Decision: In Stiller v. Costco Wholesale Corp., the Southern District of California decertified a statewide class of approximately 30,000 employees who were allegedly required to remain inside Costco warehouses at the end of their shifts without pay while lockdown procedures were completed. The court also decertified a nationwide collective action under the Fair Labor Standards Act that had been conditionally certified in December 2010 concurrent with the California class certification. The decision was based on a finding that Costco’s liability hinged on individualized determinations as to “whether, how often, and for how long [individual] class members actually experienced unpaid [off-the-clock] time.”

The court agreed with the plaintiffs (and the prior class certification decision, which was made by a different judge) that common questions existed with regard to whether Costco had a de facto policy of “locking employees, who had already clocked out, in warehouses for a compensable amount of time without pay,” whether that policy was enforced on a companywide basis and whether it resulted in the employees being subject to Costco’s control . The court stated, however, that such common questions only addressed whether off-the-clock work resulting from the alleged policy constituted work and whether Costco took action to remedy any unpaid time, which are only two of three elements of an off-the-clock claim. As to the third element of an off-the-clock claim (whether an individual employee performedsuch off-the-clock work) the court determined “no common answer” existed. The court relied on evidence provided by Costco that the alleged policy did not always result in off-the-clock work, such as the discretion its managers had with regard to how often clocked-out employees were permitted to leave once warehouses were locked down.

The court concluded that, “at a minimum, the class would need to be redefined to include employees who were not only subject to the Alleged Policy, but who also experienced unpaid detention times as a result.” But defining the class this way would, the court further concluded, “require a liability finding as to each employee to determine whether he or she [was] even a member of the California Class. And undertaking individualized inquiries as to approximately 30,000 individuals … would result in the common questions here being overcome by individualized inquiries.” Importantly, the court cited the Supreme Court’s Comcast decision as overruling the Ninth Circuit’s decisions in Stearns and Yokoyama with respect to whether individualized damages issues can defeat predominance.

Impact: This case follows Ortiz v. CVS Caremark Corporation, a Northern District of California decision from December 2013 denying certification of a proposed statewide class of more than 50,000 CVS employees, where the court determined that the commonality requirement was not met because CVS had provided evidence of written lawful policies and declarations showing that at least some managers and employees followed those policies. Stiller thus shows that employers are continuing to gain traction against class certification following the Supreme Court’s landmark decision in Dukes v. Wal-Mart, which emphasized the need for a classwide proceeding to produce common answers, not just common questions. The impact is not necessarily limited to wage and hour cases. In combating class actions, employers should continue to marshal evidence, as Costco did here, of variance from a purportedly established unlawful policy (or compliance with a written lawful policy), so as to demonstrate individualized inquiries that can defeat certification.