A California federal court denies class certification on meal and rest break claims, rejecting the use of surveys, and even denying class discovery.

by Reed L. Russell

Phelps Dunbar LLP, Tampa, FL

In Flores v. CVS Pharmacy, Inc., et al., No. 2:07-cv-05326-JHN-Ex, slip op. (C.D. Cal. Sep. 7, 2010), a California federal district court denied plaintiff’s motion for class certification of claims for (1) failure to provide meal breaks, (2) failure to provide rest breaks, and (3) failure to include premium shift payments in the calculation of the regular rate for purposes of determining overtime (“regular rate class”).  Plaintiff, a former pharmacy technician, sought to certify these three classes for all of the former free-standing Sav-on drug stores in California (which are now CVS stores).  For the meal break and rest break classes, the court concluded that there would be too many individualized inquiries in resolving the reasons employees allegedly missed such breaks.  The court rejected class treatment on typicality grounds, because defendants could show that, regardless of plaintiff’s allegations, she had not been harmed by any failure to account for shift premiums in her regular rate. Although the denial of class certification for meal break and rest break claims is not uncommon in federal court in California, particularly in the Central District (Los Angeles), this case has a few interesting points for those involved in such cases. 

            First, the discovery phase offered a good opportunity for defendants to narrow the class definition and the issues to be litigated in the class certification motion.  Plaintiff sought to certify three subclasses of hourly employees who worked at the former stand-alone Sav-on drug stores in California, which were sold by the Albertsons, Inc. retail grocery and drug store chain in June 2006 to the CVS drug store chain, and that exist today only as CVS stores.  The Flores case was originally filed against CVS regarding post-June 2006 conduct.  CVS settled quickly with plaintiff on a class basis, and was dismissed.  Through a series of amendments before CVS was dismissed, however, plaintiff added New Albertsons, Inc. and its parent company, SuperValu, Inc., as well as Save Mart Supermarkets, and, Lucky Stores, Inc.  New Albertsons acquired and operates the Albertsons grocery stores in Southern California, and was potentially liable for any pre-CVS acquisition liability related to Sav-on drug stores.  SuperValu owns New Albertsons, Inc.  Save Mart had acquired the Northern California Albertsons grocery stores from a company called Albertsons LLC in 2007, and Save Mart re-bannered the Albertsons stores as Lucky Stores.  None of the four defendants operates any stand-alone drug stores in California.

Plaintiff was able to add all of these defendants on the theory that her claims pre-dated the 2006 sale of the Sav-on drug stores to CVS, and that one or more of the 4 defendants could be liable as successors for any wage and hour violations that occurred in that time frame (she also had a very compliant judge, who retired in late 2009).  However, plaintiff, who had worked solely in a Sav-on drug store pharmacy, not even in the general merchandise section of the store, sought to take discovery regarding all hourly employees at the drug stores and the grocery stores.  Indeed, early in the case, plaintiff’s discovery requests could be read as seeking discovery of post-2006-sale employees of the grocery stores, despite plaintiff having worked only at CVS after June 2006, and never having worked at a grocery store at all.  During the meet and confer process of discovery, she limited her requests to pre-June 2006 events, but still sought to obtain discovery from the grocery stores. 

It was during this discovery process that the seeds of denial of class certification were sown.  Plaintiff sought discovery of the names and addresses of all hourly employees at all Albertsons grocery stores and Sav-on drug stores in California for the limitations period up to June 2006.  Defendants opposed, relying primarily on (1) a case denying a motion to compel called Mantolete v. Bolger, 767 F.2d 1416 (9th Cir. 1985), which held that class discovery should not be permitted if plaintiff has not made a prima facie Rule 23 showing or explained how the discovery will allow the plaintiff to make that showing; and (2) the argument that meal and rest break claims are inherently unsuited for class treatment, because the law requires only that employers make meal and rest breaks available, not force employees to take them, thus any inquiry into alleged missed breaks must rest on individual questions of why a break was missed.  The magistrate judge agreed with defendants, and was affirmed by the district court.  Flores, No. 2:07-cv-05326-JHN-Ex , slip op. (C.D. Cal. Mar. 23, 2010).  In affirming the denial of discovery, the district court foreshadowed her decision on class certification:  “the district courts in the Central District have consistently held that a showing that employer policies deprived plaintiffs of breaks requires ‘substantial individualized fact finding.’”  Id., slip op. at 14. 

Although the opinion suggests the court may have been troubled by plaintiff’s over-broad request to grocery stores as well as drug stores, her language on the treatment of meal and rest break cases arguably could have sustained the denial of discovery even if the request had been limited to drug stores, or even pharmacies within drug stores.  This result is unusual, especially in California, where it is conventional wisdom—and, be warned, still generally true in state court—that plaintiffs are entitled to some kind of employee list of names and addresses in putative class actions alleging wage and hour violations.  However, it shows that defendants need not necessarily agree to provide employee contact information, at least not in federal court.  Moreover, after that ruling, plaintiff moved for class certification only on the stand-alone drug stores, leaving out the much larger population of grocery store employees, and significantly reducing the potential value of the case.  For plaintiffs, it also shows the danger of over-reaching in defining the class.  It was relatively easy for defendants here to highlight the separate nature of the grocery and drug store operations, and the differences in policies, practices, and procedures that accompanied that separation, which put plaintiff in a difficult spot with the court.

Even on the narrowed class definition, however, the court still rejected class treatment.  The court first rejected certification of the meal and rest break subclasses, reasoning that plaintiff could not meet her burden to show that common issues would predominate over individual issues.  The court rested its decision on the (b)(3) prong of Rule 23, and did not analyze the Rule 23(a) factors for these two subclasses, finding it unnecessary to do so. 

The court made three important points.  First, she accepted the argument that the reason meal breaks and rest breaks are missed is part of the merits analysis, making them incapable of common resolution (This issue is still pending before the California Supreme Court for state cases, see Brinker Rest. v. Super. Ct., S168806).  Second, she held that competing employee declarations from plaintiff and defendant that employees did and did not miss breaks “highlight the individualized nature of the inquiry,” and “show that Plaintiff’s proposed sub-classes would include non-class members.”  Thus, even though plaintiff submitted around 100 declarations alleging that employees missed breaks, that evidence only undermined class treatment in light of defendants’ declarations which stated that employees did take breaks.  Three, the court rejected the use of “surveys, sampling and statistical extrapolation to establish liability.”  She reasoned that such methods would still have non-class members in the sub-classes, leaving the fact finder to “engage in individual mini-trials to separate the class members from non-class members.”  (relying on Judge Patel’s reasoning in In re Wells Fargo Home Mortg. Overtime Pay Litig., 2010 WL 174329, at *8 (N.D. Cal. Apr. 27, 2010)). 

With respect to the final, regular rate subclass, it was perhaps a case of too little too late.  It was arguable whether plaintiff even asserted a regular rate claim in her complaint, and she took no real discovery on it.  Rather, it appeared from her class motion that she had come up with it late in the game.  The court denied the regular rate class on typicality grounds, because the evidence in the record showed that plaintiff had not received overtime on any day where she earned a shift premium (California generally requires daily overtime after 8 hours worked), and so she had no claim.  The court did not need to evaluate the company’s policy.

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