Heredia v. Eddie Bauer LLC

          ORDER GRANTING DEFENDANT'S MOTION FOR DECERTIFICATION; TERMINATING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AGAINST THE CERTIFIED CLASS AS MOOT; DENYING PLAINTIFF'S MOTION TO MODIFY CLASS DEFINITION [RE: ECF 60; 51; 71]

          BETH LAB SON FREEMAN UNITED STATES DISTRICT JUDGE

         This matter is a wage and hour class action against the well-known outdoor lifestyle brand Eddie Bauer (“Defendant”), alleging that the company failed to compensate its hourly employees for time spent undergoing off-the-clock “exit inspections” of employees' personal belongings before leaving the store. Plaintiff, Stephanie Heredia, worked as a sales associate at an Eddie Bauer retail store in Gilroy, California from November 2013 to March 2016. During that time, she alleges that she was required to undergo inspections of her personal belongings-otherwise known as “bag checks” or “security inspections”-whenever she left the store. On January 10, 2018, the Court certified a class of “[a]ll current and former non-exempt retail store employees who were employed by Defendant in the State of California at any time from September 28, 2012, through the present.” Order Granting Plaintiff's Motion for Class Certification (“Cert. Order”) at 19, ECF 33.

         Before the Court are three related motions: (1) Defendant's Motion for Summary Judgment Against the Certified Class (ECF 51), (2) Defendant's Motion for Decertification (ECF 60), and (3) Plaintiff's Motion to Modify Class Definition (ECF 71). The Court heard oral arguments on Defendant's Motion for Summary Judgment on September 12, 2019. The Court also held a hearing on Defendant's Motion for Decertification on December 5, 2019. The Court finds Plaintiff's Motion to Modify Class Definition appropriate for disposition without oral argument. See Civ. L.R. 7-1(b). Accordingly, the hearing set for January 23, 2020 is VACATED.

         For the reasons stated in Section II below, the Court GRANTS Defendant's Motion for Decertification. With the class decertified, Defendant's Motion for Summary Judgment Against the Certified Class is TERMINATED AS MOOT. Additionally, Plaintiff's Motion to Modify Class Definition is DENIED for the reasons stated in Section IV below.

         I. BACKGROUND

         Because Eddie Bauer's retail stores carry a variety of merchandise that is susceptible to theft, Eddie Bauer requires all of its retail employees to submit to a security inspection before exiting the store, whether the employee's departure is for a meal break, rest break, or to leave at the end of a shift. See Keith Long Deposition (“Long Dep.”) 53:9-15, 55:18-56:2, 65:14-66:7, ECF 29-4, Exh. 4. At Eddie Bauer, this security inspection is known as “Personal Property Inspection Policy, ” and applies to all retail employees who carry a bag or container that could be used to conceal company merchandise. See Long Dep. 55:18-56:2, 58:1-15; Exh. 7 (Store Associate Resource Guide, updated August 2016); Exh. 8 (SOP regarding Package/Personal Property Checks, dated November 10, 2016), ECF 29-4. In relevant parts, the written policy provides:

All associates must have their handbags, packages, briefcases, backpacks and other parcels, inspected by a member of store management whenever they leave the store. Package checks are also completed for breaks and meal periods, or whenever associates leave the store for any reason.

         Long Dep., Exh. 8. It is undisputed that Eddie Bauer's written policies are silent on whether the employees must clock out before or after undergoing the required security inspections. See Defendant's Motion for Decertification (“Decert. Mot.”) at 2, ECF 60-1; Opposition to Motion for Decertification (“Decert. Opp'n”) at 1, ECF 65. The parties dispute, however, whether in practice, Eddie Bauer employees undergo inspection while off the clock. See Decert. Mot. at 1-2; Decert. Opp'n at 1-2.

         At the time the Court certified the class, only two depositions had been conducted: (1) Heredia and (2) Eddie Bauer's FRCP 30(b)(6) witness, Keith Long, who was designated to testify to topics related to Eddie Bauer's security inspection policies. Cert. Order at 2. Evidence submitted for the motion to certify the class showed that Heredia worked as a sales associate at Eddie Bauer's Gilroy store from November 2013 to March 26, 2016. See Declaration of Stephanie Heredia (“Heredia Decl.”) ¶ 2, ECF 29-4, Exh. 5. During her deposition, Heredia explained that she always clocked out before waiting for a manager to become available to perform the security check and then undergoing the inspection. Heredia Deposition (“Heredia Dep.”) 74:19-22; 118:24-119:3, ECF 29-4, Exh. 3. According to Heredia, “[e]verbody waited until after they clocked out” to have their bags checked. Heredia Dep. 46:19-22. Heredia testified that her managers instructed her to clock out and wait at the front of the store before the manager would conduct a bag check. Heredia Decl. ¶ 5; see also Heredia Dep. 55:11-17, 123:22-25, 126:6-13. On the other hand, Long testified during his deposition that it is Eddie Bauer's policy to train managers to conduct personal property checks while employees are still clocked in. Long Dep. 77:14-20.

         Based on this limited record, in January 2018, the Court certified a class of “All current and former non-exempt retail store employees who were employed by Defendant in the State of California at any time from September 28, 2012, through the present.” Cert. Order at 19. The Court found that at least two common questions exist: (1) whether Eddie Bauer's policy and practice was to mandate that security checks be performed off-the-clock; and, if so, (2) whether time spent by employees off-the-clock for security checks should be deemed as hours worked and thus compensated as wages. Id. at 10. The Court came to that conclusion because (1) the evidence showed that Eddie Bauer's written policy applies to all non-exempt employees, (2) Heredia demonstrated the existence of a uniform policy applying to all employees in California, and (3) Eddie Bauer offered no evidence regarding the actual practice at the various stores regarding on-the-clock or off-the-clock bag checks. Id. at 12-14.

         Shortly thereafter, Eddie Bauer filed a motion for reconsideration. ECF 36. The Court denied the motion and rejected Eddie Bauer's arguments that some class members did not share Heredia's injury because Eddie Bauer had presented the Court with “no evidence of any of these ‘on-the-clock' employees.” ECF 37 at 4, 7-8. The Court further noted that “[s]hould Eddie Bauer acquire such evidence of class members who were subject to bag checks before they clocked out, it could present their experiences to the Court in a motion to decertify the class.” Id. at 8.

         The record has significantly developed since then. First, Eddie Bauer's expert, Robert W. Crandall, conducted a “time and motion” study that included video observation of store operations for 114 full days, totaling over 1, 482 hours in 7 Eddie Bauer California stores (50% of the Eddie Bauer stores in California). Declaration of Robert W. Crandall Regarding “Time and Motion” Study (“Crandall Decl.”) ¶¶ 90; 58, Dkt. No. 51-3. Of the 620 exits captured, 137 exits captured all aspects of the exit inspection-waiting time, bag check, visual inspection, other time, and clocking out. Id. ¶¶ 94-100. Of those 137 fully-observed exits, 80.3% were on the clock and 19.7% were off the clock. Id. ¶¶ 95-96. Of the 620 exits captured by the Crandall Study, 273 exits captured some aspects of the exit inspection. Id. ¶¶ 101-108. Based on the 273 exits where some aspects of the exit inspection were observed in the study, 172 exits-or 63.0%-showed that the employees had no waiting time, no bag check, and no visual inspection because the employee left the store without carrying a bag or other item subject to inspection. Id. ¶ 106.

         Second, the parties agreed on a procedure for selecting a representative sample of class members. See ECF 41 § IV.A. The class members who were deposed include current or former Eddie Bauer employees who worked for the company during every year of the certified class period-2012, 2013, 2014, 2015, 2016, 2017, 2018, and 2019. Declaration of Michael Afar in Support of Defendant's Motion for Decertification (“Afar Decl.”) ¶ 8, ECF 60-2. Eddie Bauer's expert, Mr. Crandall, summarized the deponents' testimony regarding on-the-clock/off-the-clock inspections in a table reproduced below^[1]:

TABLE 2 Testimony Regarding Frequency Of Exit Inspections That Occurred On The Clock
Class Member	On The Clock	Off The Clock
Katie Anderson	100%	0%
Ashley Beck	S5%	15%
Christine Brown	25%	75%
Colleen Cash	10%	90%
Katie Cheetham	0%	100%
Teresa Kober (Ameluxen)	0%	100%
Elicia Maurer	S5%	15%
Walter Montti	7.2%	92. S%
Joyce O'Brien	0%	100%
Malta Price	0%	100%
Michelle Pringle	99%	1%
Valerie Raaueneau	98.7%	1.3%
Jean-Jacques Reibel	100%	0%
Sheryl Saporsantos	0%	100%

         Supplemental Declaration of Robert W. Crandall Regarding Class Member Depositions (“Crandall Supp. Decl.”) ¶ 113, Table 2, ECF 51-4. Upon analyzing the deposition testimony, Mr. Crandall concluded that the weighted total of exit inspections conducted on the clock is 54.2% of all shifts. Id. ¶ 113.

         Based on this new record, Eddie Bauer has challenged the certified class in two motions: (1) Motion for Summary Judgment Against the Certified Class and (2) Motion for Decertification. ECF 51; 60. Heredia opposes both motions and has filed her own motion seeking to modify the class definition. See ECF 54; 65; 71.

         II. EDDIE BAUER'S MOTION FOR DECERTIFICATION

         Eddie Bauer seeks to decertify the class because “the new evidence shows that there are no common questions or common answers” regarding off-the-clock security inspections at its stores. Decert. Mot. at 1. Eddie Bauer relies on its expert's “time and motion study, ” which shows that 80.3% of the observed exit inspections occur on the clock. Id. at 3-5. Eddie Bauer also relies on the outcome of the stipulated sample of class member depositions, which showed that 54.2% of the weighted total of exit inspections occurred on the clock. Id. at 5-8.

         Heredia provides no arguments as to why the class, as-certified, should be maintained. See generally Decert. Opp'n. Instead, Heredia proposes to modify and narrow the class period to end on December 31, 2016. Decert. Opp'n at 1. Heredia has also separately filed a motion to modify the class definition. Motion to Modify Class Definition (“Mot. to Modify”), ECF 71. Thus, Heredia has effectively conceded that based on the current record, the certified class cannot move forward to trial. The Court first decides whether the certified class should be decertified. The Court will then address Heredia's proposed class definition in Section IV below.

         A. Legal Standard

         “Even after a certification order is entered, the [Court] remains free to modify it in the light of subsequent developments in the litigation.” Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982); see also Fed. R. Civ. P. 23(c)(1)(C) (“An order that grants or denies class certification may be altered or amended before final judgment.”). “A district court may exercise its sound discretion to decertify a class.” Ser Lao v. H&M Hennes & Mauritz, L.P., No. 5:16-CV-00333-EJD, 2019 WL 7312623, at *2 (N.D. Cal. Dec. 30, 2019). “The standard used by the courts in reviewing a motion to decertify is the same as the standard when it considered Plaintiffs' certification motions.” Ries v. Ariz. Beverages USA LLC, No. 10-01139 RS, 2013 WL 1287416, at *3 (N.D. Cal. Mar. 28, 2013). Certification orders, however, are not altered “‘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, No. 12-CV-00632-JSC, 2016 WL 6070490, at *2 (N.D. Cal. Oct. 17, 2016)).

         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, Heredia 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.”

         B. Discussion

         The Court agrees with Eddie Bauer-and Heredia concedes-that the certified class cannot be maintained based on the current record, because the class members did not experience a uniform policy of off-the-clock exit inspections.

         1. No. Uniform Policy to Undergo Exit ...