Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_08-cv-01072/USCOURTS-casd-3_08-cv-01072-4/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

YVONNE DALTON,

individually and on behalf of all others

similarly situated

Plaintiffs,

CASE NO. 08cv1072-GPC-NLS

ORDER GRANTING IN

PART AND DENYING IN

PART DEFENDANT’S

RENEWED MOTION TO

DECERTIFY

[DKT. NO. 154]

vs.

LEE PUBLICATIONS, INC.,

Defendant.

Before the Court is Defendant Lee Publications, Inc.’s renewed motion to

decertify the class. (Dkt. No. 154.) Plaintiffs opposed the motion and Defendants

submitted a reply to the opposition papers. (Dkt. Nos. 157, 158, 159 and 161.) A

hearing was held on the motion on December 7, 2012. After careful consideration of

the parties’ arguments and applicable law, the Court hereby GRANTS in part and

DENIES in part Defendant’s renewed motion to decertify the class. 

PROCEDURAL BACKGROUND 

On August 27, 2008, Plaintiffs filed their first amended complaint which

alleged nine causes of action for failure to pay minimum wage, hourly wages and

overtime wages (first cause of action); failure to provide meal periods (second cause

of action), failure to provide rest breaks (third cause of action); failure to reimburse

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business expenses (fourth cause of action); unlawful withholding of wages due

(fifth cause of action); failure to provide itemized wage statements (sixth cause of

action); failure to keep accurate payroll records (seventh cause of action); waiting

time penalties (eighth cause of action); and unfair business practices (ninth cause of

action). (Dkt. No. 9.) 

On March 12, 2010, Defendants filed a motion for partial summary judgment

as to Plaintiff Hector Salgado. (Dkt. No. 53.) On March 22, 2011, the Court granted

partial summary judgment in favor of Defendants and against Plaintiff Salgado on

the sixth, seventh and eighth causes of action. (Dkt. No. 99 at 10). In addition, the

Court granted partial summary judgment in favor of the Defendants as to meal

claims and non-Sunday rest period claims. (Id.) 

On October 4, 2012, this Court granted Defendant leave to file a renewed

motion to decertify the class based on the premise that Plaintiffs were unable to

present common evidence at trial under Rule 23(a)(2). (Dkt. No. 150.) At a hearing 1

on the motion to decertify class held on December 7, 2012, the parties stipulated

that only four causes of action remain in this class action case: failure to pay

minimum wage, hourly wages and overtime wages (first cause of action); failure to

provide rest breaks, or compensation in lieu thereof (third cause of action); failure

to reimburse reasonable business expenses (fourth cause of action); and unfair

business practices (ninth cause of action). (Dkt. No. 9, Amended Complaint; Dkt.

No 164, Transcript of Decert. Hearing at 3). Consequently, the Court limits its

review of class certification to these four causes of action.

FACTUAL BACKGROUND

Lee Publications, doing business as North County Times (“NCT”), is a

newspaper of general circulation in the San Diego area. Plaintiffs are former homedelivery newspaper carriers for NCT. Plaintiffs allege, as a group, newspaper

Defendant does not contest the other Rule 23(a) prerequisites in the motion to decertify and 1

the Court does not specifically address them herein. 

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carriers delivering the NCT have been misclassified as “independent contractors,”

resulting in various violations of the California Labor Code, and causing them to

suffer damages in the form of unpaid regular and overtime wages, unpaid rest

breaks and meal periods, improper deductions from their paychecks, and expenses

incurred in discharging their duties. Defendant denies these claims, maintain that

Plaintiffs are properly classified as independent contractors, and are therefore not

entitled to the relief sought. 

On July 27, 2010, Judge Moskowitz granted certification, under Rule

23(b)(3), of the following class:

“All persons presently and formerly engaged as newspaper home delivery

carriers by LEE PUBLICATIONS, INC., and for the North County Times

newspaper in the State of California during the period from and including

April 18, 2004, through and including the date of trial set for this action, and

who, as a condition of such engagement, signed a written agreement for the

home delivery of newspapers, which categorized them as independent

contractors and not employees.” [Dkt. No. 76 at 15-16.]

In certifying the class, Judge Moskowitz found “there is ‘one significant issue

common to the class’ sufficient to warrant certification. And that issue is the one

central to this case: whether Defendant improperly characterized Plaintiffs as

independent contractors instead of employees.” (Dkt. No. 76, Order Certifying the 2

Class, quoting Dukes v. Wal-Mart, Inc. 509 F.3d 1168, 1176 (9 Cir. 2007)). Judge

th

Moskowitz found the Plaintiffs had satisfied each of the Rule 23(a) elements,

including commonality requirement contained in Rule 23(a)(2). (Id. at 4.) Judge

Moskowitz cited the common contracts with the Defendant, the similar duties

among the carriers, and similar pay structures to find that “these common facts and

issues are sufficient to satisfy the permissive commonality requirement.” Id. He

further conducted a Rule 23(b)(3) analysis, focusing on whether the factors under

The Court supports the employee status analysis conducted by Judge Moskowitz in certifying 2

the class. Although the Court analyzes this question for purposes of commonality under Rule 23(a),

Judge Moskowitz provides a sound approach to the employee status/independent contractor question

for purposes of Rule 23(b)(3) “predominance”test. 

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California law used to determine whether a worker is an employee or independent

contractor were susceptible to common proof. The Court considered the primary

factor as to whether or not the defendant had the “right to control the manner and

means of accomplishing the result desire.” (Id. at 9, quoting Cristler v. Express

Messenger Sys., Inc., 171 Cal.App.4th 72, 77 (2009)). He also reviewed the 12

“secondary factors” in the independent contractor/employee analysis. (Id. at 9-12.) 

Although certain factors were less susceptible to common proof, he ultimately

concluded that “common issues predominate and it would be far more efficient to

resolve the question of employment status on a classwide, rather than individual

basis.” (Id. at 15.) 

On April 24, 2012, Judge Bencivengo denied Defendant’s motion to decertify

the class. (Dkt. No. 126.) In the motion to decertify, Defendant argued that

discovery failed to show that the class met Federal Rules of Civil Procedure 23(a),

“commonality”, and (b), “predominance and superiority.” Defendant claimed that

discovery in the case, as well as the U.S. Supreme Court’s post-class certification

decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), showed

predominating individualized issues made a class action unmanageable and inferior. 

Defendant further argued that discovery had been completed, and still Plaintiffs

could not provide a common answer to the threshold question of employee status. 

Judge Bencivengo found that the Supreme Court decision in Wal-Mart did

not warrant decertification of the class in this case. She found that Plaintiffs

satisfied the Wal-Mart commonality prerequisite because there was a significant

common issue central to the case: whether Defendant improperly characterized

Plaintiffs as independent contractors instead of employees. Judge Bencivengo

further found that Plaintiffs provided sufficient evidence through discovery that

there were common answers to this question. She refused to revisit Judge

Moskowitz’ determination on finding the class satisfied Rule 23(b)(3)’s

predominance factor, since the Court in Wal-Mart did not analyze the predominance

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factor, and the Judge was satisfied with the Plaintiffs’ representations in briefing

that they had methods to prove common issues on a classwide basis. 

LEGAL STANDARD

“A district court's order respecting class certification is ‘inherently tentative’

prior to final judgment on the merits.” Officers for Justice v. Civil Serv. Comm'n,

688 F.2d 615, 633 (9th Cir.1982); see also Fed. R. Civ. P. 23(c)(1)(C). Thus, if the

Court determines that a class was not properly certified it may modify or decertify

that class. See Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982). In

reviewing whether certification remains proper, the Court again applies the

requirements of Federal Rule of Civil Procedure 23. O'Connor v. Boeing N. Am.,

Inc., 197 F.R.D. 404, 410 (C.D.Cal.2000). The moving party bears the burden of

demonstrating that class certification is no longer proper. Gonzales v. Arrow Fin.

Servs. LLC, 489 F.Supp.2d 1140, 1153 (S.D.Cal.2007); Slaven v. BP Am., Inc., 190

F.R.D. 649, 651 (C.D.Cal.2000). However, the decision on whether to decertify lies

within the Court's sound discretion. Knight v. Kenai Peninsula Borough Sch. Dist.,

131 F.3d 807, 816 (9th Cir.1997). 

Rule 23 provides district courts with broad authority at various stages in the

litigation to revisit class certification determinations and redefine or decertify

classes as appropriate. Armstrong v. Davis, 275 F.3d 849, 871 n.28 (9th Cir. 2001),

abrogated on other grounds by Johnson v. California, 543 U.S. 499, 504-05 (2005). 

In deciding this motion, the Court “is bound to take the substantive allegations of

the complaint as true.” In re Coordinated Pretrial Proceedings in Petroleum Prods.

Antitrust Litig., 691 F.2d 1335, 1342 (9th Cir.1982) (citing Blackie v. Barrack, 524

F.2d 891, 901 n. 17 (9th Cir.1975)). Nonetheless, the Court may “consider evidence

which goes to the requirements of Rule 23 even though the evidence may also relate

to the underlying merits of the case.” Hanon v. Dataproducts Corp., 976 F.2d 497,

509 (9th Cir.1992). However, weighing of competing evidence is inappropriate. 

Wang v. Chinese Daily News, Inc., 231 F.R.D. 602, 605 (C.D.Cal.2005) (citing

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Staton v. Boeing Co., 327 F.3d 938, 954 (9th Cir.2003)) (abrogated on other

grounds by Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935 (9th Cir.2009).

DISCUSSION

The Court’s July 27, 2010 order certifying a class focused on the threshold

question of whether the class members were employees or independent contractors. 

The Court reaffirms the finding that the question of employee status may be

resolved on a classwide basis. On this central issue, the existence of a uniform

contract in addition to other available evidence generates “common answers apt to

drive the resolution of the litigation.” Wal-Mart, Inc. v. Dukes, 131 S. Ct. 2541,

2550 (2011).

While employee status may be determined on a classwide basis through

common proof, the Court concludes that certain causes of action are not amenable

to class treatment. Upon review of Plaintiffs’ proposed trial plan and applicable

law, the Court affirms class certification under Rule 23(c)(4) for the following

claims: failure to reimburse for reasonable expenses and unfair business practices. 

Meanwhile, the Court finds individual issues predominate on questions of liability

and damages for the claims of failure to pay overtime wages, failure to pay

minimum wage, and failure to provide rest breaks. As such, these claims are

decertified. 

1. Employee Status Can Be Resolved on a Classwide Basis

The threshold issue in this case is whether Defendant improperly classified

Plaintiffs as independent contractors. Defendant asserts that commonality is lacking

because Plaintiffs lack the capacity to generate common answers. If trial were to

proceed, “individualized inquiries would predominate, precluding common answers

to the questions that Plaintiffs’ claims raise.” (Dkt. No. 154 at 1.) Defendant

contends there is no ability to generate common answers in one stroke, and that the

multiple pronged test to determine whether Plaintiffs were improperly classified as

independent contractors yield many different answers. As a result, “a finder of fact

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could not analyze these factors and then reach a common answer resolving this

issue on a classwide basis.” (Id. at 2.) 

Plaintiffs respond that the uniform contract and comprehensive records

regarding the performance of the carriers work provides sufficient commonality.

(Dkt. No. 157 at 9-14.) Plaintiffs dispute the claim that the proposed trial plan

demonstrates that individualized issues will predominate and undermine

commonality. (Id.) Instead, the evidence to be admitted at trial reflects “how the

terms of the contracts translate into the daily practices of the parties adds clarity and

definition to the express terms of the contracts by showing how the Defendant

asserted its right to control the carriers pursuant to the contracts’ terms.” (Id. at 3.)

Under California law, “the principal test of an employment relationship is

whether the person to whom service is rendered has the right to control the manner

and means of accomplishing the result desired.” Tieberg v. Unemployment Ins.

App. Bd., 2 Cal. 3d 943, 946 (1970). The secondary indicia are derived from the

Restatement Second of Agency. Id. at 949. These additional factors are (a) whether

or not the one performing services is engaged in a distinct occupation or business;

(b) the kind of occupation, with reference to whether, in the locality, the work is

usually done under the direction of the principal or by a specialist without

supervision; (c) the skill required in the particular occupation; (d) whether the

principal or the workman supplies the instrumentalities, tools, and the place of work

for the person doing the work; (e) the length of time for which the services are to be

performed; (f) the method of payment, whether by the time or by the job; (g)

whether or not the work is a part of the regular business of the principal; and (h)

whether or not the parties believe they are creating the relationship of employeremployee. Rest. Agency § 220. 

Here, the newspaper carrier contracts and additional information about the

carriers’ duties provide substantial evidence to determine Defendant’s level of

control over the carriers. The contract includes terms that dictate how each carrier

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should conduct the work, including the time and manner of delivery of the

newspapers. The contract also includes (1) the duration of the contract, which is for

a period of time; (2) the amount of money the Defendant is required to pay the

carrier for each paper; (3) the amount of money the carrier will be fined if the

Defendant is required to redeliver a paper;(4) the requirement that the carrier pay a

rental fee of $6.00 if he or she chooses to prepare their papers at the Defendant’s

facility loading dock; and (6) a uniform termination provision. (Dkt. No. 157 at 9;

Exhibit A, Contract Agreement.) Under the agreement, the carriers are required to

pay for all the supplies used in performance of their duties, including car expenses,

plastic bags, and rubber bands. (Id.) Additional evidence indicates Defendant

controlled the delivery process by managing complaints from the subscribers. (Dkt.

No. 157 at 11-12.) Defendant managed complaints by leaving instructions called

“toppers” on the newspaper bundles, which directed the carrier to make changes

regarding delivery to a particular location or stop a certain delivery for vacations.

(Id.) Further evidence indicating the level of control includes Defendant’s practice

of monitoring complaints, levying penalties, and conducting “spot checks” to ensure

that the papers were delivered on time.(Id.) In addition, Defendant provided the

newspapers to the carriers each morning, thereby dictating the time in which

Plaintiffs could begin folding and delivering papers.(Id.) This evidence suggests

there is significant common proof to show the level of control Defendants had over

each carrier and commonality predominates over any questions affecting only

individual members. Cf. Estrada v. FedEx Ground Package System, Inc., 154 Cal.

App.4th 1, 13-14 (2007)(drivers’ claims suitable for class certification based on

operating agreement and anecdotal evidence regarding interpretation of agreement). 

Overall, the Court finds there is significant commonality as to the question of

control.

The secondary factors are also sufficiently similar such that common answers

may be assessed to determine employee status. Here, the parties vigorously

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disagree as to whether the secondary factors raise individualized inquiries. 

Plaintiffs assert that newspaper delivery is not “distinct” like plumbing or

contracting, which require unique skills. Defendant counters that the trier of fact

must look to a variety of factors including whether a carrier used subcontractors or

worked for other companies at the same time to determine whether the occupation is

distinct. (Dkt. No. 154 at 6.) Regarding supervision and skill, Plaintiffs cite to cases

that have certified classes of delivery workers despite some variation in work

among deliverers. See Toyota Motor Sales, U.S.A. Inc. v. Superior Court, 220 Cal.

App. 3d 864 (1990). Defendant points to variances in proof on a number of

secondary factors, including the level of supervision and interaction, length of time

for which the services were performed, and whether the parties believed that they

were creating an employer-employee relationship. Defendant asserts that these

variances require individualized inquiries that predominate over questions that can

be decided with common proof. (Dkt. No. 154 at 15-17.) 

The slight differences among the experiences of each carrier are insufficient

to defeat certification on the question of employee status. The Court underscores

the approach taken by the California Appellate Court in Ayala v. Antelope Valley

Newspapers, which held that the independent contractor-employee issue may be

determined on a classwide basis. In assessing whether individualized variations

precluded commonality on the question of employee status, the Court stated:

Those variations do not present individual issues

that preclude class certification. Instead, because all

of the carriers perform the same job under virtually

identical contracts, those variations simply

constitute common evidence that tends to show

Defendant's lack of control over certain aspects of

the carriers' work. Similarly, the so-called

“secondary factors” that must be considered when

determining the primary issue in this case—whether

Defendant improperly classified the carriers as

i n d ep en d en t co n tr a c to rs r a t h e r t h an

employees—also may be established for the most

part through common proof, since almost all ofthose

factors relate to the type of work involved, which is

common to the class. Ayala v. Antelope Valley

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Newspapers, Inc., 210 Cal. App. 4th 77 (2012)

review granted and opinion superseded sub nom.

Ayala v. Antelope ValleyNewspapers, 292 P.3d 181

(Cal. 2013). 

Likewise, even assuming that some of the secondary factors in this case result in

individualized inquiries, common questions and answers drive the thrust of the

employee status analysis. 

Thus, the Court findsthe multiple-pronged analysisto determine employee status

on a classwide basis satisfies Rule 23(a)(2) in which “commonality requires the

plaintiff to demonstrate that the class members ‘have suffered the same injury.’” WalMart at 2551, quoting Falcon, 457 U.S. at 157. Id. As such, commonality depends on

“the capacity of a classwide proceeding to generate common answers apt to drive the

resolution of the litigation.” Id. The Court findsthe carriers have allegedly suffered the

same injury of mis-classification as independent contractors. As detailed above,

Plaintiffs have sufficiently proven they can demonstrate thisissue on a classwide basis. 

The common evidence available would allow a jury to determine the threshold issue

of employment status on a classwide basis. This evidence includes: 1) the four corners

of the employment contract; 2) information regarding Defendant’s control over the

carriers; and 3) substantial, although not precisely uniform, evidence on each of the

secondary factors. When reviewed in totality, the Court finds that there is sufficient

commonality on this issue to satisfy Rule 23(a)(2) and Rule 23(b)(4).

2. Individual Causes of Action

Plaintiffs contest the need for common proof to prove liability on each claim and

contend the issue of liability is limited to whether the carriers are employees or

independent contractors. Plaintiffs claimthat ifthe jury determinesthey are employees,

the Defendant is therefore liable for damages for each claim as set forth in the

California Labor Code. (Dkt. No. 157 at 18.) Plaintiffs assert that they will submit

claims for damages individually incurred as part of the second phase of the trial and

rely on extensive data maintained by the Defendant to calculate damages during the

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post-judgement claims process.

As a legal matter, Plaintiffs are incorrect in claiming that liability ends upon

determination of employee status. Under Rule 23(b) a class action may be certified if

the court finds that questions of law or fact common to class members predominate

over any questions affecting only individual members, and that a class action is

superior to other available methods for fairly and efficiently adjudicating the

controversy. As articulated by the California Supreme Court in assessing

predominance, trial courts must “determine whether the elements necessary to establish

liability are susceptible of common proof or, if not, whether there are ways to manage

effectively proof of any elements that may require individualized evidence.” Brinker

Rest. Corp. v. Superior Court, 53 Cal. 4th 1004, 1024 (2012)(internal citation omitted). 

Defendant contends that no method of common proof exists to allow classwide

resolution on liability or damages for the remaining claims. Defendant points to

Plaintiffs’ proposed trial plan which relies on a wide range of individualized

experiencesto support their claims. (Dkt. No. 154 at 3-4.) Defendant contendsthat the

pretrial documents indicate Plaintiffs will rely on experiences of individual class

members, rather than classwide evidence. Given that individual evidence at trial is

inevitable, Defendant asserts that individual issues, not common ones, will

predominate. As required by Rule 23(c)(4), the Court will review the factual elements

of the remaining claims and proposed proof to determine eligibility for class treatment. 

 A. Overtime Hour Claims

A cause of action under §1194 for overtime wages has the following elements:

(1) plaintiff performed work for defendant; (2) plaintiff worked overtime hours; (3)

plaintiff was paid less than the overtime rate for some or all of the overtime hours

worked; and (4) the amount of overtime owed. Labor Code §11010(3)(A)(1) (overtime

pay required for “[e]mployment beyond eight (8) hours in any work day or more than

six (6) days in any workweek”).

To prove this claim, Plaintiffs must show they either worked more than eight

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hours in one day or worked seven consecutive days. Plaintiffs do not claim any carrier

worked more than eight hours per day pursuant to their contract with the Defendant. 

As to the seventh day overtime, the Plaintiffs rely on the contract which required

delivery of newspapers every day of the work week. The contract states, in relevant

part:

Contractor agrees to meet the following minimum performance

resultsstandards: A reasonable level of customer satisfaction will

mean, as set forth herein and reasonably requested by the

subscriber, delivery of a dry readable newspaper, with all

attachments or inserts provided by Company, of each subscriber

no later than ___ A.M. each Monday thru Friday, and no later

than ___ A.M. each Saturday and Sunday. (Dkt. No. 154, Ex. 70,

North County Time Independent Contract Agreement, Provision

12, “Standards of Performance.”)

According to Plaintiffs’ counsel, “We will show that the carrier had a common policy

of not paying overtime. We know they didn’t pay overtime...They were aware these

contracts, [obligated the signatory] to work [sic] seven days a week, and they weren’t

paying them overtime.” (Decert. Hrg. Trans. at 16.)

While acknowledging the Plaintiffs were required to deliver newspapers seven

days per week, Defendant points to the fact that many carriers did not work seven

consecutive days as a result of the contractual right to hire employees to deliver

newspapers. One such provision states:

Contractor has the right to hire employees of his choosing and to

contract with others to fulfill Contractor’s obligations under this

contract. Contractor shall have the right to engage in any other

business, including the delivery of other newspapers. Contractor

understands and agrees that it is his/her obligation to effect

delivery of the newspaper each day it is published. (Id. at

Provision 1, “Independent Contractor Status.”) 

Together, these contract provisions indicate that while the carrier is obligated to

deliver papers in a certain condition seven days a week or each day the newspaper is

published, the carrier may also assign that duty to another individual. 

It is undisputed that class members used substitutes and/or helpers to perform

their obligations under the contract. Indeed, the record confirms that many distributors

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utilized substitutes and Plaintiffs themselves confirm that they used substitutes or

helpersto perform their work. (Dkt. No. 154, Statement of Facts at 11-12.) Given that 3

an undetermined number of class members have employed substitutes to perform

duties, the Court finds that the contract alone fails to show the carrier worked more

than six days a week to be entitled to overtime pay. Therefore, Plaintiffs must show

additional evidence to prove the element that Plaintiffs worked more than six days a

week. Plaintiffs fall short of providing any further evidentiary support for this claim

and the proposed trial plan also fails to propose proof of this essential element during

the liability phase of the trial.

In assessing wage and hour violations on a classwide basis, the California

Appellate Court has observed that liability is beyond a mere calculation issue, and has

denied class certification where “each class member would be required to litigate

‘substantial and numerousfactually unique questions to determine his or her individual

right to recover.’” Wilens v. TD Waterhouse Group, Inc., 120 Cal. App. 4th 746, 756

(2003), quoting Acree v. General Motors Acceptance Corporation 92 Cal.App.4th 385,

397 (2001). Here, absent common proof to determine which carriers worked seven

consecutive days, there is the likelihood of individually litigating factually unique

questions to determine a right to recover for seventh day overtime. 

As an additional matter, Defendant’s right to offer a defense magnifies the

potential for individualized inquiries at the liability phase of the trial. As held by the

Supreme Court, the defendant has the “right to raise any individual affirmative defenses

it may have,” and is “entitle[d] to litigate its statutory defenses to individual claims.”

See Statement of Facts, Section V. “Outsourcing of the Independent Contractor Work –

3

Substitutes.” (NCT and Distributor Declarations: Henschen Declaration ¶ 18 (identifying numerous

distributors who use substitutes and helpers); Kintz Decl. ¶ 17 (identifying several distributors that use

substitutes); Arroyo Decl. ¶ 21 (identifying several distributors that use substitutes); Thomas Decl. ¶

10 (has used substitutes about 4 times); Tyler Decl. ¶ 18 (has never used a substitute); Valencia Decl.

¶ 13 (occasionally uses substitutes). See also Named Plaintiffs’ Depositions: Gonzalez Dep. 35:15-20

(brother has substituted for her; Garza Dep. 65:20-3 (rarely uses substitute); E. Salgado Dep. 14:9-12

(husband substitutes on one of her routes every day); Dalton Dep. 79:15-20 (daughter substituted for

her on Tuesdays); Sanchez Dep. 46:3-6 (has used wife as substitute); Hughen Dep. 84:9, 111:4-7

(mother has substituted for her about 70 times)) 

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Wal-Mart, 131 S. Ct. 2561 (internal citation omitted). Although the Supreme Court

was dealing with a class action that proposed “trial by formula,” the same substantive

obstacle of providing reliable information exists in this case. Plaintiffs cannot prove

the number of days worked as a result of the substitute and helper issue. As such,

individualized inquiries and determinations must be made to ascertain each carrier’s

eligibility to the claims. See also Newton v. Merrill Lynch, Pierce, Fenner & Smith,

Inc., 259 F.3d 154, 192 (3d Cir. 2001) (vacating certification in part because

“defendants have the right to raise individual defenses against each class member”). 

The issue of substitutes and helpers also creates individualized issues to

determine damages. Plaintiffs intend to rely on the Henschen spreadsheets to prove

monies owed for unpaid overtime, rest breaks and minimum wage violations. 

(Plaintiffs’ Proposed Trial Plan, Dkt. No. 138 at 5). There is no dispute that the

Henschen spreadsheets do not reflect the use of helpers or substitutes. As such, the

Plaintiff’s method of proof does not even try to identify the occasions when substitutes

were used. Without more, the Plaintiffs’ methodology isinaccurate and over inclusive

thereby requiring individualized damage inquiries. 

Upon review of these issues, the Court findsthat Plaintiffs have failed to provide

common, reliable proof needed to establish liability for the overtime claims. As such,

individualized issues of fact predominate, thereby making class action treatment an

inferior method to adjudicate these claims. Accordingly, the Court vacates class

certification as to all of Plaintiffs’ overtime claims. 

B. Minimum Wage Claim

A cause of action under Labor Code §1194 seeking the minimum wage requires

a plaintiff to prove (1) plaintiff performed work for defendant; (2) plaintiff was paid

less than the minimum wage by defendant for some or all hours worked; and (3) the

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amount of wages owed. 

4

A §1194 minimumwage claimrequires proof ofthe total amount of earnings and

hours worked during a payroll period. As to hours worked, Plaintiffs rely on

“Henschen spreadsheets,” newspaper deliverydata collected bytheDefendant, to prove

hours and days worked by each carrier. To create the “Henschen spreadsheets,”

Plaintiffs explain the “carriers provided [Defendant] the mileage of their routes as well

as the length of time it took to complete the route. [Defendant] also compiled these

detailed statistics by having employees drive the routes to determine mileage as well

asrecord the time it took to complete the routes.” (Dkt. No. 157 at 19-20.) Each carrier

then received a pay stub detailing their pay, per piece rate and draw of newspapers. (Id.

at 20.) With respect to the total amount of earnings, Plaintiffs cite payment statements

and expense calculations that rely on profit statements, deductions and mileage data. 

Defendant assertsthat the spreadsheet data does not reflect actual milestraveled,

hours worked, or use of substitutes or helpers. Indeed, the manager who developed

these spreadsheets explained that “estimations of newspaper assemblytime, distribution

time and mileage associated with each route were added...for the purpose of having

some information from which to draw in terms of estimating expenses and resources.”

(Dkt. No. 154, Ex. 50, Decl. of M. Henschen, dated Aug. 31, 2012 ¶8). Mr. Henschen

states that this information was never “independently verified” nor did the company

“measure, collect, or keep track of actual hours worked or actual mileage driven by

[carrier contractors].” (Id. at ¶10.) Defendant further argues that the spreadsheet data

does not account for the use of substitutes or helpers, and erroneously leads to the

assumption that the class members actually delivered the routes themselves. (Dkt. No.

154 at 19.) 

Ultimately, the minimum wage claim fails for the same reasons as the overtime

 Under California law, Plaintiffs must show the number of hours or days worked Cal.Code 4

Regs., tit. 8 § 11010 4(B)(“Every employer shall pay to each employee, on the established payday for

the period involved, not less than the applicable minimum wage for all hours worked in the payroll

period”).

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claim. Plaintiffs cannot provide common, reliable proof that the carrier - not a

substitute or helper - performed the work; this an essential element to determine

liability. Thus, individualized inquiries asto whether the Plaintiffs actually performed

the work would predominate during the liability phase of the trial. For these reasons,

the Court finds this claim is not amenable for class action treatment and the Court

decertifies the class on the minimum wage claim. 

C. Rest Break Claims

To prove liability for a denial of rest breaks, a plaintiff must prove (1) defendant

employed plaintiff; (2) plaintiff worked for at least 3 1⁄2 hours; and (3) plaintiff was not

provided with a rest break of not less than 10 minutes. If an employer fails to provide

an employee a rest period, an employee is entitled to one hour of pay at the employee’s

regular rate of compensation for each workday that the rest period is not provided.

Labor Code § 226.7; 8 Cal.Code.Regs. § 11010(12)(A-B)(“a rest period need not be

authorized for employees whose total daily work time is less than three and one-half

(3 1/2) hours”). 

Plaintiffs are unable to offer common proof to establish liability of this claim. 

Again, Plaintiffs rely on the Henschen spreadsheets for common proof to establish

liability. A review of the spreadsheets discloses a wide variation in the number of

hours worked by the carriers. The spreadsheets indicate a large percentage of carriers

do not work 3 1⁄2 hours per day from Monday through Saturday, while another large

percentage work slightly more than 3 1⁄2 hours on those days. Given these differences,

5

individual inquiries for a large number of carriers would be required as part of the

defense to this claim. In addition, the hourly estimates do not identify the specific day

of the week when a carrier worked more than 3 1⁄2 hours. These facts lead to the

Plaintiffs’ counsel acknowledged this conclusion. “If you go down and look at the routes and 5

tally up the total number [on the Henschen spreadsheet], where it shows the carrier identified the route

taking at least three and a half hours to complete...it is a fraction of about a third-ish...most take two

and half hours, two, 1.5 [hours to complete the route].) (Dkt. No. 164, Transcript of Renewed Motion

to Decertify the Class Hearing, hereinafter “Decert. Hrg. Trans.,” at 9, 12.) 

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conclusion that individualized determinations asto work hours will predominate at trial

and there is insufficient common proof to establish liability for rest break claims. 

Defendant also argues that Plaintiffs lack common proof to show they were

denied rest breaks on days they worked more than 3 1⁄2 hours. Class representatives

testified that Defendants did not affirmatively deny theman opportunity to take a break. 

However, Plaintiffs point to the limited window of time to complete delivery as

effectively denying carriers a rest break. Cf., Jaimez v. Daiohs USA, Inc., 181

Cal.App.4th 1286 (2010)(carriers unable to take rest breaks due to delivery schedule

requirements to complete deliveries within eight hours); Amalgamated Transit Union

Local 1309, AFL-CIO v. Laidlaw Transit Services, Inc., 2009 WL 249888, at p.6

(common issue existed whether defendant scheduled bus routes in a manner that

deprived workers of opportunity to take rest breaks). Plaintiffs allege they had a

limited time frame to pick up, fold and deliver the newspapers on time. (See Dkt. No.

154, Ex. 55, Deposition of Sharon Hughen at 212. “[W]e’re required to be in and out

of the warehouse [to pick up newspapers] before 4:00 a.m. [and on a weekday, delivery

is expected] by 6:00 a.m.”). While the Court finds common proof existsto prove denial

of rest breaks, there is no such common proof on the issue of hours worked. 

After careful consideration of these factors, the Court finds common issues do

not predominate to show liability on the rest break claim. Thus, a class action is not

superior to other available methods to fairly and efficiently adjudicate this claim. The

Court therefore vacates class certification as to Plaintiffs’ rest break claims. 

D. Unreimbursed Expenses Claim

In order to prove a claim for unreimbursed expenses, the plaintiff must show: (1)

plaintiff was employed by defendant; (2) plaintiff made expenditures orincurred losses

in direct consequence of the discharge of their duties as a newspaper carrier; (3) the

expenditures or losses were not reimbursed to plaintiff by defendant. California Labor

Code §2802(a) provides in pertinent part: “An employer shall indemnify his or her

employee for all necessary expenditures or losses incurred by the employee in direct

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consequence of the discharge of his or her duties, or of his or her obedience to the

directions of the employer, even though unlawful, unless the employee, at the time of

obeying the directions, believed them to be unlawful.” Wage Order 1-2001, Section

8, provides that: “No employer shall make any deduction from the wage or require any

reimbursement from an employee for any cash shortage, breakage, or loss of

equipment, unless it can be shown that the shortage, breakage, or loss is caused by a

dishonest or willful act, or by the gross negligence of the employee.” 

For the reasons set out below, the Court finds that common issues predominate

to determine liability, and that class action is a superior method to adjudicate the claim

for unreasonable business expenses. See cf. Estrada v. FedEx Ground Package System,

Inc., 154 Cal.App.4th at 14 (class seeking reimbursement of expenses for drivers was

ascertainable and manageable). Plaintiffs allege the carriers are entitled to recover

unreimbursed expenditures and losses in relation to their job performance. Plaintiffs

allege each carrier wasrequired to provide his or her own vehicle to deliver newspapers

and incurred additional expensesfor gasoline, maintenance, and insurance. (Amended

Complaint at 14-15.) Plaintiffs further allege Defendant made deductions from the

carriers’ wages for customer complaints, redelivery fees, costs for plastic bags,

insurance, and excess or undelivered newspapers. (Id.) Plaintiffs also allege Defendant

required carriers to pay distribution center charges when they utilized the warehouse

center to fold and bag the newspapers. (Id.) Defendant argues the data Plaintiff offers

as evidence fails to prove actual mileage, and all other evidence is faulty and

unreliable. (Dkt. No. 154 at 22.)

The Court finds Plaintiffs’ proposed evidence is sufficiently common and

reliable to show Defendant’s liability for unreimbursed expenses. To prove liability,

Plaintiffs will offer evidence that the carriers made necessary expenses or incurred

losses as a direct result of performing their duties. As previously discussed, the

“Henschen spreadsheets” show mileage for each route. Plaintiffs will show gasoline

expenditures by using this mileage multiplied by the InternalRevenue Service standard

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mileage allowance (or some other permitted method) times the number of days that

newspapers were delivered. Plaintiffs will also offer the NCT Carrier Data spreadsheet

(different from the Henschen spreadsheet) which reflects the costs Defendant withheld

from the carriers earnings for these expenditures. “A review of this spreadsheet

show[s] how uniform the charges to all the carriers are, and that over 80% are charged

the $6.00 monthly fee for folding and bagging their papers at the facility. In addition,

all charges to the carriers for costs that plaintiffs allege are improper are saved

electronically and can be manipulated with the defendants two software systems,

Vision and Falcon.” (Dkt. No. 158, Ex. 1, Declaration of Keith Greer at ¶ 3.) These

carrier statements reveal that the Defendant itemized “miscellaneous charges and

credits” for each carrier. This miscellaneous section breaks out distribution center

charges, dispatch redelivery charges, as well as chargesfor plastic bags. (Dkt. No. 158,

Ex. D “Carrier Statement”.) 

The Court is satisfied individualized inquires would not be necessary to

determine liability for unreimbursed expenses. Unlike the previous claims, the issue

ofsubstitutes and helpers does not impede Plaintiffs’ ability to show common proof of

liability. Based on common evidence, Plaintiffs can show the essential elements of the

claim: that the carrier was an employee, incurred necessary expenses to perform his

duties, and Defendant deducted those expenses from the carriers’ earnings. 

Any issues regarding damages are minimal and insufficient to defeat class

certification of this claim. As proposed by Plaintiffs, during the damages phase of the

trial, testimony from the Defendant’s employees can establish that the data “identifies

with specificity every deduction taken from class members’ pay checks, and that data

is easily tabulated electronically to identify the total amount of deductions from each

class members’ pay during the class period.” (Dkt. No. 138 at 5.) To the extent there

are questions regarding the mileage for a particular route, Defendant will have the

opportunity to cross examine the witnesses who provided this information and call

witnesses who calculated a different mileage. Any additional concerns regarding the

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reliability of the data can also be presented by the Defendants, but do not necessitate

inquiries as to every expenditure by each individual carrier.

Ultimately, the Court is satisfied that the class action claim for unreasonable

business expenses is manageable at the liability and damages phases of the trial and

that class treatment is superior to individually adjudicating each reimbursement claim.

E. Unfair Business Practices

Business and Professions Code §17200 proscribes unlawful, unfair and

fraudulent business practices. §17200 “borrows” violations of other laws and treats

them as unlawful practices independently actionable under §17200. Farmers Ins.

Exchange v. Sup.Ct., 2 Cal.4th 377, 383 (1992). To the extent that the Court has

certified the unreimbursed expenses cause of action under Labor Code statutes, the

Court findsthat a class action may proceed asto this claimfor available remedies under

§17200. 

CONCLUSION

Based on the foregoing, the Court hereby GRANTS in part and DENIES in

part Defendant’s renewed motion to decertify the class. Accordingly, the Court

affirms class designation for the claim of unreimbursed expenses and unfair labor

practices. The Court decertifies the following class claims: failure to pay minimum

wage, failure to provide rest breaks, and failure to pay overtime wages. 

IT IS SO ORDERED. 

DATED: May 20, 2013

HON. GONZALO P. CURIEL

United States District Judge

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