Harrison v. Wal-Mart Stores, Inc.

• Decision Date: 07 June 2005
• Docket Number: No. COA04-989.,COA04-989.
• Citation: 613 S.E.2d 322
• Parties: Alex HARRISON, Karen Hicks, and Patricia Polk, on behalf of themselves and all others similarly situated, Plaintiffs, v. WAL-MART STORES, INC., a Delaware Corporation, Sam's Club, an operating segment of Wal-Mart Stores, Inc., and Richard Roes 1 through 75 and John Does 1 through 10, Store District, Club/General and Regional Managers, Defendants.
• Court: North Carolina Supreme Court

Page 322

613 S.E.2d 322

Alex HARRISON, Karen Hicks, and Patricia Polk, on behalf of themselves and all others similarly situated, Plaintiffs, v. WAL-MART STORES, INC., a Delaware Corporation, Sam's Club, an operating segment of Wal-Mart Stores, Inc., and Richard Roes 1 through 75 and John Does 1 through 10, Store District, Club/General and Regional Managers, Defendants.

No. COA04-989.

Court of Appeals of North Carolina.

June 7, 2005.

COPYRIGHT MATERIAL OMITTED

Appeal by Plaintiffs from order entered 11 March 2004 by Judge W. Douglas Albright in Superior Court, Forsyth County. Heard in the Court of Appeals 12 April 2005.

Bell, Davis & Pitt, P.A., by William K. Davis, Stephen M. Russell, and Kevin G. Williams, Winston-Salem, for plaintiff-appellants.

Womble Carlyle Sandridge & Rice, PLLC, by Burley B. Mitchell, Jr., Kurt D. Weaver, Sean E. Andrussier, and Elaine Whitford, Raleigh, for defendant-appellees.

WYNN, Judge.

In order to succeed on a motion for class certification, the moving party must demonstrate, inter alia, that: (1) the named and unnamed members of the proposed class have an interest in the same issues of law or fact; (2) common issues predominates over issues affecting only individual class members; and (3) no conflicts of interest exist between the named representatives and members of the class. Crow v. Citicorp Acceptance Co., 319 N.C. 274, 280-82, 354 S.E.2d 459, 464-65 (1987). In this case, in which Plaintiffs Alex Harrison, Karen Hicks, and Patricia Polk, on behalf of themselves and all others similarly situated, contend that Defendants Wal-Mart Stores, Inc. and Sam's Club, Inc. (collectively "Wal-Mart") engaged in widespread wage and hour violations, Plaintiffs allege that the trial court erred in determining that the prerequisites for class certification were not met. Because the trial court's determinations were not "manifestly unsupported by reason, or so arbitrary that it could not have been the result of a reasoned decision [,]" Frost v. Mazda Motor of Am., Inc., 353 N.C. 188, 199, 540 S.E.2d 324, 331 (2000) (quotations and citations omitted), we affirm the order of the trial court.

The record reflects that, on 29 November 2000, Plaintiffs, two former Wal-Mart employees and a former Sam's Club employee, filed a class action against Defendants. Plaintiffs alleged that, in contravention of Wal-Mart policies and unwritten contracts with Plaintiffs, Wal-Mart engaged in widespread wage and hour abuses, including failing to record and pay for all of the time employees were required to work and failing to permit employees to take or complete lunch and rest breaks. Plaintiffs pled six claims for relief: breach of contract for off-the-clock work, breach of contract for missed rest and meal breaks, quantum meruit, unjust enrichment, tortious interference with contractual relations, and violations of the North Carolina Wage and Hour Act.¹

On 4 August 2003, Plaintiffs moved for class certification. Plaintiffs' proposed class was comprised of "all current and former hourly employees of Wal-Mart Stores, Inc. [ ] in North Carolina ... who were employed by Wal-Mart on or subsequent to November 29, 1997." The record included affidavits and depositions of Wal-Mart employees who indicated they were not required to work off the clock, were not deprived their rest and meal breaks, or worked off-clock and missed breaks for reasons other than pressure exerted by Wal-Mart.

On 11 March 2004, the trial court filed an order denying Plaintiffs' motion for class certification. The trial court made numerous findings of fact and concluded, inter alia, that: (1) Plaintiffs' proposed class was overbroad and infeasible; (2) individual issues would predominate over common issues; and (3) conflicts of interest existed amongst the members of the proposed class. From this order, Plaintiffs appeal.

I. Interlocutory Appeal

Preliminarily, we note that the order denying Plaintiff's motion for class certification is interlocutory, i.e., was "made during the pendency of an action [and did] not dispose of the case, but instead [left] it for further action by the trial court to settle and determine the entire controversy." Carriker v. Carriker, 350 N.C. 71, 73, 511 S.E.2d 2, 4 (1999); Veazey v. City of Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381 (1950) (same). Generally, there is no right of immediate appeal from interlocutory orders. Travco Hotels v. Piedmont Natural Gas Co., 332 N.C. 288, 291, 420 S.E.2d 426, 428 (1992); Goldston v. Am. Motors Corp., 326 N.C. 723, 725, 392 S.E.2d 735, 736 (1990). However, we take this appeal pursuant to North Carolina General Statute section 7A-27(d)(1), allowing review of interlocutory orders affecting a substantial right, because the appeal of an interlocutory order denying class certification has been held to affect a substantial right. N.C. Gen.Stat. § 7A-27(d)(1) (2004); Frost, 353 N.C. at 192-93, 540 S.E.2d at 327 (stating that "denial of class certification has been held to affect a substantial right because it determines the action as to the unnamed plaintiffs[]" and citing Perry v. Cullipher, 69 N.C.App. 761, 762, 318 S.E.2d 354, 355-56 (1984)).

II. Standard of Review

"The trial court has broad discretion in determining whether a case should proceed as a class action." Faulkenbury v. Teachers' and State Employees' Ret. Sys. of N.C., 345 N.C. 683, 699, 483 S.E.2d 422, 432 (1997) (citation omitted). "Since the decision to grant or deny class certification rests within the sound discretion of the trial court, the appropriate standard for appellate review is whether the trial court's decision manifests an abuse of discretion." Nobles v. First Carolina Comms., Inc., 108 N.C.App. 127, 132, 423 S.E.2d 312, 315 (1992). The trial court's decision constitutes an abuse of discretion where it is "manifestly unsupported by reason, or so arbitrary that it could not have been the result of a reasoned decision[.]" Frost, 353 N.C. at 199, 540 S.E.2d at 331 (quotations and citations omitted). Moreover, "an appellate court is bound by the [trial] court's findings of fact if they are supported by competent evidence." Nobles, 108 N.C.App. at 132, 423 S.E.2d at 315 (citation omitted).

III. Rule 23 Requirements

"The party seeking to bring a class action ... has the burden of showing that the prerequisites to utilizing the class action procedure are present." Crow, 319 N.C. at 282, 354 S.E.2d at 465 (footnote omitted). Requirements for class certification include the following:

[A] `class' exists under Rule 23 when the named and unnamed members each have an interest in either the same issue of law or of fact, and that issue predominates over issues affecting only individual class members. Other prerequisites for bringing a class action are that (1) the named representatives must establish that they will fairly and adequately represent the interests of all members of the class; (2) there must be no conflict of interest between the named representatives and members of the class; (3) the named representatives must have a genuine personal interest, not a mere technical interest, in the outcome of the case; (4) class representatives within this jurisdiction will adequately represent members outside the state; (5) class members are so numerous that it is impractical to bring them all before the court; and (6) adequate notice must be given to all members of the class.

Faulkenbury, 345 N.C. at 697, 483 S.E.2d at 431 (quotation and citations omitted); see also, e.g., Crow, 319 N.C. at 282-84, 354 S.E.2d at 465-66 (same). Where all the prerequisites are met, it is within the trial court's discretion to determine whether "a class action is superior to other available methods for the adjudication of th[e] controversy."² Crow, 319 N.C. at 284, 354 S.E.2d at 466.

IV. Application

In the case sub judice, the trial court concluded that Plaintiffs failed to meet a number of the prerequisites for class certification.³

A. Infeasible Class Definition

The trial court first determined that Plaintiffs failed to define a feasible class.

"[A] `class' exists under Rule 23 when the named and unnamed members each have an interest in either the same issue of law or of fact[.]" Crow, 319 N.C. at 280, 354 S.E.2d at 464 (emphasis added); Faulkenbury, 345 N.C. at 697, 483 S.E.2d at 431 (same). In a strikingly similar case deemed persuasive authority by the trial court, Petty v. Wal-Mart Stores, Inc., 148 Ohio App.3d 348, 354, 773 N.E.2d 576, 580 (2002), four named plaintiffs brought a class action against Wal-Mart, Sam's East, and store managers for forcing employees to work off the clock and forego rest and meal breaks. The Petty trial court found that the plaintiffs' proposed class of all past and present Ohio Wal-Mart employees necessarily failed because it was clear from the evidence that not all members of the putative class had an interest in the alleged wage and hour abuses of being forced to work off the clock and miss breaks. The Court of Appeals of Ohio noted that the persons exposed to the alleged wage and hour abuses would be a mere subset of the proposed class and that "[i]f this type of class were permitted, plaintiffs would be able to define a class as broadly as possible in the hope of netting a certain percentage of injured members[,]" which would "render the class action vehicle unduly cumbersome, and ultimately ineffective" Id.

In their motion for class certification, Plaintiffs here defined the proposed class as "all current and former hourly employees" employed at any Wal-Mart in North Carolina "on or subsequent to 29 November 1997."⁴ The trial court determined that "[u]ncontroverted evidence presented to the Court establishes that the proposed class includes individuals who did not work off the clock or miss rest breaks or meal periods." This determination is supported by evidence in the record, including affidavits and deposition testimony of Wal-Mart employees who stated that they did not work...