|Court||United States State Supreme Judicial Court of Massachusetts|
|Writing for the Court||Marshall|
|Citation||893 N.E.2d 1187,452 Mass. 337|
|Parties||Crystal SALVAS & another<SMALL><SUP>1</SUP></SMALL> v. WAL-MART STORES, INC.|
|Decision Date||23 September 2008|
|Docket Number||No. SJC-10108.|
WAL-MART STORES, INC.
Shannon Liss-Riordan, Hillary Schwab, Philip J. Gordon, Boston, Audrey R. Richardson, Roslindale, & Catherine K. Ruckelshaus, New York, NY, for Massachusetts Employment Lawyers Association & others, amici curiae, submitted a brief.
Present: MARSHALL, C.J., GREANEY, IRELAND, SPINA, COWIN, CORDY, & BOTSFORD, JJ.
[893 N.E.2d 1192]
In this putative class action, the named plaintiffs are former employees of the defendant, Wal-Mart Stores, Inc. (Wal-Mart), who were paid by the hour (hourly employees). On behalf of themselves and others similarly situated they allege that Wal-Mart wrongfully withheld compensation for time worked and denied or cut short rest and meal breaks to which they were entitled. The plaintiffs appealed from a Superior Court judge’s allowance of summary judgment on certain counts of their complaint and also filed an application for direct appellate review. The judge reported the case to the Appeals Court. See Mass. R. Civ. P. 64, as amended, 423 Mass. 1410 (1996), and G.L. c. 231, § 111. See also note 40, infra. Wal-Mart also filed an application for direct appellate review. We granted both applications.
In essence we are asked to determine (1) whether the judge
abused his discretion by (a) allowing Wal-Mart’s motion to exclude the testimony of the plaintiffs’ principal expert, Dr. Martin Shapiro, as unreliable, and (b) allowing Wal-Mart’s motion to decertify the class of approximately 67,500 current and former hourly workers employed by Wal-Mart in Massachusetts for more than a ten-year period2; and (2) whether the judge erred in granting summary judgment to Wal-Mart on all of the plaintiffs’ claims concerning meal breaks, as well as certain of the plaintiffs’ claims under the payment of wages law, G.L. c. 149, § 148, for failure to compensate the plaintiffs for the time they worked.3
For the reasons set forth below, we vacate the judge’s orders. We conclude, inter alia, that the judge abused his discretion in allowing Wal-Mart’s motions to exclude the testimony of the plaintiffs’ expert and to decertify the class. We further conclude that the judge erred in granting partial summary judgment to Wal-Mart. We remand the case for the entry of an order certifying the class and for further proceedings consistent with this opinion.
1. Facts.4 Wal-Mart is a national mass-merchandising retail chain headquartered in Bentonville, Arkansas (home office), with stores located throughout Massachusetts. The operations of individual Wal-Mart stores, including payroll controls, are directed by corporate-wide policies established, disseminated, and carefully controlled by the home office. The central labor policies and payroll controls relevant to this litigation include the following.
Wal-Mart policy required all hourly employees (called “associates” by Wal-Mart) to adhere to stringent timekeeping
procedures, including clocking in and out at the beginning and end of each shift and at other prescribed times. Wal-Mart’s uniform timekeeping requirements were communicated to hourly employees from their first day of work and consistently throughout their employment at Wal-Mart through, among other channels: an employee handbook intended for every hourly employee nationwide,5 oral and written materials presented in orientation sessions designed by the home office that newly hired hourly employees were required to attend, oral and written “coaching” (disciplinary) actions, and posters and other materials posted near store time clocks and elsewhere throughout Wal-Mart stores.6 The timekeeping instructions given to hourly employees embodied the substance of two corporate-wide Wal-Mart policy directives applicable uniformly to all hourly employees. The policy directives were known internally as PD-07 and PD-43.7 PD-07 provided that, unless otherwise required by State law, all hourly employees were entitled to one paid, fifteen-minute rest break for every three hours of consecutive time worked (to a maximum of two rest breaks), and an unpaid meal break of at least thirty minutes for work in excess of six consecutive hours.8 A version of
PD-07 in effect until February 10, 2001, stated that hourly employees “whose break or meal period is interrupted to perform work would receive compensation for the entire period at their regular rate of pay and be allowed an additional break or meal period.”9 Until that date, PD-07 required employees to clock in and out for both rest and meal breaks. Thereafter, employees were required to clock in and out for meal
breaks but not for rest breaks. Neither PD-07 nor any other Wal-Mart policy directive has ever expressly permitted hourly employees to waive breaks.
PD-43 stated that hourly employees should never be required to work “off-the-clock,” that is, work when the employee’s hours are not being recorded for compensation. The same policy directive also generally prohibited employees from working overtime. PD-43 obligated store managerial personnel to investigate every instance where it was determined that an employee worked off-the-clock and to complete a working off-the-clock notice, to be signed by the supervisor or manager, the employees, and a “witness” who was required to be a salaried employee. Wal-Mart repeatedly warned its hourly employees that they would be subject to an escalating series of disciplinary “coaching,” including termination, for violating company policy concerning breaks and off-the-clock work.10 The plaintiffs introduced numerous policy directives and other internal documents, as well as affidavits and deposition testimony, specifying that Wal-Mart’s policies regarding work breaks (as well as its policies regarding off-the-clock
work) were, in the words of an internal Wal-Mart memorandum, among the company’s “non-negotiables.”11
The day-to-day responsibility for ensuring that hourly employees followed company timekeeping policies fell on individual store managers.12 For store managers, the responsibility for payroll came with considerable pressure from the home office to boost profits by, among other things, minimizing labor costs, one of the corporation’s largest controllable expenses.13 Store managers were rewarded for keeping payroll costs low. Conversely, if they exceeded Wal-Mart’s stringent labor cost guidelines, they might lose their bonuses or lose their jobs. According to documents proffered by the plaintiffs, Wal-Mart informed Massachusetts store managers of the precise margins by which their payrolls exceeded the labor cost guidelines and ordered the store managers to cut those payroll costs accordingly.14
At least since 1989, senior Wal-Mart home office executives have been made aware that, despite the written policy directives to the contrary, store managers were sometimes “[a]ltering time cards to decrease reported payroll expenses” and “[i]nstructing associates to work off the clock ….” Further, at least since
1998, the home office was aware that some hourly employees “are not receiving scheduled breaks and lunches.” One Wal-Mart payroll audit, known as the “Shipley audit,” dated July 17, 2000, surveyed 128 Wal-Mart stores nationwide. Among other things, the Shipley audit documented that in a two-week period, 127 “[s]tores were not in compliance with company and state regulations concerning the allotment of breaks and meals as 76,472 exceptions were noted.”
Wal-Mart was also aware, during the class period, of allegations of “time shaving” by store managers.15 Two time-shaving techniques in particular feature prominently in this litigation. The first was the insertion by Wal-Mart supervisors of meal break periods into hourly employees’ time records, allegedly when no meal break had in fact been taken. This effectively deprived hourly employees of compensation for the amount of time of the inserted meal break period.16,17 The second was a practice known as the “one-minute clock-out,” in which a manager inserted a “clock-out” one minute after the hourly employee had clocked in (either for a shift, or on returning from a break) even though the employee had actually worked for longer than one minute.18,19
The plaintiffs, Crystal Salvas and Elaine Polion, averred that, as hourly employees at Wal-Mart during the class period, they worked off-the-clock and were denied rest and meal breaks.20 The plaintiffs
augmented their affidavits with evidence from other hourly employees.21 This evidence includes, among other things, letters, records of telephone calls to an internal “grass roots” complaint hotline for hourly employees, and other communications to superiors from Massachusetts hourly employees in various Wal-Mart stores throughout the Commonwealth complaining about time-shaving practices and missed rest and meal breaks.22 Wal-Mart submitted countervailing affidavits from Massachusetts hourly employees stating that they did not work off-the-clock and were not denied rest or meal breaks.23
Some of the evidence proffered by the plaintiffs consists of an expert’s analysis of Wal-Mart’s business records, which were obtained by the plaintiffs through discovery from Wal-Mart’s home office. See part 3, infra. As noted, the home office closely monitored the payroll activities of all of its…