A federal appeals court ruled Tuesday that Wal-Mart Stores Inc., the world's largest private employer, must face a class-action lawsuit alleging as many as 1.5 million former and current female employees were discriminated against in pay and promotions.
The ruling by the 9th U.S. Circuit Court of Appeals upholds a 2004 federal judge's decision to let the nation's largest class-action employment discrimination lawsuit go to trial, possibly exposing the Bentonville, Ark.-based retailing powerhouse to billions of dollars in damages.
"Plaintiff's expert opinions, factual evidence, statistical evidence and anecdotal evidence present significant proof of a corporate policy of discrimination and support plaintiff's contention that female employees nationwide were subjected to a common pattern and practice of discrimination," the court wrote in a 2-1 decision.
Wal-Mart said it would ask the court to rehear the case with the same three-judge panel or with 15 judges, a move likely to idle the case for months. Tuesday's ruling came 18 months after the case was argued.
"This is one step of what is going to be a long process," Wal-Mart attorney Theodore Boutrous Jr. said. "We are very optimistic of obtaining relief from this ruling."
He said Wal-Mart's own review found no significant disparity in pay between men and women at 90 percent of its stores.
Wal-Mart, which currently employs 1.3 million workers, claimed that the conventional rules of class action suits should not apply in the case because its 3,400 stores, including Sam's Club warehouse outlets, operate like independent businesses, and that the company did not have a policy of discriminating against women.
U.S. District Judge Martin Jenkins, the San Francisco trial court judge who said the case could proceed, had ruled that anecdotal evidence warranted a class-action trial. Wal-Mart took the case to the San Francisco-based appeals court.
Jenkins said if companywide gender discrimination is proven at trial, Wal-Mart could be forced to pay billions of dollars to women who earned less than their male counterparts. Jenkins rejected as "impractical" Wal-Mart's suggestion of having individual hearings for each plaintiff and he planned to use a statistical formula to compensate the women if they won.
Wal-Mart said the judge's scenario was an unprecedented denial of its rights and sought to dismiss the case. The company said women who allege discrimination could file lawsuits against individual stores.
The women's lawyers said the idea was ridiculous, and would clog the federal judiciary.
"Although size of this class action is large, mere size does not render a case unmanageable," Judge Harry Pregerson wrote for the majority, which upheld Jenkins' decision in its entirety.
Robin Conrad, a vice president with the U.S. Chamber of Commerce, blasted the decision. If it stands, she said, it likely would force Wal-Mart to settle out of court than risk losing at trial.
"It's basically extortionist," she said. "It's giving the company no option other than to settle a case of this magnitude."
Judge Andrew Kleinfeld wrote in a dissent that women could file individual lawsuits to safeguard Wal-Mart from paying those who don't deserve money, and would also ensure women get the compensation they deserve.
The appellate court's decision, he wrote, "threatens the rights of women injured by sex discrimination. And it threatens Wal-Mart's rights."
The lawsuit covers women who work or worked for the company from 1999 to the present.
Betty Dukes, the lead plaintiff who claims she has suffered gender discrimination in terms of pay and promotion while working at a Wal-Mart in the Bay Area suburb of Pittsburg, said her pay has been boosted from $8.48 an hour to about $14 an hour.
"We are not falsely accusing Wal-Mart," said Dukes, who has worked at Wal-Mart for 13 years.
Brad Seligman, one of the attorneys who represented the women suing Wal-Mart, said the decision would hurt the company's reputation.
"No amount of PR by Wal-Mart is going to allow it to deal with its legacy of discrimination," Seligman said.
David Nassar, executive director of Wal-Mart Watch, a group critical of Wal-Mart policies, said the decision vindicates "victims of the company's illegal and immoral gender discrimination."
The cases are Dukes v. Wal-Mart, 04-16688, 04-16720.
Editors: David Kravets has been covering state and federal courts for more than a decade.Copyright © 2015, Los Angeles Times