THE SAN FRANCISCO CHRONICLE (California), December 23, 2005, Friday

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THE SAN FRANCISCO CHRONICLE (California)

December 23, 2005 Friday
FINAL Edition

SECTION: NEWS; Pg. A1

HEADLINE: Wal-Mart loses suit over lunch breaks;
Oakland jury orders giant retailer to pay workers $172 million

BYLINE: Henry K. Lee, Chronicle Staff Writer

BODY:
An Alameda County jury dealt the world's largest retailer a major blow Thursday, ordering Wal-Mart to pay $172 million to thousands of current and former employees in California who claimed the company illegally deprived them of lunch breaks.
The retail giant must pay $57 million in compensatory damages and $115 million in punitive damages to about 116,000 employees who work or formerly worked at Wal-Mart and Sam's Club stores in the state, the jury concluded in issuing the largest employee class-action judgment to date against the Bentonville, Ark., company.
The verdict comes as Wal-Mart is facing 40 other workplace lawsuits across the United States, including the nation's largest-ever discrimination suit filed in federal court in San Francisco on behalf of 1.6 million women. Last year, Wal-Mart settled a suit for $50 million in Colorado. And a trial is under way in Marin County over charges that Wal-Mart and an import company knowingly sold defective bicycles, causing injuries to children.
The Oakland jury, after deliberating for less than three days after a three-month trial before Superior Court Judge Ronald Sabraw, found that the retailer violated a 2001 state law that requires employers to give 30-minute, unpaid lunch and dinner breaks to employees. Some employees reported that they were pulled from their breaks to make up for staff shortages.
"Wal-Mart didn't do their job," jury foreman Guy E.J. Miller, 53, of San Lorenzo told The Chronicle. "They didn't pay their people."
Risa Lieberwitz, associate professor of labor law at Cornell University's School of Industrial and Labor Relations, said the judgment showed that the retailer "is certainly not immune. Even though it's huge, it can be found liable for its actions and held accountable." She said the verdict sent a message to other companies that they are not above the lawand that more juries might "listen to the plight of the worker" instead of the employer.
The workers' attorney in the lunch-break lawsuit, Fred Furth of San Francisco, said he was "very, very pleased by the verdict."
"It sets a precedent, that Wal-Mart will not be permitted to violate the laws of California the way they did here, and the jury found that they had intentionally, with malice and oppression and fraud, violated the laws of the state of California," Furth said.
In a statement Thursday, Wal-Mart officials said the company would appeal the judgment. "This case involved a meal-period statute that is unique to California," the statement said. "It has no bearing on any other state."
Neal Manne, a Houston attorney who represented the retailer, said the lawsuit centered on "some compliance problems at Wal-Mart from a number of years ago. The undisputed evidence is that those problems have long since been solved. There's 100 percent compliance now."
Manne said he believed the plaintiffs couldn't recover punitive damages because an appellate court ruling held that defendants can't be penalized twice.
But Miller, the jury foreman, said the panel had decided to award punitive damages -- doubling the compensatory-damage figure -- because although the company made some changes in 2003, "the problem started way before that. They just buried their heads."
Another juror, who didn't want to give his name, said the facts of the case showed that all companies were required to obey state law.
"In a workplace like Wal-Mart, where it's nonunion, state law is the only protection that a lot of workers have for basic rights, like meal breaks and getting their breaks on time," the juror said.
The plaintiffs accused Wal-Mart of failing to give them timely meal breaks between January 2001 and May 2005 and said the company was aware of the violations but failed to correct them.
Wal-Mart denied the allegations, saying the hourly employees "did take substantially all of their meal periods," court records show. Employees had an obligation to tell managers that they weren't receiving some or part of their breaks, the company argued, and those who weren't given breaks received an extra hour of pay.
The company has since adopted new technology that "sends alerts to cashiers when it is time for their meal breaks," the company said. The registers automatically shut down if cashiers don't respond, Wal-Mart said.
The litigation comes as the retailer has made a concerted effort to portray itself as "the good Goliath," said plaintiffs' attorney Jessica Grant.
Brad Seligman, a Berkeley attorney suing Wal-Mart in the huge sex-discrimination case, said the large punitive damage award in the lunch-break case showed that the company "grossly miscalculated what a jury might do to them." That was proof that the jury saw "corporate arrogance" on the part of Wal-Mart, he said.
Andrew Grossman, the head of Wal-Mart Watch, a Washington activist group, said in a statement that the verdict "affirms that 'time-theft' labor abuses are a chronic and systemic problem for Wal-Mart and its dangerous business model. Wal-Mart pressures managers to lower store labor costs, resulting in understaffed stores and 'off-the-clock' labor for hourly employees."
But Scott Brink, a Los Angeles attorney who represents employers in labor issues, said, "California has the most stringent and byzantine wage and hour laws in the country. Wal-Mart has found itself caught, apparently, on some of these very technical wage and hour laws that are peculiar to California."

GRAPHIC: PHOTO
Fred Furth (right), who represented Wal-Mart employees, talks with Wal-Mart attorney Neal Manne after the verdict. / Jeff Chiu / Associated Press