Wal-Mart Must Face California Bias Case, Judge Rules

Wal-Mart Stores Inc. (WMT) must face an 11-year-old gender discrimination lawsuit brought on behalf of workers in California after the U.S. Supreme Court barred a lawsuit representing Wal-Mart employees nationwide.

U.S. District Judge Charles Breyer in San Francisco said in an order yesterday that the plaintiffs have proposed a reduced class size to between one and several hundred thousand members.

The reduced class “could be certified,” Breyer wrote, if it made a “showing consistent with the Supreme Court’s decision” that a nationwide class action isn’t appropriate.

Breyer rejected Wal-Mart’s bid to dismiss the case, an argument made on grounds that even the reduced class size suffers from the problems that led the Supreme Court to bar a nationwide class certification, according to the ruling. Breyer said he “reserves for later determination” if the class should be certified.

The sex-bias case was originally filed in San Francisco in 2001 by women at a handful of Wal-Mart stores claiming they were denied pay and promotions. It was eventually certified as a class action, or group lawsuit covering more than 1 million employees after lawyers for the workers convinced a judge that Wal-Mart’s employment policies meant that women at hundreds of stores across the country were subject to similar treatment.

Class certification provides leverage to plaintiffs in financing the lawsuit and negotiating a settlement. Wal-Mart appealed the certification, saying hiring and promotion decisions were made by local managers and each claim of discrimination should be handled in individual lawsuits.

Supreme Court

The Supreme Court ruled the workers didn’t provide convincing proof of a companywide discriminatory pay and promotion policy. It threw out class certification and sent the case back to the lower court.

Worker’s attorneys refiled the lawsuit in October as a group case representing California store employees, saying that while the Supreme Court blocked a nationwide class, the court’s ruling allowed them to show evidence of bias in pay and promotion against tens of thousands of women who worked in California. They filed a separate lawsuit against Wal-Mart in Dallas on behalf of women who worked at stores in Texas.

“We have maintained all along that the Supreme Court’s decision did not preclude us from seeking justice for the women of Wal-Mart,” said plaintiffs’ lead counsel Brad Seligman of the Impact Fund, Berkeley, Calif., in a statement today.

At a hearing in June in the California case, Breyer said he was “seriously concerned” that the plaintiffs’ lawyers didn’t have the evidence to support claims of statewide discrimination.

Yesterday, Breyer set a hearing for Feb. 15 to consider whether the women can sue as a group.

The California case is Dukes v. Wal-Mart Stores Inc., 01- cv-02252, U.S. District Court, Northern District of California (San Francisco). The Supreme Court case is Wal-Mart v. Dukes, 10-00277, U.S. Supreme Court (Washington).

To contact the reporters on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net; Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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