Short-changed workers entitled to class action lawsuit despite individual damages calculations, federal appeals court rules

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by Michael Heygood

The Ninth Circuit Court of Appeals has ruled that a federal district court abused its discretion by rejecting a class action filed on behalf of current and former hourly employees of Medline Industries, Inc. The court of appeals has directed the district court to grant the plaintiff’s motion for class certification. Levya v. Medline Industries, Inc., No. 11-56849 (9 th Cir. May 28, 2013).

The plaintiff alleged that Medline violated California labor laws in several ways. One method was by rounding its hourly employees’ start times in twenty-nine minute increments. For example, workers who clocked-in between 7:31 a.m. and 8:00 a.m. would be paid only from 8:00 a.m. onward even though they began work beforehand. Employees would often clock-in before their scheduled start times because they had to complete tasks such as inspecting their machines and picking up scanners before they could begin their duties. The plaintiff alleges that the rounding practices resulted in employees performing unpaid work Medline also allegedly excluded nondiscretionary bonuses from employees’ overtime rates, thus lowering overtime pay. Plaintiff claims that this practice violated California’s unpaid overtime laws.

The Plaintiff moved the district court to certify a proposed class of about 500 current and former employers. The district court denied the motion.

Plaintiff argued that his proposed subclasses met the requirements of Rule 23(b)(3), which requires that “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.” Fed. R. Civ. P. 23(b)(3). The district court disagreed, holding that the putative class and subclasses did not meet the requirements of Rule 23(b)(3) for two reasons. First, the district court concluded that common questions did not predominate over individual questions because “although Plaintiff appears to have established that common questions exist with respect to Defendant’s liability under state law, the damages inquiry will be highly individualized.” The district court explained:

Each of the 500 putative class members are allegedly entitled to different damage awards for being ‘short-changed’ by the rounding policy and/or the bonus policy. Because evaluating each putative class member’s claims would require fact-specific, individualized inquiries into the amount of pay to which he or she was entitled, the Court finds that individual questions predominate over commons questions in this case.

The district court also found that a class action was not the “superior” method for resolving the putative class members’ claims. According to the district court:

[I]f these four classes were certified, the Court would need to determine the extent to which each putative class member lost wages and, consequently, suffered damages. Since there are more than 500 putative class members, this process would tax the Court’s resources.

The Ninth Circuit rather summarily rejected both rulings. The court of appeals held that the district court abused its discretion in concluding that (1) individual questions predominated over common questions, and (2) class certification was not superior to other means of resolving the dispute.

The court of appeals held that it was an abuse of abuse of discretion to deny certification just because for each sub-class “the damages inquiry will be highly individualized.” The court of appeals noted that damages determinations are individual in nearly all wage-and-hour class actions. Furthermore, “[t]he amount of damages is invariably an individual question and does not defeat class action treatment.” Blackie v. Barrack, 524 F.2d 891, 905 (9th Cir. 1975).

The court went on to note that the record below demonstrated that Medline had itself been able to use its own payroll and time-keeping database “to separately calculate its exposure for each putative class member’s claim.” Thus, damages could feasibly and efficiently be calculated once the common liability questions are adjudicated.

As to the district court’s conclusion that class certification was not the “superior method” of adjudication, the Ninth Circuit pointed out that the district court failed to suggest any other methods for the putative class members to adjudicate their claims. “Indeed, it appears that none exist.” The court of appeals concluded that, in light of the small size of the putative class members’ potential individual monetary recovery, class certification may be the only feasible means for them to adjudicate their claims.

The district court’s order denying class certification was reversed and the case was remanded with directions to the district court to enter an order granting Plaintiff’s motion for class certification.

Class action litigation at HO&P

At Heygood, Orr & Pearson, we have represented numerous class action plaintiffs in various class actions in California and elsewhere. Heygood, Orr & Pearson is AV-rated, the highest legal and ethical rating available from the leading law firm rating service. Our partners Michael Heygood, Jim Orr, and Eric Pearson are all Board Certified in Personal Injury Trial Law by the Texas Board of Legal Specialization. Mr. Heygood and Mr. Orr are additionally Board Certified in Civil Trial Advocacy Law by the National Board of Trial Advocacy. Our partners been voted by their peers as “Super Lawyers” in the state of Texas for several years in a row.*

If you believe you may have a proposed class action complaint, contact us for a free consultation by calling toll-free at 1-877-446-9001 or by following the link to the free consultation form on this website to find out more about your legal options.

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Michael Heygood, James Craig Orr, Jr. and Eric Pearson were selected to the Super Lawyers List, a Thomson Reuters publication, for the years 2003 through 2013.