Li v. A Perfect Day Franchise, Inc

Filing 512

ORDER Motion Hearing set for 6/14/2012 01:30 PM in Courtroom 8, 4th Floor, San Jose before Hon. Lucy H. Koh. Signed by Judge Lucy H. Koh on 5/23/2012. (lhklc2, COURT STAFF) (Filed on 5/23/2012)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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GUIFU LI, MENG WANG, FANG DAI, LIN )
CUI, and ZHONG YU, on behalf of themselves )
and all others similarly situated,
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Plaintiffs,
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v.
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A PERFECT DAY FRANCHISE, INC., a
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California Corporation, et al.,
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Defendants.
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)

Case No.: 10-CV-01189-LHK
ORDER CONTINUING HEARING;
REQUESTING ADDITIONAL
INFORMATION

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Plaintiffs’ counsel has contacted Ms. Parker Brown, the courtroom deputy, regarding

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continuing the hearing date on Plaintiffs’ motion for a default judgment in order to perfect service

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as to all defendants against whom Plaintiffs seek a default judgment. Plaintiffs’ request is

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GRANTED. The hearing on the motion for default judgment is CONTINUED to June 14, 2012 at

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1:30 p.m. Plaintiffs shall file proofs of service by May 31, 2012. The hearing on Plaintiffs’ motion

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for final approval of the class settlement remains as set for May 24, 2012.

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Additionally, the Court is concerned that Plaintiffs have not adequately supported the

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damages that they seek in their motion for default judgment. Plaintiffs’ motion merely cites to the

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expert damages report without adequately providing a legal basis for their calculations. The expert

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Case No.: 10-CV-01189-LHK
ORDER CONTINUING HEARING; REQUESTING ADDITIONAL INFORMATION

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report, in turn, explains that the expert relied on “information from the California Department of
Industrial Relations,” without citing authority or specifying what specifically that information is.

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The Court has identified several specific areas of concern. For example, in reviewing the
calculations for damages arising from Plaintiffs’ minimum wage claim, the Court is unclear as to
why the expert used the “regular rate of pay” (which is between $10.00 and $11.00 for most survey
respondents) to calculate the survey respondents’ unpaid minimum wages. California wage law
establishes that “any employee receiving less than the legal minimum wage . . . is entitled to
recover in a civil action the unpaid balance of the full amount of this minimum wage.” See Cal.
Labor Code § 1194 (emphasis added). According to the applicable wage order for service industry
employees, “[e]very employer shall pay to each employee wages not less than seven dollars and
fifty cents ($7.50) per hour for all hours worked, effective January 1, 2007, and not less than eight
dollars ($8.00) per hour for all hours worked, effective January 1, 2008 . . .” IWC Wage Order 22001 ¶ 4. Thus, based on the applicable statute and wage order, it appears as though the accurate
measure of minimum wage damages is based on the difference between the wage rate actually paid
to the employee (based on the total amount of hours worked and wages earned) and the minimum
wage rate at the time of the purported violation.1 The statute does not guarantee that Plaintiffs are
entitled to the unpaid balance of the full amount based on a “regular rate” of pay. The amount of
damages requested is not sufficiently supported by legal authority and appears to contradict the
plain language of the statute and wage order.2

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Indeed, as the SAC makes clear, SAC ¶ 77, the prevailing wage rate was not consistent
throughout the class period. Plaintiffs should also address how their calculations take this change
in the minimum wage rate into account.
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Taking survey respondent Shuangtian Wang as an example, Plaintiffs claim that she should have
earned an extra $10.93 per hour for every hour over 8 hours worked. See Petersen Decl. Table 2.
This contradicts the plain language of the wage order which states that she is entitled to $8 per hour
for all hours worked. Id. Thus, it appears as though Plaintiffs believe that Ms. Wang is entitled to
$120.23 per day ($10.93 per hour for 11 hours per day), while the statutory language suggests that
Ms. Wang is only entitled to $88 per day ($8.00 per hour for 11 hours per day) for her minimum
wage claim (of course Ms Wang is entitled to additional damages for defendants’ failure to pay
overtime as well). Plaintiffs will need to support their calculation with legal authority and explain
this discrepancy before the Court may award minimum wage damages.

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Case No.: 10-CV-01189-LHK
ORDER CONTINUING HEARING; REQUESTING ADDITIONAL INFORMATION

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Similarly, the Court is unclear as to whether Plaintiffs’ calculation of “regular rate” of pay
comports with the applicable wage order and the FLSA with respect to calculation of overtime
damages under state law and liquidated damages under the FLSA. Plaintiffs appear to calculate the
“regular rate” of pay based upon the number of hours of massages. Yet Plaintiffs have cited no
authority as to why this is the proper calculation of the “regular rate” of pay under either federal or
state law. Additionally, it should be noted that it appears as though both state law and federal law
calculate overtime based on a 40 hour work week, which is not how Plaintiffs appear to have
calculated the overtime damages. IWC Wage Order ¶ 2-2001; 29 U.S.C. § 207(a)(2)(c).
The Court is unable to verify Plaintiffs’ damages calculations based on the information
provided. By June 7, 2012, Plaintiffs shall provide an updated request for damages that addresses
these issues, supported by an updated damages expert report. Additionally, for all damages and
interest requests made in the motion for default judgment, Plaintiffs are encouraged to double
check their calculations and are ordered to provide legal authority to support their reasoning and
calculations. Plaintiffs shall also provide the survey instrument used to gather the data relied upon
for their damages calculations.

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IT IS SO ORDERED.
Dated: May 23, 2012

_________________________________
LUCY H. KOH
United States District Judge

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Case No.: 10-CV-01189-LHK
ORDER CONTINUING HEARING; REQUESTING ADDITIONAL INFORMATION