The Work

December 24, 2008 2:22 PM

Santa Brings Gifts in Wal-Mart Wage Litigation for Susman Godfrey, Greenberg Traurig

Posted by Brian Baxter

Wal-Mart announced on Wednesday that it would pay at least $352 million to settle 63 wage-and-hour class action suits stemming from allegations that the company did not appropriately compensate employees for off-the-clock work.

Depending on the number of workers affected by the agreement, payments to plaintiffs would be capped at $640 million, the Bentonville, Ark.-based discount retailer said in a statement.

Wal-Mart--represented by national coordinating counsel at Greenberg Traurig and trial counsel at Susman Godfrey--successfully won denials of class certification in a number of the suits. Still, the company has suffered some high-profile wage-and-hour defeats in recent years.

In July, after a three-month bench trial in state court in Minnesota, a judge awarded $6.5 million in compensatory damages to a class of 56,000 Wal-Mart employees who claimed that the company failed to provide them with rest breaks. (With punitive damages hearings in the case scheduled for January, Wal-Mart chose to settle earlier this month for $54.3 million.)

The ruling came on the heels of a $78.5 million compensatory damages award by a Philadelphia jury in October 2006 to an estimated 186,000 current and former Wal-Mart employees in Pennsylvania.

Less than a year before that loss, in December 2005, Wal-Mart was hit with a $172 million verdict--including $115 million in punitive damages--by a jury in Oakland that found in favor of a class of 200,000 company employees claiming they were not provided with legally mandated meal breaks.

Susman Godfrey's Neal Manne served as lead counsel for Wal-Mart in all three trials. While Wal-Mart might seem like a glutton for punishment after such high-profile defeats, plaintiffs lawyers say the company's attitude was anything but.

"Wal-Mart has taken the position that they will bury the plaintiffs bar," Franklin Azar of Denver plaintiffs firm Franklin D. Azar & Associates told The Am Law Daily's Alison Frankel in July after the Minnesota decision. "They say they'll never settle in a million years...They say, 'We're going to try them until the cows come home, and we're going to break you.'"

Azar, who was not immediately available for comment by the time of this story, has taken the lead pioneering wage-and-hour class actions against Wal-Mart. Azar previously told The Am Law Daily that since 2001, his 25-lawyer firm has been involved in 23 state class actions, 11 of which have been certified.

Azar and fellow Azar & Associates partner Rodney Bridgers served as cocounsel to Michael Donovan of Philadelphia's Donovan Searles and Judith Spanier of New York's Abbey Spanier Rodd & Abrams in the Pennsylvania class action. In the Minnesota class action, Azar served as cocounsel to Justin Perl of Minneapolis's Maslon Edelman Borman & Brand and William Schwebel of Schwebel, Goetz & Sieben. (San Francisco's The Furth Firm served as lead counsel in the meal-time case in Oakland.)

Sources familiar with the Wal-Mart wage settlement say that Brian Duffy, a partner in the Denver office of Greenberg Traurig who specializes in class action employment litigation, took the lead outside legal role advising the company on the agreement. Those same sources say that Duffy was assisted by Susman Godfrey's Manne on the matter. (Both Duffy and Manne were unavailable for immediate comment by the time of this post.)

"Resolving this litigation is in the best interest of our company, our shareholders, and our associates," said Wal-Mart executive vice president and general counsel Thomas Mars in a press release. "Many of these lawsuits were filed years ago and the allegations are not representative of the company we are today."

The cases covered in the settlement announced on Wednesday were covered by three different groups of plaintiffs lawyers. (The full list of cases covered by the settlement is available here.)

Included are cases in 14 states that Azar serves as co-lead counsel to as well as a group of 35 cases consolidated in Nevada that were brought by Carolyn Beasley Burton of the Richmond, Calif.-based Beasley Law Group and Robert Bonsignore of Boston's Bonsignore & Brewer.

But while the agreement might seem like a merciful reprieve for Susman Godfrey and Greenberg Traurig, The Wall Street Journal reports that the move could be a political rather than tactical legal decision.

President-elect Barack Obama has proclaimed wage-and-hour enforcement a priority for his nascent administration and the Employee Free Choice Act currently before Congress would give workers more freedom to unionize. Wal-Mart opposes the legislation.

One avowed Wal-Mart critic succinctly summed up his view of the company's strategy in an interview with The New York Times.

"Wal-Mart is scared with what they're going to face in an Obama administration," said David Nassar of Wal-Mart Watch, a union-funded advocacy group, to the newspaper. "You clean up your house before the in-laws come over. That's what they're trying to do."

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So much for the Sussman Godfrey mystique, for those who thought there ever was one.

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