Wal-Mart to Appeal Status Of Class-Action Bias Suit
Saturday, August 6, 2005
Wal-Mart Stores Inc. plans to ask a federal appeals court on Monday to overturn a ruling that would allow up to 1.6 million female workers, as a group, to seek compensation for discrimination.
The lawsuit, which would be the nation's largest private civil rights case, claims that Wal-Mart's female employees receive lower pay and fewer promotions than male employees. But Wal-Mart's lawyers argue that there is no pattern of discrimination and that certifying the suit as a class action would allow women who have not suffered from discrimination to benefit.
If Wal-Mart, the nation's largest private employer, does not persuade the panel of judges for the U.S. Court of Appeals for the 9th Circuit in San Francisco to overturn the class-action certification, the pressure on the company to discuss settling the charges could increase.
A class-action lawsuit allows a small number of plaintiffs to sue on behalf of a much larger group in a similar situation. For plaintiffs, it is a faster and less expensive way to seek redress while increasing the defendant's potential liability.
"If it is not decertified, then Wal-Mart is going to look long and hard at what it will cost to settle," said Harley Shaiken, a professor at the University of California at Berkeley who has studied the company. "They've got two costs. One is the final dollar amount, and the second is the continued negative publicity around this. This is not the image Wal-Mart wanted to project. No matter how much they deny the charges, it paints them in a way that is not favorable."
This year, Wal-Mart agreed to pay $11 million to settle a federal investigation that found hundreds of illegal immigrants were hired to clean its stores.
Wal-Mart is appealing a decision by U.S. District Judge Martin J. Jenkins last summer that the six named plaintiffs presented "largely uncontested descriptive statistics which show that women working in Wal-Mart stores are paid less than men in every region, that pay disparities exist in most job categories, that the salary gap widens over time even for men and women hired into the same jobs at the same time, that women take longer to enter into management positions, and that the higher one looks in the organization, the lower the percentage of women."
The company says its stores are mostly run by managers who have autonomy over hiring, pay and promotion. Theodore J. Boutrous Jr., an outside attorney representing Wal-Mart, argues that decisions by thousands of managers at 3,400 stores during a six-year period are "highly individualized and cannot be tried in one fell swoop in a nationwide class action."
"There is no commonality and typicality that would allow this class to be certified," Boutrous said. Wal-Mart submitted evidence that in more than 90 percent of stores, there was no disparity in pay, he said.
Boutrous said Wal-Mart has a right not to be forced to pay back pay or punitive damages to any person who was not a victim of discrimination.
"If the certification order is sustained . . . the inevitable result will be that women who have never experienced any discrimination will receive an award of back pay and possibly punitive damages, and, given the enormousness of the class, this unlawful result will occur hundreds or thousands of times over," Boutrous wrote in a summary of Wal-Mart's briefs.
The plaintiffs' attorney, Joseph M. Sellers, said the punitive-damage issue will be easily avoided because the women's lawyers will take "reasonable steps to make sure women who weren't harmed aren't awarded punitive damages. . . . Some women will be determined not to be underpaid."
Richard Drogin, a statistician at California State University at East Bay hired by the plaintiffs, found that it took women an average of 4.38 years from the date of hire to be promoted to assistant manager, while it took men 2.86 years. It took 10.12 years, on average, for women to become managers compared with 8.64 years for men. He also found that female managers made an average salary of $89,280 a year, while men in the same position earned an average of $105,682 a year. The results for hourly workers show that women were paid 6.7 percent less than men in comparable positions.
Attorneys for the women also cited an analysis by labor economist Marc Bendick Jr., who compared hiring practices at Wal-Mart with those at 20 other retailers. He found that 56.5 percent of the in-store managers at the competitors' stores were female, compared with 34.5 percent at Wal-Mart.
Several business groups, including the U.S. Chamber of Commerce, have filed amicus briefs calling for a reversal of the class certification.
"It's huge and it's unwieldy and it really limits the company's ability to defend itself," said Robin Conrad, senior vice president of the chamber's litigation center. "There is a host of reasons why this case should not go forward. . . . Any case of this magnitude, once it is certified as a class action, it just is certainly major incentive to settle the case no matter what the merits are. What kind of company wants this damage to its brand?"
Most large discrimination cases are settled out of court. Home Depot Inc. settled a sex-discrimination class-action suit in 1997 for $104 million. In 1996, Texaco Inc. paid a $176.1 million settlement on behalf of black employees who sued for racial discrimination. And Coca-Cola Co. paid $192.5 million in 2000 to employees who sued for discrimination. Publix Super Markets paid $81.5 million in 1997 for discriminating against female workers.