Roderick Magadia v. Wal-Mart Associates ( 2021 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
RODERICK MAGADIA, individually No. 19-16184
and on behalf of all those similarly
situated, D.C. No.
Plaintiff-Appellee, 5:17-cv-00062-
LHK
v.
WAL-MART ASSOCIATES, INC., a OPINION
Delaware corporation; WALMART
INC., a Delaware corporation,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of California
Lucy H. Koh, District Judge, Presiding
Argued and Submitted November 19, 2020
Pasadena, California
Filed May 28, 2021
Before: Consuelo M. Callahan and Patrick J. Bumatay,
Circuit Judges, and Gregory A. Presnell, * District Judge.
Opinion by Judge Bumatay
*
The Honorable Gregory A. Presnell, United States District Judge
for the Middle District of Florida, sitting by designation.
2 MAGADIA V. WAL-MART ASSOCIATES
SUMMARY **
Article III Standing / California Labor Law
In a class action suit brought by Roderick Magadia, a
former Walmart employee, alleging violations of California
Labor Code’s meal-break and wage-statement requirements,
the panel: (1) vacated the district court’s judgment and
award of damages on a Cal. Labor Code § 226.7 claim for
meal-break violations and remanded with instructions to
further remand the claim to state court; and (2) reversed the
judgment and award of damages on two Cal. Labor Code
§ 226(a) claims for wage-statement violations and remanded
with instructions to enter judgment for Walmart.
The panel held that Magadia lacked Article III standing
to bring a California Private Attorney General Act
(“PAGA”) claim for Walmart’s meal-break violations since
he himself did not suffer injury. Specifically, the panel noted
that qui tam actions are a well-established exception to the
traditional Article III analysis, but held that PAGA’s features
diverged from Vermont Agency of Nat. Res. V. U.S. ex rel.
Stevens, 529 U.S. 765 (2000)’s assignment theory of qui tam
injury. The panel also held that PAGA’s features departed
from the traditional criteria of qui tam statutes.
The panel next considered whether Magadia had
standing to bring his two wage-statement claims under Cal.
Labor Code § 226(a), which requires employers to
accurately furnish certain itemized information on its
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
MAGADIA V. WAL-MART ASSOCIATES 3
employees’ wage statements. The panel held that a violation
of § 226(a) created a cognizable Article III injury here. To
determine whether the violation of a statute constituted a
concrete harm, the panel conducted a two-part inquiry. First,
the panel held that § 226(a) protected employees’ concrete
interest in receiving accurate information about their wages
in their pay statements; and Walmart’s failure to disclose
statutorily required information on Magadia’s wage
documents, if true, violated a “concrete interest.” Second,
Magadia sufficiently alleged that Walmart’s § 226(a)
violation – depriving him of accurate itemized wage
statements – presented a material risk of harm to his interest
in the statutorily guaranteed information. The panel also
concluded that other class members who could establish
§ 226(a) injuries had standing to collect damages.
Finally, the panel considered the merits of Magadia’s
two claims under Cal. Labor Code § 226(a). First, the panel
held that the wage statement law did not require Walmart to
list the rate of the MyShare overtime adjustment on
employees’ wage statements, and the district court erred in
holding otherwise. Because Walmart must retroactively
calculate the MyShare overtime adjustment based on work
from six prior periods, the panel did not consider it an hourly
rate “in effect” during the pay period for purposes of
§ 226(a)(9), and Walmart complied with the wage statement
law here. Second, the panel held that Walmart’s Statement
of Final Pay did not violate the wage statement statute.
Namely, Walmart complied with Cal. Labor Code
§ 226(a)(6) when it furnished the required pay-period dates
to Magadia and other terminated employees in their final
wage statements at the end of the next semimonthly pay
period.
4 MAGADIA V. WAL-MART ASSOCIATES
COUNSEL
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.
MAGADIA V. WAL-MART ASSOCIATES 5
OPINION
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
6 MAGADIA V. WAL-MART ASSOCIATES
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 (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.”
1
In particular, to calculate the adjusted overtime pay, Walmart adds
together all the overtime hours an employee worked over the quarter,
prorates the MyShare bonus to account for the total overtime hours
worked that quarter, and then adjusts upward the overtime hourly rate
for overtime already paid based on the prorated MyShare bonus.
MAGADIA V. WAL-MART ASSOCIATES 7
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
8 MAGADIA V. WAL-MART ASSOCIATES
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.
MAGADIA V. WAL-MART ASSOCIATES 9
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 (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, 136 S. Ct. 1540, 1548
(2016) (quoting Lujan, 504 U.S. at 560). 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 (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.
10 MAGADIA V. WAL-MART ASSOCIATES
But qui tam actions are a “well-established exception” to
the traditional Article III analysis. Spokeo, 136 S. Ct.
at 1552 n.* (Thomas, J., concurring) (simplified); see Vt.
Agency of Nat. Res. v. U.S. ex rel. Stevens, 529 U.S. 765, 769
n.1, 774–76 (2000) (discussing qui tam’s historical pedigree
and concluding that the False Claims Act (“FCA”) was a qui
tam statute). Qui tam is short for “qui tam pro domino rege
quam pro se ipso in hac parte sequitur,” meaning he “who
pursues this action on our Lord the King’s behalf as well as
his own.” Vermont Agency, 529 U.S. at 768 n.1. A qui tam
statute permits private plaintiffs, known as relators, “to sue
in the government’s name for the violation of a public right.”
Spokeo, 136 S. Ct. at 1552 n.* (Thomas, J., concurring).
Qui tam standing for uninjured plaintiffs flows from an
assignment theory. Vermont Agency, 529 U.S. at 773–74.
The Court has recognized that an “adequate basis for the
relator’s suit for his bounty is to be found in the doctrine that
the assignee of a claim has standing to assert the injury in
fact suffered by the assignor.” Id. at 773. In a qui tam action,
the government partially assigns its claims to the relator,
“who then may sue based upon [the government’s] injury.”
U.S. ex rel. Kelly v. Boeing Co., 9 F.3d 743, 748 (9th 1993).
In other words, a “qui tam action is for a redress” of the
government’s injury, and “it is the government’s injury that
confers standing upon the private person.” Stalley v.
Methodist Healthcare, 517 F.3d 911, 917 (6th Cir. 2008).
Thus, the Court has concluded that a non-injured relator has
standing when the statute “effect[ed] a partial assignment of
the Government’s damages claim.” Vermont Agency,
529 U.S. at 773.
Outside the narrow “exception” of qui tam actions,
however, the Supreme Court has expressed skepticism that
“mere authorization to represent a third party’s interests is
MAGADIA V. WAL-MART ASSOCIATES 11
sufficient to confer Article III standing on private parties
with no injury of their own.” Hollingsworth, 570 U.S.
at 710. After all, States “have no power directly to enlarge
or contract federal jurisdiction.” Fiedler v. Clark, 714 F.2d
77, 80 (9th Cir. 1983) (per curiam) (simplified). Ultimately,
“standing in federal court is a question of federal law, not
state law.” Hollingsworth, 570 U.S. at 715.
Though the California Supreme Court has categorized
PAGA as “a type of qui tam action,” Iskanian v. CLS Transp.
Los Angeles, LLC, 59 Cal. 4th 348, 360 (2014), we must look
beyond the mere label attached to the statute and scrutinize
the nature of the claim itself. Historically, common-law
courts have required an individualized showing of injury
before permitting a private plaintiff to vindicate “public
rights”—rights involving duties owed “to the whole
community, considered as a community, in its social
aggregate capacity.” Spokeo, 136 S. Ct. at 1553 (Thomas, J.,
concurring) (quoting 4 William Blackstone, Commentaries
*5). And in the modern era, the Court has rejected several
attempts by States to bypass the individualized-injury
requirement of Article III by authorizing private plaintiffs to
represent the States’ interests. See, e.g., Hollingsworth, 570
U.S. at 707–13.
With that in mind, we examine “historical practice” to
determine whether a harm “has traditionally been regarded
as a basis for a lawsuit.” Spokeo, 136 S. Ct. at 1549. A
purported qui tam statute must hew closely to the traditional
scope of a qui tam action for an uninjured plaintiff to
maintain suit under Article III. Cf. Vermont Agency,
529 U.S. at 774 (“[T]he Constitution established that judicial
power could come into play only in matters that were the
traditional concern of the courts at Westminster[.]”
(simplified)). So long as PAGA claims satisfy the traditional
12 MAGADIA V. WAL-MART ASSOCIATES
criteria for a qui tam action, Magadia may pursue his meal-
break claim.
2.
On close inspection, PAGA has several features
consistent with traditional qui tam actions—yet many that
are not. Foremost among the similarities, PAGA operates as
an assignment from California to a relator-type plaintiff. A
PAGA plaintiff serves as a “proxy or agent of the state’s
labor law enforcements agencies” and represents the “same
legal right and interest as state labor law enforcement
agencies.” Iskanian, 59 Cal. 4th at 380 (simplified). As part
of that assignment, PAGA authorizes an aggrieved employee
to recover a “civil penalty” that could have otherwise been
“assessed and collected by” California’s Labor & Workforce
Development Agency (“LWDA”). Cal. Lab. Code
§ 2699(a).
Also consistent with traditional qui tam actions, PAGA
requires private-party plaintiffs to “share a monetary
judgment with the government[,] . . . with the government
receiving the lion’s share.” Methodist Healthcare, 517 F.3d
at 918. The FCA, for example, designates 25% of the
judgment to the relator, with the rest remitted to the Federal
government. 31 U.S.C. § 3730(d)(1), (2). Similarly, a
PAGA plaintiff must give the “lion’s share” (75%) of the
civil penalties recovered to the LWDA with the remainder
distributed among “aggrieved employees.” Cal. Lab. Code
§ 2699(i).
And just like qui tam statutes, PAGA permits the
government to dictate whether a private plaintiff may bring
a claim in the first place. For example, FCA relators must
first present the government with their proposed complaint
and related materials before they can start an action against
MAGADIA V. WAL-MART ASSOCIATES 13
a defendant; at that point the government may consider
whether to “intervene and proceed with the action” in the
relator’s place. 31 U.S.C. § 3730(b)(1)–(3). If the
government elects to intervene, it will “take over the action,”
and the prosecution of the case will “be conducted by the
Government,” not the would-be plaintiff. Id. § 3730(b)(4).
Likewise, a putative PAGA plaintiff must give written notice
of the alleged Labor Code violation to the LWDA before
suing. See Cal. Lab. Code § 2699.3(a). A PAGA suit can
begin only after the LWDA provides notice that “it does not
intend to investigate the alleged violation” in the plaintiff’s
notice or if the LWDA doesn’t respond within 65 days. Cal.
Lab. Code § 2699.3(a)(2)(A). But if, after investigating the
violation, the LWDA decides to issue a citation to the
employer, “the employee may not commence” a civil action
under PAGA. Id. § 2699.3(b)(2)(A)(i).
Despite these similarities, however, PAGA differs in
significant respects from traditional qui tam statutes. First,
PAGA explicitly involves the interests of others besides
California and the plaintiff employee—it also implicates the
interests of nonparty aggrieved employees. By its text,
PAGA authorizes an “aggrieved employee” to bring a civil
action “on behalf of himself or herself and other current or
former employees.” Cal. Lab. Code § 2699(a) (emphasis
added). 2 And PAGA requires that “a portion of the penalty
goes not only to the citizen bringing the suit but to all
employees affected by the Labor Code violation.” Iskanian,
59 Cal. 4th at 382 (emphasis added); see Cal Lab. Code
2
By contrast, an FCA relator must sue in the name of the United
States, see 31 U.S.C. § 3730(b)(1), which designates that the government
is the real party in interest, Methodist Healthcare, 517 F.3d at 918.
14 MAGADIA V. WAL-MART ASSOCIATES
§ 2699(i). 3 Finally, a judgment under PAGA binds
California, the plaintiff, and the nonparty employees from
seeking additional penalties under the statute. Iskanian,
59 Cal. 4th at 381. 4 PAGA therefore creates an interest in
penalties, not only for California and the plaintiff employee,
but for nonparty employees as well.
This feature is atypical (if not wholly unique) for qui tam
statutes. 5 It conflicts with qui tam’s underlying assignment
theory—that the real interest is the government’s, which the
government assigns to a private citizen to prosecute on its
behalf. Cf. Stalley v. Catholic Health Initiatives, 509 F.3d
517, 522 (8th Cir. 2007) (“A ‘private’ right is different from
3
See also Canela v. Costco Wholesale Corp., 971 F.3d 845, 852 n.3
(9th Cir. 2020) (PAGA’s monetary judgment “is not awarded
exclusively to the employee who files the suit” but is rather “allocated
among the aggrieved employees.”); Williams v. Superior Court, 3 Cal.
5th 531, 545 (2017) (PAGA “deputiz[es] employees harmed by labor
violations to sue on behalf of the state and collect penalties, to be shared
with the state and other affected employees.”); Arias v. Superior Court,
46 Cal. 4th 969, 986 (2009) (“[T]here remain situations in which
nonparty aggrieved employees may profit from a judgment in an action
brought under [PAGA].”).
The PAGA action, however, does not prevent nonparty aggrieved
4
employees from seeking “other remedies under state or federal law.”
Baumann v. Chase Inv. Servs. Corp., 747 F.3d 1117, 1123 (9th Cir.
2014).
For example, none of the other modern qui tam statutes mentioned
5
in Vermont Agency authorize suits on behalf of non-parties or involve
payments to non-parties. See 529 U.S. at 769 n.1 (citing 25 U.S.C. § 81,
26 U.S.C. § 201, 35 U.S.C. § 292(b)); see also Harold J. Krent, Executive
Control over Criminal Law Enforcement: Some Lessons from History,
38 Am. U. L. Rev. 275, 296–97 & n. 105–06 (1989) (listing early
American qui tam statutes, which limited recovery to the relator and the
government).
MAGADIA V. WAL-MART ASSOCIATES 15
a public right and qui tam cases exist to vindicate public
rights.” (simplified)). And it conflicts with Article III’s core
principle that each plaintiff “must assert his own legal rights
and interests, and cannot rest his claim to relief on the legal
rights or interests of third parties.” Warth v. Seldin, 422 U.S.
490, 499 (1975). Indeed, California courts have themselves
recognized that PAGA’s peculiar feature makes it an
“except[ion]” to the “traditional criteria” of qui tam actions.
Iskanian, 59 Cal. 4th at 382; see also Moorer v. Noble L.A.
Events, Inc., 32 Cal. App. 5th 736, 742 (2019) (rejecting
plaintiff’s argument that, since PAGA is a type of qui tam
action, the entire 25% of the civil penalties not allocated to
the government should go to the aggrieved employee who
brings the PAGA suit). While California may be a “real
party in interest,” Iskanian, 59 Cal. 4th at 387, a PAGA suit
also implicates the interests of other third parties.
Second, a traditional qui tam action acts only as “a
partial assignment” of the Government’s claim. Vermont
Agency, 529 U.S. at 773 (emphasis added). The government
remains the real party in interest throughout the litigation
and “may take complete control of the case if it wishes.”
U.S. ex rel. Taxpayers Against Fraud v. Gen. Elec. Co., 41
F.3d 1032, 1041 (6th Cir. 1994). Under the FCA, for
instance, the federal government can intervene in a suit, can
settle over the objections of the relator, and must give its
consent before a relator can have the case dismissed. 31
U.S.C. § 3730(b)–(f). These “significant procedural
controls” ensure that the government maintains “substantial
authority over the action.” Stalley ex rel. U.S. v. Orlando
Reg’l Healthcare Sys., Inc., 524 F.3d 1229, 1234 (11th Cir.
2008). So even if the government partially assigns a claim
to a relator, “it retains a significant role in the way the action
is conducted.” Methodist Healthcare, 517 F.3d at 918.
16 MAGADIA V. WAL-MART ASSOCIATES
In contrast, PAGA represents a permanent, full
assignment of California’s interest to the aggrieved
employee. True enough, PAGA gives California the right of
first refusal in a PAGA action. An aggrieved employee can
only sue if California declines to investigate or penalize an
alleged violation; and California’s issuance of a citation
precludes any employees from bringing a PAGA action for
the same violation. Cal. Lab. Code §§ 2699(h),
2699.3(b)(2)(A)(i). But once California elects not to issue a
citation, the State has no authority under PAGA to intervene
in a case brought by an aggrieved employee. See Iskanian,
59 Cal. 4th at 389–90 (acknowledging that PAGA
“authoriz[es] financially interested private citizens to
prosecute claims on the state’s behalf without governmental
supervision”). PAGA thus lacks the “procedural controls”
necessary to ensure that California—not the aggrieved
employee (the named party in PAGA suits)—retains
“substantial authority” over the case. See Orlando Reg’l
Healthcare, 524 F.3d at 1234.
Consistent with a full assignment, an aggrieved
employee’s PAGA judgment precludes California from
citing the employer for the same violation. See Iskanian,
59 Cal. 4th at 381. In that way, PAGA prevents California
from intervening in a suit brought by the aggrieved
employee, yet still binds the State to whatever judgment
results. A complete assignment to this degree—an anomaly
among modern qui tam statutes—undermines the notion that
the aggrieved employee is solely stepping into the shoes of
the State rather than also vindicating the interests of other
aggrieved employees.
3.
Our precedent also shows the lack of standing here. We
have ruled that an uninjured party has no Article III standing
MAGADIA V. WAL-MART ASSOCIATES 17
to sue under another California private attorney general
statute involving unfair business practices. See Lee v. Am.
Nat’l Ins. Co., 260 F.3d 997, 1002 (9th Cir. 2001) (citing
Cal. Bus. & Prof. Code § 17204). In Lee, we held that the
statute did not confer standing on a party who had not
“actually been injured by the defendant’s challenged
conduct,” even though the law permitted any person to sue
on behalf of California. Id. at 1001–02; see also Hangarter
v. Provident Life & Accident Ins. Co., 373 F.3d 998, 1022
(9th Cir. 2004) (“Even if Cal. Bus. & Prof. Code § 17204permits a plaintiff to pursue injunctive relief in California
state courts as a private attorney general even though he or
she currently suffers no individualized injury as a result of a
defendant’s conduct,” the plaintiff must show the requisite
injury to establish Article III standing.); Fiedler, 714 F.2d
at 79–80 (rejecting Article III standing when uninjured
plaintiff claimed to be “suing as a private Attorney General
on behalf of citizens of Hawaii rather than as a private
citizen”). 6
Several circuit courts have likewise concluded that
comparable statutes are not qui tam for purposes of Article
III, based on the same features we identify in PAGA. See,
e.g., Orlando Reg’l Healthcare, 524 F.3d at 1233–34
(holding that the Medicare Secondary Payer Act “differs
6
Although we have acknowledged that PAGA is a “type” or “form”
of qui tam, we have never decided whether it confers Article III standing
on uninjured employees. See, e.g., Porter v. Nabors Drilling USA, L.P.,
854 F.3d 1057, 1061 (9th Cir. 2017) (holding that PAGA is a “type of
qui tam” for purposes of an automatic stay in bankruptcy); Sakkab v.
Luxottica Retail N. Am., Inc., 803 F.3d 425, 439 (9th Cir. 2015) (holding
that the Federal Arbitration Act did not preempt PAGA because it is a
“form of qui tam” action); Baumann, 747 F.3d at 1124 (holding that
PAGA is not a class action but “a civil enforcement action filed on behalf
of and for the benefit of the state”).
18 MAGADIA V. WAL-MART ASSOCIATES
materially” from a qui tam action partly because it “provides
to the government none of the procedural safeguards to
manage or direct an action” traditionally afforded);
Methodist Healthcare, 517 F.3d at 918 (same); United
Seniors Ass’n, Inc. v. Philip Morris USA, 500 F.3d 19, 24
(1st Cir. 2007) (same); Woods, 574 F.3d at 97–98 (same);
Brintley v. Aeroquip Credit Union, 936 F.3d 489, 494–95
(6th Cir. 2019) (holding that a “private attorneys general”
suit is not necessarily “entitled to special solicitude in an
Article III standing analysis”).
***
Altogether, PAGA’s features diverge from Vermont
Agency’s assignment theory of qui tam injury, and they
depart from the traditional criteria of qui tam statutes. As a
result, we hold that Magadia lacks standing to bring a PAGA
claim for Walmart’s meal-break violations since he himself
did not suffer injury. 7 We remand Magadia’s meal-break
claim to the district court with instructions to return it to state
court. See Lee, 260 F.3d at 1008.
B.
Next, we consider whether Magadia has standing to
bring his two wage-statement claims under Labor Code
§ 226(a). That provision requires employers to accurately
furnish certain itemized information on its employees’ wage
statements. Cal. Lab. Code § 226(a). Walmart disputes that
a violation of § 226(a) creates a cognizable Article III injury
here. We hold that it does.
Because Magadia doesn’t having standing to bring a PAGA action
7
on behalf of employees who personally suffered a meal-break injury, we
do not decide whether Walmart violated § 226.7(c).
MAGADIA V. WAL-MART ASSOCIATES 19
The hallmark of an Article III injury is that it is concrete
and particularized. Although we often think of “tangible”
injuries as the basis of this jurisdictional requirement, the
Supreme Court has confirmed that “intangible injuries can
nevertheless be concrete.” Spokeo, 136 S. Ct. at 1549. The
omission of statutorily required information can constitute a
distinct, concrete injury. 8 At the same time, not “every
minor inaccuracy reported in violation of [a statute] will
‘cause real harm or present any material risk of real harm.’”
Robins v. Spokeo, Inc., 867 F.3d 1108, 1116 (9th Cir. 2017)
(“Spokeo II”) (quoting Spokeo, 136 S. Ct. at 1550)
(simplified).
To determine whether the violation of a statute
constitutes a concrete harm, we engage in a two-part inquiry.
We first consider “whether the statutory provisions at issue
were established to protect . . . concrete interests (as opposed
to purely procedural rights).” Id. at 1113. If so, we then
assess “whether the specific procedural violations alleged in
this case actually harm, or present a material risk of harm to,
such interests.” Id.
First, we believe § 226(a) protects employees’ concrete
interest in receiving accurate information about their wages
in their pay statements. An employer violates the statute if
it “fails to provide accurate and complete information”
8
See FEC v. Akins, 524 U.S. 11, 21 (1998) (“[A] plaintiff suffers an
‘injury in fact’ when the plaintiff fails to obtain information which must
be publicly disclosed pursuant to a statute.”); Envt’l Def. Fund v. EPA,
922 F.3d 446, 452 (D.C. Cir. 2019) (“The law is settled that a denial of
access to information qualifies as an injury in fact” when disclosure of
that information is required by statute.); Hajro v. U.S. Citizenship &
Immigr. Servs., 811 F.3d 1086, 1102–05 (9th Cir. 2016) (holding that
informational injuries under FOIA satisfy Article III’s “injury-in-fact”
requirement).
20 MAGADIA V. WAL-MART ASSOCIATES
required by § 226(a), and if “the employee cannot promptly
and easily determine [that information] from the wage
statement alone.” Cal. Lab. Code § 226(e)(2)(B). Section
226(a)’s procedural guarantees therefore protect an
employee’s non-abstract interest in being “adequately
informed of [the] compensation received” during the pay
period. Soto v. Motel 6 Operating, L.P., 4 Cal. App. 5th 385,
392 (2016) (simplified). As a result, Walmart’s failure to
disclose statutorily required information on Magadia’s wage
documents, if true, violates a “concrete interest.” Spokeo II,
67 F.3d at 1113 (simplified).
Second, Magadia sufficiently alleges that Walmart’s
§ 226(a) violations—depriving him of accurate itemized
wage statements—presented a “material risk of harm” to his
“interest” in the statutorily guaranteed information. See
Spokeo II, 867 F.3d at 1113. Even when a statute “has
accorded procedural rights to protect a concrete interest, a
plaintiff may fail to demonstrate concrete injury where
violation of the procedure at issue presents no material risk
of harm to that underlying interest.” Strubel v. Comenity
Bank, 842 F.3d 181, 190 (2d Cir. 2016). That is because a
“procedural violation of an informational entitlement does
not by itself suffice to keep a claim in federal court.”
Brintley, 936 F.3d at 493. The plaintiff must further “allege
at least that the information had some relevance to her.” Id.
While Walmart claims that Magadia was not harmed
because it did not underpay him, the lack of the required
information runs the risk of leaving him and other employees
unable to determine whether that is true. As Walmart’s own
witnesses confirmed, without the mandated information,
employees could not tell from their wage statements how the
company calculated their wages or which dates the paystub
covered—precisely the sort of “real harm[]” that § 226(a) is
MAGADIA V. WAL-MART ASSOCIATES 21
“designed to prevent.” See Spokeo II, 867 F.3d at 1115; Cal.
Lab. Code § 226(e)(2)(B). Even if Walmart pays its
employees every penny owed, those employees suffer a real
risk of harm if they cannot access the information required
by § 226(a). See Torres v. Mercer Canyons Inc., 835 F.3d
1125, 1135 (9th Cir. 2016) (“[I]nformational injury need not
result in direct pecuniary loss.”). 9
We therefore hold that Magadia has standing to bring his
two claims under Labor Code § 226(a). For the same reason,
we also conclude that other class members who can establish
§ 226(a) injuries have standing to collect damages. See
Ramirez v. TransUnion LLC, 951 F.3d 1008, 1017 (9th Cir.
2020) (holding that all class members “must satisfy the
requirements of Article III standing at the final stage of a
money damages suit when class members are to be awarded
individual monetary damages”).
III.
We turn, finally, to the merits of Magadia’s two claims
under California’s wage statement statute. Cal. Lab. Code
§ 226(a). To recover damages under the law, Magadia must
prove that he “suffer[ed] injury as a result of a knowing and
intentional failure by an employer to comply with the
9
Walmart alternatively argues that California, unlike Congress,
cannot confer Article III standing based on a procedural violation.
Again, we disagree. A legislature “has the power to create new interests,
the invasion of which may confer standing” so long as “the requirements
of Art. III [are] met.” Diamond v. Charles, 476 U.S. 54, 66 n.17 (1986).
Walmart seeks to distinguish between injuries born of state law and those
born of federal law. But we have held that “state law can create interests
that support standing in federal courts.” In re Facebook, Inc. Internet
Tracking Litig., 956 F.3d 589, 599 (9th Cir. 2020) (quoting Cantrell v.
City of Long Beach, 241 F.3d 674, 684 (9th Cir. 2001)).
22 MAGADIA V. WAL-MART ASSOCIATES
statute.” Price v. Starbucks Corp., 192 Cal. App. 4th 1136,
1142 (2011) (citing Cal. Lab. Code § 226(a), (e)). The
district court determined that Magadia proved that Walmart
violated the statute. We disagree.
A.
First, we conclude that the wage statement law did not
require Walmart to list the “rate” of the MyShare overtime
adjustment on employees’ wage statements. The law
requires an itemized statement with “all applicable hourly
rates in effect during the pay period and the corresponding
number of hours worked at each hourly rate by the
employee.” Cal. Lab. Code § 226(a)(9). The district court
held that the wage statements didn’t comply with the law
because they didn’t include the “hourly rates” and “hours
worked” associated with the MyShare overtime adjustment.
This was error.
Walmart did not violate the wage statement law because
there was no “hourly rate[] in effect during the pay period”
for the MyShare overtime adjustment. Walmart paid its
employees every two weeks and provided a paystub at the
end of each semimonthly pay period. At the end of a quarter
(encompassing six pay periods), Walmart awarded a
MyShare bonus to its employees based on performance,
sales, profits, and store standards from the entire quarter.
California law considers that bonus part of the employees’
base rate of pay, which in turn requires Walmart to make an
after-the-fact adjustment to overtime pay. See Cal. Lab.
Code § 510 (requiring employers to pay 1.5 times the
“regular rate of pay” for overtime). To do so, Walmart must
retroactively calculate the difference between the
employees’ overtime pay rate over the quarter and the
employees’ overtime rate as if the MyShare bonus had been
paid as part of the base rate of pay. After calculating the
MAGADIA V. WAL-MART ASSOCIATES 23
required overtime pay adjustment, Walmart reported both
the MyShare bonus and the adjusted overtime pay as lump
sums on the wage statements at the end of each quarter.
Under these facts, the MyShare overtime adjustment is
no ordinary overtime pay with a corresponding hourly rate.
It is a non-discretionary, after-the-fact adjustment to
compensation based on the overtime hours worked and the
average of overtime rates 10 over a quarter (or six pay
periods). As a recent California court recognized with a
similar bonus scheme, the supposed “hourly rate” for the
adjusted overtime pay “is a fictional hourly rate calculated
after the pay period closes in order to comply with the Labor
Code section on overtime”—“[i]t appears as part of the
calculation for an overtime bonus and then disappears,
perhaps never to be seen again.” Morales v. Bridgestone
Retail Operations, LLC, No. G057043, 2020 WL 1164120,
at *1 (Cal. Ct. App. Mar. 11, 2020) (unpublished); see also
Canales v. Wells Fargo Bank, N.A., 23 Cal. App. 5th 1262(2018) (unpublished) 11 (Because “[t]he OverTimePay
Override was an adjustment to the overtime payment due to
an employee, based on bonuses earned by the employee for
work performed during prior pay period . . . there were no
10
Since an employee’s overtime pay rate may fluctuate throughout
a quarter, Walmart needed to consider the average overtime rate in
calculating the overtime adjustment. That Walmart must base the
overtime adjustment on an average of overtime rates from the quarter is
more evidence that the adjustment is not an “hourly rate[] in effect during
the pay period.”
11
Available at: https://caselaw.findlaw.com/ca-court-of-
appeal/1896937.html.
24 MAGADIA V. WAL-MART ASSOCIATES
applicable hourly rates in effect during the pay period which
defendant was required to include in the wage statement.”). 12
As a result, we do not consider the calculation to be an
“hourly rate in effect during the pay period.” Cal. Lab. Code
§ 226(a)(9). The term “in effect” is defined as “[t]he state or
fact of being operative or in force.” 13 And the word “during”
means “[t]hroughout the whole continuance of,” or “in the
time of.” 14 So to be “in effect during the pay period,” the
hourly rate must have been “operative” or “in force”
“throughout the whole continuance of” or “in the time of”
the pay period in the wage statement. It does not apply to an
artificial, after-the-fact rate calculated based on overtime
hours and rates from preceding pay periods that did not even
exist during the time of the pay period covered by the wage
statement. See Morales, 2020 WL 1164120, at *5 (“The
hourly rate for the overtime premium is not in effect during
the pay period.”); Canales, 23 Cal. App. 5th 1262 (same).
This reading is confirmed by § 226(a)(9)’s second
requirement: that the employer must list the “corresponding
number of hours worked at each hourly rate.” During the
last two-week pay period of the quarter, but before Walmart
generates the MyShare bonus, an employee works under his
or her ordinary overtime hourly rate, which must be reported
12
Although these decisions are unpublished with no precedential
value, we may still consider them to interpret California law. See Emps.
Ins. of Wausau v. Granite State Ins. Co., 330 F.3d 1214, 1220 n.8 (9th
Cir. 2003).
13
In Effect, Oxford English Dictionary Online,
tinyurl.com/4f6t8ppt.
14
During, Oxford English Dictionary Online,
tinyurl.com/tw6mvf3s.
MAGADIA V. WAL-MART ASSOCIATES 25
in the employee’s paystub. At the end of the quarter, if the
employee receives a MyShare bonus and its required
overtime adjustment, then Walmart must also calculate the
overtime adjustment rate. But at no time during the
preceding two-week pay period did the employee work
under that overtime rate because it’s calculated after the
close of the pay period based on the preceding six pay
periods of work. For example, Magadia’s overtime
adjustment “rate” was apparently about $.20 per hour. Yet
there was no pay period in which Magadia ever worked
overtime at an hourly rate of $.20. As this illustrates,
Magadia’s reading of the statute would lead to the
anomalous result of having a wage statement listing an
“hourly rate” but with zero “number of hours worked” at that
rate.
In sum, because Walmart must retroactively calculate the
MyShare overtime adjustment based on work from six prior
periods, we do not consider it an hourly rate “in effect”
during the pay period for purposes of § 226(a)(9). Walmart
complied with the wage statement law here.
B.
Next, we hold that Walmart’s Statements of Final Pay do
not violate the wage statement statute. The law requires
employers to furnish employees “semimonthly or at the time
of each payment of wages” with “an accurate itemized
statement in writing showing . . . the inclusive dates of the
period for which the employee is paid.” Cal. Lab. Code
§ 226(a)(6) (emphasis added). Section 226(a)(6)’s use of the
disjunctive affords employers the option of furnishing the
pay statement either semimonthly or at the time of each
wage payment. Employers are thus authorized to issue a pay
statement at either time of their choosing. See Canales,
23 Cal. App. 5th at 1271–72 (published) (“The plain
26 MAGADIA V. WAL-MART ASSOCIATES
meaning of the statute indicates the Legislature specifically
intended a choice for employers as to when to furnish the
wage statement.”). So long as “an employer furnishes an
employee’s wage statement before or by the semimonthly
deadline, the employer is in compliance” with § 226(a)(6).
Id. at 1271. Walmart complied with this provision.
Magadia insists that Walmart violated the law by not
including the “dates of the period for which the employee is
paid” on his Statement of Final Pay, which he received along
with his final paycheck when he was terminated in the
middle of a pay period. But Walmart furnished the required
pay-period dates to Magadia and other terminated
employees in their final wage statements at the end of the
next semimonthly pay period. By the plain meaning of the
statute, Walmart had the option of furnishing the required
wage statement in this way and thus Walmart complied with
the law. 15
IV.
For these reasons, we VACATE the district court’s
judgment and award of damages on the Labor Code § 226.7
claim and REMAND with instructions to further remand it
to state court. We also REVERSE the judgment and award
of damages on the Labor Code § 226(a) claims and
REMAND with instructions to enter judgment for Walmart.
15
Since we conclude that Walmart didn’t violate § 226(a), we do
not decide whether Magadia satisfied the other elements of his claim.
We likewise do not decide whether the district court awarded excessive
penalties under PAGA.