Labor & Employment Law Daily Walmart’s California truck drivers survive challenge to multimillion dollar verdict in wage suit
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Wednesday, January 8, 2020

Walmart’s California truck drivers survive challenge to multimillion dollar verdict in wage suit

By Ronald Miller, J.D.

Whether an employee deserves pay in California turns on whether the employer exercised control over the employee, not whether the employee was actively working.

In a long-running wage suit brought by long-haul truck drivers employed by Walmart, the Ninth Circuit affirmed a district court’s judgment awarding millions of dollars of damages in a class action. As an initial matter, the appeals held a district court correctly concluded that this case presented an Article III case or controversy because two lead plaintiffs remained in the action after a stay was lifted. Further, the appeals court found the district court did not err in granting partial summary judgment awarding damages to the drivers for layovers, rest breaks, and inspections after the lower court correctly determined that Walmart’s written policies constituted control as a matter of California law. The appeals court also affirmed the district court’s ruling denying liquidated damages to the truck drivers, holding that the lower court did not err in finding that Walmart acted in good faith and with a reasonable belief in the legality of its action. Judge O’Scannlain filed a separate opinion concurring in part and dissenting in part (Ridgeway v. Walmart Inc. dba Wal-Mart Transportation LLC, January 6, 2019, Siler, E.).

Long-haul truck drivers. Truck drivers employed by Walmart in California filed suit asserting that the retailer violated state meal and rest break laws. The drivers worked out of several distribution centers in California that served as hubs. As part of their job, truckers would travel a wide range of routes to different locations hauling freight. The drivers claimed that they were not receiving adequate minimum wage pay.

Walmart paid drivers through an activity-based pay system. That system included pay for (1) mileage, (2) tasks that constituted “activity” such as arriving and departing a facility, and (3) hourly wages of $14 per hour for limited events like time spent waiting at a store or supplier, delays due to inclement weather, or delays caused by truck breakdown.

After the suit was removed to federal court, the parties agreed to stay the suit until after the California Supreme Court issued Brinker Restaurant Corp. v. Superior Court of San Diego County, which held that employers must make meal and rest breaks available, but do not have to ensure that employees take such breaks. Three years later, after the stay was lifted, the district court granted the plaintiffs’ motion to turn over information about potential class members to determine the identity of new class representatives.

Under the plaintiffs’ theory, Walmart 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. Ultimately, the district court granted the plaintiffs’ motion to certify a class. Thereafter, the district court granted the plaintiffs’ partial summary judgment as to their minimum wage liability claims, and eventually conducted a jury trial and entered judgment.

On appeal, Walmart raised multiple issues, claiming reversible error. First, it claimed that the district court erred by failing to dismiss for lack of jurisdiction. Second, it contended that it was error to award damages to the drivers based on layovers, rest breaks, and inspections. Third, it argued that the district court erred in certifying a class. For their part, the drivers cross-appealed, contending that the district court erred by denying liquidated damages.

Active case or controversy. As an initial matter, the Ninth Circuit rejected Walmart’s claim that the district court erred by failing to dismiss for lack of jurisdiction. The appeals court held that the district court correctly concluded that this case presented an Article III case or controversy because two lead plaintiffs remained in the action after the stay was lifted. When the stay was lifted, two named plaintiffs had died, one was no longer interested in litigating the matter, and plaintiffs’ counsel was concerned whether the fourth named plaintiff could represent the class. At that time, the class was not certified, so putative class members were not parties to the case.

Because two named plaintiffs remained parties to the action, the parties continued to have live controversies with Walmart. Thus, the district court correctly refused to dismiss the case for lack of jurisdiction.

Liability for damages. Next, the appeals court rejected Walmart’s contention that the drivers should not have been awarded damages for layovers, rest breaks, and inspections. First, it determined that the district court correctly concluded that under California law, the time drivers spent on layovers is compensable if Walmart exercised control over them during those breaks. Whether an employee deserves pay in California turns on whether the employer exercised control over the employee, not whether the employee was actively working. Here, the appeals court concluded that the district court correctly determined that Walmart’s written policies constituted control as a matter of California law.

Class certification. Additionally, the district court did not err in certifying a class and allowing representative evidence as proof of classwide damages. The drivers need not prove that they all took the same time to complete required inspections. All that was required was enough representative evidence to allow a jury to draw a reasonable inference about the unpaid hours worked. Here, plenty of evidence supported a 15-minute inspection time determination. The same was true for rest breaks. Despite variations, introduction of the representative sample and representative testimony was proper because the drivers had no other practicable way to prove how much Walmart owed them.

Liquidated damages. With regard to the drivers’ cross-appeal of the district court’s ruling denying liquidated damages, the appeals court held that the lower court did not err in finding that Walmart acted in good faith and with a reasonable belief in the legality of its action. When considering this issue, the district court did not limit Walmart to the evidence presented at trial. Limiting review to only evidence presented at trial would require defendants to anticipate losing at trial by presenting good faith and reasonableness arguments for potential post-trial liquidated damages motions. The appeals court rejected that position.

Partial concurrence and partial dissent. Judge O’Scannlain disagreed with the majority’s conclusion that the district court correctly granted partial summary judgment to the plaintiffs when it found that Walmart’s written pay policies necessarily established that the company “controlled” drivers during layovers. He argued that the jury should have been allowed to decide the meaning of ambiguous policies and the extent to which the policies actually “control” what drivers do and where they may go.

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