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Wal-Mart Class Action Defense Cases–Salvas v. Wal-Mart: Massachusetts Reverses Decertification Of Labor Law Class Action (And Grant Of Summary Judgment On Class Action Claims) Holding Predominance Test Had Been Satisfied

Labor Law Class Action Erroneously Decertified because Evidence Submitted by Class Action Plaintiffs Concerning Nationwide Practices was Relevant to Predominance of Class Action Claims of Massachusetts Employees Supreme Judicial Court Holds

Plaintiffs filed a putative class action against their former employer, Wal-Mart, alleging labor law violations; the class action complaint alleged that Wal-Mart “wrongfully withheld compensation for time worked and denied of cut short rest and meal breaks to which they were entitled.” Salvas v. Wal-Mart Stores, Inc., 452 Mass. 337, 338-39 (Mass. September 23, 2008). The trial court certified the litigation as a class action on behalf of roughly 67,500 current and former employees who worked for Wal-Mart in Massachusetts during a ten-year period, id. Wal-Mart subsequently moved for summary judgment on the class action claims; Wal-Mart also moved to exclude as unreliable the testimony of plaintiffs’ main expert witness, and to decertify the class action. Id. The trial court granted summary judgment with respect to the class action’s meal breaks claims, and with respect to some of the wage claims; the trial court also granted Wal-Mart’s motions to exclude the expert testimony and to decertify the class action. Id. The Massachusetts Supreme Judicial Court reversed. We address here only that portion of the Supreme Judicial Court’s opinion concerning class action certification.

The Supreme Judicial Court found that Wal-Mart’s home office established and directed corporate-wide policies, including payroll controls. Salvas, at 339. Under these procedures, each hourly employee “adhere[d] to stringent timekeeping procedures, including clocking in and out at the beginning and end of each shift and at other prescribed times.” Id., at 340. According to Wal-Mart policy, “hourly employees should never be required to work ‘off-the-clock’” and hourly employees were generally prohibited from working overtime. Id., at 340-41. Employees were repeatedly warned that they could be terminated for working off-the-clock or for failing to take breaks, and store managers were required to investigate “every instance” of off-the-clock work. Id., at 341. Individual store managers also worked under a competing pressure: “the responsibility for payroll came with considerable pressure from the home office to boost profits by, among other things, minimizing labor costs, one of the corporation’s largest controllable expenses.” Id., at 342. Further, “Store managers were rewarded for keeping payroll costs low. Conversely, if they exceeded Wal-Mart’s stringent labor cost guidelines, they might lose their bonuses or lost their jobs.” Id. And at least as early as 1989, Wal-Mart knew that “despite the written policy directives to the contrary, store managers were sometimes ‘[a]ltering time cards to decrease reported payroll expenses’ and ‘[i]nstructing associates to work off the clock.’” Id. Wal-Mart knew also that some hourly employees were missing meal and rest breaks, id., at 342-43.

The Supreme Judicial Court noted that trial courts enjoy “broad discretion to certify or decertify a class,” and that such orders are reviewed solely for abuse of that discretion. Salvas, at 361 (citation omitted). The Court discussed in detail the decertification order, noting that it was premised on the trial court’s conclusion that common issues did not predominate over individual issues, particularly because “the class was ‘likely to consist of a not insubstantial number’ of hourly employees who were not harmed by Wal-Mart.” Id., at b (certification order). Central to this ruling was the court’s conclusion that evidence of Wal-Mart’s national, corporate-wide practices was not relevant to the commonality of the class action claims because they were not specifically tied to Massachusetts. Id., at 364-66. The Supreme Judicial Court held that this was error: “Because the gravamen of the plaintiffs’ [class action] claims is that Massachusetts hourly employees were subjected to Wal-Mart’s nationwide, uniform, wrongful actions, the dearth of specific references to Massachusetts in the additional material is not fatal to class certification.” Id., at 366. Based on the Supreme Judicial Court’s analysis, the trial court’s concerns regarding predominance were “more properly directed to questions of damages than to questions of liability.” Id., at 368. Further, the lower court did not give appropriate weight to the “overwhelming evidence that all of the class members…were subject to the identical terms and conditions regarding breaks and off-the-clock work, which (according to company policy) were to be followed stringently.” Id., at 370. Because it found that common questions would predominate over individual issues, the Supreme Judicial Court reversed the class decertification order and remanded the matter with instructions to certify the litigation as a class action. Id., at 378.

NOTE: We do not here discuss that portion of the Court’s opinion concerning the admissibility of the testimony of plaintiffs’ expert witness. See Salvas, at 351-60. Nor do we discuss that portion of the Court’s opinion which reversed the grant of summary judgment as to certain class action claims. See id., at 372-78.

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