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Abarca v. Werner Enterprises, Inc.

United States District Court, D. Nebraska

February 28, 2018

EZEQUIEL OLIVARES ABARCA, ALFREDO ALESNA JR., DAVID CAGLE, STEPHEN L. DAVIS, FRANK EADS, and KENNETH J. SURMAN, individually and on behalf of all those similarly situated, Plaintiffs,
v.
WERNER ENTERPRISES, INC., DRIVERS MANAGEMENT, LLC, and DOES 1-100, inclusive, Defendants. WILLIAM SMITH, on behalf of himself and all others similarly situated, and on behalf of the general public, Plaintiff,
v.
WERNER ENTERPRISES, INC., d/b/a C.L. WERNER, INC., a corporation, and DOES 1-100, inclusive, Defendants.

          FINDINGS AND RECOMMENDATION AND ORDER

          MICHAEL D. NELSON UNITED STATES MAGISTRATE JUDGE.

         This matter is before the Court on Plaintiffs' Renewed Motion for Class Certification (Filing No. 166 in Case No. 8:14cv319; Filing No. 71 in Case No. 8:15cv287), and Defendants' Motion to Strike Plaintiffs' Exhibits Offered in Support of Plaintiffs' Renewed Motion for Class Certification (Filing No. 175 in Case No. 8:14cv319; Filing No. 80 in Case No. 8:15cv287).[1]

         PROCEDURAL BACKGROUND

         As detailed by prior court orders, these putative class actions arise out of Plaintiffs' allegations that Werner Enterprises, Inc. (“Werner”) and its wholly owned subsidiary, Drivers Management, LLC (“Drivers Management”) have uniform policies and practices that violate various wage and hour laws of California and Nebraska. (Filing No. 119; Filing No. 150). Plaintiffs' allege that Defendants have a

uniform policy and practice . . . of not paying all wages owed, not paying for all time worked, including compensable rest periods and compensable on-duty non-driving time, not paying premium hours for missed meal/rest periods (for the California Class), making improper deductions from pay for work performed, not providing properly itemized pay statements that accurately reflect hours worked, applicable hourly rates and (for the California Class) premium hours for missed meal/rest periods, and . . . not maintaining records that accurately reflect hours worked and applicable hourly rates.

(Filing No. 160 at p. 6).

         On June 4, 2014, Antonia Russell (“Russell”) filed a putative class action against Werner in California state court for violations of California wage and hour laws. (Filing No. 1-1). On August 25, 2014, Werner removed the case to the Northern District of California. (Filing No. 1). On October 6, 2014, the case was transferred to this district under 28 U.S.C. § 1404(a). (Filing No. 23).[2] On March 30, 2015, an amended complaint was filed by Russell, Ezequiel Olivares Abarca (“Abarca”), Alfredo Alesna Jr. (“Alesna”), David Cagle (“Cagle”), Stephen L. Davis (“Davis”), Frank Eads (“Eads”) and Kenneth J. Surman (“Surman”) against Werner and Drivers Management. (Filing No. 52). By joint stipulation of the parties, Russell was dismissed as a party on April 24, 2015, (Filing No. 55), and on September 17, 2015, Plaintiffs filed a third amended complaint adding claims under Nebraska wage and hour laws. (Filing No. 80).

         On May 12, 2015, William Smith (“Smith”) filed a putative class action against Werner in California state court for violations of California wage and hour laws. (Filing No. 1-1 in Case No. 8:15cv287). On June 26, 2015, Werner removed the case to the Northern District of California. (Filing No. 1 in Case No. 8:15cv287). On July 31, 2015, the case was transferred to this district under 28 U.S.C. § 1404(a). (Filing No. 17 in Case No. 8:15cv287).

         On November 19, 2015, the above captioned cases were consolidated for all purposes, including trial, (Filing No. 119), and Case No. 8:14cv319 was deemed the Lead Case. (Filing No. 131).

         The court set March 1, 2016, as the deadline to complete discovery limited to class certification and April 1, 2016, as the deadline for Plaintiffs to file a motion to certify a class. (Filing No. 125). On April 1, 2016, Plaintiffs filed a motion to certify two classes: a Nebraska Class and a California Class. (Filing No. 135). The operative pleading at that time was Plaintiffs' third amended complaint, which defined the California Class as “all truck drivers who worked or work in California for Werner after the completion of training at any time since four years before the filing of this legal action until such time as there is a final disposition of this lawsuit[.]” (Filing No. 80 at p. 4).

         On October 28, 2016, Senior District Judge Lyle E. Strom entered a Memorandum and Order denying Plaintiffs' motion for class certification. (Filing No. 150). Judge Strom found that the proposed “California Class” was “not adequately defined and/or clearly ascertainable, ” and therefore Plaintiffs failed to establish numerosity, commonality, typicality, and adequacy of the proposed California Class, as required under Rule 23(a) of the Federal Rules of Civil Procedure. (Filing No. 150 at pp. 7-14). Judge Strom abstained from addressing Plaintiffs' motion to certify the “Nebraska Class, ” and granted Plaintiffs leave to file a fourth amended complaint to “attempt to provide the Court with an adequately defined and clearly ascertainable definition for the California Class.” (Filing No. 150 at p. 15). Judge Strom prohibited Plaintiffs from substantively altering the complaint in any other way “including, but not limited to, adding additional claims, parties, classes, and/or causes of action.”

         On November 9, 2016, Plaintiffs filed a fourth amended complaint. (Filing No. 151). On December 29, 2016, Judge Strom sustained Defendants' motion to strike portions of Plaintiffs' fourth amended complaint, including an attached exhibit, as it contained new allegations not limited to redefining Plaintiffs' proposed California Class, in violation of the court's previous order. (Filing No. 159).

         Plaintiffs re-filed their fourth amended complaint on January 6, 2017. (Filing No. 160). Plaintiffs' fourth amended complaint purports to bring claims individually and “on behalf of similarly situated current and former truck drivers whom Werner employed to work in California after the completion of training, ” and defines the California Class as:

all truck drivers who, while working for Werner, picked up and/or dropped off a load in the state of California after the completion of training at any time since four years before the filing of this legal action until such time as there is a final disposition of this lawsuit[.]

(Filing No. 160 at p. 4).

         With respect to the Nebraska Class, Plaintiffs purport to bring claims individually and “on behalf of similarly situated current and former truck drivers whom Werner employed to work anywhere after the completion of training.” Plaintiffs allege violations of Nebraska law, which “Werner has expressly agreed would apply to truck driver employment” and define the Nebraska Class as follows: “all truck drivers who worked or work anywhere for Werner after the completion of training at any time since four years before the filing of this legal action until such time as there is a final disposition of this lawsuit[.]” (Filing No. 160 at p. 4).

         The California Class plaintiffs allege Defendants' policies violate the California Labor Code, California Industrial Commission Wage Orders, and the California Unfair Competition Law by: (1) failing to provide duty free meal/rest periods (Claim One); (2) failing to pay for off-the-clock work (Claim Two); (3) making improper deductions from paychecks for income earned (Claim Three); (4) failing to provide itemized pay statements as required under California law (Claim Four); and (5) engaging in unlawful business acts and unfair competition for the misconduct alleged in (1)-(4) (Claim Five). (Filing No. 160 at pp. 9-16). Claim Six seeks recovery under the Private Attorneys General Act of 2004 (“PAGA”)[3] to the extent recovery for the preceding claims is not obtained. (Filing No. 160 at p. 17).

         The Nebraska Class plaintiffs allege Defendants violated the Nebraska Wage and Hour Act (“NWHA”)[4] by paying less than the minimum wage (Claim Seven) and the Nebraska Wage Payment and Collection Act (“NWPCA”)[5] by failing to timely pay earned wages, failing to provide accurate itemized pay statements, and making improper wage deductions (Claim Eight). (Id. at pp. 18-21).

         The California Class requests a declaratory judgment that: (1) Defendants violated the California Labor Code, California Welfare Commission wage orders, and California Unfair Business Practices Act/Unfair Competition Law; (2) the time during which the California Class members are on duty in California constitutes compensable hours of employment for purposes of the California Labor Code and California Industrial Welfare Commission Wage Orders; (3) California Class members are entitled to an award for the unpaid wages, wages for absence of duty free meal/rest periods, recovery of improper deductions from pay earned in California, waiting time penalties, penalties for absence of properly itemized wage statements/record maintenance, and any other applicable statutory penalties; (4) Defendants must make restitution and disgorgement of all ill-gotten gains; (5) equitable distribution be made of unpaid residue of any recovery pursuant to California Code of Civil Procedure § 384; (6) injunctive relief is appropriate to prohibit future violations; and (7) penalties should be awarded under PAGA. (Filing No. 160 at pp. 21-23).

         The Nebraska Class requests a declaratory judgment that: (1) Defendants violated the NWHA and NWPCA, (2) the time during which the Nebraska Class members are working anywhere constitutes compensable hours of employment for purposes of Nebraska law; (3) Nebraska Class members are entitled to an award for the unpaid wages, recovery of improper deductions, and any applicable statutory penalties; (4) and Defendants must pay an additional amount to the State Treasurer pursuant to Neb. Rev. Stat. § 48-1232. (Filing No. 160 at p. 23).

         Defendants raise numerous affirmative defenses, including: (1) Plaintiffs consented in writing that their employment with Werner was Nebraska-based and subject to Nebraska law; (2) Plaintiffs' claims are barred in whole or in part because there is a conflict of laws prohibiting the extra-territorial application of California law; Plaintiffs' claims are barred by (3) ratification and the (4) statute of limitations; (5) Plaintiffs' claims are preempted by the Dormant Commerce Clause and the Federal Aviation Administration Authorization Act; (6) Defendants acted in good faith; (7) Plaintiffs consented in writing to alleged paycheck deductions; (8) Plaintiffs failed to exhaust administrative remedies; (9) Plaintiffs' claims are unconstitutional; (10) Plaintiffs are equitably estopped by the doctrines of waiver, estoppel, laches, and/or unclean hands; (11) Plaintiffs' damages are de minimis; (12) penalties under PAGA would be unjust, arbitrary, oppressive, and confiscatory; (13) Plaintiffs' claims and civil penalties awarded under PAGA, if any, must be limited to those penalties applicable to an initial violation; (14) Defendants substantially complied with all statutory obligations; (15) Plaintiffs lack standing; (16) Defendants' compensation practices are lawful; and (17) no agreement existed for Defendants to pay the wages claimed by Plaintiffs under the NWPCA. (Filing No. 161 at pp. 9-12).

         On May 26, 2017, Plaintiffs filed the instant renewed motion to certify a California Class and Nebraska Class.[6] (Filing No. 166). Plaintiffs seek to certify the California and Nebraska classes as defined by their fourth amended complaint. Plaintiffs state in their brief that the proposed California Class asserts claims “for work performed in California” regardless of a driver's residency. (Filing No. 167 at p. 2). Plaintiffs also alternatively suggest that the Court certify a more narrowly defined California Class “limited to Werner drivers who were California residents.” (Filing No. 167 at p. 2). Plaintiffs further request that the Court appoint the individually named Plaintiffs in Case No. 8:14cv319 as the class representatives and to appoint class counsel.

         In support of their renewed motion, Plaintiffs filed the Supplemental Declaration of Justin Swidler (Filing No. 168), and the Declaration of Jacqueline Thompson (Filing No. 169) with six attached exhibits.[7] Defendants have filed a Motion to Strike (Filing No. 175) Exhibit A (marked as Exhibit 1) attached to Swidler's Declaration (Filing No. 168 at pp. 5-25), and Exhibits 3, 4, and 5, attached to Thompson's Declaration (Filing No. 169 at pp. 321-334). Exhibit A is a copy of an excerpt of pickup and delivery records for Plaintiff Eads, which was produced by Werner in discovery in a separate wage-and-hour class action this court, Baouch v. Werner Enterprises, Inc., Case No. 8:12cv408. Exhibit A is the same exhibit that was stricken from Plaintiffs' stricken-fourth amended complaint. (Filing No. 151; Filing No. 168 at pp. 5-25). Exhibits 3, 4, and 5 are pages printed from websites. Exhibit 3 is a copy of Werner's online advertisements regarding truck sales out of its Fontana terminal from Werner's website, Exhibit 4 is a copy of Werner's Zip Recruiter advertisement for California-based drivers, and Exhibit 5 is a copy of an online advertisement for on Indeed.com. (Filing No. 169 at p. 2).

         In opposition to the renewed motion to certify, Defendants filed a brief (Filing No. 178) and Index of Evidence and attached exhibits (Filing No. 179; Filing No. 179-1 through 179-6). Defendants also state they incorporate their Index of Evidence and attached exhibits (Filing No. 142) previously offered in opposition to Plaintiffs' first motion to certify, as well as the Declaration of Mary Kaye Howe (Filing No. 15-1) previously filed in support of Defendants' motion to transfer.

         FACTUAL BACKGROUND

         Werner is a Nebraska corporation headquartered in Omaha Nebraska, engaged in the hauling and delivery of freight across the United States. (Filing No. 179-5 at p. 2 - Declaration of Jaime Maus ¶ 3). Werner's corporate policies, payroll policies and records, drivers' employment records, and all drivers' paychecks are created, maintained, calculated, and distributed from Werner's headquarters in Nebraska. (Filing No. 179-6 at p. 2 - Declaration of Steven Tisinger ¶¶ 5-6).

         Werner maintains terminals across the country, including one terminal in Fontana, California. (Filing No. 142-5 at p. 3 - Jaime Maus Deposition 15:3-11). The Fontana terminal is staffed with a terminal manager, an equipment manager, a parts manager, and a lead safety specialist. It does not have general managers, fleet managers, or dispatchers. (Filing No. 179-5 at pp. 2-3 - Maus Decl. ¶¶ 5-6). These managers manage safety personnel and do not manage drivers, and no over-the-road drivers are assigned to the Fontana terminal. (Id.). Drivers can attend orientation at the Fontana terminal. (Filing No. 142-5 at p. 3 - Maus Depo. 15:3-11). The Fontana terminal also has a company store (Filing No. 169 at p. 112 - WRN-RUSSELL00000022), a full service shop (Id. at p. 113 - WRN-RUSSELL00000023), and provides liaisons for student drivers without trainers (Id. at p. 300 - WRN-RUSSELL00000210) and student coordinators (Id. at p. 107 - WRN-RUSSELL00000017). A copy of California Wage Order 9-2001, which includes information about California's meal and rest break requirements, is posted in the vending machine room of the Fontana terminal. (Filing No. 179-5 at pp. 2-3 - Maus Decl. ¶ 8). As of June 26, 2017, Werner represents it was advertising for approximately thirty driver positions in California. (Filing No. 179-6 at p. 4 - Maus Decl. ¶ 11).

         Werner employs drivers who are residents of all fifty states, the District of Columbia, and Canada. (Filing No. 15-1 at p. 3 - Declaration of Mary Kaye Howe ¶ 5). The named Plaintiffs are all residents of California and are current or former Werner drivers. (Filing No. 160 at p. 2; Filing No. 1-1 in Case. No. 8:15cv287). Between June 4, 2010, and July 31, 2014, more than 14, 000 Werner truck drivers drove and/or traveled miles in California, excluding training miles. (Filing No. 15-1 at p. 2 - Howe Decl. ¶ 4). Payroll taxes reflect that approximately 22% of those 14, 000 drivers reside in California. (Id. at ¶ 5). Between June 4, 2010, and July 31, 2014, Werner drivers traveled a total of 1, 700, 000, 000 miles across the United States and Canada, approximately 167, 000, 000 of which were traveled in California (i.e., less than 10%). (Id. at ¶ 4). This mileage was calculated using Werner's mileage records maintained for the purpose of complying with state fuel taxes, which are reported pursuant to the International Fuel Tax Agreement (hereinafter, “IFTA”). (Id.). According to Werner, IFTA mileage is tracked using GPS, which pings based on the nearest GPS location as opposed to the driver's actual location, and is approximately 12% higher than the mileage Werner uses to calculate driver pay. (Id.). Werner uses a separate system to calculate individual drivers' mileage, the Shortest Route Guide software published by Rand McNally. (Filing No. 142-4 at p. 6 - Tisinger Depo. 20:9-21:22). Qualcomm units (now called Omnitracs) installed on each truck track the truck's approximate position by pinging a satellite approximately every 15 minutes. (Filing No. 142-5 at p. 9 - Maus Depo. 56:10-57:24; Filing No. 142-6 at pp. 3 - Mary Kaye Howe Deposition 24:14-25:11, 31:14-32-9, 36:9-37:11).

         Prospective drivers for Werner sign an “Acknowledgement of Employment in Nebraska and Consent to State of Nebraska Workers' Compensation” form, which provides that the driver acknowledges that “regardless of where he/she signs this application, all [Drivers Management] decisions to hire employees and contracts for hire are made only in Omaha, Neb., and an employee/employer relationship between the driver and [Driver's Management] can be entered into only in Omaha, Neb.” (Filing No. 142-15 - Plaintiffs' Acknowledgements of Employment). The driver also acknowledges he or she “will be a state of Nebraska-based employee, and all employees of [Drivers Management] regardless of where employees claim residence, are subject to Nebraska's workers' compensation jurisdiction and laws and Nebraska's labor and employment laws.” Id.

         Drivers are paid for point to point mileage per assigned trip as calculated using the Rand McNally software. (Filing No. 142-4 at p. 6 - Tisinger Depo. 20:9-21:22). According to Werner, the mileage rate “takes into consideration everything from origin to destination, ” including rest breaks. (Id. at p. 45 - Tisinger Depo. 177:6-18). Pay rates vary based on a driver's division or solo/team status, driving experience, safety, on-time delivery performance, among other factors. (Filing No. 142-14 at p. 7 - WRN-RUSSELL00000075; Filing No. 179-3 - WRN-RUSSELL00004209-04211, WRN-RUSSELL00007794; Filing No. 179-4 - WRN-RUSSELL0000829, WRN-RUSSELL00004469-04471). In addition to “piece rate” mileage pay, Werner also may pay drivers supplemental pay and/or discretionary pay for things such as loading/unloading, layovers, lumpers, motels, miscellaneous pay items, network optimization, shag pay, stop pay, safety pay, among other things. (Filing No. 142-4 at pp. 33-35, 49 - Tisinger Depo. 126:3-1288:13, 132:10-133:25, 135:21-137:24, 189:25-190:5; Filing No. 142-14 at p. 5 -WRN-RUSSELL00000068-0069; Filing No. 142-16 - WRN-RUSSELL00001870; Filing No. 179-2 - WRN-RUSSELL00000067, WRN-RUSSELL00000293-0294, WRN- RUSSELL00035904). Discretionary pay is “computed in any manner deemed appropriate by the driver's fleet manager[.]” (Filing No. 179-6 at pp. 3-4 - Tisinger Decl. ¶¶ 8-9).

         State taxes are withheld from drivers' paychecks based on their state of residence. (See, e.g., Filing No. 142-14 at p. 1 - Abarca Statement of Earnings). Drivers' pay statements include gross earnings, reimbursements, deductions, trip details (including point of origin and destination, stops, deadhead, rate of pay), and other notes. (Filing 142-14 at p. 14 - WRN-RUSSELL00000302). Beginning on January 9, 2013, drivers who attended orientation in California, or who have California residences for payroll and taxes purpose, or have a California CDL, additionally have their “on-duty” hours listed on their pay statements. Werner also “true[s] up” these drivers' wages to California's minimum wage. (Filing No. 142-4 at pp. 7-8, 26-27 - Tisinger Depo. 25:5-27:6, 101:15-102:10; Filing No. 179-6 at p. 5 - Tisinger Decl. ¶ 12).

         During orientation, each driver is provided a copy of the Werner Driver Handbook (“Handbook”). (Filing No. 142-5 at p. 4 - Maus Depo. 18:8-12). From June 2010, through April 2016, Werner issued five different Handbooks, as it was updated and reissued in 2008, June 2013, September 2014, April 2015, and June 2015. (Filing No. 142-2 at p. 2 - Declaration of Jaime Maus ¶ 5).

         The Handbook outlines the Federal Motor Carrier Hours of Service (“HOS”) Duty Status Definitions. Line 1 items are “Off Duty” and includes “rest breaks taken outside of the sleeper berth including meal breaks.” Line 2 is for time in the sleeper berth. Line 3 is for “Driving” and includes all time operating at the driving controls and time when the computer log detects motion. Line 4 is for logging “On Duty-Not Driving” time. This category includes all time “[f]rom the time you begin to work or are required to be ready to work until the time you are relieved from work.” It includes pre-trip and other inspections, physically loading and unloading the trailer, paperwork and receipts at a customer, time spent providing a breath sample or urine specimen, quarterly safety training, among others. It does not include rest time in a parked vehicle or up to two hours in the passenger seat of a moving vehicle immediately before or after an 8-hour consecutive break in the sleeper berth. (Filing No. 142-14 at p. 10 - WRN-RUSSELL00000165). Drivers are responsible for logging their own activities. (Filing No. 142-2 - Maus Decl. ¶¶ 10).

         The Handbook outlines HOS regulations regarding breaks, including the 11-Hour, 14Hour, and 70-Hour rules. (Filing No. 142-14 at p. 11 - WRN-RUSSELL00000166). The Handbook notes that Werner “recommends drivers take at least a 30-minute break after driving four to six hours.” (Id.). Werner trains drivers that they are “the captain of their ship” and “to take breaks when they see they need them, ” but drivers are not specifically ...


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