Leyva v. Medline Industries, Inc.

Individualized damage calculations alone do not defeat class certification under Fed. R. Civ. Pro. 23(b)(3).

Jesus Leyva sought class certification to represent approximately 538 employees of Medline Industries, Inc. (“Medline”) for violation of California labor laws: (1) rounding hourly employees’ start times in violation of California Labor Code §§ 510 and 1197; (2) excluding nondiscretionary bonuses from employees’ overtime rates; (3) owing employees penalties under California Labor Code § 203 for the rounding and bonus violation; and (4) keeping inaccurate payroll records. To be certified, the proposed class must meet four threshold requirements of Fed. R. Civ. P. 23(a): “numerosity, commonality, typicality, and adequacy of representation.” The proposed class must also meet Fed. R. Civ. P. 23(b), which defines three types of classes. The district court held that although the putative class met the “rigorous” requirements of Rule 23(a), they failed to meet the requirements of Rule 23(b)(3). First, although Leyva established commonality with regard to Medline's liability under state law, the damages would be too individualized. Second, there were less taxing methods other than a class action to resolve the dispute. The Ninth Circuit applied a two-part test to determine whether the district court abused its discretion. First, the court looked at “whether the trial court identified and applied the correct legal rule to the relief requested.” Second, the court looked at “whether the trial court's resolution of the motion resulted from a factual finding that was illogical, implausible, or without support in inferences that may be drawn from the…record.” The panel held that the district court erred by applying the wrong legal standard because the “presence of individualized damages cannot, by itself, defeat class certification under Rule 23(b)(3).” The district court also applied the wrong legal standard in holding that “class certification was not the superior method of adjudication” because of “manageability concerns,” despite contrary evidence. REVERSED and REMANDED.