required to do so." See Cal.Code Regs. tit. 8, § 11040(2)(K).
In Morillion v. Royal Packing Co., the California Supreme Court elaborated on what constitutes control. 22 Cal.4th 575, 94 Cal.Rptr.2d 3, 995 P.2d 139 (2000), as modified (May 10, 2000). The plaintiff in Morillion represented a class of agricultural laborers. Their employer, Royal Packing Company, required them to meet at specific departure points each morning so that it could transport them to the fields where they worked. At the end of the day, Royal took them back to the departure points. Id. Royal prohibited the workers from using their own transportation to get to and from the fields. The California Supreme Court held that the workers were entitled to compensation for the time they spent traveling to and from the fields, reasoning that they "were foreclosed from numerous activities in which they might otherwise engage if they were permitted to travel to the fields by their own transportation." Id. 94 Cal.Rptr.2d 3, 995 P.2d at 146. The court rejected Royal's argument that its decision would render all activities an employer requires (even grooming) compensable. The court explained that "[t]he level of the employer's control over its employees, rather than the mere fact that the employer requires the employees' activity, is determinative." Id.
Alcantar does not assert that Hobart exercises control over him should he commute in his own vehicle. Therefore, to prevail at trial he must prove not only that Hobart's restrictions on him during his commute in Hobart's vehicle are such that he is under Hobart's control, but also that, despite Hobart's profession that use of its vehicles is voluntary, employees are, as a
Alcantar acknowledges that Hobart has no official policy requiring technicians to commute in the service vehicles but argues that, in reality, service technicians have no meaningful choice. Each vehicle is equipped with tools and service parts. Although the parties dispute the value of the tools and parts (Hobart argues that the value ranges from $5,000 to $12,000; Alcantar insists a stock inventory places it at over $80,000), they agree that the technicians are responsible for them. Thus, Alcantar argues, if the tools or parts are stolen, the technicians must pay for them. Alcantar contends that because Hobart does not provide sufficient secure parking spaces, the technicians have to take the vehicles home or risk theft of the tools and service parts.
Alcantar submits numerous declarations from service technicians supporting this contention. The declarations state that even though Hobart did not have a policy requiring technicians to drive the vehicles home, the technicians could not risk having to pay for stolen tools or parts. In addition to the declarations, Alcantar offers deposition testimony from Hobart's Rule 30(b)(6) representative, who conceded that although there is enough unsecured parking at each branch, there is not enough secured parking for every technician to leave a service vehicle overnight. Alcantar also submits an excerpt from Hobart's personnel manual in which Hobart acknowledges the value of the tools and service parts:
Alcantar has gone beyond the pleadings and has pointed to declarations and deposition testimony that raise a genuine dispute of material fact as to whether technicians are, as a practical matter, required to commute in Hobart's vehicles. It is not for the court to evaluate the persuasiveness of this evidence. Alcantar need only show that a reasonable jury could find for him at trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
Hobart maintains that Alcantar's claim cannot survive summary judgment because the agreement between Hobart and the technicians gives technicians the choice to commute in their vehicles or leave them at their branch office. But as we explained above, there is a dispute of material fact as to whether that choice is genuine or illusory. To the extent Hobart argues that Alcantar's claim is foreclosed as a matter of law, the court is unpersuaded. Hobart cites no precedent stating that an employer must expressly require employees commute in their vehicles for the employees' commute time to be compensable. Nor does the court read Morillion or the cases interpreting it as imposing such a condition. Indeed, Morillion's chief concern was with what happened in practice — that Royal determined "when, where, and how" the laborers commuted to work. See Morillion, 94 Cal.Rptr.2d 3, 995 P.2d at 146. Cases applying Morillion have looked at employees' behavior in evaluating plaintiffs' claims that their employer required them to take certain transportation. See Overton v. Walt Disney Co., 136 Cal.App.4th 263, 271, 38 Cal.Rptr.3d 693 (2006), as modified (Feb. 1, 2006) (concluding
Nor are we persuaded by the reasoning of the dissent, which relies on a provision of Hobart's Personnel Policies and Procedures. That provision states that technicians are responsible for the replacement of any tool lost or stolen through the technicians' negligence and directs technicians to ensure that their vehicles are locked when left unattended. Relying on this provision, the dissent contends that "any argument that the employees are somehow required to drive their service vehicles home for the security of the vehicle's contents has no basis in the record." Citing the lack of evidence that Hobart has ever held a technician liable for a break-in at the facility, the dissent overlooks the fact that no one has ever actually parked there.
In contrast to the provision on which the dissent relies, the "Service Technician Rules/Understandings" document states that technicians are absolutely responsible for the tools, regardless of culpability. It provides that service technicians "accept full responsibility" if tools are "lost, misplaced or ... not ... available when regularly inventoried." In addition, as noted above, Alcantar has submitted numerous declarations from other technicians, stating that they could not risk leaving the vehicles at Hobart's facilities because they would be forced to pay for stolen tools or parts. These declarations say nothing of negligence, and suggest that technicians have received the message from Hobart, implicitly or explicitly, that they are absolutely responsible for the tools. Hobart's apparently inconsistent policies make the testimony of witnesses necessary to resolve the extent to which technicians are held responsible for the tools and parts. This is unlike the employees in Overton, who demonstrably had options other than riding a shuttle bus to work.
Alcantar also contends that the district court erred in ruling that Hobart was entitled to summary judgment on Alcantar's PAGA claim because the letter in which Alcantar disclosed his allegations against Hobart did not contain sufficient facts to comply with the statute's notice requirements.
PAGA allows an employee to bring an action against an employer to recover civil penalties for violations of the California Labor Code. Cal. Lab.Code § 2699(a). First, however, the employee must give "written notice by certified mail to the Labor and Workforce Development Agency and the employer of the specific provisions of [the California Labor Code] alleged to have been violated, including the facts and theories to support the alleged violation." Cal. Lab.Code § 2699.3(a)(1). ITW and Hobart argue that the letter Alcantar sent them and the Labor and Workforce Development Agency does not include sufficient facts or theories.
The only facts or theories that could be read into this letter are those implied by the claimed violations of specific sections of the California Labor Code — that Hobart failed to pay wages for time worked, failed to pay overtime wages for overtime worked, failed to include the extra compensation required by § 1194 in the regular rate of pay when computing overtime compensation, and so on. This is insufficient.
Section 2699.3(a)(1) was adopted as part of an amendment to PAGA, intended to cure perceived abuses of the Act. As the California Court of Appeal observed,
Dunlap v. Superior Court, 142 Cal.App.4th 330, 338-39, 47 Cal.Rptr.3d 614 (2006) (quoting Calif. S. Rules Comm., Off. of S. Floor Analyses, Bill Analysis for SB1809, at 5-6 (Aug. 27, 2004)). Plaintiff's letter — a string of legal conclusions with no factual allegations or theories of liability to support them — is insufficient to allow the Labor and Workforce Development Agency to intelligently assess the seriousness of the alleged violations. Neither does it provide sufficient information to permit the employer to determine what policies or practices are being complained of so as to know whether to fold or fight. Thus, we affirm. This conclusion is consistent with our unpublished opinion in Archila v. KFC U.S. Properties, Inc., 420 Fed.Appx. 667, 669 (9th Cir.2011), in which we affirmed a district court's dismissal of a PAGA claim, observing that "none of the materials Archila submitted to KFC or the LWDA contain `facts and theories' to support his allegations" and the demand letter "merely lists several California Labor Code provisions Archila alleges KFC violated and requests that KFC conduct an investigation."
For the foregoing reasons, the judgment of the district court is affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion.
The parties shall bear their own costs on appeal.
N.R. SMITH, concurring in part and dissenting in part:
This case should be over. The majority correctly rejects Alcantar's contentions regarding (a) the denial of class certification on his meal break claim, and (b) the grant of summary judgment to Hobart on his PAGA claim.
Under California law, Alcantar may only succeed on his commute time claim if he can show that he is subject to Hobart's control during his commute. See Cal.Code Regs. tit. 8, § 11040(2)(K). If an employer requires its employees to commute in employer provided vehicles and "prohibit[s] them from effectively using their travel time for their own purposes," then the employer must compensate the employees for their time as "hours worked." See Morillion v. Royal Packing Co., 22 Cal.4th 575, 94 Cal.Rptr.2d 3, 995 P.2d 139, 146 (2000). However, if the employees are "free to choose — rather than required — to" utilize employer provided transportation, then they are not under their employer's control, regardless if they ultimately use the employer provided transportation. See id. 94 Cal.Rptr.2d 3, 995 P.2d at 148 n. 5; Overton v. Walt Disney Co., 136 Cal.App.4th 263, 38 Cal.Rptr.3d 693, 699 (2006).
Here, Alcantar and all Hobart employees can choose to either commute in their own personal vehicles or commute in Hobart provided service vehicles. Nothing prevents Hobart employees from utilizing either option. Thus, because Hobart employees are free to choose their method to commute, they are not under Hobart's control during their commutes and Hobart is not obligated to pay them for their commute time. The facts, as alleged by Alcantar, confirm this result:
Given these facts (viewed in the light most favorable to Alcantar), the commute time is not compensable as "hours worked." See Morillion, 94 Cal.Rptr.2d 3, 995 P.2d at 148 n. 5; Overton, 38 Cal. Rptr.3rd at 699. Hobart employees have the choice to either (1) park their service vehicles overnight at Hobart's facilities in a secured area (if spots are available) or in an unsecured area with locked doors, and commute in their own personal vehicle (outside of Hobart's control), or (2) commute in their service vehicles (under Hobart's control). Nothing prevents Hobart employees from leaving their service vehicles overnight at Hobart's facilities.
Alcantar first argues (and the majority buys his argument) that the option to leave the service vehicles overnight at Hobart's facilities may be illusory, because the vehicles would be left in unsecured parking lots and the Hobart employees would be liable for the cost of replacing any stolen tools or equipment, should the vehicles be burglarized. However, this argument contradicts the undisputed facts in the record and Hobart's policy. Hobart's undisputed policy regarding equipment stolen from service vehicles states that employees are only liable for tools and equipment stolen
To contradict this conclusion, the majority manufactures the argument that Hobart's policies are "inconsistent." Alcantar has never even made that argument. Instead, in his opening brief, Alcantar recognized Hobart's undisputed policy, as conveyed in both the Rules/Understandings form and Hobart's Manual:
Because Alcantar has presented both the Rules/Understandings form and Hobart's Manual as an "accurate statement" of Hobart's policy, we must give both provisions effect. This is not hard to do, because the provisions are not inconsistent.
Alcantar argues (and the majority buys the argument) that the lack of secured parking somehow renders illusory the option to leave service vehicles overnight at Hobart facilities. However, the availability of secured parking areas at Hobart facilities does not matter in this analysis. A Hobart employee's liability for stolen tools does not depend on whether the vehicles were parked in a secured parking area. Instead, the employee's liability occurs only when the theft was facilitated by the employee's negligence. Parking a locked vehicle at a location specifically authorized by Hobart cannot be negligence, because Hobart has expressly authorized such conduct.
The majority responds by again trying to manufacture a disputed issue of fact. The majority emphasizes that some Hobart employees have provided declarations asserting that they thought that commuting in their service vehicles was their only practical option, because of the concern for the safety of their tools. According to the majority, this subjective belief renders the option of leaving the vehicles overnight at Hobart facilities illusory. However, the California Court of Appeal rejected similar arguments in Overton, 38 Cal.Rptr.3d at 699. In Overton, Disney employees at the Disneyland Resort in California, who commuted to work in their own vehicles, were required to park at a parking lot one mile from the Resort. Id. at 694. Disney provided a shuttle bus for the employees that ran from the parking lot to the Resort. Id. Relying on Morillion v. Royal Packing Co., the Disney employees sued for unpaid wages, claiming that the time they spent waiting for and riding the shuttle bus was compensable time, because they were required to use the shuttle for their commute. Overton, 38 Cal.Rptr.3d at 695. The California Court of Appeal rejected the Disney employees' claim, holding that the employees were not required to ride the shuttle bus. Id. at 699. Instead, the court noted that the Disney employees could use any number of alternative methods to commute, including riding the train or bus, being dropped off, or walking or riding their bikes. Id. The court then rejected the argument that commute time was compensable for "employees who, as a
Just like the employees in Overton (who thought that utilizing the shuttle bus was the only practical method of commuting), Alcantar argues that commuting in his service vehicle home was the only practical method of commuting, because it ensured the safety of the tools and equipment for which he was responsible. However, viewing the undisputed facts, Alcantar and all other Hobart employees were free to choose to leave their service vehicles at Hobart facilities and commute in their own personal vehicles, because there would be absolutely no negative consequences for doing so. Therefore, no reasonable jury could conclude that the option is illusory. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (reasoning that a genuine issue of material fact exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party").
Under both Morillion and Overton, Hobart is not required by California law to compensate its employees for their normal commute time, because employees are free to choose to commute in their own personal vehicles outside of Hobart's control. Hobart is entitled to judgment as a matter of law. Accordingly, this case should be over.
