Posts belonging to Category Certification Rulings

Over 4,000 California-based truckers will have their allegations of meal and rest break violations decided as a class, following the ruling by U.S. District Judge Jeffrey White granting the truckers’ class certification motion. See Bickley v. Schneider National Carriers, Inc., No. 08-5806 (N.D. Cal. Sept. 7, 2012) (Order on Motion for Class Certification) (available here).

This ruling is both procedurally and substantively significant. Procedurally, Bickley adds to the growing body of authority demonstrating that the rigorous analysis mandated by the U.S. Supreme Court’s Wal-Mart v. Dukes decision did not effectively end class actions, as many had predicted. Substantively, the Bickley decision applies the California Supreme Court’s Brinker v. Super. Ct., issued just this past spring.

In finding that common questions predominate as to the plaintiffs’ meal break claims, Judge White directly relied on Brinker’s holding that meal breaks must be 30 minutes long and that even an unwritten, informal policy of the employer that puts pressure on employees to forgo their breaks can be challenged using the class action mechanism. The defendant’s vague meal break policy, which stated that meal and rest breaks should be “not be less than ten (10) minutes nor more than two (2) hours in length”, proved decisive on the often-pivotal commonality issue. Order at 10. Judge White reasoned that, “[i]n light of Schneider’s failure to instruct its drivers regarding the timing of rest breaks and meal periods as required by California law and Schneider’s failure to keep records of its employees’ meal periods, the Court finds that Plaintiffs have sufficiently demonstrated common questions which are applicable class-wide.” Id.

The court also found that questions related to compensation for rest breaks and miles driven were common to the class. For the subclasses, the court concluded there were common questions over accrued vacation pay, itemized wage statements and rest and meal breaks. The defendant has petitioned for leave to file a motion for reconsideration of the certification order.

A federal judge has certified a class of current and former Costco employees who allege that the wholesale giant failed to promote women to management positions at a rate commensurate with male employees. Ellis v. Costco, No. 04-3341 (N.D. Cal. Sept. 25, 2012) (order certifying class) (available here). In a sprawling, meticulously detailed 86-page decision, Judge Edward M. Chen extensively distinguishes the Title VII claims against Costco from those deemed not suitable for class treatment in the U.S. Supreme Court’s Wal-Mart v. Dukes (131 S.Ct. 2541 (2011)). As such, Ellis is expected to provide widely applicable guidance to trial courts as they interpret and apply Dukes.

Ellis has traveled a long procedural path; its 2007 certification ruling by then-presiding Judge Marilyn Hall Patel was vacated by the Ninth Circuit, which directed the trial court to reprise its certification analysis in light of Dukes. See Ellis v. Costco Wholesale Corp., 657 F.3d 970 (9th Cir. 2011). Though also a Title VII discrimination case, Dukes is distinguishable from Ellis, most conspicuously in class size. While the Dukes plaintiffs sought to certify a class of some 1.5 million female Wal-Mart employees, the Ellis class is comprised of approximately 700 current and former Costco employees. Judge Chen reasoned, “[a]lthough class size has no per se bearing on commonality, when the claims focus in part on the exercise of managerial discretion, it is reasonable to suspect that the larger the class size, the less plausible it is that a class will be able to demonstrate a common mode of exercising discretion.” Order at 24. 

Indeed, Judge Chen relied on and excerpted extensively from the Ninth Circuit’s decision, in particular its description of Costco’s store-level management structure, concluding that “[d]espite the lack of written guidelines” governing Costco’s promotion procedures, “as observed by the Ninth Circuit, Costco nonetheless imposes uniform practices and policies with regard to its promotion system.” Id. at 7. 

However, it is the “specific employment practices” identified by the Ellis plaintiffs which are cited as the “most important” distinguishing factor in the opinion: “Unlike in Dukes, which the Supreme Court concluded merely identified the delegation of discretion (i.e., the absence of a policy), here Plaintiffs identify specific practices and a common mode of guided discretion directed from the top levels of the company.” Id. at 25.

Because the Ellis opinion closely tracks the Ninth Circuit’s remand order (and in so doing distinguishes Dukes), the plaintiffs’ discovery strategy and presentation of evidence of predominant common questions are likely to be used as a template for certification motions filed in other employment class actions. Specifically, the Ellis order notes that Costco employs the “same recruitment and selection process” company-wide, and “[t]op management’s involvement in the promotion process is also consistent, and pervasive.” Id. at 28, 29.

Ellis is likely to be a key ruling in the post-Dukes era, and it provides a far more optimistic view of the possibilities for class treatment than many had predicted when Dukes was issued.

More than 11,000 Verizon employees are now part of a certified class alleging that Verizon failed to comply with specific requirements set forth in California’s Pay Stub Law (Cal. Lab. Code § 226). The case is Banda v. Verizon California Inc., No. BC434587 (L.A. Super. Ct. Sept. 4, 2012) (order granting motion for class certification) (available here).

Superior Court Judge Charles F. Palmer rejected Verizon’s argument — commonly made by defendants facing class actions alleging wage statement violations — that the “injury” required by Labor Code section 226(e) rendered individual questions of injury predominant. Judge Palmer held that because “injury” as used in Section 226(e) is coextensive with the deprivation of a legal right, and the plaintiffs alleged that they had been uniformly deprived of the right to statutorily compliant pay stubs, individualized inquiries would not be substantially implicated. Additionally, Judge Palmer interpreted the statute as mandating that the nine pieces of information specifically required by Section 226(a)(1)-(9) be provided by the employer, thus rejecting Verizon’s contention that employees could find the missing information by doing simple math.

Section 226 requires that wage statements (commonly known as pay stubs) issued to California’s hourly workers show gross wages (Cal. Lab. Code § 226(a)(1)); total hours worked (§ 226(a)(2)); piece-rate units (§ 226(a)(3)); deductions (§ 226(a)(4)); net wages (§ 226(a)(5)); pay period beginning and ending dates (§ 226(a)(6)); employee’s name (§ 226(a)(7)); employer’s legal name (§ 226(a)(8)); and all hourly rates (§ 226(a)(9)). Filed in April of 2010, Banda alleged that the Verizon pay stubs issued to him and fellow employees failed to show the beginning dates of pay periods, hourly rates, and the number of hours worked at each hourly rate. The now-certified class is comprised of Verizon hourly employees who worked for the company in California between April 2009 and May 2011.

Because of the systematic nature of wage statements, few workplace violations are better suited to class treatment. The “injury” argument rejected in Banda has historically been the chief impediment to certification. To clarify that the Legislature’s intention as to the Section 226(e) “injury” language is consistent with Judge Palmer’s reading of it, the Legislature’s current term has been debating amendments to Section 226 that would effectively foreclose other defendants from relying on this argument in the future.

In a decision likely to be influential beyond both its jurisdictional and factual settings, the Second Circuit Court of Appeals has held that securities fraud plaintiffs need not prove that fraud-on-the-market applies in order to satisfy the predominance requirement for certification of a settlement class, the Second Circuit Court of Appeals held. In re Am. Int’l Grp., Inc. Secs. Litig., No. 10–4401 (2d Cir. Aug. 13, 2012) (available here). The influential Second Circuit also underscored the pragmatic doctrine whereby settling class action parties, despite being required to establish most elements of certification to the same degree of proof as in a contested certification motion, are not required to establish the manageability of the settled action. See Slip op. at 21 (“with a settlement class, the manageability concerns posed by numerous individual questions of reliance disappear”).

The unanimous opinion, written by Circuit Judge Gerard R. Lynch, explained that “a Section 10(b) settlement class’s failure to satisfy the fraud-on-the-market presumption does not necessarily preclude a finding of predominance,” and “the fact that the plaintiff class is unable to invoke the presumption, without more, is no obstacle to certification.” Id. at 23-24. Judge Lynch was joined by Circuit Judges Ralph K. Winter and Robert A. Katzman. The three-judge panel members were appointed, respectively, by presidents Obama, Reagan, and Clinton.

Though decided in the context of securities litigation, the American Int’l decision will likely function as a potent counterpoint in any circumstance where a class action settlement objector attempts to invoke the irrelevant “manageability” criterion to urge courts to deny motions for settlement approval.