Chelsea Hamilton v. Wal-Mart Stores, Inc.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CHELSEA HAMILTON; ALYSSA No. 19-56161

HERNANDEZ, on behalf of

themselves and all others similarly D.C. Nos.

situated, 5:17-cv-01415-

Plaintiffs-Appellants, AB-KK

5:17-cv-01485-

v. AB-KK

WAL-MART STORES, INC., a

corporation; WAL-MART

ASSOCIATES, INC., a corporation;

DOES, 1 through 50, inclusive,

Defendants-Appellees.

2 HAMILTON V. WAL-MART STORES

CHELSEA HAMILTON; ALYSSA No. 20-55223

HERNANDEZ, on behalf of

themselves and all others similarly D.C. Nos.

situated, 5:17-cv-01415-

Plaintiffs-Appellees, AB-KK

5:17-cv-01485-

v. AB-KK

WAL-MART STORES, INC., a

corporation; WAL-MART OPINION

ASSOCIATES, INC., a corporation,

Defendants-Appellants,

and

DOES, 1 through 50, inclusive,

Defendants.

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

Filed June 30, 2022

Before: Marsha S. Berzon and Jay S. Bybee, Circuit

Judges, and Kathleen Cardone, * District Judge.

Opinion by Judge Berzon

*

The Honorable Kathleen Cardone, United States District Judge for

the Western District of Texas, sitting by designation.

HAMILTON V. WAL-MART STORES 3

SUMMARY **

California’s Private Attorneys General Act

The panel reversed the district court’s dismissal of

Alyssa Hernandez’s California Private Attorney General Act

(“PAGA”) claims, alleging wage and hour violations,

against Wal-Mart Stores, Inc.; and remanded for further

proceedings.

The district court dismissed some of Hernandez’s PAGA

claims on the ground that they were unmanageable and

dismissed her remaining PAGA claims as a discovery

sanction.

California’s Labor Code allows employees to sue an

employer for violating provisions designed to protect the

health, safety, and compensation of workers. Following the

enactment of PAGA in 2004, employees may stand in the

shoes of the Labor Commissioner and recover civil penalties

for Labor Code violations. Sections 2699(a) and 2699.3 of

PAGA contain requirements for such actions.

The panel first addressed the question whether, in

addition to the presuit requirements listed in Cal. Labor Code

section 2699.3, an aggrieved employee asserting a PAGA

cause of action must also certify the requirements for class

certification included in Fed. R. Civ. P. 23. The panel held

that the recently decided Viking River Cruises, Inc. v.

Moriana, — S. Ct. —, 2022 WL 2135491, at *3 (2022), case

expressly foreclosed Walmart’s argument that Hernandez

**

This summary constitutes no part of the opinion of the court. It

has been prepared by court staff for the convenience of the reader.

4 HAMILTON V. WAL-MART STORES

was barred from pursuing her PAGA claims because she did

not seek class certification under Rule 23. In addition, given

their differing coverage, PAGA and Rule 23 are fully

compatible and do not conflict for purposes of the first step

of an Erie analysis. The panel also rejected Walmart’s

argument that the district court correctly rejected some of

Hernandez’s PAGA claims as unmanageable under its

inherent authority. The panel held that, in light of the

structure and purpose of PAGA, imposing a manageability

requirement in PAGA cases akin to that imposed under Rule

23(b)(3) would not constitute a reasonable response to a

specific problem and would contradict California law by

running afoul of the key features of PAGA actions. The

panel concluded that an employee plaintiff need not comply

with the Rule 23 requirements, including the

“manageability” requirement, to assert a PAGA cause of

action.

The panel next addressed the question whether

Hernandez’s PAGA claims were barred because of a failure

sufficiently to disclose estimated damages under Fed. R.

Civ. P. 26(a). The panel held that Rule 26(a) applied to

claims for damages. Hernandez’s PAGA claims seek civil

penalties, not damages, so Rule 26(a) does not apply to her

PAGA claims.

The panel addressed remaining claims raised on appeal

in a concurrently filed memorandum disposition.

HAMILTON V. WAL-MART STORES 5

COUNSEL

Kenneth H. Yoon (argued), Stephanie E. Yasuda, and Brian

G. Lee, Yoon Law APC, Los Angeles, California; G. Samuel

Cleaver, Law Offices of G. Samuel Cleaver, Los Angeles,

California; Brian J. Mankin and Peter J. Carlson, Fernandez

& Lauby LLP, Riverside, California; for Plaintiffs-

Appellants/Cross-Appellees.

Theane Evangelis (argued), Bradley J. Hamburger,

Elizabeth A. Dooley, and William F. Cole, Gibson Dunn &

Crutcher LLP, Los Angeles, California; Mark D. Kemple,

Robert J. Herrington, and Matthew R. Gershman, Greenberg

Traurig LLP, Los Angeles, California; for Defendants-

Appellees/Cross-Appellants.

OPINION

BERZON, Circuit Judge:

Plaintiff Alyssa Hernandez brought five claims arising

under the California Private Attorneys General Act

(“PAGA”), all concerning alleged wage and hour violations,

against Wal-Mart Stores, Inc. and Wal-Mart Associates, Inc.

(collectively, “Walmart”). The district court dismissed some

of Hernandez’s PAGA claims on the ground that they were

unmanageable and dismissed her remaining PAGA claims

as a discovery sanction. We reverse the dismissal of each of

Hernandez’s PAGA claims and remand for further

proceedings.

6 HAMILTON V. WAL-MART STORES

I.

A. Factual Background

In July 2015, Walmart opened a large ecommerce

fulfillment center in Chino, California. Employees at the

center send merchandise to consumers who order products

online.

As an anti-theft measure, Walmart placed a security

checkpoint where employees exit the facility. Employees

were required to go through the security checkpoint

whenever they left the facility, including for lunch and at the

end of the workday. The security checkpoint was located

after the terminal where employees clocked out by swiping

their badges on a timeclock machine. The process of going

through the security checkpoint involved clocking out at the

timeclock terminal, walking from the timeclock terminal to

the security checkpoint, waiting in line, placing one’s

personal belongings such as backpacks and purses in an

inspection area, waiting for security personnel to inspect the

belongings, going through metal detectors, and leaving the

security checkpoint through a turnstile.

Employees were also required to take their allotted

breaks each day in designated rest areas. The “several

minutes” employees spent walking to and from the

designated rest areas were deducted from their 15-minute

break periods.

Although Plaintiffs raised several putative class action

claims before the district court, this opinion exclusively

HAMILTON V. WAL-MART STORES 7

analyzes Hernandez’s PAGA claims. 1 In the First Amended

Complaint (“FAC”), Hernandez, a former employee of

Walmart who worked at the Chino facility from 2016 to

2018, asserted five PAGA causes of action against Walmart.

She sought civil penalties under PAGA for Walmart’s

alleged: (1) failure to pay wages for all hours worked,

(2) failure to provide meal periods, (3) failure to provide rest

breaks, (4) failure to pay wages timely, and (5) failure to

provide accurate itemized wage statements.

As the first PAGA cause of action, Hernandez alleged

that because Walmart required employees to clock out

before going through the security checkpoint, which

frequently took “15 to 20 minutes . . . to get through,” she

and other similarly situated employees were not fully

compensated for all hours worked, including overtime hours.

For the second PAGA cause of action, Hernandez stated

that although Walmart provided each employee with a 30-

minute meal period, that period included the time the

employee spent going through the security checkpoint

process. Because employees were “under the control of the

company” during that process, Hernandez alleged, she and

other similarly situated employees “were regularly not

provided with uninterrupted meal periods of at least

30 minutes, as required by California law.” See Cal. Lab.

Code § 512(a); Brinker Rest. Corp. v. Superior Court,

53 Cal. 4th 1004, 1040–41 (2012). Hernandez asserted that

Walmart’s security checkpoint policy impeded or

discouraged lunch breaks and that Walmart regularly did not

provide a second duty-free meal period during shifts in

1

We address the remaining claims raised on appeal in a concurrently

filed memorandum disposition.

8 HAMILTON V. WAL-MART STORES

excess of ten hours, also in violation of California law.

Brinker, 53 Cal. 4th at 1040–41.

Hernandez’s third PAGA cause of action alleged that she

and other similarly situated employees were required to take

their rest breaks in designated areas. The time it took “to

travel to and from the designated rest areas” was deducted

from each employee’s allotted 15-minute break period,

meaning that Hernandez and other similarly situated

employees were not always “provided net rest periods of at

least 10 minutes for each 4-hour work period, or major

fraction thereof,” as required by California law. See Cal.

Code Regs. tit. 8, § 11040(12)(A).

As the fourth PAGA cause of action, Hernandez alleged

that Walmart miscalculated the wages owed to her and other

similarly situated employees in light of the security

checkpoint issue. As a result, Walmart failed to pay “all

wages due and owing . . . within the time specified” by

California Labor Code sections 201 and 202, and also failed

to pay “waiting time penalties” in accordance with

California Labor Code section 203.

Finally, Hernandez’s fifth PAGA cause of action stated

that she and other similarly situated employees were not

provided with wage statements that accurately reported the

gross wages earned, all deductions, and net wages earned, as

well as all applicable hourly rates in effect during the pay

period and the corresponding number of hours worked at

each hourly rate.

B. Procedural History

This case was initiated in California state court by

Chelsea Hamilton, a former employee of Walmart who

worked at the Chino fulfillment center. The original

HAMILTON V. WAL-MART STORES 9

complaint did not contain any PAGA causes of action,

instead focusing on putative class claims. About one month

after Hamilton filed the original complaint, Walmart

removed the case to federal court. Hamilton then filed the

FAC adding Hernandez as a plaintiff, and Hernandez alleged

the five PAGA causes of action.

During pre-trial proceedings, Plaintiffs filed expert

reports from Dr. Brian Kriegler and Dr. Stephanie J. Bonin

regarding their methods of calculating the time required to

go through the security checkpoint and to walk to the

designated rest areas, and later filed a supplemental expert

report from Dr. Kriegler providing further detail regarding

his methodology. Walmart moved to strike the expert

reports for failure to comply with Rule 26(a) of the Federal

Rules of Civil Procedure. Walmart also moved for summary

judgment on Hernandez’s PAGA claims, arguing that the

claims could not be maintained because Hernandez did not

plead them under Rule 23 of the Federal Rules of Civil

Procedure and because the claims were unmanageable.

The district court rejected Walmart’s Rule 23 argument.

In a separate order, the court largely granted Walmart’s

motion to strike the expert reports. It concluded that the

expert reports ran afoul of Rule 26(a) because they did not

sufficiently detail how the experts would calculate “walking

time,” “waiting time,” and “security check time,” and it

further determined that the Plaintiffs’ noncompliance with

Rule 26(a) was willful. The court then struck from the

record Dr. Kriegler’s initial and supplemental time

calculations and Dr. Bonin’s entire report.

Although the court had originally certified six subclasses

for trial, it decertified all the subclasses tied to the security

checkpoint issue except for the meal break subclass, which

it limited to a “discouragement” theory. See Brinker, 53 Cal.

10 HAMILTON V. WAL-MART STORES

4th at 1040–41. Explaining its decertification ruling, the

court stated that without the expert reports, plaintiffs could

not present a workable method for calculating damages.

After Hernandez made clear her intention to continue

pursuing PAGA penalties for the decertified class claims, the

district court dismissed Hernandez’s PAGA claims related

to the security checkpoint issue as unmanageable and

dismissed her remaining PAGA claims for failure

sufficiently to disclose estimated damages under Rule 26(a).

The two surviving class claims—discouragement of

meal breaks and a wage theft claim tied to an allegedly

defective alternative workweek schedule election—

proceeded to trial. The jury returned a special verdict in

Walmart’s favor on the election claim, concluding that

Walmart “prove[d] by a preponderance of the evidence that

it met the requirements of an Alternative Workweek

Schedule election.” On the discouragement of meal breaks

claim, the jury returned a special verdict for Plaintiffs in the

amount of $6,001,599 for 452,491 meal break violations.

After a bench trial in which the trial court denied

Plaintiffs’ motion for prejudgment interest and determined

that Plaintiffs had not adduced sufficient evidence of injury

related to Plaintiffs’ wage statement claim, the district court

entered judgment. Both parties filed post-trial motions, with

Walmart seeking judgment as a matter of law as to the meal

break claim, and Plaintiffs seeking a new trial, judgment as

a matter of law on the election claim, and pretrial interest.

The district court denied all motions. Both parties appealed.

II.

“California’s Labor Code contains a number of

provisions designed to protect the health, safety, and

compensation of workers.” Kim v. Reins Int’l Cal., Inc.,

HAMILTON V. WAL-MART STORES 11

9 Cal. 5th 73, 80 (2020). Employees may sue an employer

for violating these provisions and obtain “damages or

statutory penalties . . . including double or treble damages.”

Id. (emphasis omitted). In addition, following the enactment

of PAGA in 2004, employees may stand in the shoes of the

Labor Commissioner and recover civil penalties for Labor

Code violations. See, e.g., Viking River Cruises, Inc. v.

Moriana, — S. Ct. —, 2022 WL 2135491, at *3 (2022).

Specifically, section 2699(a) of PAGA states that any

Labor Code provision “that provides for a civil penalty to be

assessed and collected by the Labor and Workforce

Development Agency or any of its departments, divisions,

commissions, boards, agencies, or employees . . . may, as an

alternative, be recovered through a civil action brought by

an aggrieved employee on behalf of himself or herself and

other current or former employees pursuant to the

procedures specified in Section 2699.3.” Cal. Lab. Code

§ 2699(a).

Section 2699.3, in turn, requires the employee to give

written notice of the alleged Labor Code violation to both

the employer and the Labor and Workforce Development

Agency. Cal. Lab. Code § 2699.3(a). The agency then has

a right of first refusal over the claim. Cal. Lab. Code

§ 2699.3(a)(2). If the agency declines to investigate the

claim, does not respond to the aggrieved employee’s notice

within 65 days, or does not issue a citation within 120 days

of announcing its decision to investigate the claim, the

aggrieved employee may commence an action for civil

penalties. Id. If the aggrieved employee’s action is

successful, 75 percent of the funds recovered go to the Labor

and Workforce Development Agency “for enforcement of

labor laws” or “education of employers and employees about

their rights and responsibilities,” and 25 percent of the

12 HAMILTON V. WAL-MART STORES

recovered funds go to the “aggrieved employees,” id.

§ 2699(i), meaning the plaintiff and all employees affected

by the Labor Code violation. Viking River Cruises, 2022

WL 2135491, at *3; Saucillo v. Peck, 25 F.4th 1118, 1128

(9th Cir. 2022).

The first question we address is whether, in addition to

the presuit requirements listed in section 2699.3, an

aggrieved employee asserting a PAGA cause of action must

also satisfy the requirements for class certification included

in Rule 23 of the Federal Rules of Civil Procedure. We

conclude that an employee plaintiff need not comply with

the Rule 23 requirements, including the “manageability”

requirement, to assert a PAGA cause of action.

The second question is whether Hernandez’s PAGA

claims are barred because of a failure sufficiently to disclose

estimated damages under Rule 26(a). Again, our answer is

no. Rule 26(a) applies to claims for damages. Hernandez’s

PAGA claims seek civil penalties, not damages, so

Rule 26(a) does not apply to her PAGA claims.

A.

i.

Walmart argues that Hernandez is barred from pursuing

her PAGA claims because she did not seek class certification

under Rule 23. The district court rejected this argument. It

noted that the dominant view among district courts in the

Ninth Circuit is that PAGA actions need not satisfy Rule 23

class certification requirements. We agree. As emphasized

in Baumann v. Chase Inv. Servs. Corp., 747 F.3d 1117,

1119–24 (9th Cir. 2014), and Canela v. Costco Wholesale

Corp., 971 F.3d 845, 848–54 (9th Cir. 2020), Rule 23 class

actions and PAGA actions are so conceptually distinct that

HAMILTON V. WAL-MART STORES 13

class action precepts generally have little salience for PAGA

actions. Viking River Cruises embraces the reasoning of

those decisions and expressly forecloses Walmart’s

argument.

In the course of invalidating as preempted by the Federal

Arbitration Act a California rule of law that previously

rendered arbitration clauses targeting PAGA claims

unenforceable, Viking River Cruises explains that although

PAGA actions “permit the adjudication of multiple claims in

a single suit” like Rule 23 class actions, “their structure is

entirely different.” Viking River Cruises, 2022 WL

2135491, at *8. It emphasizes three critical distinctions

between PAGA actions and class actions that render Rule 23

certification requirements inapplicable to PAGA suits. First,

“[a] class-action plaintiff can raise a multitude of claims

because he or she represents a multitude of absent

individuals; a PAGA plaintiff, by contrast, represents a

single principal, the [Labor Workforce Development

Agency], that has a multitude of claims.” Id. Second,

“PAGA judgments are not binding on nonparty employees

as to any individually held claims.” Id. And third, although

PAGA “gives other affected employees a future interest in

the penalties awarded in an action,” id., in the sense that

25 percent of the funds recovered in a PAGA action go to

the “aggrieved employees,” meaning the plaintiff and all

other employees affected by the Labor Code violation,”

Saucillo, 25 F.4th at 1128, “that interest does not make those

employees ‘parties’ in any of the senses in which absent

class members are” parties, nor does it give “those

employees anything more than an inchoate interest in

litigation proceeds,” Viking River Cruises, 2022 WL

2135491, at *8.

14 HAMILTON V. WAL-MART STORES

In light of these structural differences, “PAGA suits

exhibit virtually none of the procedural characteristics of

class actions,” so there is no need for courts to consider

“adequacy of representation, numerosity, commonality, or

typicality,” and “no need for certification” under Rule 23, as

the Rule 23 requirements are a logical mismatch for PAGA

actions. Id.; see also Saucillo, 25 F.4th at 1126–29; Canela,

971 F.3d at 850–54; Sakkab v. Luxottica Retail N. Am., Inc.,

803 F.3d 425, 435, 439 (9th Cir. 2015); Baumann, 747 F.3d

at 1122–24; Kim, 9 Cal. 5th at 81, 84–88; Arias v. Superior

Court, 46 Cal. 4th 969, 980–87 (2009). Walmart’s argument

that Hernandez’s PAGA claims should be dismissed because

she did not seek class certification under Rule 23 is therefore

unavailing.

ii.

Walmart argues that PAGA actions brought in or

removed to federal court nonetheless must comply with

Rule 23 because “PAGA is a state procedural statute” that

conflicts with Rule 23 and, under the Erie doctrine, federal

procedural rules “trump any inconsistent state procedur[al

rules].” See Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938).

As Viking River Cruises did not directly address this

contention, we briefly consider it here.

The Erie doctrine addresses “whether state or federal law

should apply on various issues arising in an action based on

state law which has been brought in federal court.” Walker

v. Armco Steel Corp., 446 U.S. 740, 744 (1980). It

commands that, in such cases, federal courts must apply state

substantive law. Sibbach v. Wilson & Co., 312 U.S. 1, 9–10

(1941). But “Congress has undoubted power to regulate the

practice and procedure of federal courts,” so, generally, if a

state procedural rule conflicts with a federal procedural rule,

the federal procedural rule controls. Id.

HAMILTON V. WAL-MART STORES 15

Rule 23 is, of course, a federal procedural rule. See, e.g.,

Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co.,

559 U.S. 393, 408–11 (2010) (plurality opinion). 2 But

Walmart’s assertion that PAGA as a whole constitutes a state

procedural rule inconsistent with Rule 23 is incorrect. Even

if PAGA qualifies as a state procedural rule rather than

substantive rule for purposes of an Erie analysis—a

proposition that is itself on shaky footing, see, e.g., Zackaria

v. Wal-Mart Stores, Inc., 142 F. Supp. 3d 949, 956–58 (C.D.

Cal. 2015)—we conclude that PAGA does not conflict with

Rule 23, as, for reasons largely already surveyed, Rule 23

does not govern cases with PAGA’s features. 3

2

In Shady Grove, Justice Scalia delivered the opinion of the Court

with respect to Parts I and II-A and an opinion with respect to Parts II-

B, II-C, and II-D. 559 U.S. at 395–96. Although the proposition that

Rule 23 is a federal procedural rule is discussed in Part II-B of Justice

Scalia’s opinion, all nine Justices agreed that Rule 23 is a federal

procedural rule. See, e.g., id. at 408–11; id. at 429–30 (Stevens, J.,

concurring in part and concurring in the judgment); id. at 451–52

(Ginsburg, J., dissenting).

3

Zackaria states that “[w]hile PAGA may be comparable in some

ways to rules that are procedural,” district courts have observed that it

“transcends the definition of what is simply procedural.” 142 F. Supp.

3d at 956–58 (citing several district court cases). To begin, “PAGA is

substantive for Erie purposes ‘because it gives plaintiffs a right to

recover in specified circumstances’” that would not otherwise exist. Id.

at 957 (quoting Achal v. Gate Gourmet, Inc., 114 F. Supp. 3d 781, 810

(N.D. Cal. 2015)). PAGA was also “established for a public reason”:

remedying systemic underenforcement of California’s labor laws.

Sakkab, 803 F.3d at 431. Finally, a decision to the contrary could

undermine one of the “twin aims of the Erie rule: discouragement of

forum-shopping,” Hanna v. Plumer, 380 U.S. 460, 468 (1965), by

encouraging removal of all PAGA cases to federal court. These

considerations indicate that, for purposes of an Erie analysis, PAGA in

general quite probably qualifies as substantive rather than procedural.

We shall assume otherwise, however, for purposes of this opinion.

16 HAMILTON V. WAL-MART STORES

To determine whether PAGA conflicts with Rule 23, we

“must first determine whether Rule 23 answers the question

in dispute.” Shady Grove, 559 U.S. at 398. “We ask

whether, when fairly construed, the scope of [Rule 23] is

sufficiently broad to cause a direct collision with the state

law, or, implicitly, to control the issue before the court,

thereby leaving no room for the operation of that law.” Ellis

v. Salt River Project, 24 F.4th 1262, 1269 (9th Cir. 2022)

(internal quotation marks omitted) (quoting Burlington N.

R.R. Co. v. Woods, 480 U.S. 1, 4–5 (1987)). “If so, then the

federal rule controls ‘unless it exceeds statutory

authorization or Congress’s rulemaking power.’” Id.

(quoting Shady Grove, 559 U.S. at 398). In contrast, if the

federal and state rules “can be reconciled,” then they do not

qualify as in conflict and the court’s Erie analysis ends.

Shady Grove, 559 U.S. at 410 (plurality opinion); id. at 421

(Stevens, J., concurring in part and concurring in the

judgment); id. at 437 (Ginsburg, J., dissenting).

Shady Grove is instructive with respect to this threshold

question. There, a New York state law prohibited certain

suits—such as suits to recover statutory minimum

damages—from proceeding as class actions, even if the suits

complied with the dictates of Rule 23. 559 U.S. at 396–97.

When assessing whether the statute conflicted with Rule 23,

the high court explained that Rule 23 constitutes “a

categorical rule entitling a plaintiff whose suit meets the

specified criteria” listed in Rule 23 “to pursue his claim as a

class action.” Id. at 398. Because the New York statute

precluded some suits that met those criteria from being filed

as class actions, the New York statute conflicted with Rule

23. Id. at 398–99.

Here, as we have explained, see supra Part II.A.i, in light

of the substance and essentials of a PAGA action, such an

HAMILTON V. WAL-MART STORES 17

action is distinct from a Rule 23 class action and is not

compatible with the precepts of Rule 23. To recap: because

a PAGA action is an “enforcement action[]” brought on

behalf of the state rather than an action aggregating the

individual claims of a group of plaintiffs; because PAGA

judgments do not prevent absent aggrieved employees from

seeking any “other remedies” they may be entitled to “under

state or federal law”; and because PAGA actions and

Rule 23 class actions serve differing overall and “remedial”

purposes, a PAGA does not raise the concerns to which Rule

23 is addressed. Viking River Cruises, 2022 WL 2135491,

at *8; Canela, 971 F.3d at 851–56; Baumann, 747 F.3d at

1122–24. Thus, unlike the New York statute at issue in

Shady Grove, which prohibited plaintiffs from bringing their

claims as class actions even if the claims did comply with

the dictates of Rule 23, PAGA authorizes a type of action

fundamentally distinct from a class action, one that does not

have most of the features that the requirements of Rule 23

seek to regulate. Given their differing coverage, PAGA and

Rule 23 are fully compatible and do not conflict for purposes

of the first step of an Erie analysis. See Shady Grove,

559 U.S. at 410 (plurality opinion); id. at 421 (Stevens, J.,

concurring in part and concurring in the judgment); id. at 437

(Ginsburg, J., dissenting). 4

B.

As an alternative to its argument based on Rule 23’s

general certification requirements, Walmart maintains the

4

A short footnote in Arias states that PAGA suits can be brought as

class actions. Arias, 46 Cal. 4th at 981 n.5. But that footnote was “dicta”

and was subsequently rejected in Kim, which “emphasized that a PAGA

cause of action cannot be a class action” in light of the different inherent

attributes of two kinds of suit. Canela, 971 F.3d at 855–56 (citing Kim,

9 Cal. 5th at 87).

18 HAMILTON V. WAL-MART STORES

district court correctly rejected some of Hernandez’s PAGA

claims as unmanageable, relying on its inherent authority.

That argument fairs no better.

The concept of manageability finds its genesis in

Rule 23(b)(3) class actions. See, e.g., Zackaria, 142 F.

Supp. 3d at 958–60. Such actions, which bundle individual

claims for money damages, may be maintained only if “the

court finds that questions of law or fact common to class

members predominate over any questions affecting only

individual members, and that a class action is superior to

other available methods for fairly and efficiently

adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). The

Rule expressly contemplates that “the likely difficulties in

managing a class action” are “matters pertinent” to the

court’s evaluation of predominance and superiority. Fed. R.

Civ. P. 23(b)(3)(D). That is why, when discussing the

“manageability” of a class action, courts have spoken of

whether a class action is “the superior method of

adjudicat[ing]” the controversy, Leyva v. Medline Indus.

Inc., 716 F.3d 510, 515 (9th Cir. 2013), or whether

individualized issues predominate over common issues, In

re Hyundai & Kia Fuel Econ. Litig., 926 F.3d 539, 558–60,

563 (9th Cir. 2019) (en banc).

There is a split among both district courts and California

courts regarding whether it is permissible for a court to

dismiss a PAGA action on similar “manageability” grounds.

Compare, e.g., Wesson v. Staples the Off. Superstore, LLC,

68 Cal. App. 5th 746, 755 (2021) (permissible), and Amiri v.

Cox Commc’ns Cal., LLC, 272 F. Supp. 3d 1187, 1193–94

(C.D. Cal. 2017) (permissible), with Estrada v. Royalty

Carpet Mills, Inc., 76 Cal. App. 5th 685, 710 (2022)

(impermissible), and Zackaria, 142 F. Supp. 3d at 959

(impermissible). The opinions in favor of imposing a

HAMILTON V. WAL-MART STORES 19

manageability requirement in PAGA actions observe that

courts possess an inherent power “to manage their own

affairs so as to achieve the orderly and expeditious

disposition of cases.” See, e.g., Valadez v. CSX Intermodal

Terminals, Inc., 298 F. Supp. 3d 1254, 1266 (N.D. Cal.

2018). From that proposition, the opinions derive the

conclusion that this power allows courts to strike a PAGA

claim if, for example, “establishing liability based on Labor

Code violations would be unmanageable due to the

individualized assessments required to prove violations.”

Amiri, 272 F. Supp. 3d at 1193–94; see also Wesson, 68 Cal.

App. 5th at 766–67.

In response, the opinions that reach a contrary

conclusion on the manageability question note that a court’s

inherent powers are limited and end short of imposing an

inapposite requirement. Specifically, under federal law, an

exercise of inherent powers “must be a reasonable response

to a specific problem and . . . cannot contradict any express

rule or statute.” Dietz v. Bouldin, 579 U.S. 40, 46 (2016). 5

In light of the structure and purpose of PAGA, we

conclude that imposing a manageability requirement in

5

Some unpublished decisions also justify application of a

manageability requirement in PAGA cases on the ground that Rule 12(f)

of the Federal Rules of Civil Procedure allows a court to “strike from the

pleadings any ‘redundant, immaterial, impertinent or scandalous

matter.’” See, e.g., Salazar v. McDonald’s Corp., No. 14-cv-02096-RS,

2017 WL 88999, at *7 (N.D. Cal. Jan. 5, 2017) (quoting Fed. R. Civ. P.

12(f)). A PAGA action, such courts maintain, could be considered

“‘immaterial’ to the extent a representative PAGA action is

unmanageable.” Id. Neither the parties nor the district court advanced a

Rule 12(f) argument in this case. In any event, imposing an affirmative

manageability requirement bears no resemblance to “striking” part of a

pleading, nor do materiality and manageability have anything to do with

one another.

20 HAMILTON V. WAL-MART STORES

PAGA cases akin to that imposed under Rule 23(b)(3) would

not constitute a reasonable response to a specific problem

and would contradict California law by running afoul of the

key features of PAGA actions.

i.

We note at the outset that the manageability requirement

the district court imposed on Hernandez’s security

checkpoint PAGA claims was virtually identical to the

manageability requirement it imposed on the plaintiffs’ Rule

23(b)(3) claims, with the court even commenting, “I thought

the Court had already found that those claims were

unmanageable.” Walmart’s briefing continues the same line

of reasoning, stating that “[t]he district court properly

decertified Plaintiffs’ off-the-clock Rule 23 claim on the

basis that it was unmanageable because it would require too

many individualized determinations regarding ‘the time it

takes to walk to the security checkpoint, wait in line, and go

through the security check,’” and “[b]ecause the PAGA off-

the-clock claim is premised on exactly the same theory, it is

also unmanageable.”

Although the manageability requirement makes sense in

the context of Rule 23(b)(3) actions, it does not constitute a

reasonable response to a specific problem in PAGA cases

because of, again, the structural differences between the two

forms of action.

Rule 23(b)(3) actions are considered “the most

adventuresome” type of class action. Amchem, 521 U.S. at

614–15. Aggregation “is not as clearly called for” under

Rule 23(b)(3) “as it is in Rule 23(b)(1) and Rule 23(b)(2)

situations.” Id. Aggregation is “clearly called for” in Rule

23(b)(1) cases because of the need to ensure fair outcomes

among plaintiffs, such as the appropriate distribution in

HAMILTON V. WAL-MART STORES 21

“limited fund” cases of finite resources. See id. at 614

(quoting Fed. R. Civ. P. 23 advisory committee’s note to

1937 adoption). And aggregation is “clearly called for” in

Rule 23(b)(2) cases in light of “the indivisible nature of the

injunctive or declaratory remedy warranted—the notion that

the conduct is such that it can be enjoined or declared

unlawful only as to all of the class members or as to none of

them.” Dukes, 564 U.S. at 360 (quoting Richard A.

Nagareda, Class Certification in the Age of Aggregate Proof,

84 N.Y.U. L. Rev. 97, 132 (2009)). Put differently,

“[c]lasses certified under (b)(1) and (b)(2) share the most

traditional justifications for class treatment—that individual

adjudications would be impossible or unworkable, as in a

(b)(1) class, or that the relief sought must perforce affect the

entire class at once, as in a (b)(2) class.” Id. at 361–62

(footnote omitted).

The drive to bundle the plaintiffs’ claims in Rule

23(b)(3) cases is different because the Rule “allows class

certification in a much wider set of circumstances,”

including circumstances in which an absent plaintiff could

pursue relief directly, 6 and would not jeopardize the

interests of others in doing so. Id. at 362. Congress,

“[s]ensitive to the competing tugs of individual autonomy

for those who might prefer to go it alone or in a smaller unit,

on the one hand, and systemic efficiency on the other,”

imposed the procedural requirements of predominance and

superiority on Rule 23(b)(3) cases to ensure that such cases

6

Of course, this supposition does not hold true in cases where the

cost of bringing suit outweighs the damages a plaintiff could expect to

recover. Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1190,

amended by 273 F.3d 1266 (9th Cir. 2001). In such cases, sometimes

called “negative value suit[s],” Castano v. Am. Tobacco Co., 84 F.3d

734, 748 (5th Cir. 1996), a class action is the only realistic possibility for

redress. Zinser, 253 F.3d at 1190.

22 HAMILTON V. WAL-MART STORES

may only proceed as class actions when doing so “would

achieve economies of time, effort, and expense and promote

. . . uniformity of decision as to persons similarly situated,

without sacrificing procedural fairness.” Amchem, 521 U.S.

at 615 (second alteration in original) (quoting Fed. R. Civ.

P. 23 advisory committee’s note to 1966 amendment).

The manageability requirement, a subsidiary component

of the predominance and superiority inquiries, was thus

specifically devised to address concerns arising from the

aggregation of individual claims for money damages. That

context is why the requirement is not applicable to Rule

23(b)(1) or Rule 23(b)(2) cases. See Rodriguez v. Hayes,

591 F.3d 1105, 1125–26 (9th Cir. 2010); Elliott v.

Weinberger, 564 F.2d 1219, 1229 (9th Cir. 1977), aff’d in

part and rev’d in part sub nom. Califano v. Yamasaki,

442 U.S. 682 (1979); see also, e.g., Walters v. Reno,

145 F.3d 1032, 1047 (9th Cir. 1998).

Like Rule 23(b)(1) and 23(b)(3) class actions, PAGA

cases do not involve individual claims for money damages.

As explained, see supra Part II.A.i., “[t]here is no individual

component to a PAGA action” because “[p]laintiffs may

bring a PAGA claim only as the state’s designated proxy,

suing on behalf of all affected employees.” Kim, 9 Cal. 5th

at 87; see also Viking River Cruises, 2022 WL 2135491,

at *8; Sakkab, 803 F.3d at 435. Absent employees are free

to pursue any other remedies available by law, including

damages and equitable relief. Cal. Lab. Code § 2699(g)(1);

see also Viking River Cruises, 2022 WL 2135491, at *8;

Canela, 971 F.3d at 852; Arias, 46 Cal. 4th at 987; Saucillo,

25 F.4th at 1127. And the civil penalty due upon a showing

that the defendant violated the Labor Code is fixed by statute

and does not involve individualized determinations of

injury. See Cal. Lab. Code § 2699(f)(2).

HAMILTON V. WAL-MART STORES 23

These structural distinctions between Rule 23(b)(3)

actions and PAGA actions render it inappropriate to graft a

Rule 23-derived manageability requirement onto PAGA

actions. In other words, the reasons it would be

inappropriate to apply the overarching Rule 23 requirements

to PAGA actions are amplified with respect to the

manageability requirement, which applies only to a subset of

Rule 23 class actions, based on the unique features of that

subset. So application of the Rule 23 manageability

requirement in PAGA cases would not constitute a

reasonable response to a specific problem and, by extension,

would not constitute a permissible exercise of a federal

court’s inherent powers.

ii.

Imposing a manageability requirement in PAGA cases

would also contradict the purposes of PAGA by

undermining the key features of a PAGA action, rendering it

an improper exercise of a court’s inherent powers.

PAGA empowers aggrieved employees to enforce

California labor laws, thereby preventing a recurrence of the

“systemic underenforcement of many worker protections”

that occurred before the passage of the statute. Williams v.

Superior Court, 3 Cal. 5th 531, 545 (2017). Unlike

Rule 23(b)(3), the statute’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, Viking River

Cruises, 2022 WL 2135491, at *3, and “achiev[ing]

maximum compliance with state labor laws,” Arias, 46 Cal.

4th at 980.

Imposing a manageability requirement in PAGA cases

would undermine these core goals of the statute for two

24 HAMILTON V. WAL-MART STORES

reasons. First, when the state brings suit against an employer

for violating the Labor Code, it need not comply with a

manageability requirement even though individualized

issues are equally present in such actions, as civil penalties

are assessed according to the “same limitations and

conditions” in PAGA suits and state enforcement actions.

Cal. Lab. Code § 2699(e)(1); see also Estrada, 76 Cal. App.

5th at 712; Zackaria, 142 F. Supp. 3d at 959; LaFace v.

Ralphs Grocery Co., 75 Cal. App. 5th 388, 401 (2022).

Dismissing a PAGA suit on such grounds would therefore

“impose a barrier on such actions that the state law

enforcement agency does not face when it litigates those

cases itself.” Estrada, 76 Cal. App. 5th at 710. Because

“[h]urdles that impede the effective prosecution of

representative PAGA actions undermine the Legislature’s

objectives,” Kim, 9 Cal. 5th at 87 (quoting Williams, 3 Cal.

5th at 548), the manageability requirement is inconsistent

with the statute’s structure.

Second, in the context of Rule 23(b)(3) actions, the

manageability requirement is nested as one “pertinent”

consideration among others, and the text of the Rule “calls

for a comparative assessment of the costs and benefits of

class adjudication, including the availability of ‘other

methods’ for resolving the controversy.” Briseno v.

ConAgra Foods, Inc., 844 F.3d 1121, 1126, 1128 (9th Cir.

2017) (quoting Fed. R. Civ. P. 23(b)(3)). In contrast, a

freestanding manageability requirement “would invite

courts to consider the administrative burdens” of the action

“in a vacuum.” Id. at 1128 (quoting Mullins v. Direct

Digital, LLC, 795 F.3d 654, 663 (7th Cir. 2015)). “That

difference in approach would often be outcome

determinative,” leading to the dismissal of many PAGA

cases, id., which would in turn “interfere with PAGA’s

HAMILTON V. WAL-MART STORES 25

express design as a law enforcement mechanism.” Estrada,

76 Cal. App. 5th at 712.

Put differently, Briseno held that putative class actions

involving monetary damages need not satisfy a freestanding

administrability inquiry, as Congress “opted not to make the

potential administrative burdens of a class action dispositive

and instead directed courts to balance the benefits of class

adjudication against its costs.” 844 F.3d at 1128. It would

be similarly inappropriate to allow federal courts to treat a

freestanding manageability requirement as a dispositive

consideration in PAGA cases.

***

In sum, application of the Rule 23(b)(3) manageability

requirement in PAGA cases would be “inconsistent with

PAGA’s purpose and statutory scheme,” Zackaria, 142 F.

Supp. 3d at 958, and would not represent a reasonable

solution to a specific problem. The requirement cannot be

imposed in PAGA actions under the guise of a court’s

inherent powers.

C.

The district court dismissed some of Hernandez’s PAGA

claims as a discovery sanction on the ground that Plaintiffs

failed sufficiently to disclose estimated damages under Rule

26(a). This Court reviews the imposition of discovery

sanctions for abuse of discretion. Payne v. Exxon Corp.,

121 F.3d 503, 507 (9th Cir. 1997). For dismissal of a claim

to qualify as a proper discovery sanction, “the conduct to be

sanctioned must be due to ‘willfulness, fault, or bad faith.’”

Anheuser-Busch, Inc. v. Nat. Beverage Distribs., 69 F.3d

337, 348 (9th Cir. 1995) (quoting Henry v. Gill Indus., Inc.,

983 F.2d 943, 946 (9th Cir. 1993)). Here, the district court’s

26 HAMILTON V. WAL-MART STORES

dismissal was an abuse of discretion, as Plaintiffs did not

violate Rule 26.

Rule 26(a) provides, in relevant part, that “a party must,

without awaiting a discovery request, provide” opposing

counsel with “a computation of each category of damages

claimed by the disclosing party” and “must also make

available for inspection and copying . . . the documents or

other evidentiary material, unless privileged or protected

from disclosure, on which each computation is based.” Fed.

R. Civ. P. 26(a)(1)(A) (emphasis added). The text of the

Rule therefore is limited in its reach to the calculation of

damages, as opposed to the calculation of other kinds of

remedies. 7

PAGA provides a private right of action to obtain civil

penalties for violations of the California Labor Code. Such

penalties are fixed by statute, either in the text of the

applicable provision of the Labor Code or in PAGA itself,

which establishes that for Labor Code violations for which

no penalty is provided in the statutory text, the penalty “is

one hundred dollars ($100) for each aggrieved employee per

pay period for the initial violation and two hundred dollars

7

The Advisory Committee Notes to the 1993 Amendment of Rule

26 state that “[a] party claiming damages or other monetary relief must,

in addition to disclosing the calculation of such damages, make available

the supporting documents for inspection and copying.” See United

States v. RaPower-3, LLC, 960 F.3d 1240, 1253 (10th Cir. 2020)

(quoting Fed. R. Civ. P. 26 advisory committee’s note to 1993

amendment). Walmart argues that the Rule accordingly applies to both

damages and “other monetary relief.” Although Advisory Committee

notes are “of weight” in interpreting the Rules, the notes cannot add to

the Rule, see Torres v. Oakland Scavenger Co., 487 U.S. 312, 316 (1988)

(quoting Miss. Publ’g Corp. v. Murphree, 326 U.S. 438, 444 (1946)),

and the text of the Rule makes no mention of “other monetary relief.”

HAMILTON V. WAL-MART STORES 27

($200) for each aggrieved employee per pay period for each

subsequent violation.” Cal. Lab. Code § 2699(f)(2).

Under state law, such penalties are not damages. Indeed,

the California Supreme Court has repeatedly differentiated

between damages, either common law or statutory, which

compensate for injuries, and PAGA civil penalties, which

serve the distinct function of deterring and punishing

violations of the Labor Code. See, e.g., Arias, 46 Cal. 4th

at 985–87; see also Canela, 971 F.3d at 852. This

interpretation of the word “damages” accords with the

ordinary legal usage of the term. Black’s Law Dictionary,

for example, defines “damages” as “[m]oney claimed by, or

ordered to be paid to, a person as compensation for loss or

injury.” Damages, Black’s Law Dictionary (11th ed. 2019).

Additionally, the text of Rule 26(a) specifies that parties

must provide access to the documentation upon which any

damage calculations are based, “including materials bearing

on the nature and extent of injuries suffered.” Fed. R. Civ.

P. 26(a)(1)(A)(iii) (emphasis added). This language

indicates that the damage calculations required to be

disclosed are focused on quantifying the compensation

needed to redress a plaintiff’s injury. The portion of civil

penalties distributed to the aggrieved employees in a

successful PAGA suit do not qualify as “restitution for

wrongs.” Canela, 971 F.3d at 852 (Baumann, 747 F.3d at

1123). Instead, those penalties act as an “incentive to

perform a service to the state,” id. (quoting Baumann,

747 F.3d at 1123), and are provided without regard to the

injuries suffered by individual employees. The text of the

Rule therefore demonstrates, in two distinct ways, that the

Rule does not apply to civil penalties under PAGA.

Further, the Rule 26 requirement makes sense as applied

to injuries suffered by the plaintiff, as the bulk of the

28 HAMILTON V. WAL-MART STORES

information concerning such injuries will often rest in the

plaintiffs’ hands. The Advisory Committee Notes to the

1993 Amendment of Rule 26 confirm that this rationale

undergirds the Rule, as they state that “a party would not be

expected to provide a calculation of damages which, as in

many patent infringement actions, depends on information

in the possession of another party or person.” See Fed. R.

Civ. P. 26 advisory committee’s note to 1993 amendment.

Under PAGA, information regarding civil penalties would

not be uniquely in the possession of the plaintiff. To the

contrary, once a PAGA plaintiff discloses her theory of the

case, all the information required to calculate PAGA

penalties—e.g., the number of employees affected, the

number of pay periods at issue, and the fixed penalty that

attaches for proven each violation, see Cal. Lab. Code

§ 2699(f)(2)—would be in the hands of the employer. The

underlying rationale for Rule 26 thus supports our

conclusion that the Rule does not apply to PAGA civil

penalties.

Application of an incorrect legal rule constitutes an

abuse of discretion. See United States v. Hinkson, 585 F.3d

1247, 1261–62 (9th Cir. 2009) (en banc). As the foregoing

analysis establishes that the district court improperly relied

on Rule 26 to dismiss some of Hernandez’s PAGA claims,

its dismissal of those claims must be reversed as an abuse of

discretion.

CONCLUSION

For the reasons stated above, we REVERSE the district

court’s dismissal of Hernandez’s PAGA claims and

REMAND to the district court for further proceedings

consistent with this opinion.