Case Name:   Derrick Fenley, et al. vs. Rite Aid Corporation.

Case No.:       1-12-CV-229127

 

This is a putative wage and hour class action by plaintiffs Derrick Fenley (“Fenley”), Stacy Wolchow (“Wolchow”), Steve Ton (“Ton”) and Anthony Centeno (“Centeno”) (collectively “Plaintiffs”) on behalf of themselves and others who are or have been employed by defendant Rite Aid Corporation (“Defendant”) and misclassified as overtime-exempt retail managers in any store in the State of California within the applicable class period.[1]  The class period is defined as the time from November 4, 2009 through trial.[2]  Plaintiffs allege that during the class period, Defendant has had a consistent policy of (1) permitting, encouraging and/or requiring its allegedly overtime-exempt Store Managers to work in excess of eight hours per day and in excess of forty hours per week without paying them overtime compensation as required by California’s wage and hour laws, (2) unlawfully denying Plaintiffs and putative class statutorily-mandated meal and rest periods, and (3) willfully failing to provide Plaintiffs and putative class with accurate semimonthly itemized wage statements reflecting the total number of hours each worked, the applicable deductions, and the applicable hourly rates in effect during the pay period, and (4) failing to reimburse putative class members for business expenses related to the operations of Defendant.[3]  In addition, Plaintiffs allege on information and belief that Defendant has had a consistent policy of willfully failing to pay compensation (including unpaid overtime) in a prompt and timely manner to the Plaintiffs and those putative class members whose employment with Defendant has terminated.[4]

 

The operative Second Amended Complaint (“SAC”), filed on March 24, 2014, asserts seven causes of action for: (1) unlawful failure to pay overtime wages; (2) failure to provide meal and rest periods; (3) failure to provide accurate itemized wage statements; (4) failure to pay wages on termination; (5) failure to reimburse expenses and/or prohibited cash bond; (6) unfair business practices under the Unfair Competition Law (“UCL”); and (7) violation of the Private Attorneys General Act (“PAGA”) (Cal. Lab. Code, § 2698 et seq.).

 

On June 27, 2014, the Court sustained without leave to amend Defendant’s demurrer to the PAGA claims brought by Fenley, Wolchow and Ton.

 

On July 2, 2014, the Court granted in part Plaintiffs’ motion for class certification as to the fifth and sixth causes of action.[5]  The Court denied certification without prejudice as to the first, second, third, and fourth causes of action, finding that Plaintiffs did not sufficiently demonstrate that common questions of law or fact will likely predominate over individual ones for their overtime, meal/rest break, wage statement and waiting time penalty claims.  The Court found that Defendant’s evidence of Store Managers’ flexibility in applying allegedly uniform policies showed that Defendant’s policies did not have the effect of requiring Store Managers to engage primarily in non-exempt work.

 

Defendant now moves to deny representative status of Centeno’s PAGA claim.  Defendant argues that Centento’s representative PAGA claim is unmanageable for the same reasons discussed in the Court’s order denying class certification and would be even more factually complex because of the multi-part inquiry required under the PAGA.  Defendant argues that pre-Proposition 64 UCL cases brought as representative actions set forth due process limitations on non-class representative actions, requiring courts to ask (1) whether adjudication of the representative claim requires resolution of complex factual issues; (2) whether the amount to be recovered by non-parties is nominal or significant; (3) whether determining the amount of non-parties’ recovery requires a straightforward calculation or more individualized assessment; and (4) whether entering judgment for or against non-parties would pose insurmountable control and management problems.  Defendant argues that each of these factors weighs against permitting Centeno to proceed with his representative PAGA claim.  Defendant further argues that due process requires that it be allowed to litigate its affirmative defenses in a PAGA representative action, and this will involve individualized inquiries.

 

In opposition, Plaintiffs argue that Centeno’s representative status cannot be denied because a PAGA claim is always a representative action brought by a representative of the State, and PAGA claims are not subject to the class certification requirements.  Plaintiffs argue the motion is premature because at this point in time, Cenento has not identified the Store Managers or the claims (misclassification and/or breaks) he intends to submit for adjudication, and he will only be charged with proving as many wage violations as he can.  Plaintiffs contend that the pre-Prop. 64 UCL cases are inapposite because they involved non-parties, while PAGA does not seek to recover compensation for non-party employees.

 

In reply, Defendant argues the motion is not improper because the issue is not whether Centeno acts on behalf of the State but whether trial of his PAGA claim would be unmanageable.  Defendant argues the motion is not premature because Plaintiffs have conducted significant discovery and fully litigated class certification, and Plaintiffs present no good cause for the Court to defer a decision on this motion.  Defendant argues that a PAGA representative action is like the pre-Prop. 64 UCL cases raising due process concerns over judgments affecting non-parties because the PAGA allows for penalties to be paid to the aggrieved employees.  Finally, Defendant argues that if the Court were to permit Centeno to narrow his PAGA claim, the Court should require Centeno to articulate the scope of his PAGA claim and provide the Court and Defendant with a trial plan by October 1, 2014.

 

Judicial Notice

 

With its reply papers, Defendant requests judicial notice of two orders of the Superior Court of California, County of Los Angeles in unrelated cases.  The request is DENIED.  Although courts are permitted to take judicial notice of the records of other courts (see Cal. Evid. Code, § 452, subd. (d)), Defendant seeks to use this request for judicial notice in order to cite to unpublished trial court orders as persuasive authorities.  Because this would not be allowed for unpublished appellate opinions (see Cal. Rules of Court, rule 8.1115; People v. Webster (1991) 54 Cal.3d 411, 428, fn. 4), it should not be allowed for these trial court orders.

 

Discussion

 

Many of Defendant’s arguments are contrary to California law on PAGA claims.  The class certification requirements “need not be met when an employee’s representative action against an employer is seeking civil penalties under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.).”  (Arias v. Superior Court (2009) 46 Cal.4th 969, 975.)  Furthermore, “a representative action brought by an aggrieved employee under the Labor Code Private Attorneys General Act of 2004 does not give rise to the due process concerns that [Defendant has] expressed, because the judgment in such an action is binding not only on the named employee plaintiff but also on government agencies and any aggrieved employee not a party to the proceeding.”  (Id. at p. 985.)  To deny Centeno representative status as Defendant requests would be inconsistent with the very nature of a PAGA claim.  “An employee plaintiff suing, as here, under the Labor Code Private Attorneys General Act of 2004, does so as the proxy or agent of the state’s labor law enforcement agencies.”  (Id. at p. 986.)  Furthermore, even if the class certification requirements were applicable here, because the motion for class certification was denied without prejudice as to the first, second, third, and fourth causes of action, and it is not clear whether Plaintiffs will make another attempt at certification of these claims, it would be premature to deny Centeno representative status based on the issues raised during the prior certification proceedings.  For these reasons, the motion to deny Centeno representative PAGA status is DENIED.

 

However, Defendant’s motion raises valid questions about how Plaintiffs intend to proceed and what can be done to efficiently manage the case going forward.  Having to prove individual Labor Code violations does not necessarily mean the PAGA claim will be unmanageable, but leaving open the issue of manageability could have implications on the breadth of discovery.  (See Rix v. Lockheed Martin Corp. (S.D. Cal. Jan. 4, 2012) 2012 U.S. Dist. LEXIS 653, at *8-11.)  And if Plaintiffs intend to rely on statistical sampling to manage individual issues, they must set forth a trial plan on the proposed sampling method as early as possible so that Defendant and the Court can assess its reliability.  (See Duran v. U.S. Bank National Assn. (2014) 59 Cal.4th 1, 31-32 [statistical evidence for proof on class action claims should be presented in trial plan at certification stage].)  Accordingly, Defendant’s alternative request that Plaintiffs submit a proposed trial plan is GRANTED.  Plaintiffs shall provide a proposed trial plan to Defendant and the Court by November 19, 2014.

 

[1] Second Amended Compl. (“SAC”) ¶ 1.

[2] SAC ¶ 2.

[3] SAC ¶ 3.

[4] SAC ¶ 3.

[5] The Court certified the sixth cause of action under the UCL to the extent its allegations of unlawful business practices are derivative of the fifth cause of action failure to reimburse expenses in violation of California Labor Code sections 406 and 2802.