WASHINGTON — The U.S. Supreme Court on Monday declined to hear an appeal by Wal-Mart Stores Inc. challenging a $188 million class-action judgment in favor of tens of thousands of employees who said they were forced by the retailer to work off-the-clock through paid rest breaks at several stores in Pennsylvania.
The high court’s rejection of Wal-Mart’s petition for writ of certiorari means an estimated 187,000 current and former Wal-Mart and Sam’s Club employees in Pennsylvania will be awarded a monetary judgment to be determined by the trial court.
It is the second time in a month the Supreme Court has rejected an appeal from Wal-Mart and comes at a time when the court is operating with a vacancy left by the unexpected death of Supreme Court Justice Antonin Scalia, a conservative stalwart of the court’s 5-4 majority that often sided with businesses. Scalia wrote the majority opinion in favor of Wal-Mart in 2011 in the Wal-Mart Stores Inc. vs. Dukes gender discrimination case.
The new case. Wal-Mart Stores Inc., vs. Michelle Braun et al, stemmed from separate lawsuits filed by two Wal-Mart employees, Braun and Dolores Hummel in 2002 and 2004, respectively. They charged the retailer with breach of contract and claimed Wal-Mart owed them money for thousands of hours of work they performed off the clock, beginning in 1998. The case was later certified as a class action. It went to jury trial and a jury returned a verdict against Wal-Mart in 2006.
In June 2011, the Pennsylvania Superior Court of Appeals reversed the portion of the trial court’s ruling dealing with the award of attorneys’ fees, but otherwise affirmed the rest of the judgment. Wal-Mart appealed that decision to the Pennsylvania Supreme Court, which affirmed the Superior Court’s decision and monetary judgment against Wal-Mart in 2014.
Wal-Mart appealed to the U.S. Supreme Court in March 2015.
In its petition, the retailer argued that it was denied due process during the jury trial and by the Pennsylvania state courts because a “Trial by Formula” was used in which “evidence pertaining only to a subset of class members is extrapolated to resolve the claims of the entire class without ‘further individualized proceedings.’”
The company said that process precluded it from litigation of “defenses to individual claims.”
“The Pennsylvania courts concluded that the class-wide judgment could be sustained on the basis of testimony from an expert who used data about employee breaks from 1998 to 2001 to estimate the number of breaks that class members missed in the ensuing five-year period [for which there was no data],” Wal-Mart argued.
The company further asserted that the state courts deprived it of the right to “rebut the evidence through an individualized showing that a particular break was not in fact missed or was missed as a result of a voluntary decision by that employee to work through the paid break.”
But attorneys representing the class of workers countered in their opposition brief to the court that Wal-Mart “mischaracterized” the nature of the class action.
“As the Pennsylvania Supreme Court held, there was no ‘trial by formula’ but instead a trial by exactingly maintained business records that were used to determine employee hours worked and paychecks and taxes owed,” the attorneys argued.
The attorneys for the workers also alleged that Wal-Mart stopped keeping records of employee breaks after it had been sued in eight other states for wage-payment violations.
“The trial court instructed the jury that it may take an adverse inference from Wal-Mart’s failure to keep records during that period and could utilize expert testimony to reach a verdict,” the workers’ attorneys stated in their brief. They added that the expert testimony extrapolated “missed breaks and the wages owed from the years of existing records.”
“The result of the [Supreme Court] decision allows the workers to collect on the class action they had successfully litigated in the Pennsylvania courts,” said Robert S. Peck, an attorney with the Center for Constitutional Litigation P.C. who helped file the brief on behalf of the workers. “Under the contract they had with Wal-Mart, they were guaranteed that they would be paid for 15-minute rest periods — one in the morning and one in the afternoon — as well as lunch breaks,” he said. “The employee manual bragged about the fact that they could get paid rest breaks” but often they were asked to work through the break, he asserted.
Judith Spanier, another attorney for the workers with Abbey Spanier LLP, said: “The interest of these workers has been protected and they finally — after an extremely long time [14 years] — are getting what they are entitled to under the law. Without class actions they would not get anything.”
Wal-Mart said: “We are disappointed the Supreme Court decided not to review our case. While we continue to believe these claims should not be bundled together in a class-action lawsuit, we respect the court’s decision. We will now determine how we move forward in the trial court.”
“Most of these claims are over 10 years old. Wal-Mart has had strong policies in place to make sure all associates receive their appropriate pay and break periods,” the retailer added. “We have taken additional steps over the last decade, including enhancing our time-keeping systems and additional training, to make sure all our associates understand the importance of those policies and comply with them.”