COMMONWEALTH OF MASSACHUSETTS SUPR.FME2 JUD7:CIAI., COURT

SJC N o . 10108

Middlesex Superior Court No. 0 1 - 0 3 6 4 5

CRYSTAL SALVAS, ELAINE POULION, et al.

Plaintiffs - Appellants,

V.

MAL-MART STORES, I N C . I

Defendant - Appellee.

APPELLANTS' REPLY BRIEF

Robert J. Eonsignore ( # 5 4 7 8 8 0 ) Robin E . B r e w e r ( # 6 3 9 5 0 6 1 BONSIGNORE & BREWER 2 3 Forest Street Medford, MA 02155 Tel: ( 7 8 1 ) 3 9 1 - 9 4 0 0 FAX: (781) 3 9 1 - 9 4 9 6 Attorney for the Appellants

Carolyn Beasley Burton (pro hac vice pending)

1009 Canyon Creek El Sobrante, CA 9 4 8 0 3

Fax: (510) 223-1883 Attorney f o r the Appellants

T e l : (510) 691-2422

TABLE OF CONTENTS

TABLE OF CONTENTS ....................................................................................................... i

TABLE OF AUTHORITIES., ............................................................................................... ii

ARGUMENT., .................................................................................................................... - 4

1 . WAL-MART’S PAYROLL RECORDS PRQVIDE A REASONABLE BASIS SUPPORTING CERTIFICATION .................................................. ........ 5

A . Wal-Mart Did Not Support Its Waiver Defense ........................................... 5

B . War-Mart Did Not Support The Attack Of Its Record Keeping ..................... 6

C . It Was Error To Discount The Payroll Records ............................................ 9

D . Common Issues Predominate ................................................................... 11

I1 . DR . SHAPIRO SHOULD NOT HAVE BEEN EXCLUDED ............................. 15

ILT . WAL-MART’S ATTEMPTS TO TRIVIALEE ITS WRONGFUL .. TAKING OF $25.000. 000 ARE MISLEADING ............................................... 19

A . Wal-Mart’s Misconduct Caused Widespread Harm ................................... 19

R . Wal-Mart’s Statistics Should Have Been Excluded ..................................... 20

C . Wal-Mart’s Criticisms Lack Merit ............................................................. 22

D . Wal-Mart Has Done Nothing To Ensure That Employees Receive Paid Rest Breaks ...................................................................................... 24

TAl3LE OF AUTHORITE S

Accord Carnegie . 376 F.3d 661 .................................................................................................................. 23

Allapattah Services, Inc. vo Exxon Corp. 333 F.3d 1248 (11"' Cir. 2003) ......................................................................................... 14

Anderson v. Mt. Clemons Pottev Co. 328 U.S. 680 (1946) ...................................................................................................... .,I4

Aspinall v. Philip Morris Companies, Inc. 442 Mass. 381 (2004) ....................................................................................................... 13

Bertulli v. Independent Ass 'n o-f Continental Pilots 242 F.3d 290 (Sh Cir. 200 1) ............................................................................................. 14

Braun v. Wal-Mad Stores, Inc, 2003 WL 22990114 (Minn.Dist.Ct. Nov. 2003) ............................................................... 1~

Camegie v. Household I d l , Inc. 376 F.3d 656 (7* Cir.2004), c m . denied, 543 US. 1051 (2005) ....................................... 3, 23

Compuser Systems Engineering, h c . v. Qantd Carp. 740 F.2d 59 (1" Cir. 1984) ......................................................................................... 27, 28

Donovan v. United Video 725 F.Zd 577 (10' Cir. 1984) ........................................................................................... 11

Dukes v. Wd-Mart, Inc. 474 F.3d 1214 (Cal. 2007) ............................................................................................... ~4

Gammon v. GCSvcs. Ltd. 162 F.R.D. 313 (N.D.Ll1.1995) ........................................................................................ 13

Gillen v. Fallon Ambulance Serv., Inc. 283 F.3d I 1 (1" Cir. 2002) ................................................................................................ 6

Goidwarer Y. Alsron & Bird 116 F.R.D. 342 (S.D. Ill. 1987) ......................................................................................... 4

In re Antibiotic Antitrust Actions 333 F.Supp. 278 (D.C.N.Y. 1971) .................................................................................... 4

Johnson v. WiImington Sales, lnc.

5Mass. App. Ct. 858 (1977) ............................................................................................ 10

Ladegnard v. Hard Rock Concrete Cutters, Inc. 2000 WL 1774091 *7 (N.D.111. Dec. 2000) ....................................................................... 12

McNarnara v. Honeman 406Mass. 43 (1989) .............................................................................................. 9, 10, 11

Pitman, et al. Y. WaZ-Mud Stores, Inc. et al. Cir. Ct. MD, Price George's C'ty, Case No. CAL-02-10206 ............................................. 17

Savaglio. Final Statementof Decision Regarding Injunctive Relief at 11 31, 162-170, September 27, 2006 ............................................................................... 2 6

Smilow v. Southwestern Bell Mobile System, hc. 323 F.3d 32 (lst Cir. 2003) ......................................................................................... 12, 13

United States v. DeGeorgia 420 F.2d 889 (9* Cir. 1969) ............................................................................................. .O

US. v. Munoz-Franco 487 F.3d 25, C.A.1, 38-39 (Puerto Rico, 2007) ................................................................. 1~

Wedinger v. Champion Healthcare Cop. 598 N.W.2d 820 (N.D. 1999) .......................................................................................... .2

Other Authorities

2 Herbert Newberg & Alba Conte, Newberg on Class Actions, $4:45, 336

5 Wigmore, Evidence (3d Ed.) $8 153 I , 1556, at 392-410

NEWBERG 94.36

Newburg 4h passim

ALBA CONTE AND HERBERT NEWBERG, 2 NEWBERG ON CLASS ACTIONS (4Ih Ed. 2007}, 5 4:32, pp. 288-289

Wal-Mart does not dispute t h a t Plaintiffs‘ expert

counted and categorized each of the hundreds of

thousands of payroll records it maintained f o r each

class member f o r t he entire class .period. Nor does

Wal-Mart dispute that Plaintiffs relied upon its

finalized payroll records, which had been zealously

policed and then approved on a daily basis by store

level management and corporate executives.

Those records document, and therefore Plaintiffs’

expert separately accounted far, millions of shifts,

t i m e records, and managerial e d i t s . H e then

specifically identified each class member w h o had been

deprived earned pay or benefits by name, date, t i m e ,

method and amount. Thus, the overriding issue f o r this

Court to decide is whether it will follow longstanding

Massachusetts law and Supreme Court authority, which

deems business records sufficiently reliable to use in

litigation, or whether hourly employees have an added

threshold burden of proving t h a t t h e i r employers’

payroll records contain a de m i n i m i s amount of errors .

The t r i a l court committed reversible error by

imposing that new, heightened burden of proof, a f t e r

Plaintiffs had repeatedly satisfied the already

rigorous requirements f o r class certification. The

court likewise erred in failing to recognize that,

based on the great wealth of evidence documenting the

extraordinary measures taken by Wal-Mart to both

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monitor and record work and break time, even that

newly created burden w a s reasonably satisfied here.

There is likewise no support for the court's

finding t h a t Plaintiffs offered no reasonable basis to

support certification (even setting aside the payroll

records). Inexplicably, the court ignored a vast body

of evidence offered by Plaintiffs, which includes a

comprehensive organizational analysis prepared by

leading experts at MIT and Harvard, contemporaneously

created business records, corporate admissions, sworn

testimony from numerous executives and employees, and

over 150 designated witnesses, in wrongly concluding

that Plaintiffs would rely exclusively upon the

payroll records at trial to establish liability.

Because Wal-Mart could not refute that evidence

with any business records, pre-litigation documents,

or testimony, it instead relied upon attorney crafted

argument as the sole basis for denying 65,000 workers

their day in court. Thus, Wal-Mart's brief should be

scrutinized both for what it says, and for what it

does not, to avoid confusing argument with evidence.

Tellingly, Wal-Mart's brief is conspicuously

devoid of any meaningful discussion or reference to

the record. For example, Wal-Mart did not provide a

s i n g l e record c i t a t i o n for the parade of horribles it

listed on pages 2 6 - 2 9 , which it contends discredits

i t s own payroll records. ' Nor did Wal-Mart identify a

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single corporate document or policy supporting i t s

claim t h a t any hourly employee could waive pay o r

benefits. T h i s is because there is no such evidence.

What: Wal-Mart does say is equally unsupported.

One of t h e m o s t flagrant distortions of the record is

i ts claim to have ensured that employees receive their

paid res t breaks when its contemporaneous business

records and corporate admissions show t h e opposite is

true. Indeed, Wal-Mart's continual abuses prompted t w o

courts to find, after full t r i a l s on the merits and

based upon the same evidence presented here, that Wal-

Mart k n o w i n g l y deprived i ts employees of paid breaks.

Wal-Mart's straw-man arguments wrongly convinced

the trial court to t reat Commonwealth workers i n f e r i o r

to those outside of the s t a t e by depriving them of a

like opportunity to seek redress in a single

proceeding in lieu of tens of thousands of cases, or

worse, none a t a l l . ' Further guidance i s needed from

this Court to protect those workers, place the focus

on the conduct of the defendant, and t o r e s t o r e the

viability of class action law i n the Commonwealth.

Specifically, the Court: should sanction the use

of business records i n class actions. Moreover,

because Massachusetts does not permit subclasses or . __-_

See, e . g . , Carnegie v. Household I n t ' l , Inc., 376 F.3d 6 5 6 , I

661 (7th Cir.2004) ("The realistic alternative to a class action is not . . . millionls of] individual suits, but z e r o individual suits.") , cer t . denied, 5 4 3 U.S. 1051 ( 2 0 0 5 ) .

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opt-outs, defendants cannot: avoid respons4bility by

defeating certification merely because a11 employees

subjected to overriding uniform practices may not have

suffered economic injury. Lastly, trial courts should

be instructed to follow t h e majority rule, and "use

their ingenuity to conduct [class] litigation in a

manner which w i l l guarantee the rights of both sides,"'

ra ther than dispense with an entire class. After all,

class actions are inherently complex.3

In the end, Plaintiffs should be allowed to

proceed t o trial and use the payroll records j u s t as

Wal-Mart's hour ly employees have successfully done i n

California, Pennsylvania, Oregon, and in Minnesota.

ARGUMENT The l o w e r court took t h e unwarranted and extreme

measure of decertifying this class a f t e r wrongly

excluding the payroll records. Based on that ruling,

the court: then found that each employee must establish

the reliability of Wal-Mart's payroll records, prove

tha t they were working while clocked in (T.R.002226-

29) and were forced to work without pay. Id. 2288-29. The court's ruling conflicts w i t h the law and fac ts , 4

21n re Antibiotic Antitrust A c t i o n s , 333 F.Supp. 278, 289 (D.C.N.Y. 1971).

3 See e . g , , Goldwater v. A l s t o n & Bird, 116 F . R . D . 342, 3 5 5 -

3 5 6 (S.D. Ill. 1987) (unmanageability requires more than a showing that the case will be difficult to try or may present novel issues because the law recognizes that complexity is an inherent t r a i t of class actions). ' Pursuant to Massachusetts law, Plaintiffs need only prove that they worked without earned compensation and benefits.

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I. WAL-MART‘S PAYROLL RECORDS PROVIDE A REASONABLE BASIS SUPPORTING CER!L’IFICATION

Wal-Mart never identified the compelling

testimony it claims undermines the accuracy of i ts

payroll records, nor can it do s o .

A . Wal-Mart Did N o t Support Its Waiver Defense

As de ta i l ed in the Opening Brief, Wal-Mart’s

waiver argument is wholly contradicted by its

contemporaneously generated business records,

corporate pal . ic ies , and all of its corporate

designees, store managers and corporate executives.

Not surprisingly, then, Wal-Mart did not substantiate

that defense here. Indeed, it remains unrefuted that:

Not a single corporate executive or manager testified t h a t hourly employees could waive breaks or compensation; 5

Wal-Mart has not identified a single business record or corporate document even suggesting t h a t hourly employees could or did voluntarily waive breaks,

Against an extensive conflicting record, Wal-Mart:

concedes, as it must, t h a t it relied exclusively upon

the affidavits its defense counsel drafted for

unrepresented hourly employees to support its claim.

Opp. at 3 . At Ehe very least, however, a j u r y should

decide the merits of Wal-Mart’s post-litigation claim

t h a t l o w income workers waived earned compensation for

At Lanigan, management again confirmed that providing 5

breaks was not optional: “we have j u s t a l o t of stuff t h a t tells us the policies t ha t w e need to follow. IC is not an opt ion . Y o u need to follow those policies.” T.R.000744-45.

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the general financial welfare of Wal-Mart'after

weighing Plaintiffs' counter evidence (including

testimony f r o m affiants who felt coerced to s i g n the

affidavits), and Wal-Mart's credibility.6

Even setting aside the invalidity of the

affidavits, less than 2 0 employees claim to have

skipped breaks and, l i k e Mr. Fleet-who the court

wrongly found voluntarily waived breaks-they mostly did

so to complete w o r k (see S.R.001719-23, 1 7 5 9 - 6 2 , 1823-

2 6 ; T . R . 0 0 2 2 3 3 ) . Additionally, that t r i v i a l number of

affidavits is statistically insignificant when

compared to the hundreds of thousands of records and

other corroborating evidence at issue here.

The affidavits are also inconsequential because

none of the affiants claim to have waived the

supplemental income that they earned, nor could they.

Thus, as a matter of law, t he re is no evidence from

which the c o u r t or ju ry could find a knowing and

intelligent waiver.

B. Wal-Mart Did Not Support 'She Attack O f I t s Record Keeping

Wal-Mart's affiants do not support its claim that

employees failed to follow corporate timekeeping and

'The same principles of law preventing parties from manufacturing declarations that contradict the evidence to defeat dispositive motions should apply to Like attempts made to defeat certification. See, Gillen v. F a l l o n Ambulance S e r v . , I n c . , 2 8 3 F.3d 11, 26 ( Isr c i r . 2002) (a par ty cannot create a genuine issue of disputed f a c t merely by filing affidavits t h a t conflict with the evidence) .

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reconciliation policies, but universally conf i rm

strict adherence to those policies, such as using

written TARS when necessary to correct swiping errors

(see S.R.001540-43; 1553-57; 1599-602; 1712-15)7.

Consequently, Wal-Mart was unable to present a single

hourly employee or payroll manager to support its fictional defense at the Lanigan hearing. 8

Instead, Wal-Mart called Chris Bryant , one of two

long-term store managers, to suggest that it w a s

impossible to determine whether employees were working

on registers while not clocked in. Notwithstanding his

lack of familiarity with Wal-Mart's technology and Dr.

Shapiro's analysis, Bryant claimed to have knowledge

of "several" instances where cashiers shared

registers, thus supposedly render ing it impossible to

identify the employee working. T.R.000667. When asked

on d i rec t to explain "several," Bryant stretched t he

term beyond all recognition claiming to mean several

"hundred or more" instances, yet could not identify a

single one. Id. That: tall tale fell apart on cross.

' Store manager Roy also admitted on cross that he was required to follow corporate time-keeping policies, and always did so. T.R.000744-45. And, contrary to Wal-Mart's claim t h a t payroll was seduced wi thout written authorization i n direct violation of corporate policy, Roy confirmed that: "You wouldn't subt rac t time without a TAR [written time adjus tment request]." Ex. 4 2 at 49-14-18. 8Contrary to Wal-Mart's assertion, it d i d not call any hourly employee/putative class members during the Lanigan hearing. Wal-Mart ca l led four managers, and three information technology supervisors.

7

F i r s t , Bryant admitted that Wal-Mart has two types of registers, one of which i s operator accountable, meaning, it requires a unique ID and password to operate, the o the r where employees may f r e e l y share. T , R . 0 0 0 7 0 5 .

strictly monitored operator accountable registers-the only type included in Dr. Shapiro's analysis-for cash shortfalls, and thereby prevented employees from sharing regis ters . T.R.000708. Third, Bryant admitted that he could not think of a single instance where employees shared accountable registers. T.R.000711.

Second, Bryant admitted t h a t Wal-Mart

This is the sum t o t a l g of what Wal-Mart

disingenuously describes as "substantial testimony"

warranting decertification. Clearly, such factual

disputes do not support the exclusion of Dr. Shapiro,

n o t only because they were thoroughly discredited, but

because they go to the weight of the proffered

evidence, and not its admissibility.

In response to Plaintiffs' contention that Wal-

Mart's defenses were unsupported, the t r i a l court

speculated that there m u s t be errors in the records,

and fashioned a hypothetical t h a t had never appeared

in any of Wal-Mart's legal briefing (but was then

'WaL-Mart a l so called an IT technician to say that its electronic databases could not be compared because they were not synchronized due to t i m e differences and rare power outages. T.R.000917. Although Wal-Mart's criticisms go to the weight o f the testimony, and not fts admissibility, Dr. shapiro readily dismissed a l l of those misleading claims by informing the c o u r t borh that (I) he was aware of PST, EST, and CST t i m e differences and accounted for those ; and ( 2 ) because each record is chronologically sequenced, power outages are readily identifiable because the sequence i s out of order.T.R.OOl.121- 23. In fact Wal- Mart has never disputed the effectiveness of any of D r . Shapiro's o t h e r synchronization methods.

8

quickly fed back to the court) nor the evidentiary

record. TR.002245-46.The court then mandated t h a t

Plaintiffs quantify those phantom errors.

Quite simply, t h i s is not a case wherein

Plaintiffs are quibbling about the trial court's

credibility determinations, b u t raises s e r i o u s

concerns about the lack of evidence and l a w supporting

the court's legal conclusions and factual findings.

C . It Was Error To D i s c o u n t The Payroll Records

Recognizing the fundamental error in excluding

business records, Wal-Mart wrongly contends that the

court did not exclude tlhe records, but only prevented

Plaintiffs from drawing any inferences f r o m them. In

addition to suggesting t h e court imposed a distinction

without a difference, Wal-Mart is wrong.

Plaintiffs and their expert did not draw any

inferences from the records, but merely extracted t h e

information contained therein, namely, the time t h a t

employees spent working, on breaks, and the exact

amount in which they were compensated. In other words,

the records provided the very information that they

were policed to contain, and which the law requires.

Plaintiffs' reliance on Wal-Mart's time records

to identify missed breaks is further supported by this

Court's opinions. See, e . g . , M c N a m a K d v. Honeyman, 4 0 6

Mass. 4 3 ( 1 9 8 9 ) (trial court properly instructed j u r y

that it could i n f e r from the l a c k of an entry in

9

business records the nonoccurrence of the! ,event in

question) ; see a l s o , Johnson v. W i l m i n g t o n S a l e s ,

Inc., 5 Mass. A p p . Ct. 8 5 8 (1977) (proper to use "cash

r ece ip t s journal of Ford Motor Company to prove the

absence of a cash payment by the plaintiff's s o n . ' l ) ,

McNamara r e f l e c t s the majority v i e w . See, e . g . , 5

Wigmore, Evidence (3d E d . ) § § 1531, 1 5 5 6 , at 392-410

(absence of ent ry in regularly maintained business

records is equivalent to an assertian by the person

maintaining the record t h a t no such transaction occurred) . 10 In f a c t , the Advisory Committee

established by this Court on June 2006 to prepare a

Guide to the Massachusetts law of evidence ha5

recommended codifying McNaniara ~ See Draft Guide,

Absence of Entry in Records Kept in Accordance w i t h

Provisions of Section 8 0 3 ( 6 ) .

Here, the unrefuted evidence shows t h a t employees

were required to record a l l breaks, and that Wal-Mart

zealously policed this policy to ensure that employees

did not cheat the company by t a k i n g extended paid

breaks, or failing to record unpaid breaks. The record

f u r t h e r shows that Wal-Mart pr in t ed daily reports

identifying all employees with missing breaks, and

' "See also Uni ted S t a t e s v. DeGeorgia, 420 F.2d 8 8 9 , 891-892 ( 9 t h Cir. 19691 (evidence that matter is not included in memorandum, reports, etc. of r egu la r ly conducted activity is admissible to prove nonoccurrence of matter, if matter was of a kind which was regularly made and preserved); U.S. v . Munoz-Franco, 487 F.3d 25, C.A.l, 3 8 - 3 9 ( P u e r t o Rico, 2 0 0 7 1 .

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that personnel managers then investigated!each such

occurrence to determine whether the break w a s actually

missed. If not, the manager corrected the record to

reflect the break.l1 Thus, j u s t as in McNdrnara, the

Plaintiffs should have been allowed to use the absence

of a break in the records to identify missed breaks.I2

D. Common Issues Predominate

Based solely on i t s erroneous exclusion of the

records, the court went on to opine t h a t individual

issues predominate as to whether employees worked

without pay and benefits. T h i s too was error.

As an initial matter, t h e elements supporting

certification, including predominance, were upheld

twice on appeal. Thus, the issue before the trial

court was n o t whether Wal-Mart's uniform corporate

practices impacted numerous employees, but: whether

Plaintiffs' experts met the Lanigan c r i t e r i a . While

objecting to litigating predominance a third time,

there is overwhelming evidence in the record

" S e e Opening B r i e f 1 6 - 1 9 . Wal-Mart has not r e f u t e d that: (1) personnel managers strictly followed policy; (2) Wal-Mart's chief controller confirmed that employees followed corporate policy, and that there were no irregularities in the payroll records; ( 3 ) employees w e r e formally disciplined f o r failing to record breaks, and were terminated for such infractions; and (4)that the database confirms adherence to reconciliation policies. "This is fu r the r warranted given that Wal-Mart's own corporate documents and executives repeatedly acknowledged tha t employees w e r e being deprived of breaks on a systemic basis, and otherwise f a i l e d to came forward with any class- wide evidence supporting i t s conflicting claim. See Donovan v. United V i d e o , 7 2 5 F.2d 577 , 584 (10th Cir. 1984).

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demonstrating that numerous common questibns

predominate challenging Wal-Mart's overr iding and

uniform corporate policies, as extensively detailed in

Plaintiffs' certification and appellate briefing.

Commonwealth courts wisely recognize that

defendants seeking to avoid certification can always

manufacture some individualized facts regarding

damages and affirmative defenses. The law therefore

"requires merely that common issues predominate, not

that a l l issues be common to t h e class." Smilow v.

Southwestern Bell Mobile Systems, I n c . , 3 2 3 F . 3 d 3 2 ,

3 9 (1st Cir. 2 0 0 3 ) ( " S r n i l o w " ) (emphasis added).

When liability focuses on uniform corporate

conduct, such as here,13 "courts generally find t h e

predominance requirement: to be satisfied even if

individual damages issues remain." S m i l o w at 40.14

Indeed, class actions are particularly favored where

determinations of liability and damages can be made

l 3 Wal-Mart's claim to have lawful written policies is irrelevant. Plaintiffs have alleged t h a t Wal-Mart's paramount policy o f artificially suppressing payroll led to widespread violations of the law and policy. Moreover, employers are not immune from liability merely because they may have lawful written policies. The f a c t t h a t a company may purport to prohibit unlawful conduct such as the hiring of undocumented workers or discrimination does not mean the company actually adheres to such policies in i t s prac t ices .

See, e. g., Wer l inger v. Champion Heal tbcare Corp. , 598 N.W.2d 8 2 0 , 8 3 0 ( N . D . 1999) (certification proper t o challenge corporate practice of failing to provide meal periods) ; L a d q a a r d v. Hard Rock Concrete Cutters, I n c . , 2 0 0 0 WL 1774091 * 7 (N.D.111. D e c . 2000) ("questions of liability for back wages and overtime predominate over individualized questions of defenses or damages.").

14

12

u s i n g systematic, neutral evidence such a3

computerized business records. Id.

Contrary to Wal-Mart's urging, predominance has

never been interpreted to require proof that the class

includes only a de m i n i m i s number of members who were

not harmed by the defendant's conduct, nor should it.15

Rule 2 3 s e t s forth the elements for certifying a

class, and has been undeniably effective in ensuring

that the underlying goals of class actions are served,

namely, to efficiently adjudicate small claims f o r

large numbers of people based on common proof.

Moreover, because class actions deter wrongful

conduct, the burden on class litigants should n o t be

increased, particularly in Massachusetts where

subclasses and opt-outs are not permitted. S e e , e . g . , 16

Gammon v. GC Svcs. L t d . , 162 F.R.D. 313, 321.

(N.D. 111.1995) q u o t i n g NEWBERG 5 4 - 3 6 (class actions were

designed "to deter violations of the law, especially

when small individual claims are involved.")

l5 The Court need n o t decide whether t he Aspinall d i s sen t imposes a new requirement for c l a s s certification because the court's burden was applied to the use of business records. I t was only a f t e r the court rejected t he records that it suggested t h a t the c lass may be over- inc lus ive . Once that predicate ruling is corrected, there is no longer any issue of over-inclusiveness. Importantly, while such a rule threatens class actions in this

s t a t e , there i s no like p r e j u d i c e to defendants. Because plaintiffs must prove damages with reasonable certainty, darnages are not increased in proportion to class size. Also, while defendants have an interest i n damages, it is well established t h a t they have no standing or interest in damage distribution.

16

13

Nor does it make sense to increase the burden on

employees in class actions. See Anderson v . Mt.

C l e m o n s Pottery Co-, 3 2 8 U . S . 6 8 0 , 687 ( 1 9 4 6 ) (burden

or? employees "should not be m a d e an impossible hurdle,

and due regard must be given to the fact that the

employer has the du ty . . . to keep proper records of

Certification is routinely granted in

employment cases even though not all class members

suffered economic injury s i n c e the focus is rightly on

the employer's misconduct, which may also be subject

to injunctive r e l i e f . See, e . g , Dukes v. W a I - M a r t ,

I n c . , 4 7 4 F.3d 1214, 1228 (Cal. 2 0 0 7 ) (affirming

certification in gender discrimination case) . The

point being, all employees were subjected to t h e

unlawful policies, even if they did not all suffer

damages; an issue traditionally resolved at trial or

during the post-trial claims process.

As a matter of public policy, Massachusetts

should continue to follow the majority rule, which

permits certification even when individualized damage

i s sues exist. See Allapattah Services , I n c . v. Exxon

Corp., 3 3 3 ~ . 3 d 1 2 4 8 , 1261 ( I l th Cir. 2 0 0 3 ) ; see also

Bertulli v. Independent Ass'n of C o n t i n e n t a l P i l o t s ,

242 F.3d 2 9 0 , 298 (Etth C i r . 2001). To rule otherwise

l 7 Wal-Mart' s wrongly contends that Anderson and i t s progeny are irrelevant- employees seeking to recover wages under state law are entitled to equal or better protection. See 2 8 USC 5 218(a).

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would clearly signify the end of class actions as

employers can always convince some employees to

”voluntarily” waive their rights as Wal-Mart has

purported to do here .

IT. Dr. Shapiro Should N o t Have Been Excluded

Just as it was error to disregard the payroll

records, it was error to exclude Dr. Shapiro for

counting them. En the f irst place, Dr. Shapiro

presented only mathematical sums calculated from t h e

information contained in Wal-Mart‘s own payroll

records. Secondly, t h e court’s finding that D r .

Shapiro “ r i g i d l y refused” to account for Wal-Mart‘s

affirmative defenses is unsupportable. Finally, Dr.

Shapiro did not change h i s methodology.”

Dr. Shapiro has devoted over 5 0 % of his

professional time to working on identical databases in

over twenty Wal-Mart employment class actions over the

past five years. T.R.001107-08. In so doing, he has

amassed an extensive working knowledge and specialized

expertise of Wal-Mart‘s payroll system, databases and

all re la ted record generation and retention policies.

Importantly, Wal-Mart has not disputed that

D r . Shapira’s review included, but was not limited to

while the methodology remained unchanged, Dr. Shapiro in

calculated one-minute clocks in conf-ormance with Massachusetts law, which requires payment within 7 days, as opposed to Wal-Mart’s electronic capabilities, which t racks payments made within five weeks.

15

Attending depositions of the persons most

I 16

knowledgeable about Wal-Mart’s computer databases R.A.004790; R.A.004805; R.A.004646; Reviewing testimony from hundreds of hourly employees, personnel and store managers, and corporate representatives since 2001 regarding policies and procedures for recording work hours and breaks, waiver issues. R . A . 0 0 4 7 9 2 , R.A.004806, R.A.004648; R.A.004697, R.A.004701; Reviewing corporate payroll and scheduling guides, company reports for each s t o r e , including the Week to D a t e Hours and ExceptionsRR.A.004791-02, R . A . 0 0 4 8 0 5 - 0 6 ,

Reviewing numerous internal audit reports, p lus various affidavits concerning same.

Reviewing Time Adjustment Request protocols and stipulation, and conducting large sample from California,Massachusetts and Minnesota, R . A . 004698; 004701; Reviewing many Coaching for Improvement Forms. R.A.004698; Reviewing “Meal./Break Exceptions” and “Timeclock Edits.” R.A.004698, R.A. 004700; Reviewing each version of Corporate Policy PD-07 & 4 3 in effect dur ing the class period, and payroll videotapes. R.A.004698; 004699; Reviewing Wal-Mart’s expert reports in this and other like cases. R.A.004700; Reviewing various documents regarding change in locking in /ou t f o r rest breaks, effective 2/9/01. R.A.004699; 004701; Reviewing “Report on the Statistical Analysis of Wal-Mart Time Cards” (from West V i r g i n i a wage and hour c a s e ) . R.A.004699; Reviewing August 1 7 , 2005 Revised Analysis of Employee Time Keeping Records, by L . Scotk Baggett, in B r a u n v, Wa1-Mart, Inc. (Minnesota) - R .A.004700;

including

R.A.004647;

R . A . 0 0 4 6 9 9 ;

Reviewing January 4, 2001 memos+ndurn to All Facility Managers from Don Harris regarding "Changes in Payroll Process." R . A . 004701 ;

Reviewing affidavits of Charles R. Burr and Marcy L . Cannon submitted by defendants in P i t t m a n , et al. v- Wa1-Mart S t o r e s , Inc. et a Z . , Cir. Ct. MD, Price George's C ' t y , Case NO. CAL-02-10206. R.A.004701; Reviewing Wal-Mart Corporate Employment Compliance presentation, Wal-Mart Personnel Training Series Broadcast materials and related excerpts from Wal-Mart's Associate Handbooks (1994, 1998 and 2 0 0 1 ) . R.A.004701;

Wal-Mart also does not dispute t h a t Dr. Shapiro

analyzed millions of payroll records to specifically

t e s t the veracity of his work and Wal-Mart's

litigation defenses. His mathematical findings, which

Plaintiffs presented to the cour t , showed a distinct

pattern of clocking in and out behavior upon which a

j u r y could find that: (1) employees were in fac t

required to clock in and ou t for breaks; ( 2 ) they d i d

in fact do so; and ( 3 ) Wal-Mart policed this behavior.

T.R. 001215-18. The strength of t h i s objective evidence

explains why, despite spending millions on hi red guns

to parrot its defenses, Wal-Mart did not commission a

single study rebutting that c r i t i c a l testimony.

There is likewise no merit to the trial court's

belief that Dr. Shapiro changed his methodology, much

less tha t he did so in response to Wal-Mart's

criticisms, When t h e cour t expressed anger during the

pre-trial status conference because Dr. Shapiro did

not i d e n t i f y employees who had been paid within a five

17

week period f o r unauthorized time shaving!, Plaintiffs

immediately explained that the scope of t h e i r analysis

was mandated by statute, and not on Wal-Mart‘s

technological capabilities.” T.R.002065, 6 7 - 6 8 ,

Specifically, MGLA Ch. 1 4 9 , Section 148 mandates

t h a t employees be paid in full no l a te r than seven

days of the pay period. Massachusetts also mandates

that employers keep accurate payroll records, and the

legislative history establishes that t h e statute is

intended to protec t employees.

Counsel further represented t h a t they would

immediately provide t h e information i f the court w a s

inclined t o i n t e r p r e t the statute as providing a five-

week grace period. Id. They then promptly did so by

filing a supplemental affidavit. O n l y the docket en t ry

is currently par t of the record, however, because the

court granted Wal-Mart’s motion to strike it, and

denied Plaintiffs’ request to include it.

At the very least, this case should be remanded

so that Plaintiffs can address the court’s newly

raised concerns, e i t h e r by motion practice to

challenge the court’s i n t e r p r e t a t i o n of Section 148,

”Dr. Shapiro likewise testiEied t ha t it was his job to extract data from Wal-Mart‘s payroll records, but it was for the lawyers, court or jury to assign the damage v a l u e based on applicable laws. T.R.001195, 1198,and 1216.

18

or to resubmit the five-week calculation,'as requested

during t h e hearing. 20

111. WAZ-MART'S ATTEMPTS TO TRIVIALIZE ITS WRONGFUL TAKING OF $25,000,000 ARE MISLEADING

A. Wal-Mart's Misconduct Caused Widespread Harm

The Court should not be fooled by Wal-Mart's

attempts to marginalize either i t s wrongdoing, or

Plaintiffs' damages. Wal-Mart's own exper t calculated

t h a t Commonwealth employees wexe deprived of over

1 , 0 0 0 , 0 0 0 meal periods d u r i n g the c lass period, and an

internal corporate audit revealed that employees had

.been deprived over 7 5 % of earned rest breaks during a

mere two week period. The trial cour t also concluded 21

that Wal-Mart violated the law. T . R . 0 0 2 1 5 9 .

Attempting to marginalize i ts misconduct, Wal-

Mart: stracegically focuses on shifts worked ra ther

than violations uncovered, os employees harmed. Wal-

Mart also parsed out Lhe various ways in which it

devised to short its employees and, conveniently

failed to identify the number of employees deprived of

'"The court: also criticized plaintiffs €or failing to analyze time adjustment requests that m a y authorize meal insertions. W a l - Mart's late production of t h e class list eliminated that possibility. Moreover, having intentionally cheated its employees, t h a t analysis is Wal-Mart's burden, not Plaintiffs, and could have been handled in a damages phase or through distribution if necessary. Importantly, such damages amounted to less than 100,000 of the over 25,000,000 i n damages, and should not have served as a basis to decertify the entire class.

See, R.A.003511; R.A.003495-96, 002338-63. Dr. Shapiro's analysis also documents millions of m i s s e d rest breaks and f u r t h e r shows t h a t every Commonwealth s t o r e utilized the one- minute clack out, collectively dipping into the till over 20,000 times. R.A.004790-802. Quite simply,the numbers axe staggering.

21

19

supplemental income for missed rest breaks-the most

flagrant manner of deprivation here. While arguably

effective in confusing t h e issues, Plaintiffs’ claims

focus on the deprivation of earned pay and benefits

from a l l forms of Wal-Mast’s time shaving caused by

its overriding policies and practices.

Wal-Mart also champions a few affidavits wherein

employees claim to have received all of their pay

and/or benefits. Even if deemed credib le , those

employees strictly adhered to company policy and

recorded all time spent working and on breaks. Thus,

if their records revealed no shortfall, they w e r e no t

included in the damage class-assessment. A n d , again,

it is patently unfair to decertify a class where t e n s

of thousands of employees suffered economic i n ju ry

merely because some employees d id not , particularly

when such employees can be identified at the damage

phase and/or through a claims procedure.

B, Wal-Mart’s Statist ics Should Have Been Excluded

Pursuant to Mass.R.Civ.P., Rule 26 , and the case

scheduling order, the deadline for disclosing expert

reports and rebuttals was in March and A p r i l of 2 0 0 6 .

Impervious to those deadlines and basic notions of

fairness, Wal-Mart dumped its charts on Plaintiffs €or

the first time, several months l a t e r , during the

middle of the Lanigan hearing-and j u s t moments before

calling its expert witness to the stand.

20

Equally offensive to notions of fa i r ' play and

justice is the fact that Wal-Mart: has never produced

the supporLing back-up f o r its ambush analysis. Hence,

Plaintiffs have been denied the opportunity to test

the conclusions that the court expressly relied upon,

and which Wal-Mart shamelessly touts here. ( T . R .

112197-98, 2 2 2 3 ) . This gamesmanship is not only

inequitable, but: has substantive ramifications.

As of the Lanigan hearing in July of 2 0 0 6 , Wal-

Mart represented t h a t it did not yet have a class

list, which it: not produce until September. Thus, W a l -

Mart's statistical analysis, done prior to July of

2006, is not representative as it includes persons w h o

are not part of the class. If, on the other hand, Wal-

Mart insists that the charts are representative, it

unfairly withheld the class list from Plaintiffs for

an additional month, and made many misrepresentations

to the court about the same.

Plaintiffs preserved t h e i r objection to Wal-

Mart's statistics both in writing, and promptly after

being ambushed at the Lanigan hearing:

I am going to object , . . We've never seen any of this data, any of it." T.R.000945; This hearing has been scheduled for a long t i m e . Anything that she [Denise Martin] did should have been produced to us. , . clearly they did [ the analysis] way in advance of the hearing. They give it t o us the day of the hearing. And its ridiculous. It should be excluded." T . R . 0 0 0 9 4 6 ;

21

"This is absolute ambush." T.R.000946; "Rule 2 6 requires [expert analysis] to be provided. And we've done a motion to exclude evidence that wasn't disclosed. And t h i s wasn't even disclosed t o us yesterday. She was here in court yesterday. This is highly prejudicial." T.R.000948.

Plaintiffs' ensuing request to exclude the

materials was flatly r e j e c t e d by the t r i a l court:

PLAINTIFFS' COUNSEL: "My suggestion is very simple. In the first place, what should happen is that: report should be excluded. She should not be able t o t a l k today. She should t e s t i f y about-" T . R . 0 0 0 9 5 4 ,

COURT: "That is not going to happen. So stop from that premise." I d .

PLZIINTIFFS' COUNSEL: "We got our objection on record." T.R.000969.

Notably, despite the fact that Plaintiffs f u l l y

disclosed their expert analyses by turning over theis

entire database, and calculations to Wal-Mart's team

Of experts, Wal-Mart h a s never disputed Dr. Shapiro's

numerical calculations, but only attacks its records.

C.Wal-Mart's Criticisms Lack Merit

It is also important to note that Wal-Mart's

criticisms of Plaintiffs' i n j u r i e s concern the merits,

and thus, should have been decided by a j u r y .

In any event , Wal-Mart's attempt to trivialize

than t h e proverbial pot calling the kettle black. In

chastising hourly employees for seeking damages for

22

2 2 minutes shorted, Wal-Mart failed to infdrrn the Court

that Plaintiffs adopted the exact methodology Wal-Mart

developed and utilized in its business practices. Not

only did Wal-Mart define that methodology, but it

automatically deducted pennies from employee paychecks

when t h e y exceeded breaks by a mere minute

T.R.001115-18; 0 0 3 3 6 3 .

when questioned about shorted breaks, Plaintiffs

explained that they had an e t h i c a l obligation to

pursue a11 available relief for the class, and had no

power to unilaterally change Wal-Mart's policies.

T.R.00221.8-35.They further made clear that t hey would,

of course, defer to the judgment of the court or j u r y

in reducing any amounts if deemed appropriate. Id.

Importantly, the court: had t he power and an equal

responsibility to b o t h parties, to a d j u s t Plaintiffs'

proposed damage model to address any legitimate

concerns-a view favored by the majority -rather than

take the Draconian measure of decertifying the class

See, e . g . , 2 Herbert N e w b e r g & Alba Conte, N e w b e r g on

C l a s s A c t i o n s , 5 4 : 4 5 , 336 (courts are cautioned not to

close the doors of j u s t i c e to class litigants due to

manageability concerns "when contrasted with j u d i c i a l

economy, small claims access, and deterrence goals of

t h e class device"); accord C a r n e g i e , 376 F . 3 d at 661

22Sliorted breaks represent only a sinall fraction of the overall violations. T.R.002 19s.

("a class action has to be unwieldy indeeh before it

can be pronounced an i n f e r i o r alternative . . . to no

litigation at all.").

Wal-Mart has also failed to defend its use of the

one-minute clock out. That admitted, nefarious

practice was utilized by management to clock employees

o u t one minute a f t e r starting or returning to a shift

when they failed to punch out at the end of the day,

and utilized by every s i n g l e Commonwealth s to re .

Although Dr. Shapiro estimated the amount employees

where sharted by painstakingly analyzing millions of

shifts and then using the average shift time, the

court struck that valid claim due t o l a c k of

precision.In essence, the court deemed i t more just t o

deny the hourly employees earned,but "shaved" pay in

order to prevent: Wal-Mart from being either slightly

over os undercharged for i t s intentional wrongdoing.

Importantly, Wal-Mart has never identified a

single hourly employee who claims to have authorized a

one-minute clock out, nor any manager claiming to have

obtained such authorization, Moreover, although the

court faulted the employees for not discovering Wal-

Mart's time shaving, there is ample evidence from

which the jury could find that Wal-Mart concealed that

practice, and still has not paid its employees.

D . W a L - M a r t Has Done Nothing To Ensure That Employees Receive P a i d R e s t Breaks.

24

Equally misleading is Wal-Mart's c l a : m , made

without a single record citation, to have ensured t h a t

workers receive a l l paid rest breaks. Opp. a t 2 2 .

I n 1998 , Wal-Mart faced the first: class action of

this kind for failing to provide hourly employees in

Colorado with earned meal and r e s t breaks. Shortly

thereafter, Wal-Mart required its auditors to review

its time records to assess the company's legal

exposure. S.R.001782-85. After conducting an extensive

nationwide audit in July of 2000, the independent

auditors (who, incidentally, used Wal-Mart's business

records) reported t h a t employees across t h e nation

were being deprived of breaks on in violation of

"company and state regulations." R . A . 0 0 0 6 9 5 - 6 9 7 .

Shortly a f t e r receiving t ha t disturbing

assessment, Wal-Mart promptly settled the Colorado

l a w s u i t on November 8 , 2 0 0 0 , and began questioning the

propriety of compiling evidence of its wrongdoing.

Notes f r o m a corporate meeting in October of 2000

d i r e c t l y link Wal-Mart's decision to scrap its

longstanding break policy to litigation-avoidance:

" 5 5 0 million lawsuit on Wal-Mart b/c 2400 [break]

exceptions - Wal-Mart will be eliminating clocking in and out for break." R.A.003359; 0 0 3 4 9 9 .

Within three shor t weeks of settling the Colorado

case, Wal-Mart eliminated its long-standing policy

requiring t h a t i ts employees clock i n l o u t f o r r e s t

25

breaks. Wal-Mart also discontinued auditing s to re s to

t rack violations. Thus, far from taking any action to

remedy its employment abuses , Wal-Mart i n s t e a d

knowingly took affirmative steps to e l i m i n a t e c r i t i c a l

objective evidence of i t s wrongdoings.

Wal-Mart's rest break violations Led to a

$ 7 8 , 5 0 0 , 0 0 0 j u ry verdict in Pennsylvania, and an

additional penalty of $ 6 2 , 2 5 3 , 0 0 0 based on t h e court's

finding of intentional wrongdoing. A court in

California likewise issued an injunction based on the

same evidence submitted here, upon finding that:23 Wal-Mart was on notice of widespread problems concerning . . . employees missing their r e s t breaks. Id., 776. The Court is troubled by the f ac t that during the period (1998-2001) Wal-Mart's senior executives were acknowledging widespread meal and res t break problems (citations omitted) a significant source of information on rest break compliance (swiping data) w a s being phased out. 1 7 7 .

The elimination of Wal-Mart's policy of requiring its hourly employees to clock in and out for rest breaks was exacerbated by the fact t h a t Wal-Mart also decided to stop its Internal Audit Department from conducting store audits to monitor compliance with meal and res t breaks. T h i s change in policy followed t he results of the "Shipley" audit in July of 2000 that revealed Wal-Mart had a significant problem with hourly employees missing t h e i r rest breaks. '' 778. "As acknowledged by M s . Reid, Wal-Mart's Corporate Compliance Direc tor , "there isn't

S a v a g l i o , Final Statement of Decision Regarding Injunctive 23

Relief at f 31, 162-170, September 27, 2 0 0 6 .

26

going to be any documentation in the audit process that: a particular employee is chronically missing his or her breaks." . , [She further] acknowledged t h a t [Wal- Mart's] informal process is "not precise at all, I"' 1 8 0 .

a "Wal-Mart's current policy does not require managers to report or otherwise document employee complaints of missed or short rest breaks to Wal-Mart headquarters. 181. "Wal-Mart does not currently [June 20061 have a corporate strategy or plan to ensure rest break compliance. Development of such a plan remains "to be determined." 1 82.

Against that backdrop, Wal-Mart brazenly asks

t h i s Cour t to sanction class decertification because,

having stopped tracking violations, it now has no way

to determine precisely h o w much it shorted each of its

employees. This claim is akin to the child who, having

murdered h i s parents, complains about being orphaned.

It should have been rejected o u t of hand. See, e . g . ,

Computer Systems Engineering, I n c . v. Q a n t e l Corp . ,

7 4 0 F.2d 5 9 , 67 (1'' Cir, 1984) (when t h e "defendant's

wrongdoing created the r i s k of uncertainty, the

defendant cannot complain about imprecision.")

In any event, Plaintiffs have more t han met their

burden of identifying an ascertainable class, and the

amount of supplemental income they were specifically

shorted between 1995-2001-prior to t he destruction of

evidence-and t h e amount they w e r e collectively shorted

post-2001, That is all the law requires since

plaintiffs in class actions, and in civil cases in

27

general, need only prove damages with reahonable

cer ta in ty . . 2 4 Moreover, courts have broad powers to

manage class actions, and to resolve issues related to

damages and distribution. 25

Since Wal-Mart has unclean hands most of its

arguments run not only afoul of t he law and facts, but

also offend sound principles of equity. It was clear

error Tor the court to close the doors of j u s t i c e to

the employees rather than utilize any one of a myriad

of tools available to protec t the rights and interests

of all parties. Indeed, while the voluminous 70-page

opinion i s replete with concerns fo r Wal-Mart's

rights, it is strikingly devoid of any like concern

f o r the rights of the aggrieved workers who Wal-Mart

knowingly shorted both pay and earned benefits.

Carolyn Beasley Burton R o b e r t J. Bansignore Pro Hac Vice Pending, BONSIGNORE & BREWER

2'See Computer Systems E n g i n e e r i n g , I n c . v . Q a n c e l C o r p . , 740 F . 2 d 59, 67 (1'' Cir. 1984) (citation omitted) ("[dlamages. . .need n o t be proved with mathematical certainty, provided an award has a rational basis in the evidence. " ) . 25 For instance, courts may: bifurcate trials; establish appropriate presumptions or inferences; determine that cerrain aspects of individual darnages are suitable for common proof and adjudication; establish statistical formulas fo r determining class-wide damages; utilize defendants' records or other available resources to determine the amount that each class member i s entitled to recover; and u t i l i z e p i l o r or test cases for damages with selected class members. See, ALBA CoNTE AM) HERBERT NEWBERG, 2 NEWBERG ON CLASS ALTIONS (4th E d . 2007) , 5 4:32, pp. 2 8 8 - 2 8 9 (citations omitted). Courts may also appoint special masters to a s s i s t w i t h claims and distribution of damages.