Marlyn Sali v. Corona Regional Medical Center , 907 F.3d 1185 ( 2018 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MARLYN SALI and DEBORAH No. 15-56460
SPRIGGS, on behalf of themselves, all
others similarly situated and the D.C. No.
general public, 5:14-cv-00985-
Plaintiffs-Appellants, PSG-JPR
v.
ORDER
CORONA REGIONAL MEDICAL
CENTER; UHS OF DELAWARE INC.,
Defendants-Appellees.
Filed November 1, 2018
Before: M. Margaret McKeown and Kim McLane
Wardlaw, Circuit Judges, and Salvador Mendoza, Jr., *
District Judge.
Order;
Dissent by Judge Bea
*
The Honorable Salvador Mendoza, Jr., District Judge for the U.S.
District Court for the Eastern District of Washington, sitting by
designation.
2 SALI V. CORONA REGIONAL MED. CTR.
SUMMARY **
Class Certification
The panel filed an order denying a petition for panel
rehearing and a petition for rehearing en banc, in a case in
which the panel reversed the district court’s denial of class
certification in a putative class action.
Judge Bea, joined by Judges Bybee, Callahan, Ikuta, and
Bennett, dissented from the denial of rehearing en banc
because he would hold that the panel erred in concluding that
expert opinion testimony need not be admissible evidence in
order to be considered at the class certification stage. Judge
Bea wrote that the panel’s decision goes against the court’s
own binding precedent, the law of four other circuits, and the
Supreme Court’s clear guidance on the issue.
ORDER
The panel has voted to deny the petition for panel
rehearing.
The full court was advised of the petition for rehearing
en banc. A judge requested a vote on whether to rehear the
matter en banc. The matter failed to receive a majority of
votes of the nonrecused active judges in favor of en banc
consideration. Fed. R. App. P. 35.
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
SALI V. CORONA REGIONAL MED. CTR. 3
The petition for panel rehearing and the petition for
rehearing en banc are DENIED.
BEA, Circuit Judge, joined by BYBEE, CALLAHAN,
IKUTA, and BENNETT, Circuit Judges, dissenting from the
denial of rehearing en banc:
I regret that we decided not to rehear this case en banc
because we could have corrected our own errors. Rather
than do that, we have established a rule that undermines the
purpose of the class certification proceeding. We have been
instructed by the Court that facts necessary to establish the
elements of a class cannot simply be those that meet a
pleading standard. 1 But the panel has reduced the
requirements of class certification below even a pleading
standard. It has accepted the undisputedly inadmissible
opinion of plaintiffs’ paralegal—not even that of an attorney
who is subject to certain pleading standards 2—that the
plaintiffs have damages typical of the class sought to be
certified.
This doesn’t pass the straight-face test.
It is no surprise the panel’s holding that expert opinion
testimony need not be admissible at the class certification
stage is contrary to our own precedent, but also contrary to
decisions of four other circuits and clear Supreme Court
guidance.
1
Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011) (“Rule
23 does not set forth a mere pleading standard.”).
2
See Fed. R. Civ. P. 11.
4 SALI V. CORONA REGIONAL MED. CTR.
I
This case arises out of a wage and hour class action under
California law. Sali v. Corona Reg’l Med. Ctr., 889 F.3d
623 (9th Cir. 2018). The two named plaintiffs, Marlyn Sali
and Deborah Spriggs (“Plaintiffs”), are Registered Nurses
(“RNs”) who were formerly employed by Corona Regional
Medical Center (“Corona”). Id. at 627. Plaintiffs brought a
putative class action alleging that, during their employment
by Corona, they and other nurses were subject to a number
of policies and practices that violated California’s wage and
hour laws. Id. Based on each of their claims, Plaintiffs
moved to certify seven classes. Id. at 628.
The district court denied the motion to certify as to all of
the proposed sub-classes, holding, in relevant part, that Sali
and Spriggs had failed to satisfy Rule 23(a)’s typicality
requirement because they failed to submit admissible
evidence that they had suffered any of the damages suffered
by the putative class. Id. In reaching this decision, the
district court refused to consider the only piece of evidence
offered to establish Plaintiffs’ injuries—the declaration of
Javier Ruiz, a paralegal employed by the law firm
representing Plaintiffs—because it contained inadmissible
evidence. Id. at 630. The panel explains that the paralegal
took a “random sampling” of Plaintiffs’ timesheets to
determine how Corona’s policy of “rounding” clock-in and
clock-out times to the nearest quarter hour had affected each
plaintiff’s pay individually. Id. Based on this “random
sampling,” Ruiz concluded that “on average over hundreds
of shifts, Corona’s rounded time policy undercounted Sali’s
clock-in and clock-out times by eight minutes per shift and
Spriggs’s times by six minutes per shift.” Id.The district court found the Ruiz declaration was
inadmissible for three reasons. First, Ruiz lacked personal
SALI V. CORONA REGIONAL MED. CTR. 5
knowledge of the data in the spreadsheets, and thus could not
authenticate the data. Id. at 630-31. Second, Ruiz offered
opinion testimony, improper unless he qualified as an expert
witness. Id. at 631. Third, Ruiz lacked the qualifications
necessary for the “cumulative conclusions” he reached via
“manipulation and analysis of raw data” to be admissible
under Federal Rule of Evidence 702. 3 Id. Because the Ruiz
3
Notably, the panel’s decision does not question the district court’s
determination that the Ruiz declaration is deficient under Federal Rule
of Evidence 702, likely because the conclusion is inescapable. Ruiz
offered his opinion based on an analysis and interpretation of data—not
one rationally based on his own perception or personal knowledge—and
thus he offered an expert opinion, not a lay opinion. See Fed. R. Evid.
701, 702. The familiar Daubert standard requires courts to assess
“whether the reasoning or methodology underlying the testimony is
scientifically valid.” See Daubert v. Merrell Dow Pharm., Inc., 509 U.S.
579, 592–93 (1993). But here, Ruiz offers no explanation of his
reasoning or methodology.
According to his declaration, Ruiz, a paralegal hired by Plaintiffs’
attorney, compiled Plaintiffs’ clock-in and clock-out times and generated
spreadsheets which purportedly analyzed how often and to what extent
Plaintiffs were underpaid by Corona’s allegedly unlawful policies. For
example, Corona had a policy whereby clock-in and clock-out times
would be rounded up to fifteen minutes if they were eight or more
minutes past the quarter-hour mark and rounded down to zero minutes if
they were seven or fewer minutes past the quarter-hour mark. According
to the panel opinion, Ruiz used a “random sampling” of the timesheets
and concluded that, “on average,” the “rounded time policy
undercounted Sali’s clock-in and clock-out times by eight minutes per
shift and Spriggs’s times by six minutes per shift.” Sali, 889 F.3d at 630.
From what evidence the panel deduced Ruiz’s choice of clock-ins and
clock-outs was “random” escapes me. His declaration says only that he
“review[ed] and analyze[d] time and payroll records” and “input[ted]
such information into Excel Spreadsheets in order to determine the
violation rate and damages.” Not once does he mention “random
sampling.” Although Ruiz attaches to his declaration spreadsheets
purporting to show various wage and hour violations, he does not
describe how he created the spreadsheets, whether the spreadsheets
6 SALI V. CORONA REGIONAL MED. CTR.
declaration was inadmissible, the district court did not
consider it. Left with no other evidence from which to
conclude Plaintiffs had been injured (much less that their
injuries were typical of class injuries), the district court
found that Plaintiffs had failed to satisfy Rule 23(a)’s
typicality requirement. 4 Plaintiffs challenged this ruling on
appeal.
The panel held that the district court’s typicality
determination was premised on an error of law. Id. at 630.
Specifically, the panel concluded that, because the class
represent all or only a portion of the time records, or what methods he
used to identify alleged violations of the relevant laws and regulations.
For all we know from his declaration, Ruiz could have “sampled” only
times that were favorable to his employer’s case and disregarded those
that were unfavorable. His methodology is simply unexplained.
In fact, when one sits back and thinks about it, to have a party’s
paralegal opine on the extent to what the plaintiff was underpaid by
allowing the paralegal to choose various time-entries without explaining
his methods is no different than a lawyer interviewing a client and
choosing only favorable information to include in the client’s pleading.
And the Supreme Court has repeatedly recognized that Rule 23 requires
more than a mere pleading standard. See, e.g., Dukes, 564 U.S. at 350.
Because the Ruiz declaration is so obviously deficient, it makes
sense that the panel opinion does not contest the district court’s ruling
that it would be inadmissible under the Federal Rules of Evidence.
4
The district court refused to consider Sali’s and Spriggs’s
declarations submitted with their reply brief after it struck Ruiz’s
declaration. Although Plaintiffs’ declarations might have made up for
the infirmity of Ruiz’s opinion, the district court acted within its
discretion when it refused to consider their late submissions. See Glenn
K. Jackson Inc. v. Roe, 273 F.3d 1192, 1202 (9th Cir. 2001) (“The district
court had discretion to consider the . . . issue even if it was raised in a
reply brief.”).
SALI V. CORONA REGIONAL MED. CTR. 7
certification order is “preliminary” and can be entered at an
early stage of the litigation, but changed later, a motion for
class certification need not be supported by admissible
evidence. 5 Id. at 631. Noting that the Supreme Court has
previously stated that class certification proceedings are “not
accompanied by the traditional rules and procedure
applicable to civil trials,” the panel held that the district court
abused its discretion by limiting its Rule 23 analysis to
admissible evidence. Id. (citing In re Zurn Pex Plumbing
Prod. Liab. Litig., 644 F.3d 604, 613 (8th Cir. 2011)
(quoting Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178
(1974))). 6 “Inadmissibility alone,” said the panel, “is not a
5
The panel attempts to bolster its reasoning for holding that
evidence need not be admissible at the class certification stage by stating
that “the evidence needed to prove a class’s case often lies in a
defendant’s possession and may be obtained only through discovery.”
Sali, 889 F.3d at 631. Further, “[l]imiting class-certification-stage proof
to admissible evidence risks terminating actions before a putative class
may gather crucial admissible evidence.” Id.
The panel’s reasoning is flawed. First, Plaintiffs here had their wage
records; the paralegal’s spreadsheet shows the wage information he
chose from Sali’s and Spriggs’s records. Second, it is well known that
discovery is not limited to the merits stage of a case. Oppenheimer Fund,
Inc. v. Sanders, 437 U.S. 340, 351 (1978). Indeed, “discovery often has
been used to illuminate issues upon which a district court must pass in
deciding whether a suit should proceed as a class action under Rule 23.”
Id. at 351 n.13.
6
To the extent the panel relies on language from the Supreme
Court’s more than 40-year-old opinion in Eisen, its reliance is misplaced.
In Eisen, the plaintiff filed a putative class action on behalf of himself
and all other “odd-lot” traders on the New York Stock Exchange,
alleging violations of antitrust and securities laws. 417 U.S. at 159.
After bouncing back and forth between the district court and the court of
appeals for over six years on various preliminary issues, the case finally
made its way to the Supreme Court on, among other issues, whether the
8 SALI V. CORONA REGIONAL MED. CTR.
proper basis to reject evidence submitted in support of class
certification.” Id. at 632. On this basis, the panel reversed
the district court’s denial of class certification and remanded
for the district court to reconsider the typicality issue without
excluding the Ruiz declaration.
notice requirement of Rule 23 requires the plaintiff to bear the cost of
notice to members of his class. Id. at 177. In reasoning that it did, the
Court held that the district court was wrong to reach its contrary
conclusion by making a preliminary determination on the merits of the
case: that defendants were “more than likely” to lose. Id. Such a
determination, the Court held, could result in “substantial prejudice to a
defendant” because the proceedings involved at the class certification
stage are not governed by “the traditional rules and procedures
applicable to civil trials.” Id. at 178.
It is this language that the Zurn Pex court and the panel here deploy
for the proposition that class certification proceedings are “preliminary”
and thus do not require admissible evidence. 644 F.3d at 613–14. Both
misread the language. First, Eisen did not involve the issue here: whether
a plaintiff must proffer admissible evidence of damages typical of those
claimed for the putative class(es) for a court to grant class certification.
As noted, Eisen involved the issue of who bore the cost of giving notice.
In Dukes, the Supreme Court made it very clear that the passage cited by
the Zurn Pex court and the panel dealt not with the propriety of class
certification (as the class had already been certified), but instead only
with shifting the cost of Rule 23(c)(2) notice from plaintiff to defendants.
564 U.S. at 351 n.6. And the Court went on: “To the extent the quoted
statement goes beyond the permissibility of a merits inquiry for any other
pretrial purpose [beside the cost of notice issue], it is the purest dictum
and is contradicted by our other cases.” Id. Thus, Eisen is inapplicable
to Rule 23 class certification determinations, and we should follow the
more recent applicable cases, Dukes and Comcast Corporation v.
Behrend, 569 U.S. 27 (2013), which are clearly at odds with the panel’s
decision.
SALI V. CORONA REGIONAL MED. CTR. 9
II
The class certification stage cannot be disdained as the
panel has done here. We have held a district court’s
determination on class certification often “sounds the death
knell of the litigation,” whether by dismissal, if class
certification is denied, or by settlement, if class certification
is granted. Chamberlan v. Ford Motor Co., 402 F.3d 952,
957 (9th Cir. 2005) (quoting Blair v. Equifax Check Servs.,
Inc., 181 F.3d 832, 834 (7th Cir. 1999)). It is for this reason
that federal courts in the past—including the U.S. Supreme
Court—have treated the class certification stage not as a
“preliminary” step in the litigation, but as an oftentimes
dispositive step demanding a more stringent evidentiary
standard.
Besides the fact that the panel’s decision is contrary to
our own precedent, 7 I take issue with the panel’s decision for
7
Although the panel opinion cites Ellis v. Costco Wholesale Corp.,
657 F.3d 970 (9th Cir. 2011), as if it were to lend support to the panel’s
holding, quite the contrary is the case. In Costco, we reversed a district
court’s grant of class certification to a group of female employees who
alleged that Costco Wholesale Corporation (“Costco”) had discriminated
against them on the basis of gender. Id. at 974. After first finding that
the plaintiffs’ expert report would be admissible under Daubert, the
district court refused to engage in any analysis of the validity or
persuasiveness of the expert report and, instead, held that the mere fact
that the opinion was admissible was sufficient to support class
certification. Id. at 982. We held that, although the district court had
“correctly applied the evidentiary standard set forth in Daubert,” it
abused its discretion by certifying a class based only on the admissibility
of the expert report, without consideration of the report’s persuasiveness.
Id. In other words, we said that admissibility of the proffered evidence
is not sufficient to demonstrate that such evidence provided the proof
required under Rule 23. Rather, admissibility is a threshold issue to
determine before considering the evidence’s persuasiveness.
10 SALI V. CORONA REGIONAL MED. CTR.
two important reasons. First, it puts our court on the wrong
side of a lopsided circuit split. And second, it defies clear
Supreme Court guidance on this issue.
A. Four of five other circuits to consider this issue
disagree with the panel.
The panel’s opinion also puts us on the short side of a
lopsided circuit split—the Second, Third, Fifth, and Seventh
The panel selectively quotes Costco to support a contrary ruling.
First, it totally omits Costco’s holding that the district court was correct
to apply Daubert, and thus correct to consider admissibility at the first
step of the Rule 23 analysis. See Sali, 889 F.3d at 631–32 (failing to
mention Costco’s holding that the district court had “correctly applied”
Daubert). Next, the panel cites Costco’s holding that a district court
abuses its discretion when it limits its Rule 23 analysis “to a
determination of whether Plaintiffs’ evidence on the point was
admissible” (where the evidence was admissible). Id. at 631 (quoting
Costco, 657 F.3d at 982). Ignoring Costco’s contrary language, the panel
deprecates what the Costco court stated as to the importance of
admissibility in evaluating compliance with Rule 23: “[A] district court
should evaluate admissibility,” the panel says, “[b]ut admissibility must
not be dispositive.” Id. at 634 (emphasis added).
The panel’s interpretation of Costco distorts its basic holding. To
the extent Costco held that admissibility is not sufficient to demonstrate
a plaintiff’s compliance with Rule 23, the panel is correct: mere
admissibility does not establish compliance. Costco thus stands for the
proposition that class certification cannot be granted on the basis of
admissibility alone.
But the panel takes that holding a step further by concluding that
neither is admissibility necessary. Costco did not say that. Costco
supports the opposite conclusion that evidence must be admissible for it
to be considered at the class certification stage. Far from supporting the
panel’s opinion, Costco is inconsistent with it. But rather than rehearing
this case en banc to correct the conflict, we have left district courts and
litigants in an impossible position.
SALI V. CORONA REGIONAL MED. CTR. 11
Circuits all require expert testimony to be admissible to be
considered at the class certification stage. See In re Blood
Reagents Antitrust Litig., 783 F.3d 183, 187 (3d Cir. 2015)
(“We join certain of our sister courts to hold that a plaintiff
cannot rely on challenged expert testimony, when critical to
class certification, to demonstrate conformity with Rule 23
unless the plaintiff also demonstrates, and the trial court
finds, that the expert testimony satisfies the standard set out
in Daubert.”); In re U.S. Foodservice Inc. Pricing Litig.,
729 F.3d 108, 129 (2d Cir. 2013) (holding that the district
court properly “considered the admissibility of the expert
testimony” at the class certification stage, but declining to
decide exactly “when a Daubert analysis forms a necessary
component of a district court’s rigorous analysis”) (emphasis
added); Am. Honda Motor Co. v. Allen, 600 F.3d 813, 817
(7th Cir. 2010) (vacating the district court’s class
certification order because it “fail[ed] to [resolve clearly] the
issue of . . . admissibility before certifying the class” and the
expert testimony in question failed to satisfy Daubert);
Unger v. Amedisys Inc., 401 F.3d 316, 319 (5th Cir. 2005)
(holding that “findings [at the class certification stage] must
be made based on adequate admissible evidence to justify
class certification”). Two other circuits have so held in
unpublished rulings. See In re Carpenter Co., No. 14-0302,
2014 WL 12809636, at *3 (6th Cir. Sept. 29, 2014) (holding
that, in light of Comcast and Dukes, the district court
properly applied Daubert at the class certification stage);
Sher v. Raytheon Co., 419 F. App’x 887, 890 (11th Cir.
2011) (holding that “the district court erred as a matter of
law” by failing to conduct a Daubert analysis at the class
certification stage).
The panel acknowledges its conflict with the Third,
Fifth, and Seventh Circuits, but emphasizes its agreement
with the Eighth—the only circuit to come out the other way.
12 SALI V. CORONA REGIONAL MED. CTR.
Sali, 889 F.3d at 632 (citing Zurn Pex, 644 F.3d at 612–13).
But even that case does not fully support the panel’s
decision. In Zurn Pex, homeowners brought a class action
against a plumbing company, claiming that the systems
installed by the company were defective. 644 F.3d at 608.
At the class certification stage, the plaintiffs proffered
evidence from two experts regarding the failure of the
plumbing systems. Id. at 609. The defendant attempted to
exclude the testimony under Daubert, and the plaintiffs
argued Daubert did not apply. Id. at 610. The district court
conducted a “focused” Daubert analysis, declining to rule on
whether the testimony was admissible, but also taking the
Daubert factors into consideration in determining whether
the expert testimony supported class certification. Id. at
610–11. The district court found that the expert testimony
supported class certification and certified the class. Id. The
Eighth Circuit affirmed, holding that the district court’s
“focused” Daubert analysis was correct and stating that
expert testimony need not be admissible at the class
certification stage, although the Daubert factors should be
considered. Id. at 613.
Zurn Pex is consistent with the panel’s position that
inadmissible expert testimony can be used to support a class
certification motion, though as noted above, the Zurn Pex
court, like the panel here, misreads Eisen. But Zurn Pex’s
requirement that district courts undertake a “focused”
Daubert analysis is more specific and rigorous than the
panel’s analysis and holding was here. The panel states that
the district court “may” consider admissibility and “should”
evaluate evidence in light of Daubert, but provides no
further guidance as to what standard district courts should
apply.
SALI V. CORONA REGIONAL MED. CTR. 13
Overall, the great weight of persuasive authority
counsels against the panel’s decision. In total, six circuits
have held in published or unpublished decisions that expert
testimony must be admissible to be considered at the class
certification stage. Before the panel’s decision in this case,
only one circuit had reached the opposite conclusion—and
even that circuit created a more stringent evidentiary
standard than the one applied by the panel here.
B. The Supreme Court’s precedent counsels against the
panel’s holding.
It is no wonder the overwhelming majority of circuits to
address this question have come down on the side opposite
the panel. Although the Supreme Court has not directly
addressed whether expert testimony must be admissible to
be considered on a motion for class certification, its guidance
in this area heavily favors the circuit majority rule. Indeed,
the last time our court issued an opinion loosening the
requirements for class certification, the Court reversed us
and offered guidance that we would have been wise to heed
here.
In Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 342
(2011), the Supreme Court reversed an en banc panel of this
court that had approved an order certifying an expansive,
1.5-million-person class. The class comprised “current and
former female employees of petitioner Wal-Mart who
allege[d] that the discretion exercised by their local
supervisors over pay and promotion matters violate[d] Title
VII by discriminating against women.” Id. Before
analyzing whether the plaintiffs had satisfied the various
elements of Rule 23, the Court discussed in some detail the
evidentiary standard appropriate at the class certification
stage. Id. at 350–51. The Court noted that “Rule 23 does
not set forth a mere pleading standard”; rather, the moving
14 SALI V. CORONA REGIONAL MED. CTR.
party must “affirmatively demonstrate his compliance with
the Rule.” Id. at 350 (emphasis added). The plaintiff “must
be prepared to prove that there are in fact sufficiently
numerous parties, common questions of law or fact, etc.” Id.(first emphasis added). The Court thus reemphasized the
point, made in a previous case, that the district court must
engage in a “rigorous analysis” to determine whether Rule
23 has been satisfied. Id. at 351 (quoting Falcon, 457 U.S.
at 161). And, relevant here, the Court expressly “doubt[ed]”
the idea, advanced by the district court in Dukes and adopted
by the panel here, that “Daubert [does] not apply to expert
testimony at the certification stage of class-action
proceedings.” Id. at 354.
At least one other Supreme Court case counsels against
the panel’s holding here. In Comcast Corporation v.
Behrend, 569 U.S. 27 (2013), the Supreme Court discussed
again the evidentiary standard at the class certification stage
when it reversed the Third Circuit’s opinion affirming a
grant of class certification. The Court reaffirmed the
principles emphasized in Dukes that Rule 23 demands more
than a “mere pleading standard” and that a plaintiff must
“affirmatively demonstrate”—that is, “prove”—that he “in
fact” has complied with Rule 23. Comcast, 569 U.S. at 33
(citing Dukes, 564 U.S. at 350–51) (emphasis in original).
Although it failed to address directly whether evidence must
be admissible at the class certification stage, the Court held
that “satisfy[ing] through evidentiary proof at least one of
the provisions of Rule 23(b)” is a prerequisite to class
certification. Id. (emphasis added). Once again, the Court’s
guidance strongly suggests that it favors the rule of the
majority of circuits, which the panel in this case rejected.
SALI V. CORONA REGIONAL MED. CTR. 15
III
The panel’s decision in this case involves a question of
exceptional importance and is plainly wrong. It goes against
our own binding precedent, the law of four other circuits, and
the Supreme Court’s clear guidance on this issue. Our court
should have reheard this case en banc to reverse the panel’s
decision on our own.