Chelsea Hamilton v. Wal-Mart Stores, Inc. ( 2022 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CHELSEA HAMILTON; ALYSSA No. 19-56161
HERNANDEZ, on behalf of
themselves and all others similarly D.C. Nos.
situated, 5:17-cv-01415-
Plaintiffs-Appellants, AB-KK
5:17-cv-01485-
v. AB-KK
WAL-MART STORES, INC., a
corporation; WAL-MART
ASSOCIATES, INC., a corporation;
DOES, 1 through 50, inclusive,
Defendants-Appellees.
2 HAMILTON V. WAL-MART STORES
CHELSEA HAMILTON; ALYSSA No. 20-55223
HERNANDEZ, on behalf of
themselves and all others similarly D.C. Nos.
situated, 5:17-cv-01415-
Plaintiffs-Appellees, AB-KK
5:17-cv-01485-
v. AB-KK
WAL-MART STORES, INC., a
corporation; WAL-MART OPINION
ASSOCIATES, INC., a corporation,
Defendants-Appellants,
and
DOES, 1 through 50, inclusive,
Defendants.
Appeal from the United States District Court
for the Central District of California
Andre Birotte, Jr., District Judge, Presiding
Argued and Submitted May 14, 2021
Pasadena, California
Filed June 30, 2022
Before: Marsha S. Berzon and Jay S. Bybee, Circuit
Judges, and Kathleen Cardone, * District Judge.
Opinion by Judge Berzon
*
The Honorable Kathleen Cardone, United States District Judge for
the Western District of Texas, sitting by designation.
HAMILTON V. WAL-MART STORES 3
SUMMARY **
California’s Private Attorneys General Act
The panel reversed the district court’s dismissal of
Alyssa Hernandez’s California Private Attorney General Act
(“PAGA”) claims, alleging wage and hour violations,
against Wal-Mart Stores, Inc.; and remanded for further
proceedings.
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.
California’s Labor Code allows employees to sue an
employer for violating provisions designed to protect the
health, safety, and compensation of workers. Following the
enactment of PAGA in 2004, employees may stand in the
shoes of the Labor Commissioner and recover civil penalties
for Labor Code violations. Sections 2699(a) and 2699.3 of
PAGA contain requirements for such actions.
The panel first addressed the question whether, in
addition to the presuit requirements listed in Cal. Labor Code
section 2699.3, an aggrieved employee asserting a PAGA
cause of action must also certify the requirements for class
certification included in Fed. R. Civ. P. 23. The panel held
that the recently decided Viking River Cruises, Inc. v.
Moriana, — S. Ct. —, 2022 WL 2135491, at *3 (2022), case
expressly foreclosed Walmart’s argument that Hernandez
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
4 HAMILTON V. WAL-MART STORES
was barred from pursuing her PAGA claims because she did
not seek class certification under Rule 23. In addition, given
their differing coverage, PAGA and Rule 23 are fully
compatible and do not conflict for purposes of the first step
of an Erie analysis. The panel also rejected Walmart’s
argument that the district court correctly rejected some of
Hernandez’s PAGA claims as unmanageable under its
inherent authority. The panel held that, in light of the
structure and purpose of PAGA, imposing a manageability
requirement in PAGA cases akin to that imposed under Rule
23(b)(3) would not constitute a reasonable response to a
specific problem and would contradict California law by
running afoul of the key features of PAGA actions. The
panel concluded that an employee plaintiff need not comply
with the Rule 23 requirements, including the
“manageability” requirement, to assert a PAGA cause of
action.
The panel next addressed the question whether
Hernandez’s PAGA claims were barred because of a failure
sufficiently to disclose estimated damages under Fed. R.
Civ. P. 26(a). The panel held that Rule 26(a) applied to
claims for damages. Hernandez’s PAGA claims seek civil
penalties, not damages, so Rule 26(a) does not apply to her
PAGA claims.
The panel addressed remaining claims raised on appeal
in a concurrently filed memorandum disposition.
HAMILTON V. WAL-MART STORES 5
COUNSEL
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.
OPINION
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.
6 HAMILTON V. WAL-MART STORES
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
HAMILTON V. WAL-MART STORES 7
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 (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
1
We address the remaining claims raised on appeal in a concurrently
filed memorandum disposition.
8 HAMILTON V. WAL-MART STORES
excess of ten hours, also in violation of California law.
Brinker, 53 Cal. 4th at 1040–41.
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
HAMILTON V. WAL-MART STORES 9
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.
10 HAMILTON V. WAL-MART STORES
4th at 1040–41. 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 parties appealed.
II.
“California’s Labor Code contains a number of
provisions designed to protect the health, safety, and
compensation of workers.” Kim v. Reins Int’l Cal., Inc.,
HAMILTON V. WAL-MART STORES 11
9 Cal. 5th 73, 80 (2020). Employees may sue an employer
for violating these provisions and obtain “damages or
statutory penalties . . . including double or treble damages.”
Id. (emphasis omitted). In addition, following the enactment
of PAGA in 2004, employees may stand in the shoes of the
Labor Commissioner and recover civil penalties for Labor
Code violations. See, e.g., Viking River Cruises, Inc. v.
Moriana, — S. Ct. —, 2022 WL 2135491, at *3 (2022).
Specifically, section 2699(a) of PAGA states that any
Labor Code provision “that provides for a civil penalty to be
assessed and collected by the Labor and Workforce
Development Agency or any of its departments, divisions,
commissions, boards, agencies, or employees . . . may, as an
alternative, be recovered through a civil action brought by
an aggrieved employee on behalf of himself or herself and
other current or former employees pursuant to the
procedures specified in Section 2699.3.” Cal. Lab. Code
§ 2699(a).
Section 2699.3, in turn, requires the employee to give
written notice of the alleged Labor Code violation to both
the employer and the Labor and Workforce Development
Agency. Cal. Lab. Code § 2699.3(a). The agency then has
a right of first refusal over the claim. Cal. Lab. Code
§ 2699.3(a)(2). If the agency declines to investigate the
claim, does not respond to the aggrieved employee’s notice
within 65 days, or does not issue a citation within 120 days
of announcing its decision to investigate the claim, the
aggrieved employee may commence an action for civil
penalties. Id. If the aggrieved employee’s action is
successful, 75 percent of the funds recovered go to the Labor
and Workforce Development Agency “for enforcement of
labor laws” or “education of employers and employees about
their rights and responsibilities,” and 25 percent of the
12 HAMILTON V. WAL-MART STORES
recovered funds go to the “aggrieved employees,” id.§ 2699(i), meaning the plaintiff and all employees affected
by the Labor Code violation. Viking River Cruises, 2022
WL 2135491, at *3; Saucillo v. Peck, 25 F.4th 1118, 1128
(9th Cir. 2022).
The first question we address is whether, in addition to
the presuit requirements listed in section 2699.3, an
aggrieved employee asserting a PAGA cause of action must
also satisfy the requirements for class certification included
in Rule 23 of the Federal Rules of Civil Procedure. We
conclude that an employee plaintiff need not comply with
the Rule 23 requirements, including the “manageability”
requirement, to assert a PAGA cause of action.
The second question is whether Hernandez’s PAGA
claims are barred because of a failure sufficiently to disclose
estimated damages under Rule 26(a). Again, our answer is
no. Rule 26(a) applies to claims for damages. Hernandez’s
PAGA claims seek civil penalties, not damages, so
Rule 26(a) does not apply to her PAGA claims.
A.
i.
Walmart argues that Hernandez is barred from pursuing
her PAGA claims because she did not seek class certification
under Rule 23. The district court rejected this argument. It
noted that the dominant view among district courts in the
Ninth Circuit is that PAGA actions need not satisfy Rule 23
class certification requirements. We agree. As emphasized
in Baumann v. Chase Inv. Servs. Corp., 747 F.3d 1117,
1119–24 (9th Cir. 2014), and Canela v. Costco Wholesale
Corp., 971 F.3d 845, 848–54 (9th Cir. 2020), Rule 23 class
actions and PAGA actions are so conceptually distinct that
HAMILTON V. WAL-MART STORES 13
class action precepts generally have little salience for PAGA
actions. Viking River Cruises embraces the reasoning of
those decisions and expressly forecloses Walmart’s
argument.
In the course of invalidating as preempted by the Federal
Arbitration Act a California rule of law that previously
rendered arbitration clauses targeting PAGA claims
unenforceable, Viking River Cruises explains that although
PAGA actions “permit the adjudication of multiple claims in
a single suit” like Rule 23 class actions, “their structure is
entirely different.” Viking River Cruises, 2022 WL
2135491, at *8. It emphasizes three critical distinctions
between PAGA actions and class actions that render Rule 23
certification requirements inapplicable to PAGA suits. First,
“[a] class-action plaintiff can raise a multitude of claims
because he or she represents a multitude of absent
individuals; a PAGA plaintiff, by contrast, represents a
single principal, the [Labor Workforce Development
Agency], that has a multitude of claims.” Id. Second,
“PAGA judgments are not binding on nonparty employees
as to any individually held claims.” Id. And third, although
PAGA “gives other affected employees a future interest in
the penalties awarded in an action,” id., in the sense that
25 percent of the funds recovered in a PAGA action go to
the “aggrieved employees,” meaning the plaintiff and all
other employees affected by the Labor Code violation,”
Saucillo, 25 F.4th at 1128, “that interest does not make those
employees ‘parties’ in any of the senses in which absent
class members are” parties, nor does it give “those
employees anything more than an inchoate interest in
litigation proceeds,” Viking River Cruises, 2022 WL
2135491, at *8.
14 HAMILTON V. WAL-MART STORES
In light of these structural differences, “PAGA suits
exhibit virtually none of the procedural characteristics of
class actions,” so there is no need for courts to consider
“adequacy of representation, numerosity, commonality, or
typicality,” and “no need for certification” under Rule 23, as
the Rule 23 requirements are a logical mismatch for PAGA
actions. Id.; see also Saucillo, 25 F.4th at 1126–29; Canela,
971 F.3d at 850–54; Sakkab v. Luxottica Retail N. Am., Inc.,
803 F.3d 425, 435, 439 (9th Cir. 2015); Baumann, 747 F.3d
at 1122–24; Kim, 9 Cal. 5th at 81, 84–88; Arias v. Superior
Court, 46 Cal. 4th 969, 980–87 (2009). Walmart’s argument
that Hernandez’s PAGA claims should be dismissed because
she did not seek class certification under Rule 23 is therefore
unavailing.
ii.
Walmart argues that PAGA actions brought in or
removed to federal court nonetheless must comply with
Rule 23 because “PAGA is a state procedural statute” that
conflicts with Rule 23 and, under the Erie doctrine, federal
procedural rules “trump any inconsistent state procedur[al
rules].” See Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938).
As Viking River Cruises did not directly address this
contention, we briefly consider it here.
The Erie doctrine addresses “whether state or federal law
should apply on various issues arising in an action based on
state law which has been brought in federal court.” Walker
v. Armco Steel Corp., 446 U.S. 740, 744 (1980). It
commands that, in such cases, federal courts must apply state
substantive law. Sibbach v. Wilson & Co., 312 U.S. 1, 9–10
(1941). But “Congress has undoubted power to regulate the
practice and procedure of federal courts,” so, generally, if a
state procedural rule conflicts with a federal procedural rule,
the federal procedural rule controls. Id.HAMILTON V. WAL-MART STORES 15
Rule 23 is, of course, a federal procedural rule. See, e.g.,
Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co.,
559 U.S. 393, 408–11 (2010) (plurality opinion). 2 But
Walmart’s assertion that PAGA as a whole constitutes a state
procedural rule inconsistent with Rule 23 is incorrect. Even
if PAGA qualifies as a state procedural rule rather than
substantive rule for purposes of an Erie analysis—a
proposition that is itself on shaky footing, see, e.g., Zackaria
v. Wal-Mart Stores, Inc., 142 F. Supp. 3d 949, 956–58 (C.D.
Cal. 2015)—we conclude that PAGA does not conflict with
Rule 23, as, for reasons largely already surveyed, Rule 23
does not govern cases with PAGA’s features. 3
2
In Shady Grove, Justice Scalia delivered the opinion of the Court
with respect to Parts I and II-A and an opinion with respect to Parts II-
B, II-C, and II-D. 559 U.S. at 395–96. Although the proposition that
Rule 23 is a federal procedural rule is discussed in Part II-B of Justice
Scalia’s opinion, all nine Justices agreed that Rule 23 is a federal
procedural rule. See, e.g., id. at 408–11; id. at 429–30 (Stevens, J.,
concurring in part and concurring in the judgment); id. at 451–52
(Ginsburg, J., dissenting).
3
Zackaria states that “[w]hile PAGA may be comparable in some
ways to rules that are procedural,” district courts have observed that it
“transcends the definition of what is simply procedural.” 142 F. Supp.
3d at 956–58 (citing several district court cases). To begin, “PAGA is
substantive for Erie purposes ‘because it gives plaintiffs a right to
recover in specified circumstances’” that would not otherwise exist. Id.
at 957 (quoting Achal v. Gate Gourmet, Inc., 114 F. Supp. 3d 781, 810
(N.D. Cal. 2015)). PAGA was also “established for a public reason”:
remedying systemic underenforcement of California’s labor laws.
Sakkab, 803 F.3d at 431. Finally, a decision to the contrary could
undermine one of the “twin aims of the Erie rule: discouragement of
forum-shopping,” Hanna v. Plumer, 380 U.S. 460, 468 (1965), by
encouraging removal of all PAGA cases to federal court. These
considerations indicate that, for purposes of an Erie analysis, PAGA in
general quite probably qualifies as substantive rather than procedural.
We shall assume otherwise, however, for purposes of this opinion.
16 HAMILTON V. WAL-MART STORES
To determine whether PAGA conflicts with Rule 23, we
“must first determine whether Rule 23 answers the question
in dispute.” Shady Grove, 559 U.S. at 398. “We ask
whether, when fairly construed, the scope of [Rule 23] is
sufficiently broad to cause a direct collision with the state
law, or, implicitly, to control the issue before the court,
thereby leaving no room for the operation of that law.” Ellis
v. Salt River Project, 24 F.4th 1262, 1269 (9th Cir. 2022)
(internal quotation marks omitted) (quoting Burlington N.
R.R. Co. v. Woods, 480 U.S. 1, 4–5 (1987)). “If so, then the
federal rule controls ‘unless it exceeds statutory
authorization or Congress’s rulemaking power.’” Id.(quoting Shady Grove, 559 U.S. at 398). In contrast, if the
federal and state rules “can be reconciled,” then they do not
qualify as in conflict and the court’s Erie analysis ends.
Shady Grove, 559 U.S. at 410 (plurality opinion); id. at 421(Stevens, J., concurring in part and concurring in the
judgment); id. at 437 (Ginsburg, J., dissenting).
Shady Grove is instructive with respect to this threshold
question. There, a New York state law prohibited certain
suits—such as suits to recover statutory minimum
damages—from proceeding as class actions, even if the suits
complied with the dictates of Rule 23. 559 U.S. at 396–97.
When assessing whether the statute conflicted with Rule 23,
the high court explained that Rule 23 constitutes “a
categorical rule entitling a plaintiff whose suit meets the
specified criteria” listed in Rule 23 “to pursue his claim as a
class action.” Id. at 398. Because the New York statute
precluded some suits that met those criteria from being filed
as class actions, the New York statute conflicted with Rule
23. Id. at 398–99.
Here, as we have explained, see supra Part II.A.i, in light
of the substance and essentials of a PAGA action, such an
HAMILTON V. WAL-MART STORES 17
action is distinct from a Rule 23 class action and is not
compatible with the precepts of Rule 23. To recap: because
a PAGA action is an “enforcement action[]” brought on
behalf of the state rather than an action aggregating the
individual claims of a group of plaintiffs; because PAGA
judgments do not prevent absent aggrieved employees from
seeking any “other remedies” they may be entitled to “under
state or federal law”; and because PAGA actions and
Rule 23 class actions serve differing overall and “remedial”
purposes, a PAGA does not raise the concerns to which Rule
23 is addressed. Viking River Cruises, 2022 WL 2135491,
at *8; Canela, 971 F.3d at 851–56; Baumann, 747 F.3d at
1122–24. Thus, unlike the New York statute at issue in
Shady Grove, which prohibited plaintiffs from bringing their
claims as class actions even if the claims did comply with
the dictates of Rule 23, PAGA authorizes a type of action
fundamentally distinct from a class action, one that does not
have most of the features that the requirements of Rule 23
seek to regulate. Given their differing coverage, PAGA and
Rule 23 are fully compatible and do not conflict for purposes
of the first step of an Erie analysis. See Shady Grove,
559 U.S. at 410 (plurality opinion); id. at 421 (Stevens, J.,
concurring in part and concurring in the judgment); id. at 437(Ginsburg, J., dissenting). 4
B.
As an alternative to its argument based on Rule 23’s
general certification requirements, Walmart maintains the
4
A short footnote in Arias states that PAGA suits can be brought as
class actions. Arias, 46 Cal. 4th at 981 n.5. But that footnote was “dicta”
and was subsequently rejected in Kim, which “emphasized that a PAGA
cause of action cannot be a class action” in light of the different inherent
attributes of two kinds of suit. Canela, 971 F.3d at 855–56 (citing Kim,
9 Cal. 5th at 87).
18 HAMILTON V. WAL-MART STORES
district court correctly rejected some of Hernandez’s PAGA
claims as unmanageable, relying on its inherent authority.
That argument fairs no better.
The concept of manageability finds its genesis in
Rule 23(b)(3) class actions. See, e.g., Zackaria, 142 F.
Supp. 3d at 958–60. Such actions, which bundle individual
claims for money damages, may be maintained only if “the
court finds that questions of law or fact common to class
members predominate over any questions affecting only
individual members, and that a class action is superior to
other available methods for fairly and efficiently
adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). The
Rule expressly contemplates that “the likely difficulties in
managing a class action” are “matters pertinent” to the
court’s evaluation of predominance and superiority. Fed. R.
Civ. P. 23(b)(3)(D). That is why, when discussing the
“manageability” of a class action, courts have spoken of
whether a class action is “the superior method of
adjudicat[ing]” the controversy, Leyva v. Medline Indus.
Inc., 716 F.3d 510, 515 (9th Cir. 2013), or whether
individualized issues predominate over common issues, In
re Hyundai & Kia Fuel Econ. Litig., 926 F.3d 539, 558–60,
563 (9th Cir. 2019) (en banc).
There is a split among both district courts and California
courts regarding whether it is permissible for a court to
dismiss a PAGA action on similar “manageability” grounds.
Compare, e.g., Wesson v. Staples the Off. Superstore, LLC,
68 Cal. App. 5th 746, 755 (2021) (permissible), and Amiri v.
Cox Commc’ns Cal., LLC, 272 F. Supp. 3d 1187, 1193–94
(C.D. Cal. 2017) (permissible), with Estrada v. Royalty
Carpet Mills, Inc., 76 Cal. App. 5th 685, 710 (2022)
(impermissible), and Zackaria, 142 F. Supp. 3d at 959
(impermissible). The opinions in favor of imposing a
HAMILTON V. WAL-MART STORES 19
manageability requirement in PAGA actions observe that
courts possess an inherent power “to manage their own
affairs so as to achieve the orderly and expeditious
disposition of cases.” See, e.g., Valadez v. CSX Intermodal
Terminals, Inc., 298 F. Supp. 3d 1254, 1266 (N.D. Cal.
2018). From that proposition, the opinions derive the
conclusion that this power allows courts to strike a PAGA
claim if, for example, “establishing liability based on Labor
Code violations would be unmanageable due to the
individualized assessments required to prove violations.”
Amiri, 272 F. Supp. 3d at 1193–94; see also Wesson, 68 Cal.
App. 5th at 766–67.
In response, the opinions that reach a contrary
conclusion on the manageability question note that a court’s
inherent powers are limited and end short of imposing an
inapposite requirement. Specifically, under federal law, an
exercise of inherent powers “must be a reasonable response
to a specific problem and . . . cannot contradict any express
rule or statute.” Dietz v. Bouldin, 579 U.S. 40, 46 (2016). 5
In light of the structure and purpose of PAGA, we
conclude that imposing a manageability requirement in
5
Some unpublished decisions also justify application of a
manageability requirement in PAGA cases on the ground that Rule 12(f)
of the Federal Rules of Civil Procedure allows a court to “strike from the
pleadings any ‘redundant, immaterial, impertinent or scandalous
matter.’” See, e.g., Salazar v. McDonald’s Corp., No. 14-cv-02096-RS,
2017 WL 88999, at *7 (N.D. Cal. Jan. 5, 2017) (quoting Fed. R. Civ. P.
12(f)). A PAGA action, such courts maintain, could be considered
“‘immaterial’ to the extent a representative PAGA action is
unmanageable.” Id. Neither the parties nor the district court advanced a
Rule 12(f) argument in this case. In any event, imposing an affirmative
manageability requirement bears no resemblance to “striking” part of a
pleading, nor do materiality and manageability have anything to do with
one another.
20 HAMILTON V. WAL-MART STORES
PAGA cases akin to that imposed under Rule 23(b)(3) would
not constitute a reasonable response to a specific problem
and would contradict California law by running afoul of the
key features of PAGA actions.
i.
We note at the outset that the manageability requirement
the district court imposed on Hernandez’s security
checkpoint PAGA claims was virtually identical to the
manageability requirement it imposed on the plaintiffs’ Rule
23(b)(3) claims, with the court even commenting, “I thought
the Court had already found that those claims were
unmanageable.” Walmart’s briefing continues the same line
of reasoning, stating that “[t]he district court properly
decertified Plaintiffs’ off-the-clock Rule 23 claim on the
basis that it was unmanageable because it would require too
many individualized determinations regarding ‘the time it
takes to walk to the security checkpoint, wait in line, and go
through the security check,’” and “[b]ecause the PAGA off-
the-clock claim is premised on exactly the same theory, it is
also unmanageable.”
Although the manageability requirement makes sense in
the context of Rule 23(b)(3) actions, it does not constitute a
reasonable response to a specific problem in PAGA cases
because of, again, the structural differences between the two
forms of action.
Rule 23(b)(3) actions are considered “the most
adventuresome” type of class action. Amchem, 521 U.S. at
614–15. Aggregation “is not as clearly called for” under
Rule 23(b)(3) “as it is in Rule 23(b)(1) and Rule 23(b)(2)
situations.” Id. Aggregation is “clearly called for” in Rule
23(b)(1) cases because of the need to ensure fair outcomes
among plaintiffs, such as the appropriate distribution in
HAMILTON V. WAL-MART STORES 21
“limited fund” cases of finite resources. See id. at 614
(quoting Fed. R. Civ. P. 23 advisory committee’s note to
1937 adoption). And aggregation is “clearly called for” in
Rule 23(b)(2) cases in light of “the indivisible nature of the
injunctive or declaratory remedy warranted—the notion that
the conduct is such that it can be enjoined or declared
unlawful only as to all of the class members or as to none of
them.” Dukes, 564 U.S. at 360 (quoting Richard A.
Nagareda, Class Certification in the Age of Aggregate Proof,
84 N.Y.U. L. Rev. 97, 132 (2009)). Put differently,
“[c]lasses certified under (b)(1) and (b)(2) share the most
traditional justifications for class treatment—that individual
adjudications would be impossible or unworkable, as in a
(b)(1) class, or that the relief sought must perforce affect the
entire class at once, as in a (b)(2) class.” Id. at 361–62
(footnote omitted).
The drive to bundle the plaintiffs’ claims in Rule
23(b)(3) cases is different because the Rule “allows class
certification in a much wider set of circumstances,”
including circumstances in which an absent plaintiff could
pursue relief directly, 6 and would not jeopardize the
interests of others in doing so. Id. at 362. Congress,
“[s]ensitive to the competing tugs of individual autonomy
for those who might prefer to go it alone or in a smaller unit,
on the one hand, and systemic efficiency on the other,”
imposed the procedural requirements of predominance and
superiority on Rule 23(b)(3) cases to ensure that such cases
6
Of course, this supposition does not hold true in cases where the
cost of bringing suit outweighs the damages a plaintiff could expect to
recover. Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1190,
amended by 273 F.3d 1266 (9th Cir. 2001). In such cases, sometimes
called “negative value suit[s],” Castano v. Am. Tobacco Co., 84 F.3d
734, 748 (5th Cir. 1996), a class action is the only realistic possibility for
redress. Zinser, 253 F.3d at 1190.
22 HAMILTON V. WAL-MART STORES
may only proceed as class actions when doing so “would
achieve economies of time, effort, and expense and promote
. . . uniformity of decision as to persons similarly situated,
without sacrificing procedural fairness.” Amchem, 521 U.S.
at 615 (second alteration in original) (quoting Fed. R. Civ.
P. 23 advisory committee’s note to 1966 amendment).
The manageability requirement, a subsidiary component
of the predominance and superiority inquiries, was thus
specifically devised to address concerns arising from the
aggregation of individual claims for money damages. That
context is why the requirement is not applicable to Rule
23(b)(1) or Rule 23(b)(2) cases. See Rodriguez v. Hayes,
591 F.3d 1105, 1125–26 (9th Cir. 2010); Elliott v.
Weinberger, 564 F.2d 1219, 1229 (9th Cir. 1977), aff’d in
part and rev’d in part sub nom. Califano v. Yamasaki,
442 U.S. 682 (1979); see also, e.g., Walters v. Reno,
145 F.3d 1032, 1047 (9th Cir. 1998).
Like Rule 23(b)(1) and 23(b)(3) class actions, PAGA
cases do not involve individual claims for money damages.
As explained, see supra Part II.A.i., “[t]here is no individual
component to a PAGA action” because “[p]laintiffs may
bring a PAGA claim only as the state’s designated proxy,
suing on behalf of all affected employees.” Kim, 9 Cal. 5th
at 87; see also Viking River Cruises, 2022 WL 2135491,
at *8; Sakkab, 803 F.3d at 435. Absent employees are free
to pursue any other remedies available by law, including
damages and equitable relief. Cal. Lab. Code § 2699(g)(1);
see also Viking River Cruises, 2022 WL 2135491, at *8;
Canela, 971 F.3d at 852; Arias, 46 Cal. 4th at 987; Saucillo,
25 F.4th at 1127. And the civil penalty due upon a showing
that the defendant violated the Labor Code is fixed by statute
and does not involve individualized determinations of
injury. See Cal. Lab. Code § 2699(f)(2).
HAMILTON V. WAL-MART STORES 23
These structural distinctions between Rule 23(b)(3)
actions and PAGA actions render it inappropriate to graft a
Rule 23-derived manageability requirement onto PAGA
actions. In other words, the reasons it would be
inappropriate to apply the overarching Rule 23 requirements
to PAGA actions are amplified with respect to the
manageability requirement, which applies only to a subset of
Rule 23 class actions, based on the unique features of that
subset. So application of the Rule 23 manageability
requirement in PAGA cases would not constitute a
reasonable response to a specific problem and, by extension,
would not constitute a permissible exercise of a federal
court’s inherent powers.
ii.
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.
PAGA empowers aggrieved employees to enforce
California labor laws, thereby preventing a recurrence of the
“systemic underenforcement of many worker protections”
that occurred before the passage of the statute. Williams v.
Superior Court, 3 Cal. 5th 531, 545 (2017). Unlike
Rule 23(b)(3), the statute’s provisions are directed not at
promoting convenience and judicial economy, but at
augmenting the limited enforcement capabilities of the
Labor and Workforce Development Agency, Viking River
Cruises, 2022 WL 2135491, at *3, and “achiev[ing]
maximum compliance with state labor laws,” Arias, 46 Cal.
4th at 980.
Imposing a manageability requirement in PAGA cases
would undermine these core goals of the statute for two
24 HAMILTON V. WAL-MART STORES
reasons. First, when the state brings suit against an employer
for violating the Labor Code, it need not comply with a
manageability requirement even though individualized
issues are equally present in such actions, as civil penalties
are assessed according to the “same limitations and
conditions” in PAGA suits and state enforcement actions.
Cal. Lab. Code § 2699(e)(1); see also Estrada, 76 Cal. App.
5th at 712; Zackaria, 142 F. Supp. 3d at 959; LaFace v.
Ralphs Grocery Co., 75 Cal. App. 5th 388, 401 (2022).
Dismissing a PAGA suit on such grounds would therefore
“impose a barrier on such actions that the state law
enforcement agency does not face when it litigates those
cases itself.” Estrada, 76 Cal. App. 5th at 710. Because
“[h]urdles that impede the effective prosecution of
representative PAGA actions undermine the Legislature’s
objectives,” Kim, 9 Cal. 5th at 87 (quoting Williams, 3 Cal.
5th at 548), the manageability requirement is inconsistent
with the statute’s structure.
Second, in the context of Rule 23(b)(3) actions, the
manageability requirement is nested as one “pertinent”
consideration among others, and the text of the Rule “calls
for a comparative assessment of the costs and benefits of
class adjudication, including the availability of ‘other
methods’ for resolving the controversy.” Briseno v.
ConAgra Foods, Inc., 844 F.3d 1121, 1126, 1128 (9th Cir.
2017) (quoting Fed. R. Civ. P. 23(b)(3)). In contrast, a
freestanding manageability requirement “would invite
courts to consider the administrative burdens” of the action
“in a vacuum.” Id. at 1128 (quoting Mullins v. Direct
Digital, LLC, 795 F.3d 654, 663 (7th Cir. 2015)). “That
difference in approach would often be outcome
determinative,” leading to the dismissal of many PAGA
cases, id., which would in turn “interfere with PAGA’s
HAMILTON V. WAL-MART STORES 25
express design as a law enforcement mechanism.” Estrada,
76 Cal. App. 5th at 712.
Put differently, Briseno held that putative class actions
involving monetary damages need not satisfy a freestanding
administrability inquiry, as Congress “opted not to make the
potential administrative burdens of a class action dispositive
and instead directed courts to balance the benefits of class
adjudication against its costs.” 844 F.3d at 1128. It would
be similarly inappropriate to allow federal courts to treat a
freestanding manageability requirement as a dispositive
consideration in PAGA cases.
***
In sum, application of the Rule 23(b)(3) manageability
requirement in PAGA cases would be “inconsistent with
PAGA’s purpose and statutory scheme,” Zackaria, 142 F.
Supp. 3d at 958, and would not represent a reasonable
solution to a specific problem. The requirement cannot be
imposed in PAGA actions under the guise of a court’s
inherent powers.
C.
The district court dismissed some of Hernandez’s PAGA
claims as a discovery sanction on the ground that Plaintiffs
failed sufficiently to disclose estimated damages under Rule
26(a). This Court reviews the imposition of discovery
sanctions for abuse of discretion. Payne v. Exxon Corp.,
121 F.3d 503, 507 (9th Cir. 1997). For dismissal of a claim
to qualify as a proper discovery sanction, “the conduct to be
sanctioned must be due to ‘willfulness, fault, or bad faith.’”
Anheuser-Busch, Inc. v. Nat. Beverage Distribs., 69 F.3d
337, 348 (9th Cir. 1995) (quoting Henry v. Gill Indus., Inc.,
983 F.2d 943, 946 (9th Cir. 1993)). Here, the district court’s
26 HAMILTON V. WAL-MART STORES
dismissal was an abuse of discretion, as Plaintiffs did not
violate Rule 26.
Rule 26(a) provides, in relevant part, that “a party must,
without awaiting a discovery request, provide” opposing
counsel with “a computation of each category of damages
claimed by the disclosing party” and “must also make
available for inspection and copying . . . the documents or
other evidentiary material, unless privileged or protected
from disclosure, on which each computation is based.” Fed.
R. Civ. P. 26(a)(1)(A) (emphasis added). The text of the
Rule therefore is limited in its reach to the calculation of
damages, as opposed to the calculation of other kinds of
remedies. 7
PAGA provides a private right of action to obtain civil
penalties for violations of the California Labor Code. Such
penalties are fixed by statute, either in the text of the
applicable provision of the Labor Code or in PAGA itself,
which establishes that for Labor Code violations for which
no penalty is provided in the statutory text, the penalty “is
one hundred dollars ($100) for each aggrieved employee per
pay period for the initial violation and two hundred dollars
7
The Advisory Committee Notes to the 1993 Amendment of Rule
26 state that “[a] party claiming damages or other monetary relief must,
in addition to disclosing the calculation of such damages, make available
the supporting documents for inspection and copying.” See United
States v. RaPower-3, LLC, 960 F.3d 1240, 1253 (10th Cir. 2020)
(quoting Fed. R. Civ. P. 26 advisory committee’s note to 1993
amendment). Walmart argues that the Rule accordingly applies to both
damages and “other monetary relief.” Although Advisory Committee
notes are “of weight” in interpreting the Rules, the notes cannot add to
the Rule, see Torres v. Oakland Scavenger Co., 487 U.S. 312, 316 (1988)
(quoting Miss. Publ’g Corp. v. Murphree, 326 U.S. 438, 444 (1946)),
and the text of the Rule makes no mention of “other monetary relief.”
HAMILTON V. WAL-MART STORES 27
($200) for each aggrieved employee per pay period for each
subsequent violation.” Cal. Lab. Code § 2699(f)(2).
Under state law, such penalties are not damages. Indeed,
the California Supreme Court has repeatedly differentiated
between damages, either common law or statutory, which
compensate for injuries, and PAGA civil penalties, which
serve the distinct function of deterring and punishing
violations of the Labor Code. See, e.g., Arias, 46 Cal. 4th
at 985–87; see also Canela, 971 F.3d at 852. This
interpretation of the word “damages” accords with the
ordinary legal usage of the term. Black’s Law Dictionary,
for example, defines “damages” as “[m]oney claimed by, or
ordered to be paid to, a person as compensation for loss or
injury.” Damages, Black’s Law Dictionary (11th ed. 2019).
Additionally, the text of Rule 26(a) specifies that parties
must provide access to the documentation upon which any
damage calculations are based, “including materials bearing
on the nature and extent of injuries suffered.” Fed. R. Civ.
P. 26(a)(1)(A)(iii) (emphasis added). This language
indicates that the damage calculations required to be
disclosed are focused on quantifying the compensation
needed to redress a plaintiff’s injury. The portion of civil
penalties distributed to the aggrieved employees in a
successful PAGA suit do not qualify as “restitution for
wrongs.” Canela, 971 F.3d at 852 (Baumann, 747 F.3d at
1123). Instead, those penalties act as an “incentive to
perform a service to the state,” id. (quoting Baumann,
747 F.3d at 1123), and are provided without regard to the
injuries suffered by individual employees. The text of the
Rule therefore demonstrates, in two distinct ways, that the
Rule does not apply to civil penalties under PAGA.
Further, the Rule 26 requirement makes sense as applied
to injuries suffered by the plaintiff, as the bulk of the
28 HAMILTON V. WAL-MART STORES
information concerning such injuries will often rest in the
plaintiffs’ hands. The Advisory Committee Notes to the
1993 Amendment of Rule 26 confirm that this rationale
undergirds the Rule, as they state that “a party would not be
expected to provide a calculation of damages which, as in
many patent infringement actions, depends on information
in the possession of another party or person.” See Fed. R.
Civ. P. 26 advisory committee’s note to 1993 amendment.
Under PAGA, information regarding civil penalties would
not be uniquely in the possession of the plaintiff. To the
contrary, once a PAGA plaintiff discloses her theory of the
case, all the information required to calculate PAGA
penalties—e.g., the number of employees affected, the
number of pay periods at issue, and the fixed penalty that
attaches for proven each violation, see Cal. Lab. Code
§ 2699(f)(2)—would be in the hands of the employer. The
underlying rationale for Rule 26 thus supports our
conclusion that the Rule does not apply to PAGA civil
penalties.
Application of an incorrect legal rule constitutes an
abuse of discretion. See United States v. Hinkson, 585 F.3d
1247, 1261–62 (9th Cir. 2009) (en banc). As the foregoing
analysis establishes that the district court improperly relied
on Rule 26 to dismiss some of Hernandez’s PAGA claims,
its dismissal of those claims must be reversed as an abuse of
discretion.
CONCLUSION
For the reasons stated above, we REVERSE the district
court’s dismissal of Hernandez’s PAGA claims and
REMAND to the district court for further proceedings
consistent with this opinion.