Otsuka, et al. v. Polo Ralph Lauren Corporation, et al.: the shifting dynamic of wage & hour certification

Greatsealcal100Wage & hour class actions have, for many years, been presented for certification in an entirely predictable manner.  Since well before Sav-on Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, wage & hour class actions habitually involved a war of employee declarations.  The defendant typically submitted a taller stack of current employee declarations, while the plaintiff struggled to collect a smaller group of declarations provided mostly by former employees.  This competing stack of declarations was then tossed up in the air for the Court to sort out.  In Sav-on, it so happened that the trial court sided with the plaintiff's stack of declaration.  But along the way, the dynamic has evolved.

The first major shift hit when the Supreme Court decided Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360, reminding litigants that plaintiffs can discovery class member information before certification.  Pioneer was then extended into the wage & hour realm with Belaire-West Landscaping, Inc. v. Superior Court (2007) 149 Cal.App.4th 554.  The upshot was that plaintiffs had nearly as much access to the putative class as did defendants.  However, this change, alone, did not necessarily do anything to deter the war of declarations.  Instead, it armed both sides with the ability to assemble similar volumes of putative class member declarations.

This approach has not been without its critics.  One Judge in the complex litigation panel in Los Angeles remarked during a hearing that there had to be a better way to evaluate wage & hour class actions for certification purposes.  An example of possible alternative is provided by a recent certification Order from the United States District Court for the Northern District of California.  In Otsuka, et al. v. Polo Ralph Lauren Corporation, et al. (C 07-02780 SI), Judge Susan Illston granted certification in spite of the typical declaration set offered by defendants.  The Court's statement of facts suggests what information was held significant by the Court:

Plaintiffs contend that defendants use a single employee handbook for all California stores, and that defendants’ policies and practices are standardized throughout California in both retail and outlet stores. See, e.g., TAC at ¶ 45.

(Opinion, at p. 2.)  In contrast, defendants may have protested too much:

Defendants vigorously object to class certification, arguing that plaintiffs fail to meet almost every requirement of Rule 23 for the main class and the two subclasses. As discussed below, however, defendants’ arguments primarily dispute the merits of plaintiffs’ claims and raise questions of fact that will not be resolved at this juncture, and the Court finds that class certification is appropriate because plaintiffs have satisfied the requirements of Rule 23(a) and Rule 23(b)(3).

(Opinion, at p. 5.)  Plaintiffs persuasively cast the action as one of common procedures and common legal inquiries:

Plaintiffs persuasively argue that many questions of law and fact are common to the class, such as whether: (1) defendants’ policy of not compensating employees for time spent waiting for loss-prevention inspections violates California law or constitutes an unfair business practice; (2) time spent waiting for these inspections was “postliminary” or de minimis, and whether these federal standards would even apply to plaintiffs’ California law claims; (3) defendants breached their contracts with class members by failing to compensate them for time spent awaiting loss prevention inspections; (4) defendants had a policy of not providing or discouraging rest breaks; (5) defendants violated California law by failing to pay employees one hour’s wage when rest breaks were not provided; (6) defendants failed to maintain accurate pay records as a result of these alleged labor code violations; and (6) whether defendants’ failure to maintain accurate records was knowing and intentional. As these questions suggest, plaintiffs have sufficiently demonstrated that the commonality requirement of Rule 23(a) has been met with respect to the main class.

(Opinion, at p. 6.)

This approach, the focus on class-wide policies, has seen some increased use, with Court's accepting a theory of class liability that focuses almost exclusively on whether policies of the employer resulted in wage & hour violations, such as off-the-clock work or missed breaks.

As with a chess match, the adaptations and legal developments that have helped plaintiffs respond to the declaration onslaught will undoubtedly be countered with a new approaches from defendants.  It will be interesting to see how those new approaches fare in practice.

The Otsuka Opinion can be downloaded here, or, you can view the embedded opinion in the flash viewer below:


[Via Class Action Defense Blog]