A Game-Changing Misstep for Walmart?

This post was contributed by Jennifer J. Walsh, an Attorney in McNees Wallace & Nurick LLC's Labor & Employment Practice Group in Scranton, Pennsylvania.

A federal district court recently sanctioned Walmart for "spoliation of evidence" in an employment litigation case. Although Walmart has asked the Court to reconsider its decision or allow it to appeal the decision to the appellate court, there's an important lesson to be learned regardless of the outcome: Mind Your Rs & Ds. In other words, pay attention to your company’s retention and destruction of, well, everything employment-related, particularly if there is reason to suspect that litigation is a possibility. When an employer knows or has reason to know that litigation is possible, it has a duty to preserve all relevant evidence. If the company doesn't do that, and relevant evidence is destroyed, the Court has the discretion to punish, or sanction, the employer.

In Abdulahi v. Wal-Mart Stores East, L.P., Ibrahim Abdulahi's termination for poor performance came on the heels of his filing two discrimination complaints with the Equal Employment Opportunity Commission ("EEOC"). Mr. Abdulahi, assistant manager of Store 1181, was of Ethiopian national origin. He had a storied 15 year work history with his employer, consisting of disciplinary-type "coachings" alongside consistent "solid performer" evaluation ratings.

In the EEOC complaints, Abdulahi claimed that two of his superiors at Store 1181 were "belittling" him and treating him "different than other assistant managers," which treatment allegedly included negative comments and jibes about his ethnicity and accent. Two months after Abdulahi filed the EEOC charges, he was terminated for allegedly failing to lock the Garden Center entrance overnight. Walmart claimed that video surveillance confirmed that the gates were not locked.

So, what's the problem, you ask? Well, that video footage – the only objective evidence in support of Walmart's claim that Abdulahi was terminated for legitimate reasons - was not preserved, and was written over as a matter of the company's routine video storage and re-use practices. From Abdulahi's perspective, that video footage was the only way to establish that the gates were locked, and that Walmart's stated reason for firing him was a pretext for retaliation.

The Court agreed with Abdulahi, and sanctioned Walmart for failing to preserve the video footage. Walmart was on notice that litigation was reasonably foreseeable, since Abdulahi had already filed two charges of discrimination with the EEOC. Walmart's punishment for failing to preserve the video recordings is a stringent one: when this case goes to trial, Abdulahi will be entitled to a potentially game-changing jury instruction. The Court will tell the jury that Walmart's destruction of the video footage creates a presumption that Walmart's stated reason for firing Abdulahi (the unlocked Garden Center gates) was essentially a smoke screen, and that the real reason Walmart fired him was to retaliate against him for filing EEOC charges and complaining of discriminatory treatment. Game-changer, indeed.

If your company has a policy or practice of automatically destroying documents, materials, or information within a certain time frame, remember to halt that process until you preserve all information relating to an issue or person if litigation is reasonably foreseeable. This "preservation" requirement applies to electronically stored information too, so be sure to check your email systems for auto-delete parameters. Promptly taking the necessary steps to preserve information when litigation is reasonably foreseeable is most certainly the recommended route to avoid game-changing sanctions for spoliation of evidence.

By Meaghan McWhinnie A recent Ontario Court of Appeal decision Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419, is an important reminder to employers that failing to properly investigate allegations of harassment in the workplace can be incredibly costly. Facts Ms. Boucher was an Assistant Manager of a Wal-Mart retail location. After she refused to falsify a... → Read More

The National Labor Relations Board (the "NLRB") announced yesterday that it has issued a complaint against Walmart, asserting that it had broken U.S. labor laws during the Black Friday strikes  of 2012 and 2013.  The complaint alleges that Walmart violated the National Labor Relations Act (the "Act") by issuing threats to or punishing employees who participated in the coordinated walkouts.  In particular, the general counsel for the NLRB accuses Walmart of illegally firing, disciplining, or otherwise coercing over 60 employees across 14 states for involving themselves in the strikes, which purportedly were organized to protest low wages and substandard working conditions.

The strike actions at issue in this complaint are somewhat unusual because the group acting ostensibly on the employees' behalf, OUR Walmart, is not technically a union.  Instead, it is a grass-roots group made of up local activists, clergy members, and some former employees of the superstore, whose stated goal is to improve wages and benefits for Walmart employees.     

In the complaint, the Board mentions an internal Walmart memo that was allegedly read aloud to workers in February of last year, which warned employees that Walmart did not consider such "hit-and-run work stoppages" to be protected activity under the Act and "will not excuse [such strikes] in the future."  The complaint further references an incident in November of 2012 when a Walmart spokesperson appeared on CBS News.  In his appearance, David Tovar warned that there would be "consequences" for any Walmart employees who chose to take part in the labor stoppages.  Those comments were reportedly made known to employees in several states by store managers as well.  

Commenters have noted that the NLRB has been particularly aggressive recently, going so far as to insert itself into disputes that do not involve traditionally direct labor-management relationships: 

"The NLRB is being a little more assertive at protecting the collective rights of workers in non-union settings, something they haven't traditionally done in their history," said Richard W. Hurd, a labor studies professor at Cornell University. "They're trying to carve out a little more territory in a measured, reasonable way — not as a politically motivated stunt."

Walmart now has until the end of this month to respond to the Board's complaint.  A spokeswoman for the company noted that the retailer has been engaged in discussions with NLRB officials since November of last year, when settlement talks were reportedly taking place.  However, those talks did not bear fruit, so a hearing date will be set in the near future.         

While the company will not be facing any financial penalties if found guilty of this myriad of unfair labor practice charges filed against it, Walmart could  potentially be forced to award back pay to employees or reinstate them, as the case may be.  Further, if any disciplinary actions against striking employees are found to be unfair labor practices, the company would likely have to rescind those actions.   

All employers ought to follow these developments closely, but particularly those in the food and retail sector impacted by recent campaigns of highly publicized job actions.  We will post updates as events warrant.