Ninth Circuit Revives PAGA Claims, Finding That Federal Certification Rules Do Not Apply

Employment Law

The Ninth U.S. Circuit Court of Appeals revived an employee’s Private Attorneys General Act (PAGA) claims relying on the Supreme Court’s decision in Viking River Cruises, Inc. v. Mariana.

Chelsea Hamilton brought five wage and hour claims under PAGA against Walmart in California state court, alleging that Walmart denied workers overtime and meal breaks because it required all employees to clock out before going through a security checkpoint, which frequently took 15 to 20 minutes.

After Walmart removed the case to federal court, the plaintiffs filed expert reports regarding how they planned to calculate the time required to go through the security checkpoint.

Walmart moved to strike the expert reports for failure to comply with Rule 26(a) of the Federal Rules of Civil Procedure.

The district court granted the motion and then decertified the various classes of plaintiffs, holding that, without the expert reports, they could not present a workable method for calculating damages. In addition, the district court dismissed some of the PAGA claims as unmanageable and others for the plaintiffs’ failure to sufficiently disclose estimated damages under Rule 26(a).

The case proceeded to trial on two class claims with a split verdict. Both parties filed post-trial motions. Siding with the employees, the Ninth Circuit reversed the district court’s dismissal of the PAGA claims.

The panel rejected Walmart’s argument that the plaintiffs were barred from pursuing the PAGA claims because they did not seek class certification under Rule 23. Invoking Viking River the court held that Rule 23’s requirements do not apply because “Rule 23 class actions and PAGA actions are so conceptually distinct.”

The court also refused to dismiss the PAGA claims based on “manageability,” stating that imposing the manageability requirement of Rule 23(b)(3) would “contradict California law by running afoul of the key features of PAGA actions.”

Unlike Rule 23(b)(3), PAGA’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 (LWDA) and achieving maximum compliance with state labor laws, the court explained.

Finally, the panel held that because PAGA cases do not involve individual claims for money damages, the district court erred when it dismissed claims for failure to sufficiently disclose estimated damages under Rule 26(a).

The panel reversed the dismissal of the PAGA claims and remanded to the district court for further proceedings.

To read the opinion in Hamilton v. Wal-Mart Stores, click here.

Why it matters: The Ninth Circuit refused to apply the Federal Rules of Civil Procedure to PAGA claims, emphasizing the structural differences between the federal procedural requirements and the state law, as well as the difference in purpose.



pursuant to New York DR 2-101(f)

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