Wal-Mart Appeals Bias-Suit Ruling

Retailer Seeks a Reversal Of the Class-Action Status In Sex-Discrimination Case 

ANN ZIMMERMAN / Wall Street Journal 8aug2005

[More on Wal-Mart]

Wal-Mart Stores Inc. will attempt to convince a federal appellate panel today that it should overturn a judge's order last year allowing a sex-discrimination lawsuit against the company to proceed as a class action. Wal-Mart contends the case is too big to fairly defend.

The outcome of the appeal carries high stakes for both sides. If the order is upheld, the Bentonville, Ark., retailer could face a lengthy court battle or, more likely, would pursue a settlement that by some estimates could cost Wal-Mart billions of dollars. Mass discrimination cases rarely proceed to trial after being certified as class actions because of the risk of costly judgments against the defendants, according to legal experts.

On the other hand, if class-action certification is overturned, it would likely become too costly and cumbersome for the plaintiffs to pursue their cases individually, experts said. The three-judge panel in the U.S. Ninth Circuit Court of Appeals in San Francisco isn't expected to rule quickly on the Wal-Mart case, and a decision could take months.

The suit, filed in 2001 by six female workers, alleges the world's biggest retailer systematically paid women less than men with similar qualifications, and frequently overlooked women for promotions. Persuaded by the plaintiffs' statistical evidence that Wal-Mart paid women workers 5% to 15% less than men in comparable jobs, a federal judge in San Francisco ruled last year that the lawsuit could apply to all women who have worked for Wal-Mart since December 1998. The ruling potentially affects as many as 1.6 million current and former Wal-Mart employees.

The company has denied it discriminates and maintains that any pay disparities were isolated. In its appeal request, Wal-Mart argued that while the district court looked at companywide data, pay and promotion decisions are made by local managers on a store-by-store basis. The company said store-by-store statistics show that individual stores don't discriminate against women.

Wal-Mart lawyers are expected to argue today that the complaints of six workers, supported by affidavits from an additional 100 current and former employees, aren't representative of the entire class of 1.6 million women. The company said it should be able to defend itself on a case-by-case basis and that a class-action lawsuit seeks payments for thousands of women who weren't victims of discrimination.

"In this case, the plaintiffs' lawyers went way too far, denying the company the right to put on any evidence of what actually happened and relying solely on statistics," said Wal-Mart's appellate attorney Theodore Boutrous of the Los Angeles law firm of Gibson, Dunn & Crutcher.

Joe Sellers, one of the lead attorneys for the plaintiffs, countered: "The argument that they have a right to defend against each class member individually would turn on its head 25 years of jurisprudence. The whole purpose of a class action is to permit adjudication of a class member's claims in one case."

If the plaintiffs prevail, Mr. Sellers added, their compensation would be calculated by a formula based on the company's own objective criteria considered in pay decisions, including length of tenure, performance appraisals, location and job classification.

"Some women were indeed not underpaid and others were significantly underpaid, and the sophisticated formula would be used to fairly apportion the amount of lost earnings people should recover," said Mr. Sellers, of the Washington law firm of Cohen, Milstein, Hausfeld & Toll.

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