Wal-Mart’s Bid to Void Suit Calls It Too Big
The world’s biggest retailer hopes to derail history’s biggest private civil-rights case next week by arguing before a federal appellate panel that a massive gender-discrimination suit against Wal-Mart is too big.
The suit accuses Wal-Mart of systematically favoring men over women in pay and promotion. An appeals court ruling that backs turning the case into a class action affecting as many as 1.5 million women not only would put billions of dollars at stake but also would set up a battle that both sides say would mean a lot for other employers and employees.
“It’s a nightmare for business,” said Robin Cook, legal director for the U.S. Chamber of Commerce.
In a brief filed to support Wal-Mart’s appeal of the class certification, the chamber argued that allowing cases that large would create an avalanche of suits against U.S. businesses that would be so hard to defend against that many companies would be encouraged to settle regardless of the facts.
Advocates for workers, however, say the case must remain a class action because the courthouse is often the only place where low-wage, nonunion employees can stand up to corporate giants like Wal-Mart.
A victory for the plaintiffs would “send a message to employers that illegal discrimination won’t be tolerated no matter how big the corporation,” said Linda Meric, executive director of an advocacy group called 9to5, National Assn. of Working Women.
Filed by six female employees in June 2001, the suit accused the Bentonville, Ark.-based retailer of violating Title VII of the 1964 Civil Rights Act by systematically paying its female employees less than men in comparable positions and discriminating against them in giving promotions and job assignments. The suit seeks back pay and lost wages, punitive damages and changes in Wal-Mart’s pay and promotion practices.
The plaintiffs say they have examined Wal-Mart payroll data that show that the retailer paid women, on average, 5% less than less-qualified men in comparable positions.
Wal-Mart spokeswoman Sarah Clark, however, said the company did not discriminate. Any pay disparities are limited to isolated areas, she said.
“At over 90% of our stores there is no statistically significant difference in the pay regarding men and women,” Clark said.
The case gained steam in June 2004, when U.S. District Judge Martin Jenkins in San Francisco certified it as a class action -- including every female employee at any of the company’s 3,600 Wal-Mart and Sam’s Club stores in the United States since 1998, from cashiers to managers.
Jenkins was persuaded by data submitted by the plaintiffs that, he wrote, highlighted disparities in pay and promotion cutting across regions that could not be explained by education, experience or performance evaluations.
Wal-Mart appealed in November, putting the case on hold until a three-judge panel of the U.S. 9th Circuit Court of Appeals in San Francisco considered whether Jenkins was wrong to allow so large a class. The appellate panel’s hearing is scheduled for next Monday.
Along with denying the bias charges, the company argues that Jenkins erred by including virtually all female Wal-Mart employees regardless of whether they claim discrimination.
“The judge has precluded Wal-Mart from arguing that certain individuals should not be part of the class, that there were reasons they might have received less pay or were passed over for promotion,” said the retailer’s lead attorney in the case, Theodore Boutrous Jr. of Los Angeles-based Gibson Dunn & Crutcher. That procedural phase is “a fundamental part of Title VII cases,” he said.
The result, he added, would be a class so disparate and unwieldy that Wal-Mart effectively would be prevented from defending itself. The company also has argued that employment decisions are made by store managers based on local market conditions, so it was wrong of Jenkins to lump all the employees together.
Lawyers for the plaintiffs are equally insistent that the class-action decision was correct.
“The judge did an incredibly careful job and considered every legal and factual issue,” said Jocelyn Larkin, a lawyer with the Berkeley-based Impact Fund, a public-interest law firm that is leading the plaintiffs’ team.
The class is not unwieldy, she said, because the plaintiffs’ payroll data already allow them to determine which women suffered damages and how much.
“We’re not arguing that every woman was paid less in every circumstance,” Larkin said. “Some women at Wal-Mart have done well
Moreover, “No court has ever said to a defendant in a class action that you can litigate each individual’s claim. In that case there just wouldn’t be a class action.”
That’s why Wal-Mart’s attack on the certification order, she continued, “is really an attack on Title VII cases generally.”
The outcome of the appeal is key to the fate of the discrimination suit because class certification has become “the crucial moment” for mass discrimination cases, said UCLA Law School professor Katherine Stone, a labor law expert.
“If the class is certified, the defendants will usually settle,” she said. But if the plaintiffs’ petition for a class action is rejected, it becomes too expensive for plaintiffs’ lawyers to pursue their cases individually and they will “usually fold,” Stone said.
Wal-Mart says it has made changes in its employment practices since the lawsuit was filed. About 38% of managers are women, up from 34% in 2002, the company said.
Regardless of who wins at next week’s circuit court hearing, lawyers for both sides say an appeal to the U.S. Supreme Court is likely.
