FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JESUS LEYVA, on behalf of himself

and all other members of the general

public similarly situated,

Plaintiff-Appellant,

v.

MEDLINE INDUSTRIES INC., a

California corporation,

Defendant-Appellee.

No. 11-56849

D.C. No.

5:11-cv-00164-

RGK-MAN

OPINION

Appeal from the United States District Court

for the Central District of California

R. Gary Klausner, District Judge, Presiding

Argued and Submitted

December 7, 2012—Pasadena, California

Filed May 28, 2013

Before: Harry Pregerson, Richard A. Paez,

and Andrew D. Hurwitz, Circuit Judges.

Opinion by Judge Pregerson
2 LEYVA V. MEDLINE INDUSTRIES, INC.

 This summary constitutes no part of the opinion of the court. It has

*

been prepared by court staff for the convenience of the reader.

SUMMARY

*

Class Certification

The panel reversed the district court’s order denying class

certification, and remanded with directions for the district

court to enter an order granting the motion for class

certification where plaintiffs sought to represent 538

employees of Medline Industries, Inc., and alleged violations

of California’s labor laws.

The panel held that the district court applied the wrong

legal standard and abused its discretion when it denied class

certification on the grounds that damages calculations would

be individual. The panel also held that the district court

abused its discretion by finding that the class would be

unmanageable despite the record’s demonstration to the

contrary.

COUNSEL

David M. deRubertis (argued) and Kimberly Y. Higgins, The

deRubertis Law Firm, Studio City, California; N. Nick

Ebrahimian and Jordan Bello, Lavi & Ebrahimian LLP,

Beverly Hills, California, for Plaintiff-Appellant.

Steven A. Groode (argued) and Matthew J. Sharbaugh, Littler

Mendelson, P.C., Los Angeles, California, for DefendantAppellee.
LEYVA V. MEDLINE INDUSTRIES, INC. 3

 Medline removed this case to federal court under the Class Action 1

Fairness Act, 28 U.S.C. § 1332(d). Medline demonstrated in its removal

notice that its liability exposure to putative class members’ claims exceeds

five million dollars.

OPINION

PREGERSON, Circuit Judge:

Plaintiff-Appellant Jesus Leyva appeals the district

court’s denial of class certification. Plaintiff seeks to

represent approximately 538 employees of Medline

Industries, Inc. (Medline). The complaint asserts claims

against Medline for violating California labor laws.

I. Allegations of Putative Class Members

 Medline manufactures and delivers medical products.

The putative class members are current and former hourly

employees in Medline’s three California distribution

warehouses. Because Medline’s warehouse employees earn

low wages, the amount each could claim for unpaid wages is

relatively low—for example, Plaintiff’s individual claim is

for less than $10,000.

Plaintiff alleges that Medline violated the California

Labor Code, California Industrial Commission Wage Order

1-2001, and California’s Unfair Business Practices Law.

Plaintiff seeks to certify separate sub-classes to pursue the

following four claims :

1

1. Rounding violation: Medline rounded its hourly

employees’ start times in twenty-nine minute increments. For

example, workers who clocked-in between 7:31 a.m. and
4 LEYVA V. MEDLINE INDUSTRIES, INC.

8:00 a.m. would be paid only from 8:00 a.m. onward even

though they began work beforehand. Putative class members

would clock-in before their scheduled start times because

they had to complete tasks such as inspecting their machines

and picking up scanners before they could begin their duties.

Plaintiff alleges that the rounding practices resulted in

employees performing unpaid work before their scheduled

start times, in violation of California Labor Code §§ 510 and

1197, and that they are entitled to compensation pursuant to

California Labor Code §§ 1194, 1194.2, and 1197.1.

2. Bonus violation: Medline allegedly excluded

nondiscretionary bonuses from employees’ overtime rates,

thus lowering overtime pay. Plaintiff claims that this practice

violated California law, citing to Marin et al. v. Costco

Wholesale Corp., 169 Cal. App. 4th 804, 807 (2008).

3. Waiting time penalties: Plaintiff alleges that because

of the time rounding and bonus violations, Medline owes its

employees penalties under California Labor Code § 203,

which provides that an employer who willfully fails to pay

any wages due to a terminated employee owes waiting time

penalties.

4. Wage statement penalties: Plaintiff alleges that

because of the rounding and bonus violations, Medline’s

payroll records did not accurately record the hours employees

worked and the wages they earned. California Labor Code

§ 226(e)(1) provides that an employee can recover up to four

thousand dollars in damages, and additional civil penalties,

for such violations.
LEYVA V. MEDLINE INDUSTRIES, INC. 5

II. Class Certification Requirements and the District

Court’s Ruling

To be certified, the putative class and sub-classes must

meet the four threshold requirements of Federal Rule of Civil

Procedure 23(a): numerosity, commonality, typicality, and

adequacy of representation. Fed. R. Civ. P. 23(a); see also

Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir.

1998). Moreover, the proposed class must satisfy the

requirements of Rule 23(b), which defines three different

types of classes. Plaintiff argues that the proposed subclasses meet the requirements of Rule 23(b)(3), which

requires 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.” Fed. R. Civ. P. 23(b)(3).

The district court found that “[t]he putative classes appear

to meet the requisites of Rule 23(a),” including the “rigorous”

commonality standard established in Wal-Mart Stores, Inc. v.

Dukes, __ U.S. __, 131 S. Ct. 2541, 2551 (2011) (requiring

that class members’ claims “depend upon a common

contention . . . [whose] truth or falsity will resolve an issue

that is central to the validity of each one of the claims in one

stroke.”). However, the district court nonetheless denied

class certification, holding that the putative class and subclasses did not meet the requirements of Rule 23(b)(3) for

two reasons. First, the district court concluded that common

questions did not predominate over individual questions

because “although Plaintiff appears to have established that

common questions exist with respect to Defendant’s liability

under state law, the damages inquiry will be highly

individualized.” The district court explained:
6 LEYVA V. MEDLINE INDUSTRIES, INC.

Each of the 500 putative class members

are allegedly entitled to different damage

awards for being ‘short-changed’ by the

rounding policy and/or the bonus policy.

Because evaluating each putative class

member’s claims would require fact-specific,

individualized inquiries into the amount of

pay to which he or she was entitled, the Court

finds that individual questions predominate

over commons questions in this case.

Therefore, the proposed classes are not

sufficiently cohesive to warrant adjudication

by representation.

Second, the district court concluded that because of the

size of the class, under Rule 23(b)(3) “alternative methods for

resolving this dispute are superior because of the likely

difficulties in managing this case as a class action.” The

district court did not explain which methods would be

superior. Instead, the court reasoned that “if these four

classes were certified, the Court would need to determine the

extent to which each putative class member lost wages and,

consequently, suffered damages. Since there are more than

500 putative class members, this process would tax the

Court’s resources.” The court also noted that it would have

to determine “which of several bonuses offered by Medline

to different putative class members were ‘nondicretionary’”

and that “employees within the bonus group each received

different bonuses at different pay periods.”

III. The District Court Abused its Discretion

We review the district court’s denial of class certification

for abuse of discretion. Knight v. Kenai Peninsula Borough
LEYVA V. MEDLINE INDUSTRIES, INC. 7

Sch. Dist., 131 F.3d 807, 816 (9th Cir. 1997). We apply a

two-step test to determine whether a district court abused its

discretion. United States v. Hinkson, 585 F.3d 1247, 1263

(9th Cir. 2009). First, we “look to whether the trial court

identified and applied the correct legal rule to the relief

requested. Second, we look to whether the trial court’s

resolution of the motion resulted from a factual finding that

was illogical, implausible, or without support in inferences

that may be drawn from the facts in the record.” Id.

We find that the district court abused its discretion in

concluding that (1) individual questions predominated over

common questions, and (2) class certification was not

superior to other means of resolving the dispute.

A. Predominance of Common Questions

The district court applied the wrong legal standard by

concluding that individual questions predominate over

common questions. The only individualized factor that the

district court identified was the amount of pay owed. “In this

circuit, however, damage calculations alone cannot defeat

certification.” Yokoyama v. Midland Nat’l Life Ins. Co.,

594 F.3d 1087, 1094 (9th Cir. 2010).

The district court denied certification because for each

sub-class “the damages inquiry will be highly

individualized.” But damages determinations are individual

in nearly all wage-and-hour class actions. Brinker Rest.

Corp. v. Superior Court, 273 P.3d 513, 546 (Cal. 2012) (“In

almost every class action, factual determinations of damages

to individual class members must be made. Still we know of

no case where this has prevented a court from aiding the class

to obtain its just restitution. Indeed, to decertify a class on
8 LEYVA V. MEDLINE INDUSTRIES, INC.

the issue of damages or restitution may well be effectively to

sound the death-knell of the class action device.”) (internal

citation and quotation marks omitted). Thus, “[t]he amount

of damages is invariably an individual question and does not

defeat class action treatment.” Blackie v. Barrack, 524 F.2d

891, 905 (9th Cir. 1975); see also Yokoyama, 594 F.3d at

1089 (“The potential existence of individualized damage

assessments . . . does not detract from the action’s suitability

for class certification.”). In deciding otherwise, the district

court abused its discretion by applying the wrong legal

standard. See Hinkson, 585 F.3d at 1263.

Indeed, the Supreme Court clarified in Dukes that

“individualized monetary claims belong in Rule 23(b)(3).”

131 S. Ct. at 2558. Thus, the presence of individualized

damages cannot, by itself, defeat class certification under

Rule 23(b)(3). It is true that the plaintiffs must be able to

show that their damages stemmed from the defendant’s

actions that created the legal liability. Comcast Corp. v.

Behrend, 133 S. Ct. 1426, 1435 (2013) (“The first step in a

damages study is the translation of the legal theory of the

harmful event into an analysis of the economic impact of that

event.”) (internal quotation marks omitted). In Comcast, the

Supreme Court reversed an order granting class certification

because the plaintiffs relied on a regression model that “did

not isolate damages resulting from any one theory of antitrust

impact.” Id. at 1431. The Court concluded that “a model

purporting to serve as evidence of damages in this class

action must measure only those damages attributable to that

theory.” Id. at 1433.

Here, unlike in Comcast, if putative class members prove

Medline’s liability, damages will be calculated based on the

wages each employee lost due to Medline’s unlawful
LEYVA V. MEDLINE INDUSTRIES, INC. 9

practices. In the record, Plaintiff included deposition

testimony of Medline’s director of payroll operations, and

Medline’s Notice of Removal. Those documents show that

Medline’s computerized payroll and time-keeping database

would enable the court to accurately calculate damages and

related penalties for each claim. For example, in its removal

notice, Medline used its electronic database to separately

calculate its exposure for each putative class member’s claim.

The removal notice states that “to determine the potential

amount in controversy with regard to Plaintiff’s minimum

wage off-the-clock claim, Medline multiplied each

employee’s hourly rate by the number of workweeks he/she

was employed by Medline during the applicable period . . . .”

Medline listed the amount in controversy for each individual

claim and totaled the exposure on all the claims, calculating

a total amount in controversy of $5,934,761. Medline’s

removal notice thus demonstrates that damages could feasibly

and efficiently be calculated once the common liability

questions are adjudicated.

B. Superiority of Class Adjudication

The district court also applied the wrong legal standard

when it concluded that a class action was not the superior

method for resolving the putative class members’ claims.

The district court acknowledged that certification was

superior when considering three of the four Rule 23(b)(3)

factors—the class members’ interests in controlling litigation,

the nature of litigation, and the desirability of concentrating

the litigation of the claims—but denied class certification

based on manageability concerns.

The district court incorrectly held that class certification

was not the superior method of adjudication because of the
10 LEYVA V. MEDLINE INDUSTRIES, INC.

difficulty of managing the approximately 500 member class

and determining “the extent to which each putative class

member lost wages, and, consequently, suffered damages.”

The district court again abused its discretion when it based its

manageability concerns on the need to individually calculate

damages. See Cooter & Gell v. Hartmarx Corp., 496 U.S.

384, 405 (1990) (“A district court would necessarily abuse its

discretion if it based its ruling on an erroneous view of the

law . . . .”); Blackie, 524 F.2d at 905 (holding that the need to

determine individualized damages does not defeat class

certification).

Moreover, the district court’s reasoning regarding

manageability of the class action is “implausible” under

Hinkson’s second step. 585 F.3d at 1263. The district court

concluded that class certification is not the superior method

of adjudication but did not suggest any other means for

putative class members to adjudicate their claims. Indeed, it

appears that none exist.

The California Labor Code protects all workers regardless

of their immigration status or financial resources. California

Labor Code § 1171.5; see also Reyes v. Van Elk, Ltd., 56 Cal.

Rptr. 3d 68, 78 (Ct. App. 2007). In light of the small size of

the putative class members’ potential individual monetary

recovery, class certification may be the only feasible means

for them to adjudicate their claims. Thus, class certification

is also the superior method of adjudication. See Local Joint

Exec. Bd. of Culinary/Bartender Trust Fund v. Las Vegas

Sands, Inc., 244 F.3d 1152, 1163 (9th Cir. 2001) (“If

plaintiffs cannot proceed as a class, some—perhaps

most—will be unable to proceed as individuals because of the

disparity between their litigation costs and what they hope to

recover.”).
LEYVA V. MEDLINE INDUSTRIES, INC. 11

The district court’s denial of class certification because of

manageability concerns also lacks “support in inferences that

may be drawn from the facts in the record.” See Hinkson,

585 F.3d at 1262 (internal citations and quotation marks

omitted). The putative class and proposed sub-classes

contain approximately 538 people, and courts routinely

certify larger and more complex classes. See, e.g., Ortega v.

J.B. Hunt Transp., Inc., 258 F.R.D. 361, 364 (C.D. Cal. 2009)

(certifying class of “nearly 6,000” employees who alleged

that their employer failed to pay minimum wages, provide

proper meal and rest periods, provide accurate wage

statements, or provide wages due upon termination); Kamar

v. Radio Shack Corp., 254 F.R.D. 387, 402 (C.D. Cal. 2008)

(certifying class of 15,000 employees who alleged that their

employer’s policies violated state reporting time and splitshift regulations).

Moreover, as noted above, Medline’s own documents

demonstrate the feasibility of calculating damages in this

case. Medline’s electronic payroll records contain much of

the data needed to calculate damages. In its notice removing

the case from state to federal court, Medline calculated the

damages exposure through a review of company payroll

records. Through a query of the computerized timekeeping

database, Medline’s director of payroll operations calculated

the amount of money plaintiff Leyva had lost due to

Medline’s rounding policy. The payroll director said the

calculation took him “probably an hour and a half,” and that

he could repeat the process for the entire class. The district

court, or a special master appointed under Federal Rule of

Civil Procedure 53, could use a similar method to calculate

damages once the court adjudicates liability. Thus, the

district court abused its discretion by ignoring the database’s

potential to alleviate the burden of determining damages.
12 LEYVA V. MEDLINE INDUSTRIES, INC.

IV. Conclusion

The district court applied the wrong legal standard and

abused its discretion when it denied class certification on the

grounds that damages calculations would be individual. The

court also abused its discretion by finding that the class would

be unmanageable despite the record’s demonstration to the

contrary. The district court’s order denying class certification

is REVERSED and REMANDED with directions to the

district court to enter an order granting Plaintiff’s motion for

class certification. Plaintiff is entitled to costs on appeal.