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Judge Upholds $185 Million Award in Wal-Mart Class Action

A Philadelphia judge has affirmed a $185 million award against retail titan Wal-Mart in a class action alleging underpayment of Wal-Mart employees as part of an opinion written for an appeal now pending with the Pennsylvania Superior Court.

Common Pleas Judge Mark I. Bernstein's opinion under Pennsylvania Rule of Appellate Procedure 1925(a) said the appeals court should affirm a jury verdict finding over 186,000 current and former Pennsylvania Wal-Mart employees were not properly compensated for off-the-clock work and missed rest breaks between March 19, 1998, and May 1, 2006.

The jury found that Wal-Mart employees were owed $1,462,910.35 in damages for off-the-clock work and $27,715,964 for rest break violations between March 19, 1998, and Dec. 31, 2001, and $1,031,430 for off-the-clock work and $48,258,111 for rest break violations between Jan. 1, 2002, and May 1, 2006, Bernstein wrote in his opinion from Wednesday.

Bernstein also said that the Superior Court should affirm his judgment that Wal-Mart should pay $62.2 million in statutory liquidated damages, $10.2 million in prejudgment interest, $33.8 million in statutory attorney fees and $11.9 million in nonstatutory attorney fees.

The total judgment against Wal-Mart now stands at $187,648,589.11.

The class action trial in Braun v. Wal-Mart and Hummel v. Wal-Mart was held in September 2006.

Wal-Mart argued in its post-verdict motions that rest breaks and lunch breaks are not fringe benefits, that the two class actions shouldn't have been certified and that Philadelphia wasn't the proper venue for the class action, among other arguments, Bernstein wrote.

Wal-Mart argued that Bernstein improperly denied its motion in limine to preclude the plaintiffs' argument that the evidence that Wal-Mart ceased record-keeping of employee break periods potentially was evidence of an improper action, Bernstein said.

But Bernstein rejected that argument, saying the trial evidence showed that Wal-Mart corporate leaders ceased all record-keeping of employees' rest break periods after numerous lawsuits over the missed rest breaks were filed. Bernstein said the jury was entitled to infer that Wal-Mart changed its policy to ensure that there were no records of missed rest breaks.

"The class action case claimed that national policy was to stop employees from using their promised and earned break and lunch time," Bernstein wrote. "A company internal national review, the Shipley Audit, demonstrated this national problem ... The corporate decision to stop recording the start and end times of breaks without offering any explanation other than in reaction to class action litigation and bad publicity concerning this policy, and the trial stipulations entered into by defendant concerning national litigation, further demonstrate that there was no error in admission or reference to national policy and conduct."

In general, Bernstein said the defense "purports to raise hundreds of points of error in the twenty-six paragraphs in their motion for post-trial relief," but he said the points were "excruciatingly repetitive" and didn't all need to be addressed individually in his 1925(a) opinion.

Bernstein defended his evidentiary rulings, saying he believes those rulings did not "adversely affect the verdict which was overwhelmingly supported by factual first hand testimony, augmented by proper expert opinions and the defendant's own records and analysis."

Bernstein also noted Wal-Mart didn't present any evidence contesting the accuracy of its employee payroll records and instead argued that its employees voluntarily renounced their breaks; the jury, the judge noted, however, found in favor of the plaintiff class.

Bernstein also said Wal-Mart's argument that the jury should have been asked if rest breaks and meal breaks were fringe benefits was only raised post-verdict; in fact, he said, Wal-Mart's counsel had taken the opposite tack prior to trial.

The jury awarded $78.5 million in compensatory damages to 186,000 current and former Wal-Mart associates. A total of 124,506 current and former Pennsylvania employees also qualified for the $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.

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 in a past opinion.

Lead class counsel Michael Donovan of Donovan Searles said of Bernstein's decision: "We're pleased with Judge Bernstein's cogent explanation as to why he rejected the frivolous post-trial claims of Wal-Mart."

He said he's anxious to get Wal-Mart employees the compensation that they're owed.

Daphne Moore, a Wal-Mart spokeswoman, said it is Wal-Mart policy to pay every associate for all the time they work, and that managers who violate the policy face discipline, including termination.

Moore also said that associates testified during the trial that they voluntarily skipped or cut short their breaks, and an employer shouldn't be penalized for a choice made freely by employees.

Moore said other courts have denied class certification for similar class actions because it is erroneous to base a class action suit on individual circumstances.