The Ninth Circuit recently affirmed the District Court’s
certification of a wage and hour class action against Stoneledge Furniture, a
wholly owned subsidiary of Ashley Furniture Industries.
Stoneledge Furniture operates 14 retail furniture stores in
California and employs about 600 sales associates, who primarily sell furniture
and accessories to Stoneledge’s customers. Stoneledge paid its sales associates
on commission.
Plaintiff Ricardo Vaquero, a former sales associate of Stoneledge, asserts that Stoneledge violates California’s minimum wage and hour laws because it requires sales associates to do many tasks unrelated to sales. Vaquero alleges that Stoneledge requires sales associates to clean the store, attend meetings, and carry furniture. According to Vaquero, Stoneledge does not pay its sales associates for such work, beyond what they earn in commissions, and this policy violates California wage and hour laws.
Under the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d)(2), Defendants removed the case to federal court, and Vaquero moved to be named a class representative. He asked to represent four subclasses, three of which were derivative of the first: (1) a class of all California sales associates employed from August 24, 2008, to the present who were paid less than minimum wage for non-sales time worked; (2) sales associates who were not provided with itemized wage statements; (3) former sales associates who were not paid all wages due at separation; and (4) sales associates who were subject to unlawful business practices.
The district court granted class certification for all of
the classes except for the third subclass.
Defendant Ashley Furniture moved to appeal the district court’s decision to certify the remaining subclasses pursuant to Federal Rule of Civil Procedure 23(f). The sole issue before the court is whether the district court properly granted class certification.
Defendants argued that Vaquero failed to meet the
requirements of Rule23(a), alleging that Plaintiffs failed to establish commonality
and predominance of class claims among the class. Defendants also asserted that class
certification altered the parties’ substantive rights in violation of the Rules
Enabling Act, 28 U.S.C. § 2072(b).
Defendants relied on Wal-Mart Stores, Inc. v. Dukes, arguing
that commonality did not exist among the class.
However, the court disagreed, distinguishing Dukes from the present case.
Dukes involved a class action
against Walmart for sex discrimination, alleging that the corporate culture and
the retailer’s delegation of promotion decision to individual managers denied a
class of female employees equal pay and promotional opportunities in violation of
Title VII. The Supreme Court held that
subjective decision by many managers in different locations could not be
considered a common injury across a class of more than one million plaintiffs.
Unlike in Dukes,
the Ninth Circuit found that the class in Vaquero had commonality because the
class all had the common contention that Defendant’s compensation structure
violated California’s minimum wage laws for all such employees, a relatively
small number of class members who all generally performed the same work.
Defendants also argued that Vaquero’s class failed to
establish predominance, asserting that predominance cannot be reached when
damage calculations cannot be performed on a class-wide basis. Defendant’s
based their argument on Comcast Corp. v.
Behrend, an antitrust case where the Supreme Court reviewed certification
of a class of consumers that offered a complex damages model to show how
customers were subject to anti-competitive pricing.
The Ninth Circuit has interpreted Comcast to mean that plaintiffs must be able to show that damages
resulted from the Defendant’s conduct in order to establish predominance. The Ninth Circuit found that Vaquero easily
established predominance because the class alleges that Defendant’s consciously
chosen compensation policy deprived the class of earnings in violation of
California minimum wage laws. The court
also held that the Vaquero class’s inability to prove individual damages cannot
alone defeat class certification and held that the permissibility of using
representative or statistical models to establish damages turns not on the form
a proceeding takes—be it a class or individual action—but on the degree to
which the evidence is reliable in proving or disapproving the elements of the
cause of action.
Defendants also argued—relying heavily again on Dukes—that allowing the class to use
representative evidence to prove damages would inevitably change the
substantive rights of the parties by preventing Defendants from individually
cross-examining and challenging each class member’s claim. In Dukes,
the Supreme Court rejected plaintiffs’ trial plan to determine damages through
statistical sampling because Wal-Mart would lose the right to litigate its
statutory defenses to individual claims.
However, the Ninth Circuit found Ashley Furniture’s reliance
on Dukes misplaced. The court found that Defendants’ concerns
about damages were hypothetical at this stage of the litigation and that the
district court’s grant of class certification did not expand Vaquero’s
substantive rights or those of the class. The court explained that Defendants
could challenge the viability of Vaquero’s evidence at a later stage of the
proceedings and that it was immature to decide at the stage of class
certification.
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