Case Name: Xuehua Wang, et al. v. Art of Reflexology Milpitas, LLC, et al.
Case No.: 2015-1-CV-283659

* This tentative ruling was issued to the parties on June 6, 2018.

This is a class action alleging that defendants misclassified employees as independent contractors and committed other wage and hour violations. Before the Court are motions by plaintiffs (1) to compel the production of documents in compliance with deposition notices and (2) for an order restricting defendants’ communications with class members and for an order modifying the class definition. Both motions are opposed.

I. Factual and Procedural Background

According to the operative First Amended Complaint (“FAC”), the “Defendant LLCs” owned, operated, and managed at least 11 massage establishments and hired massage therapists as full-time, non-exempt employees. (FAC, ¶¶ 5, 29.) Six of the Defendant LLCs remain active. (FAC, ¶ 6.) Individual defendants Chiu Hung Lam and Wah Yiu Lee created the Defendant LLCs for purposes of evading individual liabilities and they are the members of the LLCs. (FAC, ¶ 29.)

Defendants are the joint employers of plaintiffs Xuehua Wang and Wenwei Gu. (FAC, ¶ 30.) They classified plaintiffs as independent contractors and caused them to sign “independent contractor” agreements through coercion, fraud, or misrepresentation. (FAC, ¶ 31.) Lam and Lee set work hours, weekly schedules, pay rates, and pay schedules for plaintiffs, selected their work locations, and required them to perform services on the business premises and to remain there during work hours even if no patrons came in. (FAC, ¶ 33.) Plaintiffs typically worked 11 hours a day, from 10:00 a.m. until 9:00 p.m., six days a week. (FAC, ¶ 34.) Defendants generally distributed service fees and gratuities to plaintiffs three times a month, but intentionally delayed the distribution of each payment for about 10 days. (FAC, ¶ 36.) Lam and Lee required plaintiffs to pay a monthly fee in advance for the next month’s usage of equipment and materials by the 24th day of each month. (FAC, ¶ 37.) Defendants paid neither overtime compensation nor minimum wages to plaintiffs. (FAC, ¶ 38.)

The FAC, filed on November 10, 2015, sets forth the following causes of action: (1) failure to pay overtime; (2) failure to pay minimum wages; (3) failure to furnish itemized wage statements; (4) unlawful repayment of wages; (5) failure to timely pay wages due and owing upon termination of employment; (6) willful misclassification; (7) unfair competition; (8) actions under the Private Attorney General Act of 2004; and (9) failure to provide personnel files.

On September 28, 2016, the Court (Hon. Kirwan) granted plaintiffs’ motion for class certification as to a class of “all persons employed by the Defendants in California as message [sic] practitioner from 2011 up until the date of entry of judgment after trial who claim they were misclassified as independent contractors by the Defendants and who no longer worked [sic] for Defendants.” Notice has not yet been served on the class. While the parties have met and conferred on this issue, it appears that a series of disputes—some of which are related to issues raised in the instant motions—have contributed to the failure to serve notice thus far.

According to the parties’ most recent joint case management conference statement, Randal Oakley became defendants’ fourth lead counsel following the departure of Brian Stewart, William Barrett, and Nancy R. Tragarz. The oppositions to the motions before the Court were filed by other attorneys at the Law Offices of Sam X.J. Wu, APC, the same law firm with which most or all of these attorneys were affiliated. Plaintiffs’ counsel indicates that Mr. Stewart, Ms. Tragarz, and Mr. Oakley have now all left Mr. Wu’s firm.

II. Motion to Compel the Production of Documents

Plaintiffs move to compel further responses to document demands included in deposition notices served on defendants Lam and Lee, and request an award of monetary sanctions against defendants and their counsel. Defendants oppose plaintiffs’ motion and seek sanctions against plaintiffs and their counsel.

A. Discovery Dispute

On August 11, 2017, plaintiffs served defendants Lam and Lee with amended deposition notices, each of which included 44 requests for the production of documents. On September 7, defendants—who were represented by Mr. Stewart at Mr. Wu’s firm at the time—served voluminous objections to the document requests, which did not indicate that any specific documents would be produced. The objections were prefaced with a general statement that “all documents which may be produced at deposition are those documents which are presently available and specifically known to Responding Party based only upon information currently known to Responding Party, and disclose only those contentions which presently occur to Responding Party.”

Plaintiffs deemed these responses deficient. The parties began to meet and confer on this issue, but agreed to put their efforts on hold to facilitate mediation.

According to plaintiffs’ counsel, after mediation “fell through,” defendants produced some documents responsive to four of plaintiffs’ 44 requests. Beginning on December 1, 2017, plaintiffs’ counsel met and conferred with defendants’ counsel Ms. Tragarz and on January 10, 2018, defendants made an additional document production that remained significantly deficient. On January 26, plaintiffs’ counsel sent an additional meet and confer letter regarding this document production, but never received a reply from anyone at the Law Offices of Sam Wu.

Plaintiffs filed the instant motion to compel on March 1, 2018. The parties participated in an informal discovery conference (“IDC”) with the Court on March 16, with attorney Randal Oakley representing the defendants. The parties’ IDC statement indicates that Mr. Oakley, like Mr. Stewart and Ms. Tragarz, was associated with the Law Offices of Sam X.J. Wu. With the parties having stipulated to a protective order on March 15, defendants indicated that an additional document production would be forthcoming.

In their opposition, defendants state that both Lam and Lee have now served supplemental responses to plaintiffs’ document requests, which they attach to the declaration supporting their opposition. In the supplemental responses, defendants state that they will produce all documents responsive to many requests and, as to a handful of requests, that they will produce daily logs showing total service fees, service fees allocated to therapists, and tips. Defendants also state that they have no documents responsive to many requests. It appears that defendants did make an additional document production following the IDC, although they do not describe the content of this production.

In a letter dated April 27, plaintiffs’ counsel stated that plaintiffs had received defendants’ supplemental production, but found the documents “materially incomplete and largely repetit[ious] of [defendants’] prior production.” Counsel stated that not all promised documents were produced and urged that the production of daily logs in response to several demands is insufficient. Counsel also noted that defendants’ statements of inability to comply were incomplete. Plaintiffs’ counsel renews these arguments in a declaration filed with plaintiffs’ reply brief.

B. Legal Standard

Section 2025.480 of the Code of Civil Procedure provides that “[i]f a deponent fails to answer any question or to produce any document … that is specified in the deposition notice or a deposition subpoena, the party seeking discovery may move the court for an order compelling that answer or production.” (Code Civ. Proc., § 2025.480, subd. (a).) “If the court determines that the answer or production sought is subject to discovery, it shall order that the answer be given or the production be made on the resumption of the deposition.” (Code Civ. Proc., § 2025.480, subd. (i).)

C. Analysis

While defendants’ service of supplemental responses to plaintiffs’ document demands arguably renders plaintiffs’ motion moot (see Sinaiko Healthcare Consulting, Inc. v. Pac. Healthcare Consultants (2007) 148 Cal.App.4th 390, 409), the Court will endeavor to address the parties’ remaining disputes as outlined in plaintiffs’ April 27th meet and confer letter and in the declaration filed in support of plaintiffs’ reply brief.

1. Preliminary Issues

As an initial matter, while plaintiffs’ document requests were included in deposition notices, it does not appear that plaintiffs seek to compel the resumption of any depositions, and defendants have already supplemented their production once through written responses. Under the circumstances, the Court assumes that the parties are amenable to proceeding through written responses to the document demands and will craft its order accordingly.

Also, defendants contend that plaintiffs failed to adequately meet and confer prior to filing their motion and following defendants’ service of supplemental responses. The Court disagrees. A reasonable and good faith meet and confer effort requires that the parties present the merits of their respective positions with candor, specificity, and support. (Townsend v. Superior Court (EMC Mortgage Co.) (1998) 61 Cal.App.4th 1431, 1435, 1439.) Here, plaintiffs’ counsel has repeatedly and specifically raised asserted defects with defendants’ discovery responses, in both written correspondence and in-person conversations. After months of engagement with multiple defense attorneys yielded no progress, plaintiffs moved to compel and only then received a supplemental production that they contend adds little to the discovery they had already received. Plaintiffs explained their specific issues with this production in another meet and confer letter, but defendants did not volunteer to address these issues. Under the circumstances, plaintiffs are justified in concluding that a ruling on their motion is necessary to resolve the parties’ impasse.

Finally, plaintiffs contend that defendants’ opposition was improperly served by fax and email without a prior agreement. However, because the Court utilizes mandatory electronic filing, plaintiffs are required to accept electronic service. (See Cal. Rules of Court, rule 2.251(c).)

2. Defendants’ Responses

In their reply brief, plaintiffs vigorously argue that defendants have made a range of false statements in connection with their discovery responses, including falsely claiming that they have produced all documents responsive to certain requests and falsely claiming that other documents are not in their possession. The Court is not in a position to evaluate this claim on the record before it, but it will order defendants to provide additional, sworn supplemental responses stating that their production is complete as to demands they indicated they would fully comply with and setting forth code-compliant statements of inability to comply where appropriate. Defendants are cautioned that the Court expects them to fully and promptly comply with their discovery obligations, and will consider imposing sanctions upon a properly noticed motion if they fail to do so.

Plaintiffs further contend that defendants’ promise to produce only daily logs in response to several document requests is inadequate. The requests at issue are as follows:

• Request no. 3, “all DOCUMENTS concerning or constituting the record of service fees collected from massage customers from 2011 up until the present, including but not limited to bank transaction records, bank statements, record of POS (Point of Sale) systems, cash record, or any other written or electronic records”;

• Request no. 4, “all DOCUMENTS concerning or constituting the record of service fees distributed to massage practitioner/therapists from 2011 up until the present, including but not limited to bank transaction records, bank statements, cash record, or any written or electronic receipts made by massage practitioner/therapists, or any other written or electronic records”;

• Request no. 5, “all DOCUMENTS concerning or constituting the record of tips collected from massage customers from 2011 up until the present, including but not limited to” the categories of records specified in request no. 3;

• Request no. 6, “all DOCUMENTS concerning or constituting the record of tips distributed to massage practitioner/therapists from 2011 up until the present, including but not limited to” the categories of records specified in request no. 4; and

• Request no. 9, “all DOCUMENTS concerning or constituting the record of working hours of all massage practitioner/therapists from 2011 up until the present, including but not limited to timecards (punchcards/timesheets), work schedules, attendance sheets, substitution schedules, or any other written or electronic records.”

These documents are clearly relevant to plaintiffs’ claims, and there is good cause to order their production. The Court agrees with plaintiffs that defendants’ promised production limited to daily logs showing total service fees, service fees allocated to therapists, and tips is inadequate to fully respond to these requests. Defendants do not explain or attempt to justify this limitation in their opposition. The Court will order defendants to fully respond to these requests by indicating that they will produce all responsive documents in their possession, custody, or control and by specifically identifying any categories of documents that are not in their possession, custody, or control. Defendants’ responses must comply with the requirements set forth in Code of Civil Procedure sections 2031.210-2031.250.

Finally, while they insist that their objections are not “boilerplate,” defendants fail to specifically defend any of their objections to any of plaintiffs’ requests. Contrary to defendants’ argument, it is their burden to do so in opposing a motion to compel, not plaintiffs’ burden to refute their objections. (See Williams v. Superior Court (Marshall’s of CA, LLC) (2017) 3 Cal.5th 531, 549 [“the party opposing discovery has an obligation to supply the basis for” the court’s finding in its favor].) Defendants’ objections are accordingly overruled, except for any objections based on the attorney-client privilege and the work product doctrine, which are preserved. (See Best Products, Inc. v. Superior Court (Granatelli Motorsports, Inc.) (2004) 119 Cal.App.4th 1181, 1188.)

D. Requests for Monetary Sanctions

Plaintiffs request an award of $2,887.50 in monetary sanctions against “the responding party and his attorney of record” pursuant to Code of Civil Procedure section 2025.480, subdivision (j). That provision states that the court shall award sanctions against any party or attorney who unsuccessfully opposes a motion to compel, “unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” Here, defendants and their counsel did not act with substantial justification, and no other circumstances render sanctions unjust.

Defendants correctly note that plaintiffs do not specifically identify which defendant or counsel they seek sanctions against. Consequently, the Court will not award sanctions against any particular party or attorney. However, it will not permit defendants’ law firm to escape sanctions for discovery misconduct by assigning this case to a rotating cast of associates. The same firm has represented defendants for the duration of this discovery dispute, and the firm itself will be responsible for paying the sanctions resulting from its attorneys’ conduct.

Plaintiffs’ counsel submits a declaration stating that he spent 6.2 hours preparing plaintiffs’ motion to compel and anticipates spending an additional 2.5 hours reviewing defendants’ opposition, drafting plaintiffs’ reply, and attending the hearing. In his reply declaration, counsel states that he actually expended 8.7 hours preparing the reply papers. This is an excessive amount of time to spend on reply papers, and the Court will therefore award only the 2.5 hours of time originally requested by plaintiffs’ counsel, which is reasonable. The remainder of the time billed and counsel’s billing rate of $325 per hour are also reasonable. The Court will thus award $2,827.50 in sanctions in connection with the present motion ($325/hr. x 8.7 hours). The $60 filing fee will also be included, for a total of $2,887.50.

Finally, defendants request $3,217.50 in sanctions against plaintiffs and their counsel, arguing that plaintiffs’ motion is “frivolous.” The Court disagrees with this characterization, and there is no basis to award sanctions to defendants given that plaintiffs’ motion was successful.

E. Conclusion and Order

Plaintiffs’ motion to compel is GRANTED. Defendants shall serve verified, code-compliant further responses to all of plaintiffs’ document demands and produce all remaining responsive documents in conformity therewith within 20 calendar days of the filing of this order. Statements of compliance shall indicate that all responsive documents have been produced, and statements of inability to comply “shall affirm that a diligent search and a reasonable inquiry has been made in an effort to comply with th[e] demand” and “shall also specify whether the inability to comply is because the particular item or category has never existed, has been destroyed, has been lost, misplaced, or stolen, or has never been, or is no longer, in the possession, custody, or control of the responding party.” (Code Civ. Proc., § 2031.230.) Defendants’ responses shall be without objection, except for any preserved objections based on the attorney-client privilege and work product doctrine applicable to individual documents. Along with their responses, defendants shall provide a privilege log identifying any documents withheld on the basis of these privileges and providing a factual basis for the privilege claimed.

Plaintiffs’ request for monetary sanctions is GRANTED in the amount of $2,887.50. The Law Offices of Sam X.J. Wu, APC shall remit this amount to plaintiffs’ counsel within 20 calendar days of the filing of this order.

III. Motion for Modification of Class Definition and “Prophylactic Measures” Regarding Defendants’ Communications with Plaintiffs

In their second motion before the Court, plaintiffs seek an order (1) restricting defendants’ communications with class members and (2) modifying the class definition. Defendants oppose plaintiffs’ motion in the first respect. With regard to the class definition, defendants agree that the definition should be modified but dispute plaintiffs’ proposed wording.

A. Motion for an Order Restricting Defendants’ Communications with Class Members

Plaintiffs ask the Court to enter an order “prohibiting the defendants from contacting Class members for purposes of encouraging or coercing Class members to opt out, or in any way interfering with Class members’ free will to remain in this case.” Their request is prompted by former counsel Brian Stewart’s statement in meet and confer correspondence that “[i]t is my understanding that other than your clients, all other potential members of the ‘class’ have indicated that they will opt out once notice is given.”

This statement is indeed troubling. First of all, it is an ethical violation for defense counsel to communicate unilaterally with the class once a class has been certified. “[A]bsent class members of a … certified class are ‘parties’ represented by class counsel,” triggering the requirements of California Rules of Professional Conduct, rule 2-100. (Hernandez v. Vitamin Shoppe Industries, Inc. (2009) 174 Cal.App.4th 1441, 1459-1460.) Rule 2-100 provides that an attorney “shall not communicate directly or indirectly about the subject of the representation with a party the member knows to be represented by another lawyer in the matter, unless the member has the consent of the other lawyer.”

It is also improper for defendants to coerce class members into opting out of the class, because such coercion runs contrary to the Court’s supervisory role with regard to the notice and opt-out processes. A defendant’s unauthorized, competing communications with the class and invitations for class members to opt out “defeat[] the whole point of the court’s holding a hearing to approve the notice to the class” and constitute “an end run around the court’s supervisory powers.” (Gainey v. Occidental Land Research (1986) 186 Cal.App.3d 1051, 1058.) For this reason, a defendant does not have an unrestricted right to communicate with class members once a class has been certified. (Ibid.) Where improper communications have occurred, “[t]he proper remedy … is that those who [opted out at defendant’s request] be restored to the class, and that a remedial notice be sent giving them a new period in which to make a new and unfettered decision whether to opt out.” (Ibid.)

“Courts have … recognized that in the context of an employer/worker relationship, there is a particularly acute risk of coercion and abuse when the employer solicits opt-outs from its workers.” (Guifu Li v. A Perfect Day Franchise, Inc. (N.D. Cal. 2010) 270 F.R.D. 509, 517 [invalidating improperly solicited opt-outs and ordering corrective notice]; see also Laguna v. Coverall North America, Inc. (S.D. Cal., Nov. 30, 2010, No. 09-CV-2131-JM (BGS)) 2010 WL 11508987 [same].) Courts have issued orders restricting defendants’ communications with class members where the record supports it in light of these concerns. (See Wang v. Chinese Daily News, Inc. (C.D. Cal. 2006) 236 F.R.D. 485, 490, aff’d (9th Cir. 2010) 623 F.3d 743, cert. granted, judgment vacated on another ground by (2011) 565 U.S. 801 [granting such an order based on the criteria stated in Kleiner v. First Nat. Bank of Atlanta (11th Cir. 1985) 751 F.2d 1193]; see also Aldapa v. Fowler Packing Company Inc. (E.D. Cal., Mar. 18, 2016, No. 115CV00420DADSAB) 2016 WL 1073252 [restricting both parties from initiating communications with putative class members during the opt-out period].)

Here, the record supports the issuance of a temporary order restricting defendants’ communications with class members concerning this action, which the Court will revisit when defendants submit sworn statements fully disclosing their communications with class members about this litigation. Notably, while defendants argue that plaintiffs have not submitted enough evidence to support their request, they do not explain the statement in Mr. Stewart’s letter or deny that improper communications with the class have occurred. The Court will also consider including corrective language in the class notice if warranted by the facts disclosed by defendants’ declarations.

B. Motion for an Order Modifying the Class Definition

Finally, plaintiffs seek an order modifying the class definition to eliminate its limitation to employees “who claim that they were misclassified as independent contractors.” The parties agree that the class should not be defined with reference to this disputed legal issue.

Plaintiffs propose that the class be defined as “all persons employed by Defendants in California as massage practitioner[s] from 2011 up until the date of entry of judgment after trial.” Defendants propose a competing definition of “all persons who have worked as massage practitioners for Defendants within the State of California from July 29, 2011 through the final disposition of this case, and who have been compensated as independent contractors.”

Defendants propose describing class members as having “worked as” massage practitioners to avoid implying that they were defendants’ employees. The Court agrees with this suggestion, since class members’ employment status is a disputed issue.

Defendants contend that the class period should be defined with reference to the applicable statute of limitations, which would bar claims that accrued more than four years before this action was filed on July 29, 2015. The Court agrees. While plaintiffs contend that estoppel may allow older claims to be prosecuted, they offer no support for this argument and do not explain why the class period should begin in “2011,” specifically.

Finally, plaintiffs urge in their reply brief that limiting the class to those “who have been compensated as independent contractors” perpetuates the inclusion of disputed issues in the class definition. The Court agrees. Absent evidence that defendants utilized the services of any massage practitioners who were not compensated as independent contractors, this qualification is unnecessary and potentially confusing to the class.

The Court will issue an order modifying the class definition in accordance with these principles.

C. Conclusion and Order

With regard to plaintiffs’ request for an order restricting defendants’ communications with class members, plaintiffs’ motion is GRANTED IN PART as follows and is CONTINUED IN PART to July 13, 2018 at 9:00 A.M. in Department 1. By June 15, defendants Lam and Lee shall file and serve declarations fully disclosing and describing their communications with class members—before or after the class was certified—regarding this action and class members’ option to opt out of it. By the same date, defendants shall file and serve declarations on the same subjects by any counsel or former counsel at the Law Offices of Sam X.J. Wu, APC who communicated directly with class members. By June 22, the parties shall file and serve supplemental briefs of up to ten pages in length addressing (1) whether the Court should impose continued restrictions on defendants’ communications with class members and (2) whether further corrective action, in the form of corrective language in the class notice or otherwise, should be taken.

From the time this order is entered until the time the continued hearing is completed, defendants and their counsel are barred from (1) initiating any communications with class members regarding this action and (2) expressing any view to class members regarding whether they should remain in the action or opt out of it. Meanwhile, the parties shall continue to meet and confer regarding a procedure for providing notice to the class and a form of notice. If they come to agreement, plaintiff shall file a stipulation along with a statement and proposed order pursuant to California Rules of Court, rule 3.766. If disputes remain, the parties shall each file statements of up to five pages in length addressing their positions and attaching their proposed forms of notice. These statements shall be filed and served by June 29.

With regard to the class definition, plaintiffs’ motion is GRANTED IN PART and the class is redefined as “all persons who have worked as massage practitioners for Defendants within the State of California from July 29, 2011 through the final disposition of this case.”

Counsel for the parties, including Sam Wu and any attorneys currently practicing in his office who have a role in this case, are ordered to personally appear at the June 8th hearing on these motions.

The Court will prepare the order.