Tschudy v. J.C. Penny Corporation, Inc. et al, No. 3:2011cv01011 - Document 129 (S.D. Cal. 2014)
Court Description: ORDER Denying 93 Motion to Strike Class Allegations; Granting 119 Motion for Class Certification, and Denying Related Evidentiary Motions. Plaintiffs' counsel of record, Sheldon A. Ostroff, of the Law Offices of Sheldon A. Ostroff, and Ja mes C. Kostas, of Huffman & Kostas, are Appointed as Class Co-Counsel. The parties' evidentiary objections are overruled, and their motions to strike evidence related to the motions for class certification (Doc. Nos. 97 , 121 -1, and 124 ) are Denied. Signed by Judge Jeffrey T. Miller on 12/17/2014. (rlu)
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Tschudy v. J.C. Penny Corporation, Inc. et al Doc. 129 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 13 RAYMOND TSCHUDY, individually, on behalf of himself, all others similarly situated, and on behalf of the general public, vs. Plaintiff, 14 15 16 ORDER DENYING MOTION TO STRIKE CLASS ALLEGATIONS, GRANTING MOTION FOR CLASS CERTIFICATION, AND DENYING RELATED EVIDENTIARY MOTIONS J.C. PENNEY CORPORATION, INC., a Delaware corporation, Defendants. 17 18 CASE NO. 11-cv-1011 JM (KSC) Before the court are two motions regarding whether this case can be 19 litigated as a class action, as well as several motions to strike evidence related 20 to class certification. On November 8, 2013, J.C. Penney Corporation, Inc. (“JCP”) 21 filed a motion to strike the class-action allegations from Plaintiffs’ second amended 22 complaint (“MTS”). (Doc. No. 93.) On June 9, 2014, Plaintiffs filed a motion to 23 certify this case as a class action (“MTC”). (Doc. No. 119.) Both motions were 24 fully briefed. The parties also filed several motions to strike items of evidence 25 related to class certification. (Doc. Nos. 97, 121-1, and 124.) For the reasons set 26 forth below, the court denies JCP’s motion to strike the class-action allegations, 27 grants Plaintiffs’ motion to certify this case as a class action, and denies the 28 evidentiary motions. -1Dockets.Justia.com 1 BACKGROUND 2 A. Procedural Background 3 1. 4 Plaintiff Tschudy filed the original complaint in this case on April 5, 2011, Original Complaint and Removal 5 in San Diego Superior Court. (Doc. No. 1-1.) Defendants removed the case to 6 this court on May 9, 2011, pursuant to the Class Action Fairness Act, 28 U.S.C. 7 § 1332(d). (Doc. No. 1.) 8 2. 9 On February 8, 2012, Plaintiffs filed the operative second amended complaint The Second Amended Complaint 10 (“SAC”). (Doc. No. 45.) In the SAC, Plaintiffs contend that under California 11 law vacation benefits accrue and vest as employees work, and that JCP’s vacation 12 policy, called My Time Off (“MTO”), causes management associates (“MA”) and 13 part-time non-management associates (“PTNMA”) to forfeit vacation benefits “if 14 such employees are not employed on the first day of the calendar month following 15 the month or months during which such paid vacation benefits were earned.” (Id. 16 ¶ 74.) The provisions Plaintiffs challenge (the “challenged provisions”) read: 17 Management - You become eligible and receive your first deposit on the first day of the third month of employment. ... 18 19 Part-Time Non-Management - You become eligible and receive your first deposit on the first day of the month following 12 months of employment if you average 25 or more hours during the first 48 weeks of employment. You must qualify each year for MTO deposits. 20 21 22 (Id.) 23 Based on these provisions, Plaintiffs assert two causes of action, for 24 (1) forfeiture of wages, under California Labor Code § 200 et seq.; and (2) unlawful 25 business practices, under California Business & Professions Code § 17200 et seq.1 26 (Id. ¶¶ 73–93.) Specifically, Plaintiffs claim that the MTO violates California 27 28 1 The SAC also presented claims under Illinois law, but those claims were transferred to Illinois. (See Doc. No. 55.) -2- 1 Labor Code §§ 201 and 202 (timely payment of wages upon employee’s termination 2 or resignation); § 203 (waiting-time penalties for failure to comply with §§ 201 3 and 202); § 204 (payment of all compensation earned within each pay period); 4 and § 227.3 (prohibition on forfeiture of vested vacation time upon termination), 5 and that these violations also constitute unlawful business practices within the 6 meaning of California Business & Professions Code § 17200 et seq. (Id. ¶¶ 74–82, 7 84.) 8 On their claim for forfeiture of wages Plaintiffs seek damages, penalties, 9 interest, costs and fees, and an injunction prohibiting JCP from continuing the 10 challenged practices. (Id. ¶ 103.) On their claim for unlawful business practices 11 Plaintiffs seek disgorgement, restitution, interest, costs and fees, and an injunction 12 prohibiting JCP from continuing the challenged practices. (Id.) 13 3. 14 On August 20, 2012, JCP filed a motion for summary judgment or summary Summary Judgment 15 adjudication (“MSJ”). (Doc. No. 59.) JCP asserted that it was entitled to judgment 16 because its written policy unambiguously advises employees that they are eligible 17 to accrue vacation benefits “only after the expiration of their waiting period,” and 18 the policy makes clear that the deposits of vacation time employees receive are 19 advances for future work rather than compensation for past work. (Doc. No. 59-1 20 at 10.) As the basis of its arguments, JCP relied on language in detailed versions 21 of the policy (referred to here and in previous orders as “JMTOs”), and it asserted 22 that all new-hires, including Plaintiffs, received copies of the policy. (Id., Harris 23 Decl. ¶¶ 5–10.) 24 Plaintiffs opposed JCP’s motion, asserting that they had never received the 25 JMTO, and that the only policy documents they had ever been given were shorter 26 versions (referred to here and in previous orders as “EMTOs”) that did not indicate 27 that vacation deposits were advances for future work. (Doc. No. 66 at 3–6, 16.) 28 They argued that summary judgment was inappropriate because there was a material -3- 1 dispute regarding which was the controlling plan. (Id. at 16.) 2 On January 28, 2013, the court denied JCP’s motion for summary judgment, 3 as JCP had not shown that Plaintiffs had ever received the JMTOs, and the EMTOs 4 and other statements Plaintiffs had received did not make clear that vacation 5 deposits were advances for future work. (Doc. No. 78.) In a footnote the court 6 stated: 7 8 9 10 11 However, had JCP established that the Plaintiffs received the JMTOs, the court’s analysis might have been different. The JMTO is more extensive, even providing examples about when an employee who started on a given date would begin earning MTO benefits. That additional information might have put PTNM employees on notice about the details of JCP’s MTO policy. But the court need not examine that scenario at this juncture as JCP has not shown conclusively that the Plaintiffs received the JMTOs. 12 (Id. at 12 n.8.) 13 4. 14 On November 8, 2013, JCP filed the instant motion to strike the class Motions on Class Certification 15 allegations from the SAC. (Doc. No. 93.) Plaintiffs opposed the motion, (Doc. 16 No. 96), and moved to strike some of the evidence JCP submitted with its motion, 17 (Doc. No. 97), and JCP filed a reply, (Doc. No. 114). 18 On June 9, 2014, Plaintiffs filed the instant motion to certify this case as a 19 class action. (Doc. No. 119.) JCP opposed the motion, (Doc. No. 121), and moved 20 to strike some of the evidence Plaintiffs submitted with their motion, (Doc. No. 12121 1). Plaintiffs replied, (Doc. Nos. 122, 123), and moved to strike some of the 22 evidence JCP filed with its opposition. (Doc. No. 124.) 23 B. Legal and Factual Background 24 1. 25 California does not require employers to offer employees paid vacation. See California Law 26 California Department of Labor Standards Enforcement Policies and Interpretation 27 Manual (“DLSE Manual”) § 15.1.2 (2006) (“Neither the statute nor the case law 28 requires that any employer provide vacation benefits; the law only addresses the -4- 1 requirements which a vacation plan, if offered, must meet.”). But, if an employer 2 chooses to offer vacation benefits, the benefits are considered “in effect, additional 3 wages for services performed,” Suastez v. Plastic Dress-Up Co., 31 Cal. 3d 774, 779 4 (1982), or “a form of deferred compensation,” id. at 780. Hence, “[a] proportionate 5 right to a paid vacation ‘vests’ as the labor is rendered.” Id. at 784. Once the right 6 has vested, California Labor Code § 227.3 protects it from forfeiture. See id. 7 Section 227.3 requires employers to pay terminated employees for vested vacation 8 time in accordance with the “contract of employment or employer policy,” and 9 prohibits contracts and policies that “provide for forfeiture of vested vacation time 10 upon termination.”2 11 California allows employers who offer vacation to place certain limits on 12 it, consistent with these rules. For example, “[a]n employer is entitled to adopt a 13 policy specifying the amount of vacation pay an employee is entitled to be paid as 14 wages, depending on the length of service.” Owen v. Macy’s, Inc., 175 Cal. App. 15 4th 462, 464 (2009) (internal quotation marks omitted). And, because employers 16 are not required to offer employees vacation, they can impose a waiting period 17 during which no vacation is earned or vested “[i]f an express written company 18 policy forewarns new employees that their compensation package does not include 19 paid vacation during their initial employment.” Id.; see also DLSE Manual § 15.1.3 20 (“Vacation plans which establish probation periods during which no vacation pay 21 is vested are permitted.”). 22 23 24 25 26 27 28 2 Section 227.3 reads: Unless otherwise provided by a collective-bargaining agreement, whenever a contract of employment or employer policy provides for paid vacations, and an employee is terminated without having taken off his vested vacation time, all vested vacation time shall be paid to him as wages at his final rate in accordance with such contract of employment or employer policy respecting eligibility or time served; provided, however, that an employment contract or employer policy shall not provide for forfeiture of vested vacation time upon termination. -5- 1 2. 2 As noted above, JCP’s vacation policy is embodied in its My Time Off JCP’s My Time Off Policy 3 (“MTO”) plan. At this point there appear to be five documents that mention or 4 contain some version of the MTO, some of which exist in multiple iterations: 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 1. JMTO—The full-length policy statement JCP relies on, in two iterations dated January 1, 2007, and December 31, 2008, respectively, (MSJ, Harris Decl., Exhs. E & F); 2. EMTO—The plan summary Plaintiffs rely on, from Your Benefits Book 1, dated January 1, 2007, (MTC, Ostroff Decl., Exh. 5, Part 1 at 5–14); 3. New Hire Guide to Benefits—In iterations for various years 2008 through 2012, (MTC, Ostroff Decl., Exh. 5, Part 2 at 18–25 (2008), 32–39 (2009); Exh. 5, Part 3 at 5–13 (2010), 16–22 (2012)); 4. Benefits to Go—Which JCP describes as a “quick version” of the MTO, (MTC, Ostroff Decl., Exh. 5, Part 2 at 38–39); and 5. The Associate Guide to Winning Together—In two iterations dated May 2007 and January 2009, respectively, (Doc. No. 76, Harris Decl., Exhs. A & B). With minor variations in wording, the first four documents all contain the provisions Plaintiffs challenged in the SAC: Management - You become eligible and receive your first deposit on the first day of the third month of employment. ... Part-Time Non-Management - You become eligible and receive your first deposit on the first day of the month following 12 months of employment if you average 25 or more hours during the first 48 weeks of employment. You must qualify each year for MTO deposits. 23 (MSJ, Harris Decl., Exh. E. at 2 (Jan. 1, 2007 JMTO); Exh. F. at 2 (Dec. 31, 2008 24 JMTO); MTC, Ostroff Decl., Exh. 5, Part 1 at 13 (EMTO); see also MTC, Ostroff 25 Decl., Exh. 5, Part 2 at 22 (2008 New Hire Guide), 35 (2009 New Hire Guide), 26 38 (Benefits to Go); MTC, Ostroff Decl., Exh. 5, Part 3 at 12–13 (2010 New Hire 27 Guide), 20 (2012 New Hire Guide).) The Associate Guide to Winning Together 28 -6- 1 contains only a brief description and does not explain how benefits are calculated.3 2 The first four documents listed above all also contain some explanation of 3 how MTO benefits are calculated. For example, the EMTO explains that “MTO is 4 calculated based on your average week, job classification and service months as of 5 December 31. You must be employed on the first day of each month to receive an 6 MTO deposit. Using the following table and formulas, you can calculate your own 7 MTO deposit. . . . Average Week × Annual MTO Weeks Factor = Annual MTO 8 ÷ 12 Months = Monthly MTO Deposit.” (MTC, Ostroff Decl., Exh. 5, Part 1 at 13.) 9 The JMTOs, however, include details the other documents do not. For 10 example, the JMTOs provide the following example: “If you are hired on October 11 30, you will be eligible and receive your first MTO deposit on November 1 of the 12 following year, provided you averaged 25 hours or more per week in the 48-week 13 period beginning October 30.” (MSJ, Harris Decl., Exh. E at 2, Exh. F at 2.) And 14 only the JMTOs state, “If you are actively at work on the first day of each month, 15 you will receive a deposit of MTO hours that you can earn during that month. The 16 hours are advanced to you and are available for your immediate use as soon as they 17 are deposited into your account.” (MSJ, Harris Decl., Exh. E at 3, Exh. F at 3.) 18 According to Jeff Marcellus, whom JCP designated as most knowledgeable 19 20 3 21 follows: 22 23 24 25 26 27 28 Both versions of The Associate Guide to Winning Together state as We recognize that you may have personal situations and responsibilities to take care of during normal working hours. Paid time off provides you with pay for time off during hours you are scheduled to work. PTO (Paid Time Off) and MTO (My Time Off) are our paid time off benefits programs. To participate in PTO, you must have been Benefits Eligible on December 31, 2003, and have remained Benefits Eligible. All other Associates who meet the eligibility requirements receive monthly deposits of MTO that can be used during that month or the remainder of the year. When possible, submit all requests for time off to your Supervisor as far in advance as possible. Certain dates are unavailable, such as blackout periods resulting from key business activities. PTO/MTO balances are available on the Associate Kiosk. (Doc. No. 76, Harris Decl., Exh. A at 28; Exh. B. at 24.) -7- 1 on the MTO, the policy was first implemented in California on January 1, 2004, 2 has remained substantively the same since then, and is applied according to its 3 terms to all MA and PTNMA. (MTC, Ostroff Decl., Exh. 4 at 5–7, 9–12.) And, 4 according to Anne Buckingham, JCP’s designee on matters concerning JCP’s 5 adoption, implementation, and enforcement of the MTO, the JMTO only “exists 6 online on the PowerLine website” and has “never existed in any . . . format other 7 than online.” (MTC, Ostroff Decl., Exh. 5, Part 1 at 15.) What information 8 employees received about the existence of the JMTO, its significance, or how 9 to access it remains unclear. The Named Plaintiffs4 10 3. 11 According to the filings, Raymond Tschudy was a PTNM JCP employee 12 in California from February 11, 2007, until he voluntarily ended his employment 13 on February 27, 2008. (Doc. No. 119-1 at 8.) He completed 53 weeks of 14 employment and averaged more than 25 hours per week during his entire 15 employment. (Id.) According to Tschudy, JCP did not pay him vacation benefits 16 after his termination because he was not employed on March 1, 2008. (Id. at 9.) 17 According to JCP, Tchudy was not entitled to vacation pay because his employment 18 ended on February 29, 2008, “one day short of attaining eligibility to earn MTO 19 benefits.” (Doc. 93-1 at 6.) 20 Sheila Walker was a PTNM JCP employee in California from September 17, 21 2008, through April 2010. (Doc. No. 119-1 at 9.) She worked more than 48 weeks 22 and averaged 24.15 hours a week until she went on medical leave in October 2009, 23 after which she did not return to work. (Id.) Her employment ended in April 2010. 24 (Id.) The precise factual basis for her claim is unclear, but, like the other plaintiffs, 25 she claims that she “forfeited vacation because of the MTO.” (Id.) 26 27 4 The SAC identified three additional plaintiffs who are no longer involved in this case. Laura Garcia and Lore Rednour’s Illinois-law claims were transferred 28 to Illinois. (Doc. No. 55.) The parties voluntarily dismissed Leticia Hinojosa. (Doc. No. 88.) -8- 1 Kamryn Candelaria was a PTNM JCP employee in California for almost five 2 years, from July 2007 through May or June of 2012 (after this lawsuit was filed), 3 when she resigned to take a full-time position at a bank. (Id. at 10.) During her first 4 48 weeks of employment she averaged about 24.26 hours per week. (Id.) She never 5 received MTO benefits. (Id.) According to JCP, she satisfied the policy’s waiting 6 period, but she was never eligible for MTO benefits because “she did not average 7 at least 25 hours of work over the relevant period.” (Doc. No. 93-1 at 8–9.) 8 DISCUSSION 9 The court addresses JCP’s threshold arguments regarding standing and 10 judicial estoppel before turning to class certification, appointment of counsel, 11 and the parties’ evidentiary motions. 12 A. Standing to Seek Injunctive Relief 13 In JCP’s filings in support of its motion to strike and in opposition to 14 Plaintiff’s motion to certify this case as a class action, it contends that Plaintiffs 15 lack Article III standing to seek injunctive relief on their claim under California 16 Business & Professions Code § 17200 et seq., because none of them are current 17 JCP employees. (Doc. No. 93-1 at 3 n.3; Doc. No. 121 at 24–25.) Although not 18 raised by the parties, the same concern applies to Plaintiffs’ standing to seek 19 injunctive relief on its claim under California Labor Code § 200 et seq. 20 “In a class action, the plaintiff class bears the burden of showing that 21 Article III standing exists.” Ellis v. Costco Wholesale Corp., 657 F.3d 970, 978 22 (9th Cir. 2011). “Standing requires that (1) the plaintiff suffered an injury in fact, 23 i.e., one that is sufficiently concrete and particularized and actual or imminent, 24 not conjectural or hypothetical, (2) the injury is fairly traceable to the challenged 25 conduct, and (3) the injury is likely to be redressed by a favorable decision.” Id. 26 (brackets and internal quotation marks omitted). “Plaintiffs must show standing 27 with respect to each form of relief sought. Standing exists if at least one named 28 plaintiff meets the requirements.” Id. (citation omitted). -9- 1 A plaintiff seeking prospective injunctive relief “must demonstrate that 2 he has suffered or is threatened with a concrete and particularized harm, coupled 3 with a sufficient likelihood that he will again be wronged in a similar way.” 4 Bates v. United Parcel Service, Inc., 511 F.3d 974, 985 (9th Cir. 2007) (citation 5 and internal quotation marks omitted). To satisfy the second requirement, there 6 must be a “real and immediate threat of repeated injury.” Id. (internal quotation 7 marks omitted). When evaluating standing, “[the court] must look at the facts as 8 they exist at the time the complaint was filed.” Slayman v. FedEx Ground Package 9 Sys., Inc., 765 F.3d 1033, 1047 (9th Cir. 2014) (internal quotation marks omitted). 10 In the present case, the initial complaint was filed in April 2011. By that 11 time Tschudy and Walker had long ceased their employment at JCP, as Tschudy’s 12 employment at JCP ended in 2008, and Walker’s ended in 2009. Consequently, 13 when the case was filed, they “lacked standing to seek injunctive or declaratory 14 relief because they would not stand to benefit from such relief.” Id. at 1047–48 15 (internal quotation marks omitted); see also Ellis, 657 F.3d at 988 (“[O]nly current 16 employees have standing to seek injunctive relief.”). Candelaria, however, was 17 still employed by JCP when the complaint was filed and did have standing to seek 18 injunctive relief at the time. But, because she was no longer employed by JCP as 19 of May or June of 2012, “[her] claims for prospective relief became moot because 20 [she] could no longer benefit from such relief.” Slayman, 765 F.3d at 1048. 21 “[W]here, as here, the plaintiff’s claim becomes moot before the district 22 court certifies the class, the class action normally also becomes moot” unless an 23 exception to mootness doctrine applies, such as the exceptions for inherently 24 transitory claims or claims mooted by the defendant’s litigation strategy. Id. 25 Neither exception applies here. The claims are not inherently transitory, as the 26 putative class is not constantly changing in the sense that some members leave 27 the class while others come in. See Sze v. INS, 153 F.3d 1005, 110 (9th Cir. 1998) 28 (“An inherently transitory claim is one where there is a constantly changing putative -10- 1 class, and where the trial court will not have enough time to rule on a motion for 2 class certification before the proposed representative’s individual interest expires.” 3 (citation and internal quotation marks omitted)). Nor does it appear that JCP 4 mooted Candelaria’s claim by terminating her. Rather, she indicates that she left 5 her employment at JCP voluntarily. Accordingly, her claims for injunctive relief 6 are moot. 7 Because Tschudy and Walker did not have standing to seek prospective 8 injunctive relief when the suit was filed, and Candelaria’s claims for injunctive 9 relief became moot before Plaintiffs moved for class certification, none of the 10 named Plaintiffs have standing to seek injunctive relief on behalf of the class. 11 Where, as here, the named plaintiff’s claim became moot before the class 12 was certified, some Ninth Circuit cases have suggested that the district court should 13 consider whether a putative class member with a live claim should be allowed to 14 intervene. See Wade v. Kirkland, 118 F.3d 667, 670 (9th Cir. 1997); Kennerly 15 v. United States, 721 F.2d 1252, 1260 (9th Cir. 1983); see also Newberg on Class 16 Actions § 2:17 (5th ed. 2014) (discussing substitution of class representatives in 17 claims mooted before a ruling on class certification). In Kennerly, such an analysis 18 was necessary because other putative class members “may have relied” to their 19 detriment “on [the class representative’s] asserted representation of the class.” 20 Kennerly, 721 F.2d at 1260. 21 In this case, however, Plaintiffs’ only response to JCP’s standing arguments 22 is that “restitution may still be obtained without also obtaining an injunction under 23 [California Business & Professions Code § 17200 et seq.],” and that they “seek[] 24 to recover on behalf of all class members the vacation that should have accrued 25 but for the unlawful terms in JCP’s MTO.” (Doc. No. 122 at 9.) Plaintiffs have 26 not proposed intervention by a putative class member who has a live controversy, 27 despite two opportunities to do so, nor have they offered any argument that 28 putative class members may have detrimentally relied on their asserted -11- 1 representation of the class. See Sze, 153 F.3d at 1010 (the district court was not 2 required to consider intervention where plaintiffs had not shown that putative class 3 members had relied on plaintiffs’ asserted representation, and it was not the case 4 that putative class members’ case would be time-barred but for the relation back 5 of a later class certification). Because Plaintiffs do not have standing to seek 6 injunctive relief on either of their claims and have not proposed intervention by 7 a putative class member with a live claim, they cannot seek injunctive relief on 8 behalf of the class. Their claims for damages, penalties, restitution, disgorgement, 9 and fees and costs remain. 10 B. Judicial Estoppel 11 In their motion for class certification, Plaintiffs assert that discovery 12 since summary judgment has confirmed that “[a]ll iterations of JCP’s MTO 13 are substantively identical,” and that “[t]he only variations are non-substantive 14 introductions and examples of how to calculate benefits.” (Doc. No. 119-1 at 3.) 15 JCP responds that Plaintiffs should be judicially estopped from making these 16 statements because at summary judgment Plaintiffs argued that there were material 17 differences between the various MTO documents that precluded summary judgment 18 for JCP. (Doc. No. 121 at 3.) 19 Judicial estoppel is an equitable doctrine, invoked by a court at its discretion, 20 that “generally prevents a party from prevailing in one phase of a case on an 21 argument and then relying on a contradictory argument to prevail in another phase.” 22 New Hampshire v. Maine, 532 U.S. 742, 749 (2001) (internal quotation marks 23 omitted). Although there are no rigid prerequisites for applying judicial estoppel, 24 the Supreme Court has instructed that “[the] party’s later position must be clearly 25 inconsistent with its earlier position,” and that additional considerations include 26 “whether the party has succeeded in persuading a court to accept that party’s earlier 27 position, so that judicial acceptance of an inconsistent position in a later proceeding 28 would create the perception that either the first or second court was misled,” id. at -12- 1 750 (internal quotation marks omitted), and “whether the party seeking to assert 2 an inconsistent position would derive an unfair advantage or impose an unfair 3 detriment on the opposing party if not estopped,” id. at 751. 4 The focus of the summary judgment arguments was whether JCP employees 5 were effectively put on notice—and, as a result, contractually bound—by JCP’s 6 practices regarding vacation benefits. At that juncture of the case, the emphasis 7 was not upon the legality of deferring eligibility or receipt of earlier “deposited” or 8 “earned” vacation benefits. Put another way, the earlier summary judgment filings 9 and court decision did not comprehensively address whether JCP’s particularized 10 deferral of accrued vacation time constitutes a forfeiture proscribed by California 11 law. Moreover, while this court’s earlier summary judgment ruling stated, as a 12 general proposition, that JCP may require a waiting period as a condition for 13 vacation benefits to vest, this court did not mean to imply that JCP’s practice 14 categorically did or did not pass muster on the forfeiture question. 15 Since the court ruled on summary judgment, it has become more clear that 16 the iterations of JCP’s vacation policy are less important than the reality that they 17 essentially share the complained-of features. Accordingly, it is rather immaterial 18 for purposes of class certification whether these shared MTO features were 19 communicated to an employee by EMTO, JMTO, word of mouth, handbook, 20 or other means. 21 In sum, the court finds that judicial estoppel is not appropriate here, as there 22 is no clear inconsistency between Plaintiffs’ arguments at summary judgment and 23 their position now. Plaintiffs appear to assert only that all versions of the MTO 24 contain the challenged provisions. That is not clearly inconsistent with their 25 argument at summary judgment that there were material differences between 26 the JMTO and the other policy documents that precluded summary judgment. 27 /// 28 /// -13- 1 C. Class Certification 2 1. 3 “The class action is an exception to the usual rule that litigation is conducted Legal Standards 4 by and on behalf of the individual named parties only.” Wal-Mart Stores, Inc. v. 5 Dukes, — U.S. —, 131 S. Ct. 2541, 2550 (2011) (internal quotation marks omitted). 6 To come within the exception, a putative class-action plaintiff must “affirmatively 7 demonstrate” that the claim meets each of the four requirements of Federal Rule of 8 Civil Procedure 23(a) and “at least one of the provisions of Rule 23(b).” Comcast 9 Corp. v. Behrend, — U.S. —, 133 S. Ct. 1426, 1432 (2013). Rule 23(a) requires 10 that “(1) the class is so numerous that joinder of all members is impracticable; 11 (2) there are questions of law or fact common to the class; (3) the claims or defenses 12 of the representative parties are typical of the claims or defenses of the class; and 13 (4) the representative parties will fairly and adequately protect the interests of the 14 class.” Fed. R. Civ. P. 23(a); Wal-Mart Stores, 131 S. Ct. at 2548 (internal 15 quotation marks omitted). Rule 23(b)(3), the only Rule 23(b) subsection under 16 which Plaintiffs propose certification, requires the court to find that “the questions 17 of law or fact common to class members predominate over any questions affecting 18 only individual members, and that a class action is superior to other available 19 methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 20 23(b)(3). 21 “[C]ertification is proper only if the trial court is satisfied, after a rigorous 22 analysis,” that the requirements of Rule 23 are satisfied. Comcast, 133 S. Ct. at 23 1432 (internal quotation marks omitted). “Such an analysis will frequently entail 24 overlap with the merits of the plaintiff’s underlying claim.” Id. (internal quotation 25 marks omitted). “The district court is required to examine the merits of the 26 underlying claim in this context, [but] only insomuch as it must determine whether 27 common questions exist; not to determine whether class members could actually 28 prevail on the merits of their claims.” Ellis, 657 F.3d at 983 n.8. The court’s review -14- 1 of the merits should be “limited to those aspects relevant to making the certification 2 decision on an informed basis.” Fed. R. Civ. P. 23 advisory committee notes. 3 “To hold otherwise would turn class certification into a mini-trial.” Ellis, 657 F.3d 4 at 983 n.8. 5 2. 6 “Though not explicitly stated in Rule 23, courts have held that the class must Adequacy of the Class Definition 7 be adequately defined and clearly ascertainable before a class action may proceed.” 8 Algarin v. Maybelline, LLC, 300 F.R.D. 444, 454 (S.D. Cal. 2014). “A class is 9 sufficiently defined and ascertainable if it is administratively feasible for the court 10 to determine whether a particular individual is a member.” Id. (internal quotation 11 marks omitted). Typically, that requirement is satisfied “if [class] members can 12 be ascertained with reference to objective criteria.” Id. (internal quotation marks 13 omitted). 14 In their motion for certification, Plaintiffs propose the following class 15 definition: 16 17 18 Part-Time Non-Management Associates and Management Associates employed in California by JC Penney from April 5, 2007 through the date of trial who, according to JC Penney’s records, were not permitted to accrue, or were not paid, all accrued and unused My Time Off. 19 (Doc. No. 119-1 at 10.)5 20 Although the proposed definition is somewhat inartful, the court construes 21 the proposed class as consisting of those JCP employees who were not permitted 22 to accrue, or who were not paid, vacation benefits pursuant to the challenged 23 24 5 The definition Plaintiffs propose in their MTC is narrower than the 25 definition they proposed in the SAC, which was: 26 27 28 [A]ll similarly-situated former and current California employees of [JCP] who, during the four years prior to the commencement of this action . . . forfeited accrued vacation benefits and/or were denied compensation in lieu thereof pursuant to [JCP]’s vacation policies. (SAC ¶ 53.) JCP does not object to the narrowing of the definition. -15- 1 provisions in JCP’s uniform MTO policy during the proposed class period. Thus 2 construed, the definition is sufficiently ascertainable, as it provides objective criteria 3 for identifying class members. 4 JCP responds, however, that the proposed definition is grossly overbroad 5 because it includes (1) employees who would not be entitled to benefits under any 6 reasonable reading of policy, such as those who were employed for only a week 7 or a day, those who never averaged 25 hours per week, and those who were not 8 employed on the first day of the thirteenth month of their employment; (2) 13,685 9 seasonal workers who have no reasonable expectation of receiving time off because 10 they are told that there is a blackout period for the duration of their employment 11 during which no vacation can be taken; (3) current employees (approximately 12 10,586 of them) who, even if Plaintiffs prevail on the merits, are not eligible 13 for payment for vacation time under California Labor Code § 227.3 because 14 (according to JCP) that provision applies only to terminated employees; (4) 32,127 15 employees hired after July 17, 2009, who executed binding arbitration agreements 16 that include class-action waivers; and (5) another 4,000 employees who executed 17 releases in JCP’s favor. (Doc. No. 121 at 21–24 & nn. 21, 26.) 18 The first two arguments appear to be that those who do not satisfy the MTO’s 19 eligibility requirements must be excluded from the class. The problem, however, 20 is that the requirements JCP refers to—that PTNMA must (1) average 25 or more 21 hours (2) for 48 weeks and (3) be employed on the first day of the month following 22 12 months of employment—are the very provisions Plaintiffs contend are unlawful. 23 Such a merits-based exclusion would be inappropriate at this point and, regardless, 24 would not affect the court’s ascertainability analysis. 25 The third argument, that no current employees can be included in the class 26 because California Labor Code § 227.3 requires compensation only for terminated 27 employees, suffers from a similar defect. Plaintiffs assert that courts have extended 28 § 227.3 to protect current employees, not just terminated employees, (Doc. No. 119-16- 1 1 at 2), while JCP contends that Plaintiffs are wrong on that point, (Doc. No. 121 2 at 22 n.23). The court cannot resolve this issue without ruling on its merits. 3 Beyond that, however, JCP has not offered any argument or authority explaining 4 why, even if it is correct on that point, current employees (who have not been 5 terminated, but may be) cannot be included in the class. 6 JCP’s fourth and fifth arguments, that the class cannot include those who 7 executed arbitration agreements or signed releases in JCP’s favor, are more 8 substantial, given the strong federal policies favoring enforcement of arbitration 9 agreements. But this court has not yet determined whether the arbitration agreement 10 would bar this lawsuit, the present motions are not the proper vehicle for deciding 11 the issue, and JCP offered no evidence of the 4,000 signed releases it refers to. 12 Moreover, other courts to have confronted similar claims have concluded that “the 13 fact that some members of a putative class may have signed arbitration agreements 14 or released claims against a defendant does not bar class certification.” Avilez v. 15 Pinkerton Gov’t Servs., 286 F.R.D. 450, 474 (C.D. Cal. 2012) (internal quotation 16 marks omitted); Herrera v. LCS Fin. Servs. Corp., 274 F.R.D. 666, 681 (N.D. Cal. 17 2011). The court agrees. 18 Accordingly, the court finds that the proposed class definition is sufficiently 19 ascertainable and not too broad. This conclusion does not foreclose the possibility 20 that subclasses may be created in the future to address these issues as necessary. 21 See Fed. R. Civ. P. 23(c)(3)(5). 22 3. 23 As discussed above, to satisfy Rule 23(a) a case must meet four requirements: Rule 23(a) Requirements 24 (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of representation. 25 See Wal-Mart Stores, 131 S. Ct. at 2548. The court addresses each below. 26 27 a. Numerosity Rule 23(a)(1) requires the proposed class to be “so numerous that 28 joinder of all members is impracticable.” Fed. R. Civ. P. 23(a)(1). In this -17- 1 context, “impracticability does not mean impossibility, but only the difficulty 2 or inconvenience of joining all members of the class.” Harris v. Palm Springs 3 Alpine Estates, Inc., 329 F.2d 909, 913–14 (9th Cir. 1964) (internal quotation marks 4 omitted). In determining whether numerosity is satisfied, the court “may consider 5 reasonable inferences drawn from [the] facts before [it].” Gay v. Waiters’ & Dairy 6 Lunchmen’s Union, 549 F.2d 1330, 1332 n.5 (9th Cir. 1977). 7 Plaintiffs assert, based on data JCP produced in July 2013, that there are 8 approximately 64,593 class members, which includes 53,637 terminated PTNMA; 9 10,266 current PTNMA; 369 terminated MA; and 361 current MA.6 (Doc. No. 10 119-1 at 15.) In its motion to strike, JCP asserts that “this matter involves more 11 than 62,000 employees,” (Doc. No. 93-1), and in its opposition to Plaintiff’s motion 12 for certification, JCP does not dispute that numerosity is satisfied. There is no 13 doubt that joinder of such numbers is impracticable. Accordingly, the court finds 14 that numerosity is satisfied. 15 16 b. Commonality Rule 23(a)(2) requires that “there are questions of law or fact common to the 17 class.” Fed. R. Civ. P. 23(a)(2). “Commonality requires the plaintiff to demonstrate 18 that the class members have suffered the same injury.” Wal-Mart Stores, 131 S. Ct. 19 at 2551 (internal quotation marks omitted). “This does not mean merely that they 20 have all suffered a violation of the same provision of law.” Id. Rather, “[t]heir 21 claims must depend upon a common contention,” which “must be of such a nature 22 that it is capable of classwide resolution,” so that “determination of its truth or 23 falsity will resolve an issue that is central to the validity of each one of the claims 24 in one stroke.” Id. But “all questions of fact and law need not be common to satisfy 25 the rule.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998). Rather, 26 27 6 According to Plaintiffs’ counsel, the sum of PTNMA and MA exceeds 28 64,593 because several hundred putative class members worked in more than one capacity. (MTC, Kostas Decl. ¶ 8.) -18- 1 “[t]he existence of shared legal issues with divergent factual predicates is sufficient, 2 as is a common core of salient facts coupled with disparate legal remedies.” Id. 3 For purposes of this inquiry, “even a single common question will do.” Wal-Mart 4 Stores, 131 S. Ct. at 2556 (brackets and internal quotation marks omitted). 5 In this case, the question common to all putative class members’ claims is 6 whether the challenged provisions in JCP’s uniform MTO violate California law. 7 Such a legal question is the type that can be answered on a classwide basis. See 8 Stiller v. Costco Wholesale Corp., 298 F.R.D. 611, 624 (S.D. Cal. Apr. 15, 2014) 9 (“Claims alleging that a uniform policy consistently applied to a group of employees 10 is in violation of the wage and hour laws are of the sort routinely, and properly, 11 found suitable for class treatment.”) (quoting Brinker Restaurant Corp. v. Superior 12 Court, 53 Cal. 4th 1004, 1033 (2012)). JCP focuses its arguments almost 13 exclusively on predominance and does not, beyond those arguments, address 14 whether commonality is satisfied. The court is satisfied that there is a common 15 question and addresses JCP’s arguments on predominance below. 16 17 c. Typicality Rule 23(a)(3) requires the representative party to have claims or defenses 18 that are “typical of the claims or defenses of the class.” Fed. R. Civ. P. 23(a)(3). 19 “Typicality refers to the nature of the claim or defense of the class representative, 20 and not to the specific facts from which it arose or the relief sought.” Hanon v. 21 Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992) (internal quotation marks 22 omitted). “The test of typicality is whether other members have the same or similar 23 injury, whether the action “is based on conduct which is not unique to the named 24 plaintiffs, and whether other class members have been injured by the same course 25 of conduct.” Id. (internal quotation marks omitted.) “The purpose of the typicality 26 requirement is to assure that the interest of the named representative aligns with 27 the interests of the class.” Id. “[R]epresentative claims are typical if they are 28 reasonably coextensive with those of absent class members; they need not be -19- 1 substantially identical.” Hanlon, 150 F.3d at 1020. 2 In this case, the named Plaintiffs’ claims and the claims of putative class 3 members all arise from the challenged provisions in the MTO, are based on the 4 same legal theories, and involve similar injuries in the form of purportedly 5 improperly denied or forfeited vacation benefits. 6 JCP contends that Plaintiffs are atypical of the class because none of them 7 were ever MA and none of them satisfied the “facial requirements” to accrue 8 vacation time under the JMTO. (Doc. No. 121 at 25.) But JCP does not explain 9 why it matters that Plaintiffs were never MA, and there is no obvious reason why 10 Plaintiffs, who are former PTNMA, cannot effectively represent MA, whose 11 vacation benefits are governed by a simpler provision of the same policy that 12 governs PTNMA and is, according to Plaintiffs, illegal for the same reasons.7 Nor 13 does it matter for purposes of this analysis that none of the named Plaintiffs satisfied 14 the so-called “facial requirements” to accrue vacation time, as those requirements 15 appear to be the very provisions Plaintiffs contend are illegal. Given that Plaintiffs’ 16 claims are essentially identical to those of PTNMA class members, who comprise 17 almost the entire class, and very similar to those of MA class members, the court 18 finds the typicality requirement satisfied. 19 20 d. Adequacy Rule 23(a)(4) requires that “the representative parties will fairly and 21 adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). “The 22 adequacy inquiry under Rule 23(a)(4) serves to uncover conflicts of interest 23 between named parties and the class they seek to represent.” Amchem Prods., 24 Inc. v. Windsor, 521 U.S. 591, 625 (1997). “Resolution of two questions 25 determines legal adequacy: (1) do the named plaintiffs and their counsel have 26 any conflicts of interest with other class members and (2) will the named plaintiffs 27 28 7 As noted earlier, the court leaves open the possibility of future subclasses. -20- 1 and their counsel prosecute the action vigorously on behalf of the class?” Hanlon, 2 150 F.3d at 1020. 3 In support of their motion for certification, Plaintiffs submitted declarations 4 stating, among other things, that they understand their duties and that they will 5 continue to vigorously prosecute this case on behalf of the class. (MTC, Tschudy 6 Decl., Walker Decl., Candelaria Decl.) Plaintiffs’ counsel submitted declarations 7 and detailed biographies indicating that they are experienced in wage-and-hour 8 class litigation. (MTC, Ostroff Decl. ¶ 7 & Exh. 1; MTC, Kostas Decl. ¶ 2 & Exh. 9 1.) And the court has not been made aware of any conflicts that threaten to impair 10 the representation. JCP contends that Plaintiffs are not adequate for the reasons that 11 their claims are atypical, (Doc. No. 121 at 25), but, as discussed above, Plaintiffs’ 12 claims are typical of the class. Accordingly, the court finds that Plaintiffs and their 13 counsel are adequate to represent the class. 14 4. 15 As noted above, to certify a class under Rule 23(b)(3), the court must find Rule 23(b)(3) Requirements 16 (1) “that the questions of law or fact common to class members predominate over 17 any questions affecting only individual members,” and (2) “that a class action is 18 superior to other available methods for fairly and efficiently adjudicating the 19 controversy.” Fed. R. Civ. P. 23(b)(3); Hanlon, 150 F.3d at 1022. The court 20 addresses each consideration below. 21 22 a. Predominance Rule 23(b)(3)’s predominance requirement is more stringent than Rule 23 23(a)(2)’s commonality requirement. The analysis under Rule 23(b)(3) “presumes 24 that the existence of common issues of fact or law have been established pursuant 25 to Rule 23(a)(2),” and, “[i]n contrast to Rule 23(a)(2), Rule 23(b)(3) focuses on 26 the relationship between the common and individual issues.” Hanlon, 150 F.3d 27 at 1022. For purposes of this inquiry, there is “clear justification” for handling the 28 dispute on a representative basis “[w]hen common questions present a significant -21- 1 aspect of the case and they can be resolved for all members of the class in a single 2 adjudication.” Id. (internal quotation marks omitted). 3 In this case, the overriding question is whether JCP’s uniform policy violates 4 California labor law. Certainly, the policy itself contains different provisions 5 (or limitations) that may affect putative class members differently, depending on 6 the length of employment and hours worked (or averaged). But, fundamentally, 7 the issue is the same for all putative class members: Does JCP’s uniform policy 8 of deferred vesting cause a “forfeiture” within the meaning of the California Labor 9 Code? The answer to that question will not depend upon, for example, whether 10 an otherwise qualified employee was “employed on the first day of the thirteenth 11 month” following a twelve-month period of employment, or what each employee 12 believed about the provisions of the policy. Rather, the inquiry will be whether 13 non-entitlement to “accrued” vacation “deposits,” predicated upon the challenged 14 provisions of JCP’s policy, is illegal. On the other hand, if JCP’s policy passes 15 muster, as, for example, advance payment of wages or compensation, then that 16 result applies across the putative class as well. The court concludes, therefore, 17 that common questions predominate. 18 In its motion to strike and its opposition to Plaintiffs’ motion for certification, 19 however, JCP argues at length that this case cannot be litigated as a class action 20 because individualized questions of contract formation predominate, and because 21 Plaintiffs all claim reliance on different sources for their understanding of the MTO. 22 (Doc. No. 93-1 at 9–21; Doc. No. 121 at 16–21.) In support of those propositions 23 it relies on this court’s order denying summary judgment and the existence of the 24 various MTO documents. (Id.) 25 But the court’s only conclusions at summary judgment were that JCP had 26 not established that it had made the JMTO available to employees, and that the 27 documents Plaintiffs had received did not make clear that MTO deposits are 28 advances for future work, as opposed to compensation for past services. (See -22- 1 Doc. No. 78 at 11–12.) That is all. Indeed, California Labor Code § 227.3 2 contemplates that vacation benefits are controlled either by a “contract of 3 employment or employer policy.” (Emphasis added.) In this case, as discussed 4 above, all versions of the MTO contain the challenged provisions, and JCP does 5 not dispute that it applies the MTO according to its terms as to all PTNMA and MA. 6 Because Plaintiffs challenge the legality of a uniform policy that, at this point, 7 appears to be uniformly applied, there is no need for individualized determinations. 8 JCP asserts also that the need for individualized damages determinations 9 precludes class certification. (Doc. No. 93-1 at 21–25.) But the Ninth Circuit has 10 instructed that “individualized monetary claims belong in Rule 23(b)(3). Thus, 11 the presence of individualized damages cannot, by itself, defeat class certification 12 under Rule 23(b)(3).” Levya v. Medline Indus. Inc., 716 F.3d 510, 514 (9th Cir. 13 2013) (internal quotation marks omitted). In Levya, the fact that individualized 14 damages determinations would be necessary did not preclude a finding of 15 predominance where the defendant company’s “computerized payroll and 16 timekeeping database would enable the court to accurately calculate damages 17 and related penalties for each claim.” Id. 18 Here, as in Levya, if putative class members prove JCP’s liability, damages 19 will be calculated based on the wages each employee lost due to JCP’s unlawful 20 practices. Based on Plaintiffs’ submissions, JCP’s employment records appear 21 to contain all the information necessary to calculate damages, including each 22 employee’s name, contact information, hire date, termination date, weekly hours 23 worked, pay rates, and MTO deposits and usage. (See Doc. No. 119-1 at 14.) 24 Accordingly, the fact that damages will need to be calculated for each employee 25 if Plaintiffs prevail does not preclude a finding of predominance. 26 27 b. Superiority Whether a class action is the superior method of litigation depends on 28 (1) “the class members’ interests in individually controlling the prosecution or -23- 1 defense of separate actions”; (2) “the extent and nature of any litigation concerning 2 the controversy already begun by or against class members”; (3) “the desirability 3 or undesirability of concentrating the litigation of the claims in the particular 4 forum”; and (4) “the likely difficulties in managing a class action.” Fed. R. Civ. P. 5 23(b)(3)(A)–(D). 6 In this case, putative class members stand to recover relatively small sums 7 of money, making individualized litigation unlikely. The court is not aware of 8 any similar or related cases in California. This court is an appropriate forum for 9 resolution of the case, as the claims are under California law and the class is limited 10 to California employees. And, as discussed above, the court is not aware of any 11 likely difficulties in managing this case. Accordingly, the court finds that a class 12 action is the superior method of resolving Plaintiffs’ claims. 13 C. Appointment of Class Counsel 14 Rule 23(g) requires the court to appoint class counsel when certifying a case 15 as a class action. The court must consider the following four factors: (I) the work 16 counsel has done in identifying or investigating potential claims in the action; 17 (ii) counsel’s experience in handling class actions, other complex litigation, and 18 the types of claims asserted in the action; (iii) counsel’s knowledge of the applicable 19 law; and (iv) the resources that counsel will commit to representing the class. 20 Fed. R. Civ. P. 23(g). 21 Based on their submissions, the court is satisfied that Plaintiffs’ counsel of 22 record, Sheldon A. Ostroff, of the Law Offices of Sheldon A. Ostroff, and James C. 23 Kostas, of Huffman & Kostas, meet the criteria of Rule 23(b) and should serve 24 as class co-counsel. 25 D. Evidentiary Motions 26 As noted earlier, the parties filed several evidentiary objections and 27 corresponding motions to strike related to their motions on class certification. 28 Plaintiffs object to statements JCP’s counsel submitted regarding former Plaintiff -24- 1 Leticia Hinojosa, (Doc. No. 97), and portions of employee declarations JCP 2 submitted in opposition to the motion for class certification, (Doc. No. 124). 3 JCP objects to various aspects of Plaintiffs’ declarations. (Doc. No. 121-1.) 4 Because class certification is a preliminary procedure, “evidence presented 5 in support of class certification need not be admissible at trial.” Makaeff v. Trump 6 Univ., LLC, 2014 WL 688164, at *20 (S.D. Cal. Feb. 21, 2014); Amalgamated 7 Transit Union Local 1309, AFL-CIO v. Laidlaw Transit Servs., Inc.,2009 WL 8 249888, at *3 (S.D. Cal. Feb. 2, 2009). Accordingly, at this stage, the court 9 overrules the parties’ evidentiary objections and denies the motions to strike. 10 11 CONCLUSION JCP’s motion to strike the class allegations from Plaintiff’s second amended 12 complaint (Doc. No. 93) is DENIED. Plaintiffs’ motion to certify this case as a 13 class action (Doc. No. 119) is GRANTED. Plaintiffs’ counsel of record, Sheldon 14 A. Ostroff, of the Law Offices of Sheldon A. Ostroff, and James C. Kostas, of 15 Huffman & Kostas, are APPOINTED AS CLASS CO-COUNSEL. The parties’ 16 evidentiary objections are overruled, and their motions to strike evidence related 17 to the motions for class certification (Doc. Nos. 97, 121-1, and 124) are DENIED. 18 IT IS SO ORDERED. 19 DATED: December 17, 2014 20 21 Hon. Jeffrey T. Miller United States District Judge 22 23 24 25 26 27 28 -25-
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