On April 15, 2014, in Wang v. Chinese Daily News, Inc., a California federal district court re-certified a Rule 23(b)(3) California state law wage and hour action involving a class of 200 non-exempt employees who alleged their employer routinely required them to work more than 40 hours per week without paying overtime, denied rest and meal breaks, improperly compensated for unused vacation pay, miscalculated the regular rate, and issued inaccurate wage statements.

Background

The district court’s decision is the latest development in a 10-year odyssey that began with the filing of the complaint in March 2004. In January 2005, after the proposed class was narrowed to include only non-exempt employees at one of two facilities, the district court certified an FLSA collective action and a state law class action under Rule 23 of the Federal Rules of Civil Procedure. In June 2006, the district court granted summary judgment in favor of plaintiffs on their inaccurate wage statement, regular rate miscalculation, and vacation pay claims, as well as their claim that reporters do not fall within the “creative professional” exemption.  A 16-day jury trial concluded in January 2007 with an award of $2.5 million to the plaintiffs. After a three-day bench trial on injunctive relief, penalties, pre-judgment interest, and restitution issues, the district court increased damages for the plaintiff class to $5.1 million. In September 2010, the Ninth Circuit affirmed the district court’s judgment.  In October 2011, however, the U.S. Supreme Court vacated the Ninth Circuit’s opinion and remanded the case for further consideration in light of the Supreme Court’s  June 2011 decision in Wal-Mart Stores, Inc. v. Dukes.

On remand in September 2013, the Ninth Circuit vacated the district court’s finding on class certification and directed it to reconsider its decision in light of Dukes. The Ninth Circuit also instructed the district court to consider the California Supreme Court’s decision in Brinker Restaurant Corp. v. Superior Court and recent Ninth Circuit rulings regarding the relevance of uniform exemption policies on class certification.

The Current Decision

On remand, the district court again found that class certification was appropriate on all issues, even in light of the holdings in Dukes and Brinker. The court acknowledged that, after Dukes, it was not enough to show that common questions existed – a party seeking class certification must also show that the questions presented can generate “common answers apt to drive the resolution of the litigation.” The court found the plaintiffs met this standard by showing that the employer’s “treatment of class members was consistent, not subject to discretion, and that the entire class was injured” by the employer’s conduct. Regarding the unpaid overtime claims, the court found the evidence showed the employer had standard practices of: (1) providing wage statements that showed that hourly employees worked the same number of hours each pay period, regardless of actual hours worked; (2) not paying any premium for overtime hours worked; and (3) not maintaining any system for accurately tracking employee hours.  The court found that on these and other issues relating to the employer’s pay practices and vacation payment policy, the employer had failed to raise any unsettled factual disputes that had to be resolved before finding “a common pattern and practice that could affect the class as a whole.” 

Notably, the court rejected the employer’s argument that claims regarding exemption classification cannot apply commonly across the class and individual inquiries will dominate. First, the court found that the proposed class did not include exempt employees. Second, the court stated it did not base its certification on the employer’s exemption policy. Rather, the court concluded that the common questions warranting class certification did not “require any inquiries into how much time each individual employee spent in or out of the office and how the employee performed her job.” In other words, the court explained, it did not need to look at any employee’s “daily functions.” On these grounds, the court found that the exemption issue did not predominate over the common issues of whether the lawfulness of the employer’s overtime and meal and rest period practices could be determined on a class basis.

The court also found that Brinker did not present a bar to class certification on the plaintiffs’ meal and rest break claims. The plaintiffs alleged that the trial evidence showed the employer did not have a meal and rest period policy, employees were not advised of their right to take meal and rest periods, and the employer discouraged employees from taking breaks except to use the rest room. The court found this evidence demonstrated that class certification was appropriate as to the plaintiffs’ meal and rest claims, even after Brinker.

It may be argued that the district court’s decision in Wang should be limited to its very specific and individualized procedural history and fact pattern, including the extensive summary judgment and trial records and findings. Employers should nevertheless be aware of the more general aspects of the decision, such as the court’s decision regarding the employer’s meal and rest break policy, which is consistent with some other recent California state court decisions.