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Big Business’ View of Walmart’s “Due Process” Rights (or, What the US Supreme Court Said “No” To)

April 4, 2016

In December 2014, the Pennsylvania Supreme Court found in favor of Walmart employees in a class-action lawsuit on behalf of approximately 189,000 Walmart workers employed between 1998 and 2006. The issue at hand was whether Walmart violated its own employee handbook by requiring workers to work during meal breaks and rest breaks. As Reuters reported in December 2014:

Dec 16 Wal-Mart Stores Inc said the Pennsylvania Supreme Court had ordered it to pay about $188 million to settle a class-action lawsuit filed by employees who claimed their meal and rest breaks were regularly cut.

Wal-Mart said the ruling, which it may appeal, would reduce its fourth-quarter earnings from continuing operations by about 6 cents per share. (Read about that here.)

The suit, filed in March 2002, represented about 187,000 Wal-Mart employees who worked in Pennsylvania between 1998 and 2006. (Reporting by Shailaja Sharma in Bangalore; Editing by Saumyadeb Chakrabarty)

In fact, Walmart (through a third party) did appeal to the US Supreme Court. Below are excerpts from its Amicus brief. (Actually, the Chamber of Commerce and Business Roundtable filed this Amicus on behalf of Walmart. That is how Amicus works.) In short, petitioners filing on behalf of Walmart believe Walmart’s due process rights have been violated because the Pennsylvania court found in favor of plaintiffs in class-action format. From the brief:

The question presented is:

Whether the Due Process Clause of the Fourteenth Amendment prohibits a state court from certifying a class action, and entering a monetary judgment in favor of the class, where the court permits the use of extrapolation to relieve individual class members of their burden of proof and forecloses the defendants from presenting individualized defenses to class members’ claims.

In other words, Walmart wanted the Supreme Court to render a judgment in favor of having each individual Walmart employee present his/her own case of rest/lunch break violations in place of the state court deciding that on the basis of a number of situations in which Walmart exploited employees by violating its own employee handbook it likely did so to most employees. (Let’s just recognize that Walmart is behind this Amicus brief.)

The brief continues (abbreviated for ease of reading):

The Pennsylvania trial court in this wage-and-hour case certified a class consisting of “all current and former hourly employees of Wal-Mart in the Commonwealth of Pennsylvania from March 19, 1998 to the present December 27, 2005.” … Ultimately, the class consisted of 187,979 members employed by 139 stores. …

During the trial, plaintiffs offered anecdotal evidence from six employees asserting they had been forced to skip rest breaks or work off-the-clock. … Plaintiffs also presented expert testimony based on a review of time-clock and cash-register records for sixteen stores over a four-year period. … Based on this anecdotal evidence and the review of records for only about 10 percent of Wal-Mart’s stores in Pennsylvania, plaintiffs’ experts were permitted to hypothesize that (i) Wal-Mart engaged in a pattern and practice of forcing employees to work off-the-clock and forego breaks; (ii) this pattern and practice persisted over an eight-year period—including four years when employees were not required to clock-out for breaks or lunch; (iii) all workers at some point either missed a rest break or worked off-the-clock; and (iv) the class of workers collectively suffered tens of millions of dollars in damages in the form of unpaid wages as a result. …

The trial court certified the class, and a divided jury found in plaintiffs’ favor on their state-law wageand-hour claims. … Ultimately, the amount of the judgment entered on the verdict was $187,648,589. … Between the fees included in that amount and a subsequent award, plaintiffs were awarded over $45 million in attorneys’ fees alone. ….

In pertinent part, the intermediate appellate court affirmed, as did the state supreme court. … The Pennsylvania Supreme Court sought to distinguish the proceedings in this case from the “Trial by Formula” disapproved by this Court in Dukes on the basis that the evidence presented in the former related to damages, whereas the evidence presented in the latter related to liability. … The court concluded that both parties had opportunities to explain discrepancies in the evidence presented; therefore in the court’s view Wal-Mart was not denied due process. …

Review is further warranted because this case presents a rare opportunity for this Court to address the extraordinarily important issue of the procedural fairness guaranteed by federal due process in state court class actions. …

This case is one of the rare state-court class actions actually to proceed to trial. It therefore offers the Court an ideal vehicle for confirming that due process does not permit trial by formula either in federal or state court, but requires affording class-action defendants a meaningful opportunity to be heard and to present every available defense. For those reasons, the petition should be granted and the judgment should be reversed.

As the Amicus brief continues, Walmart’s petitioners try to play off wanting the mega-corp’s own due process as also serving the rights of the individuals (if allowed to present their own situations before the court as opposed to being awarded in class-action fashion):

…The Pennsylvania courts permitted evidence of statistically determined “average” circumstances to replace evidence relevant to “each,” in violation of due process. “Each” simply is not the same as “on average,” and class certification does not transmogrify one into the other. Class certification within a system of civil procedural rules achieves joinder of individual persons and entities and the claims brought by or against them. It does not substantively create a new juridical person. That class members become “parties” in the sense that their claims are brought into litigation does not, to be sure, necessarily make them “parties” for all purposes within any civil rule system. But as relevant here, class members (plaintiffs or defendants) are “parties” for purposes of the property interests protected by the Due Process Clause because they are bound as individuals by the final judgment. … What is more, as to each plaintiff proceeding against it, a defendant is entitled to a meaningful opportunity to be heard.

However, the bottom line is the usual business “bottom line”– which can only benefit if each and every Walmart employee is required to present his or her own situation regarding lunch and rest breaks before the court:

More specifically, the fundamental fairness rooted in the notion of procedural due process dictates that when a single trial is conducted on multiple claims, a defendant must be allowed to defend every claim. The trial-by-formula approach adopted by the courts below, however, deprived Wal-Mart of its right to show that individual plaintiffs were not harmed (among other things). The hypothesis that the amount determined to be due employees as a result of this trial by formula might coincidentally approximate the amount that would have resulted from proper procedures does not diminish the due process problem. Just as there is no way of knowing whether a valid defense might have prevailed if defendant had been allowed the opportunity to present it, there is no way of knowing what would have happened if Wal-Mart had been given the opportunity to defend each claim. But the risk of erroneous deprivation is indisputable—and that is what counts for due-process purposes. ….

Here, the risk is enormous—where anecdotal testimony of injury by only 6 individuals was extrapolated to an entire class of nearly 188,000 individuals, based solely on evidence of a “pattern of discrepancies” that was in turn derived from the records of only 16 of 139 stores for only 4 of 8 years. And the trial court abdicated its responsibility to reduce the risk of erroneous deprivation by failing to address the individualized factual issues, and proceeding based on the purported statistical significance of the extrapolation methodology. …

Think about what Walmart’s comrades in big business are trying to argue: “Only” 16 Walmart stores showed discrepancies in records– discrepancies that caught the Pennsylvania courts’ attention. In truth, Walmart should have had some sort of quality control in place to make sure that none of its stores had recorded “discrepancies” that could serve as evidence of worker exploitation.  The chain apparently did not, which in itself supports the argument for sloppy/negligent management.

And exploiting employee rights should not have happened in any year; so, to argue that it only happened in four of eight years goes nowhere with those who expect the billionaire employer to treat its low-wage employees far better.

The Amicus brief ends with this flourish (imagine an American flag waving in the wind, not for the individuals Walmart exploited, but for the *rights of big business*):

There is no need to wait to resolve that issue. Indeed, given the pressure on class-action defendants to settle even meritless claims, the vast majority of them settle—so this case presents the Court with a rare opportunity to address the issue. Percolation is not needed. There will be no better time than the present for this Court to provide much-needed guidance to the state and federal courts on the limits of what due process can tolerate with regard to the rights of defendants in class actions to have a meaningful opportunity to be heard and to present every available defense. Streamlining litigation cannot be allowed to abrogate litigants’ essential rights.

And to the above, on April 04, 2016, the US Supreme Court told Walmart (and its big business petitioners) no.

 

frowny face

_____________________________________________________________

Coming June 2016 from TC Press:

 

school choice cover  (Click image to enlarge)

Stay tuned.

 

***

Schneider is a southern Louisiana native, career teacher, trained researcher, and author of the ed reform whistle blower, A Chronicle of Echoes: Who’s Who In the Implosion of American Public Education.

She also has a second book, Common Core Dilemma: Who Owns Our Schools?.

both books

Don’t care to buy from Amazon? Purchase my books from Powell’s City of Books instead.

From → litigation, Walton

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