Hamilton v. Wal-Mart Stores, Inc.

• Citation: 39 F.4th 575
• Decision Date: 30 June 2022
• Docket Number: 19-56161, No. 20-55223
• Parties: Chelsea HAMILTON; Alyssa Hernandez, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. WAL-MART STORES, INC., a corporation; Wal-Mart Associates, Inc., a corporation; Does, 1 through 50, inclusive, Defendants-Appellees. Chelsea Hamilton; Alyssa Hernandez, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees, v. Wal-Mart Stores, Inc., a corporation; Wal-Mart Associates, Inc., a corporation, Defendants-Appellants, and Does, 1 through 50, inclusive, Defendants.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

39 F.4th 575

Chelsea HAMILTON; Alyssa Hernandez, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants,

v.WAL-MART STORES, INC., a corporation; Wal-Mart Associates, Inc., a corporation; Does, 1 through 50, inclusive, Defendants-Appellees.

Chelsea Hamilton; Alyssa Hernandez, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees,

v.Wal-Mart Stores, Inc., a corporation; Wal-Mart Associates, Inc., a corporation, Defendants-Appellants,andDoes, 1 through 50, inclusive, Defendants.

No. 19-56161

No. 20-55223

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 14, 2021 Pasadena, California

Filed June 30, 2022

Kenneth H. Yoon (argued), Stephanie E. Yasuda, and Brian G. Lee, Yoon Law APC, Los Angeles, California; G. Samuel Cleaver, Law Offices of G. Samuel Cleaver, Los Angeles, California; Brian J. Mankin and Peter J. Carlson, Fernandez & Lauby LLP, Riverside, California; for Plaintiffs-Appellants/Cross-Appellees.

Theane Evangelis (argued), Bradley J. Hamburger, Elizabeth A. Dooley, and William F. Cole, Gibson Dunn & Crutcher LLP, Los Angeles, California; Mark D. Kemple, Robert J. Herrington, and Matthew R. Gershman, Greenberg Traurig LLP, Los Angeles, California; for Defendants-Appellees/Cross-Appellants.

Before: Marsha S. Berzon and Jay S. Bybee, Circuit Judges, and Kathleen Cardone,^* District Judge.

BERZON, Circuit Judge:

Plaintiff Alyssa Hernandez brought five claims arising under the California Private Attorneys General Act ("PAGA"), all concerning alleged wage and hour violations, against Wal-Mart Stores, Inc. and Wal-Mart Associates, Inc. (collectively, "Walmart"). The district court dismissed some of Hernandez's PAGA claims on the ground that they were unmanageable and dismissed her remaining PAGA claims as a discovery sanction. We reverse the dismissal of each of Hernandez's PAGA claims and remand for further proceedings.

I.

A. Factual Background

In July 2015, Walmart opened a large ecommerce fulfillment center in Chino, California. Employees at the center send merchandise to consumers who order products online.

As an anti-theft measure, Walmart placed a security checkpoint where employees exit the facility. Employees were required to go through the security checkpoint whenever they left the facility, including for lunch and at the end of the workday. The security checkpoint was located after the terminal where employees clocked out by swiping their badges on a timeclock machine. The process of going through the security checkpoint involved clocking out at the timeclock terminal, walking from the timeclock terminal to the security checkpoint, waiting in line, placing one's personal belongings such as backpacks and purses in an inspection area, waiting for security personnel to inspect the belongings, going through metal detectors, and leaving the security checkpoint through a turnstile.

Employees were also required to take their allotted breaks each day in designated rest areas. The "several minutes" employees spent walking to and from the designated rest areas were deducted from their 15-minute break periods.

Although Plaintiffs raised several putative class action claims before the district court, this opinion exclusively analyzes Hernandez's PAGA claims.¹ In the First Amended Complaint ("FAC"), Hernandez, a former employee of Walmart who worked at the Chino facility from 2016 to 2018, asserted five PAGA causes of action against Walmart. She sought civil penalties under PAGA for Walmart's alleged: (1) failure to pay wages for all hours worked, (2) failure to provide meal periods, (3) failure to provide rest breaks, (4) failure to pay wages timely, and (5) failure to provide accurate itemized wage statements.

As the first PAGA cause of action, Hernandez alleged that because Walmart required employees to clock out before going through the security checkpoint, which frequently took "15 to 20 minutes ... to get through," she and other similarly situated employees were not fully compensated for all hours worked, including overtime hours.

For the second PAGA cause of action, Hernandez stated that although Walmart provided each employee with a 30-minute meal period, that period included the time the employee spent going through the security checkpoint process. Because employees were "under the control of the company" during that process, Hernandez alleged, she and other similarly situated employees "were regularly not provided with uninterrupted meal periods of at least 30 minutes, as required by California law." See Cal. Lab. Code § 512(a) ; Brinker Rest. Corp. v. Superior Court , 53 Cal. 4th 1004, 1040–41, 139 Cal.Rptr.3d 315, 273 P.3d 513 (2012). Hernandez asserted that Walmart's security checkpoint policy impeded or discouraged lunch breaks and that Walmart regularly did not provide a second duty-free meal period during shifts in excess of ten hours, also in violation of California law. Brinker , 53 Cal. 4th at 1040–41, 139 Cal.Rptr.3d 315, 273 P.3d 513.

Hernandez's third PAGA cause of action alleged that she and other similarly situated employees were required to take their rest breaks in designated areas. The time it took "to travel to and from the designated rest areas" was deducted from each employee's allotted 15-minute break period, meaning that Hernandez and other similarly situated employees were not always "provided net rest periods of at least 10 minutes for each 4-hour work period, or major fraction thereof," as required by California law. See Cal. Code Regs. tit. 8, § 11040(12)(A).

As the fourth PAGA cause of action, Hernandez alleged that Walmart miscalculated the wages owed to her and other similarly situated employees in light of the security checkpoint issue. As a result, Walmart failed to pay "all wages due and owing ... within the time specified" by California Labor Code sections 201 and 202, and also failed to pay "waiting time penalties" in accordance with California Labor Code section 203.

Finally, Hernandez's fifth PAGA cause of action stated that she and other similarly situated employees were not provided with wage statements that accurately reported the gross wages earned, all deductions, and net wages earned, as well as all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate.

B. Procedural History

This case was initiated in California state court by Chelsea Hamilton, a former employee of Walmart who worked at the Chino fulfillment center. The original complaint did not contain any PAGA causes of action, instead focusing on putative class claims. About one month after Hamilton filed the original complaint, Walmart removed the case to federal court. Hamilton then filed the FAC adding Hernandez as a plaintiff, and Hernandez alleged the five PAGA causes of action.

During pre-trial proceedings, Plaintiffs filed expert reports from Dr. Brian Kriegler and Dr. Stephanie J. Bonin regarding their methods of calculating the time required to go through the security checkpoint and to walk to the designated rest areas, and later filed a supplemental expert report from Dr. Kriegler providing further detail regarding his methodology. Walmart moved to strike the expert reports for failure to comply with Rule 26(a) of the Federal Rules of Civil Procedure. Walmart also moved for summary judgment on Hernandez's PAGA claims, arguing that the claims could not be maintained because Hernandez did not plead them under Rule 23 of the Federal Rules of Civil Procedure and because the claims were unmanageable.

The district court rejected Walmart's Rule 23 argument. In a separate order, the court largely granted Walmart's motion to strike the expert reports. It concluded that the expert reports ran afoul of Rule 26(a) because they did not sufficiently detail how the experts would calculate "walking time," "waiting time," and "security check time," and it further determined that the Plaintiffs' noncompliance with Rule 26(a) was willful. The court then struck from the record Dr. Kriegler's initial and supplemental time calculations and Dr. Bonin's entire report.

Although the court had originally certified six subclasses for trial, it decertified all the subclasses tied to the security checkpoint issue except for the meal break subclass, which it limited to a "discouragement" theory. See Brinker , 53 Cal. 4th at 1040–41, 139 Cal.Rptr.3d 315, 273 P.3d 513. Explaining its decertification ruling, the court stated that without the expert reports, plaintiffs could not present a workable method for calculating damages. After Hernandez made clear her intention to continue pursuing PAGA penalties for the decertified class claims, the district court dismissed Hernandez's PAGA claims related to the security checkpoint issue as unmanageable and dismissed her remaining PAGA claims for failure sufficiently to disclose estimated damages under Rule 26(a).

The two surviving class claims—discouragement of meal breaks and a wage theft claim tied to an allegedly defective alternative workweek schedule election—proceeded to trial. The jury returned a special verdict in Walmart's favor on the election claim, concluding that Walmart "prove[d] by a preponderance of the evidence that it met the requirements of an Alternative Workweek Schedule election." On the discouragement of meal breaks claim, the jury returned a special verdict for Plaintiffs in the amount of $6,001,599 for 452,491 meal break violations.

After a bench trial in which the trial court denied Plaintiffs' motion for prejudgment interest and determined that Plaintiffs had not adduced sufficient evidence of injury related to Plaintiffs' wage statement claim, the district court entered judgment. Both parties filed post-trial motions, with Walmart seeking judgment as a matter of law as to the meal break claim, and Plaintiffs seeking a new trial, judgment as a matter of law on the election claim, and pretrial interest. The district court denied all motions. Both...