Second District Affirms Denial of Class Certification, Finding Trial Court Appropriately Decided Threshold Legal Issue Re Provision of Meal Breaks
In a putative meal and rest break class action, the Second District denied class certification, holding that “employers must provide employees with breaks, but need not ensure employees take breaks.” Hernandez v. Chipotle Mexican Grill, Inc., No. B216004, 2010 WL 3789012 (Cal. Ct. App. 2d Dist. Sept. 30, 2010). Plaintiff and appellant Rogelio Hernandez (Hernandez) Hernandez filed a class action lawsuit against Chipotle Mexican Grill, Inc. (Chipotle) alleging that Chipotle violated labor laws by denying employees meal and rest breaks. Id. *1. The trial court denied class certification, and plaintiff appealed. Id. The Court of Appeal affirmed, holding that it would not be “practical” to require “enforcement of meal breaks” since it “would place an undue burden on employers whose employees are numerous or who … do not appear to remain in contact with the employer during the day.” Id. *7. “It would also create perverse incentives, encouraging employees to violate company meal break policy in order to receive extra compensation under California wage and hour laws.” Id.
The Court of Appeal also held that: (1) It was appropriate for the trial court to decide the threshold legal issue of whether employers must provide meal breaks rather than ensure they be taken as it could not otherwise assess whether class treatment was warranted; (2) a party seeking to introduce sampling of employee testimony to support certification must explain how the procedure will effectively manage the issues in question; and (3) there was substantial conflicts of interest among the putative class members were some employees moved in and out of supervisory roles with the responsibility to provide meal and rest breaks for themselves and other employees on the shift.
Chipotle is a fast food restaurant chain, and all employees are nonexempt, except for the salaried position of “restaurateur.” Id. Chipotle’s written policies require managers to provide employees with meal and rest breaks, and employees are not permitted to self-initiate breaks and are prohibited from skipping breaks. Id. Chipotle directs employees to record their breaks. Id. Chipotle pays employees for the time they take for breaks even though they are relieved of duty and free to leave the restaurant, so there is no financial incentive for employees to record all breaks accurately. Id. Chipotle provides free food and beverages to encourage employees to take their meal breaks and provides comfortable break facilities. Id.
Motions to Decertify and to Certify
Chipotle moved to deny class certification and strike the class allegations and two weeks later, plaintiff moved for class certification. Id. *2. Both Chipotle and plaintiff submitted dozens of declarations. Id. Chipotle’s declarations were from employees who attested that they had received all meal and rest breaks and who declared that some employees occasionally had forgotten to record breaks, or had recorded them inaccurately. Id. Chipotle’s Human Resource Director also submitted a declaration, explaining that “Because crew members are paid for meal and rest breaks, they do not have a financial incentive to record their breaks accurately and occasionally fail to do so. Some crew members simply forget to clock in or out or to record their breaks…. [I]f a crew member records the start of a meal break and forgets to record the time it ends, the meal break is still fully paId. As a result, the records do not always indicate that meal periods are taken, even when they are provided. They also do not indicate the reason why breaks are not recorded, even when they are provided and made available.” Id.
Hernandez conceded that California employers need only provide employees with rest breaks, but citing Cicairos v. Summit Logistics, Inc., 133 Cal. App. 4th 949 (2005), he contended that employers were obligated to ensure employees took meal breaks. Hernandez submitted a compilation of his time records and deposition testimony where he stated that managers interrupted his meal breaks two to three times a week. Id. Hernandez additionally submitted declarations from 23 nonmanagement, hourly employees who declared that sometimes their managers denied or interrupted their breaks, in varying degrees. Id. *3.
Hernandez also filed an expert declaration from professor of statistics Richard Kakigi, Ph.D, who concluded that ninety-two percent of the employees had missed at least one meal break. Id.
Trial Court’s Certification Ruling
The court found Hernandez had established the factors of numerosity, ascertainability of the class, typicality of Hernandez’s claims, and adequacy of Hernandez and his counsel as representatives. Id. But the court denied certification on the grounds that individual issues predominated over common issues, and class treatment was not superior to individual actions. Id. The trial court held that with regard to rest breaks, as conceded by Hernandez, employers need only authorize and permit such breaks, which means to make them available. Id. The trial court concluded the Supreme Court likely was to decide California employers were required to provide employees with the ability to take breaks, not to ensure breaks be taken. Id. The trial court further ruled that although there were common questions regarding whether Chipotle’s policy was to provide breaks, whether employees “missed or received shorten[ed] meal and rest breaks[,] and whether such constituted an unfair business practice, these questions do not predominate.” Id. But the trial court noted that if the Supreme Court held employers had to ensure employees take breaks, class action treatment of this case would be appropriate.
The trial court found that class adjudication of the wage and hour break claims was not manageable, because individual inquiry was “required to determine if [Chipotle] is liable for denying proper meal and rest breaks to each of its thousands of employees.” Id. *4. Classwide adjudication was unmanageable because, even if an employee’s time record indicated a break was missed, that in and of itself did not establish that Chipotle failed to provide, authorize or permit the employee to take a meal or rest break. Id.
Hernandez relied on Cicairos v. Summit Logistics, Inc., supra, 133 Cal. App. 4th 949 (Cicairos) to argue employers must ensure meal breaks are taken. Id. *6. The Court of Appeal disagreed:
Hernandez’s position also is not practical. “Requiring enforcement of meal breaks would place an undue burden on employers whose employees are numerous or who … do not appear to remain in contact with the employer during the day. See White v. Starbucks Corp., 497 F. Supp. 2d 1080, 1088-89 (N.D. Cal. 2007). It would also create perverse incentives, encouraging employees to violate company meal break policy in order to receive extra compensation under California wage and hour laws. [Citation.]” (Brown v. Federal Express Corp., supra, 249 F.R.D. at p. 585.) Thus, although the Supreme Court has yet to decide the issue, we hold that the trial court used the correct legal analysis with regard to meal breaks.
Hernandez also argued that the trial court should not have addressed whether employers must provide meal breaks rather than ensure they be taken because a certification issue is essentially a procedural one that does not ask whether an action is legally or factually meritorious. Id. The court rejected this position, finding that the “trial court appropriately decided the threshold legal issue as it could not otherwise assess whether class treatment was warranted.” Id. *8.
The Court of Appeal concluded that the trial court did not abuse its discretion in denying certification. Id. The court found that there was substantial evidence supporting the trial court’s ruling that individual issues predominate. Id. The declarations and depositions of putative class members showed Chipotle did not have a universal practice with regard to breaks. Id.
The evidence before the trial court suggested that in order to prove Chipotle violated break laws, Hernandez would have to present an analysis restaurant-by-restaurant, and perhaps supervisor-by-supervisor. Given the variances in the declarations, Hernandez did not demonstrate a common practice or policy. . . . Even if Chipotle managers directed when employees could take breaks, there was substantial evidence that Chipotle’s supervisory personnel did not uniformly handle breaks. The only evidence of a company-wide policy and practice was Chipotle’s evidence that it provided employees with meal and rest breaks as required by law.
The court found that the time records did not demonstrate Hernandez can prove on a classwide basis that Chipotle failed to provide employees with breaks. Id.
[T]here is substantial evidence the time records may be unreliable, because Chipotle paid employees for breaks and, thus, employees lacked an incentive to clock in and out, and many did not do so. . . . A trier of fact will have to ascertain if Chipotle employees actually missed breaks, or simply forgot to record them, as well as the reason why employees might have missed breaks or went back to work before completing them. In light of the size of the proposed class, there could be thousands of mini-trials to address the factual issues, supporting the trial court’s conclusion that class treatment is not superior to individual lawsuits.
Hernandez also argued that Chipotle cannot rely upon the inaccuracy of its own records to defeat certification because Chipotle was required to keep accurate records of all meal breaks taken. The court rejecting this argument:
First, we doubt this argument applies to rest break claims, as employers are not obligated to keep records of rest breaks. (Cal.Code Regs., tit. 8, § 11050, subd. 7.) Further, here there was no evidence Chipotle falsified records or purposefully failed to keep records. Certification of a class is not required simply because an employer’s records of meal and rest breaks are not 100 percent accurate.
The court further found that Hernandez’s evidence did not undermine the trial court’s ruling that introducing evidence by the use of a sampling of employee testimony was not manageable. Id. “It is not sufficient … simply to mention a procedural tool; the party seeking class certification must explain how the procedure will effectively manage the issues in question.” Id. (citing Dunbar v. Albertson’s, Inc., 141 Cal. App. 4th 1422, 1432 (2006)).
Finally, the Court of Appeal found that there was substantial evidence of conflicts of interest among the putative class members. Id. *10.
There was substantial evidence that some employees move in and out of supervisory roles with the responsibility to provide meal and rest breaks for themselves and other employees on the shift, without a change of title or other indicia of managerial status. Therefore, some putative class members may accuse other putative class members of violating their meal and rest period rights. The trial court did not abuse its discretion in concluding the likelihood that some class members might testify against other class members demonstrated antagonism of so substantial a degree as to defeat the purpose of class certification. (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 472).
Judges and Attorneys
Associate Justice Elizabeth A. Grimes wrote the opinion for the court. Associate Justice Madeleine Flier and Judge O’Connell concurred.
Altshuler Berzon, Michael Rubin, James M. Finberg, Eve Cervantez, Danielle E. Leonard; Rastegar & Matern, Matthew J. Matern and Douglas W. Perlman for Plaintiff and Appellant.
Sheppard, Mullin, Richter & Hampton, Richard J. Simmons and Geoffrey D. DeBoskey for Defendant and Respondent.
By CHARLES JUNG