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Perez v. Wells Fargo & Co.

United States District Court, N.D. California

August 8, 2016

MONIQUE PEREZ, et al., Plaintiffs,
WELLS FARGO & COMPANY, et al., Defendants.


          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.


         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.


         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.


         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. ...

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