Wal-Mart Loses Bid to Block Group Bias Suit
Wednesday, February 7, 2007
A federal appeals court ruled yesterday that the largest sex discrimination lawsuit in U.S. history could proceed as a class action against Wal-Mart, which is accused of paying female workers less than men and giving them fewer promotions.
The ruling will allow about 2 million women who have worked for Wal-Mart since 1998 to seek compensation for discrimination as a group.
Wal-Mart said it will ask the U.S. Court of Appeals for the 9th Circuit in San Francisco to reconsider its decision. Barring that, the company will ask the U.S. Supreme Court to overturn the certification. A lower court originally said the case could proceed as a class action in June 2004, and the company first appealed the decision in August 2005.
"We think its analysis is much too deferential to plaintiffs and erred in not taking into account Wal-Mart's evidence," said Theodore J. Boutrous Jr., an attorney for Wal-Mart. He said the court's ruling does not address the merits of the plaintiffs' claims, but whether the case meets the technical requirements to move forward as a class action.
The 2-to-1 ruling took no position on the case's merits, but agreed with the lower court ruling that the case Dukes v. Wal-Mart, originally filed by six women in 2001, could proceed as a class action against the retailer.
With nearly 2 million women, the lawsuit is the nation's largest sex discrimination case filed against a business. Most large discrimination cases are settled out of court. The suit claims that Wal-Mart's female employees receive lower pay and fewer promotions than male employees. But Wal-Mart's lawyers argued that there is no pattern of discrimination.
The women who filed suit are represented by the Impact Fund, a nonprofit group in Berkeley, Calif.
"No amount of PR or spin is going to allow Wal-Mart to avoid facing its legacy of discrimination," Brad Seligman, a lawyer and executive director of the Impact Fund, said in an interview. "Now two courts have ruled this trial should go forward. I expect they will attempt to further appeal, but I have great confidence the women will get their day."
A class-action lawsuit allows a small number of plaintiffs to sue on behalf of a much larger group in a similar situation.
The judge in the original case ruled that the attorneys for the six named women presented sufficient evidence for a class-action suit, calling it "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 has two opportunities to overturn the decision. It will first ask the three-judge panel to reconsider yesterday's ruling and a panel of more than a dozen Ninth Circuit Court of Appeals judges to rehear the panel decision. If the court does not overturn its decision, the company will petition the U.S. Supreme Court.
"And then we have a trial, which is where we think we're headed," said Joseph M. Sellers, a Washington-based civil rights and employment lawyer, who represents the plaintiffs. "What Wal-Mart has tried to do so far is derail the case procedurally. The evidence, we think, is very strong. We have a number of clients who would like to have their day in court."
The company said its stores are mostly run by managers who have autonomy over hiring, pay and promotion. Boutrous argued that decisions by thousands of managers at 3,400 stores during a six-year period were "highly individualized and cannot be tried in one fell swoop in a nationwide class action."
Richard Drogin, a statistician at California State University at East Bay hired by the plaintiffs, said 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.
Several business groups, including the U.S. Chamber of Commerce, have filed amicus briefs calling for a reversal of the class certification.
In 1996, Texaco paid a $176.1 million settlement on behalf of black employees who sued for racial discrimination. Home Depot settled a sex discrimination class-action suit in 1997 for $104 million. That same year, Publix Super Markets paid $81.5 million for discriminating against female workers. Coca-Cola paid $192.5 million in 2000 to employees who sued for racial discrimination. Morgan Stanley agreed to pay $54 million in 2004 to settle claims it underpaid and did not promote women, and a few days later, aircraft manufacturer Boeing agreed to pay up to $72.5 million to settle similar allegations.