Sandoval Ortega v. Aho Enters.

JOSE SALVADOR SANDOVAL ORTEGA, et al., Plaintiffs, v. AHO ENTERPRISES, INC., et al., Defendants.

Case No. 19-cv-00404-DMR

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

August 10, 2020

ORDER RE: PLAINTIFFS' MOTION FOR CLASS CERTIFICATION AND FOR CONDITIONAL CERTIFICATION OF A COLLECTIVE ACTION

Re: Dkt. No. 47

Plaintiffs Jose Salvador Sandoval Ortega, J. Guadalupe Alaniz, Efrain Henriquez, Norberto Rodriguez, Jose Luis Correa Martinez, Melvin Efrain Godoy Ramirez, Eduardo Rodriguez, Rodolfo Vazquez, Daniel Valencia, and Jose Valencia bring federal and state law wage and hour claims against Defendants Aho Enterprises, Inc. dba Superior Body Shop, Jack Aho, Issa Aho, and Hani Aho on behalf of themselves and a putative class of current and former non-exempt employees. Plaintiffs allege that Defendants failed to pay them and the putative class members overtime pay, failed to provide meal and rest breaks, and failed to provide accurate itemized wage statements and final pay. Plaintiffs now move pursuant to Federal Rule of Civil Procedure 23(b)(3) to certify three subclasses and for conditional certification of a collective action under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. ("FLSA"). [Docket No. 47.] The court held a hearing on July 23, 2020. For the following reasons, the motion is granted in part and denied in part. The court grants certification of the overtime pay and rest break subclasses and the related derivative claims for failure to pay wages at termination or resignation and failure to provide accurate wage statements, and denies certification of the meal break subclass. The court also certifies an FLSA collective action.

I. BACKGROUND

A. Factual Background

Defendant Aho Enterprises, Inc. ("Aho Enterprises") does business as Superior Body Shop ("Superior"), an automobile body repair business in San Carlos, California. Defendants Jack Aho, Issa Aho, and Hani Aho are brothers who own and operate Aho Enterprises. [Docket No. 64-3 (J. Aho Decl., June 18, 2020) ¶ 2.] Superior employs individuals as production workers to perform repair work on cars. Production workers include technicians, technician helpers, detailers, painters, and painter helpers. [Docket No. 48-2 (Hanhan Dep., "PMK Dep.") 43-45.] There are between 20 and 30 individuals employed as production workers in any given month. Id. at 45. Until sometime in 2019, production workers tracked their hours worked using a time clock and physical timecards that they used to clock or "punch" in and out for their shifts. Superior ceased using a time clock in 2019, and now tracks production workers' hours by computer instead of using a time clock and physical timecards. PMK Dep. 8-9, 13. The end date for each of Plaintiffs' proposed classes and subclasses is September 30, 2019.

1. Overtime

Superior's Employee Handbook contains a provision governing overtime for non-exempt employees. See PMK Dep. Ex. 9 (Employee Handbook, updated Oct. 1, 2015) at 36. It provides in relevant part that "[a]ll hours worked in excess of eight hours in one workday or 40 hours in one workweek will be treated as overtime," and that "[c]ompensation for hours in excess of 40 for the workweek, or in excess of eight and not more than 12 for the workday, . . . shall be paid at a rate one and one-half times the employee's regular rate of pay[.]" Id.

Superior's designated Rule 30(b)(6) deponent, Mary Hanhan, is responsible for calculating the production workers' hours to calculate payroll. See PMK Dep. 22-29. She testified that despite the foregoing provision in the Employee Handbook, she paid overtime for hours worked in excess of 40 per week only ("weekly overtime"), and admitted that she did not pay overtime for hours worked in excess of eight per day ("daily overtime"). Id. at 30-31 ("I was paying 40 hours a week per week and anything above that is overtime."), 80. Hanhan's practice of paying only weekly overtime was in place from 2013 until 2019. Id. at 31.

Employees also had a second physical timecard that they used to record additional hours worked, including hours worked on weekends. The second timecards were referred to as "cash cards." Superior paid employees for hours recorded on the cash cards in cash at the employee's regular hourly rate. PMK Dep. 31, 35-36, 41-42. Employees did not receive wage statements for the cash payments and Superior does not have records of the cash cards or cash payments for the hours recorded on the cash cards. Id. at 38-39, 99. Hanhan testified that Superior ended the cash card practice in 2017. Id. at 41.

2. Meal and Rest Breaks

During the period when Superior's employees used a time clock and physical timecards, production workers clocked out and then back in for an unpaid "lunch" break in the middle of the day. See PMK Dep. 22; see, e.g., PMK Dep. Exs. 3, 4 (showing four time entries per day). Plaintiffs contend that this mid-day break lasted for only 30 or 40 minutes and was the sole break they were permitted to take during the day. [Docket Nos. 48-9 (D. Valencia Decl., Mar. 10, 2020) ¶ 5; 48-11 (E. Rodriguez Decl., Mar. 12, 2020) ¶¶ 4-5; 48-13 (Henriquez Decl., Mar. 12, 2020) ¶ 5; 48-14 (Alaniz Decl., Mar. 13, 2020) ¶ 4; 48-16 (Correa Martinez Decl., Mar. 13, 2020) ¶¶ 5-7; 48-17 (Sandoval Ortega Decl., Mar. 13, 2020) ¶ 5; 48-19 (J. Valencia Decl., Mar. 7, 2020) ¶ 5; 48-21 (Godoy Ramirez Decl., Mar. 12, 2020) ¶¶ 3, 5; 48-23 (N. Rodriguez Decl., Mar. 7, 2020) ¶ 5; 48-24 (Vasquez Decl., Mar. 13, 2020) ¶ 5.]

Hanhan testified that when calculating hours worked, she credited production workers with approximately 25 minutes per day, or .4 of an hour, in addition to their actual hours worked. This credit represented "rest break pay" for a 15-minute rest break in the morning and a 10-minute rest break in the afternoon, even though production workers did not have to punch in and out for rest breaks and thus any time taken for rest breaks was theoretically time worked. See PMK Dep. 22-24, 28 (describing subtracting 25 minutes from the time taken for the clocked-out lunch break, resulting in a credit of 25 minutes); J. Aho Decl. ¶ 10. Hanhan's practice of crediting employees for an additional 25 minutes per day for breaks ended in April 2019 when her supervisors discovered the error. J. Aho Decl. ¶ 10; PMK Dep. 48 ("there's a few people that said we always get paid the rest period, so I thought I am supposed to pay the rest period."). She also testified thatSuperior never paid an hour's worth of pay to a production worker for a missed meal or rest break. PMK Dep. 60.

B. Procedural History

Plaintiffs filed this putative class action on January 23, 2019. In the second amended complaint, which is the operative complaint, Plaintiffs plead the following claims for relief: 1) failure to pay overtime in violation of the FLSA; 2) failure to pay overtime in violation of California Labor Code sections 500, 510, 1194, and the applicable wage order; 3) failure to pay minimum wage in violation of California Labor Code sections 226, 226.6, 1194, 1194.2, 1197 and the applicable wage order; 4) failure to provide rest periods in violation of California Labor Code sections 203, 226, 226.7, 1194, and the applicable wage order; 5) failure to provide meal periods in violation of California Labor Code sections 203, 226, 226.7, 512, 1194, and the applicable wage order; 6) failure to pay wages at termination in violation of California Labor Code sections 201, 202, and 203; 7) failure to provide accurate and itemized wage statements in violation of California Labor Code sections 226, 1174, 1175, and the applicable wage order; 8) violation of California Business and Professions Code section 17200 et seq., the unfair competition law; and 9) civil penalties under the Private Attorneys General Act ("PAGA"), California Labor Code section 2698 et seq. [Docket No. 39 (2d Am. Compl.).]

C. Motion for Class Certification and Certification of a Collective Action

Plaintiffs seek certification under Federal Rule of Civil Procedure 23 of a class of all non-exempt production employees, including body shop technicians, technician helpers, detailers, painters, and painter helpers, who were employed by Aho Enterprises, Inc. in the State of California at any time from January 23, 2015 to September 30, 2019. They also seek certification of three subclasses and two derivative subclasses.

Plaintiffs also seek conditional certification of the following FLSA collective action: All non-exempt production employees, including body shop technicians, technician helpers, detailers, painters, and painter helpers, who were employed by Aho Enterprises, Inc. in the State of California at any time from January 23, 2016 to September 30, 2019, who worked more than 40 hours a week.

Plaintiffs seek appointment of Jose Salvador Sandoval Ortega, J. Guadalupe Alaniz, Efrain Henriquez, Norberto Rodriguez, Jose Luis Correa Martinez, Melvin Efrain Godoy Ramirez, Eduardo Rodriguez, Rodolfo Vazquez, Daniel Valencia, and Jose Valencia as class representatives. They also move for appointment of Mallison & Martinez as class counsel.

II. EVIDENTIARY OBJECTIONS

Plaintiffs' reply brief contains evidentiary objections to several of Defendants' supporting declarations. Reply 11-18. The objections are denied as moot, as the court did not rely on the disputed evidence in reaching its decision.

III. CLASS CERTIFICATION

A. Legal Standard

"Federal Rule of Civil Procedure 23 governs the maintenance of class actions in federal court." Briseno v. ConAgra Foods, Inc., 844 F.3d 1121, 1124 (9th Cir. 2017). A plaintiff seeking class certification bears the burden of demonstrating that he or she has met each of the four requirements of Rule 23(a), and at least one of the requirements of Rule 23(b). Ellis v. Costco Wholesale Corp., 657 F.3d 970, 979-80 (9th Cir. 2011) (citing Zinser v. Accufix Research Institute, Inc., 253 F.3d 1180, 1186 (9th Cir.), amended by 273 F.3d 1266 (9th Cir. 2001)); Lozano v. AT&T Wireless Servs....