Wal-Mart Disputes Class-Action Filing

The $285 billion retailer might be liable for billions of dollars in penalties should it lose at trial in the largest workplace bias case in U.S. history.

SAN FRANCISCO — In a case closely watched by U.S. businesses, Wal-Mart Stores Inc. is set to argue in federal appeals court here today that a gender discrimination lawsuit filed by six current and former female workers should not have been designated a class action on behalf of some 1.5 million current and former women workers.

The $285 billion retailer might be liable for billions of dollars in penalties should it lose at trial in the largest workplace bias case in U.S. history.

If the case is litigated as a class action, “the approach plaintiffs are taking today could affect all big retailers” and other companies where hiring decisions are made in decentralized local branches, said Theodore J. Boutrous Jr., a Los Angeles attorney who will argue Wal-Mart’s appeal before a three-judge panel.

Joseph Sellers, who represents the plaintiffs, said that the level of proof to show “commonality” of potential discrimination among a larger group of women has been met. “What Wal-Mart is really seeking to do is challenge the foundation of class-action law,” Sellers said.

The female workers were allowed to sue as a group in June 2004 by U.S. District Court Judge Martin Jenkins in San Francisco. Wal-Mart argues Jenkins wrongly based his decision on payroll data used by Wal-Mart’s accusers to show women are paid an average of 5 percent less than men in comparable jobs. The firm said a more accurate picture of potential bias should involve scrutiny of the hiring and promotion practices at its more than 3,500 stores because the chain’s hiring is decentralized. Wal-Mart’s own store-by-store study showed “there was no statistically significant evidence of discrimination at the vast majority of stores.”

Attorneys for the plaintiffs counter that Wal-Mart has a well-known centralized business model at its Bentonville, Ark., headquarters touching all aspects of the company including hiring.

In reaching his decision to give the lawsuit class-action certification, Jenkins cited “largely uncontested descriptive statistics” used by the women’s attorneys. Jenkins, while not ruling on the merits of the suit, said it was “historic in nature” and coincided with the 50th anniversary of the landmark civil rights case Brown vs. Board of Education. “This anniversary serves as a reminder of the importance of the courts in addressing the denial of equal treatment under the law wherever and by whomever it occurs,” he wrote.

This story first appeared in the August 8, 2005 issue of WWD.  Subscribe Today.

Among the business entities coming to Wal-Mart’s defense is the Retail Industry Leaders Association, which represents discounters. RILA said in a friend of the court brief that if the lawsuit proceeds as a class action it would “subject retailers, who by their nature employ workers in a wide spectrum of positions across a large number of stores” to sweeping discrimination lawsuits where a common thread of bias hasn’t been established.

RILA disputed accusations that Wal-Mart and other retailers are top-down centralized operations, including hiring. “Store managers overseeing this broad range of departments need some discretion to make compensation and promotion decisions to effectively manage … in fact, any other system would undermine Wal-Mart’s ability to effectively manage its stores,” RILA wrote.