Pa.: Wal-Mart Class Action Judgment Not ‘Trial by Formula’

By Rosemarie Lally Jan 20, 2015
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Noting that Wal-Mart’s liability to an entire class of employees for breach of contract and wage violations was established through presentation of Wal-Mart’s own wage policies as well as its business records and internal audits, the Pennsylvania Supreme Court determined that this was not a “trial by formula.”

Class action claims were brought by a group of current and former employees against Wal-Mart Stores Inc., and Sam’s Club (collectively, “Wal-Mart”) based on policies and conduct related to rest breaks and meal breaks. A class consisting of “all current and former hourly employees of Wal-Mart” in Pennsylvania from March 19, 1998 to Dec. 27, 2005, was certified by the trial court; ultimately it consisted of 187,979 members. The class members alleged systemic wage violations, specifically that Wal-Mart had promised them paid rest and meal breaks but then had forced them to work through their breaks and also to work “off-the-clock.”

A jury trial resulted in a win for Wal-Mart on all claims relating to meal breaks and a finding for the class members on the claims based on disallowed rest breaks and off-the-clock work. A judgment of nearly $1.88 billion was entered on the verdict. Wal-Mart appealed and the Superior Court affirmed in part and reversed in part. Its decision corrected a mathematical error made by the trial court, reversed the award of attorneys’ fees, and remanded the case for recalculation of the lodestar the trial court had used to determine the amount of attorneys’ fees.

On review by the Pennsylvania Supreme Court, Wal-Mart asserted that the trial court’s class certification, the jury verdict,andtheSuperiorCourtaffirmanceallimproperlyreliedupon“shamstatisticsandbaselessextrapolations” of expert witnessesregardingWal-Mart’s time clock and cash register records.

The issues Wal-Mart presented on appeal were: (1) whether Wal-Mart was subjected to a “trial by formula” that denied its right to due process in violation of Pennsylvania law; and (2) whether the class members were improperly relieved of their burden to produce class-wide common evidence on key elements of their claims.

“The evidence of Wal-Mart’s liability to the entire class for breach of contract and [state wage violations] was established at trial by presentation of Wal-Mart’s own universal employment and wage policies, as well as its own business records and internal audits,” the Supreme Court found. These records were sufficient to support the factfinder’s determination that there was an extensive pattern of discrepancies between the number and duration of breaks earned and the number and duration of breaks taken.

The court also noted that damages were assessed based on a computation of the average rate of an employee’s pay – about eight dollars per hour – multiplied by the number of hours for which pay should have been received but was not. “In our view, this was not a case of “trial by formula” or of a class action “run amok,” the court concluded, affirming the Superior Court’s judgment.

Hummel v. Wal-Mart Stores, Inc., Pa. Sup. Ct., No. 32 EAP 2012 (Dec. 15, 2014).

Rosemarie Lally, J.D., is a freelance legal writer and editor based in Washington, D.C.

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