MARGARET NAGLE, Magistrate Judge
Plaintiff filed a Complaint on December 24, 2008, seeking review of the denial by the Social Security Commissioner ("Commissioner") of plaintiff's application for supplemental security income ("SSI"). On February 26, 2009, the parties consented to proceed before the undersigned United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). The parties filed a Joint Stipulation on August 10, 2009, in which: plaintiff seeks an order reversing the Commissioner's decision and awarding benefits or, in the alternative, remanding the matter for further administrative proceedings; and defendant seeks an order affirming the Commissioner's decision. The Court has taken the parties' Joint Stipulation under submission without oral argument.
SUMMARY OF ADMINISTRATIVE PROCEEDINGS
On September 4, 2002, filed an application for SSI, in which she alleged to have been disabled since September 1, 1991, due to anxiety, memory loss, partial blindness, and lower back, pelvic, and left shoulder pain. (A.R. 66-74.) Plaintiff's past relevant work experience includes the jobs of clothes tagger and prep cook. (A.R. 243, 290, 311-12.)
Plaintiff had filed earlier applications in 1983, and 1989, which were denied, and she did not request a hearing and/or seek review of the denial of those applications. (Administrative Record ("A.R.") 13.) Plaintiff also filed an application on October 31, 2000, which an Administrative Law Judge denied on January 24, 2002; the Appeals Council denied review on April 22, 2002. ( Id.)
While this Court's review of the denial of her instant SSI claim was pending, plaintiff filed another SSI application on September 21, 2005; the Appeals Council consolidated that claim with plaintiff's claim based on her September 4, 2002 application. This lawsuit stems from the Commissioner's final decision on the consolidated claims. (A.R. 237, 266.)
Plaintiff's application was denied initially and upon reconsideration (A.R. 47-58), and she requested a hearing (A.R. 59). On March 31, 2004, plaintiff, who was represented by counsel, testified at a hearing before Administrative Law Judge F. Keith Varni ("ALJ Varni"). (A.R. 40-46.) On April 30, 2004, ALJ Varni denied plaintiff's application. (A.R. 10-20.) Plaintiff appealed ALJ Varni's decision, and the Appeals Council denied plaintiff's request for review. (A.R. 3-8.) On September 13, 2004, plaintiff sought review in this Court (Case No. EDCV 04-1118-MAN). (A.R. 269.) On March 27, 2006, the Court reversed the decision and remanded the case for further proceedings. (A.R. 268-80.) On April 24, 2006, the Appeals Council vacated ALJ Varni's decision and remanded the case to an Administrative Law Judge. (A.R. 266-67.)
On July 3, 2008, Administrative Law Judge Phillip E. Moulaison ("ALJ") held a hearing, at which plaintiff and others testified. (A.R. 285-318.) On August 22, 2007, the ALJ issued a decision that was partially favorable in that the ALJ found plaintiff to be disabled and entitled to receive SSI as of December 27, 2007, but found she was not disabled prior to that date. (A.R. 237-44.)
SUMMARY OF THE COMMISSIONER'S DECISION
The ALJ found that plaintiff has not engaged in substantial gainful activity since September 1, 1991, the alleged onset date. (A.R. 239.) The ALJ determined that plaintiff has a combination of severe impairments consisting of: a history of chronic lower back, right hip, pelvic, and left shoulder pain; diabetes mellitus; peripheral neuropathy; hypertension; history of hepatitis; history of right eye injury; and obesity. (A.R. 239.) Relying on the December 10, 2002 report of Dr. Linda M. Smith, a psychiatrist who performed a consultative psychiatric evaluation of plaintiff, the ALJ concluded that plaintiff's mood disorder is non-severe. (Id.) The ALJ further determined that plaintiff's impairments, singly or in combination, do not meet or equal any of the impairments listed in 20 C.F.R. Part 404, Subpart P, Appendix 1. (A.R. 240.)
The ALJ determined that, as of December 27, 2007, plaintiff's residual functional capacity ("RFC") was for unskilled sedentary work as defined in 20 C.F.R. § 416.967(a), because she needed a cane to walk. (A.R. 240.) The ALJ concluded that, as of December 27, 2007, plaintiff was unable to perform her past relevant work as a clothes tagger or a prep cook (A.R. 243), and based on her age, education, work experience, and RFC, there was not a significant number of jobs in the national economy that she could perform (A.R. 244). Accordingly, a finding of "disabled," as of December 27, 2007, was warranted. (Id.)
On December 27, 2007, plaintiff's age category changed from younger individual to individual approaching advanced age. (A.R. 243.)
With respect to the pre-December 27, 2007 time frame, the ALJ concluded that plaintiff had the RFC to perform unskilled light work with certain limitations. (A.R. 242.) Specifically, the ALJ concluded that plaintiff was able to engage in the following activities with the indicated limitations: sit for six hours in an eight-hour workday; stand and/or walk for six hours in an eight-hour workday; lift and/or carry and push and/or pull 10 pounds frequently and 20 pounds occasionally; climb, balance, stoop, kneel, crouch, and crawl occasionally; reach overhead with the left arm occasionally; and engage in unlimited handling, fingering, and feeling. (A.R. 240.) The ALJ found that, although plaintiff's color vision is unlimited, her right eye vision was limited in near acuity, far acuity, depth perception, accommodation, and field of vision. ( Id.) He further found that plaintiff had no communicative or environmental limitations. (Id.)
The ALJ found that, prior to December 27, 2007, there was a significant number of jobs in the national economy that plaintiff could have performed. (A.R. 243-44.) The ALJ relied on the Medical-Vocational Guidelines, 20 C.F.R. Part 404, Subpart P, Appendix 2 (the "Grids"), as the basis for concluding that, given plaintiff's age, education, work experience, and RFC for light work prior to December 27, 2007, a finding of "not disabled" was warranted for the period prior to December 27, 2007. (A.R. 244.)
It is unclear whether the ALJ was referring to plaintiff's past relevant work or different jobs or both. At Step Four, the ALJ made the express finding that plaintiff "is unable to perform any past relevant work"; however, his attendant Step Four discussion focused only on the relationship between the light RFC required for plaintiff's past relevant work and her sedentary RFC post-December 27, 2007. (A.R. 243.) In his Step Five finding, the ALJ failed to identify what jobs in the national economy he had determined plaintiff could perform prior to December 27, 2007. (A.R. 243-44.)
STANDARD OF REVIEW
Under 42 U.S.C. § 405(g), this Court reviews the Commissioner's decision to determine whether it is free from legal error and supported by substantial evidence in the record as a whole. Orn v. Astrue, 495 F.3d 625, 630 (9th Cir. 2007). Substantial evidence is "`such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.'" Id. (citation omitted). The "evidence must be more than a mere scintilla but not necessarily a preponderance." Connett v. Barnhart, 340 F.3d 871, 873 (9th Cir. 2003). "While inferences from the record can constitute substantial evidence, only those `reasonably drawn from the record' will suffice." Widmark v. Barnhart, 454 F.3d 1063, 1066 (9th Cir. 2006) (citation omitted).
Although this Court cannot substitute its discretion for that of the Commissioner, the Court nonetheless must review the record as a whole, "weighing both the evidence that supports and the evidence that detracts from the [Commissioner's] conclusion."Desrosiers v. Sec'y of Health and Human Servs., 846 F.2d 573, 576 (9th Cir. 1988); see also Jones v. Heckler, 760 F.2d 993, 995 (9th Cir. 1985). "The ALJ is responsible for determining credibility, resolving conflicts in medical testimony, and for resolving ambiguities." Andrews v. Shalala, 53 F.3d 1035, 1039-40 (9th Cir. 1995). "Where the evidence as a whole can support either a grant or a denial, [a federal court] may not substitute [its] judgment for the ALJ's." Bray v. Comm'r of Soc. Sec. Admin., 554 F.3d 1219, 1222 (9th Cir. 2009) (citation and internal punctuation omitted).
The Court will uphold the Commissioner's decision when the evidence is susceptible to more than one rational interpretation.Tommasetti v. Astrue, 553 F.3d 1035, 1038 (9th Cir. 2008); Burch v. Barnhart, 400 F.3d 676, 679 (9th Cir. 2005); see also Batson v. Comm'r of Soc. Sec. Admin., 359 F.3d 1190, 1193 (9th Cir. 2004) ("if evidence exists to support more than one rational interpretation, we must defer to the Commissioner's decision"). However, the Court may review only the reasons stated by the ALJ in his decision "and may not affirm the ALJ on a ground upon which he did not rely." Orn, 495 F.3d at 630; see also Connett, 340 F.3d at 874. The Court will not reverse the Commissioner's decision if it is based on harmless error, which exists only when it is "clear from the record that an ALJ's error was `inconsequential to the ultimate nondisability determination.'"Robbins v. Soc. Sec. Admin., 466 F.3d 880, 885 (9th Cir. 2006) ( quoting Stout v. Comm'r, 454 F.3d 1050, 1055-56 (9th Cir. 2006)); see also Tommasetti, 533 F.3d at 1038; Burch, 400 F.3d at 679.
DISCUSSION
Plaintiff alleges the following three issues: (1) whether the ALJ properly considered the vocational expert's testimony; (2) whether the ALJ properly analyzed plaintiff's combination of impairments to determine whether her impairments meet or medically equal an impairment set forth in the Listing of Impairments, 20 C.F.R. Pt. 404, Subpt. A, App. 1 (the "Listings"); and (3) whether the ALJ properly considered plaintiff's obesity. (Joint Stipulation ("Joint Stip.") at 2-3.)
I. No Step Three Error Warranting Reversal Has Been Shown.
A. The Listings
At Step Three of the five-part sequential evaluation for determining whether a claimant is disabled, the Commissioner must determine whether a claimant's impairment or impairments meet or equal one of the specific impairments set forth in the Listings. 20 C.F.R. § 416.920(a)(4)(iii). The physical and mental conditions contained in the Listings are considered so severe that "they are irrebuttably presumed disabling, without any specific finding as to the claimant's ability to perform his past relevant work or any other jobs." Lester v. Chater, 81 F.3d 821, 828 (9th Cir. 1995). The Listings were "designed to operate as a presumption of disability that makes further inquiry unnecessary." Sullivan v. Zebley, 493 U.S. 521, 532, 110 S. Ct. 865, 892 (1990); see also Lewis v. Apfel, 236 F.3d 503, 512 (9th Cir. 2001). If a claimant shows that her impairments meet or equal a Listing, she will be found presumptively disabled. 20 C.F.R. §§ 416.925-416.926.
For an impairment or combination of impairments to meet a Listing, all of the criteria of that Listing must be satisfied for the requisite durational period. Zebley, 493 U.S. at 530, 110 S. Ct. at 891 (the impairment "must meet all of the specified medical criteria" in the Listing) (emphasis in original); see also 20 C.F.R. §§ 416.909 and 416.925(c)(3); Social Security Ruling ("SSR") 83-19 ("[a]n impairment `meets' a listed condition in the Listing of Impairments only when it manifests the specific findings described in the set of medical criteria for that listed impairment").
For an impairment or combination of impairments to equal a Listing, the claimant "must present medical findings equal in severity to all the criteria for the one most similar listed impairment." Zebley, 493 U.S. at 531, 110 S. Ct. at 891 (emphasis in original); see also 20 C.F.R. § 416.926(a)-(b); SSR 83-19 (an impairment is "equivalent" to a Listing only if a claimant's symptoms, signs, and laboratory findings are "at least equivalent in severity" to the criteria for the listed impairment most like the claimant's impairment). In making an equivalence assessment, the claimant's impairments "`must be considered in combination and must not be fragmentized in evaluating their effects.'"Lester, 81 F.3d at 829 (citation omitted). A determination of medical equivalence must rest on objective medical evidence. See Lewis, 236 F.3d at 614 ("[a] finding of equivalence must be based on medical evidence only"); Tackett v. Apfel, 180 F.3d 1094, 1100 (9th Cir. 1999) ("[a] generalized assertion of functional problems is not enough to establish disability at step three," because "`[m]edical equivalence must be based on medical findings'"; citation omitted); 20 C.F.R. § 416.929(d)(3) ("In considering whether your symptoms, signs, and laboratory findings are medically equal to the symptoms, signs, and laboratory findings of a listed impairment, we will look to see whether your symptoms, signs, and laboratory findings are at least equal in severity to the listed criteria. However, we will not substitute your allegations of pain or other symptoms for a missing or deficient sign or laboratory finding to raise the severity of your impairment(s) to that of a listed impairment.").
At Step Three, the claimant bears the burden of proving that her impairment or combination of impairments meets or equals the criteria of a Listing. Tackett, 180 F.3d at 1098-99. In addition, "[a]n ALJ is not required to discuss the combined effects of a claimant's impairments or compare them to any listing in an equivalency determination, unless the claimant presents evidence in an effort to establish equivalence." Burch, 400 F.3d at 683; see also Lewis, 236 F.3d at 514 (finding that the ALJ's failure to discuss equivalence did not warrant reversal, because the claimant had not offered any theory, plausible or otherwise, that might show how the combined effect of his impairments equaled a Listing).
"An ALJ must evaluate the relevant evidence before concluding that a claimant's impairments do not meet or equal a listed impairment." Lewis, 236 F.3d at 512. A "boilerplate finding [at Step Three] is insufficient to support a conclusion that a claimant's impairment" does not meet or equal a listing. Id. In Marcia v. Sullivan, 900 F.2d 172, 176 (9th Cir. 1990), the Ninth Circuit held that: an ALJ must explain and evaluate the evidence that supports his Step Three finding; and an ALJ's unexplicated finding at Step Three — to wit, "[t]he claimant has failed to provide evidence of medically determinable impairments that meet or equal the Listings" — was reversible error, because the ALJ failed to explain adequately his evaluation of why certain medical evidence of record and/or the combined effects of the claimant's impairments did not equal the Listing in question. Id. However, in Lewis, the Ninth Circuit clarified that the lack of a formal analysis and findings at the Step Three level will not constitute reversible error when: the ALJ's subsequent discussion of the relevant medical evidence supports a conclusory Step Three finding; and with respect to equivalency, the claimant fails to proffer a theory or evidence showing that his combined impairments equal a Listing. 236 F.3d at 513-14.
B. The ALJ's Step Three Finding
As plaintiff correctly notes, the ALJ, in his decision, did not "provide an analytical discussion at the step three sequential evaluation process that addressed the combined effect of Plaintiff's multiple impairments." (Joint Stip. at 8.) The ALJ simply concluded that no impairment or combination of impairments met or equaled a Listing, because "[t]he objective medical evidence does not support a conclusion that the claimant has had limitations of listing level severity." (A.R. 240.)
Plaintiff argues that the ALJ's Step Three finding was erroneous, because her combined impairments meet or equal three Listings specifically, No. 1.02A, 2.02, and 14.09A. She contends that the ALJ failed to analyze properly the combined effect of her "osteoarthritis, chronic left hip and leg pain, and visual limitation" with respect to these three Listings. (Joint Stip. at 9-13.)
Relying on a physician's "impression" that plaintiff may have fibromyalgia (A.R. 183), plaintiff asserts that she has received a "diagnosis" of fibromyalgia as a "medically determinable impairment," which the ALJ should have considered at Step Three as part of her "collective" impairments. (Joint Stip. at 13.) In the proceedings before the Commissioner, plaintiff did not claim to suffer from fibromyalgia. She did not include fibromyalgia among the ailments she reported to the numerous consulting physicians who examined her. Plaintiff has not cited any evidence indicating that any clinical testing was performed and elicited positive findings that she has fibromyalgia. Accordingly, plaintiff's fibromyalgia argument is not persuasive.
1. Listing 1.02A
Plaintiff first argues that the medical evidence establishes that she met or equaled Listing 1.02A, which governs the major dysfunction of a joint due to any cause. The Listing requires three findings — a gross anatomical deformity and chronic joint pain and stiffness, with signs of limitation of motion or other abnormal motion of the affected joint, and medical imaging showing narrowing, destruction, or ankylosis of the affected joint — plus a further finding of the involvement of a major peripheral weight-bearing joint, resulting in the inability to ambulate effectively, as defined in 1.00B2b.
Plaintiff argues that her treating records are replete with evidence that she has complained, on an ongoing basis, of chronic shoulder, back, hip, knee, and lower extremity pain. Plaintiff relies on 2002 and 2003 physician notes indicating that, based on plaintiff's complaints of hip and leg pain, she might have osteoarthritis. However, medical imaging performed in 2001, 2004, and 2005 was negative for osteoarthritis or bone or joint abnormalities in her knees or hips. (A.R. 134-35, 379, 384-86.) A 2004 diagnostic image of plaintiff's left shoulder did show moderate degenerative changes in her left shoulder (glenohumeral joint). (A.R. 387.) On July 14, 2008, a treating physician at Arrowhead Regional Medical Center ("ARMC") noted that plaintiff has left shoulder weakness and pain, with a decreased range of motion. (A.R. 468-69.)
Thus, there was some medical evidence of record supportive of the first three findings required for Listing 1.02A based on plaintiff's left shoulder impairment, but not as to her lower extremities. Plaintiff argues that the further required finding of Listing 1.02A — involvement of a weight-bearing joint resulting in an inability to ambulate effectively as defined in 1.00B2B — is met by evidence that: in February 2001, a nurse observed that plaintiff walks slowly using a cane and with a slight limp (A.R. 137); in February 2005, an ARMC physician noted that plaintiff complained of a burning sensation on the bottom of her fe9 (9th Cir. 2010). These requirements must be satisfied with respect to each class and subclass. Fed.R.Civ.P. 23(c)(5); Betts v. Reliable Collection Agency, Ltd., 659 F.2d 1000, 1005 (9th Cir. 1981). The Court first addresses whether Plaintiffs' proposed class and subclasses have satisfied the elements of 23(a).
The requirements of Rule 23(a) are that (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. Fed.R.Civ.P. 23(a). These requirements are known as numerosity, commonality, typicality, and adequacy.
A. Numerosity
Rule 23(a)(1) requires that the proposed class be "so numerous that joinder of all members is impracticable." Fed.R.Civ.P. 23(a)(1). The numerosity requirement "requires examination of the specific facts of each case and imposes no absolute thresholds." Gen. Tel. Co. of the Nw., Inc. v. EEOC, 446 U.S. 318, 330 (1980) (citing cases). Although a plaintiff is not required to denote a precise number of class members, "[t]he central question is whether Plaintiffs have sufficiently identified and demonstrated the existence of the numbers of persons for whom they speak." Schwartz v. Upper Deck Co., 183 F.R.D. 672, 680-681 (S.D. Cal. 1999). In general, courts find numerosity when the class includes at least forty members. Rannis v. Recchia, No. 09-55859, 2010 WL 2124096, at *4 (9th Cir. May 27, 2010); Dilts v. Penske Logistics, LLC, ___ F.R.D. ___, 2010 WL 1709807, at *4 (S.D. Cal. April 26, 2010) (citing Consol. Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 482 (2d Cir. 1995)). And classes of fifteen or less are too small. Gen. Tel. Co., 446 U.S. at 339. Each class and subclass must meet the numerosity requirement. See Fed.R.Civ.P. 23(c)(5); Traylor v. Avnet, Inc., 257 F.R.D. 521, 527 (D. Ariz. 2009) (citing Betts v. Reliable Collection Agency, 659 F.2d 1000, 1005 (9th Cir. 1981)) ("When a class is divided into subclasses, each subclass must independently meet Rule 23 certification requirements.").
i. Main Class
Plaintiffs claim that the main class comprises about four-hundred members. If this is true, the class would easily meet the numerosity requirement. But Rossi Concrete argues that Plaintiffs' evidence does not establish that the class has that many members.
Plaintiffs originally cited only one piece of evidence to support its claim: Rossi Concrete's interrogatory response. Plaintiffs had asked how many "field employees" Rossi Concrete employed during the relevant time period. (Cvitan Decl., Ex. E at 163.) And Rossi Concrete answered, "Approximately 400 field employees." But the main class is defined as those employees who "performed construction work on public works for Employer," and it is possible that only a subset of the four-hundred field employees actually worked on public-works projects. Some may have worked only on private construction jobs, which Plaintiffs admit is a part of Rossi Concrete's work. (Pls.' Mem. 1:16-19.)
Field employees are presumably those employees who perform construction work.
In their reply, Plaintiffs produce additional evidence that would show numerosity for the main class. They show that Plan 3 has 238 participants. (Cvitan Decl., Ex. C at 45.) All the participants in Plan 3 are, or were, prevailing-wage employees, (Cvitan Decl., Ex. D at 86; Suppl. Bautista Decl., Ex. I; Suppl. Cvitan Decl., Ex. A, 117:1-15), and prevailing-wage employees are construction workers on public-works projects. See Cal. Lab. Code § 1771 (prevailing-wage must be paid to "workers employed on public works"); Lab. Code § 1723 (worker defined as "laborer, worker, or mechanic"). So all 238 participants in Plan 3 were construction workers who worked on public works projects and were entitled to the prevailing wage.
The Court granted Defendants leave to file a sur-reply, which they did. Defendants had an opportunity to respond to the new evidence and arguments raised in Plaintiffs' reply.
Rossi Concrete therefore employed at least 238 construction workers who worked on public-works projects, and numerosity would be satisfied for the main class.
ii. Subclasses
Before addressing numerosity in the subclasses, the Court first addresses the precise definition of each subclass. All the subclasses, by definition, are subsets of the main class. See Fed.R.Civ.P. 23(c)(5) ("Subclasses. When appropriate, a class may be divided into subclasses that are each treated as a class under this rule.") (emphasis added). And the main class only contains Rossi Concrete's field employees who worked on public-works projects. So each subclass also only contains field employees who worked on public-works projects. For example, the Plan 1 Subclass, which Plaintiffs define as all participants in Plan 1 during the relevant time period, does not really include all the Plan 1 participants. It only includes those participants who were also field employees and who worked on public-works projects. If the Court does not interpret each subclass as containing the additional limitations of the main class, there would be an absurd result: Defendant Joe Rossi, who is a member of Plan 1 (but not a field employee who worked on public works), would be a member of the Plan 1 Subclass, and would be both a plaintiff and defendant in this lawsuit. With this in mind, the Court analyzes whether each subclass meets the numerosity requirement.
The Plan 3 Subclass, which comprises all Plan 3 participants, has 238 members. As discussed above, all the Plan 3 participants are or were prevailing-wage employees and members of the main class. The Plan 3 Subclass therefore satisfies the numerosity requirements. But the Plan 1 and Plan 2 Subclasses, as well as the Plan 1 Termination Subclass, may not.
Plaintiffs define the Plan 1 and Plan 2 Subclasses to comprise all participants in each of those benefit plans. There are 110 participants in Plan 1, and 32 participants in Plan 2. Although the total number of participants in these plans may be sufficiently numerous, Plaintiffs do not cite any evidence showing how many participants in Plans 1 and 2 were also part of the main class. Some of the participants in those plans may be not be field workers, or may not have worked on public-works projects. So the Court cannot make a finding about how many participants in Plan 1 and Plan 2 were actually part of the main class, and therefore cannot make a finding about how many people are in the Plan 1 and Plan 2 Subclasses. Failure to provide sufficient information to estimate the number of members of the Plan 1, Plan 1 Termination, and Plan 2 Subclasses prevents Plaintiffs from establishing numerosity at this time. See Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1266 (11th Cir. 2009) (reversing finding of numerosity where plaintiff failed to provide evidence of number of employees that met class definition); Schwartz, 183 F.R.D. at 680-682.
Indeed, Defendant Joe Rossi is a participant in Plans 1 and 2.
The same is true of the Driver Subclass. That subclass contains "class members who were required to drive vehicles to and from jobsites." Plaintiffs claim that the Driver Subclass has eighty members. But the evidence they cite only establishes that eighty field employees have driven vehicles. (Cvitan Decl., Ex. E at 164.) It is unclear how many of those eighty drivers worked on public-works projects.
The Terminated Subclass also fails to satisfy the numerosity requirement for a similar reason. Although Rossi Concrete admits that it terminated 327 field employees during the relevant time period, Plaintiffs have not cited any evidence showing how many of those 327 field employees worked on public works projects, which makes it impossible for the Court to determine the size of the Terminated Subclass.
Therefore, Plaintiffs have established numerosity only for one of the proposed subclasses, the Plan 3 Subclass. Because they have failed to establish that there are any members of the Plan 1 and 2 Subclasses, the Court denies certification for those Subclasses. And because the Court, as set forth below, certifies only the Plan 3 Subclass, it need not certify an overarching main class at this time. This is without prejudice to Plaintiffs seeking reconsideration based on evidence obtained at discovery that there are public works employees in the other proposed Subclasses.
Plaintiffs point to Romero v. Producers Dairy Foods, Inc., 235 F.R.D. 474, 480 (E.D. Cal. 2006) for the proposition that "[t]he numerosity requirement is more readily met where a class contains employees suing their present employer." But the mere fact that this action involves current employees does not excuse Plaintiffs from their burden of presenting evidence to show who would comprise membership of the other Subclasses.
B. Commonality
Rule 23(a)(2) requires that "there are questions of law or fact common to the class." Fed.R.Civ.P. 23(a)(2). "Commonality focuses on the relationship of common facts and legal issues among class members." Dukes, 603 F.3d at 599. Rule 23(a)(2) is permissive, and "[a]ll questions of fact and law need not be common to satisfy the rule." Id. (quoting Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998). "[O]ne significant issue common to the class may be sufficient to warrant certification," id., and "[t]he existence of shared legal issues with divergent factual predicates is sufficient." Dukes, 603 F.3d at 599.
i. Seventh and Eleventh Claims
Plaintiffs seek to certify two issues relevant to "the entire class" with respect to the Seventh and Eleventh Claims. The first is whether Rossi Concrete paid its public-works field employees the correct base rate in wages. And the second is whether Rossi Concrete correctly calculated the credit it took for its contributions to employee benefit plans. Although Plaintiffs do not seek explicitly to certify these issues for the Plan 3 Subclass, these issues involve the rights of Plan 3 Subclass members as current and former employees of Rossi who have performed construction work on public works projects and are thus relevant to this Subclass. Accordingly, the Court will consider whether aspects of the Seventh and Eleventh Claims may be certified for the Plan 3 Subclass. See American Finance System, Inc. v. Harlow, 65 F.R.D. 94, 107 n. 14 (D. Md. 1974) ("Through the `housekeeping' powers conferred on the district court by Rule 23(d), a class may be subdivided, certified as to certain issues, and, impliedly, combined with other proposed classes within the meaning of Rule 23(c)(4)."). The Court first addresses the base-rate issue.
Under California law, contractors on public-works projects must pay their employees a prevailing wage. Cal. Lab. Code § 1771. The employer can use either an all-cash wage or a combination of a cash wage and contributions to employee benefit plans to meet the prevailing rate. See id. at § 1773.1(a); WSB Elec., 88 F.3d at 791. When an employer uses a combination of cash wages and benefits to meet the prevailing rate, Plaintiffs claim that employers must still pay a minimum cash wage. See Cal. Lab. Code § 1773.1(c);Cal. Code. Regs. tit. 8, § 16200(a)(3)(I). Plaintiffs call this minimum cash wage the base rate.
The prevailing wage, including the base rate, is set by the Department of Industrial Relations ("DIR"). Cal. Lab. Code § 1770. The DIR issues prevailing wages for each type of worker. The base rate for some workers increases over time based on pre-determined rate increases also set by the DIR. Plaintiffs claim that Rossi Concrete, as a matter of policy, failed to apply these pre-determined increases to class members' cash wages, and instead applied the increase to the pension contributions. Whether or not California law requires employers to pay a certain base rate in cash wages, and if so, whether Rossi Concrete had a policy of paying wage increases to benefit plans instead of cash wages, are issues common to the Plan 3 Subclass. This is because prevailing-wage laws apply to each member of the Plan 3 Subclass, so the resolution of this common issue would affect all of their rights.
Historical prevailing-wage spreadsheets can be found online at www.dir.ca.gov/dlsr/main.htm (last visited June 29, 2010).
The DIR indicates a worker should get a pre-determined wage increase by using a double asterisk next to the prevailing wage's expiration date. Cal. Code Regs. tit. 8, § 16204(b) (Prevailing wage determinations with double asterisks (**) after the expiration date indicate that the basic hourly wage rate, overtime and holiday pay rates, and employer payments to be paid for work performed after this date have been predetermined. If work is to extend past this date, the new rate must be paid and should be incorporated in contracts entered into now.")
There is some evidence that Rossi Concrete had such a class-wide policy. Suzzette Stickney, Rossi Concrete's director of human resources, testified at her deposition that Rossi Concrete pays the pre-determined rate increases "all to pension." (Supp. Cvitan Decl., Ex. A, 93:10-14.) "We put it all to pension, and we leave it. Because it's all — the money is all paid to the employee, just in some cases maybe not cash. It's all paid to pension. So we leave it as is." Id. at 94:3-6.
Another common issue is whether Rossi Concrete took the right amount of credit for its employer contributions. As the Court mentioned above, employers can use their contributions to employee benefit plans to help satisfy the prevailing wage. See Cal. Lab. Code § 1773.1(a). The question here is whether Rossi Concrete properly converted its employer contributions into an hourly rate.
Plaintiffs argue that Rossi Concrete had to annualize its employer benefits in determining the hourly rate of employer contributions. There are at least two methods of counting employer contributions. One is the annualization rule, which is the method Plaintiffs allege Rossi Concrete had to use. Under that rule, Rossi Concrete had to add up all the employer contributions made during a year on both private and public-works projects, and divide the contributions by the total number of hours an employee worked on both private and public-works projects. For example, an employee worked 500 hours in a year on public jobs and 500 hours on private ones. And during his work on the public jobs, his employer contributed a total of $300 to his pension plan as part of his wages, and on the private jobs the employer contributed $200. So in that year he worked a total of 1000 hours and the employer paid a total of $500 to his pension. Under the annualization rule, the employer would divide the $500 by 1000 hours to get $0.50 per hour, and the employer could count that $0.50 of employer contributions toward the prevailing wage.
Rossi Concrete admits it did not annualize contributions, but argues that it did not have to. According to Rossi Concrete, it had to add up the employer contributions it made for public-works projects only, and divide these contributions by the number of hours worked on public-works projects. Using the same example, the employer would count only the 500 hours worked on public jobs and the $300 contributed to the employee's pension on public jobs; the hours worked and amounts contributed on private jobs would not be counted. The employer would then divide the $300 by 500, which would result in an hourly contribution of $0.60. So under this rule and using the same facts, an employer could take more credit for his employer contributions than it could if it used the annualization rule. That is because without annualization an employer could contribute less to benefit plans while the employee works on private jobs, and those lower contributions would have no effect on the credit it could take for its contributions. But under the annualization rule, if Rossi Concrete paid less in benefits on private jobs, these lower payments would reduce the amount of credit Rossi Concrete could take for its contributions.
So the annualization question raises at least two general issues. The first is whether annualization is required. And the second, assuming annualization is required, is whether Rossi Concrete properly annualized its employer contributions. These are both issues which are common to the members of the Plan 3 Subclass, who are, by definition, prevailing-wage employees whose employer contributions may be subject to the annualization requirement. Under the permissive standard of Rule 23(a)(2), Dukes, 603 F.3d at 599, these issues along with the base-rate issue are sufficient to show that there are issues common to the class.
Defendants argue that the annualization issue requires too much individual inquiry. But Rule 23(a)(2) is permissive, and the "existence of shared legal issues with divergent factual predicates is sufficient" to satisfy it. Dukes, 603 F.3d at 599. Although there will be individual inquiries necessary to assess any potential damages, at the very least there are "shared legal issues with divergent factual predicates" and so the commonality requirement is satisfied. Id.
ii. Third Claim
The Plan 3 Subclass comprises all participants in Plan 3 who were prevailing-wage employees. In the Third Claim, Plaintiffs allege that Rossi Concrete failed to contribute enough to Plan 3 because it did not annualize its contributions and therefore may not have paid enough into the ERISA plans. The applicability of the annualization rule is central to the Plan 3 Subclass and it is therefore an issue common to the class, in satisfaction of Rule 23(a)(2).
C. Typicality
Rule 23(a)(3) requires that "the claims or defenses of the representative parties are typical of the claims or defense of the class." Fed.R.Civ.P. 23(a)(3). "Under the rule's permissive standards, representative claims are `typical' if they are reasonably coextensive with those of absent class members; they need not be substantially identical." Dukes, 603 F.3d at 613 (quoting Hanlon, 150 F.3d at 1020) (internal quotation omitted). "Some degree of individuality is to be expected in all cases, but that specificity does not necessarily defeat typicality." Staton v. Boeing Co., 327 F.3d 938, 957 (9th Cir. 2003).
The four Moving Plaintiffs worked on public-works projects. (Decl. of Zacarias Millan ¶ 7; Decl. of Reynaldo Galvan ¶ 8; Decl. of Juan Martinez ¶ 8; Decl. of Andres Millan ¶ 7.) They also all participated in Plan 3, which was the Rossi Concrete, Inc., 401K PSP. (Decl. of Zacarias Millan ¶ 5; Decl. of Reynaldo Galvan ¶ 5; Decl. of Juan Martinez ¶ 5; Decl. of Andres Millan ¶ 5.) They are therefore members of the Plan 3 Subclass, and there is no evidence before the Court showing that their claims are not typical of the classes they seek to represent.
Defendants argue that because the named plaintiffs raised un-pled retaliation claims in their depositions, the named plaintiffs' claims are not typical of the classes they seek to represent. But the proper focus is on the claims pled in the Complaint, and the named plaintiffs have typical claims.
Defendants also argue several of the named plaintiffs "admitted at deposition that they suffered no physical injury or lost any money or property as a result of conduct alleged in the claims plaintiffs seek to certify." (Opp. at 17.) They argue that because they have not suffered injury, they cannot represent the class. O'Shea v. Littleton, 414 U.S. 488, 494 (1974) (named plaintiffs must have sustained injury). Defendants, however, overstate the deposition testimony. For example, in response to questions like, "[D]uring that time between 2002 and 2007, did you ever lose any money or property because of something Rossi Concrete did?" named plaintiff Andres Millan referred to Rossi Concrete's failure to reimburse him for a work-related traffic accident and for some on-the-job lunches, but nothing else. (A. Millan Dep. 39:19-41:23.) This hardly qualifies as an admission, as the question is ambiguous and did not specifically refer to the prevailing-wage issues, annualization, or any other issue alleged in the Complaint. Defendants try to make hay out of the fact that most of the named plaintiffs did not complain to Rossi Concrete that they were not being paid enough, but the Court would not expect the named plaintiffs to be aware of errors in computing increases in their base rate or the annualization requirement. These are errors which are not apparent on the face of their pay stubs and are somewhat technical. The deposition testimony of the other named plaintiffs is similar and, for the same reasons, do not qualify as admissions.
D. Adequacy
Rule 23(a)(4) permits certification of a class only if the "representative parties will fairly and adequately protect the interests of the class." Fed.R.Civ.P. 23(a)(4). This factor requires "(1) that the proposed representative Plaintiffs do not have conflicts of interest with the proposed class, and (2) that Plaintiffs are represented by qualified and competent counsel." Dukes, 603 F.3d at 614 (citing Hanlon, 150 F.3d at 1020). The conflicts must be serious and irreconcilable in order to defeat certification. Breeden v. Benchmark Lending Group. Inc., 229 F.R.D. 623, 629 (N.D. Cal. 2005) (citing Sosna v. Iowa, 419 U.S. 393, 403 (1975). Only one of the named plaintiffs must be an adequate representative. Local Joint Executive Bd. of Culinary/Bartender Trust Fund v. Las Vegas Sands, Inc., 244 F.3d 1152, 1162 n. 2 (9th Cir. 2001).
The named plaintiffs are all members of the classes they want to represent, and they have no apparent conflicts with the other class members. Defendants, however, argue that this class action could preclude absent class members from pursuing claims individually. Preclusion of individual claims is a feature inherent in virtually all class actions, and any individual class members who want to pursue their own claims will have the chance to opt out. They also argue "Plaintiffs are ignorant of their claims and the allegations in their complaint." (James Rossi Opp. at 12.) But a class representative does not have to know the legal basis of their claims or even understand them. Cf. Las Vegas Sands, Inc., 244 F.3d at 1162 (adequacy focuses on "absence of antagonism, a sharing of interests between
representatives and absentees, and the unlikelihood that the suit is collusive"). The record shows that the representatives understand and are willing to fulfill their duties, (Galvan Decl. ¶ 11, Z. Millan Decl. ¶ 10, A. Millan Decl. ¶ 10, Martinez Decl. ¶ 11), and Rule 23(a)(4) does not require more. See Las Vegas Sands, Inc., 244 F.3d at 1162 ("The record indicates clearly that he understands his duties and is currently willing and able to perform them. The Rule does not require more.").
Regarding the requirement that Plaintiffs are represented by qualified and competent counsel, Defendants do not oppose this point, and the Court finds that Plaintiffs' counsel are qualified and will represent Plaintiffs effectively.
3. Rule 23(b)
A plaintiff must satisfy only one of three criteria under Rule 23(b) in order to certify a class. Plaintiffs seek certification for the Third Claim under Rule 23(b)(1) and certification for the Seventh and Eleventh Claims under Rule 23(b)(3).
A. Rule 23(b)(1) — The Third Claim
Certification under Rule 23(b)(1)(B) is appropriate if "(1) prosecuting separate actions by or against individual class members would create a risk of: . . . (B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests." A classic example of a Rule 23(b)(1)(B) action is one which charges "a breach of trust by an indenture trustee or other fiduciary similarly affecting the members of a large class of beneficiaries, requiring an accounting or similar procedure to restore the subject of the trust." Ortiz v. Fibreboard Corp., 527 U.S. 815, 834 (1999).
Plaintiffs seek certification under this rule for the Third Claim, which asserts a fiduciary breach under ERISA § 502(a)(2). Under that provision, any monetary relief would go to the plan as a whole, not to an individual plaintiff. See Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 141-44 (1985). "In light of the derivative nature of ERISA § 502(a)(2) claims, breach of fiduciary duty claims brought under § 502(a)(2) are paradigmatic examples of claims appropriate for certification as a Rule 23(b)(1) class, as numerous courts have held." In re Schering Plough Corp. ERISA Litigation, 589 F.3d 585, 604 (3d Cir. 2009) (listing cases). The Court therefore finds that the Third Claim satisfies Rule 23(b)(1)(B). See In re Syncor ERISA Litigation, 227 F.R.D. 338, 346-47 (C.D. Cal. 2005) (certifying class asserting ERISA claims under Rule 23(b)(1)(B)); Hochstadt v. Boston Scientific Corp., ___ F. Supp. 2d ___, 2010 WL 1704003, at *12, n. 12 (D. Mass. Apr. 27, 2010) (same).
Defendants argue Moving Plaintiffs lack standing to pursue the ERISA claims because they have not shown they were plan participants at the time the lawsuit was filed and because some class representatives have cashed out of their plans. But the evidence shows that each of the class representatives were participants in Plan 3. (Galvan Decl. ¶ 5, Z. Millan Decl. ¶ 5, A. Millan Decl. ¶ 5, Martinez Decl. ¶ 5.) Moreover, "employees who have cashed out their individual accounts but allege they are entitled to additional benefits as a result of a breach of fiduciary duty have standing as `participants' under ERISA." Vaughn Bay Environmental Mgmt., Inc., 567 F.3d 1021, 1028 (9th Cir. 2009).
Defendants also argue that because Plaintiffs seek primarily monetary relief for their ERISA claim, the Third Claim should not be certified. But they cite no case law in support of their argument, and another court has rejected this argument on nearly identical facts. See re Syncor ERISA Litigation, 227 F.R.D. at 346. The court in Syncor "could find no other case which barred certification under Rule 23(b)(1)(B) just because the plaintiffs seek monetary relief," and neither can this Court. Id.
The Court certifies the Third Claim under Rule 23(b)(1)(B).
B. Rule 23(b)(3) — The Seventh and Eleventh Claims
Plaintiffs seek certification for the Seventh and Eleventh Claims under Rule 23(b)(3). This rule provides that a class action may be certified if
(3) the court finds that questions of law or fact common to class members predominate over any questions affecting only individual members, and that
a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. The matters pertinent to these findings include:
(A) the class members' interests in individually controlling the prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and
(D) the likely difficulties in managing a class action.
Fed.R.Civ.P. 23(b)(3). "When common questions present a significant aspect of the case and they can be resolved for all members of the class in a single adjudication, there is clear justification for handling the dispute on a representative rather than on an individual basis." Las Vegas Sands, Inc., 244 F.3d at 1162. "[T]he Court must identify the issues involved in the case, and determine which are subject to common proof and which are subject to individualized proof." In re TFT-LCD (Flat Panel) Antitrust Litig., 267 F.R.D. 291, 310 (N.D. Cal. 2010).
Moving Plaintiffs seek to certify two causes of action relevant to the Plan 3 Subclass: the seventh cause of action for prevailing wages, and the eleventh cause of action under California's UCL. As the Court explained above, the prevailing-wage claim involves resolving whether Rossi Concrete had to make periodic increases to the base rate of cash wages, which is a legal issue that can be determined using common proof. The other base-rate issue is, assuming Rossi Concrete had to make increases to the base rate, whether those increases should be allocated to cash or could instead go to increases in pension payments. This is also a legal question. Determining what Rossi Concrete's actual practice was regarding base-rate wage increases can also be resolved using common proof by analyzing employer documents and deposing their witnesses. Assuming Rossi Concrete had to make increases to the base rate cash wages and did not, then the only remaining issue would likely be calculating damages.
The seventh cause of action also asserts an overtime claim, but Plaintiffs only sought certification of the overtime claim for the Driver Subclass, which, as explained above, does not meet the numerosity requirement. The Court therefore only includes the prevailing-wage claim as part of the certification analysis.
The Court has already noted that there is some evidence that Rossi Concrete had a class-wide policy of allocating base-rate wage increases to pension payments. Suzzette Stickney, Rossi Concrete's director of human resources, testified at her deposition that Rossi Concrete pays the pre-determined rate increases "all to pension." (Supp. Cvitan Decl., Ex. A, 93:10-14.) "We put it all to pension, and we leave it. Because it's all — the money is all paid to the employee, just in some cases maybe not cash. It's all paid to pension. So we leave it as is." Id. at 94:3-6.
The prevailing-wage claim involves another issue: whether Rossi Concrete was required to annualize its employer contributions. This is primarily a legal issue that the Court can resolve by reviewing the applicable statutes, regulations, and case law. If the Court decides that Rossi Concrete should have annualized, then the only remaining task would be calculating damages. Although calculating damages would involve individual inquiry into the wages of each class member, this would likely involve only simple arithmetic and would not be a reason to deny class certification. See Yokoyama v. Midland Nat'l Life Ins. Co., 594 F.3d 1087, 1094 (9th Cir. 2010) ("[T]he amount of damages is invariably an individual question and does not defeat class action treatment.").
Defendants argue against a finding of predominance in several ways. The first is that individual questions predominate regarding whether each class member is a "worker[] employed on public works," which is essentially the definition of a prevailing-wage employee. See Cal. Lab. Code §§ 1771, 1772. But this is an issue regarding which class members are actually in the class, which is an inherent part of any class action. Moreover, Plaintiffs are not challenging Rossi Concrete's classifications regarding who is a prevailing-wage employee and who is not. See Reply at 18. Having to determine who is in the class and who is not will not defeat class certification. See Durham v. Continental Cent. Credit, No. 07cv1763, 2010 WL 2776088, at *3 (S.D. Cal. July 14, 2010) (rejecting similar argument regarding predominance because it "relate[d] to who qualifies as a class member, not whether issues common to the class predominate").
Their second argument is that different standards apply to different public-works projects, and so the rules regarding determining the prevailing wage, and deciding whether it even applies, will differ. The Court finds that this issue, too, goes to either the extent of damages or whether a person is actually a class member. And, as discussed above, calculating damages or having to decide who is a class member will not defeat certification.
Defendants next argue that a class member is only entitled to the prevailing wage based on the classification applicable to work that he actually performs. So to determine each class members' prevailing wage, a plaintiff would have to prove exactly what work he actually did and then match that to a prevailing-wage classification. Although Defendants are right that this would involve an individual inquiry, Plaintiffs do not challenge Rossi Concrete's classifications and do not seek certification on the issue of which class members fall into which classifications.
Defendants' last argument against predominance is that there are individual questions about the number of hours worked, wages earned, and compensation paid. These are all damages issues and will not defeat certification. See Yokoyama, 594 F.3d at 1094.
For these reasons, the Court finds that common issues predominate. The Court must now decide whether a class action is "superior to other available methods for fairly and efficiently adjudicating the controversy." Fed.R.Civ.P. 23(b)(3). "This determination necessarily involves a comparative evaluation of alternative mechanisms of dispute resolution." Hanlon, 150 F.3d at 1023. Rule 23(b)(3) sets forth factors to guide the Court's analysis: "(A) the class members' interests in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) the likely difficulties in managing a class action." Fed.R.Civ.P. 23(b)(3).
The Court finds that a class action would be superior. Although Plaintiffs could pursue some of their claims individually through the FLSA or by using state procedures, "courts have not hesitated to certify class actions for wage and hour claims simply because California law provides for administrative relief." Wang v. Chinese Daily News, Inc., 231 F.R.D. 602, 614 (C.D. Cal. 2005) abrogated on other grounds by Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935 (9th Cir. 2009); see also Romero v. Producers Dairy Foods, Inc., 235 F.R.D. 474, 490-91 (E.D. Cal. 2006) (class action superior for wage-and-hour claims against employer); Ansoumana v. Gristede's Operating Corp., 201 F.R.D. 81 (S.D.N.Y. 2001) (holding that certification of plaintiffs' state claims was consistent with collective action under FLSA § 16(b) and that class treatment was superior). Because of the common issues the Court has identified above, adjudicating these claims as a class action will be more efficient for the parties and for the Court.
Moreover, the four factors listed in Rule 23(b)(3) weigh in favor of certification. There is no evidence that the class members have a strong interest in individually prosecuting these claims or that they are already litigating these claims in other forums. It would be efficient to concentrate the litigation of the claims in this Court, and the parties have not shown that there would be significant difficulties in managing a class action.
Defendants barely address the superiority prong explicitly, and only claim in a conclusory way that "Plaintiffs have not shown any support for the ERISA claims by any purported class members" and they have failed to demonstrate superiority. Joseph Rossi Opp. 12. Although Defendants focus on the ERISA claims in their argument against a finding of superiority, the Court has certified the ERISA claims as a Rule 23(b)(1) class, which does not require showing superiority. Compare Fed.R.Civ.P. 23(b)(1) with Fed.R.Civ.P. 23(b)(3). Defendants' arguments against superiority are therefore unpersuasive.
For these reasons, the Court finds that Plaintiffs have satisfied the superiority requirement with respect to the Seventh and Eleventh Claims.
IV. CONCLUSION
The Court GRANTS in part and DENIES in part Moving Plaintiffs' motion for class certification. The Court denies certification as to the Plan 1, Plan 1 Termination, Plan 2, Termination and Driver Subclasses for failure to present sufficient evidence of numerosity. Because the Court certifies only the Plan 3 Subclass, it need not certify an overarching main class at this time. The Court certifies the Plan 3 Subclass as follows:
The Plan 3 Subclass includes all current and former employees of Rossi Concrete who within four years of filing the Complaint have performed construction work on public works for Rossi Concrete and have participated in the employee benefit plan defined as Plan 3 in the Complaint.
The Moving Plaintiffs — Reynaldo Galvan, Juan Martinez, Andres Millan, and Zacarias Millan — will serve as representative plaintiffs of this class.
The class issues relevant to the Plan 3 Subclass are (1) the third cause of action for ERISA violations and (2) the following issues within the seventh and eleventh causes of action: (i) whether Rossi Concrete correctly calculated the credit allowed for employer payments as defined in California Labor Code § 1773.1; and (ii) whether the correct base rate for each prevailing wage classification was paid to class members on their paychecks.
Class counsel will be the law firm of Reich, Adell Cvitan.
The parties shall confer about appropriate notice to the class, and shall move, jointly if possible, the magistrate judge for an order approving the form of notice.
IT IS SO ORDERED.