United States District Court, N.D. California, San Jose Division
ORDER DENYING MOTION TO DECERTIFY CLASS RE: DKT. NO.
122
EDWARD
J. DAVILA, UNITED STATES DISTRICT JUDGE
This
matter is a wage and hour class action against the clothing
retailer H&M. Last August, the court certified the class
“[a]ll current and former non-exempt retail store
employees who were employed by [H&M] in the State of
California at any time from December 11, 2011, through the
present” with respect to Plaintiff's claims
predicated on security checks, and any associated wait times,
performed at the end of an employee's shifts or at
closing. Dkt. No. 81 (the “Certification Order”).
H&M now moves to decertify that class. The court has
considered the parties' briefing and exhibits, their oral
arguments, and the relevant law. The court now denies the
motion.
I.
Background
The
court previously certified two classes in this litigation.
Certification Order at 23. One class concerns former
employees of H&M that received their final wages in the
form of a Money Network Paycard. This class is not at issue
here. The other class encompasses all H&M retail
employees, and its claims turn on H&M's alleged
policy of requiring all retail employees to undergo a visual
inspection by a manager (or other designated person) after
they clock out-either at the end of a shift or at closing-but
before they leave the H&M store where they work (the
“Class”). Plaintiff contends that H&M uses
two types of security checks: (1) bag inspections, where only
retail employees that have a bag must allow a manager to
check the bag before leaving, and (2) visual inspections,
where every retail employee-regardless of whether they have a
bag-must inform a manager of when they leave, allowing the
manager to observe their person. Plaintiff argues that, under
California law, the time taken for the visual inspections and
for any waiting prior to the inspections is compensable.
In the
Certification Order, the court considered H&M's
written Internal Theft Prevention Policy (the
“Policy”), and the depositions of H&M's
witnesses and various class members. The Policy, in relevant
part, provides:
All employees, regardless of position or assignment, that
have entered a store carrying a bag, purse, briefcase,
backpack, etc., will have that bag visually searched by a
member of management (or Uniformed Guard where applicable)
prior to exiting the store. The only exception is when an
employee is only shopping on the sales floor. If an employee
goes into an ‘employee only' area (breakroom,
manager's office, etc.) then they must be inspected
before exiting the work location if they have a bag, purse,
briefcase, backpack, etc.
It is very important that all staff understand that when they
leave the store, if a manager or security officer is not at
the door, they need to seek out a manager and have their bag
inspected. If an employee does not have a bag, purse,
briefcase, backpack, etc., they do not need to wait for a
member of management before exiting the store but inform
a member of management that they are leaving the store
for their safety. Any coats or jackets worn while exiting
the store without a bag must be unzipped and unbuttoned.
Certification
Order at 3 (emphasis added). H&M's corporate designee
on the security check policy, Corey May, testified, “If
an employee in California was wearing outerwear, I suppose
they would need to have it open as they walked out.”
May Dep. at 156:12-22. Another H&M witness testified that
retail employees had to check in with the appropriate manager
before leaving, and, at that point, the manager would see
whether the employee had a bag, jacket, or coat. Fritt Dep.
at 34:17-35:6. Class members testified to H&M's
policy of requiring employees to be seen by a manager before
leaving. Bynes Depo at 30:13-24 (manager must visually see
the employee before the employee leaves); Lalas Depo at
47:12-22, 48:2-6 (manager must see the employee leave); Loke
Depo at 58:23-59:3, 63:16-19 (H&M's policy requires
manager to check outerwear when they are leaving); Pund Depo
at 35:7- 11 (employee leaving store with a coat or jacket but
no bag must be inspected before leaving); Vergara Depo at
36:2-24 (manager must confirm that an employee is not exiting
the store with a zipped jacket or coat). These checks occur
after the employees are off the clock. May Dep. at 107:6-11,
123:5-19. Based on this evidence, the court found that
H&M had a common practice of requiring employees to
undergo a visual inspection after clocking out and before
leaving, regardless of whether they brought a bag to work.
Whether H&M was required to compensate employees for the
time in between clocking out and completing the visual
inspection is a question common to the Class. Certification
Order at 14-15. Because the evidence indicated that this
policy and procedure applied to all H&M employees, the
court found that Plaintiff had satisfied the requirements for
commonality and predominance under Rule 23. Id. at
11-16, 18-19. The court also found that H&M's
arguments that individual questions- e.g., whether
an employee brought a bag on a particular day, whether the
manager on duty followed the policy, how long the wait and/or
inspection took-primarily related to damages and did not
defeat the predominance arising from H&M's purported
companywide policy of requiring uncompensated visual
inspections. Id. at 19.
Both
parties moved for summary judgment on the claims connected to
the Class. Dkt. Nos. 112, 113. The court found that whether
H&M mandated security checks for all retail employees or
only retail employees with bags was a disputed question of
material fact. Dkt. No. 139 at 5. This dispute was sufficient
to deny H&M's motion. Id. It was also
sufficient to deny Plaintiff's motion because if a
reasonable fact finder concluded that the Policy only applied
to bags, then whether the checks occurred with such
irregularity as to make it unreasonable to expect employers
to compensate employees for the time was also a disputed
question of material fact. Id. at 6. The court based
its reasoning on the 25 depositions of class members that
were conducted after the court issued the Certification
Order. Id. at 1-2.
II.
Legal Standard
A
district court may exercise its sound discretion to decertify
a class. O'Connor v. Boeing N. Am., Inc., 197
F.R.D. 404, 409 (C.D. Cal. 2000) (citing Knight v. Kenai
Peninsula Borough School Dist., 131 F.3d 807,
816 (9th Cir.1997); see Fed. R. Civ. P. 23(c)(1)(C).
The “party seeking decertification of a class bears the
burden of demonstrating that the elements of Rule 23 have not
been established.” Zakaria v. Gerber Prod.
Co., 2017 WL 9512587, at *16 (C.D. Cal. Aug. 9, 2017)
(collecting cases). “This burden is relatively heavy,
since any doubts regarding the propriety of class
certification should be resolved in favor of
certification.” Sandoval v. M1 Auto Collisions
Ctrs, 2016 WL 6561580, at *12 (N.D. Cal. Sept. 23, 2016)
(quoting Rosales v. El Rancho Farms, 2014 WL 321159,
at *4 (E.D. Cal. Jan. 29, 2014)). Decertification should not
be granted “‘except for good cause,' such as
‘discovery of new facts or changes in the parties or in
the substantive or procedural law.'” Morales,
et al. v. Kraft Foods Grp., Inc., 2017 WL 2598556, at
*20 (C.D. Cal. June 9, 2017) (quoting Ramirez v. Trans
Union, LLC, 2016 WL 6070490, at *2 (N.D. Cal. Oct. 17,
2016). On a motion to decertify, the court must engage in a
“rigorous analysis into whether the prerequisites of
Rule 23 are met.” O'Connor, 197 F.R.D. at
409 (quotation and citation omitted); see also Wal-Mart
Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). Rule
23(a) requires that (1) the members of the class must be so
numerous that joinder is impracticable, (2) there must be
questions of law or fact common to the class, (3) the
representative's claims and defenses must be typical of
the class members' claims and defenses, and (4) the
representative must fairly and adequately protect the
interests of the class. The class must also meet one of the
requirements of Rule 23(b). Here, Plaintiff seeks to maintain
the Class subject to Rule 23(b)(3)'s requirements 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.”
“In
California, wage and hour claims are . . . governed by two
complementary and occasionally overlapping sources of
authority: the provisions of the Labor Code, enacted by the
Legislature, and a series of 18 wage orders, adopted by the
[Industrial Welfare Commission (“IWC”)].”
Troester v. Starbucks Corp., 5 Cal. 5th 829');">5 Cal. 5th 829, 839
(2018), as modified on denial of reh'g (Aug. 29,
2018) (citation and quotation omitted). “The IWC's
wage orders are to be accorded the same dignity as statutes.
They are presumptively valid legislative regulations of the
employment relationship, regulations that must be given
independent effect separate and apart from any statutory
enactments.” Id. (citations and quotations
omitted). IWC Order No. 2001-7 defines “hours
worked” as “the time during which an employee is
subject to the control of an employer, and includes all the
time the employee is suffered or permitted to work, whether
or not required to do so.” Cal. Code Regs., tit. 8,
§ 11070(2)(G). “Hours worked” by an employee
are compensable. See Id. § 11070(3)(A)(1),
4(B); see also Troester, 5 Cal. 5th at 840;
Morillion v. Royal Packing Co., 22 Cal.4th 575, 587
(2000), as modified (May 10, 2000).
III.
Discussion
H&M
argues that the Class should be decertified because it cannot
met the commonality requirement of Rule 23(a)(2), it fails
the predominance requirement of Rule 23(b)(b)(3), it is not
ascertainable, and Plaintiff has not submitted a manageable
trial plan. The court considers each argument.
a.
Commonality
H&M's
first argument is that testimony from 25 class members
deposed after the Certification Order shows that the Class
lacks commonality. “[C]ommonality requires that the
class members' claims ‘depend upon a common
contention' such that ‘determination of its truth
or falsity will resolve an issue that is central to the
validity of each claim in one stroke.'” Jimenez
v. Allstate Ins. Co., 765 F.3d 1161, 1165 (9th Cir.
2014) (quoting Mazza v. Am. Honda Motor Co., 666
F.3d 581, 588 (9th Cir. 2012)). “The existence of even
one significant issue common to the class is sufficient to
warrant certification.” Californians for Disability
Rights, Inc. v. California Dept. of Transp., 249 F.R.D.
334, 346 (N.D. Cal. 2008). “[A]ll that Rule 23(a)(2)
requires is a single significant question of law or
fact.” Moore v. Ulta Salon, Cosmetics &
Fragrance, Inc., 311 F.R.D. 590, 603 (C.D. Cal. 2015)
(quoting Abdullah v. U.S. Sec. Assocs., Inc. 731
F.3d 952, 957 (9th Cir. 2013)).
H&M
contends that these depositions indicate (a) that it did not
have a uniform policy requiring security check of retail
employees who did not have bags, (b) that any security checks
of retail employees without bags was the product of
inconsistent or incorrect applications of the Policy, and (c)
that the visual inspections, when they did occur, were so
brief as to be non-compensable under California law. As to
the first argument, H&M primarily relies on the
deposition testimony of class members Kimberly Cuevas, Javier
Lopez, Juan Sanchez, and Duarte Sousa to argue that it does
not require security checks of employees without bags. Cuevas
testified about the security check process as follows:
Q: [D]o you always have to go through a security
inspection before you can leave?
A: Yes.
. . . .
Q: And whether you had a bag or you didn't have a
bag, you still need a manager to check you; is that
right? . . . .
A: [Y]es, because even if I don't have anything, I
still have to letsomebody know that I'm going
to walk out with no bag. So yes, like I ...