Wal-Mart Willfully Violated Minnesota Labor Laws Entitling Members Covered by Class Action Lawsuit to Millions in Damages and Potentially Billions in Civil Penalties Minnesota Trial Court Holds
Plaintiffs filed a labor law class action against Wal-Mart in Minnesota state court alleging that it required them to work “off the clock” without pay and deprived them of meal and rest breaks, that it violated Minnesota’s Fair Labor Standards Act (MFLSA), and that it failed to maintain accurate time records. Braun v. Wal-Mart, Inc., Case No. 19-CO-01-9790 (Minn. Dakota County, June 30, 2008) [Slip Opn., at 1-2 and 6-7]. The class action sought various relief including civil penalties, liquidated damages, and injunctive relief, id., at 2. The class action complaint alleged further that Wal-Mart’s conduct was “willful” so as to fall within the longer three-year statute of limitations period under Minn. Stat. § 541.07(5), id. The scope of the class action included claims against Sam’s Club, id., at 3 n.1. The trial court certified the litigation as a class action, id., at 7, and the matter proceeded to a bifurcated bench trial, id., at 2. At the liability phase, the trial court limited each side to 60 witnesses and 100 hours of testimony. Id., at 2. The trial court heard about 160 hours of testimony from more than 90 witnesses, and received into evidence almost 1200 exhibits. Id. Forty (40) of the witnesses were Wal-Mart hourly employees, id., at 7. The court then issued a 151-page opinion ruling against Wal-Mart in the class action.
In part, defense attorneys argued that class action treatment was inappropriate because “each individual’s experience is so intrinsically unique that each individual should have to testify about their experience.” Braun, at 11. The trial court found, however, that “[s]ome general patterns and some shared experiences emerged from the testimony at trial” such that it could “decide the factual and legal issues in dispute on a class-wide basis.” Id. In part, the court found that Wal-Mart “should have been on notice of that there was a potential widespread problem of missed rest and meal breaks.” Id., at 18. This problem appears to have been caused by understaffing, and while employee contemporaneous complaints that there were too few employees was not alone sufficient to establish chronic understaffing, see id., at 16-17, an internal audit that revealed tens of thousands of missed meal and rest breaks attributed the problem to “staffing and scheduling not being prepared appropriately,” see id., at 19. The understaffing was particularly problematic in light of Wal-Mart’s written policy to avoid overtime. See id., at 27-29. The trial court found that Wal-Mart “ignored” the internal audits, id., at 20. Subsequent audits revealed that “in November 2003, every audited store in Minnesota scored ‘unsatisfactory’ for the portion of the audit dealing with rest and meal break compliance.” Id., at 21. Moreover, nationally “rest and meal break compliance was the item most frequently rated as ‘unsatisfactory.’” Id., at 22. The court rejected defense efforts to attack the reliability of these audits. Importantly, the court also found that Wal-Mart’s decision to terminate the practice of employee swiping in and out for breaks was directly tied to the problems identified by the audits: “Wal-Mart chose to stop requiring associates to clock in and out for rest breaks, at least in part, to avoid creating what might be construed or used, whether fairly or not, as evidence of missed breaks in litigation.” Id., at 24. The court additionally found that “payroll pressure” contributed to this problem, id., at 25-27.
The court rejected class action plaintiffs’ claim that employees failed to take meal or rest breaks based on the “Time Clock Archive Report” (TCAR) records, because the court found that the evidence showed Wal-Mart employees did not regularly clock in or out of breaks thus rendering the TCAR records unreliable. See Braun, at 32-37. The class action plaintiffs also argued that Wal-Mart’s “corporate culture” was to blame for the labor law violations, a claim the trial court rejected. See id., at 31. The court did find, however, that Wal-Mart’s failure to make employee compliance with labor laws “a meaningful factor in supervisor and management evaluations did play a significant role” (italics in original), and that violations most likely would have been “significantly reduced” if “compliance had been a major factor in evaluations.” Id. In a similar vein, the trial court found that “if Wal-Mart had been more vigilant about identifying and investigating instances of off-the-clock work in its stores” then “it likely would have found additional violations.” Id., at 101-02.
In the end, the trial court found “Wal-Mart recklessly and therefore willfully deducted rest break time from class members’ pay in violation of Minnesota law.” Braun, at 105. But while there was evidence certain managers “inserted” breaks into employee time records, without the employees’ knowledge or consent, the court did not find that this occurred on a class-wide basis because it was not Wal-Mart policy that managers do this. Id., at 106.
We do not further discuss the court’s factual findings, which continue through page 115 of the order. Nor do we detail the court’s conclusions of law, which may be found at pages 115 through 146 of the order. We do note, however, that the court found insufficient evidence that Wal-Mart denied employees meal breaks on a class-wide basis because Minnesota law does not require a fixed amount of time for such breaks but, rather, simply “a sufficient amount of time to eat a meal.” Braun, at 137. We further note that the court found Wal-Mart committed more than 1.5 million violations of Minnesota’s law prohibiting employers from deducting rest breaks from total hours worked, resulting in an award of $660,000 for this violation, plus exposure to a civil penalty of upwards of $1000 per violation. See id., at 141. Combined with its exposure for other civil penalties, such as $1000 for each of the 325,000 shifts for which Wal-Mart failed to maintain time records, see id., at 145, the trial court order reflects a maximum damage award of approximately $2 billion. A concise summary of the trial court’s order ruling is set forth at pages 146 through 150 of the order.
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