ROBERT J. KING v. WAL-MART STORES, INC.

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CLASS ACTION COMPLAINT

Plaintiff, Robert J. King, individually and on behalf of all those similarly situated, by and through his attorneys, hereby alleges as follows:

NATURE OF ACTION

1. This is a class action brought on behalf of the Wal-Mart Profit Sharing and 401(k) Plan (the “Plan”) pursuant to §§ 502 (a)(2) and (a)(3) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132(a)(2) and (a)(3), against the fiduciaries of the Plan, a defined contribution 401(k) retirement plan sponsored by Wal-Mart Stores, Inc. (“Wal-Mart” or the “Company”).

2. Plaintiff’s claims arise from the failure of Defendants, who are fiduciaries of the Plan, to act solely in the interests of the Plan’s participants and beneficiaries, as well as Defendants’ failure to exercise all the required skill, care, prudence and diligence in administering the Plan and the Plan’s assets during the period February 1, 1997 to the present (the “Class Period”). Specifically, Plaintiff alleges that Defendants participated in a conspiracy, or at the very least failed to take any corrective action, concerning Wal-Mart’s miscalculation and underpayment of retirement benefits to those hourly employees of Wal-Mart who participated in the Plan throughout the Class Period.

3. This action, brought on behalf of the Plan, seeks to recover tens or hundreds of millions of dollars of retirement savings that should have been, but were not, paid to the Plan as a result of Wal-Mart’s illegal underpayment and suppression of employee wages.

4. As more fully explained below, the Plan provides that Wal-Mart contributes to the Plan each year a percentage of the annual “regular salary or wages” of Wal-Mart’s employees. Although Wal-Mart publicly proclaimed that it was contributing a specified percentage of employee wages to the Plan each year, in reality Wal-Mart underpaid its contributions to the Plan by wrongfully manipulating the underlying employee wages on which Wal-Mart based Plan contributions. Wal-Mart did so through a variety of illicit practices, described below. By fraudulently lowering the total amount of wages Wal-Mart employees received, the Company, with the other Defendants’ complicity, also fraudulently reduced the amount of retirement benefits hourly workers received.

5. Wal-Mart willfully and intentionally conspired to unlawfully lower the wages of its hourly employees by systematically failing to pay them for all of the time they actually worked. Specifically, Wal-Mart deleted hundreds of thousands of hours of time worked from employee payroll records -- a practice known in the industry as “time-shaving” -- and required hourly employees to work hours “off the clock” that were not recorded in Company payroll records. Wal-Mart used a variety of illicit practices to pay its workers less than it was required to pay them, including:

• deleting overtime hours that employees worked in excess of forty hours;
• altering employee records to make it appear as if the employees= workday ended one minute after their meal period concluded, effectively denying employees their pay for the three or four hours of work they performed after the meal period;
• deleting employee punches so that employees would not be paid for an entire day or afternoon of work;
• altering employee time records to make it appear as if employees took meal periods when in fact they did not, resulting in unauthorized deductions from employee paychecks; and
• failing to pay employees for all reported time.

6. Not only did such illicit practices improperly suppress Wal-Mart employees’ wages, they also improperly reduced hourly workers’ retirement savings. This occurred because Wal-Mart’s illegal suppression of employees’ wages reduced the “regular salary or wages” on which Wal-Mart calculated its Plan contributions. This action seeks relief for the Plan against Defendants for their breaches of ERISA fiduciary duties in allowing Wal-Mart to underpay its promised contributions to the Plan.

7. This action seeks relief from Defendants, as fiduciaries of the Plan, to make the Plan whole for the losses suffered as a result of Defendants’ failure to discharge their fiduciary obligations. Because the violations alleged in this Complaint caused the Plan (and not just individual participants) to suffer losses, and because ERISA authorizes a Plan participant to sue for plan-wide relief for breaches of fiduciary duty, Plaintiff brings this action on behalf of herself and on behalf of all Plan participants and beneficiaries during the Class Period to recover losses to the Plan pursuant to ERISA § 409, 29 U.S.C. § 1109, as well as for other relief for the Plan.

8. This action is brought on behalf of the Plan and seeks to recover losses to the Plan for which Defendants are personally liable pursuant to ERISA §§ 409 and 502(a)(2), 29 U.S.C. §§ 1109, and 1132(a)(2). In addition, under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3), Plaintiff seeks other equitable relief from Defendants, including, without limitation, injunctive relief and, as available under applicable law, constructive trust, restitution, equitable tracing, and other monetary relief.

9. In Count I, Plaintiff alleges that Defendants breached their fiduciary duties of prudence and loyalty to the Plan’s participants in violation of ERISA by failing to act solely in the interests and for the exclusive purpose of Plan participants. In Count II, Plaintiff alleges that Defendants breached their fiduciary duties by failing to disclose important information to participants and beneficiaries of the Plan. Count III alleges that Defendants breached their duties and responsibilities as co-fiduciaries by failing to prevent breaches by other fiduciaries of their duties of prudent and loyal management, and complete and accurate communication.

10. ERISA §§ 409(a) and 502(a)(2) authorize participants such as Plaintiff to sue in a representative capacity for losses suffered by the Plan as a result of breaches of fiduciary duty. Pursuant to that authority, Plaintiff brings this action as a class action under Fed. R. Civ. P. 23 on behalf of all participants and beneficiaries of the Plan.

11. In addition, because Plaintiffs’ claims are based, in part, on documents solely in Defendants’ possession, certain of Plaintiffs’ allegations are by necessity upon information and belief. At such time as Plaintiff has had the opportunity to conduct discovery, Plaintiff will, to the extent necessary and appropriate, amend this Complaint, or, if required, seek leave to amend to add such other additional facts as are discovered that further support Plaintiff’s claims.

II. JURISDICTION AND VENUE

12. This is a civil enforcement action for breach of fiduciary duty brought pursuant to ERISA § 502(a), 29 U.S.C. 1132(a). This Court has original, exclusive subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1331 and ERISA § 502(e)(1), 29 U.S.C. § 1132(e)(1).

13. ERISA provides for nationwide service of process. ERISA § 502(e)(2), 29 U.S.C. § 1132(e)(2). All of Defendants are residents of the United States, and the Court therefore has personal jurisdiction over them. This Court also has personal jurisdiction over Defendants pursuant to Rule 4(k)(1)(A) of the Federal Rules of Civil Procedure because Defendants are each subject to the jurisdiction of a court of general jurisdiction in the Commonwealth of Pennsylvania.

14. This Court has personal jurisdiction over Defendants because each of them, directly or indirectly and/or through their subsidiaries, related entities, or agents, is doing business in the Commonwealth of Pennsylvania.

15. Venue is proper in this judicial district pursuant to ERISA § 502(e)(2), 29 U.S.C. § 1132(e)(2), because the Plan was administered in this district, some of the fiduciary breaches for which relief is sought occurred in this district, and one or more of Defendants may be found in this district. Venue is also proper in this district pursuant to 28 U.S.C. § 1391, because Wal-Mart systematically and continuously does business in this district and because a substantial part of the events or omissions giving rise to the claims occurred within this judicial district.

III. PARTIES

16. Plaintiff, Robert J. King, has been an hourly worker employed by Wal-Mart in a Wal-Mart store located in Philadelphia. Plaintiff is a resident of Pennsylvania and, at all relevant times, a participant in the Plan within the meaning of ERISA § 3(7), 29 U.S.C. § 1002(7), whose retirement savings are invested in the Plan.

17. Defendant Wal-Mart Stores, Inc. (“Wal-Mart” or the “Company”) is a Delaware corporation headquartered in Bentonville, Arkansas. Wal-Mart operated nearly 4,000 stores throughout the United States last year. Outside the U.S., the Company operated more than 1,000 stores. Wal-Mart’s annual sales last year totaled more than $300 billion, and Wal-Mart transacts millions of dollars of business within Pennsylvania each year. In 2006, the Company employed approximately 1.8 million employees worldwide, 1.3 million of whom were employed in the United States. Wal-Mart has been at all relevant times a fiduciary of the Plan within the meaning of ERISA.

18. Defendant the Wal-Mart Retirement Plans Committee (the “Committee”) is a “Named Fiduciary” of the Plan pursuant to the provisions of the Plan and was responsible for managing the Plan, during the Class Period.

19. Plaintiff does not currently know the identity of the Committee members who served during the Class Period. Therefore, the members of the Committee are named fictitiously, as Defendants John/Jane Does 1-15. Once their true identities are ascertained, Plaintiff will seek leave to join them under their true names.

IV. THE PLAN

20. The Wal-Mart Profit Sharing and 401(k)Plan (the “Plan”) is an “employee pension benefit plan” within the meaning of ERISA § 3(2)(A), 29 U.S.C. § 1002(2)(A). The Plan is an “eligible individual account plan” within the meaning of ERISA § 407(d)(3), 29 U.S.C. § 1107(d)(3), and is also a “qualified cash or deferred arrangement” within the meaning of I.R.C. § 401(k), 26 U.S.C. § 401(k).

21. The Plan is a legal entity that can sue and be sued. ERISA § 502(d)(1), 29 U.S.C. § 1132(d)(1). In a breach of fiduciary duty action such as this, however, the Plan is neither defendant nor plaintiff. Rather, pursuant to ERISA § 409, 29 U.S.C. ERISA § 1109, and the law interpreting it, the relief requested in this action is for the benefit of the Plan and its participants and beneficiaries.

22. ERISA requires that every employee benefit plan be “established and maintained pursuant to a written instrument”. ERISA § 402(a)(1), 29 U.S.C. ERISA § 1102(a)(1). Wal-Mart established the Plan as a benefit for its employees, and Wal-Mart is the “sponsor” of the Plan within the meaning of ERISA § 3(16)(B), 29 U.S.C. § 1002(16)(B).

23. The Wal-Mart Stores, Inc. Profit-Sharing Plan (the “Profit Sharing Plan”) was established in 1971 as an employee stock ownership plan (an “ESOP”) that invests primarily in Wal-Mart stock. Wal-Mart established the Plan on February 1, 1997, under the name of the Wal-Mart Stores, Inc. 401(k) Retirement Savings Plan. The Plan was amended, effective October 31, 2003, to merge the assets of the Wal-Mart Stores, Inc. Profit Sharing Plan applicable to United States participants with the Plan. In connection with the merger, the Plan was renamed Wal-Mart Profit Sharing and 401(k) Plan.

24. The responsibility for operation and administration of the Plan (except for investment management and control of assets) is vested in the Committee. Committee members are appointed by the Company’s Vice-President, Retirement Plans, with ratification of a majority of sitting committee members. The trustee function of the Plan is performed by Merrill Lynch Investment Managers LLC (the “Trustee”).

25. At all relevant times, the Plan had two separate components: (1) a contributory component, which consisted of participant contributions; and (2) a matching component, which consisted entirely of employer contributions.

26. All eligible Wal-Mart employees may participate in the Plan and may elect to contribute from one percent to 25 percent of their eligible wages to the Plan. Regardless of whether an associate contributes to the Plan, he or she is entitled to receive a portion of the Company’s Qualified Non-Elective contributions and Profit Sharing contributions, if otherwise eligible. To be eligible to receive Company contributions, an employee must complete at least 1,000 hours of service during the Plan year for which the contributions are made, as well as be employed on the last day of that Plan year.

27. Although technically, Wal-Mart’s contributions to the Plan are discretionary and can vary from year to year, at the end of each Plan year the Board of Directors of the Company, or its authorized committee or delegate, has determined that the Company will contribute a particular amount to the Plan. Each year, the Company’s contribution for each employee is based on a percentage of the associate’s wages for the Plan year. For the Plan year ended January 31, 2006, Wal-Mart announced that it was contributing two percent of eligible participants’ compensation as the Company’s Profit Sharing contribution to the Plan. The 2006 Summary Plan Description (“SPD”) provides:

At the end of each plan year, Wal-Mart determines the amount of its contribution (if any) for the plan year. The contribution will be a percentage of your pay while you were a participant for such plan year. . . . Currently, Wal-Mart anticipates making a contribution from 0% to 2% of your pay to your Profit Sharing Account and a contribution of 0% to 2% of your pay to your Company-Funded 401(k) Account. . . . For purposes of determining the amount of your Wal-Mart contributions, your pay will include:

- Regular salary or wages, including any pre-tax dollars you use for your 401(k) contributions or to purchase benefits available under Wal-Mart=s health and welfare plan.

2006 Associate Guide at p. 162.

28. Plan participants are immediately vested in all elective contributions, catch-up contributions, Qualified Non-Elective contributions, roll-over contributions, tax credit contributions and Profit Sharing Plan rollover contributions. A participant’s Profit Sharing contributions vest based on years of service at a rate of 20% per year from years three through seven. Profit Sharing contributions become fully vested upon Participant retirement at age 65 or above, or total and permanent disability or death.

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