In re Wage

         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 ...