Posts belonging to Category Certification Rulings

Godfrey v. Oakland Port Services: CA Ct. of App. Affirms Judgment for Driver Class

Last month, the California Court of Appeal affirmed an order by the Alameda County Superior Court certifying a class of drivers for various wage-and-hour violations against their employer, Oakland Port Services Corp, d/b/a AB Trucking. Godfrey v. Oakland Port Services Corp., No. A139274 (First Dist. Div. 2 Oct. 28, 2014) (slip op. available here). The drivers claimed that that they had not been paid for missed meal and rest periods, among other violations. The appellate court also upheld the lower court’s judgment for the plaintiffs after a bench trial in which the plaintiffs had been awarded nearly $1 million, in addition to attorney fees, litigation expenses, and class representative enhancement awards. It also found that the Federal Aviation Administration Authorization Act (FAAAA) did not preempt California’s meal and rest break requirements.

The plaintiffs had alleged that the defendant had failed to pay its drivers for all hours worked, misclassified some drivers as non-employee trainees, and failed to provide meal and rest breaks. Finding for the plaintiffs, the trial court’s statement of decision and judgment held that: (1) AB Trucking failed to pay for all hours worked because its records showed that “it deducted one hour per day from each employee . . . , even though the driver did not receive a one hour meal period”; (2) “AB misclassified drivers who were suffered or permitted to work as non- employees, or unpaid ‘trainees.’”; and (3) plaintiffs had “presented substantial and persuasive evidence that class members were routinely and consistently precluded by AB from taking meal periods and rest breaks.” Slip op. at 3-4.

AB Trucking argued, on appeal, that the trial court had found erroneously that the FAAAA did not preempt state law with regard to meal and rest breaks. The FAAAA provides for federal regulation of commercial carriers and preempts state law “related to a price, route, or service of any motor carrier . . . with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). The court disagreed with the defendant, finding that the FAAA does not preempt claims for missed meal and rest periods by the drivers and that the defendant failed to offer any evidence that the state’s break laws had any actual impact on its prices, routes, or services. Citing recent federal and California precedents such as Dilts v. Penske Logistics, LLC, No. 12-55705 (9th Cir. July 9, 2014), and People ex rel. Harris v. PAC Anchor Transportation, Inc., No. S194388 (July 28, 2014), which have limited the preemptive reach of the FAAAA, the court concluded that compliance with the state’s meal and rest break laws does not conflict with federal law. 

Employee Class Certified in Tian v. Ma Laboratories

The trial judge in the Santa Clara Superior court, Judge Peter H. Kirwan, certified a class of employees who alleged that Ma Laboratories Inc. failed to pay for all “hours worked” pursuant to 8 Cal. Code Regs., § 11070(2)(G). The wage-and-hour lawsuit claimed that the defendant was shaving time off employees’ actual hours worked; the judge found that time-shaving is a “one-way” practice and that workers are under their employers’ control as soon as they are on the clock, even if they are not performing any actual work. Tian v. Ma Laboratories Inc., No. 1-11-cv-195373 (Cal. Super. Ct. Oct. 9, 2014) (slip op. available here).

The court certified the time-shaving class and several subclasses, finding that even workers who are sitting around before their shifts smoking cigarettes and waiting for instructions are considered on the clock and working and thus must be paid. The class consisted of approximately 550 employees who worked at Ma Labs’ headquarters in San Jose or in its facility in Los Angeles. Stating, “even those who are waiting for instructions in the morning are clocked in and subject to Ma Labs’ control/suffered or permitted to work, whether or not required to do so,” the court held that, per the plaintiffs’ theory, “this still constitutes ‘hours worked’ for purposes of compensation, and the necessary findings can be made from the timekeeping alone.” Slip op. at 7.

Ma Labs allegedly had a strict start and end time for each employee, so that if and when workers clocked in before that set time starts or clocked out after it ends, the extra time needed to be approved and manually revised by a system administrator. The plaintiffs also alleged that this time-shaving practice allowed Ma Labs to not always pay for the extra time when workers arrived early or stayed late, but consistently docked their pay if they came in late or clocked out early. Approval for pre-shift time was “rarely if ever” granted, and post-shift time was not typically approved unless it was less than ten minutes. Slip op. at 6. The defendant argued that the plaintiffs were unable demonstrate that each particular employee was not incorrectly reporting his or her time or individual reasons for each individual’s denial of overtime or time card adjustment. Ma Labs also contended that workers would sometimes swipe their cards to clock in, then eat breakfast or perform personal tasks, rather than begin work right away. However, the court declined to address the merits of the plaintiffs’ time-shaving theory and stated that “[defendant’s] evidence that some employees occasionally engaged in personal activities after clocking in does not defeat certification because the record does not suggest that such instances would predominate over common ones.” Slip op. at 7 (emphasis added).

The court granted certification as to the time-shaving subclass, the auto-deduct lunch policy subclass consisting of employees from March 1, 2007 to February 15, 2010, the second meal period policy subclass, the rest period policy subclass from March 1, 2007 to February 15, 2010, the derivative wage statement class, and derivative waiting time penalty subclass. However, it denied the certification motion as to a drivers subclass within the auto-deduct lunch policy theory and a broader rest period policy subclass after February 15, 2010.

9th Cir.: Affirms Order Certifying Claims Adjusters Class in Jimenez v. Allstate

Earlier this month, the Ninth Circuit Court of Appeal affirmed the California district court’s order certifying a class of approximately 800 claims adjusters who alleged that Allstate denied them overtime pay, ruling the class met the commonality requirement. Jimenez v. Allstate Insurance Co., No. 12-56112 (9th Cir. Sept. 3, 2014) (slip op. available here). Stating that the use of statistical sampling testimony to show classwide liability did not contradict the U.S. Supreme Court’s ruling in Wal-Mart Stores Inc. v. Dukes, 131 S. Ct. 2541 (2011), the court found that it and its sister circuit courts have regularly found that statistical sampling and representative testimony are acceptable ways to show liability. Moreover, the lower court had preserved the defendant’s ability to raise any individualized defenses it might have at the damages stage, and thus the certification order did not violate its due process rights.

Claims adjuster Jimenez filed this putative class action in 2010, on behalf of all Allstate claims adjusters in California working since Sept. 29, 2006. After Allstate reclassified its California claims adjusters from exempt positions to hourly status in 2005, the plaintiffs alleged that the defendant did not pay them overtime wages or for missing meal breaks. In April 2012, U.S. District Court Judge Kronstadt certified the overtime class, ruling that if Allstate had a common practice of disregarding its own written policies and discouraging employees from reporting overtime, then the employees meet the requirements for commonality. Meal and rest break claims were denied, however, because they were too individualized.

The Ninth Circuit agreed with the lower court’s order finding that the plaintiffs had raised at least three common questions: whether the class was forced to work unpaid overtime due to the defendant’s unofficial policy of deterring employees from reporting overtime (among other reasons), whether the defendants knew or should have known that the class members were working unpaid overtime, and whether the defendants “stood idly by.” Citing Dukes, the court opined that the lower court did not abuse its discretion in determining that these three common questions contained the ‘glue’ necessary to say that ‘examination of all the class members’ claims for relief will produce a common answer to the crucial question[s]’ raised in the plaintiffs’ complaint. Slip op. at 11 (internal citations omitted). The panel also rejected Allstate’s argument that statistical sampling violates due process during the liability phase of class action proceedings. “[S]tatistical sampling and representative testimony are acceptable ways to determine liability so long as the use of these techniques is not expanded into the realm of damages.” Id. at 12.

7th Cir. Rules “Commonality of Damages” Not Required for Cert. in IKO Roofing

Earlier this month, the Seventh Circuit Court of Appeal held that “commonality of damages” was not required under Wal-Mart v. Dukes, 131 S. Ct. 2541 (2011) and Comcast v. Behrend, 133 S. Ct. 1426 (2013) for class certification in a consumer case involving claims that “organic” roof shingles did not meet an industry standard. In the Matter of IKO Roofing Shingle Prods. Liab. Litig., No. 14-1532 (7th Cir. July 2, 2014) (slip opinion available here). Purchasers of the shingles sued IKO, alleging that the defendant falsely told customers that the shingles met an industry standard. Plaintiffs asked the district court to certify a class that would cover IKO’s sales of the product in various states since 1979, but the motion was denied by the multidistrict litigation judge in the Central District of Illinois. The district court stated that Comcast and Dukes required proof “that the plaintiffs will experience a common damage and that their claimed damages are not disparate” and that “’commonality of damages’ is essential.” Slip op. at 6.

Circuit Judge Frank Easterbrook authored the opinion for the panel consisting of Judges Wood and Kanne. The panel wrote that the district court incorrectly interpreted Comcast; such an interpretation would make “class actions about consumer products impossible.” Slip op. at 6. Distinguishing Dukes as having “nothing to do with commonality of damages,” the opinion stated, “[i]t dealt instead with the need for conduct common to members of the class, and it concerned Rule 23(a)(2) rather than Rule 23(b)(3).” Id. However, in a suit like IKO Roofing, which alleges a defect common to all instances of a consumer product, “the conduct does not differ.” Id. at 6-7.

Furthermore, while Comcast does discuss injury under Rule 23(b)(3), all it requires is that the theory of loss (damages) match the theory of liability. Id. at 7. In Comcast, the plaintiffs specified four theories of liability, but the district judge had only certified a class limited to one of the four theories. However, the plaintiffs’ damages expert estimated harm assuming all four of the theories were established. Because there was only one certified theory of liability but four theories of damages, the theory of loss failed to match the theory of liability. Id. In IKO Roofing, the panel found that the plaintiffs submitted two theories of damages that matched their theory of liability: the first being the difference between the market price between the product as represented and a tile that does not satisfy the industry standard, which is applied to every purchaser, and the second being purchasers whose tiles actually failed could recover damages if the alleged defect (not meeting the industry standard) caused the failure.

The panel stated that although the district court was not required to certify this class action if there were other issues that make class treatment unwieldy despite any common issues, here, the lower court failed to apply the correct legal standard—“commonality of damages” is not a requirement for certification. It is too early to tell, but IKO Roofing’s holding may have positive implications for wage-and-hour class actions, if utilized in employee class certification arguments.