The world's biggest retailer hopes to derail history's biggest private civil-rights case next week by arguing before a federal appellate panel that a major gender-discrimination lawsuit against Wal-Mart is too big.
The lawsuit accuses Wal-Mart of systematically favoring men over women in pay and promotion. An appeals court ruling that backs turning the case into a class action suit affecting as many as 1.5 million women not only would put billions of dollars at stake, but also would set up a battle that both sides say would mean a lot for other employers and employees.
"It's a nightmare for business," said Robin Cook, legal director for the U.S. Chamber of Commerce.
In a brief filed to support Wal-Mart's appeal of the class certification, the chamber argued that allowing cases that large would create an avalanche of lawsuits against U.S. businesses that would be so hard to defend against that many companies would be encouraged to settle regardless of the facts.
Advocates for workers, however, say the case must remain a class action suit because the courthouse is often the only place where low-wage, nonunion employees can stand up to corporate giants such as Wal-Mart.
A victory for the plaintiffs would "send a message to employers that illegal discrimination won't be tolerated no matter how big the corporation," said Linda Meric, executive director of 9to5, National Association of Working Women, a Milwaukee advocacy group.
Filed by six female employees in June 2001, the lawsuit accuses the retailer of violating Title VII of the 1964 Civil Rights Act by systematically paying its female employees less than men in comparable positions, and discriminating against women in promotions and job assignments. The lawsuit seeks back pay and lost wages, punitive damages and changes in Wal-Mart's pay and promotion practices.
The plaintiffs say they have examined Wal-Mart payroll data that show the retailer paid women, on average, 5 percent less than less-qualified men in comparable positions.
Wal-Mart spokeswoman Sarah Clark, however, said the company did not discriminate. Any pay disparities are limited to isolated areas, she said.
"At over 90 percent of our stores there is no statistically significant difference in the pay regarding men and women," Clark said.
The case gained steam in June 2004, when U.S. District Judge Martin J. Jenkins in San Francisco certified it as a class action suit - including every female employee at any of the company's 3,600 Wal-Mart and Sam's Club stores in the United States since 1998. Positions covered by the suit range from cashiers to managers.
Data submitted by the plaintiffs highlighted disparities in pay and promotion that could not be explained by education, experience or performance evaluations, Jenkins wrote in his decision.
Wal-Mart appealed in November, putting the case on hold until a three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco considered whether Jenkins was wrong to allow so large a class. The appellate panel's hearing is scheduled for Monday.
Along with denying the bias charges, the company argues that Jenkins erred by including virtually all female Wal-Mart employees regardless of whether they claimed discrimination.
"The judge has precluded Wal-Mart from arguing that certain individuals should not be part of the class, that there were reasons they might have received less pay or were passed over for promotion," said the retailer's lead attorney in the case, Theodore J. Boutrous Jr. of Gibson, Dunn & Crutcher LLP in Los Angeles. That procedural phase is "a fundamental part of Title VII cases," he said.
The result, he added, would be a class so disparate and unwieldy that Wal-Mart effectively would be prevented from defending itself. The company also has argued that employment decisions are made by store managers based on local market conditions, so it was wrong of Jenkins to lump all the employees together.
Lawyers for the plaintiffs are equally insistent that the class action decision was correct.
"The judge did an incredibly careful job and considered every legal and factual issue," said Jocelyn D. Larkin, a lawyer with the Impact Fund, a public-interest law firm in Berkeley, Calif., that is leading the plaintiffs' legal team.
The class is not unwieldy, she said, because the plaintiffs' payroll data already allow them to determine which women have been damaged and by how much.
"We're not arguing that every woman was paid less in every circumstance," Larkin said. "Some women at Wal-Mart have done well ... [and] not every woman would receive back pay or damages if the company settled the case."
The Los Angeles Times is a Tribune Publishing newspaper.