Harper v. Charter Communications, LLC ( 2021 )

1 `` 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 LIONEL HARPER and DANIEL No. 2:19-cv-00902 WBS DMC SINCLAIR, individually and on 13 behalf of all others similarly situated and all aggrieved 14 employees, ORDER RE: PLAINTIFFS’ MOTION TO MODIFY THE SCHEDULING 15 Plaintiffs, ORDER AND FOR LEAVE TO FILE A SECOND AMENDED COMPLAINT 16 v. 17 CHARTER COMMUNICATIONS, LLC, 18 Defendant. 19 20 21 ----oo0oo---- 22 Plaintiffs Lionel Harper and Daniel Sinclair brought 23 this putative class action against their former employer, Charter 24 Communications, alleging various violations of the California 25 Labor Code. Among other things, plaintiffs allege that Charter 26 misclassified them and other California employees as “outside 27 salespersons,” failed to pay them overtime wages, failed to 28 1 provide meal periods or rest breaks (or premium wages in lieu 2 thereof), and provided inaccurate wage statements. (See 3 generally First Amended Complaint (“FAC”) (Docket No. 45).) 4 Plaintiffs now move to modify the scheduling order and for leave 5 to amend their complaint. (Mot. for Leave to Amend (Docket No. 6 121).) 7 I. Factual Background 8 Charter is a broadband connectivity company and cable 9 operator serving business and residential customers under the 10 Spectrum brand, among others. Harper and Sinclair worked as 11 small/medium sized business Account Executives (“AEs”) at 12 Charter’s Redding, California location. Charter classifies AEs 13 as “exempt” employees. 14 Plaintiffs claim that Charter erroneously classified 15 them as exempt employees by mistakenly classifying them as 16 “outside salespersons.” See Cal. Code Regs. tit. 8, § 11070. 17 Under California law, “outside salespersons” are exempt from 18 overtime, minimum wage, meal period, and rest period 19 requirements. See Cal. Lab. Code § 1171. Importantly, under 20 California case law, employees are only subject to the outside 21 salesperson exception if their employer actually had an 22 expectation that they spend more than half their time outside the 23 office engaged in sales activities, and if that expectation was 24 reasonable. See Ramirez v. Yosemite Water Co., 20 Cal. 4th 785, 25 790 (Cal. 1999). Plaintiffs’ claim is essentially that Charter 26 did not have an expectation that they spend 50% of their time 27 outside of the office both during and after their training weeks, 28 and even if it did, that expectation was unreasonable given the 1 number of tasks Charter expected them to complete that required 2 them to be in the office. (See generally FAC.) 3 Plaintiffs’ claims of failure to pay overtime wages, 4 failure to provide meal periods or rest breaks (or premium wages 5 in lieu thereof), and failure to provide accurate wage statements 6 are derivative of their misclassification claim. Because Charter 7 misclassified them, plaintiffs contend, Charter necessarily 8 failed to pay them overtime and failed to provide necessary rest 9 and meal breaks. (See generally FAC.) Plaintiffs further claim 10 that Charter failed to pay them commission wages to which they 11 were entitled, and provided them with inaccurate and misleading 12 wage statements.1 (Id.) 13 Plaintiffs seek to represent two classes of Charter 14 employees: all California employees who were classified as exempt 15 outside salespersons, and all persons employed by Charter in 16 California who were paid commission wages. (See FAC ¶ 12.) 17 II. Procedural Background 18 Plaintiff Harper filed his initial complaint in Shasta 19 County Superior Court on May 3, 2019. Charter removed the case 20 to this court on May 17, 2019. (Docket No. 1.) Harper sought 21 leave to amend his complaint and add another named plaintiff, 22 Daniel Sinclair, on October 30, 2019. The court granted Harper’s 23 request on December 13, 2019. (See FAC (Docket No. 45).) 24 The court issued a pretrial scheduling order on October 25 9, 2019. (Docket No. 34.) The parties amended the scheduling 26 1 Plaintiffs also claim that Charter failed to pay them 27 all wages owed upon termination, failed to provide them with employment records, and violated the California UCL and PAGA. 28 (See generally FAC.) 1 order via stipulation on six occasions: on January 29, May 4, 2 June 25, September 17, and December 11, 2020, and again on 3 January 29, 2021. (Docket Nos. 49, 59, 69, 82, 91, 102.) On 4 December 18, 2020, Charter filed a motion for summary judgment. 5 The court denied most of Charter’s motion on February 16, 2021, 6 holding that triable issues of fact existed as to the majority of 7 plaintiffs’ claims, including whether plaintiffs were 8 misclassified as “outside salespersons.” 9 On April 4, 2021, pursuant to the deadline specified in 10 the court’s operative pretrial scheduling order (Docket No. 104), 11 plaintiffs filed a motion for class certification, set for 12 hearing on June 1, 2021. (See Motion for Class Certification 13 (Docket No. 115).) This motion included declarations by three 14 “Direct Sales Reps” (“DSRs”) who worked for Charter’s Irwindale, 15 Bakersfield, and Anaheim locations--Hassan Turner, Luiz Vazquez, 16 and Pedro Abascal. After receiving the motion, Charter requested 17 plaintiffs provide available dates for Charter to depose the 18 three DSRs. (Decl. of Jamin Soderstrom (“Soderstrom Decl.”) ¶ 9 19 (Docket No. 121-1).) The parties agreed that the depositions of 20 the DSRs would go forward on April 22 and 27, 2021. (Id.) 21 On April 16, 2021, plaintiffs filed the instant motion 22 to modify the scheduling order and for leave to file a Second 23 Amended Complaint. (See Mot. for Leave to Amend.) Plaintiffs’ 24 motion makes a number of changes to the complaint’s factual 25 allegations, amends the class and subclass definitions, and seeks 26 to add Turner, Vazquez, and Abascal as named plaintiffs. (See 27 generally id.) Plaintiffs emphasize that, though their proposed 28 Second Amended Complaint adds three named plaintiffs, it does not 1 materially expand or change the scope of the operative 2 complaint’s claims and allegations, as the putative class in the 3 operative complaint already includes all California Charter 4 employees classified as exempt outside salespersons (not just 5 AEs). The proposed complaint adds additional allegations 6 regarding the plaintiffs’ required tasks which indicate why they 7 were misclassified as outside salespersons. (See Proposed Second 8 Amended Complaint (“SAC”) (Docket No. 121-2).) Evidence of most, 9 if not all, of these tasks was collected in discovery and 10 discussed in the parties’ briefs regarding Charter’s motion for 11 summary judgment. (See Docket Nos. 93, 98, 103.) The Proposed 12 Second Amended Complaint also offers two additional theories of 13 liability for plaintiffs’ claim that Charter’s commission wage 14 statements were defective, makes a number of changes to 15 plaintiffs’ proposed subclasses, and focuses the outside 16 salesperson class allegations on the employees’ training weeks. 17 (See Proposed SAC.) 18 Three days after plaintiffs filed their motion, Charter 19 applied ex parte to stay the court’s consideration of plaintiffs’ 20 motion for class certification until this motion has been 21 decided. (Docket No. 123.) The court granted Charter’s ex parte 22 application, ordering that the hearing date for plaintiffs’ 23 motion for class certification be vacated until the court rules 24 on the instant motion. (Docket No. 127.) 25 III. Discussion 26 Once the district court has filed a pretrial scheduling 27 order pursuant to Federal Rule of Civil Procedure 16, which 28 establishes a timetable for amending pleadings, that rule’s 1 standards control the court’s analysis of whether leave to amend 2 a pleading should be granted. See Johnson v. Mammoth 3 Recreations, Inc., 975 F.2d 604, 607–08 (9th Cir. 1992). “A 4 schedule may be modified only for good cause and with the judge’s 5 consent.” Fed. R. Civ. P. 16(b)(4). Unlike Rule 15(a)’s liberal 6 amendment policy which focuses on the bad faith of the party 7 seeking to interpose an amendment and the prejudice to the 8 opposing party, Rule 16(b)’s good cause standard primarily 9 considers the diligence of the party seeking the amendment. See 10 Johnson, 975 F.2d at 609. If that party was not diligent, the 11 inquiry should end. See id. 12 Plaintiffs argue that good cause exists to amend their 13 complaint because they did not obtain evidence needed to confirm 14 their allegations, as well as the legal and factual basis to join 15 new employees who held different positions (such as DSRs), until 16 recently. Plaintiffs represent that they needed to obtain 17 additional evidence concerning Charter’s classification of other 18 positions (including DSRs), training courses, commission 19 agreements, wage statements, and applicable arbitration 20 agreements in order to anticipate the arguments Charter would 21 likely make in opposition to their motion for class 22 certification. (See Soderstrom Decl. ¶ 5.) Because of a long- 23 running series of discovery disputes between the parties, which 24 led to plaintiffs filing five motions to compel (Docket Nos. 47, 25 57, 62, 78, 117) and one motion for sanctions (Docket No. 100), 26 plaintiffs represent that they were unable to obtain documents 27 from Charter related to positions other than Harper and Sinclair 28 until the early part of 2021, and that plaintiffs were unable to 1 schedule depositions of Charter employees who could testify as to 2 Charter’s classification of other positions, training, commission 3 agreements, and wage statements until March 2021. (See 4 Soderstrom Decl. ¶¶ 6-9.) 5 Despite Charter’s prior representations that it did not 6 possess any relevant documents, Charter finally produced (in 7 response to an order by the magistrate judge) documents 8 pertaining to its training materials and arbitration agreements 9 with other employees, such as DSRs, in February 2021. (Id.; 10 Supplemental Decl. of Jamin Soderstrom (“Soderstrom Supp. Decl.”) 11 ¶ 5 (Docket No. 139-1).) Plaintiffs also obtained declarations 12 from four DSRs in early April 2021 which supported plaintiffs’ 13 allegations that DSRs were also subject to the same 14 classification, training, and commission-related practices as AEs 15 and “several other positions.” (See Soderstrom Decl. ¶¶ 6-9.) 16 Plaintiffs contend that, because they filed their motion for 17 leave to amend shortly thereafter, on April 16, 2021, they acted 18 with sufficient diligence under Rule 16. 19 In response, Charter points out that plaintiff’s 20 counsel has represented one of the proposed new named plaintiffs, 21 Hassan Turner, since at least April 8, 2020, when counsel 22 requested Turner’s employment records from Charter. As for the 23 other proposed plaintiffs, Vazquez and Abascal, Charter argues 24 that plaintiffs have known of their identities since at least 25 December 2020, and their failure to move for leave to amend the 26 complaint to add them as plaintiffs until April 2021, two weeks 27 after filing a motion for class certification and after Charter 28 had requested to depose the proposed named plaintiffs, 1 demonstrates a lack of diligence. 2 While Charter correctly suggests that plaintiffs should 3 have moved to amend their complaint before moving to certify the 4 class, the court has already delayed consideration of plaintiffs’ 5 motion for class certification until this motion is resolved. 6 Plaintiffs also point out that, had they moved to amend their 7 complaint prior to the resolution of Charter’s motion for summary 8 judgment (filed in December 2020, and decided on February 16, 9 2021), they would have been subject to a higher standard under 10 Ninth Circuit law. See PowerAgent Inc. v. U.S. Dist. Ct., 210 11 F.3d 385 (9th Cir. 2000) (courts “may require a showing of 12 substantial and convincing evidence supporting the proposed 13 amendment before allowing leave to amend [while a motion for 14 summary judgment is pending], because a court may be concerned 15 that a plaintiff may simply be maneuvering to stave off 16 termination of the lawsuit”). 17 According to plaintiffs’ counsel, though he requested 18 Turner’s employment records in April 2020, Turner did not want to 19 join a publicly filed class action as a named plaintiff at that 20 time, and did not agree to serve as a class representative until 21 April 2021. (Soderstrom Supp. Decl. ¶ 8.) Because plaintiffs 22 have only recently obtained documentary and testimonial evidence 23 related to other positions at Charter, including DSRS, and 24 represent that counsel was only recently able to obtain 25 supporting declarations and agreement from the three proposed 26 plaintiffs to represent them as class representatives, the court 27 finds that plaintiffs have provided sufficient evidence of their 28 diligence to satisfy Rule 16’s good cause standard. See Johnson, 1 975 F.2d at 609. 2 Charter next argues that plaintiffs cannot show that 3 there is good cause to amend the complaint because their proposed 4 amendments are unnecessary. Specifically, Charter argues that 5 (1) amendments to allegations that are merely meant to “clarify” 6 or “update” existing claims, without adding new substantive 7 claims, are unnecessary, (2) amendments to the class definitions 8 are unnecessary because the court will determine the proper class 9 definition when evaluating plaintiffs’ motion for class 10 certification, and (3) that there is no need to add three 11 additional class representatives when the two existing class 12 representatives would suffice. 13 In similar situations where a plaintiff’s proposed 14 amendments would not add any additional claims against a 15 defendant, but rather merely set forth additional evidence of 16 existing claims, some courts have held that good cause to amend 17 does not exist under Rule 16 because such amendments are 18 “unnecessary.”2 See, e.g., In re Rocket Fuel Inc. Securities 19 Litigation, No. 14-cv-03998-PJH, 2017 WL 344983, *3 (N.D. Cal. 20 Jan. 24, 2017). Here, plaintiffs do not explain why or how the 21 proposed amendments to their factual allegations would materially 22 advance their case, besides stating that they have an obligation 23 2 Other courts have considered the necessity of proposed 24 amendments under Rule 15’s “futility” factor. See, e.g., Allergan, Inc. v. Athena Cosms., Inc., No. SACV 07-1316 JVS, 2012 25 WL 12898000, at *2 (C.D. Cal. Dec. 5, 2012). Regardless of which Rule the court considers necessity under, because both Rules 15 26 and 16 must be satisfied to grant leave to amend, a showing that 27 an amendment is unnecessary would be sufficient to deny leave to amend. See, e.g., In re Rocket Fuel, 2017 WL 344983, at *3; 28 Allergan, 2012 WL 12898000, at *2. 1 to re-evaluate their pleadings in light of prior court orders 2 that have been issued since their complaint was last amended (the 3 court has not ordered plaintiffs to amend or alter their 4 complaint in any way). (See Pls.’ Reply at 13 (Docket No. 139).) 5 Nor do plaintiffs explain why their proposed amendments to their 6 class definitions are necessary. However, for its part, Charter 7 does not explain what harm there would be in allowing plaintiffs 8 to amend their class definitions, when the question will 9 ultimately be evaluated at the class certification stage anyway. 10 As for the addition of the three proposed plaintiffs, 11 Charter points to a statement from plaintiffs’ motion in which 12 they seemingly admit that they “do not need to substitute class 13 representatives in order for the court to certify their proposed 14 classes and subclasses.” (See Mot. for Leave to Amend at 12 15 (emphasis in original).) Plaintiffs clarify in their reply, 16 however, that evidence provided by Charter in February 2021 17 showing certain differences in Charter’s training materials and 18 wage statements for AEs and DSRs has revealed a “potential” need 19 to add DSRs as class representatives. (See Soderstrom Supp. 20 Decl. ¶ 6.) Plaintiffs’ counsel also noted at oral argument that 21 the proposed DSR plaintiffs may be more typical representatives 22 of certain members of the putative class because they were 23 purportedly subject to different arbitration agreements than 24 Harper and Sinclair. 25 While Charter does not contend that Sinclair was 26 subject to any arbitration agreements, and, as the court has 27 previously held, Harper’s claims in this matter were governed by 28 the JAMS arbitration agreement (Docket No. 24), Charter contends 1 that the proposed plaintiffs were subject to the “Solutions 2 Channel” arbitration agreement. (See Charter’s Opp’n at 11, 23 3 (Docket No. 138).) Therefore, although plaintiffs believe that 4 they are adequate and typical class representatives, they contend 5 that adding three additional DSR class representatives would 6 allow them to prospectively address arguments Charter is likely 7 to raise in opposition to their class certification motion, 8 including that Harper and Sinclair are not adequate or typical 9 representatives of putative class members who were subject to the 10 Solutions Channel arbitration agreement. See Morgan v. Laborers 11 Pension Trust Fund for N. Cal., 81 F.R.D. 669, 673 (N.D. Cal. 12 1979) (granting leave to amend to add additional class 13 representatives “to provide the court with both a broader and a 14 more representative sample of factual situations relating to the 15 class allegations”). 16 The court agrees with plaintiffs that adding the three 17 proposed plaintiffs would seem to advance their case by allowing 18 the court to evaluate whether the three proposed plaintiffs are 19 adequate and typical representatives of the class. These 20 amendments are therefore not “unnecessary,” see In re Rocket Fuel 21 Inc. Securities Litigation, 2017 WL 344983, at *3, and good cause 22 exists to amend the complaint by adding the three proposed named 23 plaintiffs. Because Charter has not shown that plaintiffs’ other 24 proposed amendments would prejudice it, the court will also 25 permit plaintiffs to amend the complaint’s factual allegations 26 and class definitions. See Johnson, 975 F.2d at 609 (“the 27 existence or degree of prejudice to the party opposing the 28 modification [to the scheduling order] might supply additional 1 reasons to deny a motion”). 2 For the same reasons, discussed above, that the court 3 finds good cause to allow the proposed amendments under Rule 16, 4 the court also finds that the liberal standards set forth in 5 | Ahlmeyer v. Nevada System of Higher Education, 555 F.3d 1051, 6 1055 n.3 (9th Cir. 2009), support granting leave to amend under 7 Rule 15. 8 IT IS THEREFORE ORDERED that plaintiffs’ motion to 9 | modify the scheduling order and for leave to file a Second 10 Amended Complaint (Docket No. 121) be, and the same hereby is, 11 GRANTED. Plaintiffs are directed to file the Proposed Second 12 | Amended Complaint attached to their motion (Docket No. 121-2) 13 | within five days of the issuance of this Order. 14 IT IS FURTHER ORDERED THAT plaintiffs withdraw their 15 | motion for class certification (Docket No. 115) and file a new 16 motion which reflects the addition of Hassan Turner, Luis 17 Vazquez, and Pedro Abascal as named plaintiffs and class 18 representatives on or before July 12, 2021. If the parties wish 19 to stipulate to a briefing schedule and/or hearing date for 20 plaintiffs’ motion for class certification, as well as further 21 modifications to the court’s Status (Pretrial Scheduling) Order 22 (see Docket Nos. 34, 104), they may submit a stipulation for the 23 court’s approval on or before June 28, 2021. 24 | Dated: June 3, 2021 tleom ah. A. be—~ 25 WILLIAM B. SHUBB UNITED STATES DISTRICT JUDGE 26 27 28 12