Judge David S. Cunningham, Case Number: BC349267, Date: 2024-08-01 Tentative Ruling

Department: 11

Judge: David S. Cunningham III

The Court intends to comply with the Court of Appeal’s opinion and will follow the Court of Appeal’s rulings. Consequently, for now, the overtime cause of action is out of the case, and the Court declines to reopen discovery as to the overtime claim.

The Court is inclined to order Plaintiffs to submit a trial plan that includes a manageable plan for trying TNS’s defenses.

Plaintiffs’ discovery proposal is too limited. Prior to reopening discovery, the Court is inclined to see/hear expert evidence on what discovery would be needed to make each side’s sample representative.

This is a wage-and-hour class action. The extensive procedural history is summarized in the Court of Appeal’s October 2023 opinion. Relevantly, the Court of Appeal reversed several summary-adjudication rulings and remanded the case with instructions. (See Doshi Decl., Ex. F.)

Here, the Court must consider the parties’ briefs concerning severability and the scope of discovery post-remand.

“In May 2012, Plaintiffs moved for class certification.” (Doshi Decl., Ex. D, p. 4.) Judge (now Justice) John Shepard Wiley, Jr. denied it, “concluding that Plaintiffs were incapable of establishing liability against TNS through common proof because of the diversity of work conditions and policies of the Staffing Companies.” (Ibid.)

“Plaintiffs appealed, and the Court of Appeal reversed. [Citation.]” (Ibid.)

“In September 2015, following remand and reconsideration,” Judge Wiley “granted Plaintiffs’ motion for class certification.” (Ibid.)

“On January 27, 2017, Judge Wiley granted Plaintiffs’ motion for summary adjudication, ruling that TNS employed the class and had a statutory duty to give class members proper breaks and overtime pay. [Citation.]” (Ibid.) “Judge Wiley found that TNS failed to pay some class members their overtime as well as failing to provide meal and rest breaks to many class members. [Citation.]” (Ibid.)

“On February 26, 2018, Judge Wiley granted Plaintiffs’ motion for summary adjudication on the first three causes of action for unpaid overtime, meal break premiums and rest break premiums. [Citation.]” (Ibid.) “Judge Wiley found that Plaintiffs’ expert, Dr. Brian Kriegler, ‘proposed a fundamentally sound method’ for approximating damages but neglected to account for evidence that certain employees either took breaks or willingly skipped them. [Citation.]” (Ibid.)

“Judge Wiley denied Plaintiffs’ motion for summary adjudication of the claims for wage statement and waiting time penalties[.]” (Ibid.) He found that “Plaintiffs improperly assessed penalties based on TNS’s failure to pay meal and rest break premiums[,]” and he “ordered Plaintiffs to re-file with revised damages calculations. [Citation.]” (Ibid.)

“On February 5, 2019,” Judge Amy Hogue (now retired) “granted Plaintiffs’ revised motion for summary adjudication as to the amount of overtime, meal and rest break damages and interest[.]” (Ibid.) “Relying on” Kriegler’s calculations, “Judge Hogue concluded that TNS owed $927,270 in overtime damages, $3,142,766 for meal break omissions and $3,375,053 [for] rest break omissions. [Citation.]” (Ibid.) She found the total to be $7,445,089. (See ibid.)

Judge Hogue “denied summary adjudication for Plaintiffs for additional wage statement penalties based on meal and rest break violations under” Labor Code section 226.7. (Id. at Ex. D, pp. 4-5.)

“Judge Hogue allowed for potential liability for wage statement penalties under Section 226 that were unrelated to meal and rest break violations.” (Id. at Ex. D, p. 5.) She “noted that ‘TNS produced wage statements that accurately reflect the total number of hours worked by class members, but omit the additional pay earned by class members who worked overtime.’ [Citations.]” (Ibid.) Citing Maldonado v. Epsilon Plastics, Inc. (2018) 22 Cal.App.5^th 1308,” she “explained that injury is not presumed when a wage statement fails to include wages earned and observed that only the absence of hours worked gives rise to an inference of an injury supporting penalties.” (Ibid.)

“Judge Hogue further found that TNS had raised a triable issue regarding a possible ‘good faith’ defense to Labor Code section 203 penalties. [Citation.]” (Ibid.)

“On July 9, 2019,” this Court “granted in part and denied in part TNS’s subsequent motion for summary adjudication as to the Sections 203 and 226 penalty claims.” (Ibid.) “The Court granted summary adjudication in favor of TNS, holding that penalties for Section 226.7 for meal and rest break violations cannot support any additional wage statement penalties under Section 226.” (Ibid.)

“However, summary adjudication of this limited issue did not fully dispose of Plaintiffs’ fifth and seventh causes of action for civil penalties.” (Ibid.) “The Court denied summary adjudication for TNS as to ‘injury’ under Section 226, and as to willfulness and the good faith defense under Section 203, subject to a bench trial on these disputed claims.” (Id. at Ex. D, pp. 5-6.)

This Court held the bench trial in 2020. “Kriegler submitted a declaration calculating penalties for the class and testified at trial.” (Id. at Ex. F, p. 14.) He “assumed each staffing company technician’s employment with TNS ended on the final day TNS’s timekeeping records showed the technician worked on a TNS project.” (Ibid.) “Because no technicians worked for TNS after 2013, Kriegler determined all technicians who had unpaid overtime compensation were entitled to the maximum waiting time penalty of 30 days’ pay at their regular hourly rate. [Citation.]” (Ibid.) “Using his prior determinations of which technicians had unpaid overtime compensation[,]” he “calculated waiting time penalties for each technician.” (Ibid.) “The total waiting time penalties for the class was $1,177,943.” (Ibid.)

“TNS argued it was not liable for any waiting time penalties under section 203 because there were good faith disputes whether the staffing company technicians were independent contractors rather than employees and whether TNS therefore had to pay any overtime compensation to the technicians. [Citation.]” (Ibid.) “TNS also argued there was a good faith dispute whether it was responsible for paying the technician’s wages because, under its agreements with the staffing companies, the staffing companies were supposed to pay wages.” (Ibid.)

The Court disagreed and “found in favor of the class on the cause of action for waiting time penalties under section 203 and accepted Kriegler’s calculations for penalties.” (Id. at Ex. F, p. 15.) The Court held that “TNS failed to meet its burden to establish a good faith dispute for two reasons.” (Ibid.) “First, the evidence showed ‘TNS took no reasonable action to determine whether it was the employer’ of the staffing company technicians, for example, by ‘seek[ing] attorney advice, seek[ing] guidance from [s]tate agencies,’ or comparing its practices with similar employers.” (Ibid.) “Second, there was no evidence TNS took any steps to audit the staffing companies to determine whether the companies were paying the technicians legally required overtime wages.” (Ibid.)

Plaintiffs “also sought penalties for various wage statement violations under section 226.” (Id. at Ex. F, p. 15 n.4.) The Court ruled “in favor of TNS on this claim, ruling Benton did not meet his burden to prove the class suffered any injury from the asserted wage statement violations.” (Ibid. [citing Maldonado, supra, 22 Cal.App.5^th at 1334-1335].)

(2) it vacates the “January 27, 2017, February 26, 2018 and February 5, 2019 orders granting [Plaintiffs’] motions for summary adjudication” (ibid.);

(3) it instructs the Court to “enter a new order granting [Plaintiffs’] motion for summary adjudication on the cause of action for failure to pay overtime compensation” (ibid.; see also id. at Ex. F, pp. 43-48 [finding that “[t]he trial court did not err in granting [Plaintiffs’] motion for summary adjudication on the cause of action for failure to pay overtime compensation”], capitalizing and italicizing deleted; id. at Ex. F, p. 3);

(4) it instructs the Court to “enter a new order . . . denying [Plaintiffs’] motion for summary adjudication on the causes of action for failure to provide meal and rest breaks” (id. at Ex. F, p. 62; see also id. at Ex. F, pp. 20-37 [finding that “[t]he trial court erred in granting [Plaintiffs’] motion for summary adjudication on the causes of action for failure to provide meal and rest breaks”], capitalizing and italicizing deleted; id. at Ex. F, p. 3);

(5) it vacates the “order granting TNS’s motion for summary adjudication on the claims for waiting time and wage statement penalties for unpaid and unreported meal and rest break premiums” (id. at Ex. F, pp. 62-63);

(6) it instructs the Court to “enter a new order denying [TNS’s] motion” (id. at Ex. F, p. 63; see also id. at Ex. F, pp. 38-42 [finding that “[t]he trial court erred in granting TNS’s motion for summary adjudication on the claims for waiting time and wage statement penalties for failing to provide meal and rest breaks”], capitalizing and italicizing deleted; id. at Ex. F, pp. 3-4);

(7) with respect to the bench trial, it holds that the Court “did not err in finding in favor of the class on the claim for waiting time penalties for unpaid overtime” (id. at Ex. F, p. 48, capitalizing and italicizing deleted; see also id. at Ex. F, pp. 49-55; id. at Ex. F, p. 4);

(8) it holds that the Court “did not err in denying TNS’s motion to decertify the class” (id. at Ex. F., p. 56, capitalizing and italicizing deleted; see also id. at Ex. F, pp. 4, 57-62); and

(9) it directs the Court to “conduct further proceedings on the causes of action for failure to permit meal and rest breaks and the associated claims for waiting time and wage statement penalties” (id. at Ex. F, p. 4).

TNS claims the Court of Appeal’s reversal of the judgment is an unqualified reversal. TNS contends “[t]he effect of an unqualified reversal . . . is to vacate the judgment ,and to leave the case ‘at large’ for further proceedings as if it had never been tried, and as if no judgment had ever been rendered.” (TNS’s Opening Brief, p. 6; see also TNS’s Reply Brief, pp. 3-6.) As a result, TNS contends none of the Court of Appeal’s rulings constitutes law of the case. (See TNS’s Opening Brief, p. 7; see also TNS’s Reply Brief, pp. 6-8.)

Given the multiple instructions in the opinion, and the fact that the opinion essentially upholds Judge Wiley’s ruling as to the overtime cause of action, it is questionable whether the reversal qualifies as an unqualified reversal. (See, e.g., Doshi Decl., Ex. F, pp. 62-63.)

Even assuming it is an unqualified reversal, though, TNS admits that the Court of Appeal’s opinion “must be followed[.]” (TNS’s Opening Brief, p. 6 [quoting Ellsworth v. City of Berkeley (2023) 89 Cal.App.5^th 258, 268].) For example, TNS concedes that the Court must obey the Court of Appeal’s instruction to “enter a new order granting [Plaintiffs’] motion for summary adjudication on the cause of action for failure to pay overtime compensation[.]” (Id. at p. 7 [quoting page 62 of the Court of Appeal’s opinion].) Undisputedly, the new order, once issued, “will ‘remove[]’ that cause of action ‘from the case[.]’” (Ibid. [quoting Raghavan v. Boeing Co. (2005) 133 Cal.App.4^th 1120, 1137].)

TNS’s argument – the new order will not be law of the case because the Court will still be able to reconsider it “if proper grounds arise” (ibid.) – does not change the result. Code of Civil Procedure section 1008 sets a 10-day deadline for reconsideration. (See Code Civ. Proc. § 1008, subd. (a).) The Court doubts that there will be a new fact, circumstance, or law justifying reconsideration within 10 days. After 10 days, the Court would have to act sua sponte to reconsider. The Court of Appeal’s opinion appears to chastise the parties and the trial judges for the delay that has already occurred in this case. (See Doshi Decl., Ex. F, p. 2.) Absent a clear change in law, the Court would be disinclined to grant reconsideration since it would create additional delay. Bottom line, the likelihood of reconsideration is small.

Whether treated as actual law of the case or quasi-law of the case, the Court intends to comply with the opinion and to follow the Court of Appeal’s rulings. At this time, the Court finds that the overtime cause of action is out of the case and that discovery should not be reopened as to the overtime claim.

The severability doctrine allows “[a]n aggrieved party . . . to take only a partial appeal from a ‘severable’ part of a judgment.” (Eisenberg, et al., Cal. Practice Guide: Civ. Appeals and Writs (The Rutter Group December 2023 Update) ¶ 2:312, emphasis in original.) “A portion of a judgment is nonseverable (and hence not subject to a partial appeal) if it is so interwoven with all other provisions of the judgment as to preclude independent examination.” (Ibid., emphasis in original.) “Thus, the ‘test’ of severability is whether the matters or issues embraced by the portion in question are ‘the same as, or interdependent upon, the matters or issues which have not been attacked’” – i.e., “whether any appellate disposition on the portion in question would affect the other provisions of the judgment.” (Ibid. [citing Gonzales v. R.J. Novick Construction Co. (1978) 20 Cal.3d 798, American Enterprise, Inc. v. Van Winkle (1952) 39 Cal.2d 210 (“American Enterprise”), and Marriage of Garrity & Bishton (1986) 181 Cal.App.3d 675].)

“If a judgment is severable, the unappealed portions are final and left in full force.” (Id. at ¶ 2:317, emphasis in original.) “The appellate court lacks jurisdiction to consider the portions not appealed; and a reversal or modification of the appealed portion has no effect on the unappealed portions.” (Ibid., emphasis in original.) “In other words, a partial appeal effectively ‘abandons’ the right to appellate review of the severable parts of a judgment that were not appealed.” (Ibid. [citing Gonzales, supra, 20 Cal.3d 798 and ReadyLink Healthcare v. Cotton (2005) 126 Cal.App.4^th 1006].)

Nevertheless, “a purported partial appeal from a nonseverable judgment normally brings before the reviewing court all of the nonseverable portions[.]” (Id. at ¶ 2:318, emphasis in original.) The reviewing court “has jurisdiction to review not only the specific portion appealed but also the ‘interdependent’ nonappealed portions (the appeal need not be dismissed).” (Ibid. [citing Gonzales, supra, 20 Cal.3d 798, American Enterprise, supra, 39 Cal.2d 210, and Everly Enterprises, Inc. v. Altman (1960) 54 Cal.2d 761], emphasis in original.)

According to Plaintiffs, “[t]hese rules [] mean that the portion of the case that has been finally determined – the overtime claim and the claim for section 203 penalties for class members owed overtime – are no longer appealable.” (Plaintiffs’ Opening Brief, p. 2.) Plaintiffs contend “[t]he remaining portions of the case which have been returned to active litigation – the meal break claim, the rest break claim, the section 203 claim for class members owed meal or rest breaks, and the wage statement claim – will be separately appealable from the final judgment.” (Ibid.; see also Plaintiffs’ Reply Brief, pp. 1, 5-7.)

TNS claims the Court of Appeal’s unqualified reversal of the judgment renders the severability doctrine inapplicable. (See TNS’s Opening Brief, p. 8; see also TNS’s Reply Brief, pp. 3-8.)

Again, it is questionable whether the reversal qualifies as an unqualified reversal.

Regardless, because of the reversal, and because reconsideration is unlikely, the severability doctrine “is not implicated.” (TNS’s Opening Brief, p. 8.)

TNS contends the Court should require Plaintiffs file a new “class action trial plan” to show that the case, especially TNS’s affirmative defenses, can be tried in a manageable way. (Id. at p. 11; see also id. at p. 12; TNS’s Reply Brief, pp. 15-16.)

On one hand, case law recognizes the ongoing obligation of courts to evaluate manageability and to “decertify . . . if individual issues prove unmanageable.” (Duran v. U.S. Bank N.A. (2014) 59 Cal.4^th 1, 29.) The Court has discretion to order a trial plan to help the Court carry out this evaluation duty, and there is a reasonable basis for requiring a trial plan under the circumstances. The class is made up of employees from more than 30 staffing companies. (See TNS’s Reply Brief, pp. 11-12.) TNS expects to pursue affirmative defenses pertaining to how the staffing companies communicated and carried out their meal and rest break polices employee-by-employee. This could make the trial unmanageable. Ordering a trial plan would help to see if it is feasible to try these issues.

On the other hand, the sequence of events arguably demonstrates that the Court of Appeal believes this case should be certified. The Court of Appeal overturned Judge Wiley’s initial denial of certification. On remand, he certified the class. Subsequently, this Court denied TNS’s motion to decertify, and the Court of Appeal found that the Court “did not err[.]” (Doshi Decl., Ex. F., p. 56, capitalizing and italicizing deleted; see also id. at Ex. F, pp. 4, 57-62.) To order a trial plan now, and to take another look at manageability, causing more delay, might invite another reversal.

On balance, the Court is inclined to order a trial plan. The total number of class members is 655 – 113 direct hire class members plus 542 staffing company class members. (See TNS’s Reply Brief, p. 11.) In opposing summary adjudication, TNS presented declarations from just 13 class members. The Court of Appeal found those declarations sufficient to raise triable issues. (See Doshi Decl., Ex. F, pp. 25-37.) But, as TNS’s chart shows, to date, it has received zero discovery from most class members and staffing companies. (See TNS’s Reply Brief, pp. 11-12.) The Court’s reading of the Court of Appeal’s opinion is that TNS is entitled to present individualized evidence as to both liability and damages to prove its defense to the meal and rest break causes of action. (See Doshi Decl., Ex. F, pp. 25-37.) Potentially, this could lead to hundreds of new depositions and document requests and, perhaps, to hundreds of new witnesses at trial. Before reopening discovery, the Court believes the best approach is to have Plaintiffs submit a trial plan that, among other things, sets out a manageable plan as to TNS’s defenses.

One more point. On the current record, the Court is not convinced that bifurcating liability would make a difference in Plaintiffs’ favor. The Court of Appeal found triable issues conerning liability based on a small number of declarations. (See id. at Ex. F, pp. 25-28, 34-36.) The insinuation in the opinion is that TNS should receive an opportunity to challenge liability as to the other class members in the same way. (See, e.g., id. at Ex. F, p. 35 [noting that, “[b]y granting the motion for summary adjudication,” the trial court “denied TNS its right to challenge Benton’s showing at a trial that would allow TNS to present case-specific evidence on liability and the class’s damages”], emphasis added.)

Indeed, Duran v. U.S. Bank N.A. (2014) 59 Cal.4th 1 states that “any procedure to determine the defendant’s liability to the class must still permit the defendant to introduce its own evidence, both to challenge the plaintiffs’ showing and to reduce overall damages.” (Duran, supra, 59 Cal.4^th at 38.) “Moreover, ‘[i]f a defense depends upon questions individual to each class member,’ the evidence ‘must be designed to accommodate these case-specific deviations,’ and ‘statistical proof may not be appropriate.’” (Doshi Decl., Ex. F, p. 34 [quoting page 40 of Duran].) The Court of Appeal criticized two assumptions made by Judge Wiley – “(1) that every single class member who had not (yet) submitted testimony in the action was not provided a meal or rest break and (2) that TNS (or a staffing company) did not authorize a class member to take a break in every instance the time records did not reflect the class member took a break” – and found that Plaintiffs failed to submit a “reliable and representative model of proof” to support an inference of liability. (Id. at Ex. F, pp. 35, 37.) The opinion recognizes that TNS has a right to “introduce . . . individual declarations” under these circumstances. (Id. at Ex. F, p. 37.)

* “no additional direct hire depositions should be permitted” (Plaintiffs’ Opening Brief, p. 10);

* “four [staffing company] class member depositions with a limit of two hours of questions by each party” (id. at p. 12);

* three staffing company representative depositions “with questioning limited to two hours from each party” (id. at p. 13);

* that Plaintiffs’ amount of discovery be reciprocal to TNS’s amount (see ibid.);

* that “requests to supplement prior discovery responses . . . be allowed” (ibid.); and

TNS wants to “take discovery of the class members for whom discovery has not been completed and the staffing companies.” (TNS’s Opening Brief, p. 10.)

To repeat, there are 655 class members – 113 direct hire class members plus 542 staffing company class members – yes TNS has not received discovery from most class members and staffing companies. (See TNS’s Reply Brief, pp. 11-12.)

TNS does not cite a case holding that it is entitled to depose all absent class members; however, case law permits depositions of “a reasonable number of unnamed class members.” (National Solar Equipment Owners’ Assn., Inc. v. Grumman Corp. (1991) 235 Cal.App.3d 1273, 1284, emphasis in original.) “Oral, written and business records depositions may be sought from unnamed class members who have not appeared in the action, through service of a subpoena and without court order.” (Edmon & Karnow, Cal. Practice Guide: Civ. Procedure Before Trial (The Rutter Group June 2023 Update) ¶ 8:463.1, emphasis deleted; see also Cal. Rules of Court, rule 3.768, subd. (a).)

But protective orders are available. “A party representative or deponent or other affected person may move for an order prohibiting or limiting depositions of unnamed class members.” (Edmon & Karnow, supra, at ¶ 8:463.3; see also Cal. Rules of Court, rule 3.768, subd. (b).)

Per Rule of Court 3.768(d), the following factors should be considered in deciding whether to grant a protective order:

(5) The possibility of reaching factual stipulations that eliminate the need for such discovery;

(6) Whether class representatives are seeking discovery on the subject to be covered; and

(7) Whether discovery will result in annoyance, oppression, or undue burden or expense for the members of the class.

Here, there is neither a pending discovery request to depose absent class members nor a motion for protective order.

That said, the Court believes Plaintiffs’ proposal is too limited. At minimum, assuming TNS does not have a right to depose all absent class members, it at least probably has a right to depose a representative sample to counter Plaintiffs’ sample (as explained in the Court of Appeal’s opinion, Plaintiffs have not presented a representative sample yet). With over 30 staffing companies in play, it seems improbable that granting only four staffing company class member depositions and three staffing company representative depositions would be enough to generate a representative sample. Before discovery is reopened, the Court probably needs see/hear expert testimony on what discovery is necessary to allow each side to make sampled that are representative.