One of the top-sellers at Wal-Mart this month is the Nintendo Wii Nurf-N-Strike Bundle, which you can pick up for $59.74. The first 908,102 customers who buy Nurf-N-Strike will help to pay off the $54,250,000 bill Wal-Mart was hit with in a “settlement” December 9th from a class action lawsuit. It took more than 100,00 workers seven years of litigation to beat Wal-Mart — but they left the giant retailer on the ropes this week in one of the largest class action settlements against the Arkansas-based retailer. A joint press release issued from Minneapolis and Bentonville by the worker’s lawyers and Wal-Mart’s lawyers, announced that the wage and hour dispute lawsuit, know as Braun et al v. Wal-Mart has been settled. In its 2008 Annual Report, Wal-Mart warned stockholders that “the company is a defendant in numerous cases containing class action allegations in which the plaintiffs are current and former hourly associates who allege that the Company forced them to work ‘off the clock’ or failed to provide work breaks, or otherwise that they were not paid correctly for work performed.” The Braun case began trial in September of 2007 in the First Judicial Court for Dakota County, Minnesota, and testimony took roughly two and a half months, ending in December, 2007. In June of 2008, Wal-Mart told its investors, “No ruling has been received. The judge has not determined whether the plaintiffs will be allowed to proceed to trial on their claims for punitive damages, but a separate trial has been scheduled for October 20, 2008, in the event those claims are allowed to proceed to trial. The Company believes that is has substantial factual and legal defenses to the claims at issue.” Realizing however that they could lose the case, Wal-Mart ended by saying, “The Company cannot reasonably estimate the possible loss or range of loss that may arise from this litigation.” This week, the “range of loss” was quantified at a straggering $54.25 million. The average Wal-Mart worker in Arkansas reading this article makes $10.65 an hour. It would take that worker 5,093,896 hours to make what Wal-Mart lost this week. Put another way, it would take nearly 2,711 Wal-Mart workers putting in 36 hours per week for an entire year to earn the money that Wal-Mart “settled” in this case. The $54.25 million settlement involves as many as 100,000 current and former Wal-Mart workers just in the state of Minnesota, who worked for the company from September of 1998 to November of 2008. As part of the agreement, Wal-Mart must maintain “various electronic systems, surveys, and notices that will further compliance with wage and hour policies and Minnesota laws.” The case now needs to be approved by the court, and how much the workers will actually get from this case will depend on how many, and the amount of, claims that class members file. “We are satisfied with this settlement,” said a spokesman for the Minneapolis law firm of Maslon Edelman Borman and Brand that represented the workers, “gratified that these hourly workers will now be paid after seven years of litigation, and happy that the State of Minnesota will receive the largest wage and hour civil penalty in its history.” A Wal-Mart spokesperson tried to turn the settlement into some kind of victory statement. “Wal-Mart is pleased that the court in Minnesota ruled in its favor on many claims,” the company said. “Our policies are to pay every associate for every hour worked and to make rest and meal breaks available for associates. Any manager who violates these policies is subject to discipline, up to and including termination. We remain committed to providing good jobs with real career opportunity to the 1.45 million U.S. associates who choose to work for Wal-Mart and serve our customers every day.” So Wal-Mart exonerates itself, and throws its managers under the bus. The court is expected to take up this settlement in mid January.
Wal-Mart explains in its Annual Report the legal theory behind settling these cases. “The Company may enter into discussions regarding settlement of these matters, and may enter into settlement agreements, if it believes settlement is in the best interests of the Company’s shareholders.” Clearly Wal-Mart decided in the Braun case that getting this nasty case behind them was the in the “best interests” of Wal-Mart. Coming as it does right at the peak of the Xmas season, the retailer is certainly hoping that this will be a one-day headline story. But the fact is, Wal-Mart has lost a huge class action lawsuit, and its shareholders might reasonably ask how many more of these wage and hour ‘off the clock’ lawsuits are going to cost the shareholders dearly. Wal-Mart’s feeble attempts to blame wayward managers aside, the public will remember only that Wal-Mart paid a whopping financial settlement to get this story off the front pages quickly. This agreement means the case will not go to a jury, which some in the media have suggested could have resulted in a Wal-Mart fine of as much as $2 billion. According to a July 1, 2008 ruling by Minnesota District Judge Robert King, Jr., Wal-Mart broke labor laws more than 2 million times. The Judge ordered Wal-Mart to give employees $6.5 million in back pay. The court found that the company required hourly employees to work off-the-clock during training, and denied them full rest or meal breaks in violation of state wage-and-hour laws. “Wal-Mart’s failure to compensate plaintiffs was willful,” Judge King wrote in his July decision. “Wal-Mart was on notice from numerous sources of the wage and hour violations at issue and failed to correct the problem.” Two years ago, Wal-Mart lost a $78 million wage and hours case in Pennsylvania, and a $172 million class action case from California three years ago. The lead plaintiff in this case is Nancy Braun, who worked at a Wal-Mart store in Apple Valley, Minnesota. Braun charged that she had to work off-the-clock and was denied meal and rest breaks. Readers are urged to email Wal-Mart’s Career office by going to http://jobs-walmart.icims.com/jobs/referral and creating a profile to send the following message: “Dear Wal-Mart, If you want to encourage people to have ‘real careers’ at Wal-Mart, you might want to admit up front that the company has had major problems in the past paying workers for every hour they work, every rest and meal break they were entitled to. This is a form of ‘time theft’ from your workers, and the theft can add up to a very large profit for the company. In this way, Wal-Mart is stealing from the people who sell its products. It’s time for Wal-Mart to settle all the class action wage and hour lawsuits that are pending against it, and to publicly admit that shortchanging its own workers was wrong, and that the company is beginning a corrective action plan to ensure that ‘asssociates’ are never stolen from again.”