The opinion of the court was delivered by: Oliver W. Wanger United States District Judge
MEMORANDUM DECISION RE PLAINTIFFS‟ MOTION FOR CLASS CERTIFICATION AND DEFENDANTS‟ MOTION TO EXCLUDE DECLARATION AND REPORT OF JAMES LACKRITZ (DOCS. 185, 221).
Plaintiffs move to certify a class action under Fed. R. Civ. P. 23(a) and 23(b)(3). (Pls. Mot. Class Cert., ECF No. 185.) Taco Bell Corp. and Taco Bell of America, Inc. ("Taco Bell") filed an opposition (Defs. Opp‟n Class Cert., ECF No. 220), to which Plaintiffs replied (Pls. Reply Class Cert., ECF No. 235). Both parties filed supplemental briefs regarding the subclass definitions (Pls. Response Hearing, ECF No. 252; Defs. Prop. Defins., ECF No. 254), and Plaintiffs filed an objection and response to Taco Bell‟s supplemental brief (Pls. Obj‟n Prop. Defins., ECF No. 255).
Taco Bell moves to exclude the declaration and report of Plaintiffs‟ expert Dr. James Lackritz. (Defs. Mot. Lackritz, ECF No. 221.) Plaintiffs filed an opposition (Pls. Opp‟n Lackritz, ECF No. 237), to which Taco Bell replied (Defs. Reply Exclude, ECF No. 244). Taco Bell also filed an objection to Plaintiffs‟ evidence and expert Dr. Philip C. Gorman (Defs. Obj‟n Gorman, ECF No. 220-6), to which Plaintiffs responded (Pls. Opp‟n Gorman, ECF No. 235-2). Plaintiffs object to Taco Bell‟s evidence and expert Michael Buchanan. (Pls. Obj‟n Buchanan, ECF No. 235-1.) Taco Bell filed an opposition (Defs. Opp‟n Buchanan, ECF No. 239), to which Plaintiffs replied (Pls. Reply Buchanan, ECF No. 241).
The motions were heard June 6 and 7, 2011.
This case is a consolidation of six related putative wage and hour class actions against Taco Bell: (1) Medlock v. Taco Bell Corp., Case No. 1:07-cv-01314; (2) Hardiman v. Taco Bell Corp., Case No. 1:08-cv-01081; (3) Leyva v. Taco Bell Corp., et al., Case No. 1:09-cv-00200; (4) Naranjo v. Yum! Brands, Inc., Case No. 1:09-cv-00246; (5) Widjaja v. Yum Brands, Inc., Case No. 1:09-cv-01074; and (6) Nave v. Taco Bell Corp., Case No. 1:10-cv-02222.
On June 29, 2009, Plaintiffs filed a Consolidated Complaint alleging: (1) unpaid overtime; (2) unpaid minimum wages; (3) unpaid wages; (4) missed meal periods; (5) missed rest periods; (6) non-compliant wage statements; (7) unreimbursed business expenses; (8) vested accrued vacation wages; (9) non-payment of wages upon termination; and (10) non-payment of wages during employment. (Compl., ECF No. 118-1.) The Consolidated Complaint also asserts a claim for violation of California Business & Professions Code 17200, et seq. and penalties pursuant to California Labor Code sections 2698, et seq. Id. Plaintiffs were granted leave to file a First Amended Consolidated Complaint (Order Am. Compl., ECF No. 229), and they did so on May 17, 2011 (Am. Compl., ECF No. 230).
On December 30, 2010, Plaintiffs filed a motion to certify a class action and eight proposed subclasses: (1) late meal break subclass; (2) underpaid automatic adjustment subclass; (3) on-duty meal period agreement subclass; (4) unpaid on-duty meal period subclass; (5) rest break subclass; (6) final pay subclass; (7) vested accrued vacation wage subclass; and (8) non-management employee vacation subclass. (Pls. Mot. Class Cert., ECF No. 185.) On August 30, 2011, Plaintiffs' meal and rest break claims (subclasses 1 to 5) were stayed for the California Supreme Court's pending resolutions of Brinker Restaurant Corp. v. Superior Court, 165 Cal. App. 4th 25 (2008), review granted, 85 Cal. Rptr. 3d 688 (2008), and Brinkley v. Public Storage, Inc., 167 Cal. App. 4th 1278 (2008), review granted, 87 Cal. Rptr. 3d 674 (2009). (Order Stay, ECF No. 265.) Plaintiffs now seek certification of the final pay subclass and vacation subclasses.
A class action "may only be certified if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied." Gen. Tel. Co. of Sw. v. Falcon , 457 U.S. 147, 161, 102 S.Ct. 2364 (1982). To satisfy Rule 23(a):
(1) the class must be so numerous that joinder of all members is impracticable; (2) there must be questions of law or fact common to the class; (3) the claims of the class representatives must be typical of the claims of the class; and (4) the class representatives must fairly and adequately protect the interests of the class. Fed. R. Civ. P. 23(a).
In addition to satisfying Rule 23(a), a proposed class must also fit within one of three categories in Rule 23(b). Fed. R. Civ. P. 23(b). Here, Plaintiffs move to certify the subclasses under Rule 23(b)(3). Class certification under Rule 23(b)(3) is appropriate if:
the court finds that 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. The matters pertinent to these findings include:
(A) the class members' interests in individually controlling the prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and
(D) the likely difficulties in managing a class action.
Fed. R. Civ. P. 23(b)(3).
District courts have broad discretion to determine whether to certify a class, and may revisit certification throughout the proceeding. Armstrong v. Davis , 275 F.3d 849, 872 n.28 (9th Cir. 2001). The party seeking class certification has the burden of demonstrating that all the requirements of Rule 23(a) are met and that the class is maintainable under Rule 23(b). Narouz v. Charter Commc‟ns, LLC , 591 F.3d 1261, 1266 (9th Cir. 2010).
In deciding class certification, the primary question is not whether plaintiffs have stated a cause of action that will prevail on the merits, but whether the party seeking certification has met the requirements of Rule 23. United Steel, Paper & Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv. Workers Int‟l Union, AFL-CIO v. ConocoPhillips Co., 593 F.3d 802, 808 (9th Cir. 2010). However, "Rule 23 does not set forth a mere pleading standard. A party seeking class certification must affirmatively demonstrate his compliance with the Rule -- that is, he must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc." Wal-mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011). "[S]ometimes it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question." Id. (quoting Falcon, 457 U.S. at 160). "[C]ertification is proper only if "the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied." Wal-mart, 131 S. Ct. at 2551 (quoting Falcon, 457 U.S. at 161).
The gravamen of Plaintiffs‟ complaint is that "[a]n analysis of Defendants‟ wage records shows that Defendants did not have a practice of paying timely wages to employees upon discharge." (Pls. Mot. Class Cert. 19, ECF No. 185-1.) Plaintiffs move to certify the following final pay subclass:
All persons who were terminated involuntarily as a non-exempt, hourly-paid employee at a corporate-owned Taco Bell restaurant in California from September 7, 2004 until the resolution of this lawsuit who were not timely tendered their wages upon involuntary termination of employment.
(Pls. Mot. Class Cert. 25 n.2, ECF. 185-1.)
Taco Bell attacks Plaintiffs‟ motion to certify the final pay subclass on the grounds that: (1) individual issues predominate; (2) Plaintiffs lack evidence to support their final pay claim; and (3) the final pay subclass lacks a typical and adequate representative.
1.Rule 23(a) Requirements
Rule 23(a)(1) requires that "the class is so numerous that joinder of all members is impracticable." Fed. R. Civ. P. 23(a)(1). Numerosity demands "examination of the specific facts of each case and imposes no absolute limitations." Gen. Tel. Co. of Nw., Inc. v. EEOC , 446 U.S. 318, 330, 100 S. Ct. 1698, 64 L.Ed.2d 319 (1980). In determining numerosity, a court should consider not only class size, but also geographic diversity of the class, ability of class members to file suit separately, and the nature of the underlying action and relief sought. Nat‟l Ass‟n of Radiation Survivors v. Walters , 111 F.R.D. 595, 599 (N.D. Cal. 1986).
Plaintiffs argue that their final pay subclass is sufficiently numerous because Dr. Lackritz‟s analysis of 1,684 former employees‟ payroll records shows that 635 employees, or approximately 38%, received their final paychecks more than three days after their termination date. Dr. Lackritz‟s analysis, however, is overbroad, and is not limited to employees (1) who were involuntarily terminated, as required for inclusion in Plaintiffs‟ putative subclass; and (2) who were present at their place of discharge to receive their final paycheck, as required by the California Labor Code. See Cal. Labor Code § 208 ("Every employee who is discharged shall be paid at the place of discharge, and every employee who quits shall be paid at the office or agency of the employer in the county where the employee has been performing labor."). Plaintiffs cannot extrapolate the number of putative final pay subclass members from Dr. Lackritz‟s over-inclusive analysis, nor show that joinder would be impracticable. Taco Bell, however, does not dispute numerosity.
Rule 23(a)(2) requires that "there are questions of law or fact common to the class." Rule 23(a)(2) has been construed permissively; all questions of law and fact do not need to be common. Hanlon v. Chrysler Corp. , 150 F.3d 1011, 1019 (9th Cir. 1998). "However, it is insufficient to merely allege any common question." Ellis v. Costco , 2011 U.S. App. LEXIS 19060, at *22 (9th Cir. Sep. 16, 2011). Commonality requires a plaintiff to demonstrate that class members "have suffered the same injury," but this does not merely mean that they have all suffered a violation of the same law. Walmart , 131 S.Ct. at 2551 (quoting Falcon , 457 U.S. at 157). Rather, class members‟ claims "must depend upon a common contention" that is "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." Walmart , 131 S.Ct. at 2551.
What matters to class certification . . . is not the raising of common "questions‟ -- even in droves -- but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation. Dissimilarities within the proposed class are what have the potential to impede the generation of common answers.
Plaintiffs assert that the common question tying the final pay subclass together is the question whether Taco Bell failed to tender final paychecks to involuntarily terminated employees immediately upon discharge.
Taco Bell contends that Plaintiffs‟ final pay subclass is not suitable for class certification because individual issues predominate. Plaintiffs rejoin that liability and damages are readily ascertainable through analysis of Taco Bell‟s time and wage records, and that the "back-story to employees‟ not picking up their paychecks is irrelevant." (Pls. Reply Class Cert. 15, ECF No. 235.)
Under the California Labor Code, if an "employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately." Cal. Labor Code § 201(a). If an employee quits, wages are "due and payable not later than 72 hours thereafter, unless the employee has given 72 hours previous notice," in which case wages are due "at the time of quitting." Cal. Labor Code § 202.
A discharged employee must be paid at the place of discharge, and an employee who quits must be paid at the office where they performed labor. Cal. Labor Code § 208. "The California final pay statutes (Labor Code §§ 201, 202) are triggered not only by termination of employment, but by the associate performing his or her duty to be at the store to receive tender of final pay or to give [the employer] specific mailing instructions." In re Wal-Mart Stores, Inc. Wage & Hour Litig. , 2008 U.S. Dist. LEXIS 14756, at *24 (N.D. Cal. Feb. 13, 2008). An employee who quits his or her employment may request that his or her final paycheck be mailed, but this option "must be expressly exercised by the employee." Villafuerte v. Inter-Con Sec. Sys., Inc., 96 Cal. App. 4th Supp. 45, 51, 117 Cal. Rptr. 2d 916 (2002); Cal. Labor Code § 202.
The putative class is not, as Plaintiffs propose, simply composed of involuntarily terminated employees who were not timely tendered their wages. It can only include involuntarily terminated employees who appeared at their place of discharge and did not receive their final paychecks. Taco Bell contends that this requirement necessitates individual inquiries as to when employees presented themselves for payment, which cannot be proven through Taco Bell‟s payroll documents.
After the hearing, Plaintiffs proposed limiting the final pay subclass to employees whose time records indicate that they worked on their date of termination and were issued their final paychecks subsequent to that date. Plaintiffs proposed the following alternative subclass definition:
All persons who worked as a non-exempt, hourly-paid employee at a corporate-owned Taco Bell restaurant in California from September 7, 2004 until the resolution of this lawsuit (i) whose records maintained by Taco Bell show that they were involuntarily terminated; (ii) whose time records show that they worked on the day of termination; and (iii) whose final paychecks were issued subsequent to the date of termination, as reflected by Defendants‟ payroll records. (Pls. Response Hearing 10, ECF No. 252.) Plaintiffs assert that this revised definition eliminates any individual inquiries because (1) Taco Bell maintains records of how and when employees are terminated, including whether such termination was voluntary; (2) Taco Bell maintains time records; and (3) payroll records indicate the date paychecks, including final paychecks, are issued. Limiting the final pay subclass to employees whose payroll records indicate that they were involuntarily terminated and clocked in and out of work on their date of termination could eliminate individual inquiries regarding whether an employee was on Taco Bell‟s premises to receive their final pay.
The revised subclass definition, however, does not eliminate all potential individual inquiries. California Labor Code § 203 provides a waiting time penalty only if an employer willfully fails to pay wages owed in accordance with Sections 201 and 202. Cal. Labor Code § 203(a). "An employee who secretes or absents himself or herself to avoid payment to him or her, or who refuses to receive the payment when fully tendered to him or her . . . is not entitled to any benefit under this section for the time during which he or she so avoids payment." Id. "[A] good faith dispute that wages are due will preclude imposition of waiting time penalties under Section 203." Alvarez v. Nordstrom, Inc. , 2011 U.S. Dist. LEXIS 56646, at *13 (C.D. Cal. May 24, 2011) (quoting 8 C.C.R. § 13520). The willfulness inquiry poses serious problems to Plaintiffs‟ final pay subclass. See id. Willfulness raises an inherently fact intensive inquiry focusing on state of mind and surrounding circumstances. If a final pay subclass is certified, mini-trials would be required for each class member to determine whether waiting time penalties should be imposed, including whether an employer acted willfully and whether there is a good faith dispute that wages are due. See id.
(2)Dr. Lackritz‟s Declaration and Report
Taco Bell further argues a merits issue that Plaintiffs lack any proof to support their final pay claims. Taco Bell asserts that Plaintiffs‟ only evidence to support their final pay claims is Dr. Lackritz‟s faulty declaration and report, which Taco Bell moves to exclude under Rule 702.
Under Federal Rule of Evidence 702, expert testimony is admissible if: "(1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case." Fed. R. Evid. 702. An expert may testify regarding scientific, technical or other specialized knowledge if it will assist the trier of fact to understand the evidence or to determine a fact in issue. Daubert v. Merrell Dow Pharm., Inc ., 509 U.S. 579, 589, 113 S.Ct. 2786 (1993).
The subject of an expert's testimony must be "scientific ... knowledge." The adjective "scientific" implies a grounding in the methods and procedures of science. Similarly, the word "knowledge" connotes more than subjective belief or unsupported speculation. The term "applies to any body of known facts or to any body of ideas inferred from such facts or accepted as truths on good grounds. . . But, in order to qualify as "scientific knowledge," an inference or assertion must be derived by the scientific method. Proposed testimony must be supported by appropriate validation-i.e., "good grounds," based on what is known. In short, the requirement that an expert's testimony pertain to "scientific knowledge" establishes a standard of evidentiary reliability."
Id. at 589-590 (citations omitted).
The Supreme Court recently suggested in dicta that Daubert should be applied to expert testimony at the class certification stage. See Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2553-2554 (2011) ("The District Court concluded that Daubert did not apply to expert testimony at the certification stage of class-action proceedings. We doubt that is so .." (citation omitted)). Supreme Court dicta is accorded "appropriate deference" and "may be followed if sufficiently persuasive" but "ought ...