Magadia v. Wal-Mart Assocs., Inc.

• Decision Date: 28 May 2021
• Docket Number: No. 19-16184,19-16184
• Citation: 999 F.3d 668
• Parties: Roderick MAGADIA, individually and on behalf of all those similarly situated, Plaintiff-Appellee, v. WAL-MART ASSOCIATES, INC., a Delaware corporation; Walmart Inc., a Delaware corporation, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

999 F.3d 668

Roderick MAGADIA, individually and on behalf of all those similarly situated, Plaintiff-Appellee,

v.WAL-MART ASSOCIATES, INC., a Delaware corporation; Walmart Inc., a Delaware corporation, Defendants-Appellants.

No. 19-16184

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 19, 2020 Pasadena, California

Filed May 28, 2021

Theane Evangelis (argued), Julian W. Poon, Bradley J. Hamburger, and Joseph Tartakovsky, Gibson Dunn & Crutcher LLP, Los Angeles, California, for Defendants-Appellants.

Jonathan E. Taylor (argued), Deepak Gupta, Gregory A. Beck, and Daniel Wilf-Townsend, Gupta Wessler PLLC, Washington, D.C.; Larry W. Lee, Kwanporn Tulyathan, and Max Gavron, Diversity Law Group PC, Los Angeles, California; Dennis S. Hyun, Hyun Legal APC, Los Angeles, California; for Plaintiff-Appellee.

Thomas R. Kaufman, Sheppard Mullin Richter & Hampton LLP, Los Angeles, California, for Amici Curiae Employers Group and California Employment Law Council.

Matthew B. Gunter, Assistant General Counsel, RCN Capital LLC, South Windsor, Connecticut, for Amicus Curiae RCN Capital LLC.

Deanna M. Rice, O'Melveny & Myers LLP, Washington, D.C.; Anton Metlitsky, O'Melveny & Myers LLP, New York, New York; Steven P. Lehotsky and Jonathan D. Urick, U.S. Chamber Litigation Center, Washington, D.C.; Stephanie Martz, National Retail Federation, Washington, D.C.; Deborah R. White, Retail Litigation Center Inc., Arlington, Virginia; for Amici Curiae Chamber of Commerce of the United States of America, National Retail Federation, and Retail Litigation Center Inc.

Henry Hewitt and Sairah Budhwani, Legal Aid at Work, San Francisco, California, for Amicus Curiae Legal Aid at Work.

Before: Consuelo M. Callahan and Patrick J. Bumatay, Circuit Judges, and Gregory A. Presnell,^* District Judge.

BUMATAY, Circuit Judge:

Roderick Magadia worked sales for Walmart for eight years. After the company let him go, Magadia filed a class action suit against Wal-Mart Associates, Inc., and Walmart, Inc., (collectively, "Walmart"), alleging three violations of California Labor Code's wage-statement and meal-break requirements. First, Magadia alleged that Walmart didn't provide adequate pay rate information on its wage statements. See Cal. Lab. Code § 226(a)(9). Next, he claimed that Walmart failed to furnish the pay-period dates with his last paycheck. See id . § 226(a)(6). Finally, he asserted that Walmart didn't pay adequate compensation for missed meal breaks. See id . § 226.7(c). Magadia sought penalties for these claims under California's Private Attorneys General Act ("PAGA"), which authorizes an aggrieved employee to recover penalties for Labor Code violations on behalf of the government and other employees. See id. § 2699.

The district court at first certified classes corresponding to each of Magadia's three claims. After summary judgment and a bench trial, the district court found that Magadia in fact suffered no meal-break violation and decertified that class. Even so, the district court allowed Magadia to still seek PAGA penalties on that claim based on violations incurred by other Walmart employees. The district court then ruled against Walmart on the three claims and awarded Magadia and the two remaining classes over $100 million in damages and penalties.

On appeal, we hold that Magadia lacked standing to bring the meal-break claim because he did not suffer injury himself. As for the two wage-statement claims, we hold that Magadia had standing but conclude that Walmart did not breach California law.

I.

Walmart pays its employees and issues wage statements every two weeks. Walmart also voluntarily offers quarterly "MyShare" bonuses to high-performing employees. Walmart reports these quarterly bonuses on qualifying employees’ wage statements as "MYSHARE INCT."

Besides the bonus itself, California law requires Walmart to adjust the rate of overtime pay it awards employees to account for these bonuses. See Cal. Lab. Code § 510. That's because California considers an employee's bonus to be part of the employee's "regular rate of pay" when calculating overtime rates. See Alvarado v. Dart Container Corp. of Cal. , 4 Cal. 5th 542, 554, 229 Cal.Rptr.3d 347, 411 P.3d 528 (2018). Thus, if a Walmart employee receives a MyShare bonus and worked overtime during that quarter, the employee must receive an adjusted overtime pay because of that MyShare bonus. Walmart calculates this adjusted overtime pay using a formula that includes the number of hours the employee worked each pay period of the quarter and the employee's overtime rate.¹ Walmart lists this adjusted overtime pay on its employee's wage statement as "OVERTIME/INCT." Walmart's OVERTIME/INCT item appears as a lump sum on the wage statement issued at the end of the quarter, with no corresponding "hourly rate" or "hours worked."

California law separately provides that when "an employer discharges an employee," the employee's wages are due "immediately." Cal. Lab. Code § 201(a). In compliance with the law, Walmart issues a final paycheck at the time of an employee's termination, along with a "Statement of Final Pay." The Statement of Final Pay does not include the "dates of the period for which the employee is paid." See id . § 226(a)(6). But Walmart separately provides the employee a final wage statement at the end of the semimonthly pay period that lists the required dates.

California law also requires employers to provide employees "a meal period of not less than 30 minutes" every five hours. Id. § 512(a). If employers fail to provide this meal break, they must pay their employees "one additional hour of pay at the employee's regular rate of compensation." Id. § 226.7(c). Walmart paid its employees whenever it failed to provide them with a compliant meal break. But when calculating its employees’ "regular rate of compensation" for meal-break violations, Walmart relied on the employees’ hourly rate and did not factor in the MyShare adjustment to overtime rates.

Magadia worked as a sales associate at Walmart from 2008 to 2016. In late 2016, Walmart fired Magadia and provided him with his final paycheck and a Statement of Final Pay. At the end of his last pay period with the company, Walmart also provided Magadia with his final wage statement. Magadia then filed a putative class action against Walmart in state court, alleging three California Labor Code violations: (1) that Walmart's wage statements violated Labor Code § 226(a)(9) because its adjusted overtime pay does not include hourly rates of pay or hours worked; (2) that Walmart violated § 226(a)(6) by failing to list the pay-period start and end dates in its Statements of Final Pay; and (3) that Walmart's meal-break payments violated § 226.7 because it did not account for MyShare bonuses when compensating employees. Magadia also sought penalties for all three claims under PAGA. See Cal. Lab. Code § 2698 et seq . Walmart removed the case to federal court. See 28 U.S.C. § 1332(d)(2).

After removal, the district court certified a class for each of Magadia's three claims. The district court later granted Magadia partial summary judgment on his two wage-statement claims and held a three-day bench trial on all three claims. The district court ultimately ruled for Magadia on his two wage-statement claims, holding that Walmart violated both § 226(a)(9) and § 226(a)(6). On the remaining meal-break claim, the district court found that Magadia did not establish that he personally suffered any meal-break violation. The district court held that, since Magadia failed to show that Walmart denied him meal breaks required under California law, his claims were not typical of the claims or defenses of the class. See Fed. R. Civ. P. 23(a)(3). As a result, the district court decertified the class based on that claim and denied Magadia's individual claim under § 226.7. Still, the district court permitted Magadia to recover PAGA penalties on the claim because Magadia had established that other Walmart employees had sustained meal-break violations.

The district court then awarded Magadia $101,947,700 for the three claims: $96 million award for the adjusted-overtime-rate claim ($48 million in statutory damages and another $48 million in PAGA penalties); $5.8 million in PAGA penalties for the final-wage-statement claim; and $70,000 in PAGA penalties for the meal-break claim.

On appeal, we review findings of fact for clear error and conclusions of law de novo. OneBeacon Ins. Co. v. Haas Indus., Inc. , 634 F.3d 1092, 1096 (9th Cir. 2011).

II.

Before we turn to the merits of his claims, we must ensure that Magadia has Article III standing. To meet the "irreducible constitutional minimum" of standing, a plaintiff must have (1) suffered an "injury in fact," (2) that is "fairly traceable" to the challenged conduct, and (3) will be redressed by a favorable decision. Lujan v. Defs. of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). To show an injury in fact, the plaintiff "must show that he or she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’ " Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S. Ct. 1540, 1548, 194 L.Ed.2d 635 (2016) (quoting Lujan , 504 U.S. at 560, 112 S.Ct. 2130 ). For an injury to be concrete, it "must actually exist." Id. Standing must "persist throughout all stages of [the] litigation." Hollingsworth v. Perry , 570 U.S. 693, 705, 133 S.Ct. 2652, 186 L.Ed.2d 768 (2013).

A.

1.

We start by considering whether Magadia has standing to bring a PAGA claim for the meal-break violations. Although the district court found that he did not suffer a meal-break injury himself, Magadia insists he has standing to pursue this claim because PAGA is a qui tam statute. Of course, with no individualized harm, Magadia cannot establish traditional Article III standing. See Lujan , 504 U.S. at 560 & n.1, 112 S.Ct. 2130.

But qui tam actions are a ...