"Costco Sample Handlers Win Conditional Cert. in Wage Suit" (online)
Law360, November 9, 2017

By Joyce Hanson

A California federal judge on Thursday granted conditional certification to a class of in-store demonstrators who hand out coffee and tea samples in Costco Wholesale Corp. stores, ruling that they presented enough facts to move ahead with their suit claiming they were misclassified as independent contractors rather than employees.

U.S. District Judge Yvonne G. Rogers granted lead plaintiff Leona Marino conditional certification of her wage-and-hour collective action under the federal Fair Labor Standards Act in the suit against Costco, tea-and-coffee company CACafe Inc. and in-store demonstration management firm Club Demonstration Services. The judge defined the class as all workers employed as CACafe in-store demonstrators at Costco warehouse store locations around the United States at any time within the last three years.

The suit alleges that the defendants also violated California state wage law by denying in-store demonstrators overtime compensation, minimum wage payments, meal and rest breaks and reimbursement for business expenditures required by their jobs.

“Marino submits evidence that Costco, acting through CDS and CACafe, retained the right to exert discipline over ISDs to ensure that they did not perform in an ‘un-Costco way,’” Judge Rogers ruled. “Based on the evidence presented by Marino, conditional certification is appropriate since it meets the ‘modest factual showing’ threshold for initial certification under the FLSA and service of a notice of the opportunity to opt in to the action.”

Marino filed her initial complaint in October 2016, saying she was an in-store demonstrator in Costco warehouse stores whose job it was to encourage sales of CACafe’s coconut-infused coffees and teas. From late 2013 through late 2016, Marino said, CACafe hired approximately 113 ISDs to promote sales of its beverage products at Costco’s warehouses in California and several other states.

The ISDs were classified as independent contractors and paid solely based on the number of jars of CACafe product sold in Costco’s stores on days they performed product demonstrations, according to the suit. They had to report before opening time to the store to which they were assigned, buy coffee and supplies and set up a display in the area of the store assigned by a Club Demonstration Services or Costco manager, the suit said.

Then the ISDs were required to take a picture of their demonstration area and send it to CACafe. They additionally submitted to daily, in-person inspections by a Club Demonstration Services event manager using that firm’s checklist, according to Marino. Their required duties included making and providing samples of the coffee for shoppers, cleanup of the area and removal of displays only after the store closed.

“Marino submits evidence that the conditions of the in-store demonstrations were dictated by the policies in Costco’s standard operating procedures, which in turn were enforced by CDS and CACafe,” Judge Rogers said.

Marino’s lawyer, Bryan Schwartz, told Law360 in an email on Thursday that the district court appropriately maintained the low threshold for providing notice in FLSA cases.

“Where, like these in-store demonstrators at Costco, workers are misclassified as independent contractors, they may not even know they have a right to be paid their overtime and minimum wages,” Schwartz wrote. “It is especially important in such cases to provide a prompt court-authorized notice to class members, to let them know about the case and their opportunity for potential recovery.”

The suit seeks an award by trial of damages including business expenses, unpaid overtime and minimum wage compensation, liquidated damages, penalties, and meal and rest period compensation.

Representatives for CACafe and Costco did not immediately respond Thursday to requests for comment.

Marino is represented by Bryan Schwartz and Eduard Meleshinsky of Bryan Schwartz Law.

CACafe is represented by Sam X.J. Wu and Alexei Brenot of The Law Offices of Sam X.J. Wu APC.

Costco Wholesale Corp. is represented by Catherine M. Dacre, Justin T. Curley, Tatyana A. Shmygol and David D. Kadue of Seyfarth Shaw LLP.

Club Demonstration Services Inc. is represented by Mustafa El-Farra of Littler Mendelson PC.

The case is Marino v. CAcafe Inc. et al., case number 4:16-cv-06291, in the U.S. District Court for the Northern District of California.

Editing by Orlando Lorenzo