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Nielson v. Sports Authority

United States District Court, Ninth Circuit

July 8, 2013

KHANH NIELSON, individually, and on behalf of all others similarly situated, Plaintiffs,
v.
THE SPORTS AUTHORITY, and DOES 1 through 100, inclusive, Defendants.

ORDER DENYING RENEWED MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT AND ORDER TO SHOW CAUSE RE DISMISSAL Dkt. 32

SAUNDRA BROWN ARMSTRONG, District Judge.

Plaintiff Khanh Nielson ("Plaintiff") brings the instant putative wage and hour class action on behalf of herself and all other non-exempt employees of The Sports Authority ("Defendant" or "Sports Authority"), a sporting goods retailer, claiming that they were not paid in accordance with the California Labor Code. Though Plaintiff does not dispute that non-exempt employees were correctly classified, she alleges that such employees were subject to off-the-clock "mandatory security checks" of their personal bags whenever they left the store, even when they were leaving to take a rest or meal break.

The Court previously denied Plaintiff's motion for preliminary approval due to various deficiencies. The parties subsequently revised their settlement and have now submitted a "Stipulated Ex Parte Application" for settlement approval, which the Court construes as a renewed motion for preliminary approval. Dkt. 32. Having read and considered the papers filed in connection with this matter, the Court DENIES the parties' motion. In addition, the Court directs the parties to show cause why the instant action should not be dismissed for lack of jurisdiction and/or failure to prosecute under Federal Rule of Civil Procedure 41(b).

I. BACKGROUND

A. FACTUAL OVERVIEW

Defendant is a retailer of athletic clothing and equipment which operates stores throughout California. Nielson Decl. ¶ 4 (att'd as Ex. C to Salassi Decl.), Dkt. 32-1. According to Plaintiff, Defendant has failed to comply with California wage and hour laws by compelling all non-exempt store employees to undergo off-the-clock security checks, presumably to ensure that they are not stealing merchandise. Plaintiff alleges:

During the Class Period, Defendant had a consistent policy of, inter alia, (1) requiring its non-exempt retail employees, including Plaintiff and Class Members, to remain at work, under the control of Sports Authority, after completion of these workers' ordinary duties, without paying these employees' wages (including overtime wages) for all compensable time, (2) requiring its non-exempt retail employees, including Plaintiff and Class Members, to submit to mandatory security checks of their persons and/or belongings without paying them compensation (including overtime and/or other compensation for working during meal and/or rest periods), (3) willfully failing to pay compensation owing in a prompt and timely manner to those Class Members whose employment with Sports Authority has terminated, (4) willfully failing to provide Plaintiff and Class Members with accurate semimonthly itemized statements of the total number of hours each of them worked, the applicable deductions, and the applicable hourly rates in effect during the pay period, and (5) willfully failing to provide meal periods and/or rest periods to Plaintiff and/or Class Members.

Compl. ¶ 4. There is no dispute between the parties that, for purposes of this litigation, all class members were properly classified. According to Plaintiff, the only issue regarding the payment of wages arises from Defendant's alleged policy of subjecting employees to security checks without pay. Ex Parte Appl. at 2 n.5 ("there is no misclassification issue in this case.... The claims in this lawsuit relate to Defendant's daily mandatory security checks.").

Plaintiff has been employed by Defendant at its Sunnyvale and Union City locations since 2007. Nieslon Decl. ¶¶ 2-3. For the time period from 2007 to March 2011, Plaintiff worked as a non-exempt Operations Manager, and thereafter, assumed the position of Lead Price Auditor Coordinator. Id.[1] In her declaration filed in support of the instant application, Plaintiff states that "based on [her] understanding" Defendant maintains a security inspection policy of inspecting employees' bags whenever they exit the store, even when they are taking a meal or rest break. Id . ¶ 5. She also claims, again based "on [her] understanding, " that employees are not paid for missed breaks or overtime wages. Id . ¶¶ 6-7. Plaintiff does not articulate the factual basis for her "understanding" that such policies and practices actually exist. Perhaps more fundamentally, Plaintiff does not state in her declaration that she was personally subjected to Defendant's bag inspection policy or that she was in any way harmed by that policy. Nor does Plaintiff claim that she is owed overtime wages or wages for missed breaks.

B. PROCEDURAL HISTORY

On August 22, 2011, the law firm of Scott Cole & Associates ("SCA") filed the instant action in state court on behalf of Plaintiff, individually and on behalf of "[a]ll persons who are and/or were employed as non-exempt employees by The Sports Authority, Inc. in one or more of its California retail stores between August 22, 2007 and the present." Compl. ¶ 20. Defendant removed the action to this Court on September 22, 2011, on the basis of diversity jurisdiction, 28 U.S.C. § 1332(a), and the Class Action Fairness Act, id. § 1332(d)(2). Dkt. 1.

The Complaint alleges state law causes of action for: (1) failure to provide meal and rest periods; (2) failure to pay wages (straight time, overtime, premium pay, and minimum wage); (3) failure to provide accurate itemized or properly formatted wage statements; (4) failure to pay wages upon termination or timely upon/after termination; (5) unfair business practices in violation of Cal. Business and Professions Code section 17200, et seq.; and (6) violation of the California Private Attorney General Act, Cal. Labor Code section 2699 et seq. The Complaint also seeks waiting time penalties under Labor Code section 203, pre-judgment interest, and attorneys' fees and costs.

On February 27, 2012, the Court entered an Order for Pretrial Preparation ("Scheduling Order"), pursuant to Rule 16. Order for Pretrial Prep., Dkt. 19. Among other things, the Scheduling order set: May 7, 2013 as the motion cut-off date; May 28, 2013 as the deadline to file pretrial documents; a pretrial conference for June 25, 2013; and a trial date of July 8, 2013. Id. at 1-2, 5.

On August 31, 2012, Plaintiff filed a motion for preliminary approval, which sought preliminary approval for a $2.5 million settlement (with an unrestricted reversion to Defendant of any unclaimed net settlement funds), conditional certification of the settlement class under Rule 23(a) and (b)(3), the appointment of SCA as class counsel, the appointment of Plaintiff as the class representative and authorization for Plaintiff's ...


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