January 31, 2017

In an unpublished decision issued on January 20, 2017, the United States Court of Appeals for the Ninth Circuit affirmed the lower court’s decertification of plaintiffs’ class in Eric Stiller and Joseph Moro, et al. v. Costco Wholesale Corp., Case No. 3:09-cv-02473-GPC-BGS (9th Cir. Jan. 20, 2017) (“Stiller”).

In Stiller, various employees of Costco Wholesale Corporation (“Costco”) filed a putative class action and an FLSA collective action against Costco, alleging that Costco failed to pay wages to employees who worked closing shifts and were “locked in” after clocking out while managers completed tasks including till and jewelry pulls.

In December 2010, the Southern District of California conditionally certified the employees’ nationwide FLSA collective action and certified a statewide class alleging violation of California’s wage and hour laws under Federal Rule of Civil Procedure 23(b)(3).

Later, in April 2014, the District Court decertified the Rule 23 class and the FLSA collective action.  In decertifying the Rule 23 class, the Court found that Costco had sufficiently demonstrated that there was no company-wide “lock-in” policy and that even if there had been such a policy, “there is no classwide method of determining whether, how often, and for how long class members actually experienced unpaid OTC time” as a result of the policy.  The need for such varied evidence precluded class-wide proof and thus warranted decertification.

Earlier this month, the Ninth Circuit affirmed the District Court’s decertification order.  Noting that class members bore the burden of establishing that they actually performed unpaid work, the Ninth Circuit found that showing to be impossible based on the evidence before it because plaintiffs had failed to establish that a uniform “lock-in” policy was implemented and applied.

More important than the actual result, however, was the Ninth Circuit’s reference to Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036 (2016).  Tyson Foods, of course, addressed the propriety of relying on statistical (or representative) evidence at the certification stage.  There, the Supreme Court confirmed that there is no general rule regarding use of statistical evidence to establish class-wide liability at the certification stage.  Rather, whether statistical evidence is appropriate in a given case depends on the purpose for which it is being introduced and the underlying causes of action because its admissibility turns on the degree to which it is reliable in proving or disproving the underlying elements of the claims asserted.  Tyson Foods, 136 S. Ct. at 1046 (citing Erica P. John Fund, Inc. v. Halliburton Co., 563 U.S. 804, 809 (2011)).

In Stiller, the Ninth Circuit noted that the District Court’s conclusion that statistical evidence could never be used as a proxy for individual proof was incorrect in light of Tyson.  However, that erroneous conclusion did not alter the outcome, presumably because statistical evidence was not proffered.

Stiller, then, underscores the fact that a lack of records of off-the-clock work will not necessarily defeat certification because after Tyson, plaintiffs can use statistics in appropriate cases to fill evidentiary gaps in the proof of hours worked.  It also confirms Dukes v. Walmart in that a policy not uniformly implemented or no policy at all can prove to be an impediment to certification.