Trader Joe's to appeal $30M PAGA penalty over no seats for workers

California retailer Trader Joe's saw a potential penalty of $254 million drop to $30 million after a judge ruled the full amount would be "excessive" in a PAGA case brought by employees over the provision of seats at cashier stands in its grocery stores.

San Mateo County  Superior Court Judge Susan L. Greenberg made the order on the penalties May 1, following a bench trial nine months ago that found Trader Joe's violated Sections 14(A) and 14(B) of the Wage Order by failing to provide seating to cashier and demonstration employees

Lead attorney for the plaintiff, Matthew Righetti of Righetti Glugoski PC, said in a phone interview Friday that where other litigation around seat provision for retailers had failed, his team's "evidence and arguments hit the right persuasive tone that seats should be provided."

"I think Trader Joe's got off with a lot less than what they were potentially on the hook for," Righetti added.

He said Trader Joe's is yet to implement seating at its stores and said counsel for the retailer have made it clear they intend to appeal the decision.

Righetti said, "When you look around the retail landscape, you have Walmart, Safeway, WinCo, Target. One retailer after another in the state of California who are making seats available to cashiers and other employees in retail stores and Trader Joe's is saying, 'No, we will never do it.'

"And it's unfortunate, and you know what's further unfortune it is that they push this case all the way through trial and the court heard all the evidence and appropriately said, 'Gee, why aren't you providing seats?'"

Dawn Sestito of O'Melveny & Myers LLP, counsel for Trader Joe's, did not respond to phone calls and an email request for comment.

Fellow defense counsel Susannah K. Howard has since moved from O'Melveny & Myers LLP to Wilson Sonsini Goodrich & Rosati and said she was unable to provide a comment as a result.

Trader Joe's media office was contacted for comment. Trader Joe's Wage and Hour Cases, JCCP5196 (S. Mateo Cty. Super. Ct. filed Jan 31, 2020).

Greenberg wrote in her statement that the plaintiff's expert calculated the initial $254 million penalty amount and while Trader Joe's contested the calculation, it also stated it would not argue inability to pay penalties.

The penalty amount was calculated after Trader Joe's identified 43,479 employees who worked during the relevant period, covering 2,543,299 pay periods, and that was multiplied by the PAGA standard penalty of $100 per aggrieved employee per pay period.

Greenberg wrote that the potential penalty of $254 million was excessive because the violation did not result in wage losses and stated that Trader Joe's employees spent about 1/8th of an eight-hour shift per pay period on cashiering or demonstration duties, letting that fraction be reflected in the final penalty amount.

Under PAGA, 75%, or $22.5 million of the penalty was awarded to the state's Labor Workforce Development Agency and the remaining 25% to the aggrieved employees.

Trader Joe's asserted its business reasons for not providing the seats: It would lower revenue, reduce customer frequency or spending and would interfere with stocking of merchandise.

But according to Greenberg, in discovery and trial Trader Joe's failed to provide any documents or evidence to support those claims.

Greenberg wrote that her interpretation of seat requirements was guided by the California Supreme Court case Kilby v. CVS Pharmacy, Inc., which established that courts must objectively determine if the nature of the work permits sitting and that "'business judgment' does not extend to include 'an employer's mere preference that particular tasks be performed while standing.'"