Friday, July 1, 2011

Central District Certifies Paystub Claim Against FedEx: McKenzie v. Fed. Express Corp.

On June 16, 2011, Central District court Judge Gary Allen Feess ordered certification of a Labor Code section 226(e) paystub claim against FedEx in McKenzie v. Fed. Express Corp., 2011 U.S. Dist. LEXIS 65278 (C.D. Cal. June 16, 2011). Plaintiff's alleged that Fedex violated Cal Lab Code § 226(a) by (1) failing to provide a separate category calculating the total hours worked, (2) including an overtime rate that only identified the amount above the regular rate, rather than expressly identifying an all-inclusive, precise overtime rate, and (3) failing to provide an end-date for the pay-period.

The case is somewhat noteworthy as it really underscores the fact that the threshold burden necessary to certify a paystub claim is very low. Due to the systemic nature which pay-stubs are created, the only defense an employer generally has is to focus on the element of injury. However, as the Court’s predominance analysis makes clear, how each class member was injured does not require an individualized inquiry under section 226(e). See McKenzie, 2011 U.S. Dist. LEXIS 65278, at 25.

First, citing to the prior decision in Jaimez v. DAIOHS USA, Inc., 181 Cal. App. 4th 1286 (2010), the Court concluded that an alleged practice of failing to adhere to the requirements of Section 226 itself – not the alleged injury – is the basis on which certification of a paystub claim must rest. As explained by the Court, Jaimez made clear that certification was required “even though there was no evidence in the record of the plaintiff's injury resulting from the inaccurate paystubs….” See McKenzie, 2011 U.S. Dist. LEXIS 65278, at 25-26. As further noted by the Court on this point:
[E]ven if there was no evidence in the record that McKenzie suffered an injury from the wage statements issued by FedEx, and some individualized proof of damages may be necessary in this case, the holding in Jaimez also supports McKenzie's position that common issues nevertheless predominate in the present action. See 105 Cal. Rptr. 3d at 460 (holding that "[t]he fact that individualized proof of damages may ultimately be necessary does not mean . . . that [the plaintiff's] theory of recovery is not amenable to class treatment. A common legal issue predominates the claim, and it makes no sense to resolve it in a piecemeal fashion.")
See McKenzie, 2011 U.S. Dist. LEXIS 65278, at 30 fn. 3.

Second, citing to the decision in Ortega v. J.B. Hunt Transp., Inc., 258 F.R.D. 361 (C.D. Cal. 2009), the Court reasoned that an inherent injury necessarily accompanies a violation of a section 226(e) that will be common to the class. Specifically, “the court in Ortega explained that the plaintiff's ‘statement that he could usually do the math in [his] head and figure out approximately what [he] was going to get gross is consistent with the type of injury that has been found sufficient to support a claim for violation of Section 226.’” See McKenzie, 2011 U.S. Dist. LEXIS 65278, at 26-27. Moreover, the Court reasoned that “this lawsuit, and the difficulty and expense incurred by McKenzie and the proposed class in reconstructing time and pay records is sufficient evidence that they suffered a common injury.” See id., at 29-30.

Thus, based on the forgoing analysis, it is fairly clear that the threshold burden necessary to certify a paystub claim under Section 226 is very low. Essentially all that is required is evidence that the alleged violation was standardized among the employees which comprise the class.

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