F OR P UB LIC AT ION 

### U N I TED STA TES C O U R T O F A PPEA LS F O R T H E N IN T H C IR C U IT

J ESU S L EY VA , o n b e ha lf

of him se lf and all other

members of

the g ener al public simil arly

situated, Plaintif f-Appellant ,

v. M EDL I NE I

N D U ST RI ES I

NC ., a California c orporation,

Defendant-

Appellee

. No. 11-56849

D.C. No. 5:11-cv-00164- RGK-MAN

OPI NI ON

Appea l from the United States District Court fo r t he Ce ntr a l D istri c t of

Ca lif or nia R. Gary Klausner , District J udg e, Presiding Argued and Submitted De c e mbe r 7 , 2 01 2—Pa sa de na , Ca lif or nia Filed Ma y 28, 2013 B e f o r e : H ar r y Pr e g e r s o n , Ri c h ar d

A

. Pa e z, and An dr e w D . H ur

wi tz, C ir c uit

Judg e s. Opinion by

J udg e Preg ersonL EY VA V
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. 2

T hi s s ummary cons t i t ut es n o part of t he op i ni on of

t he cour t

. I t ha s * b een p repa red b y co urt s t af f f o r t he co nveni ence o f

t he read er. SUMMAR

Y *

Class Cert if

ication Th e pa ne l r e ve rs e d th e dis tr ic t c ourt ’s or de r de nyingc la ss cer tification, and re manded with dire ctions for the dis trict c ourt to e nte r a

n o rd e r gra

nti ngthe mot ion

fo r c la ss cer tification wher e plaintiffs soug ht t o represent 538 employ ees of

Medline I ndustries, I nc., and a lleg ed violations of Ca lif or nia ’s la bo r l aws . The pa nel held that the dist ri ct cour t applied the wr ong le g a l stand ard and

a bu se d it s d isc re tio n w he n it de nie d c la ss c e rt if ic a tio n o n th e g ro un ds that dam a g e s c a lc ulatio ns wo uld be individual. The pa

nel also held that the distri ct cour t abused its discre tion by finding that th e cl as s would be unmanag eable despite the re cord’ s demonstration t o the c o n t r ar y.

CO UN SEL David M. deRuber

tis (argued) a

nd Kimberly Y. Hig g ins, The deRubertis L aw F irm, Studi o City , California; N. Nic k Eb ra him ian a nd Jord an B e llo, L avi & Eb ra him ian L L P, B e ve rl y Hi lls , Ca lif

or nia , f or Pla int if f- Ap pe lla nt. Steven A. Gr oode (a

rgued) and Matthew J . Sharbaug h, L ittler Me nd e lso n, P.C. , L os An g e le s, Ca lif or nia , f or De fe nd antAppellee

.L EY VA V
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. 3

M edl i n e r emov ed t h i s c as e t o f ed eral cou r t u n der t h e Cl as s Act i on 1 Fai r nes s Act , 28 U

. S. C

. § 13 32 ( d). M edl i ne dem ons t r at ed i n i t s r emo val n ot i ce t h at i t s l i abi l i t y e x pos u r e t o pu t at i v e cl as s membe r s ’ c l ai ms e x ce eds f i ve m i l l i o n d o l l ars. OP IN ION PREGERS ON, Circuit J udg e: Plaintiff-Appellant Jesus L ey va appe als the district c ourt ’s de nia l of

c la ss c e rt if

ic a tio n. Pla int if

f s eek s to repr esent a

pproxi mately

538 employ ees of

Medline I nd us tr ie s, I nc . ( Me dli ne ). Th e c omp la int a sse rt s c la ims a g a ins t Me dli ne fo r v iol a tin g Ca lif or nia la bo r l aws . I. Allegations of

P utative Class Me m bers Me dli ne manu fa c tur e s and de liv e rs me dic a l pr od

ucts

. Th e putativ e c la ss m e mbers are curr e nt a nd fo rm e r h ourl y employ ees in Medline ’s three California distribution war ehouses. Bec ause Medline’s warehouse e mploy ees e arn low wa g e s, the amou

nt ea c h co uld c la im f

or un pa id w a g e s is re lativ e ly low —f or e xamp le , Pl a int if

f’ s in divid ua l c la im i s for less than $10,000. Pla int if f a lle g e s th a t Me dli ne vio late d th e Ca lif or nia L ab o r Code, California

I ndustrial Commi ssion W ag e Or der 1-2001, and California ’s Unfa ir Busine ss Practice s L aw. Plaintiff seeks to ce rtify

separ ate sub-c lasses to pursue the fo llo wi ngfo ur

c la ims :

1 1. Round ingvio latio n: M e dl ine r ound e d it s h ourl y employ ees’ start times in twenty -nine minute inc reme nts. For example, worker s who clocke d-in betwe en 7:31 a.m. andL EY VA V
. M EDL I NE I NDU S TRI ES , I

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. 4 8:00 a.m

. wo u l d be paid only from 8:00 a.m. onwa

rd eve n though the y

beg an wor

k befor ehand. Putative c lass members wo uld c loc k- in b e fo re th e ir

sc he du le d s tart

tim e s b e c a

us e they had to complete ta sks such as inspec ting their machines and pic kin g up sc ann e rs be fo re the y c ou ld be g in the ir dutie s. Pla int if f a lle g e s th a t the ro un din g pr a c tic e s r e su lte d in employ ees pe rfor

ming unpa id work bef

o re t heir sche duled start times, in violation of California L abor Code §§ 510 and 11 97 , a nd tha t th e y are e nti tle d to compe ns a tio n p ur su ant t o California L abor Code §§ 1194, 1194.2, a nd 1197.1. 2. Bonus violation: Medline alleg edly excluded no nd isc re tio na

ry bo nuse s f

ro m e mpl oy e e s’ ov e rt ime ra te s, thus loweringovertime pay . Plaintiff claims that this practice vio late d Ca lif

or nia law, c iti ng

to Ma rin et al. v. Costco W holesale Corp. , 169 Cal. App. 4th 804, 807 (2008). 3. Wai tin g tim e pe na lti e s: Pla int if f a lle g e s that be c a

us e of the tim e ro un din g and bo nu s v iol a tio ns , M e dli ne ow e s it s empl oy ees pe nalties under Ca lifornia L abor Code § 203, which provide s that an employ er who wi llfully fails to pay an y w a g e s d

u e t o a t e r

m i n a t e d e mp l o y e e o w e s w a i tin g tim e pe na lti e s. 4. Wage statement pena lties: P laintiff alleg es that beca use of the r oundin g and bonus vi olations, Medline’s pay roll rec ords did not acc urate ly rec ord the hours employ ees worke d and t h e wag es they ear ned. California

L abor Code § 226(e) (1) pr ovides that an e mploy ee can r ecove r up to four tho us and do lla rs in d ama g e s, and

a dd iti on a l c ivi l penaltie s, fo r s uc h v iol a tio ns .L EY VA V
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. 5 II. Class C ert if

ication Requirem ents and the Di s tric t Co ur t’ s R uling T o b e c e rt i f

i e d , t h e p u t at i v e c l a s s an d s u b

- c l a s s e s mu st me e t th e fo ur

thr e sh old re qu ir e me nts of

F e de ra l Ru le of

Civ il Procedur e 23(a ): numerosity , commonality , ty picality , and a d e qu a c y o f r e p r e s e n t a t i o n . F e d

. R

. C i v . P

. 2 3( a ); see als o Hanlon v. Chrysler Corp. , 150 F.3d 1011, 10 1 9 (9th Cir. 1998). More over, t he propose d class must satisfy the require ments of Rule 23(b), wh i ch define s three dif fer ent ty pes of c lasses. Plaintiff argues that the pro p o s ed subclasses me et the re quirements of Rule 23( b)(3) , which re qu ir e s th at “ qu e sti on s o f l aw o r f a c t c omm on

to c la ss me mbe rs pred ominate ov e r a ny qu e sti on s a ff

e c tin g on ly ind ivi du a l me mbe rs , a

nd that a c la ss a c tio n is su

pe ri or to other available methods for fairly and ef ficiently adjudicating the controve rsy .” F ed. R. Civ. P. 23(b)(3). The district cour

t found that “[t] he putative classes appe ar to m e e t th e re qu isi te s o f R ule 23 (a ), ” inc lud ingthe “ ri g or ou s” commonality

standard established in W al-Mart Stores, Inc. v

. Duke s , __ U.S. __, 131 S. C t. 2541, 2 5 51 (2011) ( requiring that class member s’ claims “de pend upon a c ommon contention . . . [w h o s e] truth or falsity will resolve an issue that is centra l to the validity of ea ch one of

the claims in one stroke.”) . Howeve r, the district court nonetheless denie d c la s s c e rti f

ic a ti o n , h o ld in g th a t t

h e p u tati v e c la s s an d

s ubclasses did not mee t the requir em ents of Rule 23(b) (3) f or two rea sons. First, t he dis trict court concluded that common questions did not predominate over individual questions beca use “a lthough Plaintiff appe ars to have est ab l ished that c omm on qu e sti on s e xist wi th re sp e c t to De fe nd ant’ s li a bil ity un der state law, the dama g e s in qu ir y wi ll b e highly individualiz ed.” T he district cour t expl ained:L EY VA V
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. 6 E ac h of the 500 putative c lass members ar e al l ege d l y en t i t l ed t o d i ff er en td am age awa rds for be ing ‘ short-cha ng ed’ by the r o u n d i n g p o l i c y an d

/ o r t h e b o nu s p o l i c y. B e c a us e e va luatin g e a c h p utativ e c la ss member’ s claims would require fac t-specif ic, individualiz ed inqui ries into the amount of pay to which he or she was entitl ed, the Court fi nd s th a t in div idu a l qu e sti on s pre do min a te over c ommons questions i n this c ase. There fore , the p ro posed cla sses are not sufficie ntly

cohesive to warr ant adjud i cation by repr esentation. Second, the district cour

t co n cl uded that bec ause of the siz e of the class, under

Rule 23(b)(3) “alter

native methods for re so lvi ngthi s d isp ute are su pe ri or bec a

us e of the lik e ly difficulties in manag ing this ca se as a class action.” T he d i s t ri ct court did not ex plain which methods would be superior. Instead, the c ourt rea soned t h at “if these four classes were cer

tified, the C ourt would need to de termine the extent to which each putative class m ember lost wag es and, conseque ntly , suffe red da mag es. Si nce the re a

re more than 500 putative class membe rs, t h i s proce ss would tax the Court’s resour ces. ” T h e court also noted that it would have to de termine “which of sever al bonuses offe red b y M edline to differ ent putati v e cla ss members we re ‘ nondicre tionary ’” and that “em p l o y ees w ithin the bonus group e ach r ece ived differ ent bonuses at diff

ere nt pay periods.” III. The District C ourt Abused its Discret ion We reviewthe district court’s de nial of cla ss cer tification for a buse of discr etion. Knight v. Kenai Pe ninsula BoroughL EY VA V
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. 7 Sc h. Di st. , 1 3 1 F

. 3 d 8 0 7 , 8 1 6 ( 9 t h C i r . 1 9 9 7 )

. W e a p p l y a tw o- ste p te st t o d e te rm ine wh e the r a dis tr ic t court a bu se d it s discretion. United States v. Hink son , 585 F.3d 1247, 1263 (9t h C i r. 2 009). F irst, we “look to whe ther the tria l court identified and a

pplied the cor

rec t leg al rule to the r elief re q u es ted. Second, we look to whether the trial court’ s resolution of th e m o tion resulted from a fac tual finding that was illog ical, implausible, or without sup port in infere nces that may be dra wn from the f

acts in the re cord.” Id. We f ind that th e dis tr ic t c ourt

a bu se d it s d isc re tio n in concludingthat (1) individual questions predominated over common questions, and (2) c lass cer tification was not superior to other

means of r esolving the dispute. A. Pre do minanc eof

Common Que

stions The district cour

t applied the wr ong legal st andar d by co ncluding that individual questions predominate over common questions. The only individualiz ed fa ctor that the district court identified wa s the amount of pa y ow e d. “ I n th is circ uit, however , damag e ca lculations alo ne ca nnot defe at cer tification.” Y

okoyam a v. Midland Nat’l L i fe Ins. Co. , 594 F.3d 1087, 1094 ( 9th Cir. 2010). The d i s t ri ct cour

t denied ce rtification bec ause f or ea ch su b- c la ss “ the da ma g e s in qu ir ywi ll b e hig hly individualiz ed.” But dama g es dete rminations are individual in near ly all wag e-a

nd-hour c lass actions. Br inker Re st. Cor p. v . S up e rio r Co ur t , 2 7 3 P

. 3 d

5 1 3 , 5 4 6 ( C a l

. 2 0 1 2 ) ( “ In almost every

class action, fac tual deter minations of damag es to individual class members must be made. Stil l we know of no c a se wh e re thi s h a s p re ve nte d a c ourt fr om a idi ngthe c la ss to obtain its j ust r es t i t u t i o n. I ndeed, to de cer tify a cla ss onL EY VA V
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. 8 the iss ue of

dama g e s o r re sti tut ion may we ll b e e ff

e c tiv e ly to sound the death- knell of the class action device .”) ( i n t ernal citation and quotation marks omi t ted). Thus, “ [t ]he amount of dama g es is invariably

an individual question and does not defe at class action tre atment.” Blac k ie v. Barrack

, 524 F.2d 891, 90 5 ( 9th

Cir . 1 97 5) ; see also Y

okoyam a , 594 F.3d at 1 0 8 9 (“ T h e p o t en t i al ex i s t en ce o f i n d i v i d u al i z edd am age a sse ssm e nts

. . . d oe s n ot d e tr a c t f ro m th e a c tio n’ s su ita

bil ity for c lass cer

tification.”)

. I n decidingotherwise, the district court a bused its discretion by

applying the wronglegal standard. See H

inkson , 585 F.3d at 1263. I ndeed, the Supreme Court cla rified in Duke

s that “individualized monetary claims b el o n g in Rule 23(b)(3) .” 131 S. Ct . at 2558. Thus, the presence of individualiz ed damag es cannot, by itself, defe at class cer tificati o n u n der Rul e 23 (b )( 3) . It i s tr ue th a t th e pla int if fs mus t be a

ble to s how that their damag es stemmed fr om the defe ndant’s actions that cr eate d the leg al liability

. Comcast Corp. v. Behrend, 133 S. Ct . 1426, 1435 (2013) ( “The first step in a d ama g e s s tu dy is th e tr an s lati o n o f the l egal t heory of the harmful eve nt int o an ana ly sis of the e c on omi c imp a c t of that eve nt .”) (interna l quotation marks omitted). I n Com c as t , the Supreme Court re verse d an order g rantingclass ce rtification be c a us e the pl ain tiff

s r e lie d o n a

re g re ssi on

mod e l th at “ did no t is olate dama g e s r e su lti ngfr om any on e the or y of anti tr us t impact.” Id. at 1431. The Court c oncluded th at “a m o d el purp or tin g to se rv e a s e vid e nc e of dama g e s in

thi s c la ss action must m ea sure only those damag es attributable to that theory .” Id. at 1433. Her e, unlike in Com c as t , if putative class member s prove Medline’s liability , damag es will be c alculate d based on the wag es ea ch em p loy ee lost due to Medline’ s unlawfulL EY VA V
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. 9
prac tices. In the re cord, Plaintiff inclu ded deposition te s ti mo n y o f M e d li n e ’ s d ir e c to r

o f p ay r o ll o p e r a ti o n s , and Medline’s Notice o f R emoval. Those documents show that Me dli ne ’s c omp ute ri zed

pa y ro ll a nd tim e -k e e pin g databa se would enable the cour

t to accur ately

calc ulate dama g es and related pena lties f

or eac h claim. For

example, in its remova l no tic e , M e dli ne us e d it s e le c tr on ic data ba se to s e para te ly c a lc ulate its e xpos ur e fo r ea c h putativ e c la ss m e mbe r’ s c la im. The remova l notice states that “to deter mine the po t enti al amount in con t rover sy

with reg ard to Plaintiff’s minimum wag e off

-the-c l o ck cla im, Medline multi plied eac h employ ee’ s hourly ra t e by the number of

workwe eks he/she was employ ed by Medline during the applicable period

. . . .” Medline listed the amount in controve rsy for each individual claim and totaled the exposure on all the claims, ca lculating a total amount in controve rsy of $5,934,761. Medline’ s rem ov al n ot ice th us dem on st rat es t hat dam ages co ul d fea sibly and e ff ic ie ntl y be c a lc ulate d o nc e the comm on lia bil ity questions are adjudicate d. B. Superiori ty of Class Adju dication The district cour

t also applied the wr ong leg al stan dard when it conc luded that a c lass acti o n was not the super ior met ho d f or re so lvi ngthe putativ e c la ss m e mbe rs ’ c la ims

. The district cour

t acknowle dg ed that ce rti fi cation was superior when considering three of the four Ru l e 2 3(b)( 3) fac tors—the class membe rs’ intere sts in c o ntr o ll inglitigation, the nature of litigation, a n d t h e desira bility of conc entrating the litigation of the claims—but denied cla ss cer tification ba se d o n ma

na g e a bil ity c on c e rn s. The district cour

t incorre ctly

held t h at class certification was not the super ior met hod of adjudication because of theL EY VA V
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. 10 dif fi c ult y of mana g in g t he a

pp ro xima te ly

50 0 me mbe r c la ss and de te rm ini ng“ the e xten t to wh ic h e a c h p ut ati ve cla ss member lost wa g es, and, conseque ntly , suffe red damag es.” Th e dis tr ic t c ourt a g a in a

bu se d it s d isc re tio n w he n it ba se d it s mana g e a bil ity c on c e rn s o n th e ne e d to ind ivi du a lly c a lc ulate damag es. See Cooter &Gell v. Ha r t ma r x Corp. , 4 96 U. S. 38 4, 40 5 ( 19 90 ) ( “ A d istri c t court wo uld ne c e ssa ri ly a bu se its discretion if it based its ruling on a n err oneous view of

the law . . . . ” ); Blac k

ie , 524 F .2 d at 9 05 (h old ingthat th e ne e d to de te rm ine ind ivi du a lize d d ama g e s d oe s n ot d e fe a t c la ss cer tification). M o r e o v e r , th e d is tr ic t c o u rt’ s r e a s o n in g r e g a r ding manag eability

of the c las s action is “implausible” unde r Hinkson ’s sec ond step. 585 F.3d at 1263. The dist rict cour t conclude d that cl ass ce rtification is not the superior me thod of adjudication but did not sug gest any other mea

ns for putativ e c la ss m e mbe rs to a dju dic a te the ir c la ims

. I nd e e d, it a pp e ars that no ne e xist. Th e Ca lif or nia L a bo r C od e pr ote c ts a ll w o rk e rs re g ard le ss of the ir imm ig ratio n status or fi na nc ia l re so ur c e s. Ca lif

or nia L a bo r Cod e § 1 17 1. 5; see also Re yes v . Van Elk, Ltd. , 5 6 Ca l. Rptr. 3d 68, 78 (Ct. App. 2007). In light of the small siz e of the putative cla ss members’ pote ntial indivi d u al monetary rec overy , cla s s cer

tification may

be the only

fea sible means for them to adjudica

te t heir c laims. Thus, class ce rtification is also the s uperior method of adjudication. See Local J oint Exe c. Bd. of Culinary/Bartender Trust Fund v. Las Vegas Sands, Inc. , 2 4 4 F

. 3 d 1 1 5 2 , 1 1 6 3 ( 9 t h C i r . 2 0 0 1 ) ( “ If plaintiffs ca

nnot p ro cee d as a c lass, some—perha ps most—will be unable to pr ocee d as individuals be cause of the dis pa ri ty be tw e e n th e ir

lit ig a tio n c os ts a

nd wh a t th e y

ho pe to rec over.” ).L EY VA V
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. 11 The district c ourt’s denial of class ce rtification bec ause of manag eability

conce rns also lacks “support in infer ence s that may be dra wn from the f

acts in the re cord.” See H inkson , 585 F.3d at 1262 (interna l c itations a nd quotation m arks omitted). The putative c lass and propose d sub-classe s c on ta in a pp ro xima te ly

53 8 p e op le , a

nd c ourt s r outin e ly cer tify larg er and more complex classes. See, e .g. , Ortega v. J.B. Hunt T

ransp., Inc. , 258 F.R.D. 361, 364 (C.D. Cal. 2009) (ce rtifying c lass of “ne arly 6 , 0 00” employ ees who alleg ed that their em p l o y er failed to pay minimum wag es, provide p ro p er m ea l an d

re s t p e r i o d s , p ro v i d e a cc u ra t e w age statements, or provide wag es due upon termination); Kamar v. Radio Shack Corp. , 254 F.R.D. 387, 402 (C.D. Cal. 2008) (c e rt if ying cla ss of

15 ,0 00 e mpl oy e e s w ho a lle g e d th a t th e ir e mpl oy e r’ s p oli c ie s v iol a te d s tate re po rt ingtim e and sp lit

shift regulations). Mo re ov e r, a s n ote d a

bo ve , M e dli ne ’s own d oc ume nts de mon str a te the fe a sib ili ty of c a lc ulating dama g e s in

thi s case . Medline’s e lectronic pay roll reco rds contain much of the data ne eded to calculate damag es. I n its noti ce r emoving the ca se fr om state to fede ral co u rt , M edline ca lculated the damages e xpos ur e thr ou g h a re vie w o f c omp any

pa y ro ll rec ords. Throug h a query of the computeriz ed t imekeeping databa se, Medline’ s director of pay roll operations calculate d the amou

nt o f m on e y

pla int if f L e y va ha d lo st d

ue to Medline’s roundingpolicy . The pa y roll directo r s ai d the calc ulation took him “pr obably an hour a nd a half ,” and that he could r epeat the proce ss fo r the entire class. The district court, or a

specia l master ap p ointed under F eder al Rule of Civ il Pr oc e dure 53 , c ou ld u se a sim ila r m e tho d to c a lc ulate damag es once the cour

t ad j u d icates liability . Thus, the district c ourt abused its discr etion by ignor ing the databa se’s po te nti a l to a lle viate the burd e n o f d e te rm ini ngdama g e s.L EY VA V
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. 12 IV. Conclusion The district court applied the wr ong leg al standar d and abused its discre tion when it denied cla ss cer tification on the g rounds that damag es ca lculations would be individual. The c ourt a lso a bu se d its dis c re tio n b y

fi nd ingthat th e c la ss w ou ld be unmana g eable despite th e record’s de monstration to the contra ry . The dist rict court’s order denying c lass cer

tification is RE VE RSE D and R EM A N DED with directions to the district court to e nter a

n order g rantingPlaintiff’s motion for c la ss c e rt if

ic a tio n. Pla int if

f i s e nti tle d to c os ts o n a

pp e a l.