• Braun v. Wal-Mart Stores, Inc: Opening the Door to Class Actions?
  • February 6, 2015 | Authors: Thomas W. Curvin; Patricia A. Gorham; Allegra J. Lawrence-Hardy; Phillip E. Stano
  • Law Firms: Sutherland Asbill & Brennan LLP - Atlanta Office ; Sutherland Asbill & Brennan LLP - Washington Office ; Sutherland Asbill & Brennan LLP - Atlanta Office ; Sutherland Asbill & Brennan LLP - Washington Office
  • In Braun v. Wal-Mart Stores, Inc.,1 the Pennsylvania Supreme Court upheld a $187 million jury verdict in favor of class action plaintiffs. The rationale of the ruling raises the concern that Pennsylvania state courts may become a favored destination for forum shopping class action plaintiffs.

    In Braun, former Sam’s Club and Wal-Mart employees brought several class action claims against Wal-Mart related to its meal and rest breaks. The class consisted of all “current and former hourly employees” in Pennsylvania. The class members asserted that they were promised paid meal and rest breaks per company policies but that Wal-Mart forced employees to work through or miss their earned breaks and also to work “off-the-clock.” The case was filed in Pennsylvania state court prior to the effective date of the Class Action Fairness Act of 2005, so CAFA removal was not an option. The trial court certified the class, which consisted of 187,979 members. After a six-week trial, the jury returned a $187,648,589 verdict in favor of the class on claims relating to rest breaks and off-the-clock work, but found in Wal-Mart’s favor on the meal-breaks claim.

    The appellate court reversed and affirmed in part. Wal-Mart then requested discretionary review from the Pennsylvania Supreme Court on the specific issue of whether Wal-Mart was subjected to a “trial by formula,” where the class was “relieved of” its burden “to produce common evidence on key elements of their claims.” Wal-Mart asserted that the trial court should have never certified the class because the employees did not present class-wide common evidence of their claims. Additionally, Wal-Mart argued that the class certification, jury verdict, and the previous appeal all relied on “sham statistics and baseless extrapolations” regarding time clock and cash register records. In sum, Wal-Mart claimed that the class was overbroad and that the appellee-class members had failed to show sufficient proof of Wal-Mart’s liability to each purported class member, resulting in a denial of due process under Pennsylvania law.

    In addressing Wal-Mart’s arguments, the court explained that due process requires an opportunity to confront and cross-examine adverse witnesses. Whether due process was denied involves looking at the trial as a whole, the complexity and length of the litigation, the quality of the evidence, and the difficulty of the fact finder’s task. Additionally, the court cited to Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), in determining whether a “trial by formula” took place. Dukes involved a “trial by formula” plan whereby a sample of class members’ claims could be tried; if the claims were meritorious, damages were to be extrapolated to the broader class recovery to avoid further individualized proceedings. The Pennsylvania court distinguished Dukes on the grounds that there had been no “trial by formula” because there had been no initial adjudication of Wal-Mart’s liability to a subset of employees that would then be extrapolated.

    Instead, the court concluded that Wal-Mart’s liability to the entire class, and not just a subset, had been established at trial. The plaintiffs presented expert and lay testimony analyzing hours worked, wages paid, breaks taken, and testimony that current and former employees were forced to work without breaks because stores were under-staffed. The employees also offered evidence of an internal audit conducted by Wal-Mart, which was national in scope and included an examination of time clock and cashier log-in records. Lastly, the employees presented evidence of Wal-Mart’s liability to the entire class through Wal-Mart’s employment and wage policies. Wal-Mart presented testimony of current and former employees who testified that they had never been forced to miss a rest break and were compensated for all of their breaks.

    The Pennsylvania court found that this evidence was “sufficient to support the fact finder’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.” In rejecting Wal-Mart’s due process claim, the court found that both parties had ample opportunity to present evidence, and that the class had presented sufficient evidence to prove commonality.

    Finally, the court addressed whether the calculation of damages was proper. Relying on Comcast v. Behrend, 133 S. Ct. 1426 (2013), the court stated that damages need not be exact and that extrapolation was proper. Nonetheless, the class offered data and analysis from Wal-Mart’s own business records to support its claim of damages related to wage and hour violations. Ultimately, the court disagreed with Wal-Mart’s argument that the determination of damages would only be proper on an individual basis and that “across-the-board” tabulation would violate due process.

    While Dukes and Comcast support more rigorous standards for class certification at the federal level, Braun suggests that Pennsylvania courts may permit certification based on aggregated proof. Braun suggests that the commonality requirement may be satisfied by the broad application of corporate policies to class members. Even more troubling may be the implication that damages may be extrapolated across an enormous class. At this time, it is unknown if Wal-Mart may seek certiorari to the United States Supreme Court. If this decision stands, however, it may encourage class action filings in Pennsylvania state courts.

    1 32 EAP 2012 (Dec. 15, 2014).