New Jersey High Court Hands Wal-Mart a Setback

By Steven Greenhouse
The New York Times

Friday 01 June 2007

In a setback for Wal-Mart, the New Jersey Supreme Court ruled yesterday that a lawsuit claiming off-the-clock violations could proceed as a class action on behalf of nearly 80,000 current and former Wal-Mart employees.

Judith L. Spanier, a lawyer for the plaintiffs, applauded the decision, saying the case resembled a Pennsylvania class action in which a jury ordered Wal-Mart Stores to pay $78 million last October, after finding that managers had forced employees to work off the clock and miss many breaks.

In a 5-to-1 ruling, the state Supreme Court reversed a lower court and rebuffed Wal-Mart's arguments, concluding that it would be more efficient for the case to proceed as a class action than as hundreds or perhaps thousands of individual lawsuits or administrative complaints.

Pressed as individual claims, the suits would most likely have cost Wal-Mart, the world's largest retailer, little money. But now that the case has been certified as a class action, lawyers said that Wal-Mart could, as in Pennsylvania, face liability of tens of millions of dollars.

The New Jersey case covers all hourly employees who worked in more than 50 Wal-Mart stores in New Jersey since May 30, 1996.

The court also said that a class action was the best way to proceed because the case contained many common questions regarding the workers, such as whether Wal-Mart had a practice of altering employee time records and promoted a work environment in which policies were ignored to cut labor costs.

In the majority opinion, Chief Justice James R. Zazzali wrote, "The core of the present dispute is whether Wal-Mart engaged in a systematic and widespread practice of disregarding its contractual, statutory and regulatory obligations to hourly employees in this state by refusing to provide earned rest and meal breaks and by encouraging off-the-clock work."

John Simley, a spokesman for Wal-Mart, voiced disappointment with yesterday's ruling.

"An increasing number of courts have found cases like this are not suitable for class treatment," he said, noting that the decision did not address the merits of the case.

"We've always maintained that it is our policy to pay every associate for every hour they have worked," Mr. Simley said.

Ms. Spanier, the lawyer, disagreed, saying that Wal-Mart managers systematically forced employees to work off the clock and to miss breaks in an effort to cut labor costs and increase profits.

The New Jersey Supreme Court emphasized that class actions were an important tool to enable individuals with small claims to band together to sue a large and powerful defendant.

"By allowing this manageable litigation to proceed, we permit a class of hourly, retail employees to unite and - on an equal footing with their adversary - to seek relief for their 'small claims,'" the court wrote.