United States District Court, N.D. California
ORDER DENYING MOTION FOR CLASS CERTIFICATION
PHYLLIS J. HAMILTON United States District Judge
The
motion of plaintiff Sona Anand for an order certifying a New
York class came on for hearing before this court on June 15,
2016. Plaintiff appeared by her counsel Rhonda Wills, and
defendants appeared by their counsel Richard Alfred and
Jessica Lieberman. Having read the parties’ papers and
carefully considered their arguments and the relevant legal
authority, the court hereby DENIES the motion.
INTRODUCTION
This
wage-and-hour case was filed on March 3, 2014, by a group of
plaintiffs asserting individual and class claims under the
federal Fair Labor Standards Act (“FLSA”), and
under the laws of the states of California, Texas, and New
York. What remains in this case (per the third amended
complaint or "TAC, " filed May 26, 2015) are
individual FLSA claims for failure to pay overtime;
individual claims under the California Labor Code for failure
to pay overtime, failure to provide meal and rest breaks, and
failure to pay waiting time penalties, and a claim of unfair
business practices under California Business &
Professions Code § 17200; and individual and class
claims under the New York Labor Law for failure to pay
overtime.
Named
plaintiff Sona Anand ("Anand") is a resident of New
Jersey who was employed by defendants Wachovia Bank, N.A.,
Wells Fargo & Company, and Wells Fargo Bank, N.A.
(collectively "Wells Fargo") in New York and New
Jersey. In addition, five other named plaintiffs lived in New
York and worked for defendants in New York - Brandon Grzan
(“Grzan”), Jason Hoffman (“Hoffman”),
Brian Lynch (“Lynch”), John Sorocenski
(“Sorocenski”), and Sezgin Unay
(“Unay”).
Plaintiffs
assert that Wells Fargo does not compensate its nonexempt New
York employees for recorded breaks of 20 minutes or less in
duration, and has never done so. Specifically, plaintiffs
claim that the members of the proposed class were not paid
overtime wages for recorded breaks of 20 minutes or less
taken in workweeks in which they recorded at least 40 hours
of work time.
The TAC
asserts two causes of action under New York law. In the
seventh cause of action, plaintiffs allege individual claims
for unpaid overtime under N.Y. Lab. Law §§ 190 and
191, and N.Y. Comp. Codes R. & Regs. tit. 12 §
142-2.2. In the eighth cause of action, plaintiffs allege
class claims for unpaid overtime under N.Y. Lab. Law
§§ 190 and 191, which they claim is actionable
under N.Y. Lab. Law § 663 (providing for right of
employee to recover unpaid wages in a civil action). TAC
¶¶ 305-306.
Anand
now seeks an order certifying a New York class under Federal
Rule of Civil Procedure 23(b)(3), and an order also
designating her as the representative of the class, and
appointing plaintiffs' counsel as counsel for the class.
BACKGROUND
Wells
Fargo currently operates nearly 80 "retail banking
stores" in New York, which are staffed by employees in a
variety of non-exempt positions. Wachovia Bank, N.A., which
resulted from a 2001 merger between Wachovia Corporation and
First Union Corporation, merged into Wells Fargo Bank, N.A.,
effective December 31, 2008. Prior to that time, Wells Fargo
Bank, N.A. had no New York "retail banking stores,
" and used different time-keeping and payroll systems
than the ones used by Wachovia Bank, N.A. Even after the
takeover, Wachovia continued to be separately operated in
most respects for nearly all of 2009, and the Wachovia team
members remained on a separate payroll until mid-2009.
Wells
Fargo currently has a uniform timekeeping and payroll system
for its non-exempt employees. Roger Saucerman, Wells
Fargo’s former Senior Vice President of Human
Resources, testified that defendants use a timekeeping system
known as TimeTracker to track employees' "in"
and "out" times and to feed that data to the
payroll system, and that they have used PeopleSoft to
calculate the pay of its non-exempt employees nationwide.
Anand asserts that these electronic records, which date back
to 2008, can be queried to identify class members and the
corresponding pay rate, and to disclose the number and length
of short breaks and the amount owed to each class member.
Employees
manually record their time worked, including meal breaks, on
electronic timecards. TimeTracker permits employees to clock
in and out numerous times throughout the workday for various
reasons (e.g., for multiple meal breaks, lactation
breaks, or breaks in connection with disability
accommodation). According to Teresa Lee Swanson, Wells Fargo
Vice President and Business Systems Consultant Manager, Wells
Fargo requires employees to enter the actual times they begin
and end work each day into TimeTracker, including any time
for meal periods, and also requires that they certify that
the entries are correct. Wells Fargo requires non-exempt
employees to accurately record their meal periods, but they
do not record their rest periods. According to Ms. Swanson,
"[r]est periods are considered 'hours worked'
and are paid." In the TAC, plaintiffs allege that Anand,
Grzan, Hoffman, Lynch, Sorocenski, and Unay each took
recorded breaks of 20 minutes or less, in weeks in which they
recorded at least 40 hours of work time, for which they were
not paid overtime compensation. Anand testified in her
deposition that she was not paid for her recorded breaks of
20 minutes or less in duration, notwithstanding that the time
was accurately recorded. Grzan, Lynch, and Unay testified to
having had the same experience and having suffered the same
injury.
Defendants
assert that despite the requirement that employees enter
their time accurately and certify that it is correct,
employees occasionally make errors in entering their time.
They contend that once employees have submitted their time,
they alone can make changes, and that while managers are
expected to review employees' time records, they are not
required to approve the time in the timekeeping system.
Defendants
also claim that while Wells Fargo provides non-exempt
employees the opportunity to take an unpaid meal break of at
least 30-60 minutes, many employees choose to take shorter
meal breaks for a variety of reasons, including medical
reasons (splitting a longer unpaid meal break into two
shorter unpaid breaks); reasons relating to scheduling
(desire to take shortened breaks with agreement of the
manager, to permit other activities); and personal preference
(desire to shorten break to help out colleagues with heavy
workload or help out waiting customers; preference as to
amount of time required to finish meal). For example,
defendants have provided declarations from employees stating
that they took shortened meal breaks, but had sufficient time
to eat a meal during each of those breaks. Thus, defendants
assert, when an employee clocks out for an unpaid meal break,
the employee should not be compensated for that meal break
even though it is less than 20 minutes.
In
enacting the Minimum Wage Act (the New York Labor Law),
"the New York State Legislature enacted specific minimum
wages, . . . but did not directly enact an overtime
provision. Instead, the Legislature delegated authority to
the New York State Commissioner of Labor . . . to issue
'regulations governing . . . overtime.'"
Rocha v. Bakhter Afghan Halal Kababs, Inc., 44
F.Supp.3d 337, 351 (E.D.N.Y. 2014) (citing N.Y. Lab. Law
§§ 655-56). Pursuant to this authority, the
Commissioner promulgated regulations which substantially
incorporate and adopt the FLSA's overtime regulations.
See N.Y. Comp. R. Regs. tit. 12, § 142-2.2 12
("[a]n employer shall pay an employee for overtime at a
wage rate of one and one-half times the employee's
regular rate" as provided in the FLSA and subject to the
same exemptions (with limitations); see also Reiseck v.
Universal Commc'ns of Miami, Inc., 591 F.3d 101, 105
(2d Cir. 2010) (“The NYLL, too, mandates overtime pay
and applies the same exemptions as the FLSA.”).
New
York follows the federal Department of Labor's
Interpretive Guidance (Subchapter B of 29 C.F.R.) with
respect to meal and rest breaks under the FLSA. This DOL
Interpretive Guidance does not set any threshold amount of
time under which a rest break automatically becomes a
compensable rest period. Section 785.18 (which is
incorporated into the New York Labor Law), provides that
"[r]est periods of short duration, running from 5
minutes to about 20 minutes, are common in the industry. They
promote the efficiency of the employee and are customarily
paid for as working time. They must be counted as hours
worked." 29 C.F.R. § 785.18; see also 29
C.F.R. § 785.19 (“coffee breaks or time for snacks
. . . are rest periods.”).
The
federal Guidance focuses on the character of the break and
the purpose for which it is taken. While 30-minute breaks are
presumptively noncompensable bona fide meal periods, shorter
breaks may still qualify as bona fide meal periods under
“special circumstances.” 29 C.F.R. § 785.19.
Accordingly, as discussed in more detail below, the federal
DOL’s Field Operations Handbook directs investigators
to review a number of factors “in context on a
case-by-case basis” in determining whether a short
break may be considered a non-compensable meal break.
DISCUSSION
A.
Legal Standard
The
plaintiff “must be prepared to prove” that each
of the requirements of Rule 23 is satisfied. Wal-Mart
Stores, Inc. v. Dukes, 564 U.S. 338, 351 (2011). Rule 23
sets forth more than a “mere pleading standard.”
Id. at 350. The plaintiff “must actually
prove - not simply plead - that [the] proposed class
satisfies each requirement of Rule 23, including (if
applicable) the predominance requirement of Rule
23(b).” Haliburton Co. v. Erica P. John Fund,
Inc., 134 S.Ct. 2398, 2412 (2014).
The
class certification analysis “must be rigorous and may
entail some overlap with the merits of the . . . underlying
claim.” Amgen Inc. v. Conn. Retirement Plans and
Tr. Funds, 133 S.Ct. 1184, 1194 (2013) (quoting
Dukes, 564 U.S. at 350-51). However, Rule 23 does
not grant courts a “license to engage in free-ranging
merits inquiries at the certification stage.”
Id. at 1194-95. “Merits questions may be
considered to the extent - but only to the extent - that they
are relevant to determining whether Rule 23 prerequisites for
class certification are satisfied.” Id.
The
party seeking class certification bears the burden of
demonstrating by a preponderance of the evidence that all
four requirements of Rule 23(a) and at least one of the three
requirements under Rule 23(b) are met. See Dukes,
564 U.S. at 350-51; Berger v. Home Depot USA, Inc.,
741 F.3d 1061, 1067 (9th Cir. 2014). Under Rule 23(a), a
district court may certify a class only if it meets the
requirements of numerosity, commonality, typicality, and
adequacy of representation. Mazza v. Am. Honda Motor
Co., 666 F.3d 581, 588 (9th Cir. 2012); see also
Wang v. Chinese Daily News, Inc., 737 F.3d 538, 542 (9th
Cir. 2013).
A
plaintiff must also establish “through evidentiary
proof at least one of the provisions of Rule 23(b).”
Comcast Corp. v. Behrend, 133 S.Ct. 1426, 1432
(2013). Here, Anand seeks certification of a Rule 23(b)(3)
class, which requires that the court find that “the
questions of law or fact common to class members predominate
over any questions affecting only individual members, and
that a class action is superior to other available methods
for fairly and efficiently adjudicating the
controversy.” Fed.R.Civ.P. 23(b)(3).
B.
Plaintiff's Motion
Anand
seeks certification of a class defined as follows:
All persons who at any time in the 6 years preceding the
filing of this lawsuit through the date of disposition or
judgment in this action who are/were employed by [d]efendants
(one or more of them) as a non-exempt employee in the State
of New York and who recorded breaks of 20 minutes or less in
duration (in workweeks in which he/she recorded at least 40
hours of work time), but was not paid overtime compensation
for the recorded breaks.
TAC ¶ 113.
She
argues that the Rule 23(a) requisites are satisfied; and that
common questions predominate and a class action is a superior
means of adjudicating this dispute.
1. Rule
23(a)
a.
...