In October 2015, Apple expanded its restricted stock units (“RSU”) offerings to cover all employees working for the company—including those classified as non-exempt or eligible for overtime.
The Named Plaintiffs in this case all worked in jobs Apple classified as non-exempt or overtime eligible, which Apple pays on an hourly basis. Plaintiffs each received RSU awards from Apple. As a matter of policy, Apple did not include the value of the vested RSUs when calculating the regular rate for non-exempt/overtime eligible employees.
Plaintiffs brought this case to challenge that policy. In their view, RSUs should not be excluded from the regular rate of pay calculations under the FLSA, and they are therefore entitled to damages.
Plaintiffs’ primary expert witness, Dr. Dwight D. Steward, Ph.D., sought to provide a methodology to calculate damages should RSUs be incorporated into overtime calculations.
Apple, in response, brought two expert witnesses: (1) Dr. Valentin Estevez, Ph.D., who opined on Steward’s methodology and the feasibility of damages calculations; and (2) Barbara Baksa, who sought to compare RSUs to stock options and similar equity-based programs.
Named Plaintiff Francis Costa and Apple both filed motions to exclude the other party’s expert witnesses.
Economics Expert Witnesses
Dr. Dwight D. Steward holds a Ph.D. in Economics from the University of Iowa, and a B.A. in Economics from the University of Texas at Austin. He is the author of three professional economics textbooks and was previously a Senior Lecturer in the Economics department at The University of Texas at Austin and was a Visiting Assistant Professor in the Finance Department in the College of Business at Sam Houston State University in Huntsville, Texas.
Dr. Valentín Estévez has worked as a labor economics consultant and testifying expert in class action and single-plaintiff matters for clients in numerous industries.
Estévez performs economic and statistical analyses of employment discrimination claims in pay, hiring, promotions, terminations, and other employment actions and alleged violations of the FLSA and state wage and hour statutes, such as those in California, New York, and Massachusetts.
Compensation Expert Witness
Barbara Baksa is the Executive Director of the National Association of Stock Plan Professionals (NASPP).
Baksa began her career in equity compensation more than 20 years ago. She is a member of the Curriculum Committee and the Advisory Board of the CEP Institute at Santa Clara University and an Executive Fellow of the Institute for the Study of Employee Ownership and Profit Sharing at Rutgers University School of Management and Labor Relations. Baksa has a BA in English from the University of Iowa.
Discussion by the Court
I. Motions to Exclude
If two contradictory expert witnesses can offer testimony that is reliable and helpful, both are admissible and it is the function of the finder of fact, not the trial court, to determine which is the more trustworthy and credible.
The Court refused to exclude the testimony of Steward and Estevez because both parties raised issues of credibility that are “within the province of the jury.”
The more pertinent question concerns the report written by Apple’s second expert, Barbara Baksa. Costa maintained that Baksa’s report must be excluded because Baksa is “not qualified to testify as an expert on the issues the Court must decide in this case,” and that “Baksa’s opinions are not reliable or relevant, but rather, seek to advance improper legal conclusions and advocate for change in the law.”
1. Qualifications
Plaintiffs attacked Baksa’s qualifications on multiple grounds. First, they noted that the NASPP, for which Baksa works, “profits from companies that have equity compensation programs by providing them with resources and conferences.”
Plaintiffs’ arguments are not well taken. Baksa’s work with the NASPP and on the CEP advisory board do not disqualify her from testifying in this case on the matter of equity awards. Membership in the same professional organization with a party does not create an impression of possible bias.
Additionally, that Baksa lacked robust experience with legal cases did not disqualify her from providing expert testimony in this matter. Baksa has significant experience dealing with equity-based awards, of which she is being introduced to testify.
These qualifications render her able to testify about the “economic characteristics of RSUs and equity award practices in order to inform the factfinders’ determination on the merits of Apple’s argument that RSUs are excluded from the regular rate of pay under the equity exception.”
2. Reliability and Relevance
a. FLSA and Congressional Intent
Plaintiffs argued that Baksa’s “beliefs about what the FLSA should exclude are irrelevant because the FLSA’s stock exception does not include RSUs as one of the three stock programs that may be excluded.”
Whether the value of vested RSUs is excludable from the regular rate under the so-called “equity exclusion” under the FLSA is central to this case. Apple argued that to reach this answer, a “factfinder will need to determine whether Apple RSUs have the characteristics necessary to exclude them from the regular rate of pay, including under the equity exclusion,” which Baksa’s report “squarely addresses.”
Plaintiffs argued that Baksa is going further than just providing factual background: instead, they claimed that Baksa “speculates” on Congress’s intent in amending the FLSA, as well “advances the legal conclusion that RSUs are ‘discretionary awards’ and labels them ‘discretionary equity vehicles.’”
As a professional in compensation, the Court held that Baksa is entitled to present her analysis on the historical development of RSUs. Indeed, her opinions concerning the similarities between RSUs and stock options, as well as other equity-based programs, are important in resolving the dispute in question. But her analysis of the legislative history of the FLSA constitutes a legal opinion that she is not qualified to opine on (nor was she retained to provide).
b. Company Reactions to Vested RSUs
In her report, Baksa noted that should RSUs be included in overtime payment calculations, “public companies will likely cease offering equity awards to non-exempt employees,” which would “introduce significant volatility into overtime wages, which must be paid in cash.”
Plaintiffs claimed that this testimony is “unsubstantiated speculation” that is “not reliable and has zero relevance to the issues the Court must decide in this case.”
The Court agreed and excluded Baksa’s opinions about how companies may react to vested RSUs being incorporated into employee overtime pay calculations.
c. Apple’s Practices as Compared to Other Companies
Plaintiffs filed a motion to exclude Section 4 of Baksa’s report, entitled “How Apple’s Practices Align with Other Public Companies.”
There, Baksa noted that Apple’s equity practices “align with those of other technology companies,” as well as “those of stock options granted by public companies.”
Plaintiffs objected to this section on grounds of relevance, as “Apple cannot demonstrate how other companies’ pay practices are relevant to whether the law demands that Apple include vested RSUs in the regular rate.”
Because this section is marginally relevant to the issue of wilfullness and good faith, the Court declined to exclude it.
Held
The Court denied both parties’ motions to exclude expert witnesses, except for Plaintiffs’ motion to exclude portions of Barbara Baksa’s report.
Key Takeaway
Expert opinions must be excluded if rooted in “unsubstantiated speculation and subjective beliefs.” Basically, Baksa’s testimony appears focused on the potential policy consequences of plaintiffs’ interpretation of the FLSA, not what RSUs are or how they function.
Case Details:
| Case Caption: | Costa V. Apple, Inc. |
| Docket Number: | 3:23cv1353 |
| Court Name: | United States District Court, California Northern |
| Order Date: | June 11, 2026 |
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