Ninth Circuit.jpgCo-authored by Andrew Paley and Patrick Ryan

As we posted last month [here], district courts throughout the country have indicated that the Supreme Court’s recent decision in Comcast Corp. v. Behrend makes it harder for plaintiffs to pursue wage and hour claims as class actions.   Earlier this week, the Ninth Circuit issued a decision that some commentators have interpreted as bucking this trend, however, the case turns on unusual facts:  unlike in Comcast and most wage and hour cases, the defendant had submitted an affidavit establishing that damages for each putative class member could be calculated readily and mechanically through the Company’s electronic payroll records by applying basic math to undisputed timekeeping and payroll data.

In Leyva v. Medline Indus., Inc.[here], the plaintiff sued a medical product manufacturer alleging violations of California’s labor laws—including the company’s alleged use of improper time-rounding and bonus policies.  The plaintiff claimed that the company’s alleged policy of rounding time by 29 minutes and supposed failure to include non-discretionary bonuses in the calculation of the employees’ regular rate was unlawful.  The plaintiff sought class certification on behalf of approximately 538 current and former hourly employees who worked in the company’s three California distribution warehouses. 

The district court denied the plaintiff’s motion for class certification, holding 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 Ninth Circuit reversed, holding that the damage calculations required would not predominate over common questions as to liability.  In reaching this conclusion, the court explicitly distinguished the straight-forward damages at issue in Leyva from the complex damages in Comcast, noting that “unlike in Comcast, if putative class members prove [defendant’s] liability, damages will be calculated based on the wages each employee lost due to [defendant’s] unlawful practices.”  The court found the damage inquiry to be limited since the company’s payroll and time-keeping database “would enable the court to accurately calculate damages and related penalties for each claim.”  For example, if the company’s rounding policy is determined to be unlawful, then damages could be easily calculated by comparing time clock data to payroll data to determine the difference between when an employee clocked in versus when they were paid based on the company’s rounding data.  Likewise, because there is no dispute regarding the amount paid to employees in bonuses, recalculating the regular rate is a matter of simple math.    

The facts here are in stark contrast to those in Comcast and in most wage and hour cases.  Unlike Comcast and every other reported wage and hour Rule 23 certification decision since Comcast, Leyva did not involve any argument that individual damages calculations would be expensive, extensive, time-consuming, or complex.  Nor was there any suggestion of any dispute about the data from which damages could be calculated:  the hours worked, rates of pay and bonus amounts.  In other words, there was no evidence that calculating individual damages would be anything other than mechanical or that damages issues would in any way predominate over common issues.  Thus, while plaintiffs lawyers may be expected to argue that Leyva undermines the district court cases, in fact, Leyva merely stands for the unexceptional proposition that individual damage calculations will not necessarily prevent class certification if they are mechanical and based on undisputed data.   

Leyva’s holding should have little application in other wage and hour cases such as those involving claims of unpaid overtime due to off the clock work or misclassification.   By way of illustration, consider a case alleging that 2,000 employees worked off-the-clock,  Even if liability could be determined on a class-wide basis, damages for each plaintiff’s alleged off-the-clock work likely would still be a highly individualized endeavor requiring individual testimony and evidence to establish whether each employee worked off the clock on any particular day, and if so, for how long and who knew about it.  Damage calculations would require individual mini-trials and, unlike Leyva,  would not be based on undisputed objective data that lends itself to simple math.

Judge Pregerson’s opinion also cites a pre-Comcast Ninth Circuit decision stating that “damages calculations alone cannot defeat certification.”  If “calculations” refers to mere mathematical computation of damages based on known data, the quoted statement seems consistent with Comcast.  On the other hand, if it means that the need for individualized inquiries regarding damages can never predominate over common liability issues, with all due respect to Judge Pregerson, it cannot be squared with Comcast.  Indeed, the Supreme Court stated in Comcast that even if the damages model had not been flawed, individualized damages issues might well have overwhelmed common liability issues anyway.