-DLB Medlock v. Taco Bell Corp., et al., No. 1:2007cv01314 - Document 267 (E.D. Cal. 2011)

Court Description: 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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1 UNITED STATES DISTRICT COURT 2 FOR THE EASTERN DISTRICT OF CALIFORNIA 3 4 5 6 IN RE TACO BELL WAGE AND HOUR 1:07-cv-01314-OWW-DLB 7 ACTIONS MEMORANDUM DECISION RE PLAINTIFFS MOTION FOR CLASS CERTIFICATION AND DEFENDANTS MOTION TO EXCLUDE DECLARATION AND REPORT OF JAMES LACKRITZ 8 9 10 (DOCS. 185, 221). 11 12 13 14 15 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 16 17 18 opposition (Defs. Opp n Class Cert., ECF No. 220), to which Plaintiffs replied (Pls. Reply Class Cert., ECF No. 235). Both 19 parties filed supplemental briefs regarding the subclass 20 definitions (Pls. Response Hearing, ECF No. 252; Defs. Prop. 21 Defins., ECF No. 254), and Plaintiffs filed an objection and 22 response to Taco Bell s supplemental brief (Pls. Obj n Prop. 23 24 25 26 Defins., ECF No. 255). Taco Bell moves to exclude the declaration and report of Plaintiffs expert Dr. James Lackritz. (Defs. Mot. Lackritz, ECF 27 No. 221.) Plaintiffs filed an opposition (Pls. Opp n Lackritz, 28 ECF No. 237), to which Taco Bell replied (Defs. Reply Exclude, 1 1 ECF No. 244). Taco Bell also filed an objection to Plaintiffs 2 evidence and expert Dr. Philip C. Gorman (Defs. Obj n Gorman, ECF 3 No. 220-6), to which Plaintiffs responded (Pls. Opp n Gorman, ECF 4 No. 235-2). Plaintiffs object to Taco Bell s evidence and expert 5 6 7 8 9 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. 10 11 12 13 14 15 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 16 al., Case No. 1:09-cv-00200; (4) Naranjo v. Yum! Brands, Inc., 17 Case No. 1:09-cv-00246; (5) Widjaja v. Yum Brands, Inc., Case No. 18 1:09-cv-01074; and (6) Nave v. Taco Bell Corp., Case No. 1:10-cv- 19 02222. 20 21 On June 29, 2009, Plaintiffs filed a Consolidated Complaint alleging: (1) unpaid overtime; (2) unpaid minimum wages; (3) 22 23 24 unpaid wages; (4) missed meal periods; (5) missed rest periods; (6) non-compliant wage statements; (7) unreimbursed business 25 expenses; (8) vested accrued vacation wages; (9) non-payment of 26 wages upon termination; and (10) non-payment of wages during 27 employment. (Compl., ECF No. 118-1.) The Consolidated Complaint 28 2 1 also asserts a claim for violation of California Business & 2 Professions Code 17200, et seq. and penalties pursuant to 3 California Labor Code sections 2698, et seq. Id. Plaintiffs were 4 granted leave to file a First Amended Consolidated Complaint 5 6 7 8 (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 9 class action and eight proposed subclasses: (1) late meal break 10 subclass; (2) underpaid automatic adjustment subclass; (3) on- 11 duty meal period agreement subclass; (4) unpaid on-duty meal 12 13 period subclass; (5) rest break subclass; (6) final pay subclass; (7) vested accrued vacation wage subclass; and (8) non-management 14 15 employee vacation subclass. (Pls. Mot. Class Cert., ECF No. 185.) 16 On August 30, 2011, Plaintiffs meal and rest break claims 17 (subclasses 1 to 5) were stayed for the California Supreme 18 Court s pending resolutions of Brinker Restaurant Corp. v. 19 Superior Court, 165 Cal. App. 4th 25 (2008), review granted, 85 20 Cal. Rptr. 3d 688 (2008), and Brinkley v. Public Storage, Inc., 21 167 Cal. App. 4th 1278 (2008), review granted, 87 Cal. Rptr. 3d 22 23 24 25 26 27 28 674 (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 3 1 Rule 23(a) have been satisfied. Gen. Tel. Co. of Sw. v. Falcon, 2 457 U.S. 147, 161, 102 S.Ct. 2364 (1982). To satisfy Rule 23(a): 3 (1) the class must be so numerous that joinder of all members is 4 impracticable; (2) there must be questions of law or fact common 5 6 7 to the class; (3) the claims of the class representatives must be typical of the claims of the class; and (4) the class 8 representatives must fairly and adequately protect the interests 9 of the class. Fed. R. Civ. P. 23(a). 10 11 12 13 14 15 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: 19 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: 20 (A) the class members' interests in individually controlling the prosecution or defense of separate actions; 21 (B) the extent and nature of any litigation concerning the controversy already begun by or against class members; 22 (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and 16 17 18 23 24 25 26 27 28 (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 4 1 proceeding. Armstrong v. Davis, 275 F.3d 849, 872 n.28 (9th Cir. 2 2001). The party seeking class certification has the burden of 3 demonstrating that all the requirements of Rule 23(a) are met and 4 5 6 7 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 8 whether plaintiffs have stated a cause of action that will 9 prevail on the merits, but whether the party seeking 10 certification has met the requirements of Rule 23. United Steel, 11 Paper & Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv. 12 13 14 15 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 16 affirmatively demonstrate his compliance with the Rule -- that 17 is, he must be prepared to prove that there are in fact 18 sufficiently numerous parties, common questions of law or fact, 19 etc. Wal-mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 20 (2011). [S]ometimes it may be necessary for the court to probe 21 behind the pleadings before coming to rest on the certification 22 23 24 question. Id. (quoting Falcon, 457 U.S. at 160). [C]ertification is proper only if "the trial court is satisfied, 25 after a rigorous analysis, that the prerequisites of Rule 23(a) 26 have been satisfied. Wal-mart, 131 S. Ct. at 2551 (quoting 27 Falcon, 457 U.S. at 161). 28 5 1 IV. ANALYSIS 2 A. Final Pay Subclass 3 The gravamen of Plaintiffs complaint is that [a]n analysis 4 of Defendants wage records shows that Defendants did not have a 5 practice of paying timely wages to employees upon discharge. 6 (Pls. Mot. Class Cert. 19, ECF No. 185-1.) Plaintiffs move to 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 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 22 joinder of all members is impracticable. Fed. R. Civ. P. 23 23(a)(1). Numerosity demands examination of the specific facts 24 of each case and imposes no absolute limitations. Gen. Tel. Co. 25 of Nw., Inc. v. EEOC, 446 U.S. 318, 330, 100 S. Ct. 1698, 64 26 27 28 L.Ed.2d 319 (1980). In determining numerosity, a court should consider not only class size, but also geographic diversity of 6 1 the class, ability of class members to file suit separately, and 2 the nature of the underlying action and relief sought. Nat l 3 Ass n of Radiation Survivors v. Walters, 111 F.R.D. 595, 599 4 (N.D. Cal. 1986). 5 6 7 Plaintiffs argue that their final pay subclass is sufficiently numerous because Dr. Lackritz s analysis of 1,684 8 former employees payroll records shows that 635 employees, or 9 approximately 38%, received their final paychecks more than three 10 days after their termination date. Dr. Lackritz s analysis, 11 however, is overbroad, and is not limited to employees (1) who 12 13 14 15 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 16 by the California Labor Code. See Cal. Labor Code § 208 ( Every 17 employee who is discharged shall be paid at the place of 18 discharge, and every employee who quits shall be paid at the 19 office or agency of the employer in the county where the employee 20 has been performing labor. ). Plaintiffs cannot extrapolate the 21 number of putative final pay subclass members from Dr. Lackritz s 22 23 24 25 26 27 28 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 7 1 permissively; all questions of law and fact do not need to be 2 common. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 3 1998). However, it is insufficient to merely allege any common 4 5 6 7 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, 8 but this does not merely mean that they have all suffered a 9 violation of the same law. Walmart, 131 S.Ct. at 2551 (quoting 10 Falcon, 457 U.S. at 157). Rather, class members claims must 11 depend upon a common contention that is of such a nature that 12 13 14 15 16 17 18 19 20 21 22 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 23 pay subclass together is the question whether Taco Bell failed to 24 tender final paychecks to involuntarily terminated employees 25 26 27 28 immediately upon discharge. (1) Individual Inquiries Taco Bell contends that Plaintiffs final pay subclass is 8 1 not suitable for class certification because individual issues 2 predominate. Plaintiffs rejoin that liability and damages are 3 readily ascertainable through analysis of Taco Bell s time and 4 wage records, and that the back-story to employees not picking 5 6 7 8 up their paychecks is irrelevant. (Pls. Reply Class Cert. 15, ECF No. 235.) Under the California Labor Code, if an employer discharges 9 an employee, the wages earned and unpaid at the time of discharge 10 are due and payable immediately. Cal. Labor Code § 201(a). If an 11 employee quits, wages are "due and payable not later than 72 12 13 14 15 16 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 17 discharge, and an employee who quits must be paid at the office 18 where they performed labor. Cal. Labor Code § 208. The 19 California final pay statutes (Labor Code §§ 201, 202) are 20 triggered not only by termination of employment, but by the 21 associate performing his or her duty to be at the store to 22 23 24 receive tender of final pay or to give [the employer] specific mailing instructions. In re Wal-Mart Stores, Inc. Wage & Hour 25 Litig., 2008 U.S. Dist. LEXIS 14756, at *24 (N.D. Cal. Feb. 13, 26 2008). An employee who quits his or her employment may request 27 that his or her final paycheck be mailed, but this option must 28 9 1 be expressly exercised by the employee. Villafuerte v. Inter-Con 2 Sec. Sys., Inc., 96 Cal. App. 4th Supp. 45, 51, 117 Cal. Rptr. 2d 3 916 (2002); Cal. Labor Code § 202. 4 The putative class is not, as Plaintiffs propose, simply 5 6 7 composed of involuntarily terminated employees who were not timely tendered their wages. It can only include involuntarily 8 terminated employees who appeared at their place of discharge and 9 did not receive their final paychecks. Taco Bell contends that 10 this requirement necessitates individual inquiries as to when 11 employees presented themselves for payment, which cannot be 12 13 14 15 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 16 worked on their date of termination and were issued their final 17 paychecks subsequent to that date. Plaintiffs proposed the 18 following alternative subclass definition: 19 20 21 22 23 24 25 26 27 28 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; 10 1 (2) Taco Bell maintains time records; and (3) payroll records 2 indicate the date paychecks, including final paychecks, are 3 issued. Limiting the final pay subclass to employees whose 4 payroll records indicate that they were involuntarily terminated 5 6 7 8 9 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 10 all potential individual inquiries. California Labor Code § 203 11 provides a waiting time penalty only if an employer willfully 12 13 14 15 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 16 to receive the payment when fully tendered to him or her . . . is 17 not entitled to any benefit under this section for the time 18 during which he or she so avoids payment. Id. [A] good faith 19 dispute that wages are due will preclude imposition of waiting 20 time penalties under Section 203. Alvarez v. Nordstrom, Inc., 21 2011 U.S. Dist. LEXIS 56646, at *13 (C.D. Cal. May 24, 2011) 22 23 24 (quoting 8 C.C.R. § 13520). The willfulness inquiry poses serious problems to Plaintiffs final pay subclass. See id. Willfulness 25 raises an inherently fact intensive inquiry focusing on state of 26 mind and surrounding circumstances. If a final pay subclass is 27 certified, mini-trials would be required for each class member to 28 11 1 determine whether waiting time penalties should be imposed, 2 including whether an employer acted willfully and whether there 3 is a good faith dispute that wages are due. See id. 4 5 (2) Dr. Lackritz s Declaration and Report Taco Bell further argues a merits issue that Plaintiffs lack 6 7 8 any proof to support their final pay claims. Taco Bell asserts that Plaintiffs only evidence to support their final pay claims 9 is Dr. Lackritz s faulty declaration and report, which Taco Bell 10 moves to exclude under Rule 702. 11 (a) Legal Standard 12 Under Federal Rule of Evidence 702, expert testimony is 13 admissible if: "(1) the testimony is based upon sufficient facts 14 15 16 17 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 18 expert may testify regarding scientific, technical or other 19 specialized knowledge if it will assist the trier of fact to 20 understand the evidence or to determine a fact in issue. Daubert 21 v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589, 113 S.Ct. 2786 22 (1993). 23 24 25 26 27 28 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 12 1 2 3 4 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). 5 6 7 The Supreme Court recently suggested in dicta that Daubert should be applied to expert testimony at the class certification 8 stage. See Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2553- 9 2554 (2011) ( The District Court concluded that Daubert did not 10 apply to expert testimony at the certification stage of class- 11 action proceedings. We doubt that is so ¦. (citation omitted)). 12 13 14 15 16 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) 17 18 Discussion Taco Bell contends that Lackritz s opinions as to 19 Plaintiffs final pay claims are based on erroneous assumptions 20 and include irrelevant data. Taco Bell identifies the following 21 errors in Lackritz s report with respect to the final pay 22 subclass: 23 24 25 1. Lackritz calculated Defendants final pay liability from employee records showing employee termination dates, but 26 admits that he did not determine whether the terminations 27 were voluntary or involuntary. (Lackritz Dep. Tr. 155:21- 28 13 1 156:4, ECF No. 220-3.) Plaintiffs final pay claims are 2 limited to persons who are terminated involuntarily. 3 4 2. Lackritz admits that he based his final pay analysis from records that include pay end dates from September 16, 5 6 7 8 2003. (Lackritz Dep. Tr. 158:14-159:21, ECF No. 220-3.) Plaintiffs final pay claims extend back only to September 7, 2004. 9 Dr. Lackritz s analysis of Plaintiffs final pay claims 10 includes data from voluntarily terminated employees and employees 11 who terminated before the September 7, 2004 statute of 12 13 14 15 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 16 opinion is clearly unreliable, it may be disregarded. Munoz v. 17 Orr, 200 F.3d 291, 301 (5th Cir. 2000); Smith v. Pac. Bell Tel. 18 Co., 662 F. Supp. 2d 1199, 1226 (E.D. Cal. 2009). The data on 19 which Lackritz bases his opinion includes employees who are not 20 in the final pay subclass, even before the proposed narrowing of 21 the definition of the final pay subclass. Opinions derived from 22 23 24 erroneous data are appropriately excluded. Id. (citing Slaughter v. Southern Talc Co., 919 F.2d 304 (5th Cir. 1990)); see also 25 United States v. City of Miami, 115 F.3d 870, 873 (11th Cir. 26 1997) (reversing judgment based on expert opinion derived from 27 erroneous and incomplete data ). 28 14 1 Plaintiffs rejoin that Lackritz s errors are correctable, by 2 Lackritz s supplemental declaration and report filed on May 27, 3 2011, as part of Plaintiffs reply in support of class 4 certification address Taco Bell s criticisms. New evidence or 5 6 7 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 8 (9th Cir. 2000) ( [I]ssues cannot be raised for the first time in 9 a reply brief. ); Tovar v. US Postal Serv., 3 F.3d 1271, 1273 n.3 10 (9th Cir. 1993) ("To the extent that the [reply] brief presents 11 new information, it is improper. Therefore, [certain] portions of 12 13 14 15 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 16 raised for the first time in a reply brief."); Docusign, Inc. v. 17 Sertifi, Inc., 468 F. Supp. 2d 1305, 1307 (W.D. Wash. 2006) 18 (striking new information and opinions in an expert's 19 supplemental declaration submitted with a reply brief). Even if 20 Lackritz s supplemental declaration was included, it does not 21 differentiate between employees who were present on their date of 22 23 24 termination, and would still be based on incomplete data. Dr. Lackritz s report is not admissible for purposes of 25 Plaintiffs motion for class certification. Nor is it helpful to 26 a trier of fact. Plaintiffs do not offer any proof to support 27 their assertion that Taco Bell has a common pattern and practice 28 15 1 of late-paying involuntarily terminated employees their final 2 paychecks. If there is no evidence that the class was subject to 3 the same practice or policy of tardy final paychecks, there is no 4 5 6 7 question common to the class. See Ellis v. Costco, 2011 U.S. App. LEXIS 19060, at *28 (9th Cir. Sep. 16, 2011). c) Typicality 8 Rule 23(a)(3) requires that the claims or defenses of the 9 representative parties are typical of the claims or defenses of 10 the class. Typicality is satisfied when each class member's 11 claim arises from the same course of events, and each class 12 13 14 15 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 16 typicality is whether other members have the same or similar 17 injury, whether the action is based on conduct which is not 18 unique to the named plaintiffs, and whether other class members 19 have been injured by the same course of conduct. Hanon v. 20 Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992) (quoting 21 Schwartz v. Harp, 108 F.R.D. 279, 282 (C.D. Cal. 1985)). Under 22 23 24 the rule's permissive standards, representative claims are typical if they are reasonably co-extensive with those of absent 25 class members; they need not be substantially identical. Hanlon 26 v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998). 27 28 Plaintiffs putative class representative for the final pay 16 1 2 3 4 5 6 7 8 9 10 11 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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