Braun v. Walmart, 2011 Pa. Super. 121 (Pa. Super. 2011)

The Superior Court held that monetary payments for contractual rest breaks qualify as “wages” under the Pennsylvania Wage Payment and Collection Law.  The Court also upheld a $187M jury verdict against Walmart, including attorneys' fees of more than $45M.

Case Summary:

Michelle Braun was an hourly employee of a Wal-Mart store located at Franklin Mills, Pennsylvania. At the beginning of her employment, Wal-Mart gave her an employee handbook; she signed an acknowledgment page stating: “[T]he policies and benefits presented in this handbook are for your information only and do not constitute terms or conditions of employment. . . This handbook is not a contract.” At the time of Braun's employment, the handbook specified that "hourly associates who work between three and six hours will be given one, fifteen-minute, paid, rest break, and those who work more than six hours will be given two, fifteen-minute, paid, rest breaks."

In the first half of Braun's employment, employees were required to “swipe” or “punch” their badges in and out for breaks. Wal-Mart’s Time Clock Punch Exception Report (“TPER”) generated a daily listing of every employee whose punches or swipes established that they took too few breaks, short breaks, or no breaks. Later on, Walmart stopped requiring employees to punch-out before breaks, and the data along with other electronic systems that required a log-in to work (e.g. cash registers,) allowed Walmart to track employees hourly wages.

In 2002, two years after her employment with Walmart ended, Braun filed suit, alleging that Walmart had failed to compensate her for the time she spent on breaks and, further, that this failure rose to the level of breach-of-contract. Another employee, Hummel, filed a similar suit soon after. The trial court held two class-certification hearings, one in September 2004 for the Braun action, and the other in October 2005 for the Hummel action. The court evaluated hundreds of exhibits regarding Wal-Mart’s policies, practices, and record-keeping, and considered arguments, testimony, and Appellees’ expert reports by Drs. Scott Baggett and Martin Shapiro analyzing Wal-Mart’s business records. Relying primarily on the experts’ analyses, the court concluded Appellees demonstrated the systemic loss of contractual break time. The court held that Appellees established the existence of common questions of law and fact, and that common issues predominated. On December 27, 2005, the court granted class certification for both actions. The certified class in each case consisted of “all current and former hourly employees of Wal-Mart in the Commonwealth of Pennsylvania from March 19, 1998 to the present.”

On October 12, 2006, a jury held Walmart liable for failure to compensate its employees for time spent on breaks - but not meal periods. Braun moved for statutorily imposed liquidated damages, pursuant to Pennsylvania's Wage Payment & Collection Law, ("WPCL") 43 P.S. 260.1 et seq. Following testimony on the number of workers affected, the trial court awarded liquidated damages of $62,253,000 plus $29,178,873.35 in Common Law damages, interest, miscellaneous costs, and a staggering $45,694,576 in attorneys’ fees. In total, the judgment against Walmart was $187,648,589.11.

Walmart appealed.

First, Walmart claimed that "the trial court disregarded class action requirements by certifying a class that lacked commonality and predominance and was defined imprecisely.” The Pennsylvania Superior Court disagreed and, instead, concluded that the class-members claims included common questions of fact and law, and the trial court's certification was, at least, not an abuse of discretion.

Next, Walmart claimed that payment for breaks were not "wages" under the WPCL, and therefore liquidated damages under the WPCL were inappropriate. The Superior Court noted that Pennsylvania courts have had few opportunities to interpret the WPCL, and that this was a question of first impression. Having already concluded that Walmart's employee handbook was a quasi-contract, the Court noted that the few cases that had been determined construed vacation time - a similar concept - to be "wages." On this basis, it found paid breaks to be "wages." Specifically, the Court held that:

Barring or cutting short a paid, agreed-upon rest break provides a basis for a WPCL claim because the employer is no longer paying the employee to rest, but to work. Thus, refusing to provide or curtailing a paid, agreed-upon rest break results both in a violation of the agreement to provide a paid rest break and a violation of the WPCL when the employer fails to make the payment associated with taking, e.g., a fifteen-minute rest break. That the employee is not entitled to extra pay for a missed or shortened rest break does not negate the employer’s contractual obligation to provide a paid rest break and WPCL obligation to pay the employee for
taking that agreed-upon rest break. Under these specific facts, the WPCL does not permit an employer to escape liability when it receives the benefit of, for example, an employee’s eight hours of labor when that employee agreed to be paid to work seven-and-a-half hours and to rest for one-half hour.

The Superior Court also affirmed (1) the trial court's award of both common law and liquidated damages, (2) Walmart's failure to pay its employees was not the result of good-faith, (3) the jury charge was proper, (4) the WCPL does not require a class to identity with specificity the members who are owed liquidated damages. The Court, however, remanded the matter to the trial court for the limited purpose of recalculating attorney's costs.

Read the full opinion.