New Jersey Supreme Court class certification decision: Iliadis v. Wal-Mart Stores, Inc.

In Iliadis v. Wal-Mart Stores, Inc., ___ A.2d ___ (N.J. May 31, 2007), the New Jersey Supreme Court reversed an order denying class certification of meal and rest break and off-the-clock claims against Wal-Mart. Last Friday, the New Jersey Law Journal reported that "Wal-Mart Workers' Wage and Hour Suit Valid as Class Action, N.J. Court Says."

The opinion addresses the predominance, superiority, and manageability prongs of class certification. The Court's discussion of predominance and affirmative defenses (which it termed "remainder issues") is particularly interesting:

The core of the present dispute is whether Wal-Mart engaged in a systematic and widespread practice of disregarding its contractual, statutory, and regulatory obligations to hourly employees in this State by refusing to provide earned rest and meal breaks and by encouraging off-the-clock work. Essential to that issue are other salient and common questions, most notably the meaning and significance of Wal-Mart’s corporate policies concerning breaks and off-the-clock work. The impact of the Associate Handbook’s disclaimer and the uniformity of new employee orientation also are prominent common questions.

....

To be sure, as plaintiffs conceded at oral argument, resolution of those and other common questions may not dispose of the litigation. Individual questions may yet remain, such as: whether particular employees voluntarily missed rest and meal breaks; why employees who worked off-the-clock did not avail themselves of the curative time-clock procedures; how much time was worked off-the-clock; whether employees worked off-the-clock with the expectation of compensation; and how much in damages employees suffered, if any. However, the mere existence of remainder issues is insufficient to defeat class certification in New Jersey ... and elsewhere ....

So too, the individualized defenses advanced by Wal-Mart do not necessarily foreclose a finding of predominance. Although “different factual situations may arise with respect to the defenses as to different plaintiffs[, such] does not derogate from the fact that the affirmative cause of action itself has the community of interests and of questions of law or fact which justify the class action concept.” Our Appellate Division has stated: “[i]t is true that possibly different factual questions may come into play when the defense of waiver or other defenses are raised as against individual members of the class. This is not a bar to maintainability of the action as a class action.”

Slip op. at 26-29 (citations omitted) (italics added). The Court also explained that class certification would not diminish Wal-Mart's ability to present its defenses:

In finding that common questions predominate, however, we do not limit Wal-Mart’s defenses nor diminish its procedural safeguards and rights. Rather, in defending itself, Wal-Mart may argue that employees voluntarily worked through rest or meal breaks for myriad personal reasons, may contend that the conclusions of Baggett and Shapiro are flawed, may question the credibility of the July 2000 internal audit, and may advance any other relevant contentions. We are confident that, on remand, the trial court and parties’ counsel can resolve the practical challenges presented by this litigation’s individualized questions of law or fact.

Slip op. at 30-31.

The Court then addressed the superiority prong, and concluded that "[w]e cannot ignore the reality that if the proposed class is not certified, thousands of aggrieved employees will not seek redress for defendant’s alleged wrongdoing." Slip op. at 35.

Finally, as to the manageability prong, the Court noted that courts in other states (notably, California and my firm's own Wal-Mart case, Savaglio v. Wal-Mart), successfully managed "similarly-pled, state-wide class actions against Wal-Mart." Slip op. at 38. The Court went on:

We are confident that the Law Division will properly employ its broad, equitable authority and sound discretion to manage the instant litigation and appropriately address the important concerns of both parties in respect of the permissible uses of statistical extrapolation, evidentiary redundancy, and any other procedural, administrative, and evidentiary issues that may arise. We are guided by the observation that “[e]xperience . . . shows that visions of unmanageability soon disappear, because courts, together with counsel, have been able to manage litigation of constantly increasing complexity and magnitude.”

Slip op. at 40 (citation omitted).

The opinion concludes with a strong statement of the important public policies that underlying the class action device:

By equalizing adversaries, we provide access to the courts for small claimants. By denying shelter to an alleged wrongdoing defendant, we deter similar transgressions against an otherwise vulnerable class -- 72,000 hourly-paid retail workers purportedly harmed by their corporate employer’s uniform misconduct. Individually, the aggrieved Wal-Mart employees lack the strength in terms of resources and motivation to assert their grievances in court. Collectively, as a class, they are able to pursue their claims.

Slip op. at 40-41.