Campanelli v. Image First Uniform Rental Service, Inc. et al

Filing 123

ORDER by Judge Phyllis J. Hamilton granting in part and denying in part 111 Motion for Partial Summary Judgment. (pjhlc2S, COURT STAFF) (Filed on 12/21/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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KYLE L. CAMPANELLI,

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Case No. 15-cv-04456-PJH

Plaintiff,

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v.

ORDER RE DEFENDANTS' MOTION
FOR SUMMARY JUDGMENT

IMAGE FIRST HEALTHCARE
LAUNDRY SPECIALISTS, INC., et al.,

Re: Dkt. No. 111

United States District Court
Northern District of California

Defendants.
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Defendants Image First Healthcare Laundry Specialists, Inc. and Image First of

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California, LLC’s (together, “ImageFIRST”) motion for partial summary judgment came on

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for hearing before this court on September 19, 2018. Plaintiff Kyle L. Campanelli

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appeared through his counsel, Brian Malloy. Defendants appeared through their counsel,

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Eric Meckley. Having read the papers filed by the parties and carefully considered their

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arguments and the relevant legal authority, and good cause appearing, the court hereby

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GRANTS IN PART and DENIES IN PART defendants’ motion.

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BACKGROUND
This is a putative class and collective action based on the Fair Labor Standards

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Act (“FLSA”) and the California Labor Code. ImageFIRST of California employed

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Campanelli as a delivery person from March 2014 to March 2015. Dkt. 11, First

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Amended Complaint (“FAC”) ¶¶ 2, 4, 33. Plaintiff’s primary job duty was to pick up soiled

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laundry from ImageFIRST customers and deliver it to a laundry center, and to pick up

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clean laundry from the laundry center and deliver it to ImageFIRST customers. FAC

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¶ 33. Campanelli alleges that he worked over forty hours a week but was denied meal

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and rest periods, and was never paid overtime compensation. FAC ¶ 36.
Campanelli seeks to represent similarly situated delivery drivers of ImageFIRST

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entities nationwide in a collective action for failure to pay overtime wages under the

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FLSA. FAC ¶¶ 4, 37–41.1 He also seeks to represent a Rule 23 class of similarly

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situated delivery persons who were misclassified as exempt under California labor laws.

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FAC ¶¶ 42–51. Both the class and collective action define putative members as “past

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and present employees of ImageFIRST [entities] who engage/were engaged in the pick-

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up and delivery of ImageFIRST products to and from health care providers, however that

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employment was denominated, . . . and who were classified as exempt from” Federal or

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California overtime laws (the “delivery drivers”). FAC ¶¶ 39, 42.

United States District Court
Northern District of California

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Critically, the proposed class/collective includes delivery drivers who have signed

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arbitration agreements. That is not by accident. Though Campanelli is not subject to an

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arbitration agreement, he nevertheless seeks to represent delivery drivers subject to

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mandatory arbitration. In fact, defendants have submitted uncontroverted evidence that

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the vast majority of putative class/collective action members are subject to either a

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Dispute Resolution Agreement (“DRA”)—which contains an explicit arbitration clause and

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a collective action waiver—or an Employment Agreement—which contains an arbitration

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provision but is silent on whether arbitration can proceed collectively (together, the

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“arbitration agreements”). Specifically, the evidence shows that 17 of the 21 putative

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Rule 23 class members that defendants’ affiliated entities employed from September 28,

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2011 to July 21, 2018, signed at least one of the two arbitration agreements. Dkt. 111-1,

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Malandra Decl. ¶ 4; Dkt. 111-2, River Decl. ¶¶ 9, 10.2 As to the putative FLSA collective

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“ImageFIRST entities” refers to any entity bearing or using the ImageFIRST mark. As
discussed in this court’s prior order, plaintiff seeks to represent delivery drivers employed
by the named defendants, entities affiliated with the named defendants, and entities that
are franchisees of defendant ImageFIRST Health Care Laundry Specialist, Inc. Dkt. 98.
2 In support of their motion, defendants purportedly submitted in camera every DRA or
employment agreement signed by a putative class or collective member. See Rivers
Decl. The court did not review those signed agreements. Nor does this order rely on
those document. Defendants SHALL arrange for those documents to be picked up from
the Clerks Office within 14 days.
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action, of the 214 delivery drivers employed by ImageFIRST affiliated entities operating

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exclusively outside of California since about June 27, 2015, 187 delivery drivers signed a

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DRA and 209 signed an employment agreement. Malandra Decl. ¶ 5; Rivers Decl. ¶ 7.3

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Though relevant case law provides no need for the court to reach the issue here, the

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DRA and Employment Agreement appear likely to be enforceable arbitration agreements.
The present motion, like much of the past two years of this litigation, is directed at

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determining whether Campanelli, a driver not subject to an arbitration agreement, can

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represent putative collective/class members who have signed arbitration agreements.
DISCUSSION

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A.

This action’s procedural history illustrates how the court has endeavored to ensure

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United States District Court
Northern District of California

Procedural History

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plaintiff’s action remains manageable while also reaching an efficient and fair outcome.

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Though the court’s efforts ultimately failed, they are nevertheless instructive.

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1.

Stay Pending Epic

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On December 1, 2016, the court set a briefing schedule for plaintiff’s motion for

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class/collective certification, with plaintiff’s opening brief due no later than June 14, 2017.

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Dkt. 55.
On April 18, 2017, Magistrate Judge Sallie Kim resolved a discovery dispute in

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plaintiff’s favor. Dkt. 72-73. As relevant here, Judge Kim overruled defendants’ objection

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that class discovery was inappropriate because no class had yet been certified. Dkt. 72.
Two weeks later, defendants filed two motions. Defendants’ first motion sought

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relief from Judge Kim’s order allowing class/collective discovery to proceed. Dkt. 75.

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Defendants’ second motion sought to stay all class/collective action proceedings pending

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Plaintiff contends that June 27, 2015, is not the pertinent start date for his FLSA claim
because his FLSA claim should be tolled to three years prior to plaintiff filing the
complaint. As will become evident below, this order does not turn on the number of
putative FLSA members subject to an arbitration agreement. And, in any event, plaintiff’s
proposed FLSA period would add only an additional 12 putative collective members who
did not sign an arbitration agreement. Malandra Supp. Decl. ¶ 4.
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the Supreme Court’s decision in Epic Systems Corp. v. Lewis, No. 16-285 (“Epic”), and

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the cases consolidated with Epic, including the Ninth Circuit’s decision in Morris v. Ernst

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& Young, LLP, 834 F.3d 975 (9th Cir. 2016) (“Morris”). Dkt. 77. In considering

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defendants’ motion to stay the court explained:
In Epic . . . the Supreme Court will address whether “an
agreement that requires an employer and an employee to
resolve employment-related disputes through individual
arbitration, and waive class and collective proceedings, is
enforceable under the Federal Arbitration Act, notwithstanding
the provisions of the National Labor Relations Act.” See
Petition for a Writ of Certiorari, Epic, 2016 WL 4611259 at i,
cert. granted, 137 S.Ct. 809 (U.S. Jan. 13, 2017).

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The Ninth Circuit held in Morris that general collective action
waivers are not enforceable as to employment-related disputes
because the National Labor Relations Act (“NLRA”) “precludes
contracts that foreclose the possibility of concerted workrelated legal claims.” Morris, 834 F.3d at 990. Thus, “[a]n
employer may not condition employment on the requirement
that an employee sign” a concerted action waiver. Id. In Epic,
the Supreme Court will a resolve a circuit split as to the
enforceability of arbitration agreements/concerted action
waivers in this context.

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United States District Court
Northern District of California

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Dkt. 88.

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In support of their motion to stay, defendants submitted some evidence showing

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that the majority of the putative class/collective members had signed either the DRA or

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the Employment Agreement. Dkt. 78. Based on that showing and the issue pending

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before the Supreme Court, the court concluded it would be inefficient to proceed to the

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certification stage until the scope of the putative class could be resolved. That required,

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inter alia, “[a] judicial determination as to . . . whether the alleged arbitration agreements

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are enforceable, and if so, how many putative class members have signed concerted

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action waivers.” Dkt. 88 at 6.4 The court recognized that the resolution of those

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questions might have a “significant impact of the size of the class.” Id.

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The other threshold issue was “whether the employees of non-party ImageFIRST
entities are properly part of the putative class.” Dkt. 88 at 6. The court denied plaintiff’s
motion for summary judgment on that issue with respect to the ImageFirst affiliated
entities and, by agreement with the parties, deferred ruling on the issue with respect to
ImageFIRST franchisees. Dkt. 98.
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The former question depended on the Supreme Court’s decision in Epic. Under

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the then-applicable rule of Morris, the arbitration agreements could not alter the scope of

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the class because the class/collective waivers rendered the agreements unenforceable.

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However, “[i]f the Supreme Court ultimately overturn[ed] Morris and conclude[d] that

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these types of agreements are enforceable,” then the court envisioned providing

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defendants an opportunity to move for summary judgment to address the second

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question: how many putative class members are precluded by contract from participating

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in the class/collective? Id. Accordingly, with a limited exception, the court stayed the

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case pending the Supreme Court’s decision in Epic.5 See also, e.g., McElrath v. Uber
Techs., Inc., No. 16-CV-07241-JSC, 2017 WL 1175591, at *5–*7 (N.D. Cal. Mar. 30,

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United States District Court
Northern District of California

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2017) (granting stay because “whether this case can proceed as a class action turns

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squarely on the outcome of the Supreme Court’s review of Morris”); Hughes v. S.A.W.

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Entm't, LTD, No. 16-CV-03371-LB, 2017 WL 6450485, at *2 (N.D. Cal. Dec. 18, 2017).

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The court’s focus on determining the potential scope of the eligible class members

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was grounded in manageability and efficiency-related concerns. The court reasoned that

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it made no sense to certify a class/collective action that included arbitration-signing

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class/collective members only for those individuals to be compelled to arbitrate

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individually if Epic overturned Morris. Indeed, based on those same concerns, courts

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have frequently refused to send notice to arbitration-signing putative plaintiffs or have

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refused to certify class/collective actions that include arbitration-signing putative plaintiffs.

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See, e.g., Morangelli v. Chemed Corp., 2010 U.S. Dist. LEXIS 146149, at *13 (E.D.N.Y.

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June 15, 2010) (“It would be a disservice to judicial efficiency to certify all technicians,

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when those with arbitration agreements are subject to additional, prolonging [sic] motion

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practice which will likely disqualify them from the class.”).6 Similarly, district courts have

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Because class and collective discovery was stayed pending Epic, the court also denied
defendants’ objections to Judge Kim’s discovery order as moot.
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See also Daugherty v. Encana Oil & Gas (USA), Inc., 838 F. Supp. 2d 1127, 1130 (D.
Colo. 2011) (carving out putative collective members who signed arbitration provision);
Hudgins v. Total Quality Logistics, LLC, No. 16 C 7331, 2017 WL 514191, at *4 (N.D. Ill.
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recognized the manageability issues that accompany certification of nationwide

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classes/collectives that include putative class/collective members who are, unlike the

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named plaintiff(s), subject to enforceable arbitration agreements. See, e.g., Saravia v.

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Dynamex, Inc., 310 F.R.D. 412, 425 (N.D. Cal. 2015) (limiting scope of collective action

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to California to ensure the court could address the arbitration-related issues on a

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collective basis).7 And others have attempted to avoid the above issues by providing

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plaintiff leave to add a plaintiff subject to an arbitration agreement; thus ensuring that

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arbitration-related issues are decided prior to certification. See Pang v. Samsung Elecs.

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Am., Inc., No. 18-CV-01882-PJH, 2018 WL 4491154, at *1 (N.D. Cal. Sept. 19, 2018).

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In short, this court, like many courts before it, determined that if the DRA and the

United States District Court
Northern District of California

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Employment Agreements were enforceable, then it made no sense to certify a

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class/collective action that included hundreds of plaintiffs who are contractually prohibited

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from participating in this action.

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2.

Epic

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In May 2018, the Supreme Court issued its decision in Epic and left no doubt that

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the “Federal Arbitration Act [the “FAA”] . . . instruct[s] federal courts to enforce arbitration

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agreements according to their terms—including terms providing for individualized

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proceedings.” Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1619 (2018). The Supreme

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Court explained that the FAA’s “saving clause recognizes only defenses that apply to

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‘any’ contract” and “offers no refuge for defenses that apply only to arbitration.” Id. at

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1622 (internal quotation mark omitted). That includes “defenses that target arbitration . . .

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by ‘interfer[ing] with fundamental attributes of arbitration,” one of which is the

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individualized nature of arbitration. Id. at 1622-23. That reasoning does not come as a

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Feb. 8, 2017) (carving out arbitration signing putative collective members because “It
does not make sense to notify so many people about a lawsuit that they almost certainly
are unable to join; this would constitute a waste of resources and would risk misleading
those individuals into thinking they will be able to join the lawsuit.”); Fischer v. Kmart
Corp., No. CIV. 13-4116, 2014 WL 3817368, at *7 (D.N.J. Aug. 4, 2014) (same).
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Conde v. Open Door Mktg., LLC, 223 F. Supp. 3d 949, 969 & n.7 (N.D. Cal. 2017)
(same).
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surprise, as it matches the Supreme Court’s jurisprudence for at least the better part of

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the last decade. See Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 559 U.S. 662

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(2010) (because parties did not agree to class arbitration, it could not be substituted for

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individualized arbitration proceedings); AT&T Mobility LLC v. Concepcion, 563 U.S. 333

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(2011) (FAA preempted California Supreme Court rule that “condition[ed] the

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enforceability of certain arbitration agreements on the availability of classwide arbitration

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procedures”); Am. Exp. Co. v. Italian Colors Rest., 570 U.S. 228 (2013) (contractual

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waiver of class arbitration enforceable even when a plaintiff’s cost of arbitrating

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individually exceeds the potential recovery).

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Faced with the Supreme Court’s clear ruling that collective action waivers must be

United States District Court
Northern District of California

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enforced as written, the court set a briefing schedule for the present motion, which was

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set to address “whether certain putative class members are precluded by contract from

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participating in the class/collective action.” Dkt. 106 at 2; Dkt. 108. The court explained

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that “the court needs to know who can be a part of the class/collective action before

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plaintiff” moves for class/collective certification and before notice can be sent to putative

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class/collective members. Dkt. 108 at 1 (emphasis omitted).
Defendants’ Present Motion for Summary Judgment

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3.

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On July 26, 2018, defendants filed their motion for partial summary judgment. In

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short, that motion argued that the DRAs and the Employment Agreements are valid and

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enforceable contracts that prohibit signatories from participating in this action because

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the agreements contain valid arbitration clauses and because the agreements either

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include collective/class action waivers or do not explicitly provide for collective arbitration.

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Dkt. 119 at 1; Dkt 111. For those reasons, defendants requested that the court “rule that

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all individuals who signed” at least one of the two agreements “be precluded from

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participating in any way in this litigation[.]” Dkt. 111 at 22:1-4. Plaintiff responded with

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arguments essentially aimed at the court delaying any decision about the enforceability of

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the arbitration agreements until after FLSA certification. Dkt. 114. The parties completed

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briefing on September 6, 2018, and the court held a hearing on September 19, 2018.
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During that hearing, the court expressed concerns about, inter alia, the relief

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defendants’ motion sought and the basis for that relief. In response, defendants “clarified

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that the motion is based on an affirmative defense.” Dkt. 119. In a subsequent

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September 20, 2018 order, the court explained:

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United States District Court
Northern District of California

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[D]efendants’ thirty-fourth “affirmative defense” states that
certain putative class/collective action members are subject to
individual arbitration agreements and that those individuals’
claims may not be adjudicated in this action. Dkt. 23 at 21.
Even if that were a proper affirmative defense, which the court
expresses no opinion about, it is an affirmative defense against
individuals who are neither present nor parties to this action.
That said, the court understands defendants’ motion, however
it is captioned, as a challenge to the definition and scope of
plaintiff’s proposed class/collective action. . . . [Specifically,]
according to defendants, plaintiff’s class/collective definition is
too broad because the class/collective definition should, but
does not, exclude past and present employees who have
signed arbitration agreements.
Dkt. 119 at 1-2.
In consideration of efficiency and the underlying purpose of defendants’ motion,

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the court ordered supplemental briefing on two related topics: “(1) Whether the court

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should construe defendants’ motion as a motion to deny class/collective certification[;]

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and (2) Whether such a motion should be granted or denied under the relevant

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standards.” Dkt. 119 at 2 (internal citations omitted).

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In conjunction with the first issue, the court directed the parties to Vinole v.

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Countrywide Home Loans, Inc., 571 F.3d 935, 939 (9th Cir. 2009) and Till v. Saks Inc.,

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No. C 11-00504 SBA, 2013 WL 5755671, at *8 (N.D. Cal. Sept. 30, 2013). In Vinole, the

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Ninth Circuit explicitly considered whether a defendant could file a “preemptive” motion to

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deny Rule 23 class certification. Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935,

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939 (9th Cir. 2009). Vinole concluded that so long as the district court afforded litigants

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the opportunity to conduct discovery relevant to the maintainability of a class action, a

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“defendant may move to deny class certification before a plaintiff files a motion to certify a

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class.” Id. at 941-42. In Saks, the court relied on Vinole and granted defendants’

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preemptive motion to deny FLSA certification. Till v. Saks Inc., No. C 11-00504 SBA,
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2013 WL 5755671, at *9 (N.D. Cal. Sept. 30, 2013).
The parties completed their supplemental briefing on October 8, 2018.

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Unsurprisingly, defendants argued that the court could construe the motion as a motion

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to deny class/collective certification and plaintiff argued that doing so would be

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inappropriate and prejudicial because relevant class/collective discovery had not yet

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occurred. Regarding the FLSA collective action, which is the heart of the dispute in this

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case, the parties’ supplemental briefs agreed that district courts frequently apply a two-

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step approach to determine whether certification is appropriate. Unfortunately, the

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parties also (apparently) agreed to ignore the Ninth Circuit’s recent opinion that changed

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the face of FLSA certification, Campbell v. City of Los Angeles, 903 F.3d 1090, 1099 (9th

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United States District Court
Northern District of California

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Cir. 2018).

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B.

Legal Standard

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1.

Certification Under the FLSA

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An employee may bring an FLSA collective action on behalf of himself/herself and

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other employees who are “similarly situated” and who have filed written consents to join

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the action. 29 U.S.C. § 216(b); see Valladon v. City of Oakland, 2009 WL 2591346 at *7

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(N.D. Cal. Aug. 21, 2009). The FLSA does not define the term “similarly situated” and,

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before the Ninth Circuit’s Campbell decision, neither the Ninth Circuit nor the Supreme

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Court had defined the term. In Hoffmann–La Roche, Inc. v. Sperling, 493 U.S. 165, 170

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(1989), the Supreme Court indicated that a proper collective action will address in a

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single proceeding claims of multiple plaintiffs who share “common issues of law and fact

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arising from the same alleged prohibited activity.”

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Prior to Campbell, district courts in the Ninth Circuit had adopted a two-stage

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approach for determining whether putative collective action plaintiffs are “similarly

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situated.” See, e.g., Adedapoidle–Tyehimba v. Crunch, LLC, 2013 WL 4082137 at *6

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(N.D.Cal. Aug. 9, 2013). At the first stage, “the question [was] essentially whether there

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are potentially similary-situated class members who would benefit from receiving notice

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at this stage of the pendency of” the action. Shaia v. Harvest Mgmt. Sub LLC, 306
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F.R.D. 268, 272 (N.D. Cal. 2015). At the second stage, usually in response to a motion

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for decertification, districts courts in this Circuit would usually employ what was termed

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the “ad hoc” test. That test involved the consideration of “several factors, including

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disparate factual and employment settings of the individual plaintiffs; the various

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defenses available to the defendant which appear to be individual to each plaintiff;

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fairness and procedural considerations; and whether the plaintiffs made any required

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filings before instituting suit.” Id.; Campbell, 903 F.3d at 1113 (discussing ad hoc

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approach).
On September 13, 2018, seven days before this court requested supplemental

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briefing, the Ninth Circuit issued a lengthy opinion endorsing the two-stage approach.

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United States District Court
Northern District of California

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Campbell, 903 F.3d at 1110. Campbell, however, emphatically rejected the district

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courts’ prior application of the term “similarly situated,” which is naturally what both

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stages turn on. Id. at 1111 (“‘similarly situated’ is the key condition for proceeding in a

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collective, and thus the issue on which a grant or denial of decertification generally

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depends”)

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Campbell recognized that lacking an established definition of “similarly situated,”

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district courts had taken one of two approaches to the “similarly situated” requirement.

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Id. at 1111. The first, which no circuit court has adopted in toto, imports Rule 23(b)(3)’s

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requirements. Id. at 1111. The second is the ad hoc test described above. Id. at 1113-

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16. While Campbell found the ad hoc approach a significant improvement over the Rule

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23-based FLSA test, Campbell nevertheless rejected that test as well for two reasons.

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First, the ad hoc test fails to instruct on “what kinds of ‘similarity’ matter under the

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FLSA.” Id. (emphasis in original). Campbell explained that the test tends to “explain

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what the term ‘similarly situated’ does not mean—not what it does.” Id. at 1114. In

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addition, the test’s “focus on differences rather than similarities among” the plaintiff and

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putative plaintiffs can lead “district courts into an approach that treats difference as

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disqualifying, rather than one that treats . . . similarity” as the key. Id. at 1117; see also

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id. at 1113.
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Instead, Campbell explained that the appropriate inquiry is whether the named

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plaintiff and putative plaintiffs are “alike with regard to some material aspect of their

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litigation.” Id. at 1114. The pertinent type of similarity is one that that “allows . . . plaintiffs

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the advantage of lower individual costs to vindicate rights by the pooling of resources.”

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Id. (ellipses in original). “What matters is not just any similarity between party plaintiffs,

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but a legal or factual similarity material to the resolution of the party plaintiffs’ claims, in

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the sense of having the potential to advance these claims, collectively, to some

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resolution.” Id. at 1115.

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The ad hoc test’s second flaw lies in its “fairness and procedural consideration
prong.” Id. Campbell explained that that prong improperly “invites courts to import . . .

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United States District Court
Northern District of California

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requirements with no application to the FLSA[,]” such as Rule 23(b)(3)’s adequacy,

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superiority, or predominance requirements. Id. Those factors are inappropriate in the

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FLSA context because the FLSA “does not give district courts discretion to reject

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collectives that meet the statute’s few, enumerated requirements.” Id. Accordingly,

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Campbell explained, “decertification of a collective action of otherwise similarly situated

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plaintiffs cannot be permitted unless the collective mechanism is truly infeasible.” Id.

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Read as a whole, Campbell requires a much lower showing than the two-step

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approach district courts previously employed. Under Campbell, the named plaintiff and

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putative plaintiffs are “similarly situated” when “they share a similar issue of law or fact

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material to the disposition of their FLSA claim.” Campbell, 903 F.3d at 1117. If plaintiff

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makes a plausible showing that such a similarity exists, the district court should grant

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first-stage certification. Id. at 1109-10 (endorsing “plausibility standard” for first-stage

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certification). Importantly, Campbell specifically eschewed the practical considerations of

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manageability or efficiency that permeated prior district court FLSA certification

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jurisprudence. Instead, the district court may take into account those considerations only

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at the second-stage, and even then, those considerations only support decertification

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when the collective mechanism is “truly infeasible.” Id. at 1117. (a district court “cannot

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reject party plaintiffs’ choice to proceed collectively based on its perception of likely
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inconvenience.”).

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2.

Rule 23 Class Certification

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The party seeking class certification bears the burden of demonstrating by a

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preponderance of the evidence that all four requirements of Rule 23(a) and at least one

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of the three requirements under Rule 23(b) are met. See Wal-Mart Stores, Inc. v. Dukes,

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564 U.S. 338, 350-51 (2011). Under Rule 23(a), a district court may certify a class only if

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it meets the requirements of numerosity, commonality, typicality, and adequacy of

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representation. Mazza v. Am. Honda Motor Co., 666 F.3d 581, 588 (9th Cir. 2012); Fed.

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R. Civ. P. 23(a). The purpose of these requirements is to “ensure [ ] that the named
plaintiffs are appropriate representatives of the class whose claims they wish to litigate,”

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United States District Court
Northern District of California

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and to “effectively limit the class claims to those fairly encompassed by the named

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plaintiff's claims.” Dukes, 564 U.S. at 349 (internal quotation marks omitted). Class

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certification is proper only if the trial court has concluded, after a “rigorous analysis,” that

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Rule 23(a) has been satisfied. Id. at 350-51.

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If all four prerequisites of Rule 23(a) are satisfied, the court then determines

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whether to certify the class under one of the three subsections of Rule 23(b), pursuant to

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which the named plaintiffs must establish either (1) that there is a risk of substantial

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prejudice from separate actions; or (2) that declaratory or injunctive relief benefitting the

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class as a whole would be appropriate; or (3) that common questions of law or fact

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common to the class predominate and that a class action is superior to other methods

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available for adjudicating the controversy at issue. See Fed. R. Civ. P. 23(b)(3).

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C.

Analysis
The Court GRANTS Defendants’ Motion To Deny Rule 23.

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1.

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Though plaintiff is not subject to an arbitration agreement, he seeks to represent a

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Rule 23 class that includes drivers who are subject to arbitration agreements. The Ninth

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Circuit has foreclosed the viability of that proposition.

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In Avilez v. Pinkerton Government Services, Inc., 596 Fed. Appx. 579, (9th Cir.
2015), the named plaintiff's arbitration agreement did not contain a class action waiver,
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but the district court nevertheless certified classes and subclasses that included

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employees who had signed class action waivers. Id. at 579. The Ninth Circuit held that

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the district court abused its discretion in certifying those classes and subclasses because

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“those who signed such waivers have potential defenses that [the named plaintiff] would

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be unable to argue on their behalf.” Id. Thus, the Ninth Circuit concluded, the named

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plaintiff was “not an adequate representative, Fed. R. Civ. P. 23(a)(4), and her claim

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lack[ed] typicality, Fed. R. Civ. P. 23(a)(3).” Id.; see also Tschudy v. J.C. Penney Corp.,

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Inc., No. 11CV1011 JM (KSC), 2015 WL 8484530, at *3 (S.D. Cal. Dec. 9, 2015) (relying

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on Avilez to decertify class with respect to employees who signed arbitration
agreements); Tan v. Grubhub, Inc., No. 15-CV-05128-JSC, 2016 WL 4721439, at *3

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United States District Court
Northern District of California

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(N.D. Cal. July 19, 2016) (granting motion to deny class certification; collecting cases);

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Conde, 223 F. Supp. 3d at 958-63 (same with respect to putative class members who are

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“possibly bound” by arbitration agreements).

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The same is true here. Campanelli is neither subject to an arbitration clause nor a

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class/collective action waiver. Thus, he is not an adequate representative and his claims

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lack typicality with respect to putative Rule 23 plaintiffs who have signed the DRA or the

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Employment Agreement.

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Indeed, the opposite rule makes little sense. Plaintiff’s rule would allow a named

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plaintiff not subject to an enforceable arbitration agreement to certify a Rule 23 class that

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included class members subject to arbitration agreements. Conversely, a named plaintiff

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subject to an enforceable arbitration agreement would be unable to certify the same Rule

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23 class (because she would be compelled to arbitrate before the certification stage).

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The court will not endorse such an unintuitive result. And the Ninth Circuit has recently

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rejected a similar result in O'Connor v. Uber Techs., Inc., 904 F.3d 1087, 1093-94 (9th

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Cir. 2018). There, the Ninth Circuit rejected plaintiff’s argument that a named plaintiff that

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had opted out of arbitration could represent a Rule 23 class that included putative class

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members who were subject to a presumably enforceable arbitration clause. O'Connor v.

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Uber Techs., Inc., 904 F.3d 1087, 1093-94 (9th Cir. 2018).8
Plaintiff contends that (i) the arbitration agreements are unenforceable and (ii) that

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plaintiff has not had the opportunity to conduct class discovery. Avilez implicitly moots

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both of those arguments. First, Avilez found no cause to determine whether the

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arbitration agreements at issue were actually enforceable. Instead, it was enough that

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the named plaintiff had not signed a class action waiver and the putative class members

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he sought to represent had signed such an agreement. Other courts have similarly

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denied Rule 23 certification without delving into the enforceability of arbitration

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agreements that the named plaintiff is not a party to. See Conde, 223 F. Supp. 3d at

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960, 963; Tan, 2016 WL 4721439, at *3.
Second, plaintiff has not identified what additional discovery is pertinent to the

United States District Court
Northern District of California

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present motion to deny class certification. True, “discovery relating to the issue [of]

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whether a class action is appropriate needs to be undertaken before” deciding a Rule 23

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certification motion. § 1785.3 Timing of Certification, 7AA Fed. Prac. & Proc. Civ. §

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1785.3 (3d ed.) (collecting cases). But “the mere allegation that more discovery is

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desire[d] will not preclude a ruling on class certification [ ]. The court will delay its ruling

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only if it finds that discovery would be useful or is necessary in making that

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determination.” Id. That is the same general proposition that Vinole stands for in the

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motion to deny certification posture.
Critically, the present motion to deny Rule 23 certification is premised solely on

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two facts: (1) the named plaintiff has not signed an arbitration agreement and (2) putative

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class members have signed arbitration agreements. In a similar circumstance, Avilez

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held that the class definition should be narrowed to exclude putative class members who

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have signed class action waivers. Avilez found it unnecessary to determine whether the

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Citing Bickerstaff v. Suntrust Bank, 299 Ga. 459, 788 (2016), plaintiff also argues that
by “not signing the arbitration agreement, plaintiff is deemed to have opted-out of the
arbitration clauses on behalf of the collective[.]” Opp. at 21. O’Connor explicitly rejected
that argument. O'Connor, 904 F.3d at 1093-94; Magana v. DoorDash, Inc., No. 18-CV03395-PJH, 2018 WL 5291988, at *3 (N.D. Cal. Oct. 22, 2018).
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arbitration agreements were enforceable, much less engage in a fact-specific inquiry

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about the circumstances under which each putative class member signed the agreement.

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The court holds the same here.

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Accordingly, the court GRANTS defendants’ motion to deny class certification

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based on the currently defined class because the named plaintiff is not an adequate

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representative and his claims lack typicality with respect to putative Rule 23 plaintiffs who

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have signed the DRA or the Employment Agreement.
The Court DENIES Defendants’ Motion to Deny FLSA Certification.

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2.

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As outlined above, under the old two-step FLSA certification process, courts
looked to whether the FLSA named plaintiff and the putative plaintiffs were “similarly

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United States District Court
Northern District of California

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situated." However, the previously employed ad hoc test “focus[ed] on points of potential

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factual or legal dissimilarity” between the named plaintiff and the putative plaintiffs, as

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well as “fairness and procedural considerations.” Campbell, 903 F.3d at 1113. It was

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with those considerations in mind that this court sequenced defendants’ motion for

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summary judgment before plaintiff’s motion for FLSA certification.

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Under Campbell, those practical considerations no longer hold any weight.

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Instead, Campbell requires that the named plaintiff be afforded the opportunity to show

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that the named plaintiff shares a material similarity with the putative collective members.

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If so, district courts must certify plaintiff’s collective action and order notice to be sent to

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putative collective members. Campbell requires that result regardless of whether the

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putative collective members are contractually prohibited from joining the collective or

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contractually required to arbitrate individually. In other words, Campbell extinguished the

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practical considerations underlying this court’s prior scheduling orders and the present

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motion.

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As to the present motion, Campbell makes clear that even though the vast majority

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of this action’s putative plaintiffs appear to be subject to an enforceable arbitration

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agreement, this court may not preemptively deny FLSA certification or narrow the scope

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of the proposed collective. As discussed, the court must first allow plaintiff to seek FLSA
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certification and, if appropriate, order notice to be sent to all putative FLSA collective

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action members. Only after the FLSA plaintiffs join this action, may the court entertain

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defendants’ arbitration-related motions seeking to compel opt-in plaintiffs to arbitrate or to

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prohibit plaintiffs from proceeding collectively. While that sequencing strikes this court as

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highly inefficient, it is what Campbell demands.

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Accordingly, with respect to the FLSA collective action, defendants’ motion for

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summary judgment—or motion to deny FLSA certification—is DENIED without prejudice.

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Plaintiff shall file his motion for conditional certification, which shall include plaintiff’s

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tolling-related arguments, by January 23, 2019.
CONCLUSION

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United States District Court
Northern District of California

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For the foregoing reasons, defendants’ motion is GRANTED IN PART and

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DENIED IN PART. The court GRANTS defendants’ motion to deny Rule 23 certification

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and DENIES defendants’ motion in all other respects.

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IT IS SO ORDERED.
Dated: December 21, 2018
__________________________________
PHYLLIS J. HAMILTON
United States District Judge

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