Walmart must face claims over worker pay for security checks, court rules

3 minute read

A display for multinational retail corporation Walmart is seen at the Collision conference in Toronto, Ontario, Canada June 23, 2022. Picture taken June 23, 2022. REUTERS/Chris Helgren

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  • Judge had found claim to be "unmanageable"
  • Court says 'private attorney general' lawsuits don't work like class actions
  • Court upheld $6 mln verdict on separate claim

(Reuters) - A U.S. appeals court on Thursday revived a claim that Walmart Inc should have paid employees at a California fulfillment center for time spent going through security checks after they had clocked out.

A unanimous three-judge panel of the 9th U.S. Circuit Court of Appeals said a federal judge was wrong to find that the claim in a broader 2017 lawsuit by two Walmart workers at a Chino, California, warehouse had to be dismissed because it was "unmanageable."

The court said judges can impose a manageability requirement in lawsuits brought as class actions, but not to claims brought under California's unique Private Attorneys General Act (PAGA) because the two actions are fundamentally distinct.

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The lawsuit was filed as a proposed class action in California state court, and the plaintiffs added various PAGA claims after Walmart removed the case to federal court in Riverside, California.

PAGA allows workers to sue employers for wage-law violations on behalf of the state and keep 25% of any penalties they win. And like the state, PAGA plaintiffs can sue businesses on behalf of large groups of workers.

In a separate opinion on Thursday in the same case, the 9th Circuit upheld a $6 million jury verdict against Walmart on a class-action claim that workers at the warehouse were deprived of full 30-minute meal breaks.

Walmart did not immediately respond to a request for comment. Nor did the plaintiffs' lawyers at Yoon Law.

U.S. District Judge Andre Birotte in 2019 rejected Walmart's argument that the PAGA claims should be dismissed because the plaintiffs had not sought class certification.

But he agreed with Walmart that the PAGA claim involving security checks was unmanageable because it would require determinations of the time that individual workers spent waiting to leave the warehouse. The plaintiffs claim workers routinely had to wait 15 to 20 minutes to be checked.

The meal break claim went to trial, and a jury in 2019 awarded the plaintiffs $6 million for more than 450,000 individual violations.

Both sides appealed, with the plaintiffs arguing that because PAGA claims are distinct from class actions, Birotte was wrong to apply manageability requirements for class actions to the security check claim.

The 9th Circuit on Thursday agreed, saying manageability requirements are imposed in class actions largely to ensure that damages can be distributed fairly to class members. But PAGA plaintiffs seek civil penalties, and not damages, so that principle does not apply, the court said.

The panel also agreed with Birotte that plaintiffs in PAGA cases do not need to seek class certification. The 9th Circuit said the U.S. Supreme Court had made that clear in a ruling earlier this month in Viking River Cruises Inc v. Moriana.

The court in that case said PAGA claims can be compelled into individual arbitration but, as the 9th Circuit noted, also explained that there are various key distinctions between PAGA cases and class action lawsuits.

The panel included Circuit Judge Jay Bybee and U.S. District Judge Kathleen Cardone of the Western District of Texas, who sat by designation.

The case is Hamilton v. Wal-mart Stores Inc, 9th U.S. Circuit Court of Appeals, No. 19-56161 and No. 20-55223.

For the plaintiffs: Kenneth Yoon of Yoon Law

For Walmart: Theane Evangelis of Gibson Dunn & Crutcher

Read more:

U.S. Supreme Court deals major blow to California worker class actions

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Dan Wiessner (@danwiessner) reports on labor and employment and immigration law, including litigation and policy making. He can be reached at daniel.wiessner@thomsonreuters.com.