Wal-Mart challenges inadequate break allegations

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The state Supreme Court has agreed to hear an appeal on whether a $187.6 million class-action award against retail titan Wal-Mart over allegations that its Pennsylvania employees were not properly compensated for off-the-clock work and missed rest breaks violated Pennsylvania law.

The court granted allocatur on "whether, in a purported class-action tried to verdict, it violates Pennsylvania law [to] subject Wal-Mart to a 'trial by formula' that relieves plaintiffs of their burden to produce classwide 'common' evidence on key elements of their claims."

In other words, Wal-Mart believes that only certain plaintiffs had evidence showing that the company violated their workplace rights.

The class-action award in Braun v. Wal-Mart Stores and Hummel v. Wal-Mart Stores is the largest class action verdict in Pennsylvania history.

Last year, the state Superior Court upheld the class-action award, while determining that attorney fees needed to be recalculated.

While Wal-Mart argued in the Superior Court that the proof offered by the class only showed individual proof, not classwide proof, the intermediate appellate court said the commonality of the class was demonstrated through Wal-Mart's own business records to show that class members missed breaks, had too few breaks or had their breaks truncated.

Wal-Mart had argued that individual employees would have to be questioned to determine if they were all forced by managers to work through their breaks, or cut them short.

David Tovar, vice president of corporate communications for Wal-Mart, said in an emailed statement: "We are pleased the Pennsylvania Supreme Court has agreed to review the merits of the case. This case was filed more than 10 years ago and the allegations are not representative of our company."

"Our policy is to pay associates for every hour worked and to provide rest and meal breaks. This is a commitment we make to the more than 1.4 million associates who choose to work for Walmart and serve our customers and members every day. We have worked hard to have the right communication, processes and systems in place to help us live up to this commitment."

The plaintiffs' counsel, Michael D. Donovan of Philadelphia's Donovan Searles, said the Supreme Court rephrased the question posed by Wal-Mart to carve out federal due process issues, which would mean that no matter how the Pennsylvania justices decide the case, the U.S. Supreme Court could not reach the decision under the "independent and adequate state grounds doctrine."

That doctrine says the U.S. Supreme Court will not review -- and does not have jurisdiction over -- a lower, state supreme court decision if the state ground is adequate to support the judgment, and independent of federal law.

Mr. Donovan said that there was not a trial by formula, because all the proof was based on Wal-Mart's own records.

The case was unlike Dukes v. Wal-Mart Stores, in which the U.S. Supreme Court said there was not enough commonality regarding the class, Mr. Donovan said.

"In contrast to Dukes, where you're going to be looking at ... the percentage of women promoted and women who were hired and whether there was gender discrimination based on that, here the proof that people were shorted breaks and worked off-the-clock was based on Wal-Mart's own payroll records," Mr. Donovan said.

He also said he will argue that Pennsylvania's labor statutes "expressly contemplate aggregate class actions," and that there were two sets of evidentiary, class certification hearings in which the trial court certified the business records used at trial.

The Supreme Court denied allocatur on the issue of $62.3 million in statutory damages levied under the state's wage payment and collection law, which penalizes employers who fail to pay wages by requiring them to pay liquidated damages of $500 or up to 25 percent of the total amount of wages due.

In another development in class actions in Pennsylvania, the U.S. Supreme Court denied a petition for certiorari to reconsider the state Supreme Court's decision to uphold a class-action verdict awarding $5.6 million to owners of Kia sedans with faulty braking systems.

The state Supreme Court voted 6-1 in favor of upholding the verdict. In an issue of first impression, the court said it was deciding on narrow grounds that testimony in Samuel-Bassett v. Kia Motors America about aggregate damages was "probative to calculate the amount of damages" in the case.

But the state court emphasized in a footnote because of "the narrow nature of our holding in this regard, [we need not express] a definitive view on the question of whether proving damages in the aggregate in a class action is 'lawful and proper' in Pennsylvania, and of whether the methodology [in] estimating individual damages was sound."

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Amaris Elliott-Engel: aelliott-engel@alm.com or 215-557-2354. To read more articles like this, visit www.thelegalintelligencer.com.


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