Case Number: BC466987 Hearing Date: July 01, 2014 Dept: 56

Case Name: Lina v. Barnes & Noble, et al.
Case No.: BC466987
Matter: Motion for Class Certification
Moving Party: Plaintiff
Responding Party: Defendants

Tentative Ruling: Motion for class certification is denied.

Plaintiff Eric Lina filed this proposed wage and hour class action against Defendants Barnes & Noble Inc. and Barnes & Noble Booksellers Inc. The complaint alleges two causes of action: 1) violation of LC §1194 and 2) violation of BPC §17200. Plaintiff moves for class certification.

EVIDENCE

1. Requests for Judicial Notice

Plaintiff requests judicial notice of IWC Wage Order No. 7, opinion letters from the Division of Labor Standards Enforcement and 29 CFR §541.102; the RJN is granted as to these matters. Plaintiff also requests judicial notice of trial court orders and papers filed in other trial court proceedings; the RJN is denied as to these matters.

2. Plaintiff’s Objections

Plaintiff objects to the declarations of Barnes & Noble store managers on three grounds: 1) failure to inform declarants of their rights and the nature of the lawsuit, 2) failure to comply with RPC 3-600(D), and 3) failure to comply with RPC 3-310(F). The objections are overruled. Defendants have demonstrated that counsel complied with the applicable rules of professional conduct and that the store manager declarants were properly informed. See Sager & Trebicka Decl. filed 4/29/14.

3. Defendants’ Objections

Defendants object to the various declarations and evidence submitted in support of Plaintiff’s motion. None of the objections are numbered, so it is impossible to report the rulings here. The court has recorded its rulings on the order submitted by Defendants.

Defendants also object to Plaintiff’s “summary of evidence” filed with his reply brief on 4/14/14. The objection is sustained. The court has not considered this 160 page filing, as it contains argument and attempts to circumvent the page limitations which have been ordered.

4. Motion to Seal

Defendants move to seal evidence of: 1) proprietary information concerning store operations, and 2) confidential personnel records for current and former employees. There is good cause for sealing under CRC 2.550(d), and Defendants have complied with the procedural requirements of CRC 2.551. The motion is granted.

MOTION FOR CLASS CERTIFICATION

CCP §382 authorizes a class action “when the question is one of a common or general interest, of many persons, or when parties are numerous and it is impracticable to bring them all before the court.” On a motion to certify a class action, the plaintiff has the burden to establish all necessary elements. Canon USA Inc. v. Superior Ct. (1998) 68 Cal.App.4th 1, 5. This requires proof of: 1) a sufficiently numerous and ascertainable class, 2) a well-defined community of interest, and 3) that a class action will be superior to other methods of litigating the claims. Fireside Bank v. Superior Ct. (2007) 40 Cal.4th 1069, 1089.

1. Is the class sufficiently numerous and ascertainable?

Plaintiff moves to certify a class with the following definition: “All current and former salaried Store Managers employed by any of the Defendants in California at any time during the period from August 5, 2007 to final judgment.”

A class is sufficiently numerous if individual joinder of all plaintiffs is impracticable, and “no set number is required as a matter of law for the maintenance of a class action.” Rose v. City of Hayward (1981) 126 Cal.App.3d 926, 934. The evidence has shown that Plaintiff’s proposed class would include approximately 160 past and present employees, which is sufficient.

An ascertainable class exists after examining “(1) the class definition, (2) the size of the class, and (3) the means available for identifying class members.” Global Minerals v. Superior Ct. (2003) 113 Cal.App.4th 836, 849. In defining an ascertainable class, “the goal is to use terminology that will convey sufficient meaning to enable persons hearing it to determine whether they are members of the class plaintiffs wish to represent.” 113 Cal.App.4th at 858. Plaintiff’s proposed class definition is clear and easily permits anyone to determine whether he or she is a member of the class.

Plaintiff has met the first element of a sufficiently numerous and ascertainable class.

2. Is there a well-defined community of interest?

To establish a well-defined community of interest, the plaintiff must show that common questions of law and fact predominate, the class representatives have claims or defenses that are typical of the class, and the class representatives will adequately represent the class. Fireside Bank v. Superior Ct., supra 40 Cal.4th at 1089.

“Plaintiffs’ burden on moving for class certification … is not merely to show that some common issues exist, but, rather, to place substantial evidence in the record that common issues predominate.” Lockheed Martin Corp. v. Superior Ct. (2003) 29 Cal.4th 1096, 1108. In determining whether to certify a class, the trial court must evaluate the issues framed by the pleadings and the law and determine whether the theory of recovery advanced by the plaintiff is likely to prove amenable to class treatment. Ali v. USA Cab Ltd. (2009) 176 Cal.App.4th 1333, 1347; Ghazaryan v. Diva Limousine (2008) 169 Cal.App.4th 1524, 1531.

Commonality and Typicality:

The test for commonality and typicality is “whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiffs, and whether other class members have been injured by the same course of conduct.” Seastrom v. Neways Inc. (2007) 149 Cal.App.4th 1496, 1502. The starting point for this analysis is the plaintiff’s theory of recovery. See Ghazaryan, supra 169 Cal.App.4th at 1531.

Plaintiff’s theory of recovery is based upon the misclassification of Barnes & Noble store managers as exempt employees under the executive exemption of IWC Wage Order No. 7, 8 CCR §11070(1)(A)(1). Plaintiff submits declarations from former and current store managers, who state that they were not provided overtime or regular meal and rest periods, they spent the majority of their time doing the same kinds of non-exempt work performed by hourly employees, and they did not truly exercise independent judgment or discretion in performing their duties. The focal point of Plaintiff’s showing is Barnes & Noble’s “Integrated Store Operations Manual,” which describes a framework for store operations and provides comprehensive procedures and standards for every store. Plaintiff has argued that this evidence supports a uniform policy and practice which causes store managers to spend the majority of their time doing non-exempt work and is amenable to class determination.

While there is no doubt that Barnes & Noble has provided a uniform operating structure for its stores, the evidence has shown that there is considerable variation within that structure. During the period covering Plaintiff’s class definition, Barnes & Noble operated 80 bookstores in California with greatly different characteristics. Some of the stores had a café; some had had a music department; the stores ranged from 10,000 to 42,000 square feet; most stores had one floor but some had as many as three; most of the stores had different operating hours; and the stores produced revenues ranging from under $5 million to over $10 million per store. The Barnes & Noble bookstores also had vastly different workforce characteristics: the number of store employees ranged from 20 to 124; all of the stores varied their workforce by hiring temporary workers during peak periods; employees were scheduled according to “labor hours” that ranged from 20,000 to 100,000 hours per store; and some of the stores were used as training centers for employees.

The evidence submitted by both parties displays an enormous variation of working conditions, management style, and managerial preferences among Barnes & Noble store managers. The court has reviewed the parties’ voluminous evidence and is convinced that the variations among store managers are so great that class members’ claims are not susceptible to uniform standards of proof. Plaintiffs argue that the differences among store managers affect only damages, but they really go to the heart of liability and commonality. It is simply not possible to determine whether store managers were properly classified as exempt without examining the working conditions of each manager.

The determination of the percentage of work devoted to exempt versus non-exempt functions is extraordinarily fact sensitive, requiring a careful examination of how the employee actually spends time on the job. This is illustrated by one of the cases which Plaintiff has relied upon, Heyen v. Safeway Inc. (2013) 216 Cal.App.4th 795. Heyen involved a claim of wage and hour misclassification by a single assistant manager of a Safeway grocery store. In a 10 day trial that examined the plaintiff’s actual working conditions, the jury was instructed that “In determining whether [the plaintiff] is ‘primarily engaged’ in exempt work or non-exempt work, you should consider, first and foremost, how the employee actually spends his or her time. But you should also consider whether the employee’s practice diverges from the employer’s realistic expectations, whether there was any concrete expression of employer displeasure over an employee’s substandard performance, and whether these expressions were themselves realistic given the actual overall requirements of the job.” 216 Cal.App.4th at 808; accord Ramirez v. Yosemite Water (1999) 20 Cal.4th 785, 802 (in deciding misclassification “the court should consider, first and foremost, how the employee actually spends his or her time”). It is that kind of individualized inquiry which would necessarily be involved for each of the 160 store managers involved in our case.

Because of these kinds of individualized issues, other courts have been reluctant to certify class actions in wage and hour misclassification cases. In Dailey v. Sears Roebuck (2013) 214 Cal.App.4th 974, the plaintiff sought to certify a class of managers and assistant managers who worked at Sears automotive centers in the San Diego area. As in our case, the complaint alleged that the class members were improperly classified as exempt because they regularly spent more than half of their time performing nonexempt work and did not regularly exercise discretion and independent judgment. In the class certification proceedings, the parties’ evidence agreed on the class members’ job duties and the employer’s general expectations of how they should spend their work time. But there was fundamental disagreement as to the amount of time the employees actually spent in performing exempt and nonexempt functions, as Sears presented evidence that the day-to-day tasks of managers and assistant managers varied greatly from day to day and from store to store. The trial court denied class certification, finding that determining the individual facts and issues unique to each member greatly outweighed the common issues among class members.

The Court of Appeal affirmed the denial of class certification, holding: “Sears’s evidence undermines the essential premise of [plaintiff’s] motion for class certification, namely, that Sears’s liability could be established with common evidence because Sears’s allegedly uniform business practices had the same impact on Managers and Assistant Managers classwide. Based on Sears’s evidence, the trial court reasonably could infer not only that the proposed class members have flexibility in applying the allegedly ‘uniform’ policies and practices in their stores, but also that the day-to-day tasks of Managers and Assistant Managers, rather than being uniformly dictated by these few policies and practices, vary greatly depending on a number of factors, ranging from the store’s location to particular management styles and preferences.” 214 Cal.App.4th at 999-97.

A similar result was reached in Mora v. Big Lots Stores (2011) 194 Cal.App.4th 496. In that case the plaintiffs alleged that Big Lots, a chain of retail stores, had intentionally and improperly designated its store managers as exempt employees in order to avoid payment of overtime wages and other benefits. In moving to certify a class, the plaintiffs presented evidence that the basic job duties of store managers were the same and that Big Lots operated its stores in a uniform and standardized manner, in strict compliance with corporate manuals and action plans. In opposition, Big Lots presented evidence that the actual duties of its store managers varied greatly, notwithstanding the fact that they all shared the same job title and duties.

The trial court denied class certification, finding that the plaintiffs failed to meet their burden to establish a well-defined community of interest because the activities performed by store managers varied substantially, based on factors such as the size of the store, the type of merchandise, the number of employees supervised, the time of year, the personality and judgment of the individual store manager, and other unique conditions. The Court of Appeal affirmed, holding that “the trial court reasonably concluded the putative class representatives’ theory of recovery was not susceptible of common proof.” 194 Cal.App.4th at 509.

Other Courts of Appeal have affirmed the denial of class certification motions presenting similar evidence in wage and hour actions based upon misclassification of management employees. See Arenas v. El Torito Restaurants (2010) 183 Cal.App.4th 723 (affirming denial of class certification in action for misclassification of restaurant managers); Keller v. Tuesday Morning (2009) 179 Cal.App.4th 1389 (affirming decertification of class in action for misclassification of retail store managers); Dunbar v. Albertson’s (2006) 141 Cal.App.4th 1422 (affirming denial of class certification in action for misclassification of grocery store managers). See also Soderstedt v. CBIZ Southern California (2011) 197 Cal.App.4th 133 (affirming denial of class certification in action for misclassification of unlicensed accounting associates); Walsh v. IKON Office Solutions (2007) 148 Cal.App.4th 1440 (affirming decertification of subclass in action for misclassification of copying service account managers).

Like these appellate decisions, our case involves highly individualized inquiries that would dominate resolution of the key issues in the case. Common issues of law and fact do not predominate in this matter.

Adequacy of Representation:

In order to satisfy due process and res judicata requirements, the class representative must adequately represent and protect the class interests. City of San Jose v. Superior Ct. (1974) 12 Cal.3d 447, 463. Class counsel must also be qualified, experienced and generally able to conduct the proposed litigation. McGhee v. Bank of America (1976) 60 Cal.App.3d 442, 450.

Plaintiff’s counsel has submitted evidence of their experience and ability to conduct this litigation. Defendants have argued that there is a conflict of interest because of counsel’s involvement in Jones v. Barnes & Noble (BC506764). Plaintiff’s counsel has withdrawn from that case and is therefore qualified to conduct this case.

On the other hand, Plaintiff has failed to show that Eric Lina is a qualified and suitable class representative. Defendants have submitted evidence that Lina did not meet performance standards and took extended leaves of absence. While some of this has been disputed, Plaintiff has failed to submit a declaration or other evidence demonstrating that Lina’s claims are typical of proposed class and that Lina can adequately represent and protect the interests of the proposed class. Accordingly, Lina is not an adequate class representative. See Jones v. Farmers Ins. (2013) 221 Cal.App.4th 986, 998 (“Plaintiffs seeking class certification have the burden of proving the adequacy of their representation by a member of the putative class.”); Stephens v. Montgomery Ward (1987) 193 Cal.App.3d 411, 422 (same).

Plaintiff has not established a well-defined community of interest.

3. Would a class action be superior to other methods?

In addition to the requirements stated in CCP §382, courts have held that a “class action also must be the superior means of resolving the litigation, for both the parties and the court.” Aguiar v. Cintas Corp. (2006) 144 Cal.App.4th 121, 132-33. In ruling on a class certification motion, the court must “carefully weigh respective benefits and burdens and . . . allow maintenance of the class action only where substantial benefits accrue both to litigants and the courts.” Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435.

As discussed earlier, determining Plaintiff’s misclassification claim will necessarily require an individualized inquiry into the working conditions of each manager within the 160 member class. In its recent decision in Duran v. U.S. Natl. Bank (2014) 59 Cal.4th 1, 27, the Supreme Court made it clear that a trial court ruling on class certification must consider how the determination of factual and legal issues can be effectively managed: “[A] misclassification claim has the potential to raise numerous individual questions that may be difficult, or even impossible, to litigate on a classwide basis. Class certification is appropriate only if these individual questions can be managed with an appropriate trial plan.” Accord, Dailey v. Sears, supra 214 Cal.App.4th at 989 (party moving for class certification must establish how the determination of factual and legal issues “could be accomplished efficiently and manageably within a class setting”).

Plaintiff’s trial management plan is extraordinarily vague. Plaintiff has emphasized the creation of a “task list” that divides store manager tasks into exempt and non-exempt functions. But after that, Plaintiff is very fuzzy about the manner in which the “task list” can be applied to the working conditions of each store manager. Plaintiff advocates the use of statistical sampling, but merely states that “the Court should encourage the parties (and their experts) to meet and confer on issues such as random sample size and survey techniques. And, should there be substantial disagreement amongst the experts then the Court can consider appointing a statistician to advise the Court about how many class members can be randomly selected to testify at trial in order to accurately adjudicate both liability and damages while respecting the due process rights of both sides.” Motion at p. 26; accord Reply at p. 4 (advocating statistical stratification).

Statistical sampling is not a proper substitute for actual proof of liability, and when individualized proof predominates, a class action is not appropriate. As the Supreme Court cautioned in Duran v. U.S. Natl. Bank, supra 59 Cal.4th at 33, “when a trial plan incorporates representative testimony and random sampling, a preliminary assessment should be done to determine the level of variability in the class. If the variability is too great, individual issues are more likely to swamp common ones and render the class action unmanageable.”

That is exactly what we have here. The court has examined the voluminous evidence presented by the parties and is convinced that an individualized inquiry into the working conditions of each class member is unavoidable. That is because the focus of such an inquiry must be “first and foremost, how the employee actually spends his or her time”. Ramirez v. Yosemite Water, supra 20 Cal.4th at 802; Heyen v. Safeway, supra 216 Cal.App.4th at 808.

Plaintiff has not shown that a class action is a superior method of resolving the disputes in this case. The factual and legal differences among class members are so substantial that case management of a class action would be extraordinarily difficult, and the issues in the case are more conducive to individual litigation.

RULING

Plaintiff has failed to demonstrate a well-defined community of interest and that a class action would be superior to other methods of litigation. The motion for class certification is denied.