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Sunday, April 5, 2020

U.S. SC rejects appeals filed by Wal-Mart, Wells Fargo over class action judgments

By Jessica Karmasek | Apr 5, 2016

The U.S. Supreme Court building in Washington, D.C.

WASHINGTON (Legal Newsline) - The U.S. Supreme Court on Monday declined to hear the appeals of both Wal-Mart Stores Inc. and Wells Fargo & Co. in class action lawsuits filed against the companies.

The nation’s high court denied certiorari, or review, of the two cases -- Wal-Mart Stores Inc. v. Braun and Wells Fargo Bank v. Gutierrez -- according to its nine-page order list.

Wal-Mart filed its petition for certiorari in March 2015, trying to get rid of a judgment of more than $150 million in favor of a class of 187,000 employees who alleged they had been denied paid rest breaks and were required to work “off the clock.”

The company wrote in its petition that only six of those employees actually testified on behalf of the class; the remainder of the class’ case was premised on extrapolation by the class’ experts, who, Wal-Mart contended, purported to apply evidence relating only to a small subset of class members and a portion of the relevant time period to all class members over the entire eight-year class period.

Wal-Mart argued that it, in turn, was denied the opportunity to rebut the experts’ extrapolation-based opinions through the presentation of individualized defenses regarding the specific facts of absent class members’ claims.

“In Wal-Mart Stores, Inc. v. Dukes, this Court unanimously ‘disapprove[d]’ the ‘novel project’ of ‘Trial by Formula,’ in which evidence pertaining only to a subset of class members is extrapolated to resolve the claims of the entire class without ‘further individualized proceedings,’ because this procedure would impermissibly alter substantive law and preclude the litigation of ‘defenses to individual claims,’” the company wrote in its petition. “Here, both the Pennsylvania Supreme Court and Pennsylvania Superior Court upheld a classwide judgment of more than $150 million that was the product of just such a trial.”

The Supreme Court did not provide any explanation for its denial of Wal-Mart’s appeal, nor did it in the Wells Fargo case.

Wells Fargo, which filed its petition for review with the nation’s high court in April 2015, wanted justices to toss a $203 million judgment against it.

The plaintiffs in the class action alleged the bank’s marketing materials contained misleading statements indicating it would post transactions to customer accounts in chronological order, which would have resulted in fewer overdraft fees for some customers than the posting order the bank actually used -- highest to lowest dollar amount.

Wells Fargo argued in its petition that there was no evidence the challenged statements caused all or even many class members to incur greater overdraft fees.

“In fact, the district court expressly found that most customers would ‘naturally assume’ that transactions were posted in chronological order, even without the bank’s statements,” the bank wrote. “The (U.S. Court of Appeals for the) Ninth Circuit nonetheless affirmed a class-wide $203 million award, relying on the Tobacco II rule that uninjured class members may recover in a class action -- even if they could not recover in an individual action.”

The Supreme Court decided to hold off on making a decision in either case pending its action in Tyson Foods Inc. v. Bouaphakeo.

Last month, the court ruled 6-2 against Tyson Foods, one of the leading producers of meat and poultry, instead siding with a class of current and formerly hourly workers at the company’s Iowa plant.

The majority concluded that if representative proof -- also referred to as statistical modeling or statistical sampling -- is permitted in an individual claim, it also can be used in class action claims.

The Supreme Court still hasn’t issued a ruling in another important class action case, Spokeo Inc. v. Robins.

At issue in Spokeo is whether a person may bring a lawsuit when a company violates a federal privacy law.

In order to invoke the jurisdiction of federal courts under Article III, a plaintiff must have “standing,” or a legal right, to sue.

If the high court rules in the coming weeks, or months, for the plaintiff in Spokeo, then it likely will preserve the status quo.

A decision the other way, however, could curtail class actions seeking statutory damages.

From Legal Newsline: Reach Jessica Karmasek by email at

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Organizations in this Story

U.S. Supreme CourtWalmart Stores Inc.Tyson FoodsPennsylvania Supreme CourtWells Fargo & Company