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CHRISTINE H. LONG, CA STATE BAR NO. 199676
KARA L. ARGUELLO, CA STATE BAR NO. 221093
BERLINER COHEN
TEN ALMADEN BOULEVARD
ELEVENTH FLOOR
SAN JOSE, CALIFORNIA 95113-2233
TELEPHONE: (408) 286-5800
FACSIMILE: (408) 998-5388
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ATTORNEYS FOR DEFENDANTS/CROSS-COMPLAINANTS SYED
ALI AND AUTOVEST COLLISION REPAIRS, INC.,1 AND
DEFENDANT MB BODYSHOP OF SAN FRANCISCO, INC.
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SUPERIOR COURT OF CALIFORNIA, COUNTY OF SANTA CLARA
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MARTIN JUAREZ, on behalf of a class of
similarly situated individuals,
CASE NO. 1-08-CV-121859
ORDER DENYING PLAINTIFF’S MOTION
FOR CLASS CERTIFICATION
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Plaintiff,
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vs.
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SYED ALI (dba “AUTOWEST COLLISION
REPAIRS, INC.” and “AUTOWEST
COLLISION GROUP”); MB BODYSHOP OF
SAN FRANCISCO, INC.; and DOES 1
through 10, inclusive,
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Defendants.
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And Related Cross-Action.
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The Motion of Plaintiff for Class Certification came before this Court on April 6, 2012 at
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9:00 a.m.
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Christine Long appeared for Defendants.
Having considered all the papers, the Court’s file, and argument of counsel, and GOOD
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Tomas E. Margain, Stan S. Mallison and Hector Palau appeared for Plaintiff.
CAUSE APPEARING THEREFORE the Court adopts its tentative ruling as follows:
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This is a putative wage and hour class action by plaintiff Martin Juarez (“Plaintiff”)
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individually and on behalf of a class of body shop employees against their employers, defendant
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Syed Ali (“Ali”), dba Autovest Collision Repairs, Inc. (“Autovest”).
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information and belief that Autovest is owned and controlled and/or is an alter ego, non-
Plaintiff alleges on
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Erroneously sued as Syed Ali dba of AUTOWEST COLLISION REPAIRS, INC. and
AUTOWEST COLLISION GROUP
-1ORDER DENYING PLAINTIFF’S MOTION FOR CLASS CERTIFICATION
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registered dba of Ali and consists of the following California facilities: MB Bodyshop of San
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Francisco, Inc. (“MB Bodyshop”), Collision Service Center of Oakland (“CSC Oakland”), San
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Jose Autowest Collision (“SJ Autowest”), Fremont Collision Care Center (“Fremont Collision”),
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Concord Collision Care Center (“Concord Collision”), Sunnyvale Collision Care Center
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(“Sunnyvale Collision”), and Serramonte Auto Plaza Body Shop (“Serramonte Auto Plaza”). 2
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The class is defined as “All non-exempt bodyshop employees who are employed or have been
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employed by DEFENDANTS in California within four (4) years of the filing of this Complaint
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through the date of final disposition of this action.”3
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Plaintiff moves to certify the class.
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Defendants Ali, Autovest and MB Bodyshop (“Defendants”) oppose the motion and
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move ex parte for a contempt order enjoining Plaintiff’s counsel from having any further
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unilateral contact with the putative class members.
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Judicial Notice
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In support of the motion for class certification, Plaintiff seeks judicial notice of: (1)
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DLSE, Enforcement Policies and Interpretation Manual, Sections 49.1.2.1, 49.1.2.3, 49.2.1.2; (2)
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Division of Labor Standards Enforcement (“DLSE”) Opinion Letter dated February 2, 1993; (3)
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DLSE Opinion Letter dated June 17, 1994; and (4) DLSE, Enforcement Policies and
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Interpretation Manual, Section 11.3. The Court may take judicial notice of the existence of the
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DLSE Manual and opinion letters as “official acts” of the state executive branch. (See Evid.
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Code, § 452, subd. (c).) GRANTED.
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In support of their ex parte application for contempt order, Defendants seek judicial
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notice of the December 14, 2010 order of this Court re: Plaintiff’s Motions to Compel (6); and
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the Court’s May 31, 2011 order re discovery and Bel Aire Notice. GRANTED. (See Evid.
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Code, § 452, subd. (d); Day v. Sharp (1975) 50 Cal.App.3d 904, 914.)
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See Second Amended Complaint (“SAC”) ¶ 8.
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SAC ¶ 15.
-2ORDER DENYING PLAINTIFF’S MOTION FOR CLASS CERTIFICATION
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Class Certification
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Plaintiff proposes to certify the following class: “All non-exempt bodyshop workers
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employed at Autowest locations in California from September 4, 2004 to the present who
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worked on a piece rate basis.” According to Plaintiff, there are more than 200 body shop
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workers employed by Ali in several auto body repair facilities operating under the common
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control of Autowest Collision Repairs, Inc., a registered dba for Ali. Plaintiff was employed at
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the San Francisco location during the class period.
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Plaintiff argues that Defendants’ payroll policies with regards to “piece rate” workers are
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unlawful because Defendants do not pay piece rate workers overtime wages. According to
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Plaintiff, Defendants pay putative class members a “flag rate” which is a term used to describe
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piece rate pay in the automotive repair industry, in which employees are compensated for
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completing certain tasks or producing units of goods. Plaintiff argues that the law requires piece
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rates to be adjusted to reflect overtime worked, but Defendants’ timekeeping and payroll
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documents, as well as employee declarations, demonstrate that Defendants have ignored this
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requirement and failed to adjust piece rates for overtime worked. Second, Plaintiff argues that
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Defendants’ payroll policies are unlawful because Defendants failed to pay putative class
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members for work that was not part of the piece rate system, e.g., work that could not be directly
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billed to a customer such as training time, meetings, waiting time, shop cleaning, warranty and
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other free work conducted for customers.
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policies are unlawful because Defendants do not provide “paid” rest breaks. Plaintiff contends
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that since workers are only paid when they are working on a flag rate job, they are never
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provided with a paid rest break. Finally, Plaintiff argues that Defendants’ piece rate system
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included various unlawful payroll deductions, e.g., 5% to 10% to help pay for Defendants’
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overhead costs including payment of “detail” employees. Plaintiff contends these deductions are
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illegal because they are not for the direct benefit of the employee, and there were no written
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authorizations for these deductions.
Third, Plaintiff argues that Defendants’ payroll
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Code of Civil Procedure section 382 authorizes class actions “when the question is one of
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a common or general interest, of many persons, or when the parties are numerous, and it is
-3ORDER DENYING PLAINTIFF’S MOTION FOR CLASS CERTIFICATION
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impracticable to bring them all before the court, one or more may sue or defend for the benefit of
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all.”
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The party seeking certification has the burden to establish the
existence of both an ascertainable class and a well-defined
community of interest among class members. [Citations.] The
“community of interest” requirement embodies three factors: (1)
predominant common questions of law or fact; (2) class
representatives with claims or defenses typical of the class; and (3)
class representatives who can adequately represent the class.
[Citation.]
The certification question is “essentially a procedural one that does
not ask whether an action is legally or factually meritorious.”
[Citation.] A trial court ruling on a certification motion
determines “whether … the issues which may be jointly tried,
when compared with those requiring separate adjudication, are so
numerous or substantial that the maintenance of a class action
would be advantageous to the judicial process and to the litigants.”
[Citations.]
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(Sav-On, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326 [Sav-On].)
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“[A]t the certification stage the court is not to examine the merits of the case…”
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(Stephens v. Montgomery Ward (1987) 193 Cal.App.3d 411, 417.)
In order to demonstrate that questions of law or fact common to the class predominate
over questions affecting the individual members,...
[E]ach member must not be required to individually litigate
numerous and substantial questions to determine his [or her] right
to recover following the class judgment; and the issues which may
be jointly tried, when compared with those requiring separate
adjudication, must be sufficiently numerous and substantial to
make the class action advantageous to the judicial process and to
the litigants.” [Citation.] A class action should be certified only if
it will provide substantial benefits both to the courts and the
litigants. [Citation.]
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(Washington Mut. Bank FA v. Superior Court (Briseno) (2001) 24 Cal.4th 906, 913-914.)
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As a general rule if the defendant’s liability can be determined by facts common to all members
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of the class, a class will be certified even if the members must individually prove their damages.
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In order to determine whether common questions of fact predominate the trial court must
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examine the issues framed by the pleadings and the law applicable to the causes of action
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alleged. (Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, 916.)
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Plaintiff contends that the predominant common issues of law and fact will be: (1)
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whether Defendant failed to adjust piece rate pay for overtime work, which would constitute a
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per se violation of overtime law; (2) whether Defendant maintained a policy of not compensating
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employees for non-billable work tasks; (3) whether Defendant’s piece rate system was illegal
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because it did not authorize or permit a paid rest break; and (4) whether Defendant made
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unlawful deductions from employee paychecks.
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Defendants raise a valid point that without evidence of alter ego liability between the
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non-party corporate entities and Ali, Plaintiff lacks standing to sue on behalf of employees of
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shops other than the location at which he worked. Here, Plaintiff worked only for Autowest
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Collision Group in the shop in San Francisco, California, called MB Body Shop of San
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Francisco.4 This standing issue relates to commonality because if Plaintiff only has standing to
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sue his own employer, then it cannot be said that Defendants’ liability will be determined from
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facts and legal findings common to all members of the class. (See Petherbridge v. Altadena Fed.
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Sav. & Loan Assn. (1974) 37 Cal.App.3d 193, 202 [upholding dismissal for failure to
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demonstrate “a substantial possibility” of establishing conspiracy among defendants as
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prerequisite to class certification].)
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“In California, two conditions must be met before the alter ego doctrine will be invoked.
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First, there must be such a unity of interest and ownership between the corporation and its
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equitable owner that the separate personalities of the corporation and the shareholder do not in
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reality exist. Second, there must be an inequitable result if the acts in question are treated as
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those of the corporation alone. [Citations.] Among the factors to be considered in applying the
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doctrine are commingling of funds and other assets of the two entities, the holding out by one
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entity that it is liable for the debts of the other, identical equitable ownership in the two entities,
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use of the same offices and employees, and use of one as a mere shell or conduit for the affairs of
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the other. [Citations.] Other factors which have been described in the case law include
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inadequate capitalization, disregard of corporate formalities, lack of segregation of corporate
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See Decl. Juarez ¶ 5.
-5ORDER DENYING PLAINTIFF’S MOTION FOR CLASS CERTIFICATION
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records, and identical directors and officers. [Citations.] No one characteristic governs, but the
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courts must look at all the circumstances to determine whether the doctrine should be applied.
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[Citation.] Alter ego is an extreme remedy, sparingly used. [Citation.]” (Sonora Diamond
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Corp. v. Sup. Ct. (2000) 83 Cal.App.4th 523, 538-539.)
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The moving papers do not adequately address the issue of alter ego liability. Plaintiff’s
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evidence that “several shops operate under the name of Autowest” does not support alter ego
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liability. The mere fact that the shops were jointly affiliated under the “Autowest Collision
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Group” moniker does little to prove they are alter egos of Ali, just as the Petherbridge
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defendants’ membership in a savings and loan league was found to be “miniscule” evidence of a
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conspiracy. Joint management of different shops by Ali might suggest they are his alter egos,
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e.g., “identical equitable ownership” but this sole factor is not enough. There is nothing to
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indicate commingling of accounts, use of the same offices, use of one as a mere shell or conduit
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for the affairs of the other, inadequate capitalization, disregard of corporate formalities, or lack
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of segregation of corporate records.
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To dispute the alter ego allegations, Defendants submit ample evidence demonstrating
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that each of the alleged alter ego entities has separate and distinct bank accounts from which they
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pay their employees,5 files separate tax returns (except for Fremont Collision, Concord Collision
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and the former Sunnyvale Collision, which were dbas of M1),6 files separate employee
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withholding claim forms, has separate accounting staff and management, keeps personnel files of
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its employees at its own location, has its own employee handbook, 7 maintains its own systems
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for calculating the piece rate.8 Nguyen further states that Autowest is a C corporation, while MB
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Bodyshop is an S corporation, and MB Bodyshop was owned by both Rick and Bobby Ali, while
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Decl. Emily Nguyen ¶12.a, e.
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Id. ¶12.b.
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Id. ¶ 12.c.
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Id. ¶ 12.d.
-6ORDER DENYING PLAINTIFF’S MOTION FOR CLASS CERTIFICATION
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M1, CSC Oakland, and Autowest are owned solely by Bobby Ali.9 Nguyen further provides that
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each company has its own separate and independent place of business,10 manager,11 and
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accounting staff,12 and each entity and respective manager is responsible for implementing wage
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and hour policies and setting rates of pay.13 Nguyen further states that the various entities’
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boards of directors conduct annual meetings in or about November each year, and she maintains
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the relevant meeting documents and corporate books and records for each entity. 14 Nguyen
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further states that she has never seen or heard about any records indicating funds were freely
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commingled or transferred from entity to entity, and believes that Ali has never borrowed money
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from any entity or commingled his personal funds with corporate funds.15 Defendants also
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submit the declaration of Ali, who discusses the ownership and corporate status of each
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corporate entity (Autowest Collision Repairs, Inc., MB Bodyshop, CSC Oakland, M1 Entities
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[Concord, Fremont and Sunnyvale], and Serramonte),16 discusses his lack of involvement in day-
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to-day operations,17 the separation of his personal assets from those of the entities,18 the
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separation of the entities’ business assets,19 and the different piece rate systems used by the
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entities.20 Defendants also submit declarations by five managers for the various entities: (1)
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Id. ¶ 13.
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Id. ¶ 15.
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Id. ¶ 30.
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Id. ¶ 17.
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Id. ¶¶ 21-22.
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Id. ¶¶ 25-27.
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See Decl. Ali ¶¶ 2-34.
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Id. ¶¶ 35-38.
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Id. ¶¶ 39-42.
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Id. ¶¶ 43-44.
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Id. ¶¶ 45-48.
Id. ¶ 12.f., g.
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Rich Albright, Shop Manager at Concord Collision; (2) Sam Amini, body shop manager at
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Serramonte; (3) Martin Flores, Production Manager for SJ Autowest; (4) Armin Ghorbani, Shop
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Manager at Fremont Collision; and (5) David Prado, shop manager at MB Bodyshop. These
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managers provide details on each entities’ operations and different piece rate systems.
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Defendants also submit the declaration of Wayne Krause, Manager of Technical Writing At
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Mitchell International, Inc., which provides software used by companies in the automotive
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industries to estimate the cost to repair a collision damaged vehicle. Defendants also submit the
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declaration of David Prado, employee at Concord Collision, who discusses the piece rate system
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used at his work location.
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In general, Defendants’ evidence tends to show that different Autowest locations have
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different circumstances in their use of piece rate systems. This would show a lack of common
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piece rate policies among all of the shops and their employees, which defeats Plaintiff’s main
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basis for commonality. Furthermore, Defendants’ evidence supports that Ali is not the alter ego
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of any of the corporations or vice versa, as they maintain separate status and assets, and observe
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corporate formalities. Without proof of alter ego liability, Plaintiff, as an employee of MB
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Bodyshop, would not have standing to sue on behalf of employees of other shops.
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In his reply brief, Plaintiff argues that this Court has twice found that he pleaded
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sufficient facts to support theories of liability against Ali, and in the most recent order the Court
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rejected the claim that Plaintiff lacked standing to obtain time, payroll and contact information of
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class members from all shops and thus pursue his action. However, in so ruling, the Court was
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determining whether Plaintiff was entitled to discovery based on his alter ego allegations. The
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scope of discovery is based simply on the pleadings. Here however, as in Petherbridge, Plaintiff
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must submit some evidence in support of his alter ego allegations in order to support the
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certification requirements. In fact, the Court’s previous allowance of discovery means Plaintiff
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should have been able to obtain evidence to support the alter ego allegations.
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In his reply brief, Plaintiff points out that Nguyen is the custodian of records for all of the
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Autowest locations; the records are maintained centrally in San Jose; Nguyen was hired by and
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reports to Ali, is Secretary, CFO and Controller for each of the entities, has access to books and
-8ORDER DENYING PLAINTIFF’S MOTION FOR CLASS CERTIFICATION
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records of all entities owned by Ali, provides a combined monthly profit and loss statement
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comparing figures from all shops, and is responsible for managing the accounting department at
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San Jose that oversees payroll, timekeeping and payment of wages; that payroll is processed
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centrally in San Jose; that employment records of workers are kept at San Jose; that all shops
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utilize the same piece/flat rate formula for calculating wages, and use a single worker’s
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compensation insurance policy that is under the name MB Bodyshop of San Francisco, Inc.; that
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Autowest Collision Repairs, Inc. is not a registered corporation or legal entity; that Ali admitted
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in federal court papers that he does business as Autowest Collision Repairs, Inc.; that Ali
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admitted in court that he is the president of Autowest Collision Repairs; that Autowest Collision
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Repairs entered into a contract with a Mercedes Benz dealership to perform repair work, and MB
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Bodyshop sued the dealership for breach of contract; that Ali personally guaranteed a note on
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behalf of MB Bodyshop; that Ali has exclusive or majority ownership of all entities that own the
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hops, and holds officer and board positions in each entity; and that the San Jose shop has
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operated as Autowest Collision Repairs, Inc. and issued paychecks under that name.21
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There is certainly common ownership by Ali, as well as a central location for
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administrative work, and overlap of officers.
However, Plaintiff has not shown any
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commingling of funds, use of one entity as a mere shell or conduit for another, inadequate
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capitalization of any entity, disregard of corporate formalities, or lack of segregation of corporate
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records. That the records are centrally located does not prove the records are intermingled so as
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to suggest that corporate formalities are not being observed. Furthermore, the second condition
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for alter ego liability is that there will be an inequitable result if separate corporate identities are
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observed. Here, Plaintiff points to no such inequity. For instance, Plaintiff does not contend that
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the entities are undercapitalized such that their employees would not be able to sue their
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respective employers for wages and could only recover from Ali himself.
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This standing/alter ego issue also defeats typicality. Plaintiff’s claims are not typical of
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the rest of the class because he has no relationship to any entity other than MB Bodyshop. (See
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See Reply Brief at pp. 9-10.
-9ORDER DENYING PLAINTIFF’S MOTION FOR CLASS CERTIFICATION
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Baltimore Football Club v. Superior Court (1985) 171 Cal.App.3d 352, 359 [“If the plaintiff
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class representative only has a personal cause of action against one defendant and never had any
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claim of any kind against the remaining defendants, his claim is not typical of the class.”].)
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For these reasons, the motion for class certification is DENIED WITHOUT
PREJUDICE.
IT IS SO ORDERED.
DATED:
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BY:
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JUDGE JAMES P. KLEINBERG
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APPROVED AS TO FORM:
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Tomas Margain
Attorneys for Plaintiff Martin Juarez
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-10ORDER DENYING PLAINTIFF’S MOTION FOR CLASS CERTIFICATION