Wal-Mart Worker Class-Action Case Questioned by High Court

The U.S. Supreme Court suggested it may shield Wal-Mart Stores Inc. (WMT) from a gender-bias suit on behalf of potentially a million female workers in a case that may mean tighter restrictions on class-action suits.

Hearing arguments today in Washington, the justices gave a generally receptive audience to the world’s largest employer, which argued that claims by workers around the country are too varied to proceed as a single lawsuit. The class action, approved by a federal appeals court, would be the largest-ever job-bias case against a private employer.

Today’s arguments suggested the court might divide roughly along gender lines itself, with the three female justices --Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan -- emerging as perhaps the strongest supporters of the class action. Justices Antonin Scalia, Anthony Kennedy and Samuel Alito voiced skepticism.

“Your complaint faces in two directions,” Kennedy, often the court’s swing vote, told the workers’ lawyers. “You said this is a culture where Arkansas knows, the headquarters knows, everything that’s going on. Then in the next breath, you say, well, now these supervisors have too much discretion. It seems to me there’s an inconsistency there, and I’m just not sure what the unlawful policy is.”

Photographer: Daniel Acker/Bloomberg

A shopper pushes a cart through the parking lot outside a Wal-Mart Stores Inc. store in Princeton, Illinois. Close

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Photographer: Daniel Acker/Bloomberg

A shopper pushes a cart through the parking lot outside a Wal-Mart Stores Inc. store in Princeton, Illinois.

Fresh Look at Class Action

The case marks the court’s first look in a dozen years at the standards for certifying a class action. Worker advocates say a victory for Wal-Mart, based in Bentonville, Arkansas, would crush efforts to force change at companies steeped in bias. Corporate groups say a ruling allowing the suit might unleash a wave of employment, antitrust and product-liability suits.

The disagreement among the justices focused as much on the substance of the federal job-discrimination laws as on the requirements for class actions. Ginsburg, Sotomayor and Kagan all suggested Wal-Mart might not have done enough to stop local managers from using gender to make decisions about pay and promotions.

“Isn’t there some responsibility on the company to say, ‘Is gender discrimination at work?’ and if it is, isn’t there an obligation to stop it?” Ginsburg said.

The case may be the most closely watched of the court’s nine-month term. Members of the public, including relatives of some of the alleged victims, began standing in line as early as 2 a.m. Washington time to claim a seat inside the courtroom. By 6, dozens of people were in line.

Billions of Dollars

The case threatens Wal-Mart with billions of dollars in damages. Filed in 2001, the suit aims to cover every woman who worked at the retailer’s Wal-Mart and Sam’s Club’s stores at any point since December 1998.

More than 100 Wal-Mart employees have filed sworn statements saying they were paid less and given fewer opportunities for promotion than male colleagues. Six women are aiming to serve as class representatives, including Betty Dukes, a greeter in Wal-Mart’s Pittsburg, California, store.

Their lawyers blame a corporate culture they say gives local managers too much leeway to make subjective decisions.

Managers had “unchecked discretion,” which they “used to pay women less than men who were doing the same work in the same facility at the same time,” said Joseph Sellers, the lawyer for the women.

Wal-Mart says that, at the time a federal trial judge approved the class action, the company’s hourly employees worked in 53 departments and with 170 job classifications. The company had divided its retail operations into 41 regions, each with its own vice president, and had 3,400 stores, each with a manager who was afforded significant discretion in making pay and promotion decisions.

Worker-By-Worker

Wal-Mart’s lawyer, Theodore Boutrous, criticized the plan offered by the plaintiffs’ lawyers to rely on statistical evidence to allocate damages. He said the company should be allowed to present defenses on a worker-by-worker basis, arguing that no male-female pay disparity existed at 90 percent of Wal- Mart’s stores.

Chief Justice John Roberts hinted that the class action, if upheld by the court, might also violate the rights of some Wal- Mart workers. Roberts first raised the possibility that lawyers pressing the class action might lose their case at trial and then asked whether individual women with grievances would be bound by that outcome.

“It’s not fair to anyone to put this all into one big class,” Boutrous said.

Every Single Company?

Alito voiced concern that the workers’ argument would make even a “typical company” liable for society-wide disparities in the pay received by male and female employees.

Alito asked Sellers what would happen if every U.S. company had “exactly the same profile.”

“You would say every single company is in violation of Title VII?” Alito asked, referring to the main federal job- discrimination statute.

“That could very well be the case,” Sellers answered.

Roberts suggested Wal-Mart might be less culpable than the typical company. “Is it true that Wal-Mart’s pay disparity across the company was less than the national average?” he asked Sellers.

More than 20 companies are supporting Wal-Mart at the high court, including Intel Corp. (INTC), Altria Group Inc. (MO), Bank of America Corp. (BAC), Microsoft Corp. (MSFT) and General Electric Co. (GE)

A federal appeals court in San Francisco said the class action could proceed on behalf of women who were working when the lawsuit was filed.

The case is Wal-Mart Stores v. Dukes, 10-277.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net; William McQuillen in Washington at bmcquillen@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net; Larry Liebert at LLiebert@bloomberg.net.

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