Wal-Mart Lawsuit Could Pave Way for Other Massive Job-Bias Claims

Numbers talk. For lawyers and employers, 1.5 million shouts.

That’s how many current and former employees of Wal-Mart Stores Inc. could be swept into a gender discrimination lawsuit that was transformed by a federal judge into a nationwide class action this week.

If U.S. District Judge Marvin J. Jenkins’ decision withstands Wal-Mart’s promised appeal, the giant retailer will be facing the nation’s largest workplace discrimination suit -- and the possibility of a settlement or jury award running into the billions of dollars.

The prospect of such a huge liability -- or big pay day -- is reverberating through the ranks of employers, employees and lawyers on both sides of the bar.

“It is a real blockbuster,” said Georgene Vairo, a professor at Los Angeles’ Loyola Law School. “Think about the attorneys’ fees in a case where you have a class as huge as you have here.”

Plaintiffs’ lawyers are often looking for profitable new areas of litigation. And if the Wal-Mart case moves forward, Vairo said, attorneys are bound to be searching for other big companies that may be vulnerable to discrimination suits “and see what they can make of it.”

In the past, many attorneys have been reluctant to try to bring massive class-action cases for fear that the courts would deem them unwieldy.

Now, “it’s not going to be unthinkable anymore,” said Lynn Bersh, an employer lawyer at Reed Smith Crosby Heafy in San Francisco. “The path has been laid.”

The lawsuit, filed in federal court in San Francisco, alleges that the world’s largest company pays female employees less than men for the same jobs, passes them over for promotions and retaliates against those who complain.

A study of Wal-Mart payroll data by the plaintiffs last year showed that women earned an average of 5% less than male counterparts with inferior education, experience and performance reviews.

Wal-Mart denied the allegation of systematic bias, which was the rationale for giving the case class-action status. The retailer contends that pay and promotion decisions are made locally on a store-by-store basis and don’t reflect broad corporate policy.

Although taking on a deep-pocketed plaintiff such as Wal-Mart may be an enticing prospect for some attorneys, many observers don’t expect a flood of nationwide bias cases against big employers. After all, handling such litigation is difficult, expensive and risky.

“Someone asked me this week, ‘Isn’t this just about greedy plaintiffs’ lawyers trying to make a buck?’ ” said Joe Sellers, a partner at the Washington law firm of Cohen, Milstein, Hausfeld & Toll. “I had to laugh.”

Sellers is one of a team of lawyers from seven firms and nonprofit organizations across the country working on the women’s case against Wal-Mart. Their investigation began a year before the suit was filed in 2001, and Sellers estimates the case already has cost $1.5 million in expenses -- including expert witnesses, photocopying and travel -- on top of as much as $10 million in attorney’s fees.

Fewer than a dozen plaintiffs’ firms nationwide, experts say, have the experience or financial wherewithal to mount class actions that require so much up-front investigation, research and preparation.

What’s more, judges in several federal circuits are reluctant to create plaintiff classes that are much larger than the number of workers in a particular store, factory or region, lawyers said.

Indeed, the path to obtaining approval for a class action is filled with so many roadblocks that plaintiffs’ lawyers say they don’t waste their time with anything but the most promising cases.

But Jenkins’ decision in the Wal-Mart case gives hope to those lawyers who believe they have the facts to press a broad bias case. Bill Lann Lee is one of them. The former assistant attorney general for civil rights is now at Lief, Cabraser, a law firm in San Francisco.

Lee’s firm has joined the National Assn. for the Advancement of Colored People and Mexican and Asian American legal defense funds in their quest to take retailer Abercrombie & Fitch Co. to court for allegedly discriminating against minority job seekers in hundreds of its trendy clothing stores throughout the country.

The alliance between a well-financed law firm and nonprofit social activists is similar to the one battling Wal-Mart. It brought the Abercrombie suit in the same federal district that the Wal-Mart case is playing out in.

Albany, Ohio-based Abercrombie & Fitch has said it does not tolerate bias.

“Civil rights outfits often don’t have the resources” to take on such cases alone, Lee said. Like the Wal-Mart suit, “Abercrombie may be a harbinger of future cases in that you have partnership between a law firm and a nonprofit.”

Beyond marshaling resources both human and financial, there also is the question of finding suitable targets.

Human-relations advisors such as Jim Kuns, a senior consultant with Los Angeles-based Employers Group, maintain that the type of systemic discrimination alleged in the Wal-Mart case is not very common in corporate America any more.

“To even let that kind of thing happen is just hard to believe,” he said. “The employment community knows better.”

Research by Marc Bendick, a Washington-based economist and authority on workplace discrimination, lends some support to that view.

According to Bendick, whose research is being used by the Wal-Mart plaintiffs, at least 80% of the large employers in most industries aren’t vulnerable to company-wide bias suits. At those firms, workforces are sufficiently diverse, women and minorities are represented in the management ranks and pay disparities reflect differences in qualifications, not gender or race, according to a study he conducted of employment data culled by the U.S. Equal Employment Opportunity Commission from 1975 to 2000.

Of course, that still leaves a sizable group of large employers whom Bendick calls “hard core discriminators.”

“We are making progress, but there are these hold-out companies,” he said.