Wal-Mart Settles Lawsuits - December 24, 2008

In a statement released yesterday by the nation’s largest retailer, Wal-Mart Stores Inc. (WMT) confirmed that the company has settled more than 60 lawsuits against them regarding the violation of hourly workers pay and making employees work through personal breaks.

In claims that have been ongoing for several years, Wal-Mart has agreed to shell out nearly $640M in the 63 lawsuits that were pending against the company. If the settlement reaches the upper end of the $640M, it would only represent less than 0.1% of the company’s total revenue in 2008 of $378.8B.

Even after yesterday’s settlement, the company still has some 12 lawsuits pending against them for various claims.

“Resolving this litigation is in the best interest of our company, our shareholders and our associates,” Tom Mars, Wal-Mart executive vice president and general counsel, said in a joint statement by the company and the plaintiffs. “Many of these lawsuits were filed years ago and the allegations are not representative of the company we are today.”

These suits against Wal-Mart appear to be a frequent occurrence. Earlier this month, the company settled an additional suit against them in Minnesota wherein workers also claimed violations of wage and hours worked laws. Wal-Mart settled for $54.3M.

In the Minnesota case, the circuit judge found that Wal-Mart had violated wage and hour laws more than 2M times. The company agreed to pay workers more than $6.5M in back pay. If the case had gone to trial, the jury would have been asked to render judgment for damages of upwards of $2B.

Dating further back, Wal-Mart has also settled other cases involving workers’ rights and break privileges. In 2006, a Pennsylvania jury ruled against Wal-Mart in a $78M case in which the company refused workers’ personal breaks, along with unpaid wages. In 2005, a California court awarded plaintiffs more than $172M over meal breaks that were not provided.

These cases, along with those that are pending or recently settled, have caused mass concerns and outrage by consumers, environmentalists, politicians and labor groups.

By the close of trading today, shares of Wal-Mart increased marginally, adding $0.15, or 0.3%, to end the shortened session at $55.44 per share.

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