Case 4:19-cv-06363-YGR Document 35 Filed 10/20/20 Page 1 of 7
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`RHONDA HUBBARD,
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`Plaintiff,
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`vs.
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`RCM TECHNOLOGIES (USA), INC.,
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`CASE NO. 19-cv-06363-YGR
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`ORDER RE: MOTION FOR CLASS
`CERTIFICATION
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`Re: Dkt. No. 30
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`Defendant.
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`Plaintiff Rhonda Hubbard brings this putative class action on behalf of hourly healthcare
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`professionals employed by defendant RCM Technologies (USA), Inc., a healthcare staffing
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`company. The complaint asserts claims under California law for unpaid overtime, unlawful
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`business practices, and waiting time penalties. Specifically, plaintiff challenges the legality of
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`defendant’s policy of excluding the value of weekly per diem payments from the regular rate used
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`to calculate overtime, notwithstanding that the payments are based on hours worked rather than
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`expenses incurred. Now before the Court is plaintiff’s motion for class certification pursuant to
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`Federal Rule of Civil Procedure 23.
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`Defendant generally does not oppose plaintiff’s motion, subject to defendant reserving its
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`right to later move for decertification. However, defendant has filed a limited opposition
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`requesting modification of the proposed class notice to include language disclosing potential
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`adverse tax implications if the Court rules that the per diem payments at issue should be
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`reclassified as wages rather than expense requirements.1
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`1 Defendant’s opposition also requested that the Court (1) order plaintiff to give putative
`class members the option to submit exclusion forms electronically to the administrator, and (2)
`order plaintiff to meet and confer with defendant regarding the content of the exclusion form,
`which was not included with the motion papers. After filing of the opposition, plaintiff notified
`defendant of her agreement to allowing putative class members to return the exclusion form
`electronically. The parties also met and conferred and agreed on the content of the exclusion
`form. These issues therefore are moot.
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`Case 4:19-cv-06363-YGR Document 35 Filed 10/20/20 Page 2 of 7
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`Below, the Court addresses both the motion for class certification and the objection to the
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`class notice.
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`1.
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`Motion for Class Certification
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`Plaintiff seeks to certify the following class:
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`All non-exempt hourly employees employed by RCM in California who, at any
`time within four years prior to the filing of this lawsuit through the date of class
`certification, worked one or more workweeks in which they were paid overtime and
`received a weekly per diem or stipend.
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`To be certified, a class “must meet the four threshold requirements of Federal Rule of Civil
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`Procedure 23(a): numerosity, commonality, typicality, and adequacy of representation.” Leyva v.
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`Medline Indus. Inc., 716 F.3d 510, 512 (9th Cir. 2013). In addition, “the proposed class must
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`satisfy the requirements of Rule 23(b), which defines three different types of classes.” Id.
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`Relevant here, Rule 23(b)(3) “requires that ‘questions of law or fact common to class members
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`predominate over any questions affecting only individual members, and that a class action is
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`superior to other available methods for fairly and efficiently adjudicating the controversy.’” Id.
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`(quoting Fed. R. Civ. P. 23(b)(3)).
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`Numerosity: A proposed class must be “so numerous that joinder of all members is
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`impracticable.” Fed. R. Civ. P. 23(a)(1). While the numerosity requirement is not tied to any
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`fixed numerical threshold, it “is usually satisfied where the class comprises 40 or more members,
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`and generally not satisfied when the class comprises 21 or fewer members.” Twegbe v. Pharmaca
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`Integrative Pharmacy, Inc., 2013 WL 3802807, *2 (N.D. Cal. July 17, 2013). Here, proffered
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`evidence shows the proposed class consists of more than 100 individuals who worked at locations
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`across the state and traveled to different areas for work assignments. Given the size and
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`geographic diversity of the proposed class, numerosity is satisfied.
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`Commonality: “[C]ommonality requires that the class members’ claims ‘depend upon a
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`common contention’ such that ‘determination of its truth or falsity will resolve an issue that is
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`central to the validity of each [claim] in one stroke.’” Mazza v. Am. Honda Motor Co., Inc., 666
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`F.3d 581, 588 (9th Cir. 2012) (quoting Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2551
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`(2011)). This factor, too, is satisfied. Plaintiff alleges defendant violated California Labor Code
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`Case 4:19-cv-06363-YGR Document 35 Filed 10/20/20 Page 3 of 7
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`sections 510 and 1194 by systematically underpaying overtime pursuant to its policy of excluding
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`the value of per diem payments from the regular rate when calculating overtime. Liability under
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`this theory turns on common factual questions related to defendant’s alleged policies and practices
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`when calculating overtime pay for employees receiving per diem payments, and on the common
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`legal issue of whether per diem payments must be included in the regular rate under applicable
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`law. Based on the alleged failure to pay overtime, plaintiff also asserts derivative claims for
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`unlawful business practices under California Business and Professions Code section 17200 and
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`waiting time penalties under California Labor Code section 203. These claims hinge on the same
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`common factual and legal issues as the overtime claim.
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`Typicality: “The test of typicality is whether other members have the same or similar
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`injury, whether the action is based on conduct which is not unique to the named plaintiffs, and
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`whether other class members have been injured by the same course of conduct.” Evon v. Law
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`Offices of Sidney Mickell, 688 F.3d 1015, 1030 (9th Cir. 2012) (quotation marks and citation
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`omitted). Here, the named plaintiff represents that she worked travel nurse assignments for
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`defendant in California, for which she received per diem payments that were conditioned on her
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`working a certain number of hours and that were prorated based on hours worked. She further
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`represents that she worked overtime and had the value of her per diem payments excluded from
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`the regular rate used to calculate her overtime pay. Her claims are typical of the class.
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`Adequacy: “The named plaintiffs must fairly and adequately protect the interests of the
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`class.” Id. at 1031. “In making this determination, courts must consider two questions: (1) do the
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`named plaintiffs and their counsel have any conflicts of interest with other class members and
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`(2) will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the
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`class?” Id. As set forth in their declarations, neither counsel nor the named plaintiff has any
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`actual conflicts with other class members, and they have represented that they will prosecute the
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`action vigorously on behalf of the class. The adequacy factor is met.
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`Predominance and Superiority: “Rule 23(b)(3) requires a showing that questions common
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`to the class predominate, not that those questions will be answered, on the merits, in favor of the
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`class.” Amgen, Inc. v. Conn. Ret. Plans & Trust Funds, 133 S. Ct. 1184, 1191 (2013) (emphasis in
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`Northern District of California
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`United States District Court
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`Case 4:19-cv-06363-YGR Document 35 Filed 10/20/20 Page 4 of 7
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`original). As explained, liability on each asserted claim hinges upon the common questions of
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`whether defendant adopted a policy of excluding the per diem payments from the regular rate
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`when calculating overtime, and whether this policy violates California law. Thus, “[t]his case
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`presents the classic case for treatment as a class action: that is, the commonality linking the class
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`members is the dispositive question in the lawsuit.” Evon, 688 F.3d at 1029-30. The
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`predominance and superiority requirements are satisfied.
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`Accordingly, the motion for class certification is GRANTED.
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`2.
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`Objection to the Class Notice
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`A class notice must include all “information that a reasonable person would consider to be
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`material in making an informed, intelligent decision of whether to opt-out or remain a member of
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`the class.” Tierno v. Rite Aid Corp., 2007 WL 4166028, at *1 (N.D. Cal. Nov. 19, 2007) (citing In
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`re Nissan Motor Corp. Antitrust Litig., 552 F.2d 1088, 1105 (5th Cir. 1977)). At the same time,
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`notice is not adequate if it misleads potential class members. Molski v. Gleich, 318 F.3d 937, 952
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`(9th Cir. 2003), overruled on other grounds by Dukes v. Wal–Mart Stores, Inc., 603 F.3d 571 (9th
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`Cir. 2010). Here, defendant argues that plaintiff’s proposed class notice fails to inform class
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`members about tax liabilities that could arise if the class prevails in this litigation.2 As such, it
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`proposes adding the following language after the second paragraph in the section titled “What Is
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`the Lawsuit About?”:
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`RCM further contends that the Lawsuit would have harmful tax consequences on
`employees if the Court holds that the per diem benefits must be included in the
`calculation of overtime pay. Plaintiff disagrees with RCM’s assertion that
`prevailing on the overtime claims would cause adverse tax consequences. You may
`wish to consult a tax professional regarding any potential tax implications of the
`Lawsuit.
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`Plaintiff counters that the proposed language is misleading because it gives the false impression
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`that “potential adverse tax implications” can be avoided by opting out of the class.
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`2 Defendant acknowledges that a finding that the per diem payments must be included in
`the regular rate for calculating overtime “does not necessarily mean that the per diems will be
`taxable, and there is room for debate” on the issue.
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`Case 4:19-cv-06363-YGR Document 35 Filed 10/20/20 Page 5 of 7
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`In considering this issue, the Court is mindful of the importance of striking an appropriate
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`balance between ensuring that putative class members have sufficient information to decide
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`whether to participate in the litigation, and at the same time, not dissuading them from making
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`either choice. It is not unusual for language related to taxes to be included in class notices.
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`However, the first two sentences of defendant’s proposed language, with their references to
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`“harmful” and “adverse” tax consequences, raise a serious risk of dissuading those with
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`meritorious claims from joining the action. It would be particularly misleading to include such
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`language in the section titled “What Is the Lawsuit About?,” as it cannot be argued reasonably that
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`taxation is at the heart of this litigation. Moreover, as plaintiff points out, it is likely that any tax
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`consequence of a ruling that the per diem payments should have been included in the regular rate
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`would extend to all employees paid on a per diem basis, regardless of whether they participate or
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`opt out.
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`As such, the Court DENIES defendant’s specific request, but GRANTS the more generic
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`request for a modification of the class notice. Thus, plaintiff shall include the following in the
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`class notice:
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`In addition, if the lawsuit is successful, and depending on how any recovery would
`be classified, there may be tax implications. You may wish to consult a tax
`professional regarding any potential tax implications of the Lawsuit. The Court has
`not made any findings on the topic
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`This language is informative and neutral, and its inclusion in the class notice will serve the best
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`interests of putative class members.3
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`* * * * *
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`For the foregoing reasons, the Court hereby ORDERS as follows:
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`3 The cases cited by defendant do not compel a different result. In Carlino v. CHG
`Medical Staffing, Inc., Case No. 1:17-CV-01323-DAD-JLT, 2019 WL 1005070, at *7-9 (E.D. Cal.
`Feb. 18, 2019), the court approved the same language proposed here only after discussing at
`length its skepticism of this language, ultimately concluding that “because a potential for adverse
`tax consequences appears to exist, and pursuant to the parties’ agreement expressed at the . . .
`hearing on the pending motion.” (Emphasis supplied.) The court in Dittman v. Medical Solutions,
`Case No. 2:17-cv-01851-MCE-CKD, Dkt. No. 39 (E.D. Cal.) modified the class notice to include
`language regarding tax implications without explaining why the language was appropriate in that
`case. These cases offer minimal guidance here.
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`Case 4:19-cv-06363-YGR Document 35 Filed 10/20/20 Page 6 of 7
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`1. Plaintiff’s motion for class certification is granted.
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`2. The Court certifies a class consisting of: All non-exempt hourly employees employed
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`by RCM Technologies (USA), Inc. in California who, at any time within four years
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`prior to the filing of this lawsuit through the date of class certification, worked one or
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`more workweeks in which they were paid overtime and received a weekly per diem or
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`stipend.
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`3. The Court appoints plaintiff Rhonda Hubbard as the representative of the certified
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`class.
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`4. The Court appoints Matthew B. Hayes and Kye D. Pawlenko of Hayes Pawlenko LLP
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`as class counsel for the certified class.
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`5. Defendant’s objection to plaintiff’s proposed class notice is denied in part and granted
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`in part. Notice of this order shall be provided to the certified class as follows:
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`a. The proposed notice of class certification lodged as Exhibit A of plaintiff’s motion
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`is approved except that plaintiff is instructed to make the following revisions:
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`i. On the first page, plaintiff shall make the following sentence into a separate
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`paragraph, for emphasis: “If you do nothing, you will automatically be included
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`in the certified class.”
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`ii.
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`Plaintiff shall include the agreed-upon changes to the section titled “How Can I
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`Exclude Myself from the Certified Class? (Action Required),” as reflected in
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`Exhibit 2 to the Declaration of William Hays Weissman.
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`iii.
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`Plaintiff shall change the title “What Fees and Costs Are Involved in the
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`Lawsuit” to “Are There Any Financial Considerations Involved In the
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`Lawsuit?” In this section, following the paragraph on fees and costs, plaintiff
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`shall add a separate paragraph stating: “In addition, if the lawsuit is successful,
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`and depending on how any recovery would be classified, there may be tax
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`implications. You may wish to consult a tax professional regarding any
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`potential tax implications of the Lawsuit. The Court has not made any findings
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`on the topic.”
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`Case 4:19-cv-06363-YGR Document 35 Filed 10/20/20 Page 7 of 7
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`b. The revised notice of class certification shall be disseminated via first-class U.S.
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`mail.
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`c. The deadline to opt-out of the certified class shall be 60 days from mailing the
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`notice.
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`d. Within 14 days of this Order, defendant shall produce to an agreed upon third party
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`administrator the contact information – including the names and last known
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`addresses – for all members of the certified class.
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`This Order terminates Docket Number 30.
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`IT IS SO ORDERED.
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`Dated:
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`YVONNE GONZALEZ ROGERS
`UNITED STATES DISTRICT COURT JUDGE
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`Northern District of California
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`United States District Court
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`October 20, 2020
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