Wednesday, January 26, 2011

Southern District Certifies Rule 23 and FLSA “Off-the-Clock” Classes Based on Store Closing “Lockdown” Policy: Stiller v. Costco

On December 13, 2010, Southern District Court Judge, Marilyn L. Huff, certified a nationwide FLSA collective action and a California Rule 23 action arising from an alleged policy maintained by Costco which required closing shift hourly employees to remain locked inside Costco warehouses without pay while supervisors performed closing activities, such as removing jewelry from cases and emptying cash registers. See Stiller v. Costco, 2010 U.S. Dist. LEXIS 140297, at 3-4.

In certifying plaintiffs’ claims under Rule 23, the Court rejected Costco’s argument that off-the-clock claims are generally not certifiable based on (1) evidence that lockdowns occurred due to a centralized corporate policy, and (2) that issues regarding occurrences of off-the-clock work was a damages issue:
In opposing Plaintiffs' motion for class certification, Costco argues that common issues do not predominate over individualized issues, and that individual inquiries would govern attempts to determine liability arising from Costco's practices. (Doc. No. 98 at 20.) Costco argues that certification is inappropriate in cases where no uniform policy creates off-the-clock work. (Id.) In their reply, Plaintiffs point out that in this case, Costco had a centralized policy outlined in the 2004 Manual, which caused class members to be detained on a regular basis without pay during lockdowns. (Doc. No. 102 at 10.) Plaintiffs also brought substantial allegations of Costco's centralized policies that discouraged class members from seeking compensation for the recurring wait time. Thus, Plaintiffs argue that these generalized off-the-clock claims present a common, class-wide core of disputes between Costco and the class members. Plaintiffs argue that here, as in Local Joint Exec. Bd. of Culinary/Bartender Trust Fund v. Las Vegas Sands, Inc., 244 F.3d 1152 (9th Cir. 2001), the individualized issues are few. In Local Joint, the Ninth Circuit concluded that given the number and importance of the common issues, the need for individual damages determinations does not bar class certification, and the variation in individual damages was enough to defeat predominance under Rule 23(b)(3). 244 F.3d at 1163.
See Stiller, 2010 U.S. Dist. LEXIS 140297, at 20-22.

Another point of note involved the Court’s rejection of Costco’s argument that the plaintiffs proposed class action was barred by principles of collateral estoppel due to a February 1, 2010 decision in another action denying class certification pursued on behalf of all California non-exempt employees. The Court noted that Costco could not meet its heavy burden of demonstrating an identity of interest absent a detailed order in the prior action establishing that the precise issues were actually litigated and decided in the prior action:
The Court notes that that the state court in Castaneda did not issue a written opinion, or make findings of fact or conclusions of law. Here, Costco does not cite any portion of the Castaneda transcript where the court purportedly found a lack of predominating common issues as to all hourly, non-exempt, non-union employees who were subject to Costco's closing lockdown procedures. The Court concludes that Costco has not met its burden of establishing that the issues decided in Castaneda were identical to those in this case such that collateral estoppel would bar class certification in this case.
See Stiller, 2010 U.S. Dist. LEXIS 140297, at 24-25.

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