1 2 3 6 7 TANSEER KAZI, et al., Case No. 18-cv-04810-JCS
8 Plaintiffs, ORDER REGARDING MOTIONS TO 9 v. MODIFY CLASS CERTIFICATION
10 PNC BANK, N.A., Re: Dkt. Nos. 117, 118 Defendant. 11
12 14 The Court previously granted in part a motion to certify a class of current or former 15 mortgage loan officers (“MLOs”) represented by Plaintiff Linda Scheid1 asserting claims based on 16 the purported failure of Defendant PNC Bank, N.A. (“PNC”) to compensate rest breaks as 17 required by California law. At the Court’s invitation, each party now moves to modify the 18 certified class: PNC seeks to limit the class to MLOs employed through June 30, 2019 because 19 PNC changed its compensation plan at that time and instituted an arbitration agreement for MLOs 20 hired after that date, and Scheid seeks to expand the claims covered by the class definition to 21 include failure to compensate training sessions in addition to rest breaks. The Court held a hearing 22 by public videoconference on June 19, 2020. For the reasons discussed below, PNC’s motion is 23 GRANTED, and Scheid’s motion is DENIED.2 24 25
26 1 Tanseer Kazi is also named as a plaintiff in this case, but the Court determined that he cannot serve as a class representative due to his bankruptcy, and neither Kazi nor his bankruptcy trustee 27 have participated in the case since that determination. 2 A. Claims and Factual Background 3 During the period of time at issue, PNC provided incentive compensation for its MLOs 4 using a formula based in large part on the MLOs’ loan sales. While PNC also provided a basic 5 level of pay purportedly independent of incentive compensation, that basic pay was effectively 6 deducted from any incentive pay, such that in a given month an MLO would receive either the 7 incentives they earned or their base pay, whichever was larger. In at least some circumstances, a 8 negative balance on the calculation of incentive pay (after effectively deducting base pay) would 9 carry over to future months. Nevertheless, MLOs were never paid less than their regular pay for a 10 given pay period, and failure to meet incentive goals would never result in them owing money to 11 PNC at the end of their employment. MLOs also received other forms of incentive pay besides 12 the monthly incentives calculated from loan sales, but those other forms of compensation are not 13 at issue in this case. 14 Scheid contends that by effectively paying only incentive pay in months where MLOs 15 qualified for it, PNC “recaptured” any pay for “nonproductive” time not spent selling loans, such 16 as rest periods and training sessions, and thus failed to pay MLOs for that time. Scheid asserts the 17 following claims: (1) “fail[ure] to provide paid rest periods or pay premium wages in lieu thereof 18 as required by California Labor Code § 226.7” and certain wage orders, including waiting time 19 penalties for class members whose employment ended during the class period, 2d Am. Compl. 20 (dkt. 44-1) ¶¶ 22–26; (2) failure to pay for non-productive time as required by the California Labor 21 Code and applicable wage orders, again including waiting time penalties for non-current 22 employees, id. ¶¶ 27–32; (3) violation of California laws requiring accurate wage statements, id. 23 ¶¶ 33–36; (4) violation of California’s Unfair Competition Law as a result of the violations 24 addressed in the previous claims, id. ¶¶ 37–41; and (5) a non-class, representative claim under 25 California’s Private Attorneys General Act, id. ¶¶ 42–47. Scheid’s claims rely heavily, although 26 not exclusively, on section 226.2 of the Labor Code, which provides that “employees who are 27 compensated on a piece-rate basis for any work performed during a pay period” must “be 1 rate compensation.” See Cal. Lab. Code § 226.2(a)(1). 2 B. Previous Order 3 The Court previously granted in part Plaintiffs’ motion to certify this case as a class action 4 under Rule 23 of the Federal Rules of Civil Procedure. See generally Order re Mot. for Class 5 Certification (“1st Class Cert. Order,” dkt. 96).3 The Court held that with at least 119 members 6 and potentially more than 200, the class satisfied the requirements of numerosity and 7 ascertainability, which PNC did not dispute, id. at 5–6, and that “the question of whether the 8 application of [PNC’s] formula at least to months where MLOs received Plan Incentive Pay 9 adequately compensates for rest breaks and other nonproductive time” satisfied Rule 23(a)(2)’s 10 commonality requirement, id. at 6–9. The Court concluded that although Plaintiff Tanseer Kazi 11 could not serve as a class representatives due to his bankruptcy, Plaintiff Linda Scheid met Rule 12 23’s requirements of typicality and adequacy, and class counsel was also adequate for the purpose 13 of that rule. Id. at 14–15. 14 The more difficult question was whether, for the purpose of Rule 23(b)(3), common issues 15 predominated and a class action would be a superior method of adjudication. The Court held that 16 common issues predominated as to claims based on rest breaks, but that Plaintiffs had not met 17 their burden to show predominance with respect to other forms of nonproductive time—including 18 meetings and training sessions—because they had not shown any classwide method to prove the 19 amount of time that MLOs spent in meetings and training sessions not multitasking and also 20 selling loans. Id. at 9–14. 21 The Court therefore granted the motion in part and authorized Scheid to “represent a class 22 of PNC mortgage loan officers for claims based on alleged failure to pay for rest breaks, and 23 claims derivative of such a theory, defined as all individuals who were employed by PNC as 24 mortgage loan officers at any time from June 28, 2014 through the resolution of this action.” Id. at 25 16. That order was without prejudice to Plaintiffs bringing another motion to certify claims based 26
27 3 Kazi v. PNC Bank, N.A., No. 18-cv-04810-JCS, 2020 WL 607065 (N.D. Cal. Feb. 7, 2020). 1 on other forms of nonproductive time, id. at 14, and to the parties filing a stipulation or motion “to 2 modify the class time period to account for a policy change that PNC instituted in July of 2019,” 3 id. at 16. 4 C. Arguments 5 1. PNC’s Motion 6 PNC moves to replace the words “through the resolution of this action” with “through June 7 30, 2019” as the end date of the class definition, and to exclude individuals who are required to 8 arbitrate their claims. See generally PNC Mot. (dkt. 117). PNC asserts that it altered its policies 9 as of July 1, 2019 to no longer consider MLOs’ basic pay in determining their incentive 10 compensation, and that it began requiring MLOs hired after that date to enter arbitration 11 agreements. Id. at 1–2. 12 Scheid does not oppose modifying the end date, but argues that the class definition should 13 not include language addressing arbitration agreements, because PNC only began using arbitration 14 agreements for MLOs after the June 30, 2019 class period end date and a reference to such 15 agreements in the class definition might confuse class members. Pl.’s Response (dkt. 124) at 1. 16 Scheid asserts that she agreed to the end date before PNC filed its motion. Id. Scheid also argues 17 that the class claims should not be limited to “an alleged failure to pay for rest breaks” because the 18 class seeks statutory penalties for failure to provide paid rest breaks rather than back pay for those 19 breaks, and because (as addressed in her own motion) she believes claims based on training 20 sessions should also be certified. Id. at 1 n.1. 21 PNC filed a lengthy reply brief disputing Scheid’s contention that she had agreed to an end 22 date before PNC filed its motion, PNC Reply (dkt. 126) at 2–4, and arguing that in order to 23 “allow[] for effective review of certification decisions,” the Court should expressly find that the 24 arbitration agreements PNC began using on July 1, 2019 are a basis for the now-undisputed June 25 30, 2019 end date, id. at 4–7. Nevertheless, “PNC does not object to a class definition that does 26 not include a reference to the arbitration agreements so long as the class notice (which must yet be 27 negotiated) clearly indicates that California MLOs who started work after June 30, 2019, are not 1 employees would be subject to and barred by individual arbitration agreements.” Id. at 6. PNC 2 also argues that in identifying the claims based on rest breaks, the Court should use language 3 similar to its previous class certification order—“claims based on alleged failure to pay for rest 4 breaks, and claims derivative of such a theory,” 1st Class Cert. Order at 16—to avoid implying 5 that PNC prevented MLOs from taking rest breaks, which Scheid has not asserted. Reply at 7–8. 6 2. Scheid’s Motion 7 Scheid moves to expand the scope of class certification to encompass claims based on 8 failure to pay for training sessions. See generally Pl.’s Mot. (dkts. 118, 119).4 To avoid 9 preclusive effect of a previous class settlement, Bland v. PNC Bank, Scheid seeks certification of 10 claims based on training only for the period beginning after the January 5, 2017 effective date of 11 that settlement. Id. at 3. 12 Scheid contends that such claims, as opposed to claims also encompassing meetings and 13 other nonproductive time, are narrowly tailored to avoid the concerns raised in the Court’s 14 previous order, and that PNC maintained records of the estimated duration for each of its training 15 sessions and what training sessions each employee completed, as well as the training materials 16 themselves. See id. at 3–9. In Scheid’s view, testimony from PNC’s representative that the 17 “durations” were intended as maximum rather than typical times for completion do not detract 18 from their relevance. Id. at 6. She argues that reasonable estimates of the length of the training 19 sessions are sufficient to warrant certification where PNC has failed to keep more accurate records 20 of how long each MLO spent on nonproductive time. Id. at 10–11. Scheid also contends that 21 MLOs could not have performed sales functions while completing the trainings because they 22 needed to pay close attention to the trainings in order to complete tests before they could receive 23 credit for them. Id. at 11–13. 24 PNC argues that Scheid has not offered evidence to show how long any MLO other than 25 Scheid herself spent on training sessions, and PNC does not have such evidence. PNC Opp’n (dkt. 26
27 4 Scheid filed her notice of motion as docket entry 118 and her memorandum of points and 1 125) at 4–9, 12–15. According to PNC, the absence of such evidence negates any potential for 2 “common answers,” as required for class certification. Id. at 9–10 (quoting Wal-Mart Stores, Inc. 3 v. Dukes, 564 US. 338, 350 (2011)). PNC also argues that Scheid has not shown that PNC had 4 any obligation to track MLOs’ training time. Id. at 11. PNC contends that Scheid cannot account 5 for MLOs multitasking with sales work while they completed training, and that Scheid’s personal 6 experience is not representative of other MLOs. Id. at 15–18. PNC concludes that class treatment 7 of claims based on training would be unmanageable and inefficient, and individual issues would 8 predominate. Id. at 18–19. 9 Scheid argues in her reply that PNC was required to maintain records of nonproductive 10 time under the California Labor Code and that, under the relaxed standard of proof where an 11 employer fails to do so, its “duration” figures suffice as estimates and any deviations from that 12 “estimate of the norm” do not warrant denying certification. Pl.’s Reply (dkt. 130) at 1–5. Scheid 13 questions PNC’s purported evidence of employees multitasking during trainings, and again argues 14 that testing required during the trainings suggest that such multitasking is implausible or, if it 15 occurred, would have extended the time an employee needed to complete the training such that the 16 total nonproductive time would remain the same. Id. at 5–6. Scheid also disputes PNC’s evidence 17 that the “durations” were intended as maximums rather than estimates of typical time, arguing that 18 PNC failed to offer testimony from the person who calculated them, and contends that some of 19 PNC’s representative’s deposition testimony suggests that PNC could in fact distinguish whether 20 employees completed training or tested out of it. Id. at 6, 8–9. Alternatively, Scheid suggests that 21 she could show damages through testimony of other class members or by offering the training 22 materials themselves for the jury to evaluate. Id. at 7–8 & n.8. According to Scheid, this case 23 meets the standard that the Supreme Court has set forth for damages issues in employment cases 24 where an employer failed to retain records, and falls within the Ninth Circuit’s rule that individual 25 damages calculations alone may not defeat class certification. Id. at 9–10. 26 Scheid also suggests, but declines to address in detail, that defense counsel violated rules 27 of professional conduct by gratuitously insulting Scheid’s intelligence in PNC’s opposition brief. 2 A. Legal Standard 3 In the federal courts, class actions are governed by Rule 23 of the Federal Rules of Civil 4 Procedure. A party seeking class certification must demonstrate that “(1) the class is so numerous 5 that joinder of all members is impracticable; (2) there are questions of law or fact common to the 6 class; (3) the claims or defenses of the representative parties are typical of the claims or defenses 7 of the class; and (4) the representative parties will fairly and adequately protect the interests of the 8 class.” Fed. R. Civ. P. 23(a). Further, although not explicitly discussed in Rule 23, “an implied 9 prerequisite to class certification is that the class must be sufficiently definite; the party seeking 10 certification must demonstrate that an identifiable and ascertainable class exists.” Xavier v. Philip 11 Morris USA Inc., 787 F. Supp. 2d 1075, 1089 (N.D. Cal. 2011). In short, a party must show 12 numerosity, commonality, typicality, adequacy, and ascertainability. 13 A proposed class must also satisfy at least one of the subsections of Rule 23(b). Here, 14 Scheid invokes Rule 23(b)(3), which provides that a class that meets the requirements of Rule 15 23(a) may be certified where “questions of law or fact common to class members predominate 16 over any questions affecting only individual members, and . . . a class action is superior to other 17 available methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 18 23(b)(3). 19 “The class action is an exception to the usual rule that litigation is conducted by and on 20 behalf of the individual named parties only.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348 21 (2011) (internal quotation marks and citation omitted). “In order to justify a departure from that 22 rule, a class representative must be part of the class and possess the same interest and suffer the 23 same injury as the class members.” Id. “A party seeking class certification must affirmatively 24 demonstrate his compliance with [Rule 23]—that is, he must be prepared to prove that there are in 25 fact sufficiently numerous parties, common questions of law or fact, etc.” Id. at 350. “Rule 23 26 does not set forth a mere pleading standard.” Id. 27 “Before certifying a class, the trial court must conduct a ‘rigorous analysis’ to determine 1 Motor Co., Inc., 666 F.3d 581, 588 (9th Cir. 2012) (citation omitted). Such analysis, however, is 2 not a “license to engage in free-ranging merits inquiries [regarding the ultimate outcome of the 3 case] at the certification stage.” Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455, 466 4 (2013). Rather, “[m]erits questions may be considered to the extent—but only to the extent—that 5 they are relevant to determining whether the Rule 23 prerequisites for class certification are 6 satisfied.” Id. 7 Rule 23 “provides district courts with broad discretion to determine whether a class should 8 be certified, and to revisit that certification throughout the legal proceedings before the court,” 9 including discretion, “[w]here appropriate,” to “redefine the class.” Armstrong v. Davis, 275 F.3d 10 849, 872 n.28 (9th Cir. 2001), abrogated on other grounds as recognized by B.K. ex rel. Tinsley v. 11 Snyder, 922 F.3d 957, 974 (9th Cir. 2019). 12 B. PNC’s Motion 13 There is no real dispute on any issue raised in PNC’s motion. The parties agree that the 14 class should be defined as encompassing claims only through June 30, 2019. The Court is 15 satisfied that the materially different compensation plan instituted after that date renders any 16 challenge to that plan sufficiently distinct from the claims raised here to defeat predominance, and 17 that Scheid (who no longer worked for PNC at that time) would not be typical of MLOs raising 18 such a challenge. The Court is also satisfied that Scheid, who did not sign an arbitration 19 agreement, is not typical of MLOs hired after June 30, 2019, who were required to sign arbitration 20 agreements. To be clear, the Court has no occasion on the present motions to consider whether 21 PNC’s compensation policies either before or after June 30, 2019 complied with California law, or 22 whether the arbitration agreements signed by MLOs hired after that date are enforceable. It is 23 enough that those questions present material differences between the claims at issue here and any 24 claim that some other plaintiff might raise challenging PNC’s post-June 30, 2019 compensation. 25 PNC’s motion to establish a June 30, 2019 end date is GRANTED. 26 The Court does not reach at this time any argument as to whether notice to the class must 27 include an explanation of why the class period ends on that date. The Court also declines to 1 fully briefed motion. Based on the procedural history described in the parties’ briefs, it appears 2 likely that either party could have avoided such an outcome by more vigorously pursuing 3 negotiations towards a stipulation, even in the face of some degree of intransigence or neglect by 4 the opposing party, but that question is not relevant to the outcome of the motion. 5 As for the class definition of rest break claims, Scheid’s non-opposition to PNC’s motion 6 is not an appropriate vehicle for seeking reconsideration of the definition stated in the previous 7 order. Regardless, the Court remains satisfied that a definition including “claims based on alleged 8 failure to pay for rest breaks, and claims derivative of such a theory” encompasses the theory that 9 the class is entitled to statutory damages based on PNC’s purported “recapture” of pay for rest 10 breaks. 11 C. Scheid’s Motion 12 The Court previously limited class certification to claims based on statutory rest periods, 13 holding that Plaintiffs had not shown common issues to predominate with respect to other 14 categories of “nonproductive” working time. Scheid now seeks to expand the scope of 15 certification to include claims based on time spent completing training sessions. 16 1. Previous Order on Nonproductive Time 17 Addressing Plaintiffs’ claims based on nonproductive time other than rest breaks in the 18 previous class certification order, the Court held:
19 Unlike in Leyva, this is not merely an issue of consulting a “computerized payroll and time-keeping database,” cf. 716 F.3d at 20 514, but instead would likely require individualized testimony as to whether MLOs could remember periods of time in which they were 21 working but not selling loans. Even if PNC has records of training sessions that MLOs completed or meetings that they attended, 22 Plaintiffs have not offered any classwide evidence from which to determine how long MLOs spent in those sessions or meetings, or 23 whether they also worked on selling loans during that time. 24 Class Cert. Order at 12. 25 The Court held that although a plaintiff need not “always provide a fully defined damages 26 model at class certification,” Plaintiffs’ failure to show “even a common source of evidence to 27 determine how much nonproductive working time, if any, MLOs engaged in during the proposed 1 arguments on this subject as follows:
2 Plaintiffs argue that they can use representative samples and statistical evidence in lieu of actual evidence of how class members used their 3 time. Reply at 12 n.21. In the Supreme Court cases on which Plaintiffs rely, the Court held that sample evidence could be used to determine 4 time typically spent on repetitive tasks like walking to a workstation (which is no longer compensable, but was at the time) or donning and 5 doffing protective equipment, holding that such evidence is permissible in a class action if it would be permissible to prove an 6 individual plaintiff’s claim. See Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1045–47 (2016) (discussing Anderson v. Mt. 7 Clemens Pottery Co., 328 U.S. 680, 685 (1946) (superseded by statute on other grounds)). The samples in those cases, which, unlike here, 8 the plaintiffs actually obtained and put in the record, showed limited variation in the time that employees spent on those tasks. The issues 9 here—how long employees spent in training sessions, for example, or whether they multitasked and performed sales work during those 10 sessions—are likely not amenable to such uniform proof, and Plaintiffs have made no showing that representative evidence would 11 be reliable. This case is also distinguishable from Judge Freeman’s decision in Kang v. Wells Fargo Bank, N.A., where the defendant’s 12 own person-most-knowledgeable under Rule 30(b)(6) testified to the amount of time that employees typically spent on specific categories 13 of nonproductive time. See Kang v. Wells Fargo Bank, N.A., No. 17- cv-06220-BLF, 2019 WL 468818, at *3 (Feb. 6, 2019), modified on 14 other grounds by stipulation, 2019 WL 944523 (N.D. Cal. Feb. 27, 2019). The Court does not rule out the possibility that Plaintiffs might 15 be able to overcome this issue with surveys and statistical expert testimony, but it is Plaintiffs’ burden to show that class treatment is 16 appropriate, and they have offered no evidence thus far to indicate that nonproductive time other than rest breaks can be proved on a 17 classwide basis. Mere speculation that samples and statistics might serve that purpose is not sufficient. See Ridgeway [v. Walmart Inc., 18 946 F.3d 1066, 1086–87 (9th Cir. 2020)] (noting that “plaintiffs do not have free rein in using [representative] evidence,” that courts 19 “must decide whether representative evidence [is] properly used in [a particular] case,” and that “representative evidence and statistical 20 evidence are not always proper” but rather “only permissible when ‘the evidence is reliable in proving or disproving the elements of the 21 relevant cause of action’” (quoting Tyson Foods, 136 S. Ct. at 1046)). 22 Id. at 12–13 (some alterations in original). 23 The Court concluded that the record presented on Plaintiffs’ previous motion suggested 24 resolving these claims “would require virtually a full trial for each MLO as to when and how they 25 worked, what records they or PNC might have retained, whether the MLO remembers how long 26 they spent in meetings and training sessions, and whether they recall working on selling loans 27 during that time,” because Plaintiffs had not met their burden to show whether “representative or 1 13–14. The Court therefore declined to certify a class for claims based on nonproductive time 2 other than rest periods, but left the door open for Scheid to file another motion pursuing 3 certification of such claims. Id. at 14. 4 2. Standard for Predominance and Superiority Under Rule 23(b)(3) 5 “The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently 6 cohesive to warrant adjudication by representation.” Amchem Prods., Inc. v. Windsor, 521 U.S. 7 591, 623 (1997). Rule 23(b)(3) “is far more demanding” than the commonality test under Rule 8 23(a)(2). Id. at 624. That said, the Ninth Circuit has consistently “held that ‘there is clear 9 justification for handling the dispute on a representative rather than an individual basis’ if 10 ‘common questions present a significant aspect of the case and they can be resolved for all 11 members of the class in a single adjudication.’” Mazza, 666 F.3d at 589 (quoting Hanlon v. 12 Chrysler Corp., 150 F.3d 1011, 1022 (9th Cir. 1998)). Under Ninth Circuit law, complexity of 13 individualized “damage calculations alone cannot defeat certification,” Leyva v. Medline Indus. 14 Inc., 716 F.3d 510, 513 (9th Cir. 2013), but where plaintiffs “ha[ve] not demonstrated that . . . 15 damages [attributable to the plaintiffs’ theory] can be measured on a classwide basis, the 16 predominance requirement is not satisfied,” Doyle v. Chrysler Grp., LLC, 663 F. App’x 576, 579 17 (9th Cir. 2016) (emphasis added) (nonprecedential). See Comcast Corp. v. Behrend, 569 U.S. 27, 18 34 (2013) (reversing class certification where the plaintiffs failed to show “that damages are 19 capable of measurement on a classwide basis”); Leyva, 716 F.3d at 513 (distinguishing Comcast 20 and holding that a district court’s denial of class certification on the basis that “highly 21 individualized” damage calculations defeated predominance was a reversible error of law). 22 The Ninth Circuit recently addressed this standard in Senne v. Kansas City Royals Baseball 23 Corp., 934 F.3d 918 (9th Cir. 2019), noting the burden shifting framework endorsed by the 24 Supreme Court in Mt. Clemens and Tyson Foods, under which employees may rely on reasonable 25 approximations to fill gaps left by an employer’s failure to maintain required records of time 26 worked. Senne, 934 F.3d at 938–41. The Ninth Circuit summarized Tyson Foods as follows:
27 Stated another way, Tyson concluded that even where “reasonable 1 cause of action—in Tyson, whether it was probative of the “time actually worked by each employee”—that question is to be resolved 2 by the jury, not at the class certification stage. [136 S. Ct.] at 1049 (“The District Court could have denied class certification on this 3 ground [whether the representative evidence was “probative as to the time actually worked by each employee”] only if it concluded that no 4 reasonable juror could have believed that the employees spent roughly equal time donning and doffing.”) (emphasis added). If the 5 proffered representative evidence, however, were “statistically inadequate or based on implausible assumptions,” it “could not lead 6 to a fair or accurate estimate of the uncompensated hours an employee has worked.” Id. at 1048–49. But where the evidence is admissible— 7 for expert evidence, using the Daubert standard—then the “no reasonable juror” standard at the class certification stage applies. See 8 id. at 1049. 9 Senne, 934 F.3d at 940–41 (second alteration in original). 10 In Tyson Foods, the plaintiffs relied on an expert witness’s study determining the average 11 time employees took to don and doff protective gear. 136 S. Ct. at 1043. The defendant neither 12 challenged the validity or reliability of the expert’s opinions under Daubert v. Merrell Dow 13 Pharmaceuticals, Inc., 509 U.S. 579 (1993), nor offered a rebuttal expert presenting a contrary 14 conclusion. Tyson Foods, 136 S. Ct. at 1044. In concluding that the plaintiffs had met their 15 burden to provide representative evidence supporting a “just and reasonable” inference, the 16 Supreme Court specifically noted that inadequate or implausible statistical conclusions would not 17 suffice, but held that the defendant’s failure to raise a Daubert challenge left assessing the 18 reasonableness of the expert’s calculations to “the near-exclusive province of the jury.” Id. at 19 1048–49. The Supreme Court therefore concluded that the “District Court could have denied class 20 certification on this ground only if it concluded that no reasonable juror could have believed that 21 the employees spent roughly equal time donning and doffing,” and the district court made no such 22 finding. Id. at 1049. 23 The Ninth Circuit turned once more to Tyson Foods early this year, explaining in 24 Ridgeway that class members may use representative evidence to prove their damages so long as it 25 is reliable, and that “testimony from Wal-Mart drivers [could] amount to representative evidence.” 26 Ridgeway, 946 F.3d at 1087. In that case, “many plaintiffs testified about the length of their rest 27 breaks and inspection time,” in addition to an expert witness’s testimony regarding statistical 1 2019) (noting that “the court heard testimony from 43 of the 145 similarly situated salespeople”) 2 (cited with approval by Ridgeway). But Ridgeway, like Tyson Foods and Senne, acknowledged 3 that “representative evidence and statistical evidence are not always proper.” Ridgeway, 946 F.3d 4 at 1087.5 5 3. Scheid Has Not Shown Sufficient Classwide Proof for Training 6 As a starting point, Scheid is correct that the Tyson Foods standard applies here based on 7 PNC’s failure to maintain records that may have been required under California law. Section 8 226.2(a)(2) of the California Labor Code requires an employer to provide itemized statements 9 including each employee’s total hours of nonproductive time, unless the employer pays an hourly 10 wage, separate from any incentive pay, for all hours worked. While it is possible that PNC could 11 prevail on a theory that its compensation plan in fact provides such regular pay—a merits issue not 12 presently before the Court—the issue of damages only becomes relevant if Scheid succeeds in 13 showing that PNC did not provide such pay. Accordingly, for the limited purpose of determining 14 whether proving how much nonproductive time class members spent on training raises individual 15 issues precluding class treatment, the Court assumes that PNC was required to maintain records of 16 such time under section 226.2(a)(2). The question, then, is whether Scheid has provided evidence 17 from which a “reasonable juror could . . . believe[] that the employees spent roughly equal time” 18 on training—or, in conjunction with PNC’s records of what training each employee completed, 19 “roughly equal time” on each particular training module. See Tyson Foods, 136 S. Ct. at 1049. 20 PNC maintained records, or “transcripts,” showing the training modules that each MLO 21
22 5 Some cases considering Mt. Clemens in the context of proving damages on the merits, rather than certifying a class, have suggested a more sweeping rule that “an award of back wages will not 23 be barred for imprecision where it arises from the employer’s failure to keep records as required by the FLSA.” Brock v. Seto, 790 F.2d 1446, 1448 (9th Cir. 1986); but see id. (discussing a 24 plaintiff’s burden to “‘produce[] sufficient evidence to show the amount and extent of that work as a matter of a just and reasonable inference’” (quoting Mt. Clemens, 328 U.S. at 687) (emphasis 25 added in Brock)). To the extent such cases could be read as holding that a plaintiff has no burden to show any degree of precision in damages, this Court declines to apply such a rule for the 26 purpose of class certification, both because it would conflict with Tyson Foods and because the policy underlying those decisions does not apply as strongly in this context. Employees are not 27 left without a remedy if class certification is denied, but instead could pursue individual actions 1 completed, including the dates of completion. Swidler Decl. ¶ 5 & Ex. 1-D (dkt. 122-6); 2 Mackenzie Dep. at 100:16–102:18. PNC also maintained records listing a “duration” for most if 3 not all of the training programs that it offered. See, e.g., Swidler Decl. Ex. 1-A (dkt. 122-2). 4 PNC’s person most knowledgeable, Jasen Mackenzie,6 testified that the “durations” listed 5 represent “an estimated maximum time to complete the curriculum,” Mackenzie Dep. (dkt. 92-5) 6 at 35:19–23, or in other words, “the maximum time for median . . . comprehension,” id. at 45:15– 7 23. According to Mackenzie, those estimates are based on a standardized process considering “the 8 amount of topics within a module and the amount of words on a page.” Id. at 45:19–22. 9 Mackenzie testified that PNC had no other information “in its possession to dispute or challenge 10 or provide more clarification of the amount of time necessary to complete” the trainings. Id. at 11 115:7–13. 12 Although MLOs were able to see the time they spent on a course after completing it, 13 Scheid Decl. ¶ 4, PNC kept no records of the actual time an MLO spent on a given course, 14 Mackenzie Dep. at 46:14–23. Mackenzie states in a declaration that the “duration” was “not the 15 actual, nor is it an estimate, of the length of time a training course/module takes to complete,” but 16 rather “a planning tool so that MLOs can set aside some time in their busy schedules to complete 17 the training within the target calendar completion date.” 2d Mackenzie Decl. (dkt. 125-2) ¶ 5.7 In 18 some tension with Mackenzie’s testimony, one training exercise includes an estimate of how much 19 time it would take to complete. Swidler Reply Decl. Ex. 1 (dkt. 129-4) at PNC 3331 (“It will take 20 you approximately 60 minutes to complete the entire course, including the assessment.”). When 21 pressed on this issue at the hearing, however, class counsel did not assert that any other module 22 includes similar language presenting some amount of time as an actual estimate of how long 23
24 6 The record is inconsistent as to whether the “k” in Mackenzie’s name is capitalized. This order uses the format that appears below his signature on his declarations. 25 7 Scheid challenges Mackenzie’s testimony on this point because he was not the person who calculated the “duration” figures, and PNC did not offer testimony from Nancy Fox, the person 26 who did. Reply at 6. Mackenzie testified on behalf of PNC as a corporate entity under Rule 30(b)(6), which does not require his own personal knowledge. See, e.g. Great Am. Ins. Co. of N.Y. 27 v. Vegas Constr. Co., 251 F.R.D. 534, 539 (D. Nev. 2008). If Scheid wished to challenge his 1 employees would take. Counsel instead identified only other modules that include a figure 2 presented as “Time:”, with no indication as to whether that amount of time was intended as a 3 maximum or a typical duration, or whether it was a reliable estimate of either. 4 Mackenzie also states that the amount of time MLOs would take to actually complete the 5 training modules varied considerably, and that MLOs could start and stop a given course to 6 complete it in more than one sitting. 2d Mackenzie Decl. ¶ 6. Scheid states that she generally 7 took around the amount of time stated as the “duration” to complete trainings, Sched Decl. ¶ 4, 8 while Mackenzie stated in an earlier declaration that based on his own experience and his 9 knowledge of his subordinates, “the training modules take far less time to complete than the 10 calculate duration indicates,” 1st Mackenzie Decl. (dkt. 91-11) ¶ 14. 11 Mackenzie states in a declaration that he sometimes witnessed MLOs conducting sales 12 work while they were playing videos included in PNC’s training modules. 2d Mackenzie Decl. 13 ¶ 8. Scheid states the training sessions required close attention in order to pass the tests included 14 at the end. Scheid Decl. ¶ 4. Mackenzie also states that employees could test or waive out of the 15 requirement to complete some trainings, and PNC’s records would not always distinguish such 16 circumstances from an employee actually completing the training. Mackenzie Dep. at 111:10–20; 17 2d Mackenzie Decl. ¶ 5. 18 Taken together, the evidence that Scheid offers to show common proof of the time that 19 MLOs spent completing particular training modules consists of: (1) “durations” of the courses, 20 with uncontroverted—except perhaps as to a single training module—testimony from PNC’s 21 person most knowledgeable that the durations were intended as maximum rather than typical times 22 for completion; (2) testimony from a single MLO (herself) that she typically took the amount of 23 time stated as the “duration” to complete trainings, while another PNC employee (Mackenzie) 24 stated that he and his subordinates completed them more quickly;8 and (3) the training exercises 25 8 For the sake of argument, the Court disregards the declarations that PNC offered on the initial 26 class certification motion from other MLOs, which Scheid contends were obtained through misconduct. If the Court were to consider those declarations, they would not support Scheid’s 27 position that the “durations” listed by PNC were reliable estimates of the time MLOs spent on 1 themselves, which Scheid contends the jury could review and reach its own conclusions as to a 2 reasonable time for completion. 3 None of this evidence indicates that PNC MLOs “spent roughly equal time” on the 4 trainings. See Senne, 934 F.3d at 940 (quoting Tyson Foods, 136 S. Ct. at 1049). While employee 5 testimony itself can, in appropriate cases, constitute representative evidence, there is no basis here 6 for the Court or a jury to determine whether a single employee’s testimony is representative— 7 particularly where it is contradicted by another employee’s testimony. Cf. Ridgeway, 946 F.3d at 8 1087 (discussing testimony from “many plaintiffs”); Pierce, 922 F.3d at 748 (considering 9 testimony from 43 similarly situated employees). 10 Scheid’s burden on this issue is not heavy. Either an admissible expert report or consistent 11 testimony from some number of similarly situated employees would likely be sufficient to 12 overcome the “no reasonable juror” standard, see Senne, 934 F.3d at 940 (quoting Tyson Foods, 13 136 S. Ct. at 1049), even in the face of evidence from PNC tending to suggest otherwise. It is 14 certainly conceivable that an expert might prepare such a report after conducting a study or 15 reviewing the training materials themselves, or that other employees might testify in a manner 16 consistent with Scheid. But Scheid has offered no expert testimony that the Court could consider 17 under Daubert,9 nor has she presented any other MLO’s testimony regarding the time needed to 18 complete trainings. It may be true that in this case, as in Ridgeway and Tyson Foods, “a 19 representative sample is the only practicable means to collect and present relevant data to show 20 damages.” Ridgeway, 946 F.3d at 1088 (quoting Tyson Foods, 136 S. Ct. at 1046) (internal 21 quotation marks omitted). Given that Scheid has not offered such a sample, that necessity cuts 22
23 trainings in a quarter of the “duration” stated); Lanteri Decl. (dkt. 91-7) ¶ 14 (stating that another MLO typically completed trainings in “about one-third of the designated time”). 24 9 Cf. Tyson Foods, 136 S. Ct. at 1049 (holding that class certification was appropriate in part because a defendant could have challenged the plaintiff’s expert under Daubert, but did not). 25 Scheid suggests that the class could rely on a formula similar to the word– and topic-based system used to calculate PNC’s purported maximum durations in order to determine actual estimates. 26 Perhaps so, but there is no evidence before the Court that such a system is reliable. Had Scheid retained an expert witness to testify to this issue, PNC could have challenged the reliability of the 27 method under Daubert, and the Court could have determined whether the method is sufficiently 1 against granting her motion. See Green v. Fed. Exp. Corp., 614 F. App’x 906, 907 (9th Cir. 2015) 2 (affirming denial of class certification where a plaintiff offered evidence only from employees at a 3 particular branch office). 4 The defect here, as on the previous motion, goes beyond the mere “need for individual 5 damages calculations” that the Ninth Circuit has repeatedly held cannot defeat class certification, 6 see Ridgeway, 946 F.3d at 1087 (emphasis added), and instead represents a more fundamental lack 7 of common evidence. While the Ninth Circuit has cautioned that predominance “is rarely 8 defeated on the grounds of differences among employees so long as liability arises from a 9 common practice or policy of an employer,” it has recognized that such policies are “not a 10 guarantee that predominance will be satisfied.” Senne, 934 F.3d at 938 (emphasis added; citation 11 and internal quotation marks omitted). This is the rare case where a plaintiff has failed to make a 12 sufficient showing to overcome the relaxed burden where such a policy exists. In the complete 13 absence of evidence suggesting that MLOs “spent roughly equal time” on the trainings, the Court 14 concludes that “no reasonable juror” could find on this record that the time spent by different 15 MLOs was “roughly equal.” Tyson Foods, 136 S. Ct. at 1049. Based on the rule stated in Tyson 16 Foods, Scheid’s motion to expand the scope of class certification is therefore DENIED. 17 D. Administrative Motions to File Under Seal 18 Scheid filed two administrative motions to file documents under seal, one in connection 19 with her motion and one in connection with her reply brief. See dkts.122, 129. The only stated 20 basis for sealing is that PNC designated the documents as confidential. PNC did not file a 21 responsive declaration setting forth reasons for sealing as required by Civil Local Rule 79-5(e)(1). 22 Both administrative motions are therefore DENIED. Scheid shall file the documents at issue in 23 the public record no earlier than June 26, 2020 and no later than July 2, 2020. See Civ. L.R. 24 79-5(e)(2). 26 For the reasons discussed above, PNC’s motion is GRANTED, Scheid’s motion is 27 DENIED, and the scope of class certification is modified to include claims based on PNC’s ] derivative of such a theory, with a class defined as all individuals who were employed by PNC as 2 || mortgage loan officers during that time. 3 Scheid’s administrative motions to file under seal are DENIED, and she is ordered to file 4 || documents in the public record as stated above. 6 Dated: June 22, 2020 7 c ao J PH C. SPERO 8 ief Magistrate Judge 9 10 1]
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