Wal-Mart Faces Bias Claims by 1 Million Female Workers

Wal-Mart Stores Inc. female employees suing the retailer for back pay in the biggest private gender-bias case in U.S. history can proceed as a group on behalf of as many as 1 million women, an appeals court ruled.

Yesterday’s 6-5 decision by the U.S. Court of Appeals in San Francisco allows women who have worked at Wal-Mart since 2001 to be part of a single class-action lawsuit over discrimination claims, said Brad Seligman, an attorney for the workers, in a phone interview. Potential plaintiffs exceed 1 million, he said.

Claims by employees who had left Wal-Mart before the lawsuit was filed, along with claims for punitive damages, were sent back to a judge in San Francisco to decide whether they can be included in the group case. If all current and former workers are included, the case would cover about 2.5 million women, Seligman said. Their claims could amount to billions of dollars.

Ted Boutrous, an attorney representing Wal-Mart, said the company will ask the U.S. Supreme Court to review the ruling. If it’s not reversed, the decision would lead to “massive litigation” against U.S. companies, Boutrous said in a conference call yesterday.

“We’ve always believed that this case presents issues that go far beyond the company,” said Boutrous, a partner at Gibson Dunn & Crutcher LLP. Worker claims for back pay are “highly individualized questions” that shouldn’t be handled on a class- wide basis, he said.

Class Size

The court considered whether the experiences of six original plaintiffs in the case may be common among other female workers. The ruling reduced the number of potential plaintiffs in the case by two-thirds, Boutrous said. He said the number of women who can now proceed with claims for back pay is 500,000 or less.

The Supreme Court may take several months to decide whether to review the case, Boutrous said. Responding to a question during the conference call, he said he was “not in a position to talk about settlement.”

Seligman said he hopes the case goes to trial within a year.

“Wal-Mart tries to project an improved image as a good corporate citizen,” said Seligman, executive director of the nonprofit Berkeley, California-based Impact Fund law foundation that focuses on civil rights and employment cases. “But no amount of PR is going to work until it addresses the claims of its female employees.”

Wal-Mart, the largest private employer in the U.S. with 1.4 million workers, agreed in 2008 to pay as much as $640 million to settle 63 federal and state class actions claiming the company cheated hourly workers and forced them to work through breaks.

Wal-Mart Greeter

In the gender-discrimination case, the Bentonville, Arkansas-based company is accused of paying women on salary and those earning hourly wages less than men for the same jobs and giving them fewer promotions. The lawsuit was filed in 2001 by six women, including Betty Dukes, a Wal-Mart greeter in Pittsburg, California.

Experts hired by Seligman said their research of Wal-Mart’s salary and personnel data on a regional basis showed that women were paid less than men in every region and the pay disparity existed in most job categories. It took women longer to enter management than men, the experts said.

Wal-Mart, which denied discriminating, said it should be allowed to individually fight worker claims.

Store-Level Decisions

Company lawyers say there’s no pay disparity between men and woman at most of its stores and managers make subjective salary and promotion decisions at the store-level. Forcing the company to defend those decisions on a group basis was a denial of Wal-Mart’s right to due process, they said.

Company lawyers argued the plaintiffs’ expert analysis was flawed because managers make subjective pay and promotion decisions at the store-level. Forcing the company to defend salary decisions on a group basis was a denial of Wal-Mart’s right to due process, they said.

The court’s majority said in yesterday’s ruling, “It would be better to handle some parts of this case as a class action instead of clogging the federal courts with innumerable individual suits litigating the same issues repeatedly.”

Dissenting judges warned the case could set a dangerous precedent for businesses.

“Never before has such a low bar been set for certifying such a gargantuan class,” Judge Sandra Ikuta wrote. “Put simply, the door is now open to Title VII lawsuits targeting national and international companies, regardless of size and diversity, based on nothing more than general and conclusory allegations, a handful of anecdotes and statistical disparities that bear little relation to the alleged discriminatory decisions.”

Workplace Discrimination

Title VII of the Civil Rights Act of 1964 prohibits workplace discrimination based on sex, race or religion.

Yesterday’s ruling was the third time a court has said women can sue Wal-Mart as a group.

Class status makes it easier for the group to finance the litigation than if the women proceeded individually. It also gives the women more leverage to negotiate a settlement. A federal judge decided in 2004 that the experiences of the six original plaintiffs may be common to other current and former workers and certified the case as a class action.

A three-judge panel of the federal appeals court in San Francisco upheld that ruling in 2007. Wal-Mart asked a larger panel of judges to review the case. The company has 90 days to file a petition with the Supreme Court.

In addition to Seligman, the workers are represented by Cohen Milstein Sellers & Toll PLLC, three other law firms and two public justice groups.

The case is Dukes v. Wal-Mart Stores Inc., 04-16688, U.S. Court of Appeals for the Ninth Circuit (San Francisco).

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.