California Jury Grants $115 Million Award Against Wal-Mart for Punitive Damages
In December 2005, a jury in Alameda County awarded 116,000 Wal-Mart workers $115 million in punitive damages and $57 million in compensatory damages. The workers alleged that they were denied meal breaks. Click here to view the actual jury award. Three months into the jury trial, another case, Murphy v. Kenneth Cole Productions, Inc., decided in December 2005, held that the amounts recovered under Labor Code section 226.7 for missed meal breaks is a penalty and not a wage.
Wal-Mart argued that the holding in Murphy barred the plaintiffs from recovering punitive damages in addition to the penalty already imposed under section 226.7. The trial judge, Judge Sabraw, was not persuaded by Wal-Mart's argument and allowed the jury to consider, and eventually award punitive damages. Many employment attorneys believe that because Judge Sabraw was already 3 months into the jury trial when the Murphy decision came out he did not want to re-start the trial, but instead left it to Wal-Mart to appeal the case.
Wal-Mart released a statement after the verdict indicating that it will appeal the verdict. The release also stated that Wal-Mart had compliance problems when the meal break statute became effective in 2001, and since that time the company has taken steps to make sure that all employees receive their meal breaks, such as adopting new technology that alerts cashiers when it is time for their meal breaks.
Wal-Mart's appeal will be carefully watched by employers throughout California. In the mean time, employers sued for labor code violations ought to make every effort at the beginning of the case to have any claims for punitive damages barred from the complaint.