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Cuevas v. Conam Management Corp.

United States District Court, S.D. California

October 21, 2019

ELIZABETH CUEVAS, as an individual and on behalf of all others similarly situated, Plaintiff,
v.
CONAM MANAGEMENT CORPORATION, a California corporation; and does 1 through10, inclusive, Defendants.

         ORDER GRANTING PLAINTIFF'S MOTION FOR CONDITIONAL CERTIFICATION; GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR PRODUCTION OF COLLECTIVE MEMBERS' CONTACT INFORMATION; AND GRANTING IN PART AND DENYING IN PART PLAINTIFF'S REQUEST FOR APPROVAL OF NOTICE TO THE MEMBERS OF THE COLLECTIVES [Dkt. No. 37.]

          HON. GONZALO P. CURIEL UNITED STATES DISTRICT JUDGE

         Before the Court is Plaintiff Elizabeth Cuevas' motion for an order conditionally certifying the class as a collective action under the Fair Labor Standards Act, 29 U.S.C. § 216(b), (2) for production of collective members' contact information, and (3) for approval of notice to the members of the collectives. (Dkt. No. 37.) An opposition was filed by Defendant on September 27, 2019. (Dkt. No. 54.) A reply was filed by Plaintiff on October 4, 2019. (Dkt. No. 55.) Based on the reasoning below, the Court GRANTS Plaintiff's motion for conditional certification of collective action, GRANTS in part and DENIES in part Plaintiff's motion to direct Defendant to produce collective members' contact information, and GRANTS in part and DENIES in part Plaintiff's request for approval of notice to the members of the collectives.

         Background

         On September 6, 2019, Plaintiff Elizabeth Cuevas (“Plaintiff”) filed the operative first amended complaint (“FAC”) on behalf of herself and other similarly situated employees of Defendant ConAm Management Corporation (“Defendant” or “ConAm”) alleging two causes of action for its failure to pay overtime pursuant to the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and failure to timely pay overtime wages as required by 29 C.F.R. § 778.106. (Dkt. No. 48, FAC.) Specifically, Plaintiff claims that Defendant failure to pay overtime is based on its failure to calculate and/or factor non-discretionary bonuses into her regular rate of pay in assessing overtime pay. Second, Plaintiff claims Defendant's Bonus Adjustment or true-up payment pays overtime payments late or not at all. ConAm is a property management and real estate investment company with properties located throughout the United States. (Id. ¶ 2.)

         Plaintiff was employed by ConAm from about December 21, 2017[1] to about March 29, 2019 as a non-exempt leasing agent/professional at one of Defendant's properties located in Reno, Nevada. (Dkt. No. 37-3, Cuevas Decl. ¶¶ 2, 3.) In her position as a Leasing Professional, she, as well as other employees, received non-discretionary bonuses from the Lease and Renewal Bonus Program, also referred to as the “Winner's Circle” program. (Id. ¶ 4; Dkt. No. 54-1, Gillane Decl., Ex. A.) In her position as Leasing Professional, Plaintiff was only eligible for the Winner's Circle bonus. (Dkt. No. 54-1, Gillane Decl., Ex. A.) Other non-exempt employees, such as Community Managers and Business Managers are also subject to other non-discretionary bonuses. (Id.; Dkt. No. 57, Dadek Decl., Ex. B (UNDER SEAL).)

         According to Defendant,

The Winner's Circle bonus is based on outstanding achievement in two areas of property management: (1) new move-ins; and (2) lease renewals. In the first area, new move-ins, an employee's bonus is determined by the number of new apartment leases for which he or she is individually responsible in a calendar month. For each new move-in with a lease term of six months or more, the employee is eligible for a flat payment of $50. If the apartment is one which has undergone significant renovations, the employee is eligible for an additional premium, which may amount to a $75 flat payment or a different amount approved by the owner of the property. In the second area, lease renewals, bonus compensation is pooled. For each lease renewal with a term of six months or more, $50 (or an amount approved by the owner of the property) is contributed to a bonus pool. The total bonus pool is then split evenly among all eligible employees at the property based on the amount of time worked during that month. New move-ins and lease renewals are tracked on a monthly basis in the Move In Detail Report and Resident Activity Detail Report. At the end of each month, data from these two reports is manually entered into the Winner's Circle Bonus Worksheet (“WCB Worksheet”), which is used to determine each employee's eligibility for the Winner's Circle bonus and amount thereof.
ConAm pays its employees twice monthly, on or about the 7th and 22nd days of each month. Generally speaking, the calculations on the WCB Worksheet are done by the 15th of the month (for the prior month's activity) and the employee, if eligible, receives any Winner's Circle bonus payment on the 22nd of the month. Thus, for example, if an employee earns $500 in Winner's Circle bonus compensation during July 2019, she will receive that bonus amount with her paycheck on August 22, 2019. Employees working overtime receive time-and-a-half for those overtime hours based on their hourly rate for the applicable pay period, but the Winner's Circle bonus is not factored into the employee's overtime rate during that pay period. Rather, the employee receives a “Bonus Adjustment” - essentially a true-up payment - in her next paycheck (on the 7th of the month), applying the Winners' Circle bonus payment to any overtime worked . . . . ConAm uses this “true up” method because, as stated above, the Winner's Circle bonus is determined after the end of a given month based upon leasing activity during that month. Accordingly, at the time overtime is paid ConAm simply doesn't know whether or not a Winner's Circle bonus has been earned. Similarly, the Bonus Adjustment cannot be calculated until both the Winner's Circle bonus is determined and all hours and compensation information has been fully processed by payroll, which by definition cannot happen until after the 22nd of the month when the Winner's Circle bonus is paid.

(Dkt. No. 54 at 9[2] (internal citations omitted).) Plaintiff claims ConAm's payroll policy violates the FLSA because it admittedly fails to calculate and/or factor non-discretionary bonuses into her regular rate of pay in assessing overtime pay and Defendant's stated Bonus Adjustment or true-up payment necessarily provides for late overtime payments.

         Discussion

         A. Legal Standard on Conditional Certification

         The Fair Labor Standards Act of 1938 was enacted for the purpose of protecting all covered workers from “substandard wages and oppressive working hours.” Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 739 (1981). Section 16(b) provides employees the right to bring a private cause of action on behalf of herself and other employees “similarly situated” for specified violations of the FLSA but requires that each employee “opt-in” by filing a consent to sue with the court. 29 U.S.C. § 216(b); Does I thru XXIII v. Advanced Textile Corp., 214 F.3d 1058, 1064 (9th Cir. 2000). These suits are known as a “collective action” and allow aggrieved employees “the advantage of lower individual costs to vindicate rights by the pooling of resources. The judicial system benefits by efficient resolution in one proceeding of common issues of law and fact arising from the same alleged discriminatory activity.” Hoffman-La Roche Inc. v. Sperling, 493 U.S. 165, 170 (1989).[3]

         The district court has discretion in determining whether a collective action is appropriate. Adams v. Inter-Con Sec. Sys., 242 F.R.D. 530, 535 (N.D. Cal. 2007) (citing Leuthold v. Destination America, Inc., 224 F.R.D. 462, 466 (N.D. Cal. 2004)). The plaintiff bears the burden of showing that the putative collective action members are “similarly situated.” Id. at 535-36; see Harris v. Vector Mktg., Corp., 716 F.Supp.2d 835, 837 (N.D. Cal. 2010) (quoting Murillo v. Pac. Gas & Elec. Co., 266 F.R.D. 468, 470 (E.D. Cal. 2010)).

         Recently, the Ninth Circuit in Campbell v. City of Los Angeles, 903 F.3d 1090, 1100, 1109 (9th Cir. 2018), adopted the two-tiered certification process, which developed as “a product of interstitial judicial lawmaking or ad hoc district court discretion”[4], under the FLSA. First, at the pleading stage, plaintiffs will file a motion for preliminary certification and demonstrate the “similarly situated” requirement of § 216(b) for purposes of providing notice to putative collective members. Id. at 1109. The notice advises the members that they must affirmatively opt-in to the litigation. Id. At this early stage, the district court's review is limited to the pleadings and may be “supplemented by declarations or other limited evidence”, and the standard is “lenient.” Id.; Lewis v. Wells Fargo & Co., 669 F.Supp.2d 1124, 1127 (N.D. Cal. 2009) (“the standard for certification at this stage is a lenient one that typically results in certification.”); Leuthold v. Destination America, Inc., 224 F.R.D. 462, 467 (N.D. Cal. 2004) (citations omitted) (“Because the court generally has a limited amount of evidence before it, the initial determination is usually made under a fairly lenient standard and typically results in conditional class certification.”).

         Where preliminary certification has been granted and once discovery has been completed or is near completion, the defendant may move for decertification on Plaintiff's failure to satisfy the “similarly situated” requirement in light of the evidence produced in discovery and the court takes a “more exacting look at the plaintiffs' allegations and the record.” Campbell, 903 F.3d at 1109.

         The court in Campbell also defined the meaning of “similarly situated” under the FLSA. Relying on the FLSA's remedial purpose, the Ninth Circuit held that to be “similarly situated”, “plaintiffs must be alike with regard to some material aspect of their litigation.” Id. at 1114 (emphasis in original). “[I]f the party plaintiffs' factual or legal similarities are material to the resolution of their case, dissimilarities in other respects should not defeat collective treatment.” Id. “[W]hat matters is not just any similarity between party plaintiffs, but a legal or factual similarity material to the resolution of the party plaintiffs' claims, in the sense of having the potential to advance these claims, collectively, to some resolution.” Id. at 1115. In other words, “[p]arty plaintiffs are similarly situated, and may proceed in a collective, to the extent they share a similar issue of law or fact material to the disposition of their FLSA claims.” Id. at 1117.

         B. ...


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