United States District Court, S.D. California
RAYMOND TSCHUDY, individually, on behalf of himself, all others similarly situated, and on behalf of the general public, Plaintiff,
J.C. PENNEY CORPORATION, INC., a Delaware corporation, Defendants.
ORDER DENYING MOTION TO STRIKE CLASS ALLEGATIONS, GRANTING MOTION FOR CLASS CERTIFICATION, AND DENYING RELATED EVIDENTIARY MOTIONS
JEFFREY T. MILLER, District Judge.
Before the court are two motions regarding whether this case can be litigated as a class action, as well as several motions to strike evidence related to class certification. On November 8, 2013, J.C. Penney Corporation, Inc. ("JCP") filed a motion to strike the class-action allegations from Plaintiffs' second amended complaint ("MTS"). (Doc. No. 93.) On June 9, 2014, Plaintiffs filed a motion to certify this case as a class action ("MTC"). (Doc. No. 119.) Both motions were fully briefed. The parties also filed several motions to strike items of evidence related to class certification. (Doc. Nos. 97, 121-1, and 124.) For the reasons set forth below, the court denies JCP's motion to strike the class-action allegations, grants Plaintiffs' motion to certify this case as a class action, and denies the evidentiary motions.
A. Procedural Background
1. Original Complaint and Removal
Plaintiff Tschudy filed the original complaint in this case on April 5, 2011, in San Diego Superior Court. (Doc. No. 1-1.) Defendants removed the case to this court on May 9, 2011, pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d). (Doc. No. 1.)
2. The Second Amended Complaint
On February 8, 2012, Plaintiffs filed the operative second amended complaint ("SAC"). (Doc. No. 45.) In the SAC, Plaintiffs contend that under California law vacation benefits accrue and vest as employees work, and that JCP's vacation policy, called My Time Off ("MTO"), causes management associates ("MA") and part-time non-management associates ("PTNMA") to forfeit vacation benefits "if such employees are not employed on the first day of the calendar month following the month or months during which such paid vacation benefits were earned." (Id. ¶ 74.) The provisions Plaintiffs challenge (the "challenged provisions") read:
Management - You become eligible and receive your first deposit on the first day of the third month of employment.
Part-Time Non-Management - You become eligible and receive your first deposit on the first day of the month following 12 months of employment if you average 25 or more hours during the first 48 weeks of employment. You must qualify each year for MTO deposits.
Based on these provisions, Plaintiffs assert two causes of action, for (1) forfeiture of wages, under California Labor Code § 200 et seq.; and (2) unlawful business practices, under California Business & Professions Code § 17200 et seq.  (Id. ¶¶ 73-93.) Specifically, Plaintiffs claim that the MTO violates California Labor Code §§ 201 and 202 (timely payment of wages upon employee's termination or resignation); § 203 (waiting-time penalties for failure to comply with §§ 201 and 202); § 204 (payment of all compensation earned within each pay period); and § 227.3 (prohibition on forfeiture of vested vacation time upon termination), and that these violations also constitute unlawful business practices within the meaning of California Business & Professions Code § 17200 et seq. (Id. ¶¶ 74-82, 84.)
On their claim for forfeiture of wages Plaintiffs seek damages, penalties, interest, costs and fees, and an injunction prohibiting JCP from continuing the challenged practices. (Id. ¶ 103.) On their claim for unlawful business practices Plaintiffs seek disgorgement, restitution, interest, costs and fees, and an injunction prohibiting JCP from continuing the challenged practices. (Id.)
3. Summary Judgment
On August 20, 2012, JCP filed a motion for summary judgment or summary adjudication ("MSJ"). (Doc. No. 59.) JCP asserted that it was entitled to judgment because its written policy unambiguously advises employees that they are eligible to accrue vacation benefits "only after the expiration of their waiting period, " and the policy makes clear that the deposits of vacation time employees receive are advances for future work rather than compensation for past work. (Doc. No. 59-1 at 10.) As the basis of its arguments, JCP relied on language in detailed versions of the policy (referred to here and in previous orders as "JMTOs"), and it asserted that all new-hires, including Plaintiffs, received copies of the policy. ( Id., Harris Decl. ¶¶ 5-10.)
Plaintiffs opposed JCP's motion, asserting that they had never received the JMTO, and that the only policy documents they had ever been given were shorter versions (referred to here and in previous orders as "EMTOs") that did not indicate that vacation deposits were advances for future work. (Doc. No. 66 at 3-6, 16.) They argued that summary judgment was inappropriate because there was a material dispute regarding which was the controlling plan. (Id. at 16.)
On January 28, 2013, the court denied JCP's motion for summary judgment, as JCP had not shown that Plaintiffs had ever received the JMTOs, and the EMTOs and other statements Plaintiffs had received did not make clear that vacation deposits were advances for future work. (Doc. No. 78.) In a footnote the court stated:
However, had JCP established that the Plaintiffs received the JMTOs, the court's analysis might have been different. The JMTO is more extensive, even providing examples about when an employee who started on a given date would begin earning MTO benefits. That additional information might have put PTNM employees on notice about the details of JCP's MTO policy. But the court need not examine that scenario at this juncture as JCP has not shown conclusively that the Plaintiffs received the JMTOs.
(Id. at 12 n.8.)
4. Motions on Class Certification
On November 8, 2013, JCP filed the instant motion to strike the class allegations from the SAC. (Doc. No. 93.) Plaintiffs opposed the motion, (Doc. No. 96), and moved to strike some of the evidence JCP submitted with its motion, (Doc. No. 97), and JCP filed a reply, (Doc. No. 114).
On June 9, 2014, Plaintiffs filed the instant motion to certify this case as a class action. (Doc. No. 119.) JCP opposed the motion, (Doc. No. 121), and moved to strike some of the evidence Plaintiffs submitted with their motion, (Doc. No. 121-1). Plaintiffs replied, (Doc. Nos. 122, 123), and moved to strike some of the evidence JCP filed with its opposition. (Doc. No. 124.)
B. Legal and Factual Background
1. California Law
California does not require employers to offer employees paid vacation. See California Department of Labor Standards Enforcement Policies and Interpretation Manual ("DLSE Manual") § 15.1.2 (2006) ("Neither the statute nor the case law requires that any employer provide vacation benefits; the law only addresses the requirements which a vacation plan, if offered, must meet."). But, if an employer chooses to offer vacation benefits, the benefits are considered "in effect, additional wages for services performed, " Suastez v. Plastic Dress-Up Co., 31 Cal.3d 774, 779 (1982), or "a form of deferred compensation, " id. at 780. Hence, "[a] proportionate right to a paid vacation vests' as the labor is rendered." Id. at 784. Once the right has vested, California Labor Code § 227.3 protects it from forfeiture. See id. Section 227.3 requires employers to pay terminated employees for vested vacation time in accordance with the "contract of employment or employer policy, " and prohibits contracts and policies that "provide for forfeiture of vested vacation time upon termination."
California allows employers who offer vacation to place certain limits on it, consistent with these rules. For example, "[a]n employer is entitled to adopt a policy specifying the amount of vacation pay an employee is entitled to be paid as wages, depending on the length of service." Owen v. Macy's, Inc., 175 Cal.App.4th 462, 464 (2009) (internal quotation marks omitted). And, because employers are not required to offer employees vacation, they can impose a waiting period during which no vacation is earned or vested "[i]f an express written company policy forewarns new employees that their compensation package does not include paid vacation during their initial employment." Id .; see also DLSE Manual § 15.1.3 ("Vacation plans which establish probation periods during which no vacation pay is vested are permitted.").
2. JCP's My Time Off Policy
As noted above, JCP's vacation policy is embodied in its My Time Off ("MTO") plan. At this point there appear to be five documents that mention or contain some version of the MTO, some of which exist in multiple iterations:
1. JMTO-The full-length policy statement JCP relies on, in two iterations dated January 1, 2007, and December 31, 2008, respectively, (MSJ, Harris Decl., Exhs. E & F);
2. EMTO-The plan summary Plaintiffs rely on, from Your Benefits Book 1, dated January 1, 2007, (MTC, Ostroff Decl., Exh. 5, Part 1 at 5-14);
3. New Hire Guide to Benefits-In iterations for various years 2008 through 2012, (MTC, Ostroff Decl., Exh. 5, Part 2 at 18-25 (2008), 32-39 (2009); Exh. 5, Part 3 at 5-13 (2010), 16-22 (2012));
4. Benefits to Go-Which JCP describes as a "quick version" of the MTO, (MTC, Ostroff Decl., Exh. 5, Part 2 at 38-39); and
5. The Associate Guide to Winning Together-In two iterations dated May 2007 and January 2009, respectively, (Doc. No. ...