Edwards v. Heartland Payment Sys., Inc.

29 Cal.App.5th 725

240 Cal.Rptr.3d 815

Robin EDWARDS et al., Plaintiffs and Respondents,

v.HEARTLAND PAYMENT SYSTEMS, INC., Defendant and Respondent.

Jaime Torres et al., Interveners and Appellants.

B284000

Court of Appeal, Second District, Division 8, California.

Filed November 30, 2018

Shanberg, Stafford & Bartz, Ross E. Shanberg and Aaron A. Bartz, Newport Beach, for Interveners and Appellants.

Lawyers for Justice, Edwin Aiwazian, Arby Aiwazian, and Joanna Ghosh, Glendale, for Plaintiffs and Respondents.

Fisher & Phillips, Todd B. Scherwin, Los Angeles, Wendy McGuire Coats, San Francisco and Shaun J. Voigt, Los Angeles, for Defendant and Respondent.

BIGELOW, P.J.

Employee Robin Edwards filed a putative class action lawsuit against employer Heartland Payment Systems, Inc. (Heartland) for myriad wage and hour violations. Employees Jaime Torres and Jorge Martinez filed a separate, later putative class action lawsuit against Heartland for similar wage and hour violations. After Edwards entered into a proposed class action settlement with Heartland and amended her complaint to encompass the claims asserted by Torres and Martinez, Torres and Martinez filed a motion to intervene in Edwards' lawsuit. The trial court denied the motion, and Torres and Martinez appealed the court's order. We affirm.

BACKGROUND

1. Three Lawsuits Are Filed Against Heartland

Heartland provides electronic processing services in California and employs sales-based employees to secure clients for those services. It was sued in three separate class action lawsuits for alleged wage and hour violations—Edwards v. Heartland Payment Systems, Inc. (Super Ct. L.A. County, 2016, No. BC606083) (Edwards ), Wilson v. Heartland Payment Systems, Inc. (Super Ct. L.A. County, 2016, No. PC056816) (Wilson ); and Torres v. Heartland Payment Systems, Inc. (Super Ct. Orange County, 2016, No. 30–2016–00838951–CU–OE–CXC) (Torres ). The timing of the filing of the original and amended complaints in these lawsuits is important, so we set it out in some detail.

The original complaints in Edwards (the case before us) and Wilson were filed on the same day—January 5, 2016. Edwards alleged the plaintiff Robin Edwards was a "California-based Relationship Manager." It identified the putative class as "California-based Relationship Managers" who worked for Heartland within the prior four years, including two sub-classes of Relationship Managers who were not paid minimum wage for participating in new hire orientation and mandatory training sessions, and Relationship Managers who were not reimbursed for business expenses. The complaint alleged a host of violations of the Labor Code and Industrial Welfare Commission Wage Orders. Specifically, it asserted claims for failure to pay minimum wage, to pay wages upon termination, to provide accurate wage statements, and to reimburse employee expenses, as well as violations of Business and Professions Code section 17200, et seq.

Wilson was a representative suit asserting a claim under the Private Attorneys General Act (PAGA) for similar wage and hour violations.

A first amended complaint was filed in Edwards on January 14, 2016. It was substantially similar to the original complaint, although it added the "Jump Start Program" alongside new hire orientation and mandatory training as categories of work for which California-based Relationship Managers were not paid minimum wage.

A first amended complaint was filed in Wilson on February 29, 2016, adding claims for failure to pay wages, to provide meal and rest breaks, to reimburse business expenses, to provide itemized wage statements, and to pay termination wages, as well as violations of Business and Professions Code section 17200, et seq. The class was defined as all "commission-based employees" employed by Heartland during the prior four years.

The complaint in Torres was filed on March 4, 2016, after the other two cases were filed. Plaintiff Jaime Torres was a "Sales Manager" and plaintiff Jorge Martinez was a "Relationship Manager" for Heartland. The complaint identified classes of individuals "(1) Heartland has classified as temporary employees and/or trainees in a ‘Jump Start’ program and who failed to receive proper wages during the Jump Start program (‘Trainees’); and/or (2) Heartland's sales-based employees, including those holding the title of Relationship Manager, Sales Manager, and similar job titles, who have not received full reimbursement for all expenses necessarily incurred in discharging their sales-related duties for Heartland, pursuant to Heartland's policies, practices and procedures (‘Salespersons’)." The basic claims were the same as in Edwards , albeit adding factual detail and adding claims for failure to pay wages and to pay overtime compensation.

A first amended complaint was filed in Torres on April 11, 2016, adding a PAGA claim.

A second amended complaint was filed in Torres on August 2, 2016, adding more factual detail to the claims already pled and adding claims for illegal deductions from wages, injunctive relief, and accounting. The job title of "Division Manager" was added as part of the sales-based employees sub-class. Factual detail was also added for the alleged illegal deductions and failure to reimburse business expenses based on several alleged Heartland policies and practices, which were not expressly identified in the Edwards or Wilson complaints.

2. The Parties Settle Edwards After Mediation ; The Edwards Complaint is Amended

Prior to mediation, Edwards had served discovery on Heartland, and it is not clear whether Heartland responded. The parties in all the cases agreed to stay discovery and participate in mediation. The mediation was conducted on November 1, 2016, and plaintiffs' counsel from all three cases was present. Counsel in Torres claimed that counsel in Edwards refused to speak with him or with counsel in Wilson during the mediation. The plaintiffs in Edwards and Heartland reached a settlement in principle and executed a memorandum of understanding.

After the preliminary settlement was reached, Edwards propounded additional "confirmatory discovery" on Heartland. Heartland provided "formal and informal responses" to those requests.

The complaint in Edwards was then amended twice after the settlement but before the Torres plaintiffs moved to intervene. Filed on March 14, 2017, the third amended complaint was the operative complaint when the Torres plaintiffs filed their motion. It basically brought the Edwards case in line with the allegations in Wilson and Torres . Suzanne Armstrong was named as a second plaintiff as a "sales-based employee" of Heartland. The proposed class was defined as all current and former sales-based employees, including those holding the positions of "Relationship Manager, Territory Manager, Sales Manager, Division Manager, and/or similar job titles," for the prior four years. Claims were added for meal and rest period violations, unlawful wage deductions, injunctive relief, declaratory relief, an accounting, and a violation of PAGA. And factual allegations were added to support the unreimbursed business expenses claim, identifying several of the alleged Heartland policies and practices mentioned in the Torres complaint.

3. The Trial Court Denies the Torres Plaintiffs' Motion to Intervene in Edwards

On April 27, 2017, the Torres plaintiffs filed their motion to intervene in Edwards . They argued for both mandatory and permissive intervention pursuant to Code of Civil Procedure section 387, subdivisions (a) and (b).

Several days later on May 5, 2017, plaintiff's counsel in Edwards moved for preliminary approval of the settlement. The filing disclosed a proposed total settlement amount of $650,000 and a putative class of 581 members. Heartland's counsel later updated the number of proposed class members to 773. The Torres plaintiffs filed an opposition to the motion for preliminary approval of the settlement.

The trial court denied the Torres plaintiffs' motion to intervene on May 24, 2017.¹ The court denied mandatory intervention because the Torres plaintiffs could "opt-out of or object to the settlement," and it noted that they had already objected. Further, at the time of approval of the settlement, the court would "undertake its duties as a fiduciary to evaluate the fairness of the Edwards settlement, which includes whether the settlement was reached through arm's length bargaining and whether there was sufficient investigation and discovery to allow counsel and the Court to act intelligently.... Procedural mechanisms are in place to safeguard the interest of putative class members and concerns by [the Torres plaintiffs] can be raised at the time of preliminary and final approval."

The court denied permissive intervention because "[a]t this stage of the proceeding, the settlement has not been approved by the Court and thus [the Torres plaintiffs'] rights have not been detracted. Furthermore, if the settlement is approved, they will have the opportunity to challenge the release in the Edwards settlement by objecting to the settlement or may opt out of the settlement completely, such that their legal rights in the action are not hindered."

The Torres plaintiffs timely appealed the court's order denying intervention.

4. Trial Court Proceedings Continue Until We Issue a Stay

While the Torres plaintiffs' appeal was pending, the Torres plaintiffs, the Edwards plaintiffs, and Heartland filed further briefing on the preliminary approval of the settlement. As pertinent here, the Torres plaintiffs briefed whether the claims in Edwards were "typical of the class (notably Sales Managers)"; whether the Edwards plaintiffs "suffer[ed] the kinds of damages alleged in the 4th cause of action in the Second Amended Complaint—unlawful deduction of wages, portfolio buyout, grossing up"; and whether the Edwards plaintiffs were "Sales Managers." The Torres plaintiffs also briefed the extent of discovery conducted after mediation on the "newly added...