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Johnson v. Q.E.D. Environmental Systems Inc.

United States District Court, N.D. California

May 3, 2017



          William H. Orrick, United States District Judge


         In this labor case, plaintiff Terrill Johnson brings a putative class action and Fair Labor Standards Act (“FLSA”) collective action on behalf of himself and all similarly-situated non-exempt employees and former employees of Q.E.D Environmental Systems Inc. (“QED”) because QED used an “automatic deduct” policy and failed to provide all meal periods, full wages or accurate wage statements as required by law. Third Amended Complaint (“TAC”) ¶1 (Dkt. No. 29). QED now moves to deny class certification because QED did not have a common nationwide auto deduct policy: Johnson's testimony establishes that he was atypical of the class; and Johnson's testimony and evidence establish that there are only six to seven individuals in the class. Decertify Mot. at 1 (Dkt. No. 53). QED is correct; Johnson cannot meet the commonality, typicality, numerosity, and adequacy requirements of Rule 23 and the motion to deny class certification is GRANTED.

         QED also moves for sanctions against Johnson's lawyers, arguing that they failed to conduct a reasonable investigation which would have revealed that Johnson was atypical of the class; that QED's policies comply with California law; and that the proposed class could not meet the numerosity requirements for class certification. Sanctions Mot. at 1-3 (Dkt. No. 50). While I agree with much of QED's argument, in light of its failure to provide critical discovery on numerosity in a timely fashion, I DENY the motion for sanctions.

         Johnson also moves for conditional certification of his FLSA meal break claim. Certification Mot. at 1 (Dkt. No. 56). Because he has met the very low bar for conditional certification, his motion for conditional FLSA certification is GRANTED in part.


         Johnson filed this putative class action on August 26, 2017, in California Superior Court. (Dkt. No. 2-1). QED removed the case to federal court on March 24, 2016, after Johnson added a FLSA claim to his Second Amended Complaint (“SAC”). (Dkt. No. 1); (Dkt. No. 2-2). QED moved to dismiss the SAC, which I granted because “Johnson ha[d] wholly failed to meet the minimum pleading requirements” and his allegations relating to an “unidentified ‘policy or practice' ” of not providing uninterrupted meal breaks were insufficient. Dkt. No. 27 at 3.

         Johnson then filed his TAC, this time alleging that QED supervisors instructed and encouraged employees to skip or take shortened meal breaks and attaching excerpts from a July 2012 Employment Manual that outlines a meal break policy that is facially non-compliant with California law. TAC at 6; TAC, Ex. A (Dkt. No. 29-1). QED moved to dismiss, but I denied the motion because Johnson's allegations that QED pressured employees to skip meal breaks or take shorter meal breaks than required by law, in conjunction with the facially deficient policy outlined by the Employment Manual, was sufficient to meet the pleading standard. Dkt. No. 42 at 5 (explaining that because the deficient meal break policy placed “the responsibility [on] QED supervisors to advise and schedule work compliant meal and rest breaks, the allegations that QED instructed, encouraged, and directed its employees to work in a manner contrary to the Labor Code at least plausibly suggests that the QED did not in fact have a compliant meal break policy”).

         On September 30, 2016, QED produced to plaintiffs a California addendum to the employee manual, outlining a facially compliant meal break policy. Segal Decl. in Support of Oppo. to Sanctions Mot. Ex. 2 (Dkt. No. 62-3). Counsel for Johnson declares that this addendum was not included with the copy of the Employment Manual that Johnson provided to them in October of 2014. Shim Decl. ¶7.

         Once the TAC was filed, QED began efforts to arrange a deposition of named plaintiff Terrill Johnson. Sanctions Mot. at 3. After Johnson's counsel refused 11 different deposition dates, Johnson was finally deposed on December 12, 2016. Id. At his deposition, Johnson testified that he had no knowledge about the meal break or time keeping practices of QED facilities outside the San Leandro facility and had never spoken to any employees at other facilities. Connors Decl. Ex. A (“Johnson Depo”) at 28:9-12, 23-24; 29:3-5; 77:8-19; 77:3-19; 83:7-22 (Dkt. No. 53-2). He also testified that, to his knowledge, there were only six or seven other employees, all production line workers, at the San Leandro facility that were denied meal periods. Id. 52:1-8, 13-20. He specifically stated that he had no knowledge whether other non-exempt employees were denied meal periods, id. 97:23-98:8, and that the supervisors at the San Leandro facility would not have been denied lunch breaks or subject to the same meal break issues. Id. 98:23-99:17. He further testified that he believed he was denied meal periods and singled out because his supervisor didn't like him. Id. 58:13-18; 72:20-73-20; 74:22-25; 76:3-6.

         Johnson's counsel also belatedly served a 30(b)(6) notice on QED at plaintiff Johnson's deposition on December 12, 2016. Dkt. No. 60 at 3. QED refused to produce a 30(b)(6) deponent because the request was overbroad. Id. The parties brought their discovery dispute to me. I ordered that they proceed with a narrowed notice, and depositions for two 30(b)(6) witnesses finally occurred on March 7, 2017.

         On January 6, 2017, QED served on counsel for Johnson its motion for sanctions, explaining that if Johnson did not voluntarily dismiss the TAC within 21 days it would seek sanctions from the court. Dkt. No. 59-1. Johnson's counsel responded to this letter on January 28, 2017 offering to “add a clarification regarding QED's employment manual” but declining to dismiss the TAC. Conners Decl., Ex. C (Dkt. No. 68). Johnson did not take any action to amend the TAC and QED subsequently filed its motion for sanctions. Dkt. No 50.



         Federal Rule of Civil Procedure 23 governs class actions. “Before certifying a class, the trial court must conduct a rigorous analysis to determine whether the party seeking certification has met the prerequisites of Rule 23.” Mazza v. Am. Honda Motor Co., Inc., 666 F.3d 581, 588 (9th Cir. 2012) (internal quotation marks omitted). The burden is on the party seeking certification to show, by a preponderance of the evidence, that the prerequisites have been met. See Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2551 (2011); Conn. Ret. Plans & Trust Funds v. Amgen Inc., 660 F.3d 1170, 1175 (9th Cir. 2011).

         Certification under Rule 23 is a two-step process. The party seeking certification must first satisfy the four threshold requirements of Rule 23(a), numerosity, commonality, typicality, and adequacy. Specifically, Rule 23(a) requires a showing that:

(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 party seeking certification must then establish that one of the three grounds for certification under Rule 23(b) applies. See Fed. R. Civ. P. 23(b).


         An employee may bring a collective action under the FLSA on behalf of other “similarly situated” employees. 29 U.S.C. § 216(b). Most courts follow a two-step approach to determine whether employees in a proposed collective are “similarly situated” such that FLSA certification is appropriate. Harris v. Vector Mktg. Corp., 716 F.Supp.2d 835, 837 (N.D. Cal. 2010); see also Daniels v. Aeropostale West, Inc., No. 12-cv-05755-WHA, 2013 WL 1758891, at *5 (N.D. Cal. Apr. 24, 2013). During the first step, the court must determine whether the proposed collective should be informed of the action and given “notice.” Harris, 716 F.Supp.2d at 837. The “notice” stage determination of whether the putative collective members will be similarly situated is made under a “fairly lenient standard” which typically results in conditional certification. Daniels, 2013 WL 1758891 at *6. At the notice stage it is the plaintiffs' burden to make substantial allegations that the putative collective members were subject to an illegal policy, plan, or decision, by showing that there is some factual basis beyond the “mere averments” in the complaint. Id.

         Given the lenient standard at the notice stage, courts have held that plaintiffs bear a “very light burden” in substantiating the allegations. Prentice v. Fund for Pub. Interest Research, Inc., No. 06-cv-7776-SC, 2007 WL 2729187, at *5 (N.D. Cal. Sept. 18, 2007) (“Given that a motion for conditional certification usually comes before much, if any, discovery, and is made in anticipation of a later more searching review, a movant bears a very light burden in substantiating its allegations at this stage.”).

         “[T]he party opposing the certification may move to decertify the class once discovery is complete.” Benedict v. Hewlett-Packard Co., No. 13-cv-0019-LHK, 2014 WL587135, at *5 (N.D. Cal. Feb. 13, 2014). During this second stage the court makes factual determinations as to the “propriety and scope of the class, and must consider three factors: (1) the disparate factual and employment setting of the individual plaintiffs; (2) the various defenses available to the defendants with respect to the individuals plaintiffs; and (3) fairness and procedural considerations.” Richie v. Blue Shield of California, No. 13-cv-2693-EMC, 2014 WL 6982943, at *7 (N.D. Cal. Dec. 9, 2014). During this stage the “court engages in a more stringent inquiry into the propriety and scope of the collective action” because “discovery is complete and the case is ready to be tried.” Labrie v. UPS Supply Chain Solutions, Inc., No. 08-cv-3182 PJH, 2009 WL 723559, at *4 (N.D. Cal. Mar. 18, 2009). The second step of FLSA certification occurs “after the conditional class has received notice and discovery has been completed. Richie, 2014 WL 6982943 at *7. “Where substantial discovery has been completed, some courts have skipped the first-step analysis and proceeded directly to the second step.” Smith v. T-Mobile USA, Inc., No. 05-cv-5274, 2007 WL 2385131, at *4 (C.D. Cal. Aug. 15, 2007).

         III.RUL ...

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