Sample your way to Class Certification – California’s Second Appellate District holds statistical sampling may be used to certify a class, and also clarification on what constitutes an “injury” for a pay stub claim.
On November 21, 2016, California’s Second Appellate District ruled that the used of statistical sampling can be used to certify a class of employees in a wage and hour case, and that the Legislature’s clarification of what constitutes “injury” under Labor Code § 226 has retroactive effect. In what is seen as a victory for Plainitff’s attorneys in the State of California, a published, 3-0 decision by California’s Second Appellate District reversed a trial court’s decertification order of a class of 10,000 to 13,000 security guards who allege that their employer, The Wackenhut Corporation, denied them of an uninterrupted meal break, and other California Labor Code violations.
In Lubin v. Wackenhut Corp., (2016) 5 Cal.App.5th 926210 Cal.Rptr.3d 215, 2016 WL 6835499; B244383, Plaintiffs, a class of approximately 10,000 to 13,000 non-exempt security guards, allege that their employer, The Wackenhut Corporation (Wackenhut), violated provision of the California Labor Code by failing to provide off-duty meal periods, failing to provide paid rest breaks, and providing inaccurate wage statements. After extensive discovery was conducted, Plaintiffs moved for certification of the Class and that motion was granted on March 3, 2010. On June 20, 2011, the United States Supreme Court reversed a Class Certification order in Wal-Mart Stores, Inc. v. Dukes, (2011) 564 U.S. 338. On September 23, 2011, Wackenhut moved for decertification following the Dukes decision, citing the case as a significant change in the law warranting the Court to reconsider Class Certification. Before the Court entered a formal order granting Wackenhut’s motion to decertify, the California Supreme Court issued Brinker Restaurant Corp. v. Superior Court, (2012) 53 Cal.4th 1004, which resolved some issues in the handling of wage and hour class certification motions. As a result, the Wackenhut court ordered further briefing on Brinker, but ultimately upheld its ruling to decertify the Wackenhut class. After 6 years of briefing, this decision came out.
The Wackenhut court narrowed the application Dukes, which is why it is considered a victory for employees in the State of California. Rather than apply Dukes, the Second Appellate District used United States Supreme Court authority from earlier this year, Tyson Foods, Inc. v. Bouaphakeo, (2016) 136 U.S. 1036, to hold that Dukes “does not prohibit the broad use of statistical sampling in class action lawsuits.” Wackenhut at 221-224. The Second Appellate District then points out that the decision on whether statistical sampling evidence is admissible is ultimately within the discretion of the trial court. Id.
The Second Appellate District also distinguished Dukes by pointing out that those Plaintiffs wanted to use statistical sampling evidence as a means of overcoming the absence of a common policy or practice by Wal-Mart. Tyson, 136 S. Ct at 1048; Wackenhut, at 234-235. In its simplest form, deposition testimony from Wackenhut managers established that there was a common practice of violating the Labor Code, meaning the Wackenhut Plaintiffs met their burden while the Dukes Plaintiffs did not. Due to this distinction, the Second Appellate District reversed the trial court and held that class certification of the 10,000 to 13,000 Wackenhut Plaintiffs was proper.
What constitutes “injury” for a pay stub claim
The Court also clarified what it means to suffer an “injury” regarding a pay stub claim under California Labor Code § 226. Plaintiffs alleged two theories of liability: (1) that the Wackenhut Plainitff’s pay stubs lacked three required items under Labor Code § 226(a); and (2) that the pay stubs failed to include premium pay for missed meal and rest periods. Subsequent to the trial court’s decertification order, the Legislature passed Senate Bill No. 1255, which codified Labor Code § 226(e)(2)(B), clarifies that “injury” under Labor Code § 226(e)(1) was established if “the employee cannot promptly and easily determine from the wage statement alone” the inclusive dates of the period for which the employee is paid or the applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee. Wackenhut, at 239-241. This means that injury is shown from the defect in the wage statement alone, and a plaintiff need not prove any plaintiff showing individualized harm as a result of the wage statement defect.
Further, the Court also held that this clarification of what constitutes an “injury” for purposes of Labor Code § 226 also has retroactive effect. The Second Appellate District used both Federal and California State case law to justify retroactivity of Labor Code § 226(e)(2)(B) by stating that “[a]n amendment which merely clarifies existing law may be given retroactive effect even without an express Legislative intent for retroactivity.” Wackenhut, at 239-241; Negrette v. California State Lottery Comm., (1994) 21 Cal.App.4th 1739, 1744; Sandoval v. M1 Auto Collisions Centers, (N.D. Cal. 2015) 309 F.R.D. 549, 568. As a result, the wage statement claims by the Wackenhut Plaintiffs were amenable to class treatment under both of Plaintiffs’ theories of liability.
Attorneys for Wackenhut indicated their intent to appeal the ruling to the California Supreme Court, and even to the United States Supreme Court, stating that the Wackenhut ruling raises both federal and state issues regarding employment law class actions that warrant review. As it is not clear whether higher courts will review this ruling, the future of the Wackenhut ruling re-certifying a once de-certified class remains uncertain.
What does this mean for employees in the State of California? It means that courts in California are narrowing the scope of applicability of Wal-Mart Stores, Inc. v. Dukes regarding employment law wage and hour class action cases, which is a benefit for all non-exempt employees in California. California courts would rather apply the reasoning in the Tyson foods v. Bouaphakeo case regarding allowing the trial court to have discretion to admit statistical samples as evidence in class certification. Finally, the Court has given the Legislature’s clarification in what constitutes an “injury” under Labor Code § 226 an applied a retroactive effect to the benefit of California non-exempt employees. This post was drafted with the assistance of Associate Attorney George A. Aloupas, Esq at [email protected].
If you have any questions about the case of Lubin v. The Wackenhut Corp., or have a claim against your employer for any violations of the California Labor Code, please feel free to contact: