9th Circuit Allows Plaintiffs Who Won $6M Verdict Against Walmart to Sue for More

The 9th Circuit Court of Appeals on Thursday revived a whistleblower lawsuit against Walmart Stores that alleges the retailer violated California labor laws by failing to pay employees for the time they spent waiting at security checkpoints after clocking out.

The appellate panel reversed a US District Court decision that found the plaintiff’s claims were “unmanageable,” eliminating a procedural argument, along with others, that Walmart had hoped would restrict employees’ ability to bring California’s Private Attorneys Generals Act claims against it. The law allows employees to step in the shoes of the state labor commissioner to pursue civil penalties against employers.

The panel said the trial court erred by insisting the plaintiffs comply with federal Rules of Civil Procedure that address class-action lawsuits. Lawsuits brought under the Private Attorneys General Act are not class actions, the opinion says.

“PAGA empowers aggrieved employees to enforce California labor laws, thereby preventing a recurrence of the ‘systemic under-enforcement of many worker protections’ that occurred before the passage of the statute,” the opinion says, quoting a California appellate court ruling.

The claims made against Walmart by lead plaintiffs Chelsea Hamilton and Alyssa Hernandez relate to the company’s policies at its online fulfillment center in Chino, California, a Los Angeles suburb.

In 2019, the plaintiffs won a $6,001,599 award for 452,491 meal break violations in a class-action lawsuit because Walmart’s security procedures discouraged employees from leaving the premises during their 30-minute meal breaks. The jury found in favor of Walmart on claims that the company’s elective alternative work-week schedule violated labor laws.

Before the jury convened, District Court Judge Andre Birotte Jr. dismissed the plaintiffs’ claims that Walmart illegally forced employees, after they had clocked out, to wait in line at security checkpoints that were set up to prevent thefts.

Birotte found that the plaintiffs could not comply with Rule 23, which requires claims made in class-action lawsuits to be manageable. Birotte said the pleadings also did not comply with Rule 26, which requires plaintiffs to succinctly detail how damages should be calculated.

The 9th Circuit panel said lawsuits filed under the state PAGA law are not class actions, so Rule 23 does not apply. Also, PAGA lawsuits seek civil penalties, not damages, so Rule 26 doesn’t apply.

“Imposing a manageability requirement in PAGA cases would also contradict the purposes of PAGA by undermining the key features of a PAGA action, rendering it an improper exercise of a court’s inherent powers,” the court said.

The appellate court reversed the decision to dismiss the security-checkpoint claims and remanded the case to the District Court.

Los Angeles attorney Kenneth H. Yoon, who argued the case on appeal, said the decision clarifies points of laws that have interfered with PAGA lawsuits in the past. He said if he persuades the trial court that Walmart violated labor laws by forcing workers to wait at the security checkpoints, he intends to argue that the $6 million jury verdict serve as a guidepost when determining the amount of penalties.

The PAGA statute allows penalties of $100 for each employee for each pay period that the violations occur, but also gives judges wide latitude, Yoon said.

“When Walmart measures things to the minute or second, which they do, and when you have a facility of 1,000 people making, let’s say $12 an hour, and you multiple that $12 by a thousand, hundreds of times a year, it’s real money,” Yoon said.