United States District Court, E.D. California
ORDER
DENYING DEFENDANTS' RENEWED MOTION FOR JUDGMENT AS A
MATTER OF LAW, PLAINTIFFS' MOTION FOR JUDGMENT AS A
MATTER OF LAW OR MOTION FOR A NEW TRIAL, AND GRANTING
PLAINTIFFS' MOTION TO AMEND THE JUDGMENT, JUDGMENT IS
ENTERED IN FAVOR OF THE UNDERPAID MEAL PREMIUM CLASS AND
AGAINST DEFENDANTS ON THE UCL CLAIM; AND JUDGMENT IS ENTERED
IN FAVOR OF DEFENDANTS AND AGAINST THE LATE MEAL PERIOD CLASS
AND REST PERIOD CLASS ON THE UCL CLAIMS (ECF Nos. 747, 748,
749, 755, 757, 758, 759, 766, 767, 768)
Before
the Court is Plaintiffs' motion for judgment as a matter
of law or motion for a new trial and motion to amend the
judgment and Defendants Taco Bell Corp. and Taco Bell of
America, Inc.'s motion for judgment as a matter of law
pursuant to Federal Rules of Civil Procedure 50(b). Oral
argument on the motions was heard on June 15, 2016. Matthew
Theriault, Monica Balderrama, Andrew Sokolowski, and Stuart
Chandler were present and Jerusalem Beligan appeared
telephonically for the Class; and Tracey Kennedy, Nora
Stiles, Morgan Forsey, and John Makarewich appeared for
Defendants. Having considered the moving, opposition and
reply papers, the declarations and exhibits attached thereto,
arguments presented at the June 15, 2016 hearing, as well as
the Court's file and the evidence presented during the
trial of this matter, the Court issues the following order.
I.
BACKGROUND
A.
Trial
A jury
trial was held in this action beginning on February 22, 2016,
on the claims of three classes which had been certified in
this action: the Late Meal Period Class, the Underpaid Meal
Period Class, and the Rest Period Class. The parties agreed
to have the Court decide Plaintiffs' claims under
California's Private Attorney General Act
(“PAGA”). On March 9, 2016, the jury returned a
verdict. At the conclusion of the presentation of evidence,
Defendants moved for judgment as a matter of law pursuant to
Rule 50(a) of the Federal Rules of Civil Procedure.
The
jury found that the Late Meal Period Class had proved that
Defendants had a standardized or uniform policy that did not
provide meal periods that began before the end of the fifth
hour an employee worked for the relevant time period. But the
Class did not prove that during the relevant time period
class members were non-exempt employees who worked for a
corporate Taco Bell Corporate restaurant and worked shifts
longer than six hours without being provided a meal period
that began before the end of the fifth hour of work.
Similarly,
the jury found that the Rest Period Class had proved that
Defendants had a standardized or uniform company-wide policy
that did not authorize and permit a second ten minute or a
net twenty minute rest period when an employee worked more
than six hours and less than seven hours. But the Class did
not prove that during the relevant time period class members
were non-exempt employees who worked for a corporate Taco
Bell Corporate restaurant and worked shifts longer than six
hours but less than seven hours without being authorized and
permitted to take a second ten minute or net twenty minute
rest period.
The
jury found that the Underpaid Meal Premium Class had proved
that from September 7, 2003 through November 12, 2007,
Defendant had a standardized or uniform company-wide policy
that underpaid meal premiums for missed or short meal periods
and that during this time period the class members were
non-exempt employees who worked for a Taco Bell Corporate
restaurant and missed or received short meal periods and were
paid a meal premium payment of less than one full hour of
compensation. The jury awarded damages in the amount of $495,
913.66 to the Underpaid Meal Premium Class.
On
March 11, 2016, the Court heard oral argument on
Defendants' Rule 50(a) motion. On March 14, 2016, an
order was filed denying Defendants' Rule 50(a) motion. On
March 16 and 17, 2016, a bench trial was conducted on
Plaintiffs' PAGA claim. Plaintiffs' claim for PAGA
penalties was denied on April 8, 2016, and judgment was
entered.
On May
6, 2016, Defendants filed a renewed motion for judgment as a
matter of law pursuant to Rule 50(b). On May 9, 2016,
Plaintiffs filed a motion for judgment as a matter of law or
a motion for a new trial, a motion to amend the judgment, a
motion for deferral of ruling on their motion for attorney
fees, and a motion for attorney fees.[1]On May 13, 2016, Plaintiffs
filed a revised declaration in support of the motion for
attorney fees. On May 25, 2016, Plaintiffs filed a notice of
supplemental authority relating to Plaintiffs' motion for
judgment as a matter of law and motion for new trial. On June
1, 2016, Plaintiffs filed an opposition to Defendants'
motion for judgment as a matter of law; and Defendants filed
an opposition to Plaintiffs' motion to amend the
judgment, and an opposition to Plaintiffs' motion for
judgment as a matter of law. On June 8, 2016, Defendants
filed a reply in support of their motion for judgment as a
matter of law, and Plaintiffs filed a reply to the opposition
to the motion to amend judgment and motion for judgment as a
matter of law and new trial.
B.
Factual History
This is
a consolidated action comprised of six underlying lawsuits.
The first action was filed on September 7, 2007. After other
putative class actions were filed against Taco Bell, the
cases were consolidated on June 9, 2009, and thereafter. This
action proceeded to trial on the Third Amended Consolidated
Complaint (the “TACC”) and Taco Bell's Answer
to the TACC.
Plaintiffs
asserted employment-related individual and class action
claims against their former employer Defendant Taco Bell.
Prior to trial all the individual claims were settled. This
action proceeded to trial on the three classes which were
certified and defined as follows at the time of trial:
-
All persons who work or worked as a non-exempt,
hourly-paid employee at a corporate-owned Taco Bell
restaurant in California from September 7, 2003, until
July 1, 2013, who worked for a period of time in excess
of six hours and who worked for periods longer than five
hours without a meal period of not less than thirty
minutes as reflected in Defendants' employees'
time records.
-
All persons who work or worked as a non-exempt,
hourly-paid employee at a corporate-owned Taco Bell
restaurant in California from September 7, 2003, until
December 24, 2014, who worked for a period of time in
excess of six hours and less than seven hours without at
least two rest periods of not less than ten minutes, as
reflected in Defendants' employees' time records.
-
All persons who work or worked as a non-exempt,
hourly-paid employee at a corporate-owned Taco Bell
restaurant in California who, between September 7, 2003
until November 12, 2007, received at least one 30-minute
automatic adjustment on Taco Bell's Time and
Attendance System as reflected in Defendants'
employees' time records.
Plaintiff
Hardiman also sought penalties under PAGA for the certified
claims stated above.
II.
LEGAL
STANDARD
A.
Motion for Judgment as a Matter of Law
Rule 50
of the Federal Rules of Civil Procedure governs judgment as a
matter of law. Rule 50(a) provides that “[i]f a party
has been fully heard on an issue during a jury trial and the
court finds that a reasonable jury would not have a legally
sufficient evidentiary basis to find for the party on that
issue, the court may: (A) resolve the issue against the
party; and (B) grant a motion for judgment as a matter of law
against the party on a claim or defense that, under the
controlling law, can be maintained or defeated only with a
favorable finding on that issue.” Fed.R.Civ.P.
50(a)(1). The motion must be made before the action is
submitted to the jury and “must specify the judgment
sought and the law and facts that entitle the movant to the
judgment.” Fed.R.Civ.P. 50(a)(2).
Rule
50(b) provides that a party may bring a renewed motion for
judgment as a matter of law after trial. Fed.R.Civ.P. 50(b).
A Rule 50(b) motion is not a freestanding motion, but is a
renewed motion under Rule 50(a). E.E.O.C. v. Go Daddy
Software, Inc., 581 F.3d 951, 961 (9th Cir. 2009). Since
a Rule 50(b) motion is a renewed motion, it is limited to the
grounds asserted in the pre-deliberation Rule 50(a) motion.
Id. “A party cannot raise arguments in its
post-trial motion for judgment as a matter of law under Rule
50(b) that it did not raise in its pre-verdict Rule 50(a)
motion.” Freund v. Nycomed Amersham, 347 F.3d
752, 761 (9th Cir. 2003).
In
considering a motion for judgment as a matter of law, the
court cannot make credibility determinations or weigh the
evidence. Go Daddy Software, Inc., 581 F.3d at 961.
The court “must view the evidence in the light most
favorable to the nonmoving party . . . and draw all
reasonable inferences in that party's favor.”
Id. at 961 (quoting Josephs v. Pac. Bell,
443 F.3d 1050, 1062 (9th Cir.2006)). “The test applied
is whether the evidence permits only one reasonable
conclusion, and that conclusion is contrary to the jury's
verdict.” Go Daddy Software, Inc., 581 F.3d at
961 (quoting Josephs, 443 F.3d at 1062).
A
renewed motion for judgment as a matter of law is properly
granted “if the evidence, construed in the light most
favorable to the nonmoving party, permits only one reasonable
conclusion, and that conclusion is contrary to the jury's
verdict.” Escriba v. Foster Poultry Farms,
Inc., 743 F.3d 1236, 1242 (9th Cir. 2014) (quoting
Pavao v. Pagay, 307 F.3d 915, 918 (9th Cir.2002)).
The jury's verdict must be upheld if there is substantial
evidence that is adequate to support the findings of the
jury, even where contrary findings are also possible.
Escriba, 743 F.3d at 1242.
B.
Motion for New Trial
Rule
59(a) of the Federal Rules of Civil Procedure provides that
the court may grant a motion for a new trial on some or all
issues “after a jury trial, for any reason for which a
new trial has heretofore been granted in an action at law in
federal court.” Fed.R.Civ.P. 59(a)(1)(A). Historically,
the grounds that have been recognized to grant a new trial
include, but are not limited to, claims “that the
verdict is against the weight of the evidence, that the
damages are excessive, or that, for other reasons, the trial
was not fair to the party moving.” Molski v. M.J.
Cable, Inc., 481 F.3d 724, 729 (9th Cir. 2007) (quoting
Montgomery Ward & Co. v. Duncan, 311 U.S. 243,
251 (1940)). The Ninth Circuit has held that “[t]he
trial court may grant a new trial only if the verdict is
contrary to the clear weight of the evidence, is based upon
false or perjurious evidence, or to prevent a miscarriage of
justice.” Molski, 481 F.3d at 729 (quoting
Passantino v. Johnson & Johnson Consumer Prods.,
212 F.3d 493, 510 n. 15 (9th Cir.2000)). Therefore, in
considering the Rule 59 motion brought by the party against
whom a verdict has been returned, the district court must
weigh the evidence as the court saw it, “and set aside
the verdict of the jury, even though supported by substantial
evidence, where, in [the court's] conscientious opinion,
the verdict is contrary to the clear weight of the
evidence.” Molski, 481 F.3d at 729.
C.
Motion to Amend Judgment
Pursuant
to Rule 59(e) a party may move to alter or amend the judgment
within 28 days after entry of the judgment. The specific
grounds for amendment of judgment are not set forth in Rule
59(e) and the district court has considerable discretion in
granting or denying the motion. Allstate Ins. Co. v.
Herron, 634 F.3d 1101, 1111 (9th Cir. 2011). “[A]
Rule 59(e) motion is an 'extraordinary remedy, to be used
sparingly in the interests of finality and conservation of
judicial resources.' ” Wood v. Ryan, 759
F.3d 1117, 1121 (9th Cir.), cert. denied, 135 S.Ct. 21,
(2014) (quoting Kona Enters., Inc. v. Estate of
Bishop, 229 F.3d 877, 890 (9th Cir. 2000)). “In
general, there are four basic grounds upon which a Rule 59(e)
motion may be granted: (1) if such motion is necessary to
correct manifest errors of law or fact upon which the
judgment rests; (2) if such motion is necessary to present
newly discovered or previously unavailable evidence; (3) if
such motion is necessary to prevent manifest injustice; or
(4) if the amendment is justified by an intervening change in
controlling law.” Allstate Ins. Co., 634 F.3d
at 1111.
III.
ANALYSIS
A.
Defendants’ Motion for Judgment as a Matter of
Law
Defendants
contend that Plaintiffs failed to present any evidence that
would allow the jury to perform the legally required damages
calculation for the Underpaid Meal Premium Class; and
therefore, Defendants are entitled to judgment as a matter of
law. Defendants argue that to prove damages for a violation
of Labor Code section 226.7(c), Plaintiffs were required to
establish: 1) the identities of the affected Class Members;
2) the Class Members' regular rate of pay at the time of
the meal period violations; and 3) that under payment
occurred. Defendants argue that this evidence was not
presented at trial. Plaintiffs argue that there is
substantial evidence to support the jury's verdict.
Defendants
argue that the only documents introduced at trial are the
payroll verification reports (“PVRs”) and
Plaintiffs did not secure expert analysis of these documents
because it would be too expensive. Defendants contend that
since Plaintiffs did not introduce any analysis of these
records, the jury was left to analyze these 9 million pages
of documents that were not organized by date, employee name,
employee number and were not electronically searchable.
Further, Defendants argue that Plaintiffs did not introduce
any pay records for the Underpaid Meal Premium Class or any
other records indicating an actual payment of a meal premium
to members of the Underpaid Meal Premium Class. Defendants
argue that Plaintiffs did not produce any evidence of the
class members' regular rate of compensation making it
impossible for the jury to determine damages. Finally,
Defendants argue that the jury improperly relied on argument
of counsel in determining the number of violations.
Pursuant
to California law, if an employer fails to provide meal
periods or rest periods in compliance with California law,
“the employer shall pay the employee one additional
hour of pay at the employee's regular rate of
compensation for each workday that the meal or rest or
recovery period is not provided.” Cal. Lab. Code §
226.7(c). Courts have long held that “the necessity for
an individual determination of damages does not weigh against
class certification. The community of interest requirement
recognizes that 'ultimately each class member will be
required in some manner to establish his individual
damages.” Bell v. Farmers Ins. Exch., 115
Cal.App.4th 715, 742 (2004), as modified on denial of
reh'g (Mar. 9, 2004) (collecting cases). Defendants'
argument here is that the individual members of the class did
not establish their damages because Plaintiffs did not
present sufficient evidence to identify the class members who
received auto pay, and additionally, there was no evidence by
which the jury could determine the employee's regular
rate of compensation.
In
deciding a motion for judgment as a matter of law, the court
must affirm the judgment if there is substantial evidence to
support the verdict. Landes Const. Co. v. Royal Bank of
Canada, 833 F.2d 1365, 1371 (9th Cir. 1987).
“Substantial evidence is such relevant evidence as
reasonable minds might accept as adequate to support a
conclusion even if it is possible to draw two inconsistent
conclusions from the evidence.” Landes Const.
Co., 833 F.2d at 1371.
Defendants
argued at the June 15, 2016 hearing that there was no
evidence presented to connect any class member with an
autopay and the hourly rate for the violation. Defendants
contend that the jury was required to be presented with the
individual class member's rate of pay at the time of the
violation to comply with the statutory scheme for damages.
Defendants argue that the damage amount returned by the jury
was speculation. Plaintiffs responded that the raw punch
records and PVRs contain all the information the jury needed
to calculate damages in this action. Plaintiffs argue that
the experts' testimony regarding the punch data was
sufficient for the jury to identify the rate of pay in the
punch data. For example, Plaintiffs argue that Dr. Walker
testified that his review of the punch data showed a very
small percentage of records that did not include the rate of
pay.[2]
As
Defendants concede, the PVRs were admitted into evidence and
show which individual class members were entitled to the
half-hour of premium pay during the relevant time period.
While Defendants argue in their reply brief that the PVR does
not demonstrate that the employee actually received autopay
or was legally entitled to it, the jury could reasonably find
that where the payroll system identified an employee who had
a short or missed meal period, the employee was entitled to
the payment and that if the missed or short meal period was
documented on the PVR autopay issued for the employee.
At
trial, Plaintiffs proffered expert testimony by Mr.
O'Brien. Mr. O'Brien testified that he analyzed the
raw punch data to determine the number of meal periods that
did not begin before the end of the fifth hour of work when
an employee worked more than six hours, shifts where the
employee worked more than six hours but less than seven
without having at least two rest periods before the beginning
of the seventh hour, and shifts where there was a partial
payment due to the fact that the shifts were not qualifying
shifts for the purpose of meal breaks. (Trial Testimony of
Michael Dennis O'Brien 31:3-17, ECF No. 710.)
Mr.
O'Brien testified that the number of employees who were
affected by alleged meal period violations in this action is
28, 691. (ECF No. 710 at 31:6-12; 52:5-15; 124:21-19.) The
time period for these violations was September 2003 through
July 1, 2013. (ECF No. 710 at 31:17-22; 53:1-11.) This number
represents the number of employees that worked shifts in
excess of six hours and did not have a thirty minute lunch
that commenced prior to the start of the fifth hour of work.
(ECF No. 710 at 31:23-32:3; 35:1-21; 52:5-15.) Mr.
O'Brien also counted meal breaks that were shorter than
30 minutes. (Id at 39:16-25.) For this time period
there were 1, 761, 329 shifts in which a thirty minute meal
period was not recorded prior to the end of the fifth hour of
work. (Id at 62:12-17.)
Mr.
O'Brien testified that he also counted the number of
times that a full meal period was not recorded that started
before the end of the fifth hour of work from September 7,
2003 through November 12, 2007. (ECF No. 68:15-19.) There
were approximately 795, 550 incidents. (ECF No. 710 at
68:15-69:19.) The raw punch data did not indicate whether any
employee received autopay. (ECF No. 710 at 117:19-25.)
Defendants'
expert, Dr. Walker, also testified at trial. Dr. Walker
testified that he identified 2, 511, 475 shifts or 38 percent
of all shifts at least six hours long that did not have a
meal period that commenced before the end of the fifth hour
of work. (ECF No. 711 at 30:21-14.) This number includes
shifts that had a timely paid meal period. (ECF No. 711 at
32:21-5.) There were 888, 694 shifts that were worked by
managers and would have to be deducted from the total. (ECF
No. 711 at 35:12-21.) Dr. Walker found 377, 355 shifts that
had paid meal breaks. (ECF No. 40:14-41:3.) Between the years
of 2003 and 2007, Dr. Walker found 134, 819 missing meal
breaks in the raw punch data. (ECF No. 45:1-46:17.) This
included meal breaks of less than 30 minutes. (ECF No.
47:13-20.)
The
jury returned a verdict finding in favor of the Underpaid
Meal Premium Class. (ECF No. 696 at 3.) The jury found that
from September 7, 2003 through November 12, 2007, 134, 419
class members were underpaid for a missed or short meal
period. (Id.) The Court finds that substantial
evidence in the record supports the jury's finding as to
the number of violations. While Defendants argue that the
jury improperly relied on opposing counsel's closing
argument, there was evidence introduced during the trial that
corrections were made to the raw punch data before payroll
was issued. Therefore, the number of violations reflected in
the raw punch data would be higher than the actual number of
autopay that was generated. The jury could have reasonably
found that Dr. Walker's estimate of the number of
violations was high and made a deduction to account for
corrections made during the process of generating payroll.
Defendants
also argue that Plaintiffs presented no evidence by which the
jury could determine the individual employees or the hourly
rates for the specific employees that received autopay. The
jury is not required to know the identity of the individual
class members, but just to be able to determine the number of
violations and the amount of damages to the class.
In
California, “the law tolerates more uncertainty with
respect to damages than to the existence of liability.”
Duran v. U.S. Bank Nat. Assn., 59 Cal.4th 1, 40
(2014). “Uncertainty of the fact whether any damages
were sustained is fatal to recovery, but uncertainty as to
the amount is not.” Duran, 59 Cal.4th at 40
(quoting Bruckman v. Parliament Escrow Corp., 190
Cal.App.3d 1051, 1061 (1987)). Here, the raw punch data
included the hourly rates of employees. Further, the jury was
presented with evidence of the minimum hourly wage during the
relevant time period.
The
Court finds that there is sufficient evidence to support the
jury's verdict. Lakeside-Scott v. Multnomah
Cty., 556 F.3d 797, 803 (9th Cir. 2009) (judgment as a
matter of law is appropriate when the jury could have only
relied on speculation to reach its verdict). Defendants'
renewed motion for judgment as a matter of law is denied.
B.
Plaintiffs’ Motion for Judgment as ...