Medlock v. Taco Bell Corp., et al.
Filing
267
MEMORANDUM DECISION RE: Plaintiffs' Motion to Certify Class 185 and Defendants' Motion to Exclude Declaration and Report of James Lackritz 221 , signed by District Judge Oliver W. Wanger on 9/26/2011. (Kusamura, W)
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UNITED STATES DISTRICT COURT
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FOR THE EASTERN DISTRICT OF CALIFORNIA
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IN RE TACO BELL WAGE AND HOUR
1:07-cv-01314-OWW-DLB
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ACTIONS
MEMORANDUM DECISION RE
PLAINTIFFS‟ MOTION FOR CLASS
CERTIFICATION AND DEFENDANTS‟
MOTION TO EXCLUDE DECLARATION
AND REPORT OF JAMES LACKRITZ
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(DOCS. 185, 221).
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I.
INTRODUCTION
Plaintiffs move to certify a class action under Fed. R. Civ.
P. 23(a) and 23(b)(3). (Pls. Mot. Class Cert., ECF No. 185.) Taco
Bell Corp. and Taco Bell of America, Inc. (“Taco Bell”) filed an
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opposition (Defs. Opp‟n Class Cert., ECF No. 220), to which
Plaintiffs replied (Pls. Reply Class Cert., ECF No. 235). Both
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parties filed supplemental briefs regarding the subclass
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definitions (Pls. Response Hearing, ECF No. 252; Defs. Prop.
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Defins., ECF No. 254), and Plaintiffs filed an objection and
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response to Taco Bell‟s supplemental brief (Pls. Obj‟n Prop.
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Defins., ECF No. 255).
Taco Bell moves to exclude the declaration and report of
Plaintiffs‟ expert Dr. James Lackritz. (Defs. Mot. Lackritz, ECF
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No. 221.) Plaintiffs filed an opposition (Pls. Opp‟n Lackritz,
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ECF No. 237), to which Taco Bell replied (Defs. Reply Exclude,
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ECF No. 244). Taco Bell also filed an objection to Plaintiffs‟
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evidence and expert Dr. Philip C. Gorman (Defs. Obj‟n Gorman, ECF
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No. 220-6), to which Plaintiffs responded (Pls. Opp‟n Gorman, ECF
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No. 235-2). Plaintiffs object to Taco Bell‟s evidence and expert
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Michael Buchanan. (Pls. Obj‟n Buchanan, ECF No. 235-1.) Taco Bell
filed an opposition (Defs. Opp‟n Buchanan, ECF No. 239), to which
Plaintiffs replied (Pls. Reply Buchanan, ECF No. 241).
The motions were heard June 6 and 7, 2011.
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II.
FACTUAL BACKGROUND
This case is a consolidation of six related putative wage
and hour class actions against Taco Bell: (1) Medlock v. Taco
Bell Corp., Case No. 1:07-cv-01314; (2) Hardiman v. Taco Bell
Corp., Case No. 1:08-cv-01081; (3) Leyva v. Taco Bell Corp., et
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al., Case No. 1:09-cv-00200; (4) Naranjo v. Yum! Brands, Inc.,
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Case No. 1:09-cv-00246; (5) Widjaja v. Yum Brands, Inc., Case No.
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1:09-cv-01074; and (6) Nave v. Taco Bell Corp., Case No. 1:10-cv-
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02222.
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On June 29, 2009, Plaintiffs filed a Consolidated Complaint
alleging: (1) unpaid overtime; (2) unpaid minimum wages; (3)
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unpaid wages; (4) missed meal periods; (5) missed rest periods;
(6) non-compliant wage statements; (7) unreimbursed business
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expenses; (8) vested accrued vacation wages; (9) non-payment of
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wages upon termination; and (10) non-payment of wages during
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employment. (Compl., ECF No. 118-1.) The Consolidated Complaint
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also asserts a claim for violation of California Business &
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Professions Code 17200, et seq. and penalties pursuant to
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California Labor Code sections 2698, et seq. Id. Plaintiffs were
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granted leave to file a First Amended Consolidated Complaint
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(Order Am. Compl., ECF No. 229), and they did so on May 17, 2011
(Am. Compl., ECF No. 230).
On December 30, 2010, Plaintiffs filed a motion to certify a
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class action and eight proposed subclasses: (1) late meal break
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subclass; (2) underpaid automatic adjustment subclass; (3) on-
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duty meal period agreement subclass; (4) unpaid on-duty meal
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period subclass; (5) rest break subclass; (6) final pay subclass;
(7) vested accrued vacation wage subclass; and (8) non-management
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employee vacation subclass. (Pls. Mot. Class Cert., ECF No. 185.)
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On August 30, 2011, Plaintiffs’ meal and rest break claims
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(subclasses 1 to 5) were stayed for the California Supreme
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Court’s pending resolutions of Brinker Restaurant Corp. v.
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Superior Court, 165 Cal. App. 4th 25 (2008), review granted, 85
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Cal. Rptr. 3d 688 (2008), and Brinkley v. Public Storage, Inc.,
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167 Cal. App. 4th 1278 (2008), review granted, 87 Cal. Rptr. 3d
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674 (2009). (Order Stay, ECF No. 265.) Plaintiffs now seek
certification of the final pay subclass and vacation subclasses.
III. LEGAL STANDARD
A class action “may only be certified if the trial court is
satisfied, after a rigorous analysis, that the prerequisites of
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Rule 23(a) have been satisfied.” Gen. Tel. Co. of Sw. v. Falcon,
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457 U.S. 147, 161, 102 S.Ct. 2364 (1982). To satisfy Rule 23(a):
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(1) the class must be so numerous that joinder of all members is
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impracticable; (2) there must be questions of law or fact common
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to the class; (3) the claims of the class representatives must be
typical of the claims of the class; and (4) the class
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representatives must fairly and adequately protect the interests
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of the class. Fed. R. Civ. P. 23(a).
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In addition to satisfying Rule 23(a), a proposed class must
also fit within one of three categories in Rule 23(b). Fed. R.
Civ. P. 23(b). Here, Plaintiffs move to certify the subclasses
under Rule 23(b)(3). Class certification under Rule 23(b)(3) is
appropriate if:
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the court finds 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. The matters pertinent to these
findings include:
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(A) the class members' interests in individually
controlling the prosecution or defense of separate actions;
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(B) the extent and nature of any litigation concerning
the controversy already begun by or against class members;
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(C) the desirability or undesirability of concentrating
the litigation of the claims in the particular forum; and
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(D) the likely difficulties in managing a class action.
Fed. R. Civ. P. 23(b)(3).
District courts have broad discretion to determine whether
to certify a class, and may revisit certification throughout the
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proceeding. Armstrong v. Davis, 275 F.3d 849, 872 n.28 (9th Cir.
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2001). The party seeking class certification has the burden of
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demonstrating that all the requirements of Rule 23(a) are met and
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that the class is maintainable under Rule 23(b). Narouz v.
Charter Commc‟ns, LLC, 591 F.3d 1261, 1266 (9th Cir. 2010).
In deciding class certification, the primary question is not
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whether plaintiffs have stated a cause of action that will
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prevail on the merits, but whether the party seeking
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certification has met the requirements of Rule 23. United Steel,
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Paper & Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv.
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Workers Int‟l Union, AFL-CIO v. ConocoPhillips Co., 593 F.3d 802,
808 (9th Cir. 2010). However, “Rule 23 does not set forth a mere
pleading standard. A party seeking class certification must
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affirmatively demonstrate his compliance with the Rule -- that
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is, he must be prepared to prove that there are in fact
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sufficiently numerous parties, common questions of law or fact,
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etc.” Wal-mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551
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(2011). “[S]ometimes it may be necessary for the court to probe
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behind the pleadings before coming to rest on the certification
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question.” Id. (quoting Falcon, 457 U.S. at 160).
“[C]ertification is proper only if "the trial court is satisfied,
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after a rigorous analysis, that the prerequisites of Rule 23(a)
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have been satisfied.” Wal-mart, 131 S. Ct. at 2551 (quoting
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Falcon, 457 U.S. at 161).
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IV.
ANALYSIS
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A.
Final Pay Subclass
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The gravamen of Plaintiffs‟ complaint is that “[a]n analysis
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of Defendants‟ wage records shows that Defendants did not have a
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practice of paying timely wages to employees upon discharge.”
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(Pls. Mot. Class Cert. 19, ECF No. 185-1.) Plaintiffs move to
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certify the following final pay subclass:
All persons who were terminated involuntarily as a nonexempt, hourly-paid employee at a corporate-owned Taco Bell
restaurant in California from September 7, 2004 until the
resolution of this lawsuit who were not timely tendered
their wages upon involuntary termination of employment.
(Pls. Mot. Class Cert. 25 n.2, ECF. 185-1.)
Taco Bell attacks Plaintiffs‟ motion to certify the final
pay subclass on the grounds that: (1) individual issues
predominate; (2) Plaintiffs lack evidence to support their final
pay claim; and (3) the final pay subclass lacks a typical and
adequate representative.
1.
Rule 23(a) Requirements
a)
Numerosity
Rule 23(a)(1) requires that “the class is so numerous that
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joinder of all members is impracticable.” Fed. R. Civ. P.
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23(a)(1). Numerosity demands “examination of the specific facts
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of each case and imposes no absolute limitations.” Gen. Tel. Co.
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of Nw., Inc. v. EEOC, 446 U.S. 318, 330, 100 S. Ct. 1698, 64
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L.Ed.2d 319 (1980). In determining numerosity, a court should
consider not only class size, but also geographic diversity of
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the class, ability of class members to file suit separately, and
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the nature of the underlying action and relief sought. Nat‟l
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Ass‟n of Radiation Survivors v. Walters, 111 F.R.D. 595, 599
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(N.D. Cal. 1986).
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Plaintiffs argue that their final pay subclass is
sufficiently numerous because Dr. Lackritz‟s analysis of 1,684
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former employees‟ payroll records shows that 635 employees, or
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approximately 38%, received their final paychecks more than three
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days after their termination date. Dr. Lackritz‟s analysis,
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however, is overbroad, and is not limited to employees (1) who
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were involuntarily terminated, as required for inclusion in
Plaintiffs‟ putative subclass; and (2) who were present at their
place of discharge to receive their final paycheck, as required
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by the California Labor Code. See Cal. Labor Code § 208 (“Every
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employee who is discharged shall be paid at the place of
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discharge, and every employee who quits shall be paid at the
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office or agency of the employer in the county where the employee
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has been performing labor.”). Plaintiffs cannot extrapolate the
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number of putative final pay subclass members from Dr. Lackritz‟s
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over-inclusive analysis, nor show that joinder would be
impracticable. Taco Bell, however, does not dispute numerosity.
b)
Commonality
Rule 23(a)(2) requires that “there are questions of law or
fact common to the class.” Rule 23(a)(2) has been construed
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permissively; all questions of law and fact do not need to be
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common. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir.
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1998). “However, it is insufficient to merely allege any common
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question.” Ellis v. Costco, 2011 U.S. App. LEXIS 19060, at *22
(9th Cir. Sep. 16, 2011). Commonality requires a plaintiff to
demonstrate that class members “have suffered the same injury,”
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but this does not merely mean that they have all suffered a
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violation of the same law. Walmart, 131 S.Ct. at 2551 (quoting
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Falcon, 457 U.S. at 157). Rather, class members‟ claims “must
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depend upon a common contention” that is “of such a nature that
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it 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.” Walmart, 131 S.Ct. at 2551.
What matters to class certification . . . is not the raising
of common „questions‟ -- even in droves -- but, rather the
capacity of a classwide proceeding to generate common
answers apt to drive the resolution of the litigation.
Dissimilarities within the proposed class are what have the
potential to impede the generation of common answers.
Id. at 2551 n.6.
Plaintiffs assert that the common question tying the final
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pay subclass together is the question whether Taco Bell failed to
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tender final paychecks to involuntarily terminated employees
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immediately upon discharge.
(1)
Individual Inquiries
Taco Bell contends that Plaintiffs‟ final pay subclass is
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not suitable for class certification because individual issues
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predominate. Plaintiffs rejoin that liability and damages are
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readily ascertainable through analysis of Taco Bell‟s time and
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wage records, and that the “back-story to employees‟ not picking
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up their paychecks is irrelevant.” (Pls. Reply Class Cert. 15,
ECF No. 235.)
Under the California Labor Code, if an “employer discharges
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an employee, the wages earned and unpaid at the time of discharge
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are due and payable immediately.” Cal. Labor Code § 201(a). If an
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employee quits, wages are "due and payable not later than 72
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hours thereafter, unless the employee has given 72 hours previous
notice,” in which case wages are due “at the time of quitting.”
Cal. Labor Code § 202.
A discharged employee must be paid at the place of
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discharge, and an employee who quits must be paid at the office
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where they performed labor. Cal. Labor Code § 208. “The
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California final pay statutes (Labor Code §§ 201, 202) are
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triggered not only by termination of employment, but by the
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associate performing his or her duty to be at the store to
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receive tender of final pay or to give [the employer] specific
mailing instructions.” In re Wal-Mart Stores, Inc. Wage & Hour
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Litig., 2008 U.S. Dist. LEXIS 14756, at *24 (N.D. Cal. Feb. 13,
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2008). An employee who quits his or her employment may request
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that his or her final paycheck be mailed, but this option “must
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be expressly exercised by the employee.” Villafuerte v. Inter-Con
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Sec. Sys., Inc., 96 Cal. App. 4th Supp. 45, 51, 117 Cal. Rptr. 2d
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916 (2002); Cal. Labor Code § 202.
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The putative class is not, as Plaintiffs propose, simply
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composed of involuntarily terminated employees who were not
timely tendered their wages. It can only include involuntarily
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terminated employees who appeared at their place of discharge and
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did not receive their final paychecks. Taco Bell contends that
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this requirement necessitates individual inquiries as to when
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employees presented themselves for payment, which cannot be
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proven through Taco Bell‟s payroll documents.
After the hearing, Plaintiffs proposed limiting the final
pay subclass to employees whose time records indicate that they
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worked on their date of termination and were issued their final
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paychecks subsequent to that date. Plaintiffs proposed the
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following alternative subclass definition:
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All persons who worked as a non-exempt, hourly-paid employee
at a corporate-owned Taco Bell restaurant in California from
September 7, 2004 until the resolution of this lawsuit (i)
whose records maintained by Taco Bell show that they were
involuntarily terminated; (ii) whose time records show that
they worked on the day of termination; and (iii) whose final
paychecks were issued subsequent to the date of termination,
as reflected by Defendants‟ payroll records.
(Pls. Response Hearing 10, ECF No. 252.) Plaintiffs assert that
this revised definition eliminates any individual inquiries
because (1) Taco Bell maintains records of how and when employees
are terminated, including whether such termination was voluntary;
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(2) Taco Bell maintains time records; and (3) payroll records
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indicate the date paychecks, including final paychecks, are
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issued. Limiting the final pay subclass to employees whose
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payroll records indicate that they were involuntarily terminated
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and clocked in and out of work on their date of termination could
eliminate individual inquiries regarding whether an employee was
on Taco Bell‟s premises to receive their final pay.
The revised subclass definition, however, does not eliminate
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all potential individual inquiries. California Labor Code § 203
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provides a waiting time penalty only if an employer willfully
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fails to pay wages owed in accordance with Sections 201 and 202.
Cal. Labor Code § 203(a). “An employee who secretes or absents
himself or herself to avoid payment to him or her, or who refuses
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to receive the payment when fully tendered to him or her . . . is
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not entitled to any benefit under this section for the time
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during which he or she so avoids payment.” Id. “[A] good faith
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dispute that wages are due will preclude imposition of waiting
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time penalties under Section 203.” Alvarez v. Nordstrom, Inc.,
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2011 U.S. Dist. LEXIS 56646, at *13 (C.D. Cal. May 24, 2011)
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(quoting 8 C.C.R. § 13520). The willfulness inquiry poses serious
problems to Plaintiffs‟ final pay subclass. See id. Willfulness
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raises an inherently fact intensive inquiry focusing on state of
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mind and surrounding circumstances. If a final pay subclass is
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certified, mini-trials would be required for each class member to
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determine whether waiting time penalties should be imposed,
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including whether an employer acted willfully and whether there
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is a good faith dispute that wages are due. See id.
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(2)
Dr. Lackritz‟s Declaration and Report
Taco Bell further argues a merits issue that Plaintiffs lack
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any proof to support their final pay claims. Taco Bell asserts
that Plaintiffs‟ only evidence to support their final pay claims
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is Dr. Lackritz‟s faulty declaration and report, which Taco Bell
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moves to exclude under Rule 702.
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(a)
Legal Standard
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Under Federal Rule of Evidence 702, expert testimony is
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admissible if: "(1) the testimony is based upon sufficient facts
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or data, (2) the testimony is the product of reliable principles
and methods, and (3) the witness has applied the principles and
methods reliably to the facts of the case." Fed. R. Evid. 702. An
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expert may testify regarding scientific, technical or other
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specialized knowledge if it will assist the trier of fact to
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understand the evidence or to determine a fact in issue. Daubert
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v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589, 113 S.Ct. 2786
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(1993).
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The subject of an expert's testimony must be “scientific ...
knowledge.” The adjective “scientific” implies a grounding
in the methods and procedures of science. Similarly, the
word “knowledge” connotes more than subjective belief or
unsupported speculation. The term “applies to any body of
known facts or to any body of ideas inferred from such facts
or accepted as truths on good grounds. . . But, in order to
qualify as “scientific knowledge,” an inference or assertion
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must be derived by the scientific method. Proposed testimony
must be supported by appropriate validation-i.e., “good
grounds,” based on what is known. In short, the requirement
that an expert's testimony pertain to “scientific knowledge”
establishes a standard of evidentiary reliability.”
Id. at 589-590 (citations omitted).
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The Supreme Court recently suggested in dicta that Daubert
should be applied to expert testimony at the class certification
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stage. See Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2553-
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2554 (2011) (“The District Court concluded that Daubert did not
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apply to expert testimony at the certification stage of class-
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action proceedings. We doubt that is so ….” (citation omitted)).
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Supreme Court dicta is accorded “appropriate deference” and “may
be followed if sufficiently persuasive” but “ought not to control
the judgment in a subsequent suit.” United States v. Montero-
Camargo, 208 F.3d 1122, 1132 n.17 (9th Cir. 2000).
(b)
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Discussion
Taco Bell contends that Lackritz‟s opinions as to
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Plaintiffs‟ final pay claims are based on erroneous assumptions
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and include irrelevant data. Taco Bell identifies the following
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errors in Lackritz‟s report with respect to the final pay
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subclass:
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1. Lackritz calculated Defendants‟ final pay liability from
employee records showing employee termination dates, but
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admits that he did not determine whether the terminations
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were voluntary or involuntary. (Lackritz Dep. Tr. 155:21-
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156:4, ECF No. 220-3.) Plaintiffs‟ final pay claims are
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limited to persons who are terminated involuntarily.
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2. Lackritz admits that he based his final pay analysis from
records that include pay end dates from September 16,
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2003. (Lackritz Dep. Tr. 158:14-159:21, ECF No. 220-3.)
Plaintiffs‟ final pay claims extend back only to September
7, 2004.
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Dr. Lackritz‟s analysis of Plaintiffs‟ final pay claims
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includes data from voluntarily terminated employees and employees
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who terminated before the September 7, 2004 statute of
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limitations. He did not have any facts underlying the
terminations and could not have opined as to the probability of
termination of all the employees. If the basis for an expert‟s
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opinion is clearly unreliable, it may be disregarded. Munoz v.
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Orr, 200 F.3d 291, 301 (5th Cir. 2000); Smith v. Pac. Bell Tel.
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Co., 662 F. Supp. 2d 1199, 1226 (E.D. Cal. 2009). The data on
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which Lackritz bases his opinion includes employees who are not
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in the final pay subclass, even before the proposed narrowing of
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the definition of the final pay subclass. “Opinions derived from
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erroneous data are appropriately excluded.” Id. (citing Slaughter
v. Southern Talc Co., 919 F.2d 304 (5th Cir. 1990)); see also
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United States v. City of Miami, 115 F.3d 870, 873 (11th Cir.
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1997) (reversing judgment based on expert opinion “derived from
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erroneous and incomplete data”).
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Plaintiffs rejoin that Lackritz‟s errors are correctable, by
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Lackritz‟s supplemental declaration and report filed on May 27,
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2011, as part of Plaintiffs‟ reply in support of class
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certification address Taco Bell‟s criticisms. New evidence or
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analysis presented for the first time in a reply will not be
considered. Coleman v. Quaker Oats Co., 232 F.3d 1271, 1289 n.4
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(9th Cir. 2000) (“[I]ssues cannot be raised for the first time in
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a reply brief.”); Tovar v. US Postal Serv., 3 F.3d 1271, 1273 n.3
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(9th Cir. 1993) ("To the extent that the [reply] brief presents
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new information, it is improper. Therefore, [certain] portions of
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the brief are ordered stricken[.]"); Assoc. of Irritated
Residents v. C & R Vanderham Dairy, 435 F. Supp. 2d 1078, 1089
(E.D. Cal. 2006) ("It is inappropriate to consider arguments
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raised for the first time in a reply brief."); Docusign, Inc. v.
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Sertifi, Inc., 468 F. Supp. 2d 1305, 1307 (W.D. Wash. 2006)
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(striking new information and opinions in an expert's
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supplemental declaration submitted with a reply brief). Even if
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Lackritz‟s supplemental declaration was included, it does not
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differentiate between employees who were present on their date of
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termination, and would still be based on incomplete data.
Dr. Lackritz‟s report is not admissible for purposes of
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Plaintiffs‟ motion for class certification. Nor is it helpful to
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a trier of fact. Plaintiffs do not offer any proof to support
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their assertion that Taco Bell has a common pattern and practice
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of late-paying involuntarily terminated employees their final
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paychecks. If there is no evidence that the class was subject to
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the same practice or policy of tardy final paychecks, there is no
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question common to the class. See Ellis v. Costco, 2011 U.S. App.
LEXIS 19060, at *28 (9th Cir. Sep. 16, 2011).
c)
Typicality
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Rule 23(a)(3) requires that “the claims or defenses of the
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representative parties are typical of the claims or defenses of
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the class.” Typicality is satisfied “when each class member's
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claim arises from the same course of events, and each class
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member makes similar legal arguments to prove the defendant's
liability.” Armstrong, 275 F.3d at 868 (quoting Marisol v.
Guiliani, 126 F.3d 372, 376 (2nd Cir. 1997)). The test of
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typicality “is whether other members have the same or similar
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injury, whether the action is based on conduct which is not
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unique to the named plaintiffs, and whether other class members
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have been injured by the same course of conduct.” Hanon v.
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Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992) (quoting
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Schwartz v. Harp, 108 F.R.D. 279, 282 (C.D. Cal. 1985)). Under
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the rule's “permissive standards,” representative claims are
typical if they are “reasonably co-extensive with those of absent
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class members; they need not be substantially identical.” Hanlon
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v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998).
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Plaintiffs‟ putative class representative for the final pay
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subclass, Lisa Hardiman, declares:
My employment with Taco Bell ended on or about May 30, 2007.
I know this because I received a telephone call from a
fellow employee informing me that I had not picked up my
„final‟ paycheck. Prior to receiving this telephone call, it
was my understanding that I was on disability leave, and
that the last day that I worked was on or about April 17,
2007. When I called to inquire why I was receiving a
“final” paycheck, my supervisor informed me that I was being
fired. Although I was fired on or about May 30, 2007, I was
not provided with my final paycheck until June 11, 2007.
(Hardiman Decl. ¶¶ 11, 12, ECF No. 193.) Hardiman declares that
she was told to pick up her final paycheck on her termination
date, but does not assert whether and when she presented herself
12
to Taco Bell to pick up her final paycheck, as required by
13
California law. Hardiman is not a member of the final pay
14
subclass because she did not work on her termination date. The
15
final pay subclass does not have a typical representative. Moreno
16
v. Autozone, Inc., 2009 U.S. Dist. LEXIS 94842, at *5-11 (N.D.
17
Cal. Oct. 9, 2009) (single putative representative did not travel
18
19
to store to accept tender of final pay and could not represent
20
the class), affirmed by 2010 U.S. App. LEXIS 26768 (9th Cir. 2010)
21
(unpublished).
22
23
d)
Adequate Representation
Rule 23(a)(4) permits class certification only if “the
24
representative parties will fairly and adequately protect the
25
interest of the class.” Fed. R. Civ. P. 23(a)(4). “The proper
26
27
28
resolution of this issue requires that two questions be
addressed: (a) do the named plaintiffs and their counsel have any
17
1
conflicts of interest with other class members and (b) will the
2
named plaintiffs and their counsel prosecute the action
3
vigorously on behalf of the class?” In re Mego Fin. Corp. Sec.
4
Litig., 213 F.3d 454, 462 (9th Cir. 2000). Whether the class
5
6
7
representatives satisfy the adequacy requirement depends on “the
qualifications of counsel for the representatives, an absence of
8
antagonism, a sharing of interests between representatives and
9
absentees, and the unlikelihood that the suit is collusive.”
10
Walters v. Reno, 145 F.3d 1032, 1046 (9th Cir. 1998) (quoting
11
Crawford v. Honig, 37 F.3d 485, 487 (9th Cir. 1994)).
12
13
14
15
Taco Bell attacks the adequacy of Plaintiffs‟ interim lead
counsel, Initiative Law Group, to serve as class counsel. Taco
Bell argues that Initiative Law Group: (1) submitted inaccurate
16
and unreliable evidence in support of Plaintiffs‟ motion for
17
class certification, including witness declarations that
18
contradict or were unsupported by deposition testimony; (2)
19
identified four named Plaintiffs to represent the vacation pay
20
subclass who do not have valid vacation pay claims; and (3)
21
submitted an unreliable and inadmissible expert report from
22
23
24
Lackritz that is riddled with errors, misstatements and
inaccuracies. Taco Bell cites an unpublished Superior Court case,
25
Gerard v. Orange Coast Memorial Medical Center, where the court
26
held that Initiative Law Group could not “adequately represent
27
the class” because there was doubt whether the court would be
28
18
1
“able to rely on the accuracy of evidentiary submissions . . . by
2
counsel.” Gerard v. Orange Coast Mem‟l Med. Ctr., No. 30-2008-
3
00096591, slip op. at *1-2 (Orange Cnty. Sup. Ct. Sept. 20,
4
2010).
5
6
7
Taco Bell‟s examples of Initiative Law Group‟s carelessness
raise serious questions regarding their ability to adequately
8
protect the interests of the Plaintiff class and subclasses, but
9
might not disqualify Initiative Legal Group as an adequate
10
representative. Taco Bell does not provide any evidence of any
11
conflicts of interest or that Initiative Law Group will not
12
13
14
15
prosecute the action vigorously on behalf of the class. In
addition, Initiative Legal Group has ample experience litigating
class actions and wage and hour lawsuits. There are also other
16
Plaintiffs‟ counsel in this case who can monitor their legal
17
representation and petition the court if any conduct occurs that
18
is inimical to class interests. If a class or any subclasses are
19
ever certified, the court invites other counsel to petition to
20
serve as co-lead class counsel.
21
As discussed above, the putative final pay subclass does not
22
23
24
have a typical class representative. Because the subclass
representative, Hardiman, does not fit within the subclass
25
definition, she has an inherent conflict of interest with other
26
class members and does not have any incentive to prosecute the
27
final pay claims vigorously. The final pay subclass is not
28
19
1
represented adequately.
2
2.
3
4
5
Rule 23(b)(3) Requirements (Superiority)
Plaintiffs must also satisfy one of the three provisions of
Rule 23(b). Here, Plaintiffs move for class certification under
Rule 23(b)(3) because “questions of law or fact common to class
6
7
8
members predominate over any questions affecting only individual
members, and that a class action is superior to other available
9
methods for fairly and efficiently adjudicating the controversy.”
10
The Rule 23(b)(3) predominance inquiry tests “whether proposed
11
classes are sufficiently cohesive to warrant adjudication by
12
representation.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591,
13
14
15
16
17
18
623, 117 S. Ct. 2231 (1997) (citation omitted).
Rule 23(b)(3) focuses on the relationship between the common
and individual issues. 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.
Local Joint Executive Bd. of Culinary/Bartender Trust Fund v. Las
19
20
21
22
23
Vegas Sands, Inc., 244 F.3d 1152, 1162 (9th Cir.2001).
Rule 23(b)(3) provides four pertinent factors to determine
superiority:
24
(A) the class members' interests in individually
controlling the prosecution or defense of separate actions;
25
(B) the extent and nature of any litigation concerning
the controversy already begun by or against class members;
26
(C) the desirability or undesirability of concentrating
the litigation of the claims in the particular forum; and
27
(D) the likely difficulties in managing a class action.
28
20
1
2
3
4
5
Fed. R. Civ. P. 23(b).
a)
Individual Control
The first Rule 23(b)(3) factor for consideration is the
interest of each member in “individually controlling the
prosecution or defense of separate actions.”
Fed. R. Civ. P.
6
7
8
23(b)(3)(A). This factor is more relevant where each class member
has suffered sizeable damages or has an emotional stake in the
9
litigation. See, e.g., In re N. Dist. of Cal., Dalkon Shield,
10
Etc., 693 F.2d 847, 856 (9th Cir. 1982). Here, where the monetary
11
damages each plaintiff individually suffered are likely to be
12
relatively modest, certifying a class action is favored. Id.
13
14
15
16
17
b)
Other Litigation
The second Rule 23(b)(3) factor is “the extent and nature of
any litigation concerning the controversy already commenced by or
against members of the class.”
Fed. R. Civ. P. 23(b)(3)(B). The
18
only known litigation concerning the controversy have been
19
consolidated in this lawsuit.
20
c)
Forum
21
The third Rule 23(b)(3) factor is “the desirability or
22
undesirability of concentrating the litigation of the claims in
23
the particular forum.”
24
Fed. R. Civ. P. 23(b)(3)(C). This factor
is unchallenged.
25
26
27
28
d)
Management of Class Action
The fourth and final Rule 23(b)(3) factor is “the likely
difficulties in managing a class action.”
21
Fed. R. Civ. P.
1
23(b)(3)(D). This factor “encompasses the whole range of
2
practical problems that may render the class format inappropriate
3
for a particular suit.”
4
Eisen v. Carlisle & Jacquelin, 417 U.S.
156, 164 (1974).
5
6
7
8
9
10
11
12
Plaintiffs filed a Class Action Trial Plan (“Trial Plan”),
which asserts the following regarding the final pay claims:
Plaintiffs will establish that Defendants violated the
California Labor Code by drawing on the conclusions of
expert statistical analysis of employees‟ time-, payrolland personnel-related records. Supporting evidence will
include documents describing or outlining Defendants‟
payment of wages for discharged employees, and any testimony
of Defendants‟ designees concerning the payment of wages for
discharged employees.
13
(Trial Plan 6, ECF No. 185-10.) Plaintiffs also provide the
14
declaration of Philip Gorman, an economist and statistician.
15
(Gorman Decl., ECF No. 196-5.)
16
17
Taco Bell contends that Plaintiffs have not proved that the
case would be manageable if certified as a class action. Taco
18
19
Bell contends that Plaintiffs‟ only evidence regarding
20
manageability is the opinion of Gorman, who does not offer an
21
opinion or plan regarding how to actually gather or use
22
representative evidence in this case. Instead, Gorman only opines
23
on how representative evidence might be used. For example, Gorman
24
did not determine: (1) the type of survey that would be used; (2)
25
26
27
28
if unique survey instruments would be required for certain claims
or subclasses; (3) how the sample would be selected from the
class population; (4) whether a random or stratified random
22
1
sample would be used; (5) what an appropriate sample size would
2
be; (6) what an appropriate margin of error would be; and (7)
3
what would be an acceptable confidence level. Taco Bell further
4
contends that Gorman: (1) is ignorant of key facts of the case
5
6
7
that are necessary for a proper expert analysis regarding the use
of representative evidence; (2) does not have a proper factual
8
foundation for his opinions; and (3) spent less than thirteen
9
hours on this entire matter, include meeting with counsel for the
10
initial assignment, reviewing thousands of pages of documents and
11
deposition testimony, and drafting and revising his declaration.
12
13
14
15
Plaintiffs rejoin that Taco Bell does not dispute that
statistical and survey evidence is useful and admissible in
determining class certification and Taco Bell has not questioned
16
Gorman‟s educational background or experience in survey and
17
statistical design. Plaintiffs contend that another federal court
18
recently accepted similar testimony from Gorman and rejected Taco
19
Bell‟s argument. See Dilts v. Penske Logistics, LLC, 267 F.R.D.
20
625, 638, 641 (S.D. Cal. 2010). Plaintiffs contend that Gorman‟s
21
testimony demonstrates that he is able to develop a statistical
22
23
24
25
survey that can be used as common proof regarding members of the
proposed class.
Plaintiffs are correct that Defendants do not contest the
26
usefulness or admissibility of statistical and survey evidence.
27
The issue here is not the usefulness or admissibility of
28
23
1
statistical and survey evidence in general, but whether Gorman‟s
2
evidence meets the requirements of Federal Rule of Evidence 702.
3
Absent Taco Bell‟s complete and accurate records, Gorman proposes
4
surveying a selected sample of the putative subclasses to
5
6
7
calculate Defendants‟ liability to the entire subclass. Gorman
does not give any details of his survey method, the statistical
8
foundations and principles that will be applied, nor how the
9
survey would be applied to calculate Plaintiffs‟ final pay or
10
vacation pay claims. Gorman provides a general description of how
11
surveys work without any application to the facts of this case or
12
13
14
15
Plaintiffs‟ final pay and vacation claims. The only claims Gorman
even considers are the rest and meal break claims, which have
been stayed. Gorman‟s opinions are not “based upon sufficient
16
facts or data” and are not “the product of reliable principles
17
and methods.” Fed. R. Evid. 702. Plaintiffs have not adequately
18
met Rule 23(b)(3)(4) as to the methodology to manage the
19
subclass‟ claims.
20
21
22
3.
Conclusion
The final pay subclass does not meet the requirements of
Rule 23(a) and (b). Plaintiffs do not provide evidence that the
23
24
25
final pay subclass satisfies numerosity or commonality, do not
provide a typical and adequate class representative, and provide
26
no evidence that the class action is manageable. Plaintiffs‟
27
motion to certify the final pay subclass is DENIED.
28
24
1
B.
2
Plaintiffs “seek redress for the payment of all unused and
Vested Accrued Vacation Wages Subclass
3
accrued vacation time, earned pursuant to Taco Bell‟s vacation
4
policies, but have not been paid by Defendants.” (Pls. Mot. Class
5
Cert. 27, ECF No. 185.) Plaintiffs also challenge Taco Bell‟s
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
vacation policy for non-management employees, which Plaintiffs
claim prevent employees who work less than one year from being
paid unused and accrued vacation at termination.
1.
Subclass Definition
Plaintiffs move to certify the following vacation pay
subclasses:
Vested accrued vacation wages subclass: all persons who
formerly worked as an employee at a corporate owned Taco
Bell restaurant in California from November 5, 2004 until
the resolution of this lawsuit who were not paid all vested
accrued vacation wages (including, but not limited to,
vacation pay, personal day pay, personal holiday pay, and/or
floating holiday pay) at the end of their employment.
Non-management employee vacation subclass: all persons who
formerly worked as a non-exempt, hourly-paid employee at a
corporate-owned Taco Bell restaurant in California from
September 7, 2003 until the resolution of this lawsuit who
were not paid all vested accrued vacation wages (including,
but not limited to, vacation pay, personal day pay, personal
holiday pay, and/or floating holiday pay) at the end of
their employment, and who worked in any non management
employee position, including, without limitation, any of the
following job positions: Crew Member, Team Member, Food
Champion, Service Champion, Service/Food Champion, Shift
Lead, Shift Lead Trainee, Team Member Trainer, and/or
Trainee.
(Pls. Mot. Class Cert. 27 n.25, 29 n.27, ECF No. 185.) The court
27
has ruled that Plaintiffs cannot expand the statute of
28
limitations for the non-management employee vacation subclass
25
1
before November 5, 2004, and denied Plaintiffs‟ motion to divide
2
the putative vacation subclasses into two subclasses with
3
different claims periods. (Mem. Dec. 11, ECF No. 222.)
4
Plaintiffs‟ motion to certify the vacation pay subclasses is
5
6
7
8
9
10
11
12
13
14
15
redefined to a motion to certify one vacation pay subclass, as
follows:
All persons who formerly worked as an employee at a
corporate owned Taco Bell restaurant in California from
November 5, 2004 until the resolution of this lawsuit who
were not paid all vested accrued vacation wages (including,
but not limited to, vacation pay, personal day pay, personal
holiday pay, and/or floating holiday pay) at the end of
their employment.
Taco Bell contends that a vacation pay subclass should not
be certified because: (1) Taco Bell‟s policy is compliant; (2)
Plaintiffs have no evidence to support their vacation pay claim;
16
and (3) the vacation pay subclass lacks a typical and adequate
17
representative.
18
19
20
2.
Rule 23(a) Requirements
a)
Numerosity
Plaintiffs contend that their expert, Dr. Lackritz, analyzed
21
1,886 employee payroll records to conclude that of the 69 former
22
managers and 652 former non-managers, approximately 11% of former
23
managers and 25% of former non-managers were still owed accrued
24
25
26
vacation. Plaintiffs further contend that Dr. Lackritz‟s analysis
of Taco Bell‟s payroll records reveals that of the 963 former
27
non-manager employees who ended their employment prior to
28
completing a year of employment, 254, or approximately 26%, are
26
1
owed accrued and unused vacation. Taco Bell rejoins that Dr.
2
Lackritz‟s analysis as to vacation pay is so riddled with errors
3
that his opinions are inadmissible.
4
5
(1)
Dr. Lackritz‟s Declaration and Report
Taco Bell asserts that Dr. Lackritz‟s opinions as to
6
7
8
9
10
vacation pay are based on false assumptions and admitted errors
and should be excluded. Dr. Lackritz acknowledged the following
errors during his deposition:
1. Failing to pro-rate vacation time for putative class
11
members who worked less than a year, even though pro-
12
ration is required under Taco Bell's policy. Based on this
13
14
15
16
error, Lackritz erroneously opined that Taco Bell had
failed to pay all owed vacation time at termination.
(Lackritz Dep. Tr. 218:20-220:4, ECF No. 220-3.)
17
2. Improperly determining average hours worked per week for
18
hourly putative class members because he divided hours
19
worked by pay period (which are two weeks) instead of work
20
weeks. Based on this error, Lackritz erroneously opined
21
that some putative class members qualified for vacation
22
pay under Taco Bell's policy when they did not. (Lackritz
23
24
25
Dep. Tr. 216:5-16, ECF No. 220-3.)
3. Awarding 3.08 hours of vacation time to manager putative
26
class members (the amount of vacation for an entire 14-day
27
period) when the period at issue was less than 14 days.
28
27
1
Based on this error, Lackritz erroneously opined that some
2
putative class members had earned more vacation than they
3
actually had. (Lackritz Dep. Tr. 169:12-173:14 & 173:21-
4
177:1, ECF No. 220-3.)
5
6
7
4. Awarding 3.08 hours of vacation time to some putative
class member managers based on pay events, such as bonuses
8
and leaves of absence, even though Lackritz acknowledged
9
in deposition that vacation should not have been awarded
10
based on those events. Based on this error, Lackritz
11
erroneously opined that some putative members had earned
12
13
14
15
more vacation than they actually had. (Lackritz Dep. Tr.
220:21-223:9, ECF No. 220-3.)
Taco Bell also argues that Lackritz‟s methodology for
16
computing vacation pay directly contradicts with Taco Bell‟s
17
vacation policy. Taco Bell‟s corporate designee, Eddie Baker,
18
explained that vacation eligibility for non-management restaurant
19
employees is determined by looking at how many hours are worked,
20
on average, per week as calculated for one year (i.e., 26 pay
21
periods) from hire or anniversary date. (Lackritz Dep. Tr.
22
23
24
136:13-137:1, ECF No. 220-3.) Taco Bell contends that Lackritz
intentionally deviated from this protocol by using hard coding to
25
turn putative class members who were ineligible to receive
26
vacation benefits under Taco Bell's policy into vacation eligible
27
class members. For putative class members who, on average, worked
28
28
1
slightly less than 20 hours per week during their first 26 pay
2
periods, Lackritz searched for any 26 pay periods where a
3
putative class member worked on average more than 20 hours.
4
(Lackritz Dep. Tr. 194:1-7, ECF No. 220-3.)
5
6
7
Lackritz's opinions concerning some of the named Plaintiffs‟
vacation claims are also erroneous. Although Lackritz opined in
8
his report that Hardiman is due vacation time, he admitted in his
9
deposition that his calculation was in error, and Hardiman was
10
not owed vacation pay. (Lackritz Dep. Tr. 219:22-220:4, ECF No.
11
220-3.) Lackritz also admitted his opinion that Widjaja was owed
12
13
14
15
vacation pay was based on errors and miscalculations, and that
Widjaja was actually paid for more vacation time than she earned.
(Lackritz Dep. Tr. 219:22-220:4, ECF No. 220-3.) Lackritz also
16
admitted that his opinion regarding Medlock's purported vacation
17
accrual was riddled with at least five calculation errors.
18
(Lackritz Dep. Tr. 224:12-226:16, ECF No. 220-3.)
19
20
21
Lackritz‟s analysis of Plaintiffs‟ vacation pay claims is
not based on sufficient facts or data, and was not the product of
reliable principles and methods. Fed. R. Evid. 702. As the basis
22
23
24
for his opinion is unreliable, it will be disregarded for
purposes of this motion. Taco Bell‟s motion to exclude the
25
declarations and reports of Lackritz is GRANTED as to Lackritz‟s
26
opinions of Plaintiffs‟ vacation pay claims. Without Lackritz‟s
27
opinions, Plaintiffs do not present any evidence of numerosity.
28
29
1
2
(2)
Michael Buchanan‟s Declaration
Taco Bell relies on the declaration of its expert Michael
3
Buchanan to criticize Lackritz‟s opinion on vacation pay.
4
Plaintiffs in turn raise several objections to Michael Buchanan‟s
5
declaration, contending that he lacks foundation and personal
6
7
8
knowledge to assert his opinions, as required by Federal Rule of
Evidence 602. Taco Bell, however, has elicited Buchanan‟s
9
testimony as an expert, subject to meeting Federal Rule of
10
Evidence 703 and Daubert. Buchanan is an applied economist with
11
significant experience evaluating statistical and economic issues
12
in complex litigation involving labor and employment disputes.
13
14
15
16
17
18
(Buchanan Decl. 3, ECF No. 220-2.) Buchanan is qualified to
provide expert analysis of Lackritz‟s methodology and opinions.
Buchanan‟s legal conclusions, however, are disregarded.
b)
Commonality
Plaintiffs assert that the vacation pay subclass shares the
19
common question of whether Taco Bell‟s records show that Taco
20
Bell paid putative vacation class members for all their unused
21
and accrued vacation on their termination. Plaintiffs contend
22
that proof of the vacation pay claims requires only comparison of
23
Taco Bell‟s records reflecting the amount of vacation pay owed
24
25
26
against Taco Bell‟s records reflecting the amount of wages owed
at termination. Plaintiffs, however, have not provided any
27
evidence of this alleged common practice and policy. Plaintiffs‟
28
only evidence is Dr. Lackritz‟s flawed analysis of the vacation
30
1
pay claims, which does not meet Federal Rule of Evidence 702 and
2
is inadmissible.
3
4
c)
Typicality and Adequate Representation
Plaintiffs do not have a class representative with a claim
5
6
7
for unpaid vested accrued vacation wages. Plaintiffs assert that
Medlock, Widjaja and Hardiman had typical claims and could
8
represent employees who terminated with unpaid vacation pay, but
9
Lackritz admits that his calculation of their due vacation time
10
was incorrect and that they were not owed any wages for vested
11
accrued vacation. Plaintiffs have admitted that Nave, Taylor and
12
13
14
15
Doyle cannot represent the vacation class. Plaintiffs were
permitted to amend the Consolidated Complaint to add Horario
Escobar as a class representative for the vacation subclass, but
16
do not provide any evidence that he has any vested accrued unpaid
17
vacation wages. There is no typicality or adequate representation
18
for the vacation pay subclass. See Fed. R. Civ. P. 23(a)(3), (4).
19
20
21
22
3.
Rule 23(b)(3) Requirements (Superiority)
The analysis of the Rule 23(b)(3)(A) - (C) factors for the
vacation pay subclass are the same as the final pay analysis.
With respect to the manageability of the class action, the Trial
23
24
25
Plan and Gorman‟s opinion are equally ambiguous and unhelpful.
For the same reasons discussed in the final pay claim, Plaintiffs
26
have not shown that the vacation pay claim is manageable as a
27
class action.
28
31
1
2
4.
Conclusion
The vacation pay subclass does not meet the requirements of
3
Rule 23(a) and (b). Plaintiffs do not provide evidence that the
4
vacation pay subclass satisfies the numerosity or commonality
5
requirement, do not provide a typical and adequate class
6
7
8
9
representative, and do not provide evidence that the class action
is manageable. Plaintiffs‟ motion to certify the vacation pay
subclass is DENIED.
V.
10
11
12
13
14
15
16
17
18
CONCLUSION
For the reasons stated:
1. Plaintiffs‟ motion for class certification is DENIED without
prejudice as to the final pay and vacation pay subclasses.
2. Taco Bell‟s motion to exclude the opinion of James Lackritz
is GRANTED as to his opinions on Plaintiffs‟ final pay and
vacation pay claims.
3. The court will consider nomination of additional Plaintiffs‟
19
lawyers to serve as co-lead class counsel, when and if a
20
class or subclass is ever certified.
21
22
4. Taco Bell shall submit a proposed form of order consistent
with this memorandum decision within three (3) days of
23
24
25
26
electronic service of this memorandum decision.
SO ORDERED.
DATED: September 26, 2011
/s/ Oliver W. Wanger
Oliver W. Wanger
United States District Judge
27
28
32
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