Charles Ridgeway; Jaime Famoso; Joshua Harold; Richard Byers; Dan Thatcher; Willie Franklin; Time Opitz; Farris Day; Karl Merhoff, Plaintiffs-Appellees/ Cross-Appellants,
Walmart Inc., DBA Wal-Mart Transportation LLC, Defendant-Appellant/ Cross-Appellee.
and Submitted August 6, 2019 San Francisco, California
from the United States District Court for the Northern
District of California Susan Illston, District Judge,
Presiding D.C. No. 3:08-cv-05221-SI
Theodore J. Boutrous, Jr. (argued) and Lauren M. Blas,
Gibson, Dunn & Crutcher LLP, Los Angeles, California;
Rachel S. Brass and Joseph A. Gorman, Gibson, Dunn &
Crutcher LLP, San Francisco, California; James H. Hanson,
Scopelitis, Garvin, Light, Hanson & Feary, P.C.,
Indianapolis, Indiana; for
Michael Rubin (argued) and Matthew Murray, Altshuler Berzon
LLP, San Francisco, California; Lawrence M. Artenian and
Laura E. Brown, Wagner Jones Kopfman & Artenian LLP,
Fresno, California; Jacob M. Weisberg, Law Office of Jacob M.
Weisberg, Fresno, California; Stanley Saltzman, Marlin &
Saltzman LLP, Agoura Hills, California; for
Before: Diarmuid F. O'Scannlain, Eugene E. Siler,
Jacqueline H. Nguyen, Circuit Judges.
Action / California Employment Law
panel affirmed the district court's judgment awarding
tens of millions of dollars in damages in a class action
brought by Wal-Mart California truck drivers alleging
case was initially filed in state court by four truck
drivers. Wal-Mart removed the suit to federal court, and the
parties agreed to a stay until the California Supreme Court
issued Brinker Restaurant Corp. v. Superior Court,
273 P.3d 513 (Cal. 2012) (holding that employers must make
meal and rest breaks available, but do not have to ensure
that employees take such breaks). After the stay was lifted,
plaintiffs filed their fourth amended complaint and dropped
some initial plaintiffs while adding new class plaintiffs.
The district court certified the new class, granted partial
summary judgment to plaintiffs on their minimum wage
liability claims, and eventually conducted a jury trial and
panel held that Wal--Mart raised no reversible error.
panel rejected Wal--Mart's claim that the district court
erred by failing to dismiss for lack of jurisdiction. The
panel held that the district court correctly concluded that
the case presented an Article III case or controversy because
two lead plaintiffs remained in the action after the stay was
panel rejected Wal-Mart's claims that plaintiffs should
not have been awarded damages for layovers, rest breaks, and
inspections. Specifically, the panel held that the district
court correctly concluded that, under California law, time
drivers spent on layovers was compensable if Wal-Mart
exercised control over the drivers during those breaks. The
panel further held that a comprehensive review of the
Wal-Mart pay manual demonstrated that it unambiguously
required drivers to obtain preapproval to take a layover at
home, and therefore, the district court did not err in
granting partial summary judgment on this issue to
plaintiffs. The panel also held that the district court
correctly determined that Wal-Mart's written policies, if
applied as written, resulted in Wal-Mart exercising control
over employees during mandated layovers as a matter of
California law. The panel held that the district court
properly instructed the jury on layovers. The panel also held
that there was sufficient evidence for the jury to find that
Wal-Mart had exercised control over its drivers. The panel
rejected Wal-Mart's contention that the Federal Aviation
Administration Authorization Act preempted California law
governing layovers. The panel also affirmed the district
court's judgment awarding damages to plaintiffs for rest
breaks and inspections.
panel held that the district court did not err in certifying
a class and allowing representative evidence as proof of
classwide damages - including plaintiffs' expert Dr.
Phillips' testimony and sample.
cross-appeal, plaintiffs argued that the district court erred
in denying liquidated damages. The panel held that the
district court did not err in finding that Wal-Mart acted in
good faith and with a reasonable belief in the legality of
its action, and therefore affirmed the district court's
denial of liquidated damages.
O'Scannlain concurred in the majority's opinion,
except for Part II.B.1.b. Judge O'Scannlain did not agree
with the majority's conclusion that the district court
correctly granted partial summary judgment to the plaintiffs
when it found that Wal-Mart's written pay policies
necessarily establish that the company "controlled"
drivers during layovers. In his view, the jury should have
been allowed to decide the meaning of these ambiguous
policies and the extent to which the policies actually
"control" what drivers may do and where they may
truckers perform a vital service in the nation's economy.
No wonder then, that Wal-Mart, among the world's largest
retail companies, employs hundreds of truck drivers. Still,
over a decade ago, drivers in California felt that Wal-Mart
did not pay them properly in accordance with California law.
So they sued in a class action. After a sixteen-day trial,
the jury agreed with Wal-Mart on most issues. On some claims,
however, the jury sided with the class of truckers and
awarded tens of millions of dollars in damages.
Wal-Mart asks this panel to erase that judgment. Wal-Mart
contends that the district court erred at every step along
the way-in concluding that it had jurisdiction, in certifying
a class, in interpreting California minimum wage law, in
allowing expert testimony, and in providing jury
is improper for this court to play armchair district judge.
In the end, while Wal-Mart makes some compelling points,
Wal-Mart raises no reversible error. Additionally, the
district court properly concluded that liquidated damages are
not owed under California law because Wal-Mart demonstrated
that it acted in good faith and with a reasonable belief in
the legality of its conduct. Accordingly, we
The Original Lawsuit, the Stay, and the Named Plaintiffs
than a decade ago, four truck drivers sued Wal-Mart in
Alameda County Superior Court claiming Wal-Mart violated
state meal and rest break laws. Those drivers worked out of
several distribution centers in California that served as
hubs through which Wal-Mart delivered items across the
western United States. As part of their job, truckers would
travel a wide range of routes, to different locations,
hauling different freight. And, by industry standards, the
truckers were paid well-an average of $300 per day and
between $80, 000 and more than $100, 000 annually.
drivers claimed that they were not receiving adequate minimum
wage pay. Wal-Mart paid truckers through what it called an
activity-based pay system. That system included pay for (1)
mileage, (2) tasks that constituted "activity,"
such as arriving and departing a facility, as well as hooking
a new trailer to the truck, and (3) hourly wages of fourteen
dollars per hour for limited events like time spent waiting
at a store or supplier, delays due to inclement weather, or
delays caused by a truck breakdown.
removed the suit to federal court. Subsequently, the parties
agreed to stay the suit while the California Supreme Court
considered an issue that would affect the truckers'
claims. Three years later, in Brinker Restaurant Corp. v.
Superior Court, 273 P.3d 513 (Cal. 2012), the California
Supreme Court ruled that an employer must make meal and rest
breaks available, but employers did not have to ensure that
employees took such breaks.
the stay was lifted. Just one problem: it was unclear if any
of the named plaintiffs remained in the lawsuit. Of the four
original plaintiffs, two had died during the stay, one had
lost interest in pursuing the case, and class counsel had
concerns about the fourth plaintiff's ability to
adequately represent the class.
plaintiffs' counsel asked the court to order Wal-Mart to
turn over information about potential class members so that
counsel could determine the identity of new plaintiffs and
class representatives. Wal-Mart objected, arguing that
without an adequate plaintiff, the district court did not
have jurisdiction. Citing the "unique
circumstances" of the case, and noting that information
about putative class members would serve purposes other than
finding new plaintiffs, the district court granted
obtaining new information from Wal-Mart, plaintiffs'
counsel found new named plaintiffs and filed an amended
complaint. Under plaintiffs' theory, Wal-Mart did not pay
drivers for time spent under the company's control- such
as during layovers, rest breaks, and inspections-in violation
of California law. Plaintiffs filed their fourth amended
complaint in 2013, seeking damages, restitution, and
statutory penalties under California law.
plaintiffs moved to certify a class. They argued that all
Wal-Mart drivers in California after October 10, 2004, were
subject to the same written pay policies. Additionally,
plaintiffs contended that common issues predominated over any
individual issues because there were only "minor
variations" among the class members.
objected. It argued that huge variations among truckers'
locations, routes, and duties could lead to differences in
pay, so individual issues infected the class, making
district court agreed with plaintiffs and certified the
Pre-Trial Partial Summary Judgment for Plaintiffs
plaintiffs moved for partial summary judgment. Plaintiffs
argued that Wal-Mart did not pay drivers for all job duties,
required drivers to take rest breaks without pay, and
"controlled" drivers during ten-hour layover
periods, entitling drivers to minimum wage pay.
district court granted partial summary judgment as to
plaintiffs' minimum wage liability claims. The district
court found that under Wal-Mart's pay policy-if applied
as written-drivers were not paid separately for some
activities and that those activities "may not properly
be built in or subsumed into the activity pay component of
Wal-Mart's pay policies." The court also held that,
under the policy, drivers were subject to Wal-Mart's
"control"-as defined by California law-during
layovers. Thus, the district court found that Wal-Mart must
pay minimum wages during those times. Although the district
court found that Wal-Mart's policies described practices
that would violate California law, the court presented to the
jury the factual question of whether Wal-Mart had implemented
Wal-Mart's Pre-Trial Motions
discovery concluded, Wal-Mart made several pretrial motions.
First, it argued that the case could not proceed on a
classwide basis based on variations in the routes, daily
tasks, and duties of each driver. The district court denied
Wal-Mart moved for summary judgment on the minimum wage
claims. It argued that the Federal Aviation Administration
Authorization Act ("FAAAA") preempted California
law. Again, the district court denied the motion.
Wal-Mart moved to exclude Dr. G. Michael Phillips from
providing expert testimony about classwide damages. Phillips
said he could "estimate how much time [truckers] spent
performing various activities[, ] and then, under various
assumptions, . . . estimate dollar equivalent values for such
time." The district court also denied Wal-Mart's
motion to exclude, ruling that Wal-Mart's issue with
Phillips's proposed testimony went toward "weight
rather than . . . admissibility."
Trial and Jury Instructions
trial occurred in 2016, focusing on plaintiffs' minimum
wage claims for eleven separate activities from October 2004
to October 2015.
the jury instructions, the district court issued a California
minimum wage instruction stating:
"Wages" includes all amounts for labor performed by
an employee, whether the amount is calculated by time, task,
piece, commission, or some other method. The rate of the
minimum wage is set forth in Instruction No. 13.
The Court has previously found that Wal-Mart's 2008
driver pay manual states that no pay is earned for certain
tasks. Such a policy, if enforced or applied, does not comply
with California's minimum wage laws. A policy that does
not compensate directly for all time worked does not comply
with California Labor Codes, even if, averaged out, it would
pay at least minimum wage for all hours worked. Therefore, if
Wal-Mart applied the policy as it is stated in the driver pay
manual, such that no pay was earned for certain tasks, then
it did not comply with California's minimum wage law.
Wal-Mart may, however, pay drivers for certain tasks through
activity codes that include those tasks.
What is stated in any pay plan or written policy does not
itself establish whether someone was paid the minimum wage.
Rather, plaintiffs must still prove that, in accordance with
the pay policy, the class members in fact were not paid for
certain tasks. Plaintiffs have the burden to prove their
court also instructed the jury about layovers:
Plaintiffs claim that Wal-Mart owes them unpaid wages for
time spent during 10-hour "layovers" at the end of
a shift. Plaintiffs claim that Wal-Mart owes them the
difference between the layover fee paid by Wal-Mart and the
wages that plaintiffs claim should have been paid according
to the minimum wage rate required by state law.
Under California law, employers must pay employees at least
the minimum wage per hour for all hours worked. "Hours
worked" is defined as "the time during which an
employee is subject to the control of an employer, and
includes all the time the employee is suffered or permitted
to work, whether or not required to do so." The level of
the employer's control over its employees, rather than
the mere fact that the employer requires the employee's
activity, is determinative.
The Court has previously found that the policies stated in
Wal-Mart's driver pay manuals subjected drivers to
Wal-Mart's control during layover periods. Under
California law, the drivers must be paid for all of the time
that they were subject to Wal-Mart's control. Therefore,
if plaintiffs prove by a preponderance of the evidence that
Wal-Mart applied the policy as it is stated in the driver pay
manuals, then plaintiffs are entitled to the amount of
additional pay that will bring Wal-Mart's payment for
each 10hour layover up to the amount of the minimum wage that
was applicable at that time.
You must limit your calculations to wages for layovers that
occurred during the period beginning on October 10, 2005 and
ending on October 15, 2015.
court further gave the following damages instruction:
If you find for the plaintiffs on the plaintiffs' minimum
wage claim, you must determine the plaintiffs' damages.
The plaintiffs have the burden of proving damages by a
preponderance of the evidence. Damages means the amount of
money that will reasonably and fairly compensate the
plaintiffs for any injury you find was caused by Wal-Mart, in
accordance with these instructions.
It is for you to determine what damages, if any, have been
Your award must be based upon evidence and not upon
speculation, guesswork or conjecture.
In instances where Wal-Mart did not maintain records of the
number of times certain work duties were performed or the
amount of time it took class members to perform those duties,
the plaintiffs can satisfy their burden of proof if they
produce sufficient evidence to show the amount and extent of
that work as a matter of just and reasonable inference.
Wal-Mart may dispute the reasonableness of the inference to
be drawn from the plaintiffs' evidence.
jury, seemingly confused about the instruction on layovers,
asked a question, seeking a "definition regarding
Wal-Mart's control during layover period." In
response, the court instructed the jury as follows:
There is no clear definition of control in the California
Labor Code. The cases from the California courts have stated
that the level of the employer's control over its
employees, rather than the mere fact that the employer
requires the employees activity, is determinative. To
determine if a driver was subject to Wal-Mart's control
during the layover, you must determine whether the driver was
able to use that time effectively for his or her own
I will give you two examples from other cases. These involve
different factual situations, and they may be helpful to you
as guidance only. They may be helpful to you as analogies.
The facts in those cases were different from these facts. But
here are the two examples.
When an employer directs, commands or restrains an employee
from leaving the workplace during his or her lunch hour and
thus prevents the employee from using the time effectively
for his or her own purposes, the employee remains subject to
the employer's control.
And here is the second example. When agricultural worker
employees were required by their employer to meet at
designated places to take the employer's buses to work
and were prohibited from taking their own transportation, the
employees were subject to the control of the employer,
although they could read on the bus or perform other personal
called the supplemental instruction one it "c[ould] live
with" because it was "a fair compromise."
Following deliberations, the jury returned a verdict for
Wal-Mart on seven of the eleven tasks in dispute, and for
plaintiffs on four issues. The jury awarded $44, 699, 766 for
layovers, $3, 961, 975 for rest breaks, $2, 971, 220 for
pre-trip inspections, and $2, 971, 220 for post-trip
district court denied plaintiffs' post-trial motion for
liquidated damages and civil penalties. And the court denied
Wal-Mart's motions for a new trial and for judgment as a
matter of law. This appeal followed.
raises multiple issues, claiming each constitutes reversible
error. First, it claims the district court erred by failing
to dismiss for lack of jurisdiction. Second, it contends that
it was error to award damages to plaintiffs based on
layovers, rest breaks, and inspections. Third, it argues that
the district court erred in certifying a class. We affirm the
district court on all assertions of error raised by Wal-Mart.
filed a cross-appeal. They contend that the district court
erred by denying liquidated damages to plaintiffs as required
under California law. We disagree. As a result, we affirm on
the issue of liquidated damages.
Jurisdiction After Stay Was Lifted
Active Case or Controversy
review the district court's ruling on jurisdiction de
novo. Smith v. T-Mobile USA Inc., 570 ...