Walmart 2007 Annual Report Download - page 56

Wal-Mart 2007 Annual Report 54
8 Litigation
The Company is involved in a number of legal proceedings. In
accordance with Statement of Financial Accounting Standards No. 5,
“Accounting for Contingencies,” the Company has made accruals with
respect to these matters, where appropriate, which are re ected in the
Company’s Consolidated Financial Statements. The Company may enter
into discussions regarding settlement of these matters, and may enter
into settlement agreements, if it believes settlement is in the best
interests of the Company’s shareholders. The matters, or groups of
related matters, discussed below, if decided adversely to or settled by
the Company, individually or in the aggregate, may result in liability
material to the Company’s  nancial condition or results of operations.
The Company is a defendant in numerous cases containing class-action
allegations in which the plainti s are current and former hourly asso-
ciates who allege that the Company forced them to work “o the clock”
or failed to provide work breaks, or otherwise that they were not paid
for work performed. The complaints generally seek unspeci ed mon-
etary damages, injunctive relief, or both. Class or collective-action
certi cation has yet to be addressed by the court in a majority of these
cases. Where it has been addressed, certi cation has been denied in
fourteen of these cases; has been granted in whole or in part in eight
of these cases; and has been conditionally granted for notice purposes
only in two of these cases. In another  ve such cases, certi cation was
denied and the case was then dismissed, and in one additional such
case, certi cation was granted and the case was then dismissed. The
Company cannot reasonably estimate the possible loss or range of
loss which may arise from these lawsuits.
One of the class-action lawsuits described above is Savaglio v. Wal-Mart
Stores, Inc., a class-action lawsuit in which the plainti s allege that they
were not provided meal and rest breaks in accordance with California
law, and seek monetary damages and injunctive relief. A jury trial on
the plainti s’ claims for monetary damages concluded on December 22,
2005. The jury returned a verdict of approximately $57 million in stat-
utory penalties and $115 million in punitive damages. Following a bench
trial in June 2006, the judge entered an order allowing some, but not
all, of the injunctive relief sought by the plainti s. On December 27,
2006, the judge entered an order awarding the plainti s an additional
amount of approximately $26 million in costs and attorneys’ fees. The
Company believes it has substantial defenses to the claims at issue,
and on January 31, 2007, the Company  led its Notice of Appeal.
In another of the class-action lawsuits described above, Braun/Hummel v.
Wal-Mart Stores, Inc., a jury trial was commenced on September 5, 2006,
in Philadelphia, Pennsylvania. The plainti s allege that the Company
failed to pay class members for all hours worked and prevented class
members from taking their full meal and rest breaks. On October 13,
2006, the jury awarded back-pay damages to the plainti s of approx-
imately $78 million on their claims for o -the-clock work and missed
rest breaks. The jury found in favor of the Company on the plainti s’
meal-period claims. The plainti s are now seeking an additional award
of approximately $62 million in statutory penalties, plus prejudgment
interest and attorneys’ fees. The Company believes it has substantial
defenses to the claims at issue, and intends to challenge the verdict
in post-trial motions and, if necessary, on appeal.
Another of the class-action lawsuits described above, Salvas v. Wal-Mart
Stores, Inc., had been scheduled to go to trial on October 2, 2006, before
a jury in Cambridge, Massachusetts. The plainti s alleged that the
Company failed to pay class members for all hours worked and pre-
vented class members from taking their full meal and rest breaks, and
were seeking approximately $90 million in back pay, plus statutory
treble damages, interest and attorneys’ fees. Shortly before the
scheduled trial date, however, the judge took the case o the trial
docket in order to consider Wal-Mart’s motion to decertify the class,
and on November 7, 2006, the judge entered an order decertifying
the class entirely. It is anticipated that the judge will certify his ruling
for an immediate appeal.
A putative class action is pending in California challenging the
methodology of payments made under various associate incentive
bonus plans. The court has made no decision on class certi cation in
this case. The Company cannot reasonably estimate the possible loss
or range of loss which may result from this lawsuit.
The Company is currently a defendant in  ve putative class actions
brought on behalf of salaried managers who challenge their exempt
status under state and federal laws, which are pending in California,
Michigan, New Mexico and Tennessee. Conditional certi cation for
notice purposes under the FLSA has been granted in one of these
cases (Comer v. Wal-Mart Stores, Inc.). In another, class certi cation has
been denied (Sepulveda v. Wal-Mart Stores, Inc.). The Company cannot
reasonably estimate the possible loss or range of loss which may
arise from these lawsuits.
The Company is a defendant in Dukes v. Wal-Mart Stores, Inc., a class-
action lawsuit commenced in June 2001 and pending in the United
States District Court for the Northern District of California. The case
was brought on behalf of all past and present female employees in
all of the Company’s retail stores and warehouse clubs in the United
States. The complaint alleges that the Company has engaged in a
pattern and practice of discriminating against women in promotions,
pay, training and job assignments. The complaint seeks, among other
things, injunctive relief, front pay, back pay, punitive damages, and
attorneys’ fees. On June 21, 2004, the district court issued an order
granting in part and denying in part the plainti s’ motion for class
certi cation. The class, which was certi ed by the district court for
purposes of liability, injunctive and declaratory relief, punitive dam-
ages, and lost pay, subject to certain exceptions, includes all women
employed at any Wal-Mart domestic retail store at any time since
December 26, 1998, who have been or may be subjected to the pay
and management track promotions policies and practices challenged
by the plainti s. The class as certi ed currently includes approximately
1.6 million present and former female associates.
Notes to Consolidated Financial Statements