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

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUN 30 2022
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CHELSEA HAMILTON; ALYSSA No. 19-56161
HERNANDEZ, on behalf of themselves and
all others similarly situated, D.C. Nos.
5:17-cv-01415-AB-KK
Plaintiffs-Appellants, 5:17-cv-01485-AB-KK
v.
MEMORANDUM*
WAL-MART STORES, INC., a corporation;
WAL-MART ASSOCIATES, INC., a
corporation; DOES, 1 through 50, inclusive,
Defendants-Appellees.
CHELSEA HAMILTON; ALYSSA No. 20-55223
HERNANDEZ, on behalf of themselves and
all others similarly situated, D.C. Nos.
5:17-cv-01415-AB-KK
Plaintiffs-Appellees, 5:17-cv-01485-AB-KK
v.
WAL-MART STORES, INC., a corporation;
WAL-MART ASSOCIATES, INC., a
corporation,
Defendants-Appellants,
and
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
DOES, 1 through 50, inclusive,
Defendant.
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
Before: BERZON and BYBEE, Circuit Judges, and CARDONE,** District Judge.
Chelsea Hamilton and Alyssa Hernandez (“Plaintiffs”) appeal, and Wal-
Mart Stores, Inc. and Wal-Mart Associates, Inc. (collectively, “Walmart”) cross-
appeal, the district court’s judgment following a jury trial in a wage-and-hour class
action. In a concurrently filed opinion, we reverse and remand Hernandez’s
PAGA claims. In this memorandum disposition, we affirm in part, reverse in part,
and remand Plaintiffs’ remaining claims raised on appeal.
1. The district court did not err in denying Plaintiffs’ motion for judgment
as a matter of law with regard to the alternative workweek schedule (“AWS”)
election. Under California law, “[p]rior to [a] secret ballot vote, any employer who
proposed to institute an alternative workweek schedule shall have made a
**
The Honorable Kathleen Cardone, United States District Judge for the
Western District of Texas, sitting by designation.
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disclosure in writing to the affected employees, including the effects of the
proposed arrangement on the employees’ wages, hours, and benefits.” Cal. Code
Regs. tit. 8, § 11070(3)(C)(3). Viewing the evidence in the light most favorable to
Walmart and drawing all reasonable inferences in Walmart’s favor, see Reeves v.
Sanderson Plumbing Prods., Inc., 530 U.S. 133, 149–50 (2000), there was
sufficient evidence at trial to support the jury’s conclusion that Walmart properly
implemented the AWS.
The evidence before the jury included that both before and after
implementing the AWS, Walmart offered employees 24 hours of paid sick leave.
Regardless of whether Walmart was required under California Labor Code § 246
to provide three days of sick time rather than 24 hours when it switched schedules,
Walmart’s disclosures to employees were accurate. And the change to the AWS
did not waive the employees’ rights under section 246, as the sick time
requirements—however they are interpreted—still apply to Walmart. Sufficient
evidence also supports the jury’s conclusion that Walmart adequately described the
effects of the AWS as compared to the schedule the employees were currently
working. Nothing in the statute requires an employer to disclose an alternative
schedule it might offer in the event of a “no” vote.
Finally, viewing the evidence in the light most favorable to Walmart, the
jury could reasonably have concluded that Erin Schwartz was properly excluded
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from the election. Walmart’s witnesses testified that Schwartz’s original position
was not included in the AWS, that she “could have transferred to another
department,” and that employees at Walmart frequently change positions and
shifts. The jury had sufficient evidence to conclude that after the vote but before
implementation of the AWS, Schwartz switched to a position that would be
covered by the proposed AWS schedule.
As the district court properly denied Plaintiffs’ motion for judgment as a
matter of law on the overtime claims, Plaintiffs are not entitled to a new trial on the
derivative claim for waiting time penalties under California Labor Code § 203.
2. The district court did not abuse its discretion with regard to the AWS
issue in excluding evidence that some Walmart employees began work after the
vote but before implementation of the AWS. We reverse evidentiary rulings only
when we are “convinced firmly that the reviewed decision lies beyond the pale of
reasonable justification under the circumstances.” Harman v. Apfel, 211 F.3d
1172, 1175 (9th Cir. 2000).
All the pretrial materials and jury instructions—which Plaintiffs do not
challenge—focused on Plaintiffs’ theory that Walmart violated the statutory
requirements for an AWS, not on a theory that Walmart engaged in “subterfuge” in
scheduling start dates for employees. The district court’s determination that
evidence regarding the 117 people who started after the election was not relevant
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to Walmart’s statutory obligations to “affected employees” was reasonable. The
relevant wage orders define “employ” as “to engage, suffer, or permit to work,”
Cal. Code Regs. tit. 8, § 11070, and Martinez v. Combs, 49 Cal. 4th 35 (2010), held
that “engage” refers only to an ordinary common law employment relationship,
id. at 64. The district court’s exclusion of evidence concerning people who had not
begun working at the time of the election was therefore not an abuse of discretion.
3. The district court abused its discretion in dismissing Plaintiffs’ individual
unpaid wage claims after decertifying the security checkpoint subclass.
An order denying class certification or decertifying a class is not generally a
final judgment on the merits of a claim, and ordinarily, “plaintiffs may pursue their
individual claims on the merits to final judgment.” Microsoft Corp. v. Baker,
137 S. Ct. 1702, 1706 (2017). The challenged decertification was premised
entirely on Plaintiffs’ lack of a workable method for calculating class-wide
damages, an issue that does not apply to Plaintiffs’ individual claims. The district
court nonetheless dismissed the individual claims based on its conclusion that
Plaintiffs abandoned their individual claims or misled Walmart as to the status of
those claims.
“Dismissal under a court’s inherent powers is justified in extreme
circumstances, in response to abusive litigation practices, and to insure the orderly
administration of justice and the integrity of the court’s orders.” Halaco Eng’g Co.
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v. Costle, 843 F.2d 376, 380 (9th Cir. 1988) (citations omitted). The record does
not support the factual conclusions meeting this standard.
Walmart argues otherwise, maintaining that “during meet and confer
sessions, ‘Plaintiffs’ counsel confirmed that Plaintiffs Hamilton and Hernandez
would not be pursuing claims for off-the-clock work or unpaid overtime in their
individual capacities.’” But the meet-and-confer sessions Walmart references
culminated in “the parties’ March 1, 2019 Final Pretrial Conference Order.” Those
sessions occurred before the district court decertified the security checkpoint
subclass on March 4. Prior to that decertification, Plaintiffs had acknowledged
only that they were not pursuing individual claims as to theories not then certified.
In contrast, Plaintiffs represented throughout the pretrial process that they were
pursuing the wage claim on the security checkpoint theory in both their individual
and representative capacities. Nothing in the record suggests that Plaintiffs
represented to Walmart during the pre-March 1 meet-and-confer sessions that they
would abandon individual claims as to subclasses that might later be decertified.
Plaintiffs’ pursuit of their individual unpaid wage claims after decertification
was therefore not an “abusive litigation practice[]” nor an “extreme
circumstance[].” Halaco, 843 F.2d at 380. Dismissal under the court’s inherent
powers was not supported by the record and so was an abuse of discretion. See
United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc).
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4. The district court erred in concluding that Plaintiffs lacked standing to
bring their wage statement claims under California Labor Code § 226(a). Magadia
v. Wal-Mart Assocs., Inc., 999 F.3d 668, 679–80 (9th Cir. 2021). We nonetheless
affirm the dismissal of those claims, as Magadia established that the challenged
wage statements do not violate section 226(a). Id. at 680–82.
5. The district court did not err in denying Plaintiffs’ Rule 59(e) motion for
prejudgment interest. “A Rule 59(e) motion may not be used to raise arguments or
present evidence for the first time when they could reasonably have been raised
earlier in the litigation.” Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890
(9th Cir. 2000). Here, Plaintiffs had filed an earlier motion for prejudgment
interest. The district court did not abuse its discretion in determining that Plaintiffs
could have sought prejudgment interest for meal-break premiums under California
Civil Code § 3287(a) as part of their initial request.
Plaintiffs contend that they could not have reasonably raised section 3287(a)
as a basis for prejudgment interest before Naranjo v. Spectrum Security Services,
Inc., 40 Cal. App. 5th 444 (2019), review granted, 455 P.3d 704 (Jan. 2, 2020),
held that “unpaid premium wages for meal break violations accrue prejudgment
interest at 7 percent” under section 3287(a), id. at 452, 476. As an initial matter,
while review is pending before the California Supreme Court, Naranjo “has no
binding or precedential effect, and may be cited for potentially persuasive value
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only.” Cal. R. Ct. 8.1115(e)(1). But Plaintiffs still could have pursued interest
under section 3287(a) in their initial request. California courts had previously
denied prejudgment interest for meal-break premiums under other sections but
suggested that § 3287(a) might be a plausible basis for interest. Bernstein v. Virgin
Am., Inc., 365 F. Supp. 3d 980, 989 n.10 (N.D. Cal. 2019). Like the plaintiffs in
Naranjo, Plaintiffs here could have sought interest under section 3287(a) before
the appellate court’s decision. We therefore affirm the district court’s denial of
Plaintiffs’ Rule 59(e) motion.
6. Finally, the district court did not err in certifying, and subsequently
denying a motion to decertify, the meal-break class, nor did it err in denying
Walmart’s motion for judgment as a matter of law as to the same class.
(i) “When reviewing a grant of class certification, we accord the district
court noticeably more deference than when we review a denial of class
certification.” Abdullah v. U.S. Sec. Assocs., Inc., 731 F.3d 952, 956 (9th Cir.
2013) (quoting Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168, 1171
(9th Cir. 2010)).
California law requires that an employer provide a meal period to employees
in which the employer “relieves its employees of all duty, relinquishes control over
their activities and permits them a reasonable opportunity to take an uninterrupted
30-minute break, and does not impede or discourage them from doing so.” Brinker
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Rest. Corp. v. Superior Ct., 53 Cal. 4th 1004, 1040 (2012). Plaintiffs’ meal-break
theory is that Walmart’s standard practice—requiring employees who wanted to
leave the building on their meal breaks to go through a security check after
clocking out—impermissibly impeded or discouraged employees at the Chino
facility from taking meal breaks.
Class certification under Rule 23(b)(3) requires the court to “find[] that the
questions of law or fact common to class members predominate over any questions
affecting only individual members.” Fed. R. Civ. P. 23(b)(3). The gravamen of
Walmart’s arguments in the cross-appeal is that California law requires a
subjective showing that each employee felt impeded or discouraged—or was
actually prevented from—taking their lunch break in the way they would have
wanted. But the Brinker standard focuses on the employer’s obligation to provide
an uninterrupted meal break free from impediment or discouragement. In the
analogous context of employer control under the meal-break statute, Ridgeway v.
Walmart Inc., 946 F.3d 1066 (9th Cir. 2020), concluded that “the question of
control boils down to whether the employee may use break or non-work time
however he or she would like,” a “case-specific approach [which] focuses on the
level of the employer’s control on employees” not on whether every employee
wants to use their break in an unauthorized way. Id. at 1079.
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Here, all employees in the class were subject to the same security check
requirements before leaving the building. Plaintiffs’ theory of liability directly
challenged that practice. Plaintiffs’ “theory of liability—that [the employer] has a
uniform policy, and that that policy, measured against wage order requirements,
allegedly violates the law—is by its nature a common question eminently suited
for class treatment.” Brinker, 53 Cal. 4th at 1033. The district court’s certification
of the meal-break class was therefore not an abuse of discretion.
(ii) The jury determined that Walmart’s security check policy was an
impediment to employees’ ability to take an uninterrupted meal break outside the
control of their employer. That conclusion was supported by substantial evidence.
To leave the building for lunch, employees were required to go through
security after clocking out, which included removing clothing with any metal parts,
putting any personal items in a clear bin for inspection, and proving that any
phones they were carrying were not stolen—for instance by showing a
personalized home screen or entering a passcode. Viewing this evidence in the
light most favorable to Plaintiffs, such security checks to leave the building after
clocking out could be determined to be unlawful impediments on employees’ meal
breaks.
As the jury’s special verdict determined that all 452,491 meal breaks
calculated by Plaintiffs were subject to penalties for violating California’s meal-
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break requirements, Walmart’s argument that more than a de minimis number of
class members were uninjured is unavailing. The jury had sufficient evidence to
conclude that Walmart provided no meal breaks free from impediments or
discouragement.
We therefore affirm the district court’s denial of Walmart’s motions for
decertification and judgment as a matter of law.
The parties shall bear their own costs on appeal.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
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