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Howard v. CVS Caremark Corp.

United States District Court, C.D. California

December 9, 2014

Susan Howard et al.
v.
CVS Caremark Corporation et al

CIVIL MINUTES - GENERAL

HONORABLE S. JAMES OTERO, UNITED STATES DISTRICT JUDGE.

PROCEEDINGS (in chambers): ORDER DENYING PLAINTIFFS' MOTION FOR CLASS CERTIFICATION [Docket No. 42]

This matter is before the Court on the Motion for Class Certification (" Motion"), filed on September 29, 2014, by Plaintiffs Susan Howard (" Howard"), Roselyn Wooden (" Wooden"), and Isabel Alexander (" Alexander") (collectively, " Plaintiffs"). Defendants CVS Caremark Corporation, CVS Pharmacy, Inc., and CVS Pharmacy (collectively, " CVS") filed an opposition (" Opposition") on October 27, 2014, to which Plaintiffs filed their belated reply (" Reply") on November 6, 2014.[1] CVS filed an ex parte application for leave to file a sur-reply to the Reply on November 14, 2014, which the Court granted on November 18, 2014. The Court found this matter suitable for disposition without oral argument and vacated the hearing set for November 17, 2014. See Fed.R.Civ.P. 78(b). For the following reasons, the Court DENIES the Motion.

I. FACTUAL AND PROCEDURAL BACKGROUND

Defendant CVS is a retail pharmacy chain that operates more than 850 stores in California. (Def.'s App. of Evidence in Supp. of [Opp'n] (" Def.'s App.") Tab 1 Ex. A (" Stanley Decl.") ¶ 3, ECF No. 46-2.) Each of CVS' retail locations includes a pharmacy staffed by a pharmacy manager or pharmacist in charge, as well as several staff pharmacists, pharmacy technicians, and clerks. (Stanley Decl. ¶ 3.) " Pharmacy Supervisors" manage all operations in each CVS district (" District"), which is generally comprised of 15-20 pharmacies. (Stanley Decl. ¶ 3.) Districts, in turn, are grouped into regions (" Regions"). (Stanley Decl. ¶ 3.)

Plaintiffs are current and former CVS employees who work or worked in three of its California pharmacies. ( See Notice of Removal (" Notice") Ex. G, First Am. Compl. (" FAC") ¶ ¶ 20-22, ECF No. 1.) Howard worked as a pharmacist at CVS' Riverbank store between 2008 and 2012. (FAC ¶ 20; Decl. of Susan Howard in Supp. of Pls.' [Mot.] (" Howard Decl.") ¶ 2, ECF No. 42-10.) Wooden worked as a pharmacy aide at CVS' Napa store between May 2002 and December 2012. (FAC ¶ 21; Decl. of Roselyn Wooden in Supp. of Pls.' [Mot.] (" Wooden Decl.") ¶ 2, ECF No. 42-11.) Alexander currently works as a pharmacy technician at CVS' Lancaster store and has been employed by CVS since 2006 or 2007.[2] (FAC ¶ 22; Alexander Decl. ¶ 2.)

CVS employees use the Rx Connect software system (" Rx Connect" or the " System") to enter, store, and look up prescription information for the purposes of verifying customers' prescriptions and insurance, printing labels for prescription vials, and scanning drugs for accuracy. (Def.'s App. Tab 3 (" Beaumariage Decl.") ¶ 3, ECF No. 46-2; Def.'s App. Tab 2 (" Franko Decl.") ¶ 3, ECF No. 46-2.) In order to access and use the System, CVS employees must obtain a three-letter credential (" Credential") by imputing their employee IDs and password for each day that they work. (Beaumariage Decl. ¶ 4; Franko Decl. ¶ 5; Def.'s App. Tab 7 (" Mohammadkhani Decl.") ¶ 3, ECF No. 46-3.) The Credential is typically valid for a 16-hour period, regardless of the employees' actual schedule or work time, and must be typed into Rx Connect every time the employee seeks to perform tasks such as entering data, prescription labels, or verifying prescriptions. (Beaumariage Decl. ¶ ¶ 4-5.) Since Rx Connect does not maintain the history of which Credentials were active for which employee at any given time, there is no way to determine whether the same Credential " was active for multiple people in the same store, on the same day, or who was assigned [which Credential] at any given time." (Franko Decl. ¶ 5.)

Plaintiffs allege that through its use of Rx Connect, CVS " cedes control over pharmacy workflow to [CVS'] customers and their physicians, " so that " the customer or physician dictates when the prescription must be ready." (Mem. of P. & A. in Supp. of Pls.' [Mot.] (" Motion") 5, ECF No. 42-1.) As a result of this customer-driven system, Plaintiffs maintain that CVS' pharmacy employees do not have discretion regarding when to fill these prescriptions and must " work at the whim of the [customer], rather than the scheduling dictates of [CVS]." (Mot. 2.) Plaintiffs allege that CVS requires pharmacy employees to work off-the-clock in order to fill the prescriptions, refuses to pay them overtime for this work, and generally promotes a corporate culture that disfavors paying its employees overtime wages. ( See Mot. 5; FAC ¶ 26.) Plaintiffs also allege that they were denied regular and overtime wages due to CVS' failure to adequately staff its stores, refusal to approve overtime pay for employees working more than eight hours per day or 40 hours per week, and policy of requiring its employees to work off-the-clock.[3] (Notice Ex. A (" Compl.") ¶ ¶ 16, 23-24, 26.)

Plaintiffs filed the instant action in the Superior Court of California for the County of Los Angeles on March 14, 2013. ( See Compl. 1.) CVS removed the action to this Court on July 1, 2013. ( See generally Notice.) In the operative complaint, Plaintiffs assert four claims related to CVS' alleged employment policies: (1) violations of California Labor Code (" Labor Code") Section 204 (FAC ¶ ¶ 33-38); (2) violations of Labor Code Sections 201 and 202 (FAC ¶ ¶ 40-43); (3) violations of California's Unfair Competition Law (the " UCL"), Cal. Bus. & Prof. Code § § 17200, et seq. (FAC ¶ ¶ 45-49); and (4) penalties pursuant to California's Private Attorney General Act (" PAGA"), Cal. Lab. Code § § 2698, et seq . (FAC ¶ ¶ 51-58.)

On September 29, 2014, Plaintiffs filed the instant Motion seeking certification of a class (the " Class") defined as " [a]ll current and former employees of CVS Caremark Corporation who held hourly, non-exempt positions such as 'Pharmacist, ' or 'Pharmacy Technician, ' from March 14, 2009 to the present. (Mot. 7.) Plaintiffs also seek to divide the Class into four subclasses. (Mot. 7.) The first subclass includes all members of the Class who " [w]ere not paid for all hours worked as required by the applicable Labor Code and Industrial Welfare Commission ('IWC') Wage Order [provisions] for any pay period that is within the Class Period" (the " Off-the-Clock Class"). (Mot. 7.) The second subclass consists of all members of the Class who " [w]ere not provided with overtime pay" under the applicable Labor Code and IWC Wage Order provisions (the " Overtime Class"). (Mot. 7.) The third encompasses Class members who " [w]ere not provided with accurate itemized [wage] statements" as required by the Labor Code (the " Wage Statement Class"). (Mot. 7.) The fourth and final subclass includes all Class members who " [w]ere not provided with all wages due and owing at the time of their terminations" as required by the Labor Code (the " Waiting Time Period Class"). (Mot. 7.)

II. DISCUSSION

" Class actions have two primary purposes: (1) to accomplish judicial economy by avoiding multiple suits; and (2) to protect the rights of persons who might not be able to present claims on an individual basis." Haley v. Medtronic, Inc., 169 F.R.D. 643, 647 (C.D. Cal. 1996) (citing Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 103 S.Ct. 2392, 76 L.Ed.2d 628 (1983)). Rule 23(a) of the Federal Rules of Civil Procedure (" Rule 23(a)") provides that a class action is only appropriate if four prerequisites are met: " (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). If all of these prerequisites are satisfied, the court must then determine whether the class action is maintainable under one of Rule 23(b)'s subdivisions. Fed.R.Civ.P. 23(b).

A party seeking to certify a class may not merely rest on his pleadings. Rather, " [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, 564 U.S. __, 131 S.Ct. 2541, 2551, 180 L.Ed.2d 374 (2011) (emphasis in original). " [A]ctual, not presumed, conformance with Rule 23(a) remains . . . indispensable." Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982). Trial courts are expected to engage in a " rigorous analysis" to determine if the prerequisites of Rule 23 have been satisfied. Dukes, 131 S.Ct. at 2551 (quoting Falcon, 457 U.S. at 161). This rigorous analysis will often " overlap with the merits of the plaintiff's underlying claim." Id.; see also Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 568 U.S., 133 S.Ct. 1184, 1195, 185 L.Ed.2d 308 (2013) (" Merits 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.").

A. Rule 23(a) Requirements

1. Ascertainability

" As a threshold matter, and apart from the explicit requirements of Rule 23(a), the party seeking class certification must demonstrate that an identifiable and ascertainable class exists." Quezada v. Con-Way Freight, Inc., No. CV 09-03670 JSW, 2012 WL 4901423, at *2 (N.D. Cal. Oct. 15, 2012) (citing Mazur v. eBay, Inc., 257 F.R.D. 563, 567 (N.D. Cal. 2009)). " Although there is no explicit requirement concerning the class definition in [Rule 23], courts have held that the class must be adequately defined and clearly ascertainable before a class action may proceed." Schwartz v. Upper Deck Co., 183 F.R.D. 672, 679-80 (S.D. Cal. 1999) (citation omitted). A class is ascertainable " if its members can be ascertained by reference to objective criteria." Id. at 680; see also In re TFT-LCD (Flat Panel) Antitrust Litig., 267 F.R.D. 583, 592 (N.D. Cal. 2010). Plaintiffs argue that the Class is ascertainable because Class members are identifiable by objective criteria related to their job titles and dates of employment. ( See Mot. 9.) With regard to the Plaintiffs' proposed Class of current and former CVS employees who hold or held hourly, non-exempt positions such as pharmacist or pharmacy technician between March 14, 2009 and the present, the Court agrees. ( See Mot. 7.)

CVS argues that Plaintiffs' proposed sub-classes, described as the Off-the-Clock Class, Overtime Class, Wage Statement Class, and Waiting Time Period Class (together, the " Sub-Classes"), are impermissible " fail safe" classes. (Opp'n 8.) A fail safe class is one that " impermissibly determines membership based upon a determination of liability." Lewis v. First Am. Title Ins. Co., 265 F.R.D. 536, 551 (D. Idaho 2010); see also Brazil v. Dell Inc., 585 F.Supp.2d 1158, 1167 (N.D. Cal. 2008) (finding that the proposed class was a fail safe class that could not be ascertained where identifying the proposed class members would require the court to make a legal determination as to defendant's liability). The Ninth Circuit has not expressly held that fail safe classes are impermissible, but has indicated that " obvious problems" arise " when the class itself is defined in a way that precludes membership unless the liability of the defendant is established, " including unfairness to the defendant and difficulties determining which individuals should receive the class notice. See Kamar v. RadioShack Corp., 375 Fed.Appx. 734, 736 (9th Cir. 2010). Other circuits have held that fail safe classes are improper. See, e.g., Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 825 (7th Cir. 2012); Randleman v. Fid. Nat'l Title Ins. Co., 646 F.3d 347, 352 (6th Cir. 2011). Because identifying the members of the Sub-Classes would require the Court to determine CVS' liability under several of California's wage and hour laws, Plaintiffs have failed to carry their burden of proving that the Sub-Classes are precise, objective, and presently ascertainable. See Brazil, 585 F.Supp.2d at 1167 (quoting O'Connor v. Boeing N. Am., Inc., 197 F.R.D. 404, 416 (C.D. Cal. 2000)).

CVS argues that because Plaintiffs' Sub-Classes are fail safe classes, " certification should be denied on this ground." (Opp'n 9.) In light of the fact that the Ninth Circuit has not expressly forbidden fail safe classes, see In re Autozone, Inc., Wage & Hour Emp't Practices Litig., 289 F.R.D. 526, 546 (N.D. Cal. 2012) (citing Heffelfinger v. Elec. Data Sys. Corp., No. CV 07-00101 MMM, 2008 WL 8128621, at *10 n.57 (C.D. Cal. Jan. 7, 2008)), the Court declines CVS' invitation to deny certification on this ground alone. " Rather than denying certification on the basis of the fail safe definition, the Court [has] discretion [] to redefine the class" to avoid the fail safe problem. In re Autozone, 289 F.R.D. at 546. Because Plaintiffs' proposed Class of approximately 5, 000 hourly, non-exempt CVS employees is ascertainable by reference to objective criteria, the Court finds that Plaintiffs' primary proposed Class, unlike the proposed Sub-Classes, is ascertainable. See Schwartz, 183 F.R.D. at 680.

2. Numerosity

The numerosity requirement is met where the party seeking certification shows the class is " so numerous that joinder of all members is impracticable." Fed.R.Civ.P. 23(a)(1). Plaintiffs allege that according to CVS' corporate records, " there are more than 5, 000 [C]lass members." ( See Mot. 10; Decl. of Janine Menhennet in Supp. of Pls.' [Mot.] (" Menhennet Decl.") ¶ 6, ECF No. 42-2.) CVS does not dispute that the proposed class meets Rule 23(a)'s numerosity requirement or that joinder of its California pharmacy employees would be impracticable. ( See generally Opp'n, ECF No. 44.) The Court concludes that the Class is sufficiently numerous under Rule 23(a).

3. Commonality

Commonality under Rule 23(a)(2) " requires the plaintiff to demonstrate that the class members have suffered the same injury." Dukes, 131 S.Ct. at 2551 (internal citation and quotation marks omitted). This " does not mean merely that they have all suffered a violation of the same provision of law." Id. Rather, class-wide claims " must depend upon a common contention . . . of such a nature 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.; accord Abdullah v. U.S. Sec. Assocs., Inc., 731 F.3d 952, 957 (9th Cir. 2013) (common answers generated must be " apt to drive the resolution" of class claims). " In order to assess commonality, 'it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question.'" Ellis v. Costco Wholesale Corp., 285 F.R.D. 492, 506 (N.D. Cal. 2012) (quoting Gen. Tel. Co. of Sw., 457 U.S. at 160). However, " [t]he court may not go so far . . . as to judge the validity of [the] claims." United Steel Workers v. ConocoPhillips Co., 593 F.3d 802, 808 (9th Cir. 2010) (citation omitted). For the purposes of demonstrating commonality, " even a single common question will do." Dukes, 131 S.Ct. at 2556 (internal quotations marks and formatting omitted) (citation omitted); see also Mazza v. Am. Honda Motor Co., 666 F.3d 581, 589 (9th Cir. 2012) (" [C]ommonality only requires a single significant question of law or fact.").

Plaintiffs allege that the following questions, which are common to the Class members, are apt to generate common answers: (1) whether the Class members worked off-the-clock hours for which they were not compensated by CVS (Mot. 11); (2) whether CVS' policies discouraged its employees from reporting all hours worked, including overtime hours (Mot. 14); (3) whether CVS provided accurate wage statements to its pharmacy employees (Mot. 16); and (4) whether CVS is liable for waiting time penalties for failing to timely pay wages to its former employees upon termination. (Mot. 16-17.) Plaintiffs maintain that this case, and the questions posed therein, do not turn on individualized inquiries or subjective evidence because CVS' liability can be established by cross-referencing the Class members' timekeeping records with the prescription records tracked in the Rx Connect database. ( See Mot. 9, 14, 16-17.) CVS disputes Plaintiffs' characterization of and proposed use for the Rx Connect data, maintaining that for several reasons, " Rx Connect records cannot establish whether a particular employee was performing work." (Opp'n 1-2.)

Plaintiffs argue that CVS should be required to pay compensation for the off-the-clock hours worked under the applicable IWC wage order, ( see FAC ¶ 31; Mot. 7), but do not specify which of the IWC's wage orders applies to the Class members. ( See generally FAC; Mot.) The IWC's wage order number 7-2001 (" Wage Order 7-2001") applies to " all persons employed in the mercantile industry whether paid on a time, piece rate, commission, or other basis." Cal. Code Regs. tit. 8, § 11070.1. The " Mercantile Industry" is defined as " any industry, business, or establishment operated for the purpose of purchasing, selling, or distributing goods or commodities at wholesale or retail." Cal. Code Regs. tit. 8, § 11070.2(H). Because CVS self-describes as a retail pharmacy chain, ( see Stanley Decl. ¶ 3; Opp'n 3), Wage Order 7-2001 is likely applicable to the Class members. The IWC's wage order number 4-2001 (" Wage Order 4-2001"), which applies to " all persons employed in professional, technical, clerical, mechanical, and similar occupations whether paid on a time, piece rate, commission, or other basis, " may also apply to the Class members. See Cal. Code Regs. tit. 8, § 11040.1. Wage Order 4-2001 explicitly exempts pharmacists like the Class members from its professional exemption to the overtime requirement. See Cal. Code Regs. tit. 8, § 11040.1(A)(3)(f). Because both Wage Order 7-2001 and Wage Order 4-2001 (together, the " Wage Orders") include nearly identical definitions of the term hours worked, compare Cal. Code Regs. tit. 8, § 11070.2(G) with Cal. Code Regs. tit. 8, § 11040.2(K), the Court need not decide, for the purposes of this Order, which wage order applies to the Class members.

Under California law, an employee is generally entitled to receive overtime wages equal to one and one-half times his regular pay for hours worked in excess of forty hours per week or eight hours per day. See Greko v. Diesel U.S.A., Inc., 277 F.R.D. 419, 422 (N.D. Cal. 2011) (citing Cal. Lab. Code § 510(a)). The Wage Orders define " hours worked" as " the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so." See Cal. Code Regs. tit. 8, § 11070.2(G); Cal. Code Regs. tit. 8, § 11040.2(K). Hours worked may encompass unauthorized overtime where the employer suffers or permits the employee to work because he " knows or has reason to believe that [the employee] is continuing to work and the time is working time." Morillion v. Royal Packing Co., 22 Cal.4th 575, 585, 94 Cal.Rptr.2d 3, 995 P.2d 139 (2000) (internal quotation marks and citation omitted). Thus, " '[a] plaintiff may establish liability for [unpaid, off-the-clock overtime] by proving that (1) he performed work for which he ...


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