Tapia v. Zale Delaware Inc.

          ORDER DENYING DEFENDANT’S MOTIONS TO DECERTIFY CLASS AND STAY NOTICE AND SETTING HEARING ON CROSS MOTIONS FOR SUMMARY JUDGMENT [DOC. NOS. 85 & 86]

          Hon. Cynthia Bashant United States District Judge.

         On April 6, 2016, the Court granted Plaintiff Naomi Tapia’s motion to certify a class of employees in this wage dispute with Defendant Zale Delaware Inc. [Doc. No. 76] The Court agreed with Plaintiff that its overtime compensation claim raised a common question that was suitable for resolution “in one stroke.” See Jimenez v. Allstate Ins. Co., 765 F.3d 1161, 1164-65 (9th Cir. 2014) (citations omitted).

         On May 2, 2016, the Ninth Circuit Court of Appeals decided Corbin v. Time Warner Entertainment-Advance/Newhouse Partnership, 821 F.3d 1069 (9th Cir. 2016). The Corbin case affirmed the entry of summary judgment in the employer’s favor because its rounding policy to calculate wages was neutral on its face and as applied.

         Defendant now moves to decertify the class and to stay dissemination of class notice in light of the Corbin decision. The Court finds that these motions can be resolved without oral argument. See Civ. L. R. 7.1(d)(1).

         Based on a thorough review of the briefs and governing law, the Court denies the motion to decertify. Defendant argues the merits of its liability, which is an argument more suited to a motion for summary judgment or trial. Accordingly, the Court also denies Defendant’s motion to stay dissemination of the notice to class members.

         Background

         Defendant’s motion challenges only a small part of the class certification Order.^[1] Defendant argues that the Corbin decision requires decertification of the overtime compensation claim.

         As relevant to that narrow issue, Plaintiff alleged that Defendant failed to pay employees for all hours worked, including minimum wage and overtime compensation. E.g., First Am. Compl. ¶¶ 15-16, 24. Plaintiff alleged that Defendant’s “uniform compensation policy” “shaved” minutes from time records. Id. ¶¶ 52-58.

         In its Amended Answer, Defendant generally denied it “time shaves” and denied that its employees “did not receive all due compensation.” E.g., Am. Answer ¶¶ 43-44, 53, 57. Defendant pled twenty-five affirmative defenses. Id. at 22-27. In addition, it set forth a “separate defense” that its “timekeeping policy is fair and neutral on its face and is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all time they have actually worked.” Id. at 30. Defendant included a statement that the Plaintiff bears the burden of proving that Defendant “‘shaved’ time from Plaintiff’s timecard.” Id. at 30-31.

         Pursuant to Federal Rule of Civil Procedure 23, Plaintiff moved to certify a class to determine whether Defendant fully compensated its employees as required by State and Federal law. Plaintiff contended that Defendant had a standard policy and practice to “shave” minutes from time records before it calculated wages. In its opposition to class certification, Defendant raised the defense that its “rounding” practice is legal on its face and neutral as applied. See See’s Candy Shops, Inc. v. Super. Ct., 210 Cal.App.4th 889 (2012).

         The Court considered the evidence the parties submitted, including Defendant’s manuals, deposition testimony, and competing expert reports evaluating a sample of employee time records. The evidence showed that Defendant calculated time and wages for all hourly employees with its “Point of Sale” computer system. The Court held that Defendant’s standard policy met the commonality requirement of Rule 23. “[T]he class members’ claims ‘depend upon a common contention’ such that ‘determination of its truth or falsity will resolve an issue that is central to the validity of each claim in one stroke.’” See Jimenez, 765 F.3d at 1164-65. In addition, the Court cited the Sixth Circuit’s observation that a defendant who believes it has a winning argument against classwide liability “should welcome class certification” as that it provides the opportunity to resolve claims of all class members at once. In re Whirlpool Corp. Front-Loading Washer Prods. Liab. Litig., 722 F.3d 838, 857 (6th Cir. 2013).

         On June 8, 2016, Defendant filed this motion to decertify based on a new legal development. Defendant argues that Corbin “unequivocally rejected” Plaintiff’s legal theory of liability, demonstrates that its own rounding policy is lawful, and leaves Plaintiff without any cognizable legal theory; therefore, that part of the class should be decertified.

         Discussion

         A. Defendant Pled ...