Tanseer Kazi v. PNC, Bank, N.A.

Background

Tanseer Kazi and Linda Scheid brought a proposed class action against PNC Bank, N.A., alleging wage-and-hour violations involving PNC’s compensation system for mortgage loan officers. The officers received regular biweekly pay and could also receive monthly Plan Incentive Pay, which included compensation tied in part to loan originations. PNC’s formula effectively deducted regular and overtime pay from the calculation of Plan Incentive Pay. Plaintiffs argued that this structure recaptured pay for rest breaks and other nonproductive work, such as training, meetings, and driving.

The operative complaint asserted claims under California wage laws concerning paid rest periods, payment for nonproductive time, accurate wage statements, and related penalties. The plaintiffs relied heavily on California Labor Code section 226.2, which requires employees compensated on a piece-rate basis to receive separate compensation for rest and recovery periods and other nonproductive time.

The plaintiffs originally sought to represent all people whom PNC employed in California as mortgage loan officers during the proposed class period. The parties agreed that Kazi could not serve as class representative because he filed for bankruptcy during the case, did not disclose the case in his bankruptcy, and the bankruptcy trustee asserted ownership of his claim. The court therefore considered Scheid as the remaining proposed representative.

Class-Certification Standard

Federal Rule of Civil Procedure 23 requires a proposed class to satisfy numerosity, commonality, typicality, adequacy, and ascertainability. The plaintiffs also invoked Rule 23(b)(3), which requires common questions to predominate over individual questions and a class action to be superior to other methods of resolving the dispute. The court explained that it could consider merits issues only insofar as they were relevant to deciding whether those certification requirements were met; it was not deciding the ultimate legality of PNC’s compensation system at this stage.

Numerosity and Ascertainability

The court found both requirements satisfied. The evidence showed that 207 mortgage loan officers were at issue, and, even under a possible shorter period tied to an earlier settlement, 119 putative class members worked during the relevant period. PNC did not challenge the number of employees or dispute that the class could be identified using its payroll and employment records.

Commonality

The court held that the plaintiffs identified common questions, including whether PNC’s compensation formula adequately paid for rest breaks and other nonproductive time during months when officers received Plan Incentive Pay. The court found that PNC’s plan documents and payroll records could provide common evidence about the formula and whether officers received Plan Incentive Pay.

The court rejected PNC’s arguments that differing forms of compensation or the varying combinations of incentives received by individual officers defeated commonality. Whether those forms of compensation satisfied PNC’s legal obligations was a merits question common to the class, not a reason to deny certification.

Predominance and Superiority

The court found predominance and superiority for claims based on, or deriving from, the alleged failure to pay separately for statutory rest periods. Individual payroll records could be used to calculate damages, and the need for employee-by-employee damages calculations did not by itself defeat class certification. The court also concluded that differences in how employees used or benefited from rest breaks did not create an individualized issue defeating predominance.

The court reached a different conclusion for claims involving other nonproductive work, such as meetings and training. The plaintiffs had not provided common evidence showing how long employees spent in those activities or whether they performed sales work at the same time. Resolving those issues would likely require individualized testimony about when and how each mortgage loan officer worked. The court said that surveys or statistical evidence might potentially address the problem, but the plaintiffs had not shown that such evidence would be reliable in this case.

The court therefore concluded that individualized issues predominated for claims based on nonproductive time other than rest breaks. It denied certification as to those claims without prejudice to a later motion to expand the class if the plaintiffs could show a classwide method of proof.

Typicality and Adequacy

The court found that Scheid satisfied the typicality requirement. Differences between her testimony and Kazi’s did not establish that she was atypical of the class, particularly because the plaintiffs conceded that Kazi was no longer qualified to serve as representative. Her work for PNC both before and after the release period from an earlier related proceeding supported, rather than undermined, her typicality.

The court also found Scheid adequate because she demonstrated the required level of knowledge and engagement with the case. Although the court expressed concerns about counsel’s communication with Kazi and counsel’s late discovery of his bankruptcy, it found counsel adequate and appointed the plaintiffs’ attorneys as class counsel.

Disposition

Judge Joseph C. Spero granted in part and denied in part the motion for class certification. Scheid was permitted to represent a class consisting of individuals employed by PNC as mortgage loan officers from June 28, 2014, through resolution of the action, on claims based on alleged failures to pay for rest breaks and claims deriving from that theory. Certification was denied without prejudice for claims based on other nonproductive time. The court also directed the parties to meet and confer about a possible change to the class period or a later request to include additional nonproductive-time claims.