Lynne Wang v. Chinese Daily News, Inc. , 737 F.3d 538 ( 2013 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
LYNNE WANG; YU FANG INES KAI; No. 08-55483
HUI JUNG PAO, on behalf of
themselves and all others similarly D.C. No.
situated; LIEN YI JUNG; YU FANG 2:04-cv-01498-
KAI; CHANG CHINGFANG; JEFFREY CBM-JWJ
SUN; SHIEH-SHENG WEI; YUN MIN
PAO; HUI JUNG LEE; CHENGYANG
YAN; SHIANG HUANG; CHIH-MING
SHEU; MINH VI-HUYNH; JENNY LIU
HUNG,
Plaintiffs-Appellees,
v.
CHINESE DAILY NEWS, INC.,
Defendant-Appellant.
2 WANG V. CHINESE DAILY NEWS
LYNNE WANG; YU FANG INES KAI; No. 08-56740
HUI JUNG PAO, on behalf of
themselves and all others similarly D.C. No.
situated, 2:04-cv-01498-
Plaintiffs-Appellees, CBM-JWJ
v.
ORDER AND
CHINESE DAILY NEWS, INC., OPINION
Defendant-Appellant,
and
LIEN YI JUNG; YU FANG KAI;
CHINGFANG CHANG; SHIEH-SHENG
WEI; YUN MIN PAO; HUI JUNG LEE;
CHENYANG YAN; SHIANG L. HUANG;
CHIH-MING SHEU; MINH VI-HUYNH;
JENNY LIU HUNG; JEFFREY SUN,
Plaintiffs.
Appeal from the United States District Court
for the Central District of California
Consuelo B. Marshall, Senior District Judge, Presiding
Argued and Submitted
July 31, 2012—San Francisco, California
Filed September 3, 2013
WANG V. CHINESE DAILY NEWS 3
Before: Stephen S. Trott and William A. Fletcher,
Circuit Judges, and Charles R. Breyer, District Judge.*
Order;
Opinion by Judge W. Fletcher
SUMMARY**
Labor Law / Class Certification
The panel filed an order withdrawing its opinion filed
March 4, 2013, and reported at 709 F.3d 829 (9th Cir. 2013);
replacing the opinion with a new opinion; denying a petition
for rehearing; and denying a petition for rehearing en banc in
an action brought by newspaper employees under the Fair
Labor Standards Act, California’s Unfair Business Practices
Law, and the California Labor Code.
In the new opinion, on remand from the United States
Supreme Court for reconsideration in light of Wal-Mart
Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), the panel
vacated the district court’s finding of commonality under
Fed. R. Civ. P. 23(a)(2) and reversed the district court’s
certification of the state-law claims as a class action under
Rule 23(b)(2) for purposes of monetary relief. The panel
remanded for the district court to reconsider its findings of
*
The Honorable Charles R. Breyer, District Judge for the U.S. District
Court for Northern California, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
4 WANG V. CHINESE DAILY NEWS
commonality under Rules 23(a) and predominance under
Rule 23(b)(3). The panel also vacated and remanded for the
district court to examine whether the Rule 23(b)(2) class
certification could continue for purposes of injunctive relief.
COUNSEL
Della Barnett, Berkeley, California; Cordelia Dai and Randy
Renick (argued), Hadsell Stormer Richardson & Renick,
LLP, Pasadena, California, for Appellees.
Michael M. Berger (argued), Benjamin G. Shatz, Yi-Chin Ho,
and Andrew L. Satenberg, Manatt, Phelps & Phillips, Los
Angeles, California, for Appellant.
ORDER
This court’s opinion filed March 4, 2013, and reported at
709 F.3d 829 (9th Cir. 2013), is withdrawn, and is replaced
by the attached Opinion.
With the filing of the new opinion, the panel has voted
unanimously to deny the petition for rehearing. Judge
Fletcher has voted to deny the petition for rehearing en banc,
and Judges Trott and Breyer so recommend.
The full court has been advised of the petition for
rehearing en banc and no judge of the court has requested a
vote on whether to rehear the matter en banc. Fed. R.
App. P. 35.
WANG V. CHINESE DAILY NEWS 5
The petition for rehearing and the petition for rehearing
en banc, filed March 18, 2013, are DENIED.
OPINION
W. FLETCHER, Circuit Judge:
Named plaintiffs filed a class action suit against
defendant-appellant Chinese Daily News, Inc. (“CDN”),
alleging violations of the federal Fair Labor Standards Act
(“FLSA”), of California’s Unfair Business Practices Law, and
of the California Labor Code. The district court certified the
FLSA claim as a collective action and certified the state-law
claims as a class action. After a sixteen-day jury trial and a
three-day bench trial, the district court entered judgment in
favor of plaintiffs. On September 27, 2010, we affirmed the
district court. On October 3, 2011, the United States
Supreme Court vacated and remanded for reconsideration in
light of its decision in Wal-Mart Stores, Inc. v. Dukes,
131 S. Ct. 2541 (2011). We now reverse the district court’s
certification of the plaintiff class under Federal Rule of Civil
Procedure 23(b)(2), and we remand for the district court to
reconsider its analysis under Rules 23(a) and 23(b)(3).
I. Background
On March 5, 2004, Lynne Wang, Yu Fang Ines Kai, and
Hui Jung Pao filed suit against CDN on behalf of current,
former, and future CDN employees based in CDN’s San
Francisco and Monterey Park (Los Angeles) locations,
claiming violations of the FLSA, 29 U.S.C. § 206 et seq.,
California’s Unfair Competition Law, Cal. Bus. & Prof. Code
6 WANG V. CHINESE DAILY NEWS
§ 17200 et seq., and California’s Labor Code. Plaintiffs
alleged that CDN employees were made to work more than
eight hours per day and more than forty hours per week.
They further alleged that they were wrongfully denied
overtime compensation, meal and rest breaks, accurate and
itemized wage statements, and penalties for wages due but
not promptly paid at termination. They sought damages,
restitution, attorneys’ fees, and injunctive relief.
After plaintiffs narrowed the class definition to include
only non-exempt employees at the Monterey Park facility, the
district court certified the FLSA claim as a collective action.
The district court certified the state-law claims as a class
action under Rule 23(b)(2). Wang v. Chinese Daily News,
Inc., 231 F.R.D. 602, 611 (C.D. Cal. 2005). In the
alternative, the district court held that the class could be
certified under Rule 23(b)(3). Id. at 614.
The post-certification litigation proceeded in three stages.
First, both sides sought summary judgment on the question
whether CDN’s reporters were eligible for overtime under the
FLSA. The court granted summary judgment to plaintiffs,
holding that CDN’s reporters did not fall within the “creative
professional exemption” and were thus eligible for overtime.
Wang v. Chinese Daily News, Inc., 435 F. Supp. 2d 1042,
1055 (C.D. Cal. 2006); see 29 C.F.R. § 541.302(d). Second,
the district court held a sixteen-day jury trial. The jury
returned a special verdict awarding the plaintiff class over
$2.5 million in damages. Third, the court held a bench trial
on the remaining issues of injunctive relief, penalties,
prejudgment interest, and restitution. It held that plaintiffs’
injuries could be remedied by damages and denied plaintiffs’
request for an injunction.
WANG V. CHINESE DAILY NEWS 7
We affirmed. Wang v. Chinese Daily News, 623 F.3d 743(9th Cir. 2010). The Supreme Court granted certiorari,
vacated our opinion, and remanded for reconsideration in
light of Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541(2011). The parties submitted post-remand supplemental
briefing, and we held oral argument.
II. Discussion
A party seeking class certification must satisfy the
requirements of Federal Rule of Civil Procedure 23(a) and the
requirements of at least one of the categories under Rule
23(b). The district court held that Rule 23(a) had been
satisfied and certified the class under Rule 23(b)(2). In the
alternative, it held that the class could be certified under Rule
23(b)(3). Wang, 231 F.R.D. at 614. We reverse the district
court’s certification under Rule 23(b)(2) for purposes of
monetary relief in light of Wal-Mart. We remand for the
district court to reconsider its analysis under Rules 23(a) and
23(b)(3), and to examine whether the Rule 23(b)(2) class
certification may continue for purposes of injunctive relief.
A. Rule 23(a)
“Rule 23(a) ensures that the named plaintiffs are
appropriate representatives of the class whose claims they
wish to litigate.” Wal-Mart, 131 S. Ct. at 2550. The rule
requires a party seeking class certification to satisfy four
requirements: numerosity, commonality, typicality, and
adequacy of representation. Id. The rule provides:
One or more members of a class may sue or
be sued as representative parties on behalf of
all members only if:
8 WANG V. CHINESE DAILY NEWS
(1) the class is so numerous that joinder of
all members is impracticable;
(2) there are questions of law or fact
common to the class;
(3) the claims or defenses of the
representative parties are typical of the
claims or defenses of the class; and
(4) the representative parties will fairly
and adequately protect the interests of the
class.
Fed. R. Civ. P. 23(a). Class certification is proper only if the
trial court has concluded, after a “rigorous analysis,” that
Rule 23(a) has been satisfied. Wal-Mart, 131 S. Ct. at 2551(quoting General Telephone Co. of Southwest v. Falcon,
457 U.S. 147, 161 (1982)). CDN challenges the district
court’s finding that the commonality requirement of Rule
23(a)(2) was satisfied. CDN does not challenge other Rule
23(a) findings of the district court.
Plaintiffs argue that CDN has waived its right to
challenge the district court’s commonality finding because its
opening brief, filed before the Supreme Court’s decision in
Wal-Mart, discussed the existence of common questions only
in arguing against Rule 23(b)(3) certification. CDN did not
argue the issue of commonality in its discussion of Rule
23(a). “Generally, an issue is waived when the appellant does
not specifically and distinctly argue the issue in his or her
opening brief.” United States v. Brooks, 610 F.3d 1186, 1202
(9th Cir. 2010) (internal quotation marks omitted). However,
we may consider new arguments on appeal if the issue arises
WANG V. CHINESE DAILY NEWS 9
because of an intervening change in law. See Randle v.
Crawford, 604 F.3d 1047, 1056 (9th Cir. 2010). We conclude
that the Court’s decision in Wal-Mart presents a sufficiently
significant legal development to excuse any failure of CDN
to discuss the commonality requirement of Rule 23(a)(2) in
its opening brief. Further, any potential prejudice to plaintiffs
is cured by the fact that both parties were able to address the
commonality issue under Rule 23(a)(2) in their supplemental
briefs submitted after the Supreme Court’s remand.
The district court held that the commonality requirement
was satisfied because of numerous common questions of law
and fact arising from CDN’s “alleged pattern of violating
state labor standards.” 231 F.R.D. at 607. However, as the
Supreme Court noted in Wal-Mart, “any competently crafted
class complaint literally raises common questions.” Wang,
131 S. Ct. at 2551 (alteration and internal quotation marks
omitted). “What matters to class certification is not the
raising of common questions — even in droves — but, rather
the capacity of a classwide proceeding to generate common
answers apt to drive the resolution of the litigation.” Id.(alteration and internal quotation marks omitted).
Dissimilarities within the proposed class may “impede the
generation of common answers.” Id. “If there is no evidence
that the entire class was subject to the same allegedly
discriminatory practice, there is no question common to the
class.” Ellis v. Costco Wholesale Corp., 657 F.3d 970, 983
(9th Cir. 2011).
Wal-Mart was “one of the most expansive class actions
ever.” Wal-Mart, 131 S. Ct. at 2547. The class was a
nationwide class of approximately 1.5 million current and
former female Wal-Mart employees alleging “that the
discretion exercised by their local supervisors over pay and
10 WANG V. CHINESE DAILY NEWS
promotion matters violate[d] Title VII by discriminating
against women.” Id. The Supreme Court noted that the
plaintiffs in Wal-Mart “wish[ed] to sue about literally
millions of employment decisions at once.” Id. at 2552. In
order to show that examination of the class claims would
“produce a common answer to the crucial question” of why
each employee was disfavored, the plaintiffs needed to
present “significant proof” that Wal-Mart “operated under a
general policy of discrimination.” Id. at 2552–53 (internal
quotation marks omitted). Wal-Mart’s publicly announced
policy forbade discrimination. In the view of the Court, the
only countervailing evidence of a general policy of
discrimination offered by plaintiffs was “worlds away from
significant proof.” Id. at 2554 (internal quotation marks
omitted).
Wal-Mart reiterated that the “rigorous analysis” under
Rule 23(a) “sometimes [requires] the court to probe behind
the pleadings before coming to rest on the certification
question.” Id. at 2551 (quoting Falcon, 457 U.S. at 160,
161). As we explained in Ellis, 657 F.3d at 981, “the merits
of the class members’ substantive claims are often highly
relevant when determining whether to certify a class,” and “a
district court must consider the merits” if they overlap with
Rule 23(a)’s requirements. “[T]he district court was required
to resolve any factual disputes necessary to determine
whether there was a common pattern and practice that could
affect the class as a whole.” Id. at 983.
Wal-Mart is factually distinguishable from our case.
Most important, the class here is much smaller. It
encompasses only about 200 employees, all of whom work or
worked at the same CDN office. Plaintiffs’ claims do not
depend upon establishing commonalities among 1.5 million
WANG V. CHINESE DAILY NEWS 11
employees and millions of discretionary employment
decisions. Nonetheless, there are potentially significant
differences among the class members.
We vacate the district court’s Rule 23(a)(2) commonality
finding and remand for reconsideration in light of Wal-Mart.
On remand, the district court must determine whether the
claims of the proposed class “depend upon a common
contention . . . of such a nature that it is capable of classwide
resolution — which means that determination of its truth or
falsity will resolve an issue that is central to the validity of
each one of the claims in one stroke.” Wal-Mart, 131 S. Ct.
at 2551. Plaintiffs need not show that every question in the
case, or even a preponderance of questions, is capable of
classwide resolution. So long as there is “even a single
common question,” a would-be class can satisfy the
commonality requirement of Rule 23(a)(2). Wal-Mart,
131 S. Ct. at 2556 (alteration and internal quotation marks
omitted).
B. Rule 23(b)(2)
In our earlier opinion, we affirmed the district court’s
certification under Rule 23(b)(2). Relying upon our en banc
decision in Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571 (9th
Cir. 2010) (en banc), we held that the class certification under
Rule 23(b)(2) was proper because the class’s claims for
monetary relief did not predominate over its claims for
injunctive relief. Wang, 623 F.3d at 755. After we issued our
decision in this case, however, the Supreme Court reversed
our en banc decision. In reversing, the Court made clear that
“individualized monetary claims belong in Rule 23(b)(3)”
rather than Rule 23(b)(2). Wal-Mart, 131 S. Ct. at 2558. The
Court left open the possibility that “incidental” monetary
12 WANG V. CHINESE DAILY NEWS
claims could be brought in a Rule 23(b)(2) class action, but
it declined to decide that question. Id. at 2560–61.
Plaintiffs concede that class certification for their
monetary claims under Rule 23(b)(2) cannot stand in light of
Wal-Mart. See Wal-Mart, 131 S. Ct. at 2559–60. However,
the possibility of a Rule 23(b)(2) class seeking injunctive
relief remains. Rule 23(b)(2) applies “when a single
injunction or declaratory judgment would provide relief to
each member of the class.” Id. at 2557; see also Ellis,
657 F.3d at 987 (indicating that the court could certify a Rule
23(b)(2) class for injunctive relief and a separate Rule
23(b)(3) class for damages).
We remand to the district court for a determination
whether, in light of Wal-Mart, the previously granted
certification of a Rule 23(b)(2) class should continue for
purposes of injunctive relief. The district court should first
consider its commonality finding under Rule 23(a)(2). If it
again finds commonality, it should consider whether class
certification under Rule 23(b)(2) for purposes of injunctive
relief can be sustained. It appears that none of the named
plaintiffs has standing to pursue injunctive relief on behalf of
the class, as none of them is a current CDN employee. See
Wang, 623 F.3d at 756. However, because the Rule 23(b)(2)
class was certified by the district court while they were
current employees, the class certification with respect to
injunctive relief may survive if there are identifiable class
members who are still employed by CDN. See Bates v.
United Parcel Servs., Inc., 511 F.3d 974, 987 (9th Cir. 2007)
(en banc).
WANG V. CHINESE DAILY NEWS 13
C. Rule 23(b)(3)
In our earlier opinion, we declined to consider whether
the district court’s alternative ruling certifying the class under
Rule 23(b)(3) was proper. Rule 23(b)(3) provides that class
certification is permissible if:
the court finds that the questions of law or fact
common to class members predominate over
any questions affecting only individual
members, and that a class action is superior to
other available methods for fairly and
efficiently adjudicating the controversy. The
matters pertinent to these findings include:
(A) the class members’ interests in
individually controlling the prosecution or
defense of separate actions;
(B) the extent and nature of any litigation
concerning the controversy already begun
by or against class members;
(C) the desirability or undesirability of
concentrating the litigation of the claims
in the particular forum; and
(D) the likely difficulties in managing a
class action.
Fed. R. Civ. P. 23(b)(3). The predominance analysis under
Rule 23(b)(3) focuses on “the relationship between the
common and individual issues” in the case and “tests whether
proposed classes are sufficiently cohesive to warrant
14 WANG V. CHINESE DAILY NEWS
adjudication by representation.” Hanlon v. Chrysler Corp.,
150 F.3d 1011, 1022 (9th Cir. 1998) (citation and internal
quotation marks omitted).
For three reasons, we remand to the district court for
reconsideration of the propriety of class certification under
Rule 23(b)(3). First, the district court can certify a class
under Rule 23(b)(3) only if it first again determines that
plaintiffs meet the commonality requirement under Rule
23(a). See supra Section II.A.
Second, the district court’s conclusion that common
questions predominate in this case rested on the fact,
considered largely in isolation, that plaintiffs are challenging
CDN’s uniform policy of classifying all reporters and account
executives as exempt employees. See Wang, 231 F.R.D. at
612–13. In two recent decisions, we criticized the nature of
the district court’s Rule 23(b)(3) predominance inquiry in this
case. See In re Wells Fargo Home Mortg. Overtime Pay
Litig., 571 F.3d 953, 958–59 (9th Cir. 2009); Vinole v.
Countrywide Home Loans, Inc., 571 F.3d 935, 944–48 & n.14
(9th Cir. 2009). We observed that the district court in this
case “essentially create[d] a presumption that class
certification is proper when an employer’s internal exemption
policies are applied uniformly to the employees.” In re Wells
Fargo Home Mortg. Overtime Pay Litig., 571 F.3d at 958.
We wrote that such a presumption “disregards the existence
of other potential individual issues that may make class
treatment difficult if not impossible.” Id. The main concern
of the predominance inquiry under Rule 23(b)(3) is “the
balance between individual and common issues.” Id. at 959.
“[A] district court abuses its discretion in relying on an
internal uniform exemption policy to the near exclusion of
WANG V. CHINESE DAILY NEWS 15
other factors relevant to the predominance inquiry.” Vinole,
571 F.3d at 946.
Third, the California Supreme Court has recently clarified
California law concerning an employer’s duty to provide
meal breaks. In Brinker Rest. Corp. v. Superior Court,
273 P.3d 513, 535 (Cal. 2012), the court held that an
employer is obligated to “relieve its employee of all duty for
an uninterrupted 30-minute period” in order to satisfy its
meal-break obligations, but that the employer need not
actually ensure that its employees take meal breaks. If an
employee works through a meal break, the employer is liable
only for straight pay, and then only when it “knew or
reasonably should have known that the worker was working
through the authorized meal period.” Id. at 536 n.19 (internal
quotation marks omitted).
On the other hand, an employer may not
undermine a formal policy of providing meal
breaks by pressuring employees to perform
their duties in ways that omit breaks. . . . The
wage orders and governing statute do not
countenance an employer’s exerting coercion
against the taking of, creating incentives to
forego, or otherwise encouraging the skipping
of legally protected breaks.
Id. at 536.
We vacate the district court’s Rule 23(b)(3) certification
and remand to permit the court to reconsider its analysis in
light of Wal-Mart, in light of Wells Fargo and Vinole, and in
light of Brinker. Rule 23 provides district courts with broad
authority at various stages in the litigation to revisit class
16 WANG V. CHINESE DAILY NEWS
certification determinations and to redefine or decertify
classes as appropriate. Armstrong v. Davis, 275 F.3d 849,
871 n.28 (9th Cir. 2001), abrogated on other grounds by
Johnson v. California, 543 U.S. 499, 504-05 (2005). The
district court should consult the entire record of this case in
the exercise of that authority.
Conclusion
We reverse the district court’s class certification under
Rule 23(b)(2) for purposes of monetary relief. We vacate and
remand for the district court to reconsider its findings of
commonality under Rule 23(a) and predominance under Rule
23(b)(3). We also vacate and remand for reconsideration of
class certification under Rule 23(b)(2) for purposes of
injunctive relief. Because we vacate the district court’s class
certification, we do not reach any other issues from trial,
including the calculation of damages.
REVERSED in part, VACATED, and REMANDED.