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Court Orders Wal-Mart to Pay $62.3 Million in Additional Damages

A Philadelphia judge has awarded an additional $62 million in statutory liquidated damages to 124,506 current and former Pennsylvania employees of retail titan Wal-Mart who a Philadelphia jury found were not properly compensated for off-the-clock work and missed rest breaks.

Philadelphia Common Pleas Court Judge Mark I. Bernstein, who presided over the 2006 trial in Hummel v. Wal-Mart and Braun v. Wal-Mart, yesterday awarded $62,253,000 to the plaintiffs who worked after Jan. 1, 2002.

The 12-member jury last year awarded $78.5 million in compensatory damages to 186,000 current and former employees of the retailer. The rest of the class did not qualify for statutory damages because of the time frame in which they worked.

Attorneys for the plaintiff class said last year they hoped Bernstein would award $62 million in addition to the jury award based upon a calculation that each plaintiff was entitled to $500.

Bernstein's decision said that Pennsylvania's wage payment and collection law (WPCL) can require employers who fail to pay wages - and have no good faith reason to withhold payment - to pay, whichever is greater, liquidated damages of $500 or up to 25 percent of the total amount of wages due.

"By this statue the Legislature created significant financial incentives for employers to pay workers all the money they've earned by their hard work," Bernstein wrote. "Reasonably the Legislature exempted an employer who had a 'good faith' dispute about what was actually owed. In this class action, by the special verdict, the jury found that the defendant required its employees to work without pay by directing them not to record their hours on Wal-Mart's computerized pay system."

Bernstein cited findings from U.S. Eastern District Court for Pennsylvania, Pennsylvania Supreme Court and Pennsylvania Superior Court cases that executives were entitled to liquidated damages when they were not paid their fringe benefits in addition to their base salaries.

"The law in its majesty applies equally to highly paid executives and minimum-wage clerks," Bernstein said. "Just as highly paid executives' promised equity interests, or put options or percentage of sale proceeds are protected fringe benefits and wage supplements, so too the monetary equivalents of 'paid break' time cashiers and other employees were prohibited from taking are protected fringe benefits and wage supplements.

"Even more clearly, the wages which were withheld because employees were forced to work 'off the clock' are subject to mandatory liquidated damages. Clearly the WPCL liquidated damages provision applies to the verdict in this case."

"I think the opinion delivers a well-earned corporate spanking to an employer that abused its employees," lead class counsel Michael Donovan of Donovan Searles said of Bernstein's decision yesterday.

Wal-Mart spokeswoman Sharon Weber repeated Wal-Mart's argument that many employees voluntarily skipped their breaks, that it is company policy to give every employee the rest breaks they are due and that it was erroneous to base a class action suit on individual circumstances.

"While Wal-Mart respects the court and the jury, we strongly disagree with the decision against the company in this case," Weber said. "It is our policy to pay every associate for every hour worked. Every manager that violates that policy is subject to discipline up to and including termination. . . . Many employees testified they skipped or cut short their rest breaks by their own choice. While we discourage that practice, an employer should not be penalized when an employee does this on their own.

"A great majority of courts across the nation have ruled that cases like this are not properly suited or treated as class actions because every individual's circumstances are unique, that the experiences of two or three people cannot be extrapolated to tens of thousands of others," Weber said.

After the trial last year, the jury found that Wal-Mart failed to pay its employees for time they worked off the clock or for their missed rest breaks. But the jury did not find that class representatives were not paid for meal breaks they said they also had commonly missed.

The jury found Wal-Mart saved $1,031,430 by not paying their employees for the time they worked off the clock, and Wal-Mart saved $48,258,111 by prohibiting their employees from taking promised rest breaks, Bernstein said.

Wal-Mart argued that the jury verdict did not qualify for WPCL damages because paid rest breaks are not compensation and because the employees were paid some of what they were owed, but Wal-Mart's associate benefit book said that other programs and benefits supplement pay for a regular day's work, Bernstein said.

Bernstein also said that Wal-Mart's attorneys were "disingenuous" in a post-trial motion argument that the question of liquidated damages should have been presented to the jury. The judge noted that Wal-Mart moved in a pre-trial motion in limine to preserve the question of liquidated damages solely to Bernstein's purview.

Bernstein also noted that Wal-Mart argued in post-trial motion oral arguments that no class member exists, even going so far as to deny that Dolores Hummel was entitled to recover damages. But Bernstein said Wal-Mart never presented any evidence to challenge the payroll records based upon which the jury verdict was rendered.

Two motions are still awaiting Bernstein's decision, Donovan said: a motion over awarding interest on the pay owed to employees who worked in the pre-statuary period between 1998 and 2002, and a motion over whether Wal-Mart should pay plaintiffs' attorney fees.

Donovan estimated that the plaintiffs have $48 million in attorney fees and costs.

Wal-Mart's Weber said the company would not discuss the case's progression until the case is finalized.
After last year's verdict, Wal-Mart's lead counsel Neal Manne of Susman Godfrey in Houston said Wal-Mart would seek all available appellate options.

Similar cases to the Philadelphia case are pending in the rest of the country. The New Jersey Supreme Court certified in May a class of 72,000 hourly Wal-Mart current and ex-workers who suing over the same issues as in the Hummel and Braun cases. A trial over similar grievances by 56,000 current and former Wal-Mart employees is under way in Dakota County, Minn.