Trial News

The Ninth Circuit has upheld a multimillion-dollar verdict in favor of a class of Walmart truck drivers who allege the company violated California wage laws. The court found no error with the district court’s rulings in the case and ruled that the wage law violations were sufficiently proven at trial and that the compensatory damages for unpaid wages were appropriate. (Ridgeway v. Walmart Inc., 946 F.3d 1066 (9th Cir. Jan. 6, 2020).)

A class of Walmart long-haul truck drivers sued the big box retail chain for violating California wage laws, alleging that their employer failed to adequately pay them for unpaid layovers (mandated 10-hour breaks), other rest breaks, pre-trip inspections, and post-trip inspections. The defendant followed an “activity-based pay system” that compensated drivers for mileage and certain tasks, such as arriving at and departing from a shipping facility, and provided an hourly wage for times when they weren’t actively driving, for example, due to inclement weather or the truck breaking down.

The case was stayed for three years until the California Supreme Court resolved a meal and rest break issue in Brinker Restaurant Corp. v. Superior Court (273 P.3d 513 (Cal. 2012)). After the stay was lifted, the named plaintiffs in the class had to be replaced, which the district court allowed over the defendant’s objection. The class was certified, and the case went to trial in 2016. The jury awarded more than $54 million in damages. Walmart appealed to the Ninth Circuit, arguing that the district court erred in finding that it had jurisdiction and that there was insufficient evidence to award damages that Walmart’s payment scheme violated state law, among other alleged district court errors. The Ninth Circuit affirmed, stating that it is not the court’s role “to play armchair district judge.”

The court rejected the defendant’s assertion that the district court lost jurisdiction when the stay was lifted and no named plaintiffs remained in the case. To the contrary, although two plaintiffs had passed away, two remained—even though there were indications that these plaintiffs would be stepping down as class representatives. The court explained that this did not make them inadequate representatives at the time the stay was lifted—they still had a stake in the litigation despite reservations about serving as named plaintiffs and therefore there still was an Article III case or controversy for the court to adjudicate.

The defendant also challenged the amount of damages awarded for layovers, rest breaks, and inspections. The defendant argued that the layover damages could not be compensated under California law and that Walmart did not exercise control over the drivers. It also raised federal preemption and jury instruction issues, which the court rejected.

Under California law, truck drivers must take uninterrupted breaks and either use the time for sleeping or as off-duty time. The court rejected Walmart’s argument that it cannot be forced to pay for time when a driver is legally required not to work. Instead, the issue turns on whether Walmart still exercised control over the drivers during this time because California law requires that minimum wage be paid whenever an employer controls an employee.

The court examined what is considered “control” under California law, noting that there is not one clear standard. However, while “an employer may place some constraints on an employee’s movement during breaks, control exists if the employer goes too far.” This could include personal activities such as sleeping if the employer places meaningful restrictions on the employee. “In short, the question boils down to whether the employee may use break or non-work time however he or she would like,” the court explained.

To determine whether Walmart exercised control over its drivers during layovers, the court reviewed the defendant’s pay manual, which requires drivers to receive preapproval to take a layover at home. Drivers also are required to log all breaks taken at home and which supervisor approved the break. Drivers who fail to follow this policy could be disciplined and even terminated. The court found it was irrelevant that the policy allowed for home breaks with permission—the salient issue is that drivers had to ask at all, meaning they weren’t free to use their layover time as they liked. “This is not a case where Wal-Mart simply required workers to take lunch or a short break at a certain location. Instead, Wal-Mart required drivers to receive permission to enjoy one of the most fundamental privileges that all employees enjoy—the autonomy to go home when they are not working.”

The court also was not persuaded that there was insufficient factual evidence in the record to support a finding of control. Even though some drivers spent their layover time at home or in hotels, at the movies, at restaurants, or going for a walk, there also was testimony from drivers about requirements to get permission to sleep somewhere other than the truck, as well as about additional restrictions Walmart placed on them during a layover, such as not consuming alcohol and not being allowed to have a guest or pet in the truck’s cab.

Next, the court reviewed the damages the jury awarded for other rest breaks and inspections. The plaintiffs argued that Walmart excluded these activities from compensation and that they were not categorized in the defendant’s activity-based pay scheme. They also questioned the defendant’s contention that it could divide a driver’s total annual compensation by the number of hours worked and still be in compliance with wage laws so long as the individual hours reflected minimum wage. The court agreed with the plaintiffs, noting that California law does not permit this “averaging method” and that rest breaks and inspections had to be compensated separately. Further, since rest breaks and inspections were not listed as activities in the pay scheme, drivers could not know how that time was being calculated and whether it was considered an activity—even though it was something they were required to do.

Fresno, Calif., attorney Nicolas Wagner, one of the plaintiffs’ representatives, said, “This has been an eight-year battle, and we knew we were on the right side of this. These guys work about 14 hours per day and have dangerous jobs. They work hard, and they finally got justice. When you are under the control of your employer, you have to be paid.”

On Jan. 21, Walmart filed a petition with the Ninth Circuit for an en banc rehearing of the decision.

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