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US: Suit Against Wal-Mart Is Narrowed

Bloomberg News
August 29th, 2006

A federal judge Monday dismissed civil racketeering claims against Wal-Mart Stores Inc., narrowing the scope of a lawsuit that accused the retailer of knowingly employing illegal immigrants to clean its stores.

U.S. District Judge Joseph A. Greenaway Jr. in Newark, N.J., said the immigrant janitors who sued failed to adequately support the claims. The janitors said Bentonville, Ark.-based Wal-Mart kept labor costs down by using illegal immigrants, forced them into involuntary servitude and conspired with contractors to launder money.

A court "will not accept unsupported conclusions, unwarranted inferences or sweeping legal conclusions cast in the form of factual allegations," Greenaway said in a 17-page opinion. The ruling will cut the number of janitors in the suit to about 200 from several thousand, said their attorney, James Linsey.

Wal-Mart still faces a possible trial on some of the janitors' claims. The judge previously rejected Wal-Mart's request to throw out allegations that it forced janitors to work unpaid overtime and locked them in stores against their will. A U.S. probe resulted in Wal-Mart agreeing last year to pay $11 million for using undocumented workers and pledging to improve oversight of its contractors.

"We are pleased with the judge's decision, but there are claims pending," Wal-Mart spokesman John Simley said.

Shares of Wal-Mart rose 55 cents to $44.43.

The loss of the racketeering claims makes the case a collective action instead of a class action, Linsey said. That means the janitors will have to pursue individual claims rather than sue as a group.

"We believe the judge's analysis is at odds with the law," Linsey said. He said he hadn't decided whether to appeal.

Wal-Mart faces more than 70 wage-and-hour lawsuits, including class-action cases in which plaintiffs allege that it docked breaks and altered timecards to cut payroll costs.

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