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According to plaintiff lawyers, a $172 million verdict � including $115 million in punitive damages � wasn’t enough to stop America’s largest retailer from continuing to violate California’s meal and rest break law. The question of compliance by Wal-Mart Stores Inc. � and whether the company should have a court-appointed supervisor watching over its shoulder � is playing out this week in a trial before Alameda County Superior Court Judge Ronald Sabraw. The case, Savaglio v. Wal-Mart Stores, C-835687, is one of the few meal and rest break class actions to reach a trial verdict, as opposed to a settlement, lawyers say. And so the outcome of the injunctive relief phase could offer a rare glimpse into what measures a court might be willing to impose on a recalcitrant company. “Wal-Mart is hypercontrolling and super-sensitive when it comes to their business operations,” said Jessica Grant, a principal at The Furth Firm, which is representing the plaintiffs. “To see a case of this magnitude seeking an order on how they do business in California is unique.” Yet Wal-Mart argues the plaintiffs’ allegations are ancient history. Since the company has worked hard to comply with all meal and rest laws, its attorneys argue, an injunction isn’t appropriate, since that relief should be based on the likelihood of future behavior. Even though Sabraw might not issue a final decision in this phase of the trial until August, some plaintiff lawyers in the wage-and-hour arena are following the proceedings closely. If Sabraw rules against the retailer, they believe such a decision could have a positive impact in their settlement negotiations against other large corporations. “Depending on the extent that the court imposes injunctive relief on Wal-Mart and that it is viewed by Wal-Mart as being an onerous requirement, it may impact [defendants'] willingness to take a case to trial,” said Eric Grover, a partner with employment firm Keller Grover. While many companies do implement programs and policies even before a settlement is reached, Grover said there are still many who find it cheaper to deny employees certain benefits and risk liability rather than comply with the law � even after they have paid out a settlement. He is currently representing plaintiffs suing Baker’s Square restaurants over missed meal and rest breaks and managerial misclassifications. The company previously settled a similar case in California several years ago, said Grover, whose suit is pending in San Francisco Superior Court. Plaintiffs in the Wal-Mart action are asking the court to appoint Emeryville-based legal services provider LECG Inc. to act as a monitor, for Wal-Mart to undertake audits and report its compliance, and for the store to give its own employees notice of the injunction. The lawyers seek an additional $5 million in restitution for meal break violations between October and December 2000. That was the period just before the implementation of California Labor Code � 226.7, which charged employers payments for missed meal breaks. The extent of that liability is currently at issue before the California Supreme Court in Murphy v. Kenneth Cole Productions. Plaintiffs want a court order enjoining Wal-Mart from asking employees to sign away their right to meal breaks, something they say often occurs at the retailer under coercive conditions. The lawyers also say Wal-Mart should stop using a system that automatically clocks employees in and out for their meal breaks, which masks the true duration of their lunch, they say. The injunction is necessary since Wal-Mart has a history of ignoring even its own studies showing it was not following the law, Grant argues. “Even today, after the jury in this case found Wal-Mart liable for punitive damages, Wal-Mart continues to violate specific provisions of both the California Labor Code and Industrial Welfare Commission Wage Orders,” the plaintiffs contend in their brief. Meanwhile, Wal-Mart lawyers and the company’s outside counsel at Susman Godfrey argue an injunction isn’t needed, since the retailer has demonstrated “phenomenal” compliance in California over the past three years. They fault plaintiffs for basing their argument on 5-to-8-year old documents, where injunctive relief under the Unfair Competition Law should be based on the probability of future misconduct instead. During the jury trial, “this Court recognized the important distinction between current practices at Wal-Mart, rather than the events from 1998 through 2001, for the purposes of issuing an injunction,” argued Steven Sklaver, an attorney for Wal-Mart with Susman Godfrey, in his trial brief. Wal-Mart argued it has worked hard on the issue of meal and rest break compliance in its stores, making technological enhancements that include an automated procedure that keeps track of employee meal breaks. Wal-Mart attorneys at Susman Godfrey didn’t return telephone calls by press time. Gibson, Dunn & Crutcher partner Theodore Boutrous Jr. is representing the company in the appeal of the jury verdict.

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