Richard Stafford v. Dollar Tree Stores Inc et al

Filing 80

ORDER signed by Judge Kimberly J. Mueller on 11/20/2014 GRANTING 72 Motion to Bifurcate. Plaintiff's individual Labor Code claims will be determined before the representative PAGA claims. This case is set for further Scheduling Conference on 12/11/2014 at 02:30 PM in Courtroom 3 (KJM) before Judge Kimberly J. Mueller. (Donati, J)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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RICHARD STAFFORD, Individually,

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No. 2:13-cv-1187 KJM CKD

Plaintiff,
v.

ORDER

DOLLAR TREE STORES, INC.,

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Defendant.
Defendant Dollar Tree Stores’ (Dollar Tree) motion to bifurcate plaintiff’s

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individual and representative claims is currently pending before the court. The court ordered the

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motion submitted without a hearing and now GRANTS the motion.

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I. BACKGROUND

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On November 19, 2012, plaintiffs Jay Narvaez and Lisa Hornsby filed a complaint

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in Los Angeles County Superior Court alleging a number of wage and hour class claims and a

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Private Attorney General Act (PAGA) claim against Dollar Tree. ECF No. 1 at 33-60. Their

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first amended complaint was filed in the Superior Court on January 7, 2013, adding Richard

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Stafford as a plaintiff. ECF No. 1 at 87-114. Defendant removed the case to the Central District

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on February 5, 2013. Id. at 4-5.

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On February 12, 2013, plaintiff Stafford filed a Second Amended Complaint
(SAC) in the Central District, removing the class claims and alleging the following claims, all
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stemming from his work as an assistant manager at a Dollar Tree Store: (1) failure to provide

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meal periods, Cal. Lab. Code §§ 226.7(a), 512(a), and 1198; (2) failure to provide rest periods,

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Cal. Lab. Code §§ 226.7(a) and 1198; (3) failure to pay minimum and regular wages, Cal. Lab.

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Code §§ 1197 and 1198; (4) failure to pay overtime wages, Cal. Lab. Code §§ 510 and 1198;

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(5) failure to maintain accurate records, Cal. Lab. Code § 1198; (6) failure to provide and

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maintain accurate itemized wage statements, Cal. Lab. Code §§ 226(a) and 1198; and (7) failure

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timely to pay wages due during employment, Cal. Lab. Code §§ 204(a) and 1198. Plaintiff

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alleges he is an “aggrieved employee” within the meaning of the PAGA, California’s Private

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Attorney General Act, Cal. Lab. Code §§ 2699, et seq. ECF No. 12 at 6-7. Neither Narvaez nor

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Hornsby were listed as plaintiffs in the Second Amended Complaint. Id. at 1.

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On February 26, 2013, defendant filed a motion to dismiss or to transfer. ECF

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No. 15. On March 7, 2013, plaintiff filed a motion to remand. ECF No. 22. On June 22, 2013,

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the Central District court denied the motions to remand and to dismiss and granted the motion to

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transfer the case to the Eastern District, where a related case had been filed. ECF No. 37.

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On November 7, 2013, plaintiff filed a second motion to remand in this court.
ECF No. 46. This court denied the motion on March 28, 2014. ECF No. 58.

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On July 7, 2014, defendant filed the motion to bifurcate plaintiff’s individual and

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representative claims. ECF No. 72. Plaintiff has opposed and defendant has filed a reply. ECF

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Nos. 74 & 76.

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II. THE MOTION TO BIFURCATE

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A. Standard

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Rule 42(b) of the Federal Rules of Civil Procedure provides in relevant part:

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For convenience, to avoid prejudice, or to expedite and economize,
the court may order a separate trial of one or more separate issues,
claims, crossclaims, counterclaims, or third-party claims.

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A court “has broad discretion to bifurcate a trial to permit deferral of costly and

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possibly unnecessary proceedings pending resolution of potentially dispositive preliminary

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issues.” Jinro America Inc., v. Secure Invs., Inc., 266 F.3d 993, 998 (9th Cir.), amended on

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denial of reh’g, 272 F.3d 1289 (9th Cir. 2001). Courts are more reluctant to bifurcate
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proceedings when there is “an overlap of factual issues.” Hunter v. City & Cnty. of San

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Francisco, No. 11-4911, 2012 WL 4831634, at *10 (N.D. Cal. Oct. 10, 2012). Three factors are

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relevant to the inquiry: convenience, prejudice to the parties, and judicial economy. Id.; see also

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Conboy v. Wynn Las Vegas LLC, No. 2:11–CV–1649 JCM (CWH), 2013 WL 1701073, at *14

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(D. Nev. Apr. 18, 2013) (stating that a court considering bifurcation weighs “convenience,

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prejudice, judicial economy, risk of confusion and whether the issues are clearly separable”). If

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bifurcation is ordered, the court has the “power to limit discovery to the segregated issues.”

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Ellingson Timber Co. v. Great N. Ry. Co., 424 F.2d 497, 499 (9th Cir. 1970) (per curiam).

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B. The Requests for Judicial Notice
Defendant has asked the court to take judicial notice of a tentative ruling certifying

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the class in Richard Reyes v. Dollar Tree Stores, Inc., Los Angeles County Superior Court,

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No. BC488217; an order granting the motion for class certification in the Reyes case; a copy of a

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letter from California’s Labor and Workforce Development Agency (LWDA) dated

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December 21, 2012, declining to investigate plaintiff’s allegation against Dollar Tree; and an

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Amended Statement of Decision filed in Driscoll v. Granite Rock Co., Santa Clara County

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Superior Court, No. 1-08-CV-103426. Def.’s Request for Judicial Notice, ECF No. 73. Plaintiff

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does not object.

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Plaintiff has asked the court to take judicial notice of the First Amended Class

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Action Complaint filed June 6, 2014, in Stafford v. Dollar Tree Stores, Inc., Solano County

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Superior Court, No. FCS043461. Defendant has not objected.

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The court grants the parties’ requests for judicial notice of documents from the

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Reyes proceedings in state court proceedings and from the LWDA. Fed.R.Evid. 201; Harris v.

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Cnty. of Orange, 682 F.3d 1126, 1132 (9th Cir. 2012) (“We may take judicial notice of

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undisputed matters of public record, including documents on file in federal or state courts.”)

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(internal quotations omitted); Sarkisov v. StoneMor Partners, No. C 13–04834 WHA, 2014 WL

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1340762, at *6 (N.D. Cal. Apr. 3, 2014) (taking judicial notice of the pre-litigation letter from

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LWDA). It declines to take judicial notice of the Driscoll order, as this order is not relevant to

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resolution of the instant motion.
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C. Analysis

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Defendant argues that through his PAGA claims plaintiff purports to represent

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more than 3000 other current and former store managers from December 17, 2011 through the

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present for alleged wage and hour violations, even though plaintiff has not yet shown his own

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rights under the Labor Code have been violated. It also notes that a class action is pending in this

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court, with the same plaintiff, seeking damages for the same Labor Code violations. Mot. to

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Bifurcate, ECF No. 72 at 8 (referencing Stafford v. Dollar Tree Stores, Inc., No. 2:14-cv-1465

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KJM CKD (Stafford II)). Defendant says that plaintiff’s second claim for failure to provide meal

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and rest breaks for assistant managers echoes the same claim in the Reyes case in Los Angeles

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County Superior Court, which will make discovery difficult because of the problems of

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interviewing the Reyes class members who are not represented by class counsel. It asks that

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discovery and trial of plaintiff’s individual entitlement to PAGA penalties proceed first. Only if

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plaintiff shows he is an aggrieved employee, then the case should proceed with discovery and

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trial as to the representative claims. Id.

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Plaintiff opposes the motion, saying that bifurcation is inappropriate because he is

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acting as the proxy for the LWDA and requiring him to prove his individual case first undercuts

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the public policy underlying PAGA. Opp’n, ECF No. 74 at 5, 9. He also says bifurcating

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discovery will only complicate the case when it is consolidated with Stafford II, the class action

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pending in this court, raising the same issues.1 Id. at 6. Plaintiff argues also that bifurcating

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discovery will not promote judicial efficiency because of the difficulty determining whether the

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information sought in discovery is relevant to individual or group violations. He says his

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counsel’s representation of the members of the PAGA action means that defendant’s counsel

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would not be able to speak to them informally despite the Reyes action.

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In reply, defendant notes this case has not been consolidated with the Stafford

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class action, that plaintiff’s counsel does not represent the other aggrieved employees covered by

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/////

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There are pending motions for judgment on the pleadings and for remand in the Stafford
class action in Solano County.
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this PAGA action, and that requiring plaintiff to prove he is aggrieved will not undercut the

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purposes underlying PAGA litigation. Reply, ECF No. 76 at 3.

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Under the PAGA, California Labor Code § 2699:

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(a) Notwithstanding any other provision of law, any provision of
this code that provides for a civil penalty to be assessed and
collected by the Labor and Workforce Development Agency . . . for
a violation of this code, may, as an alternative, be recovered
through a civil action brought by an aggrieved employee on behalf
of himself . . . and other current or former employees pursuant to
the procedures specified in Section 2699.3.

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(c) For purposes of this part, “aggrieved employee” means any
person who was employed by the alleged violator and against
whom one or more of the alleged violations was committed.

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Section 2699(f)(2) establishes the civil penalty recoverable under these provisions

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as $100 for each aggrieved employee per pay period for the initial violation and $200 for each

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aggrieved employee per pay period for each subsequent violation when penalties are not

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otherwise specified in the Labor Code. The LWDA is entitled to 75 percent of any penalties

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recovered, with the remaining 25 percent distributed to the aggrieved employees. Cal. Lab. Code

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§ 2699(i). As a prerequisite to filing suit, the aggrieved employee must first give notice of the

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alleged violations to LWDA and bring suit only after LWDA has declined to act or has failed

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timely to respond to the notice. Cal. Lab. Code § 2966.3. The aggrieved employee cannot pursue

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a PAGA action if the agency or another party is pursuing enforcement against the employer on

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the same claims under the same provisions of the Labor Code. Cal. Lab. Code § 2699(h). See

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generally Thomas v. Aetna Health of Cal., No. 1:10-cv-01906 AWI SKO, 2011 WL 2173715, at

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*9 (E. D. Cal. June 2, 2011).

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The Ninth Circuit has noted that “PAGA plaintiffs are private attorneys general

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who, stepping into the shoes of the LWDA, bring claims on behalf of the state agency.”

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Baumann v. Chase Inv. Servs. Corp., 747 F.3d 1117, 1123 (9th Cir. 2014), pet. for cert. filed, 83

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USLW 3126 (Sept. 3, 2014). The California Supreme Court characterizes a PAGA plaintiff “as

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the proxy or agent of the state’s labor law enforcement agencies,” who “represents the same legal

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right and interest as state labor law enforcement agencies—namely civil penalties that would
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otherwise have been assessed and collected by the Labor Workforce Development Agency.”

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Arias v. Sup. Ct., 46 Cal. 4th 969, 986 (2009). Nevertheless, every PAGA action “requires some

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individualized assessment regarding whether a Labor Code violation has occurred.” Plaisted v.

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Dress Barn, Inc., No. 2:12-cv-01679 ODW (SHx), 2012 WL 4356158, at *2 (C.D. Cal. Sep. 20,

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2012) (emphasis in original); but see Alcantar v Hobart Serv., No. ED CV 11-1600 PSG (SPx),

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2013 WL 146323, at *5 (C.D. Cal. Jan. 14, 2013) (suggesting that survey evidence might be used

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to determine penalties). The Ninth Circuit has said that despite the enforcement aspects of

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PAGA, the wage and hour claims of aggrieved employees are held individually and so cannot be

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aggregated to satisfy the amount-in-controversy requirement for removing a diversity action.

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Urbino v. Orkin Servs. of Cal., Inc., 726 F.3d 1118, 1122 (9th Cir. 2013) (stating an aggrieved

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employee’s claims to vindicate breaches of the Labor Code “are held individually. Each

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employee suffers a unique injury—an injury that can be redressed without the involvement of

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other employees”). Moreover, even though the plaintiff in a PAGA action “need not have

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suffered all PAGA violations for which she seeks to pursue civil penalties,” Jeske v. Maxim

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Healthcare Servs., Inc., No. CV F 11-1838 LJO JLT, 2012 WL 78242, at *13 (E.D. Cal. Jan. 10,

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2012), PAGA “require[s] a plaintiff to have suffered an injury resulting from an unlawful action.”

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Amalgamated Transit Union, Local 1756 v. Sup. Ct., 46 Cal. 4th 993, 1001 (2009).

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In Patel v. Nike Retail Services, the court noted the tension between Baumann and

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Urbino, said that Urbino examined “the employees’ interests vis-à-vis each other” and concluded

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that for purposes of aggregating the penalties owed to the state and to the plaintiff, “[t]he Labor

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Code violations Plaintiff Patel allegedly suffered are not unique from the ones the LWDA might

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seek to vindicate; both ‘claims have as their source the exact same injuries.’”___ F. Supp. 2d ___,

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2014 WL 3611096, at *9 (N.D. Cal. 2014). Accordingly, while plaintiff and the LWDA share the

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same interest, which gives the suit its enforcement character, the other PAGA plaintiffs have

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individual interests, which will require at least some individual proof.

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Defendant has presented evidence that there are 3,205 people who served as

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assistant managers in the 457 California Dollar Tree Stores between December 17, 2011 and

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June 30, 2012, with a total 161,571 workweeks for these employees. Decl. of David
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McDearmon, ECF No. 72-2 ¶ 4. The scope of the individualized assessments necessary to

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demonstrating Labor Code violations is suggested by the potential number of aggrieved

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employees, a number plaintiff has not challenged.

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Neither side has cited nor has the court found any case discussing bifurcation of

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the PAGA plaintiff’s claims from the representative claims. Plaintiff says that bifurcation would

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undercut the enforcement aspects of PAGA while defendant argues it would save the parties and

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the court from the burdensome discovery needed to prove the threshold individual violations.

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What gives plaintiff the right to serve as “a proxy or agent” for the LWDA’s
enforcement division is his status as an aggrieved employee, one who has been injured by

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defendant’s violation of at least one provision of the Labor Code. Plaintiff has presented nothing

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rebutting defendant’s evidence that over 3,000 potential PAGA employees are part of this suit.

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And while the court does not necessarily accept defendant’s claim that it will interview and

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depose each of the assistant managers, neither does it at this stage accept plaintiff’s claim that the

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ultimate proof can be based entirely on policies and survey evidence, given the individual nature

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of the claims. See, e.g., Ortiz v. CVS Caremark Corp., 3:12-cv-05859, 2014 WL 1117614, at *4

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(N.D. Cal. Mar. 19, 2014) (discussing the potential unmanageability of PAGA action, which

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would require “a multitude of individualized assessments.”).

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Without even considering the potential problems the pendency of both the Reyes

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and the Stafford class actions, in light of the number of potential aggrieved employees, judicial

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economy favors deferring the representative portion of the PAGA claim until plaintiff’s status as

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an aggrieved employee with the right to bring this action is established. Plaintiff has not pointed

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to any definite prejudice from bifurcation, but argued more generally that the public purpose of

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the PAGA enforcement action will not be served by delay. He has not acknowledged, however,

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that PAGA’s public purpose would be ill-served if the court finds he has not been aggrieved by a

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Labor Code violation. The court agrees there likely will be some judgment calls made regarding

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whether particular discovery relates to individual or representative claims, but that is not a

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sufficient basis to deny bifurcation.

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IT IS THEREFORE ORDERED that:

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1. Defendant’s motion to bifurcate, ECF No. 72, is granted; plaintiff’s individual

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Labor Code claims will be determined before the representative PAGA claims; and
2. The case is set for a further scheduling conference on December 11, 2014. The

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parties’ joint statement concerning the bifurcated schedule is due within seven days before the

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further scheduling conference.

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DATED: November 20, 2014.

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UNITED STATES DISTRICT JUDGE
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