Under the U.S. Supreme Court: Walmart class action biggest in history

By MICHAEL KIRKLAND  |  Sept. 5, 2010 at 5:30 AM
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WASHINGTON, Sept. 5 (UPI) -- Walmart Inc., one of the world's biggest corporations and one many social critics love to hate for its purported impact on small-town America, is facing a legal nightmare -- what may turn out to be the largest class-action suit in U.S. history, one claiming systematic discrimination against women in promotion and pay.

If allowed to go forward, the suit and its class of 1.5 million U.S. women could cost the retail giant billions of dollars.

The corporation has turned to the U.S. Supreme Court, asking for review of an appeals court ruling allowing the massive corps of plaintiffs.

Beyond the money involved, The New York Times reported, the Walmart case at the Supreme Court level could set landmarks.

"This is the big one that will set the standards for all other class actions," Robin S. Conrad, executive vice president of the National Chamber Litigation Center, an agency of the U.S. Chamber of Commerce, told the Times. The center has filed several friend of the court briefs supporting Walmart.

The case started in San Francisco in 2001 when six women filed suit claiming Walmart discrimination, in part because they were passed over for promotion in favor of men -- one says she was told, "It's a man's world."

The legal dispute in which Walmart wants the Supreme Court to intervene is not about whether the women's claims have merit. Rather, it's about the certification of the class.

Many gender discrimination cases are handled by the courts on a one-by-one basis. However, when cases are brought under federal law, and plaintiffs are spread out across the states, plaintiffs can be combined into a class-action suit. The Walmart plaintiff class includes all women who worked in any of the company's 3,400 U.S. stores since the late 1990s.

Walmart argues it cannot adequately defend itself against such a large class since the facts are different for each woman.

"In our (Supreme Court) petition," the company says in a statement, "we point out that this case involves important issues about class-action procedure and Title VII (of the Civil Rights Act), and that the (U.S. Appeals Court for the) 9th Circuit's opinion contradicts numerous decisions of other appellate courts and even the Supreme Court itself.

"It is important to remember that the 9th Circuit's opinion dealt only with class certification," the company says, "not with the merits of the lawsuit. Walmart is an excellent place for women to work and has been recognized as a leader in fostering the advancement and success of women in the workplace."

In its petition for review to the Supreme Court, Walmart describes the size of the class action.

"This nationwide class includes every woman employed for any period of time over the past decade, in any of Walmart's approximately 3,400 separately managed stores, 41 regions and 400 districts, and who held positions in any of approximately 53 departments and 170 different job classifications," the petition said. "The millions of class members collectively seek billions of dollars in monetary relief under Title VII of the Civil Rights Act of 1964, claiming that tens of thousands of Walmart managers inflicted monetary injury on each and every individual class member in the same manner by intentionally discriminating against them because of their sex, in violation of the company's express anti-discrimination policy."

The petition questions whether monetary claims can be brought under the Rule 23 of the Federal Rules of Civil Procedure "which by its terms is limited to injunctive or corresponding declaratory relief," and whether the certification of the huge class passes muster under civil rights law and the Constitution's "due process," or fair proceedings, guarantee.

The petition contends: "This unprecedented class (was brought) on the ground Walmart's delegation of decentralized decision-making authority to local managers opened a 'conduit' for gender bias, a charge that can be levied against every organization of any size (including the federal government)." If the appeals court decision stands, "virtually every employer in the land could be subject to a similar suit. ... And although Title VII (of the Civil Rights Act) does not require employers to adopt 'quotas and preferential treatment' to 'avoid expensive litigation and potentially catastrophic liability,' the (appeals court's) decision will have precisely the 'chilling effect on legitimate business practices' that the (Supreme) Court has sought to avoid. ... This (Supreme) Court's review is necessary to provide much-needed clarity and to ensure that the ends of justice are served."

Washington attorney Joseph Sellers, co-leading counsel for the plaintiffs, scoffed at the idea Walmart would have a tough time defending itself against such a large class action.

Speaking by telephone from his office at Cohen Milstein Sellers & Toll, Sellers said, "There's a substantial body of evidence that comes from Walmart's own workforce data," including "very sophisticated analysis" to show what company policy was.

Walmart can use the evidence in an attempt to show that there was no company-wide discrimination, just as plaintiffs can use the same evidence to show there was, he said.

"We have evidence that there is a culture at the company that condones or says women are second-class citizens," Sellers said, some of it surfacing at managers' meetings at strip clubs or at Hooters restaurants.

As for the Walmart case opening the floodgates for similar huge class actions, Sellers said, the class action in the present case was first certified six years ago. Since that time, the number of Equal Employment Opportunity Commission class cases has actually dropped, he said.

A U.S. District Court judge and two sittings of the 9th Circuit -- a three-judge panel and the full 11-member court rehearing the appeal en banc -- approved the class. But the vote was narrow in both cases -- 2-1 for the panel and 6-5 for the full court.

In the panel's majority opinion, U.S. Circuit Judge Harry Pregerson said the women's "factual evidence, expert opinions, statistical evidence and anecdotal evidence demonstrate that Walmart's female employees nationwide were subjected to a single set of corporate policies (not merely a number of independent discriminatory acts) that may have worked to unlawfully discriminate against them in violation of Title VII."

He added, "Evidence of Walmart's subjective decision-making policies provide further evidence of a common practice of discrimination."

Circuit Judge Andrew Kleinfeld dissented, in part because of the disparate nature of each case.

"Women employed by Walmart who have suffered sex discrimination stand to lose a lot if this sex discrimination class action goes forward," he said. "All the members of the class will be bound by the judgment or settlement because, under Rule 23 (of the Federal Rules of Civil Procedure), the judgment 'shall include' all class members, 'whether or not favorable to the class.' ... What if the plaintiffs' class loses? Worse, for many women in the class, what if the plaintiffs win? Women who have suffered great loss because of sex discrimination will have to share the punitive damages award with many women who did not. Women entitled to considerable compensatory damages in addition to lost pay will be deprived of them. Women who have left Walmart will get injunctive and declaratory relief of no value to them, while new female Walmart employees will benefit from the injustice done to other women."

He added, "If the settlement is mostly words for the women and money for the lawyers, a realistic possibility, it will be a pyrrhic victory indeed."

In the April ruling by the entire court upholding the panel and district court judge, the split came along political lines. All the six circuit judges in the majority were appointed by Democrats, Law.com reported.

Four of the five dissenters, including Kleinfeld, were appointed by Republicans.

Circuit Judge Sandra Ikuta wrote the dissent: "Without evidence of a company-wide discriminatory policy implemented by managers through their discretionary decisions, or other evidence of a discriminatory company-wide practice, there is nothing to bind these purported 1.5 million claims together in a single action."

It could be some time before the Supreme Court decides whether it wants to accept or reject the case. In the past, Justice Stephen Breyer has recused himself from a Walmart case because he held stock in the company. It is not known whether Breyer is still a stockholder, or whether other members of the high court hold Walmart stock.

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