The opinion of the court was delivered by: Dean D. Pregerson United States District Judge
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' JOINT MOTION FOR CLASS CERTIFICATION [Dkt. No.80]
Presently before the court is Plaintiffs Flordeliza Escano, Marila P. Maximo, Joel T. Catublas, and Penny Burney (collectively "Escano Plaintiffs") and Plaintiffs Debbie Fitzpatrick-Seckler and Richard Silva (collectively "Fitzpatrick Plaintiffs")'s Joint Motion for Class Certification.*fn1 Having considered the parties' submissions and heard oral argument, the court adopts the following order.
The Escano Plaintiffs and the Fitzpatrick Plaintiffs are hourly employees at hospitals owned by Kindred Healthcare Operating Group, Inc. ("KHOI" or "Kindred"). (Ballard Depo. 16:16-19; Ballard PMQ-KHW Depo. 13:9-10.) Plaintiff Flordeliza Escano worked at Kindred Santa Ana as a licensed vocational nurse from 2004 to 2008. (Escano Depo. 31:17-19; 43:1-9.) Plaintiff Marila Maximo worked from 1997 to October 2008 at Kindred Santa Ana, first as a monitor tech and later as a licensed vocational nurse. (Maximo Depo. 57:8-10; 84:16-19; 34:15-18.) Plaintiff Penny Burney worked from June 20, 1997, to November 2007 at Kindred La Mirada as a supervisor of respiratory therapists. (Burney Depo. 40:13-15; 33:15-20; 145:2-146:19.) Plaintiff Debbie Fitzpatrick-Seckler worked from 1995 to approximately 2000 and then from 2008 to the present at Kindred Westminster as a licensed vocational nurse. (Fitzpatrick Depo. 15:23-16:4.) Plaintiff Richard Silva has worked as a respiratory therapist from 1993 to the present at Kindred Westminster. (Depo. Silva 58:12-24.) Plaintiffs filed their actions on a class basis.
The Escano and Fitzpatrick Plaintiffs collectively allege violations of wage and hour laws, specifically failure to pay appropriate overtime compensation, failure to provide meal periods, and failure to furnish accurate itemized wage statements.
The party seeking class certification bears the burden of showing that each of the four requirements of Rule 23(a) and at least one of the requirements of Rule 23(b) are met. See Hanon v. Dataprods. Corp., 976 F.2d 497, 508-09 (9th Cir. 1992). Rule 23(a) sets forth four prerequisites for class certification:
(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.
Fed. R. Civ. P. 23(a); Hanon, 976 F.2d at 508. These four requirements are often referred to as numerosity, commonality, typicality, and adequacy. See Gen. Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 156 (1982). "In determining the propriety of a class action, the question is not whether the plaintiff has stated a cause of action or will prevail on the merits, but rather whether the requirements of Rule 23 are met." Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974) (internal quotation and citations omitted). This court, therefore, considers the merits of the underlying claim to the extent that the merits overlap with the Rule 23(a) requirements, but will not conduct a "mini-trial" or determine at this stage whether Plaintiffs could actually prevail. Ellis v. Costco Wholesale Corp., 657 F.3d 970, 981, 983 n.8 (9th Cir. 2011).
A. Joint Employer Liability
The court finds that Plaintiffs have sufficiently alleged that Kindred is a joint employer for the purposes of class certification. In addition to owning all shares of the hospitals in question, Kindred enters into "Administrative and Support Services Agreements" with the hospitals or groups of hospitals where Plaintiffs work. (Ballard Depo. 117:17-18; Carney Decl., Exhs. 4, 5.) Kindred performs payroll functions (Thommen Depo. 35:19-23), distributes a uniform employee handbook to employees (Jasnoff Depo. 16:7-13; Carney Decl., Exhs. 1-3), plays a role in setting overtime policy (Thommen Depo. 65:23-66:10), maintains the Kronos timekeeping system (Wilson Depo. 25:19-29:10), provides orientation to newly hired CEOs (Tharasri Depo. 93:2-16; 94:5-8, 24-25), and screens employees prior to hiring. (Bibal Depo. 21:23-25; 22:1-10; 28:15-25; 29:1-2.) To the extent that different hospitals under the Kindred umbrella have different policies, this will be addressed in the consideration of the 23(a) commonality requirement.
Plaintiffs propose the following definition for their Alternative Work Schedule Overtime Class (Class 1):
All current and former California-based hourly employees who work or worked for defendants pursuant to an alternative workweek schedule (AWS), at defendants' California hospitals from June 1, 2005, through the present who left work between the 8th and 12th hour of their shift, and were not paid daily overtime.
Under California law, a "regularly scheduled alternative workweek" schedule is allowed when adopted by vote of the employees. Cal. Labor Code § 511. Under the relevant Wage Order, in the health care industry an acceptable alternative workweek schedule ("AWS") includes "work days exceeding ten (10) hours but not more than 12 hours within a 40-hour workweek." Cal. Code Regs. tit. 8, § 11050(3)(B)(8). "If an employer . . . requires an [AWS] employee to work fewer hours than those that are regularly scheduled by the agreement, the employer shall pay the employee overtime compensation at a rate of one and one-half (1 1/2) times the employee's regular rate of pay for all hours worked in excess of (8) hours . . . for the day the employee is required to work the reduced hours." Cal. Code Regs. tit. 8, § 11050(3)(B)(2). "In essence, the employer must pay a 'short-shift penalty' if AWS employees are required to work fewer hours than scheduled." Huntington Memorial Hosp. v. Superior Court, 131 Cal. App. 4th 893, 909 (2005). The short-shift penalty is intended to give employers the benefit of an AWS while protecting employees by requiring regular shifts.*fn2
2. Plaintiffs' Allegations
Plaintiffs allege that AWS employees are frequently required to leave after working eight hours but before completing their full twelve-hour shift. They assert that Defendants have a practice of "flexing off" employees when there is a low patient census and not compensating them at the overtime rate for any hours they worked over eight on days when they were flexed off. The class they propose comprises all AWS employees who worked more than eight but fewer than twelve hours and did not receive overtime compensation for the hours in excess of eight.
Defendants argue that this Class is overbroad because it includes employees who voluntarily cut their shifts short as well as employees who were required to leave early. (Response to Plaintiff's Revised Class Definitions ("Resp. to Rev'd Class Defs.") 1.) Under the relevant Wage Order, an employer must pay overtime only if an AWS employee is required to work fewer hours than her full shift. Cal. Code Regs. tit.8, § 11050(3)(B)(2). Defendants argue that because the Class includes employees who left voluntarily after eight hours, the class includes members without standing and is therefore unascertainable. See Sanders v. Apple, Inc., 672 F. Supp. 2d 978, 991 (N.D. Cal. 2009)("No class may be certified that contains members lacking Article III standing. . . . The class must therefore be defined in such a way that anyone within it would have standing.")
The court agrees that the proposed class definition is overbroad, but finds that it can be remedied by restricting the Class to those employees who were required to leave work between the 8th and 12th hour. Henceforward the court will use the following definition for Class 1:
All current and former California-based hourly employees who work or worked for Defendants pursuant to an alternative workweek schedule (AWS), at Defendants' California hospitals from June 1, 2005, through the present who were required to leave work between the eighth and twelfth hour of their shift, and were not paid daily overtime. (Emphasis added to indicate court's modification.)
Because Defendants' primary objections to this Class pertain most directly to predominance, the court will address Rule 23(b) before turning to the 23(a) analysis.
Under Rule 23(b)(3), a plaintiff seeking to certify a class must show that questions of law or fact common to the members of the class "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). Defendants argue that this Class does not meet the predominance requirement because there is a question in each instance as to whether an employee chose to leave early or was required to do so. This, they assert, is the dispositive issue, since employees who leave voluntarily after eight hours are not entitled to compensation. According to Defendants, Plaintiffs have not proposed a manageable method of answering the individual question of whether in each instance an employee was "required" to leave early.
Plaintiffs present evidence that tends to show that Defendants had a policy of not paying overtime to AWS employees working more than eight hours but less than a full AWS shift. None of the deponents indicated an awareness of the legal requirement to do so. Payroll coordinators and officers indicated that they were not aware of the law regarding short-shift penalties. Nancy Wilson, Chief Financial Officer at Kindred La Mirada, testified that the only time AWS employees are entitled to overtime is when they work over 12 hours in a day or 40 hours in a week. (Wilson Depo. 109:1-9.) She had never heard of a "short shift premium." (Wilson Depo. 121:2-3.) Defendants apparently did not record whether an AWS employee had left voluntarily or was required to leave and that no overtime was paid as a rule in such situations. (Davies Depo. 30:18-31-8.)
Plaintiffs also present evidence that there is no code in the Kronos time keeping system that a payroll officer could use to indicate that an employee was entitled to a short-shift penalty. Renay Thommen, Senior Director of Payroll at KHOI, testified that there was no code to indicate whether an employee had voluntarily left under those circumstances or if she had been required to leave. (Thommen Depo. 210:23-211:5.)
Plaintiffs also present evidence that employees were not informed that they are entitled to a short-shift premium if they are required to leave before the end of their AWS shift. While the employment agreement states that AWS employees working more than 40 hours in a week or 12 hours in a day will receive overtime for excess hours, it makes no mention of the short-shift penalty. (See Exhs. 34, 40, 46.) Because the employment policies deal with other details pertaining to AWS overtime, the failure to address short shift penalties tends to indicate a policy of not paying such premiums.*fn3
Defendants argue that even if Kindred Human Resources is not equipped to handle the short shift penalty, individualized questions predominate because in each instance of a short shift, the court would have to determine whether an employee was required to leave or left voluntarily. In support of this, Defendants point to depositions from the named Plaintiffs that are in tension with Plaintiffs' claim that AWS employees were required to leave early. Defendants point to Burney's statement that she was never required to leave a shift early nor did she require the employees she supervised to leave early. (Burney Depo. 62:15-24.) They point to Escano's testimony that some days ("few and far between") she left early to pick her son up from school, although she does not have a record of those days. (Escano Depo. 142:22-144:1.) Based on this mixed testimony, Defendants argue that there is neither substantial evidence of requiring employees to leave nor a class-wide means of answering this question.
The California Supreme Court addressed a similar issue in the context of misclassification of employees in Sav-On Drugstores, Inc. v. Superior Court of Los Angeles County, 34 Cal. 4th 319 (2004). The defendants in that case argued that "whether any individual member of the class is exempt or nonexempt from the overtime requirements depends on which tasks that person actually performed and the amount of time he or she actually spent on which tasks" and that therefore "no meaningful generalizations about the employment circumstances of its managers could be made." Id. at 325. That court found that "[t]he record contains substantial, if disputed, evidence that deliberate misclassification was defendant's policy and practice." Id. at 329. Based on such evidence, the court concluded that "to the extent plaintiffs are able to demonstrate . . . that misclassification was the rule rather than the exception, a class action would be the most efficient means of resolving class members' overtime claims." Id. at 330. "Even if some individualized proof of such facts ultimately is required to parse class members' claims, that such will predominate in the action does not necessarily follow." Id. at 334.
The issue here is whether determining that an employee was required to leave depends on individual or class-wide evidence. Plaintiffs appear to argue that they can present objective evidence that Kindred has a policy of requiring employees to leave when the patient census is low, what they refer to as the employees being "flexed off." The theory is that the supervisor looks at the patient census, determines the number of employees required by statute, and then determines how many employees, if any, will be required to leave. At that point, the supervisor may ask the employees who among them wishes to leave. Theoretically, that question should result in an employee either leaving voluntarily or being required to leave. If she leaves voluntarily, she should be paid at her usual hourly rate for the hours worked beyond eight. If she is required to leave, she should be compensated at the overtime rate (time-and-a-half) for the hours she worked over eight but under twelve.
Here, however, it appears that neither employees nor human resources staff know that employees who are required to leave are entitled to a short-shift penalty. In the absence of this information, even if the supervisor asks for volunteers, the choice to leave is not truly voluntary since employees are not aware that they would be entitled to overtime pay if they were required to leave, but not if they volunteer. With this knowledge of their rights, employees might, for instance, collectively agree not to volunteer, such that the ...