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Deluca v. Farmers Insurance Exchange

United States District Court, N.D. California

September 11, 2019

DAVID DELUCA, et al., Plaintiffs,



         Defendant Farmers Insurance Exchange (“Defendant”) moved to decertify the class, arguing that the trial plan proposed by Plaintiffs David DeLuca and Barry Francis, individual and on behalf of other similarly situated (“Plaintiffs”) is flawed. The Court held a hearing on Defendant's motion on August 27, 2019. Having considered the parties' motion and opposition papers, supporting declarations and other documents, as well as the arguments made at the hearing, for the reasons set forth below, the Court DENIES Defendant's motion. However, the Court agrees that the trial plan should be improved to be somewhat more representative, albeit not so as to achieve the inapplicable standard of statistical significance as to damages. Precisely how is premature at this juncture when additional discovery is pending, including deposition of class members who did not opt-in to the FSLA collective action.


         Plaintiffs seek unpaid overtime wages for themselves and a group of current and former special investigators. On January 4, 2017, Plaintiffs David Deluca and Barry Francis filed this class and collective action in the Northern District of California alleging wage-related claims against Defendant. The lawsuit was styled as a Rule 23 class action on behalf of California investigators and a nationwide collective action under the FLSA on behalf of special investigators throughout the United States. Dkt. No. 1. Plaintiffs challenge their status as “exempt” administrative employees under the FLSA and California state law and contend they should have been compensated for all overtime hours worked.

         This case covers a total of 78 individuals. On February 27, 2018, this Court certified the California Rule 23 class for unpaid overtime and second meal period violations. Dkt. No. 87. The California Rule 23 Class consists of 57 individuals, seventeen of whom also affirmatively opted into the FLSA collective action part of this litigation. Dkt. No. 156 (joint statement). In total, there are 38 Named and Opt-in Plaintiffs who are part of the FLSA collective, leaving 40 absent California Class Members who did not opt into the FLSA collective action. Id. Of the total of 78 investigators, 43 remain employed by Defendant and 35 investigators have ended their employment.

         On May 15, 2019, the Court granted Plaintiffs' motion for summary judgment on the administrative exemption, finding Defendant had misclassified special investigators under both the FLSA and California state law during the relevant time period. Dkt. No. 152. However, the Court declined to grant summary judgment in favor of either party on Plaintiffs' claims for willfulness, liquidated damages, waiting time penalties, and second meal period violations. Id. In response to Defendant's request that Plaintiffs set forth a trial plan explaining how the remaining disputed issues can be tried manageably with collective evidence, the Court ordered Plaintiffs to propose their trial plan for the remaining issues and required Defendant to provide its response to Plaintiffs' proposal in the parties' joint statement prior to the July 2, 2019 case management conference. Id.

         On June 13, 2019, Plaintiffs' counsel provided Defendant's counsel with the names of twenty potential testifying trial witnesses whom they might call during Plaintiffs' case in chief. See Declaration of Ryan McCoy (“McCoy Decl.”), at ¶2, Ex. 1. All proposed witnesses are either Named or Opt-in Plaintiffs to this litigation. None of the proposed witnesses are part of the 40 absent class members from the Rule 23 class.

         On June 19, 2019, Plaintiffs' counsel provided Defendant with their proposed trial plan. Plaintiffs propose using two groups of testifying Opt-in Plaintiffs from the same sample of twenty trial witnesses: a) “testimony from approximately eight of the 57 California Class Members to establish the average number of second meal periods missed per workweek, ” and b) “testimony from approximately 12 Opt-in Plaintiffs.” See Dkt. No. 156-1 (Plaintiffs' Proposed Trial Plan). Defendant complained that no explanation was provided of the methodology behind these samples, other than Plaintiffs' cursory description that class counsel “selected [the witnesses] to represent a range of geographic areas and levels of experience.” Id.

         In connection with the prior case management conference, Defendant filed a response to Plaintiffs' proposed trial plan along with the declaration of Defendant's expert Daniel Slottje (“Slottje Decl.”), arguing the plan is based on the non-random, cherry-picked testimony of only Named or Opt-in Plaintiffs, ignoring the 40 absent class members who make up over half of the population. Dkt. 156-2. Although this matter was set for trial, trial dates have been vacated pending the anticipated reassignment. Accordingly, discovery is continuing and there is no current deadline for submission of trial exhibits or trial witnesses.

         At the time of filing its motion to decertify, Defendant had deposed nine Opt-in Plaintiffs, of whom five are Rule 23 California Class members (Francis, Deluca, Daszco, O'Brien, Stewart), and four of whom are not (Reyes, Ritzema, Mitchell, Grimes). Declaration of Daniel Brome (“Brome Decl.”) at ¶ 3. The parties were working to schedule additional opt-in depositions. Defendant conveyed its intention to take the five depositions of the absent class members as permitted by the Court, see Dkt. No. 169, likely followed by additional opt-in class member depositions.


         A. Decertification under Rule 23

         A plaintiff seeking class certification bears the burden of demonstrating by a preponderance of the evidence that all four requirements of Rules 23(a) -- numerosity, commonality, typicality, and adequacy -- and at least one of the three requirements under Rule 23(b) are satisfied. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011); Ellis v. Costco Wholesale Corp., 657 F.3d 970, 979-80 (9th Cir. 2011). Rule 23(b)(3) requires that “questions of law or fact common to class members predominate over any questions affecting only individual class members, ” and “a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.R.Civ.P. 23(b)(3).

         A court may decertify a class at any time. Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982); see also Duran v. U.S. Bank, 59 Cal.4th 1, 29 (2014) (“Trial courts also have the obligation to decertify a class action if individual issues prove unmanageable”). “In considering the appropriateness of decertification, the standard of review is the same as a motion for class certification: whether the Rule 23 requirements are met.” Cruz v. Dollar Tree Stores, Inc., 2011 WL 2682967, at *3 (N.D. Cal. July 8, 2011). The court must apply “a rigorous analysis” as to both Rule 23(a) and Rule 23(b). Comcast Corp. v. Behrend, 133 S.Ct. 1426, 1432 (2013); Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2551 (2011); Marlo v. UPS, 639 F.3d 942, 946 (9th Cir. 2011) (affirming order decertifying class). Rigorous analysis entails “considerations…enmeshed in the factual and legal issues comprising the plaintiff's cause of action.” Dukes, 131 S.Ct. at 2551-52.

         Decertification is proper when the court determines that the plaintiffs have not presented a viable plan to try issues of liability and damages. Stiller v. Costco Wholesale Corp., 298 F.R.D. 611 (S.D. Cal. 2014); Marlo v. United Parcel Serv., Inc., 251 F.R.D. 476, 480 (C.D. Cal. 2008) (decertifying class because plaintiff relied on purportedly common evidence that was “neither reliable nor representative of the class”), aff'd, 639 F.3d 942 (9th Cir. 2011) (decision to decertify did not constitute abuse of discretion). Decertification also is proper where a trial would turn into individualized inquiries and mini-trials that would render the trial unmanageable. Marlo, 251 F.R.D. at 486. However, “damages determinations are individual in nearly all wage-and-hour class actions . . . the presence of individualized damages cannot, by itself, defeat class certification under Rule 23(b)(3).” Leyva v. Medline Indus. Inc., 716 F.3d 510, 513-14 (9th Cir. 2013) (citations omitted); accord Jimenez v. Allstate Ins. Co., 765 F.3d 1161, 1167-68 (9th Cir. 2014) (affirming certification of off-the-clock overtime case, noting “[s]o long as the plaintiffs were harmed by the same conduct, disparities in how or by how much they were harmed did not defeat class certification”); see also Williams v. Superior Court, 221 Cal.App.4th 1353, 1370 (2013), as modified (Dec. 24, 2013) (reversing decertification of off the clock claims, concluding “[i]t may be true that some adjusters never worked off the clock, and such adjusters were thus not injured by Allstate's practice of adjusters working off the clock. But the existence of individuality as to damages does not defeat class certification.”); Brinker Rest. Corp. v. Superior Court, 53 Cal.4th 1004, 1054 (2012) (Werdegar, J., concurring) (“In almost every class action, factual determinations [of damages] ... to individual class members must be made. Still we know of no case where this has prevented a court from aiding the class to obtain its just restitution. Indeed, to decertify a class on the issue of damages or restitution may well be effectively to sound the death-knell of the class action device.”) (internal citations and quotations omitted)).

         1. Adequacy of a Trial Plan

         Plaintiffs must present a plan to conduct a class trial. Zinser v. Accufix Research Inst., 253 F.3d 1180, 1189 (9th Cir. 2001), quoting Chin v. Chrysler Corp., 182 F.R.D. 448, 454 (D.N.J. 1998) (plaintiff “bears the burden of demonstrating a suitable and realistic plan for trial of the class claims”). Absent an acceptable trial plan, the court should decertify. Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1234 (9th Cir. 1996) (decertifying class because plaintiff made no showing “of how the class trial could be conducted”); Espenscheid v. DirectSat USA, LLC, 2011 WL 2009967, at *17 (W.D. WI, May 23, 2011) (decertifying class because plaintiffs failed to “propos[e] a trial plan that would lead to a fair result”), aff'd, 705 F.3d 770 (7th Cir. 2013).

         B. ...

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