GEORGE SCHULZ and PABLO CARDONA, individuals on behalf of themselves and all persons similarly situated, v. QUALXSERV, LLC; and WORLDWIDE TECHSERVICES, LLC
CASE NO. 09-CV-17-AJB (MDD) (consolidated with 09-CV-2081)
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA
April 26, 2012
Hon. Anthony J. Battaglia
[Doc. No. 77]
The Court heard oral argument on Plaintiffs’ motion to certify this employment class action on July 8, 2011. Having considered the briefs, the arguments of counsel, the record, and the governing law, the Court GRANTS Plaintiffs’ motion.1 The Court certifies a class of all individuals employed in California by Defendants QualxServ, LLC and Worldwide TechServices, LLC as a QualxServ Service Partner, Service Partner, or Part Time Field Service Representative who were paid by piece-rate compensation during the period from January 6, 2005 to present. The class claims are alleged in the Consolidated Complaint in the second through tenth causes of action which allege denial of overtime compensation, failure to pay wages for compensable meal and rest break periods, failure to pay minimum wage rates and time worked “off the clock,” failure to fully reimburse employees for necessary business expenses, failure to pay all final accrued wages at the time of termination, late payment of final accrued wages, failure to furnish accurate
Background
Defendants send field technicians to repair and service computers at businesses and private homes throughout California. Consol. Compl. ¶¶ 2, 24, 26-30. The representatives are two former technicians, George Schulz and Pablo Cardona. Id. ¶¶ 15-16.
According to the class allegations in the Consolidated Complaint, Defendants pay a flat rate (between $28 and $38) for each completed service call. Id. ¶ 3. The piece-rate compensated employees for the hours worked on assignment, travel time, and expenses such as gas and parking, but precluded reimbursement for out-of-pocket expenses, such as vehicles, cell phones, computers, internet service, and tools. Id. ¶ 3, 36. If the technician drives more than 35 miles to a customer, Defendants will reimburse for mileage, but at a rate below the “presumptively reasonable” rate. Pls.’ Mot. at 4. Each morning, the technician logs onto the Defendants’ computer system to review assignments and then call the customer to set up an appointment time. Id. The technician must pick up the necessary parts before noon. Id. at 4-5. At the end of the day, technicians must perform certain “postliminary” procedures.
These facts underlie the various state law claims that Plaintiffs seek to pursue on behalf of a class of similarly-situated technicians.2 First, Plaintiffs allege Defendants violated
Second, Plaintiffs allege a failure to pay minimum and overtime wages.
In related claims, Plaintiffs also allege Defendants failed to provide meal and rest break periods. Consol. Compl. ¶¶ 63 (third claim), 66 (fourth claim). These claims are based on California Labor Code
Fourth, Plaintiffs allege that Defendants failed to provide accurate, itemized wage statements pursuant to California Labor Code
As remedies for these claims, Plaintiffs seek a declaratory judgment, an injunction, damages, penalties, restitution, interest, and attorney‘s fees. Consol. Compl. at pp. 34-38.
Sixth and finally, Plaintiffs allege these labor law violations constitute unfair and unlawful business practices.
Discussion
“The class action is ‘an exception’ to the usual rule that litigation is conducted by and on behalf of the individual named parties only.” Wal-Mart v. Dukes, 131 S. Ct. 2541, 2550 (2011). California‘s clear public policy to enforce its labor laws for the benefit of workers encourages the use of the class action device. Sav-on Drug Stores, Inc. v. Super. Ct., 34 Cal. 4th 319, 340 (2004).
To obtain certification in federal court, a plaintiff bears the burden of proving that the class meets all four requirements of
“The amount of damages is invariably an individual question and does not defeat class action treatment.” Blackie v. Barrack, 524 F.2d 891, 905 (9th Cir. 1975); accord Stearns v. TicketMaster Corp., 655 F.3d 1013, 1026 (9th Cir. 2011); Yokoyama v. Midland Nat‘l Life Ins. Co., 594 F.3d 1087, 1089 (9th Cir. 2010).
Courts must engage in a “rigorous analysis” of each Rule 23 factor - even if that means the court must evaluate the merits of the plaintiff‘s case. Ellis, 657 F.3d at 981. “[T]he merits for the class members’ substantive claims are often highly relevant when determining whether to certify a class. More importantly, it is not correct to say a district court may consider the merits to the extent that they overlap with class certification issues; rather, a district court must consider the merits if they overlap with Rule 23(a) requirements.” Id. Of course, the district court does not go so far as to conduct a mini-trial to determine if the class “could actually prevail on the merits of their claims.” Id. at 983 n. 8; United Steel, Paper & Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv. Workers Int‘l Union, AFL-CIO v. ConocoPhillips Co., 593 F.3d 802, 808 (9th Cir. 2010) (“The court may not go so far . . . as to judge the validity of these claims.“) (citation omitted).
A. The Four Requirements of Rule 23(a)
1. Numerosity
The proposed “class is so numerous that joinder of all members is impracticable.”
2. Commonality
To satisfy the second element, Plaintiffs must show that “there are questions of law or fact common to the class.”
The Supreme Court‘s Wal-Mart decision clarified the focus of this inquiry. It is not enough to list several questions, such as whether the defendant violated the same provision of law. Wal-Mart, 131 S. Ct. at 2550-51. “Commonality requires the plaintiff to demonstrate that the class members ‘have suffered the same injury.‘” Id. at 2551 (citation omitted). “Their claims must depend upon a common contention . . . that is capable of classwide resolution - which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Id. “‘What matters to class certification is not the raising of
The Court finds that Plaintiffs have met this requirement because they challenge uniform policies and systemic practices that apply to this class of employees. Each claim is based on a specific statutory requirement. For example, Plaintiffs attack the written wage statements on their face because Defendants do not set out the hours worked or meal periods. Defendants identify a common defense to the rest break and meal period claims based on the nature of field work, where employees control their own breaks. Defs.’ Opp. Br. at 16-17, 19-20. Another uniform defense is whether Defendants pay a higher salary that necessarily encompasses expenses. Gattuso v. Harte Hanks Shoppers, Inc., 42 Cal. 4th 554 (2007); Defs.’ Opp. Br. 25-27. In sum, whether the Defendants’ policies and practices comply with California‘s specific requirements is the type of question that can be answered on a classwide basis. Wal-Mart, 131 S. Ct. at 2551; Dilts v. Penske Logistics, LLC, 267 F.R.D. 625, 632-33 (S.D. Cal. 2010).
3. Typicality
This factor examines whether the claim of the representatives are “typical” of the claims of the absent class members.
Defendants raise only one objection on this issue. They contend that neither Schulz nor Cardona identified a specific expense that should have been reimbursed or that was not covered by their piece-work wage. Defs.’ Opp. Br. 23. Defendants insist that each employee must show their actual expenses were greater than the sums paid. Id. at 24.
The Court rejects this argument. “Typicality refers to the nature of the claim or defense of
4. Adequate Representation
The fourth requirement of Rule 23(a) is that the representatives, Schulz and Cardona, and the attorneys they hired, “fairly and adequately protect the interests of the class.”
The two named Plaintiffs state they do not have any conflicts of interest with the potential class members, therefore, their mutual interests are aligned. Hanlon, 150 F.3d at 1020-21. They hired competent counsel to “prosecute the action vigorously on behalf of the class.” Id. at 1020. The Court concludes that Plaintiffs have met this requirement.
In opposition, Defendants contend that a conflict exists between the technicians who deducted work expenses on their income tax returns, and those who did not do so. The Court finds that this argument lacks merit. How an individual employee dealt with his expenses in terms of his own financial and tax planning is irrelevant to the question of whether the employer should have reimbursed the technicians in the first place. All of the proposed class members share the same interest in protecting their rights pursuant to California Labor Code
B. Rule 23(b)(3) Criteria for Damages
A
1. Common Questions Predominate
First, the common questions must “predominate” over any individual questions. While this requirement is similar to the Rule 23(a)(2) commonality requirement, the standard is much higher at this stage of the analysis. Wal-Mart, 131 S. Ct. at 2556-57; Amchem Prods. Inc. v. Windsor, 521 U.S. 591, 624-25 (1997); Hanlon, 150 F.3d at 1022. Rule 23(a)(2) can be satisfied by even a single common question, but 23(b)(3) requires convincing proof that the common questions “predominate.” Amchem, 521 U.S. at 623-24; Hanlon, 150 F.3d at 1022. “When common questions present a significant aspect of the case and they can be resolved for all members of the class in a single adjudication, there is clear justification for handling the dispute on a representative rather than on an individual basis.” Hanlon, 150 F.3d at 1022.
a. Reimbursement for Expenses
Plaintiffs claim they are required to use their own cars, cell phones, home computers, internet service, and tools in order to fulfill their job duties, but that Defendants’ piece-rate payment did not sufficiently reimburse them for these necessary expenses. Plaintiffs characterize the predominate issue as whether Defendants’ uniform business practice of paying a lump sum per incident complies with Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. 4th 554 (2007).
In Gattuso, the California Supreme Court held an employer must fully reimburse sales representatives who actually and necessarily incur automobile expenses in performing their employment tasks. Id. at 567-68. The employer could meet that duty in different ways, including
Defendants argue the reimbursement claim involves an individualized inquiry into each technician‘s expenses, for example, the distance driven between service calls and the particular plan selected for internet and cell phone services. Defendants argue that they pay a higher wage to cover the necessary expenses and thereby comply with Gattuso‘s approval of paying increased compensation. Plaintiffs dispute this. Pls.’ Reply Br. at 3-4.
The Court is not persuaded by Defendants’ objections because their arguments relate to the amount of damages incurred by an individual technician. Stearns, 655 F.3d at 1026; Yokoyama, 594 F.3d at 1089; Blackie, 524 F.2d at 905. The common question of whether Defendants’ uniform reimbursement policy, as reflected in its standard wage statements, complies with Gattuso can be answered on a classwide basis. Dilts, 267 F.R.D. at 639-40 (certifying class of off-site truck drivers with respect to reimbursement for expenses, including lost tools).
Defendants argue that individual factual issues dominate the class claim for overtime wages because it requires a determination of the “hours worked.” That phrase is defined in Wage Order 7-2001 as “the time during which an employee is subject to the control of an employer.” Defs.’ Opp. Br. at 9. In Morillion v. Royal Packing Co., 22 Cal. 4th 575, 586-88 (2000), the California Supreme Court held that the level of the employer‘s control determines whether time is compensable. Though an employee who must be shuttled to the work site in a company bus meets the control test, an employee who drives her own car from home to work may not be compensated. Id. Defendants argue they simply require the technicians to pick up replacement parts at the shipping facility before noon, but employees are free to stop on the way, for example, to eat breakfast or drop a child at school.
Defendants also argue that service technicians schedule their own days according to personal preferences, and many do not work enough hours to qualify for overtime; therefore, the Court will need to examine each individual‘s work day and week. Further, the amount of time to select jobs and schedule appointments is de minimis, and therefore, is not compensable. See Lindow v. United States, 738 F.2d 1057, 1062 (9th Cir. 1984) (interpreting federal labor statute). Also, Defendants defend their practice on the ground that they did not know the technicians were performing off the clock work since they work in the field. See See Forrester v. Roth‘s I.G.A. Foodliner, Inc., 646 F.2d 413, 414 (9th Cir. 1981) (“knowledge of the employer” is an element of federal claim).
The Court rejects these arguments because Plaintiffs challenge the uniform policy not to compensate service technicians for the specified activities. Defendants require the technicians to perform these daily tasks yet they do not record the time or pay the technician‘s for the time it takes to review calls on the computer; decline or accept calls; schedule appointments; drive to the facility to pick up required parts; close calls at the end of the day; or re-package parts. The application of the “control rule” is a common question that can be answered on a classwide basis. In addition, Defendants do use a system to record the time devoted to these daily duties by employees in other categories as well as by technicians who perform an early service call before
Differences in the amount of an individual‘s damages caused by the allegedly unlawful policy does not defeat class certification. Stearns, 655 F.3d at 1026; Yokoyama, 594 F.3d at 1089; Blackie, 524 F.2d at 905.
c. Meal and Rest Breaks
Defendants argue there is no evidence that it “deprived” technicians of meal or rest breaks as a general policy and, therefore, highly individual questions predominate over any common issue. Brown v. Fed. Express Corp., 249 F.R.D. 580, 585-87 (C.D. Cal. 2008).
The California Supreme Court just resolved the split in the appellate courts concerning the employer‘s obligation to “provide” meal and rest breaks. Brinker Rest. Corp. v. Super. Ct., No. S166350, (Cal. Sp. Ct. Apr. 12, 2012) (viewed on http:// www.courtinfo.ca.gov /opinions /documents/ S166350.PDF); see Brinkley v. Public Storage, Inc., 87 Cal. Rptr. 3d 674 (2009). The Court held that “an employer‘s obligation is to relieve its employees of all duty with the employee thereafter at liberty to use the meal period for whatever purpose he or she desires, but the employer need not ensure that no work is done.” Brinker, supra at 2, 27-30, 35-37 & n.19 (employee must be relieved of all duties for entire 30-minute meal period).
The Court finds that there are sufficient common questions under this standard because Plaintiffs’ challenge the Defendants’ common corporate policy of failing to relieve the technicians of all work during the rest and meal breaks. Adoma, 270 F.R.D. at 552-53 (noting unsettled California law but finding class issues predominate on meal periods); Dilts, 267 F.R.D. at 634-39 (certifying class of off-site truck drivers who worked through meal and rest breaks based on
Moreover, Plaintiff‘s meal break claim is also based on Defendants’ alleged failure to comply with Wage Order No. 4-2001, which requires the employer to “record” unpaid meal periods. If an employer fails to provide the meal break as required, the period shall be “counted as time worked,” which entitles the employee to one hour of pay.
d. Accurate, Itemized Wage Statement
Plaintiffs contend that Defendants’ standard wage statement violates California law because it fails to report all hours worked by employees, specifically, the preliminary daily activities, the time waiting to collect parts, and the tasks at the end of each day. This claim is related to other alleged substantive violations in that Plaintiffs contend the employees cannot calculate the amount apportioned for expenses and overtime. Instead, the employees must reconstruct the time worked and perform the arithmetic to determine if they were fully compensated. This claim is amenable to class treatment, even if there will be individualized proof of actual damages. McKenzie v. Fed. Express Corp., 275 F.R.D. 290, 296, 299 (C.D. Cal. 2011) (certifying class attacking “identical” wage statement and widespread policy); Adoma, 270 F.R.D. at 553 (certifying a class claim of failing to itemize wage statements because common issues
e. Timely Payment Upon Termination
Plaintiffs allege that Defendants systematically issue the final paycheck at the next, regularly scheduled pay period instead of complying with the statute that requires employers to pay an employee within 72 hours of being terminated from the job.
Defendants contend they will rely on the defense that allows an employer to delay final payment when they have a “good faith dispute that any wages are due.”
The Court agrees with Plaintiffs. Whether or not Defendants are liable depends upon their standard procedure regarding the final check, even if the amount the injured employees recover is not identical. Dilts, 267 F.R.D. at 640 (certifying penalty claim for failure to timely pay wages upon termination); Ortega, 258 F.R.D. at 365-66 (certifying class, without objection, on failure to timely pay all wages at time of termination).
f. Unfair Competition
Plaintiffs allege that Defendants’ uniform payroll practices constitute unfair competition. Defendants challenge this claim based upon their assertion that the other claims would not be certified and thus it was purely derivative. Defs.’ Opp. Br. at 34. Because the Court has certified other claims, however, this argument fails. Dilts, 267 F.R.D. at 640 (certifying claims for civil penalties and unfair competition); Ortega, 258 F.R.D. at 374. It is appropriate to certify a class of employees who challenge their employer‘s standard conduct. See Corbett v. Super. Ct., 101 Cal. App. 4th 649, 672 (2002); Mass. Mut. Life Ins. Co. v. Super. Ct., 97 Cal. App. 4th 1282, 1286-88 (2002).
2. Class Action is Superior to Other Methods
The second requirement for (b)(3) is that the class procedure is “superior” to other methods, such as joinder, “for the fair and efficient adjudication of the controversy.”
The Court finds no management difficulties that would preclude this action from being maintained as a class action. The potential management claims pertain to the calculation of each individual‘s damages, and thus do not prevent certification on the common questions concerning Defendants’ liability. Many employees may be reluctant to file an individual lawsuit for fear of retaliation. Campbell v. PricewaterhouseCoopers, LLP, 253 F.R.D. 586, 605 (E.D. Cal. 2008). Moreover, damages per employee may not be large, thus, individual suits would not be cost effective, and instead would burden the courts with duplicative cases. Kamar v. Radio Shack Corp., 254 F.R.D. 387, 406 (C.D. Cal. 2008) (uniform policies and procedures can be determined from records possessed by the employer); McKenzie, 275 F.R.D. at 301-02 (finding employee class action with civil penalties superior to numerous individual actions with small awards).
Conclusion
For the reasons stated above, the Court hereby GRANTS Plaintiffs’ motion for class certification.5 [Doc. No. 77] The Court certifies a class of all individuals employed in California by Defendants QualxServ, LLC and Worldwide TechServices, LLC as a QualxServ Service Partner, Service Partner, or Part Time Field Service Representative who were paid by piece-rate compensation during the period from January 6, 2005 to present. The class claims are the second through tenth causes of action alleged in the Consolidated Complaint. The Court appoints the law firms of Blumenthal, Nordrehaug & Bhowmik in La Jolla and Krutcik & Georggin in Mission Viejo as class counsel.
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Within seven days of the filing of this Order, counsel shall contact Magistrate Judge Mitchell Dembin‘s chambers to schedule a status conference. After that conference, the Magistrate Judge shall issue a scheduling order with all remaining pretrial dates so that this case can proceed in an orderly and timely fashion.
IT IS SO ORDERED.
DATED: April 26, 2012
Hon. Anthony J. Battaglia
U.S. District Judge