Wal-Mart class-action appeal goes to U.S. Supreme Court

Suit alleges discrimination against every woman employed in the company's U.S. stores over the past 10 years
By James Vicini and Terry Baynes
|hrreporter.com|Last Updated: 12/16/2010

(Reuters) - The United States Supreme Court has announced it will decide if the largest sex-discrimination class-action lawsuit in U.S. history against Wal-Mart can proceed.

The court will hear an appeal by the largest private U.S. employer arguing the claims of as many as 1.5 million current and former female employees, who are seeking billions of dollars in damages, were too diverse to proceed as a single class-action lawsuit.

The justices decided to review a 9th Circuit ruling that upheld the class-action certification in the lawsuit alleging discrimination against every woman employed over the past decade at the company's 3,400 U.S. stores.

The Supreme Court is expected to hear arguments in the case, which immediately became the most important business dispute before the justices this term, in March, with a ruling likely by the end of June.

The ruling could affect other class-action lawsuits. Anthony Sabino, a professor of law and business at St. John's University in New York, said the case "will test the very limits of class litigation."

Bentonville, Arkansas-based Wal-Mart, the world's largest retailer, said in a statement it was pleased the court granted review in the important case and it looked forward to the court's consideration of the appeal.

"The current confusion in class-action law is harmful for everyone -- employers, employees, businesses of all types and sizes and the civil justice system. These are exceedingly important issues that reach far beyond this particular case," Wal-Mart said.

The original lawsuit by seven women, filed in 2001, claimed that Wal-Mart paid female workers less than male colleagues and gave them fewer promotions. Wal-Mart denied that it discriminated on the basis of sex.

At issue before the Supreme Court is the question of class certification, not the merits of the sex-discrimination allegations. The lawsuit has not yet gone to trial.

Large class-action lawsuits make it easier for big groups of plaintiffs to sue corporations and have led to huge payouts by tobacco makers, and oil and food companies. Companies have sought to limit such lawsuits to individual or small groups of plaintiffs.

The Supreme Court, with a conservative majority that has often ruled for businesses, in recent years has been highly skeptical of large class-action lawsuits.

Class-action timeline

At the trial court stage in 2004, U.S. District Judge Martin Jenkins ruled in favor of class certification under Federal Rule of Civil Procedure 23(b)(3), finding sufficient commonality in the female plaintiffs' allegations of pay discrimination.

The 9th Circuit, in a 6-5 decision issued in April 2010, upheld the district court's ruling with respect to plaintiffs who were still Wal-Mart employees as of June 8, 2001. The majority concluded it was better to handle the case as a class action "instead of clogging the federal courts with innumerable individual suits litigating the same issues repeatedly." Despite the large size of the class, "mere size does not render a case unmanageable," wrote Judge Michael Daly Hawkins.

Dissenting judge Sandra Ikuta responded that "never before has such a low bar been set for certifying such a gargantuan class."

In its appeal to the Supreme Court, Wal-Mart sought to undo the class-action certification and said the female employees held different jobs in different states under the supervision of different managers.

"The class is larger than the active-duty personnel in the Army, Navy, Air Force, Marines and Coast Guard combined -- making it the largest employment class action in history by several orders of magnitude," the company said.

Attorneys for the lead female plaintiffs in the case opposed the appeal and urged the Supreme Court to reject it.

Wal-Mart's ultimate real argument is that "it is too big to be held accountable," they said. "The class is large because Wal-Mart is the nation's largest employer and manages its operations and employment practices in a highly uniform and centralized manner."

Business groups like the Chamber of Commerce and a number of large corporations, including tobacco company Altria Group Inc, software giant Microsoft Corp and chipmaker Intel Corp, supported Wal-Mart's appeal.

They said improper class certification puts inappropriate settlement pressure on defendants and that the 9th Circuit's ruling threatened to harm American business by imposing "staggering costs of class-action litigation."

Attorneys for the plaintiff female workers rejected such concerns. They said Wal-Mart has never suggested it will have to settle the case because of the class-certification order.

They also rejected the argument that the appeals court's ruling could trigger a landslide of class-action litigation and said Wal-Mart, a uniquely large and unusually uniform, centralized company, was different from the typical employer.

The Supreme Court said in a brief order that it would decide whether claims for monetary relief can be certified under Rule 23 of the Federal Rules of Civil Procedure and whether the class certification ordered in the case was proper under that rule.

The lawsuit received class-action status under a provision designed primarily for plaintiffs who seek other forms of legal relief, such as an injunction, rather than money damages.

The case is Wal-Mart Stores v. Dukes et al, U.S. Supreme Court, No. 10-277. The docket lists Theodore Boutrous of Gibson, Dunn & Crutcher in Los Angeles as the attorney for Wal-Mart. Brad Seligman of The Impact Fund and Joseph Sellers of Cohen, Milstein, Hausfeld & Toll in Washington, D.C. are listed as counsel for Dukes and the other respondents. The appellate cases are Dukes et al v. Wal-Mart, U.S. Court of Appeals for the Ninth Circuit, Nos. 04-16688, 04-16720.

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