Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Conde v. Open Door Marketing, LLC

United States District Court, N.D. California

April 27, 2017

CARLOS CONDE, et al., Plaintiffs,
v.
OPEN DOOR MARKETING, LLC, et al., Defendants.

          ORDER DENYING 20/20 COMMUNICATION'S MOTION FOR JUDGMENT ON THE PLEADINGS; GRANTING IN PART AND DENYING IN PART 20/20 COMMUNICATION'S MOTION TO DENY CLASS CERTIFICATION; GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION TO EXPAND THE SCOPE OF CERTIFIED COLLECTIVE ACTION RE: DKT. NOS. 139, 143, 144

          KANDIS A. WESTMORE, UNITED STATES MAGISTRATE JUDGE

         Plaintiffs Shikwana Jennings and Lisa Drake filed the instant suit against Defendants 20/20 Communications, Inc. ("20/20"), Open Door Marketing, LLC ("Open Door"), Larry Clark, and Jerrimy Farris, alleging violations of the Fair Labor Standards Act ("FLSA") and various California labor laws. (Third Amended Compl. ("TAC") ¶¶ 1-2, Dkt. No. 97.) Pending before the Court are the following motions: (1) Plaintiffs' motion to expand the scope of the certified collective action and issue additional notice, Dkt. No. 139 ("Plfs.' Mot. to Expand"); (2) 20/20's motion to deny class certification, Dkt. No. 143 ("20/20 Mot. to Deny Cert."); and (3) 20/20's motion for judgment on the pleadings, Dkt. No. 144 ("20/20 Mot. for Judgment on the Pleadings").

         The Court held a hearing on the motions on March 30, 2017. Having considered the papers filed by the parties, the relevant legal authority, and the arguments advanced by counsel at the hearing, the Court rules as follows: (1) Plaintiff's motion to expand the scope of the certified collective action is GRANTED IN PART AND DENIED IN PART; (2) 20/20's motion to deny class certification is GRANTED IN PART and DENIED IN PART, and (3) 20/20's motion for judgment on the pleadings is DENIED.

         I. BACKGROUND

         A. Factual Background

         Plaintiffs Jennings and Drake previously worked for Defendants "to promote free cell phones and wireless service plans for low-income individuals who meet the plans' requirements." (TAC ¶ 1.) Plaintiffs allege that they were misclassified as independent contractors, resulting in Defendants failing to pay them minimum wage, overtime, and expenses, as well as providing itemized wage statements. (TAC ¶ 2.)

         In June 2013, 20/20 first began providing marketing services for providers of wireless service plans and cellular phones. (Burks Decl. ¶ 2, Dkt. No. 143-7.) Until October 2014, 20/20 contracted directly with individuals to promote wireless service plans and cellular phones as "Sales Representatives." (TAC ¶ 16; Burks Decl. ¶ 2.) Since June 2013, to become a "Sales Representative, " individuals were required to submit an application through 20/20's online application portal. (Warren Decl. ¶ 2, Dkt. No. 143-3.) As part of the onboarding process, individuals were presented with the Mutual Arbitration Agreement ("20/20 MAA"). (Warren Decl. ¶ 4.) All newly-retained Sales Representatives were required to execute the 20/20 MAA; 20/20 asserts that it was not possible for an individual to advance to the next step of the onboarding process without executing the 20/20 MAA, as the individual would then receive an error message. (Warren Decl. ¶ 4, Exh. B.) The 20/20 MAA requires the parties to resolve all disputes and claims between the parties through final and binding arbitration unless the individual opts out of the 20/20 MAA by delivering a completed and signed opt-out form to 20/20's Vice President of Human Resources. (Warren Decl., Exh. C ("20/20 MAA") ¶¶ 1, 10.) 20/20 alleges that 186 individuals in California and 204 individuals in Nevada contracted with 20/20 "on or after September 24, 2013." (Warren Decl. ¶ 10.) No individuals in California or Nevada submitted opt-out forms. (Warren Decl. ¶ 9.)

         Plaintiffs allege that from September 2012 to October 2014, 20/20 and the individual Defendants controlled the manner in which workers "performed their marketing work, " including retaining the right to terminate, setting and monitoring performance goals, setting hours and work locations, requiring workers to send supervisors a photo of themselves at work to prove their attendance at the required time, requiring the use of a script, requiring regular attendance of meetings, requiring attendance of pre-employment training, requiring use of a uniform while working, setting disciplinary standards, requiring the use of company-provided tablets, and requiring workers to report to their supervisors how many customers they signed up each day. (TAC ¶ 17(a).)

         In October 2014, 20/20 and the individual Defendants allegedly "jointly created [Open Door] as a 'spin off' company from 20/20." (TAC ¶ 18.) Sales Representatives would contract directly with Open Door rather than 20/20. As part of the onboarding process, Open Door required Sales Representatives "to execute an independent contractor agreement . . . ." (Clark Decl. ¶ 5, Dkt. No. 143-5.) Since January 1, 2016, Open Door has used a version of the independent contractor agreement ("Open Door ICA") that includes a mandatory arbitration provision. (Clark Decl. ¶ 6, Exh. A ("Open Door ICA") ¶ 13.) The arbitration provision requires that "[a]ny controversy between the parties to this Agreement involving the construction or application of any of the terms, provisions, or conditions of this Agreement" shall be submitted to mediation and binding arbitration. (Open Door ICA ¶ 13.) There does not appear to be an opt-out provision. Of the 526 individuals who contracted with Open Door in California, 48 were engaged after January 1, 2016; of the 187 individuals who contracted with Open Door in Nevada, 4 were engaged after January 1, 2016. (Clark Decl. ¶ 8.)

         As with 20/20, Plaintiffs allege that Open Door and the individual Defendants controlled the manner in which workers "performed their marketing work, " including retaining the right to hire and terminate, setting and monitoring performance goals, setting hours and work locations, requiring workers to send supervisors a photo of themselves at work to prove their attendance at the required time, requiring the use of a script, requiring regular attendance of meetings, requiring attendance of pre-employment training, requiring use of a uniform while working, setting disciplinary standards, requiring the use of company-provided tablets, and requiring workers to report to their supervisors how many customers they signed up each day. (TAC ¶ 19(a).) Plaintiffs also allege that during this time, 20/20 acted as a joint employer of these individuals because workers "acted in the interest of 20/20, " and 20/20 maintained the right to hire, fire, and otherwise modify the employment condition of workers. (TAC ¶¶ 20(a)-(b).) 20/20 also "retained the right to supervise and control . . . work schedules, " and supervisors were required to participate in weekly meetings with 20/20, "during which they discussed the weekly number of sign-ups achieved . . ., the locations where [workers] should work, the standard operating procedures for [workers], and new [Open Door] agent hires." (TAC ¶ 20(c).) 20/20 also retained the right to determine the rate of pay. (TAC ¶ 20(e).) There was also "no change in the work responsibilities or payment methods of those [individuals] who transitioned from working for 20/20 directly to [Open Door] directly." (TAC ¶ 20(f).) 20/20 also continued to provide workers with the tablets necessary to perform their work, as well as technology support. (TAC ¶ 20(g).)

         B. Procedural Background

         Plaintiffs filed the instant action on September 8, 2015. (Compl., Dkt. No. 1.) Plaintiffs filed the operative complaint on May 12, 2016, asserting claims for: (1) failure to pay minimum wage in violation of the FLSA; (2) failure to pay overtime in violation of the FLSA; (3) failure to pay minimum wage and overtime in violation of the California Labor Code; (4) failure to provide workers with itemized wage statements in violation of California Labor Code § 226; (5) failure to reimburse workers for expenses in violation of California Labor Code § 2802; (6) unlawful business practices in violation of California Business & Professions Code § 17200; and (7) penalties under the Private Attorneys General Act ("PAGA"), California Labor Code § 2698 et seq.[1] (TAC ¶¶ 25-53.)

         Following the commencement of this action, the parties filed a series of motions. On October 23, 2015, Plaintiffs filed a motion for notice to be issued to similarly situated employees pursuant to 29 U.S.C. § 216(b). (Dkt. No. 21.) On December 7, 2015, Open Door filed a motion to compel arbitration and dismiss, or alternatively, stay claims; a motion to dismiss based on forum non conveniens and Rule 12(b)(3); and a motion to dismiss pursuant to Rule 12(b)(6), or alternatively, for a more definite statement pursuant to Rule 12(e). (Dkt. Nos. 49, 5051.) 20/20 also filed a motion to dismiss Plaintiffs' complaint, or alternatively, for a more definite statement, as well as a motion to compel arbitration and dismiss, or alternatively, stay claims. (Dkt. Nos. 53, 54.)

         On April 12, 2016, the Court issued an order on the parties' motions. (Ord., Dkt. No. 92.) First, the Court denied the motion to dismiss based on forum non conveniens, finding that the forum selection clause did not apply to the claims asserted in the action. (Id. at 6.) Second, the Court granted 20/20's unopposed motion to compel arbitration of former Plaintiff Carlos Conde. (Id. at 7.) Third, the Court granted 20/20's motion to dismiss on the ground that Plaintiffs failed to "identify the particular conduct attributable for each defendant, " as Plaintiffs instead used the term "Defendants" throughout the complaint, which "failed to give each defendant fair notice of the claims asserted against them and the grounds upon which those claims rest." (Id. at 9-10.) Fourth, the Court granted Open Door's motion to dismiss as to claims asserted against Open Door prior to September 2014, and as to claims asserted against Defendants Farris and Clark specifically due to the lack of "any allegations describing what conduct Farris and Clark engaged in that would expose them to liability for the wage and hour violations Plaintiffs allege." (Id. at 10-11.) Finally, the Court held in abeyance Plaintiffs' motion for notice to be issued to similarly situated employees pending the filing of the third amended complaint and the parties' meet and confer on the scope of the class. (Id. at 15.)

         After Plaintiffs filed their operative third amended complaint, the parties stipulated to the issuance of notice to all individuals who worked for Open Door "as independent contractors marketing free cell phones and wireless service plans to potential consumers face-to-face in Nevada and California from October 2014 to the present" who have not entered into an arbitration agreement with either Open Door or 20/20. (Dkt. No. 104 at 2.) Plaintiffs' counsel would then issue notice to these individuals, after which class members would have 60 days to opt into the collective action. (Id. at 2-3.) The parties would then participate in a full-day private mediation. (Id. at 3.) In the interim, the case would be stayed in its entirety, and Plaintiffs' motion for notice would remain held in abeyance. (Id.) On June 28, 2016, the Court granted the stipulation and stayed the case. (Dkt. No. 107.)

         On September 2, 2016, Plaintiffs filed an "emergency" motion requesting permission to distribute reminder opt-in notices. (Dkt. No. 113.) Prior to the Court ruling on the motion, Plaintiffs informed the Court that counsel had "mistakenly" e-mailed the reminder to the potential collective action members on September 9, 2016, despite not having received permission from the Court to do so. (Dkt. No. 120.) After the reminder e-mail was sent, Plaintiffs' counsel received 32 additional opt-in consent forms, which Plaintiffs filed with the Court. Although Defendants argued that the additional opt-ins should be stricken as being "influenced by the improper communications, " the Court declined to strike the additional opt-ins as "[d]oing so would only penalize the individuals who opted in, some of whom may have intended to opt in regardless of the reminder notice." (Dkt. Nos. 121, 123 at 1.)

         On November 29, 2016, Attorney David Sohn, counsel for Defendants Open Door, Larry Clark and Jerrimy Farris, moved to withdraw as attorney. (Dkt. No. 124.) Through this motion, the Court was notified for the first time that the mediation had taken place on November 10, 2016, but was unsuccessful, and that the parties had agreed to lift the stay on November 17, 2016. (Dkt. No. 124-1 ¶¶ 3-4.) The Court ordered the parties to submit a joint status report to explain the status of the case and any pending motions before the Court. After the parties filed their joint status report, the Court lifted the stay and set a case management conference. (Dkt. No. 127.) On January 10, 2017, the Court granted Attorney Sohn's motion to withdraw. (Dkt. No. 128.) Defendants Open Door, Larry Clark, and Jerrimy Farris are presently unrepresented.

         On February 21, 2017, the Court held a case management conference with the parties. (Dkt. No. 137.) Defendants Open Door, Larry Clark, and Jerrimy Farris did not appear. The Court specially set a hearing on March 30, 2017, to hear Plaintiffs' motion to expand the scope of the collective action, as well as 20/20's motion to deny class certification and motion for judgment on the pleadings. (Id. at 1-2.) The parties were directed to stipulate to a shortened briefing schedule accordingly. (Id. at 2.) On February 22, 2017, the Court issued an order to show cause, directed at Defendants Open Door, Larry Clark, and Jerrimy Farris, ordering them to explain why they should not pay monetary sanctions in the amount of $500 for their failure to appear at the case management conference. (Dkt. No. 138.) Defendants' response was due by March 10, 2017; as of the date of this order, no response has been filed. On April 6, 2017, the Court issued a second order to show cause as to Defendants Open Door, Larry Clark, and Jerrimy Farris. (Dkt. No. 168.)

         On February 22, 2017, Plaintiffs filed their motion to expand the scope of the collective action. (Plfs.' Mot. to Expand, Dkt. No. 139.) On March 10, 2017, 20/20 filed its opposition to Plaintiffs' motion to expand the scope of the collective action. (20/20 Opp'n to Mot. to Expand, Dkt. No. 152.) No reply was filed.

         On March 1, 2017, 20/20 filed its motion to deny class certification and motion for judgment on the pleadings as to Plaintiffs' PAGA claim. (20/20 Mot. to Deny Cert, Dkt. No. 143; 20/20 Mot. for Judgment on the Pleadings, Dkt. No. 144.) On March 10, 2017, Plaintiffs filed their oppositions to 20/20's motions. (Plfs.' Opp'n to Mot. to Deny Cert, Dkt. No. 151; Plf.'s Opp'n to Mot. for Judgment on the Pleadings, Dkt. No. 150.) On March 16, 2017, 20/20 filed its replies. (20/20 Reply re Mot. to Deny Cert, Dkt. No. 155; 20/20 Reply re Mot. for Judgment on the Pleadings, Dkt. No. 154.) The Court held a hearing on the motions on March 30, 2017. (Dkt. No. 163.) At the hearing, the Court permitted the parties to file supplemental briefs regarding the motion to expand the scope of the certified class. The parties filed their supplemental briefs on April 6, 2017. (Defs.' Supp. Brief, Dkt. No. 167; Plfs.' Supp. Brief, Dkt. No. 169.)

         II. DISCUSSION

         A. 20/20's Motion to Deny Class Certification

         Federal Rule of Civil Procedure 23(c)(1)(A) "addresses the timing of a district court's class certification determination, and states: 'Time to Issue: At an early practicable time after a person sues or is sued as a class representative, the court must determine by order whether to certify the action as a class action.'" Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, 939 (9th Cir. 2009) (quoting Fed.R.Civ.P. 23(c)(1)(A)). The Ninth Circuit has concluded that "[n]othing in the plain language of Rule 23(c)(1)(A) either vests plaintiffs with the exclusive right to put the class certification issue before the district court or prohibits a defendant from seeking early resolution of the class certification question." Id. at 939-40. Accordingly, "Rule 23 does not preclude a defendant from bringing a 'preemptive' motion to deny certification." Id. at 939.

         To obtain class certification, a proposed class must satisfy the prerequisites of Rule 23(a), which are:

(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests of the class.

Fed. R. Civ. P. 23(a). The purpose of these requirements is to "ensure[] that the named plaintiffs are appropriate representatives of the class whose claims they wish to litigate, " and to "effectively limit the class claims to those fairly encompassed by the named plaintiff's claims." Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 349 (2011). The plaintiff must also satisfy the requirements for certification of "one of the types of class actions identified in Rule 23(b)." Pulaski & Middleman, LLC v. Google, Inc., 802 F.3d 979, 985 (9th Cir. 2015).

         In the instant case, Plaintiffs ultimately seek to certify a Rule 23 class made up of "workers who have worked for 20/20 from September 2012 through the present and who have worked for Open Door from October 2014 to the present in California . . . ." (TAC ¶ 3.) 20/20 contends that Plaintiffs cannot satisfy the prerequisites of Rule 23 because Plaintiffs did not sign arbitration agreements with Defendants, whereas approximately 234 putative class members signed arbitration agreements with either 20/20 or Open Door.[2] (20/20 Mot. to Deny Cert at 5-6, 11.) Because Plaintiffs did not sign the arbitration agreements, 20/20 argues that Plaintiffs will be unable to demonstrate typicality, commonality, and superiority.

         i. Ripeness of Motion

         As an initial matter, Plaintiffs argue that 20/20's motion is premature because "discovery has not yet taken place." (Plfs.' Opp'n to Mot. to Deny Cert. at 1.) Plaintiffs argue that they "have had no opportunity to learn the circumstances surrounding the signing of these arbitration agreements, which might lead to procedural unconscionability defenses of which Plaintiffs are not currently aware." (Id. at 2.)

         The Court finds that the discovery sought by Plaintiffs does not prevent the Court from ruling on the instant motion. Plaintiffs seek to challenge the enforceability of the arbitration agreements; Defendants' motion, however, is premised on the fact that Plaintiffs did not sign arbitration agreements, but intend to certify a class that includes individuals who did sign the arbitration agreements. Because of this distinction, Defendants argue that Plaintiffs cannot demonstrate typicality, commonality, and superiority, as required by Rule 23(a). Plaintiffs do not dispute that they did not sign an ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.