Wal-Mart Class Action Classless? wait and see…

December 9th, 2010. By LucyC

Wal-Mart’s making employment news again. Seems like they’re never really out of the news. You have to hand it to them—at least they’re consistent—consistently at odds with their employees, that is.

This time Wal-Mart has the auspicious honor of facing what could be the largest sex-discrimination case in US history, if the US Supreme Court, which agreed on Monday to examine the class-action at Wal-Mart’s behest, says the lawsuit can proceed as a class action.

But this story started almost a decade ago, when the suit was originally filed. The allegations are that Wal-Mart paid its female employees less than its male employees and gave them fewer opportunities for promotion. Not very original, but also not very surprising, given the retailer’s track record.

Wal-Mart objects to the case being allowed to go forward as a class action because of its size, and because the women involved reportedly worked at thousands—yes thousands of different stores—with potentially different issues.

However, all this hinges on the definition of a “class”. The larger issue at play here, and one which is being watched closely, is how a “class” is defined. Wal-Mart’s petition is being supported by other large players including Bank of America Corp, General Electric Co. and Microsoft Corp. According to a piece in the Wall Street Journal, these companies say that an earlier ruling by the Ninth U.S. Circuit Court of Appeals, which essentially authorized the class action suit to proceed, could, if allowed to stand, “expose other companies to staggering liability by allowing unrelated discrimination claims to proceed as class action suits.”

Wal-Mart claims the Appeals Court misapplied the standards for defining a class, and as a result has left it exposed to punitive damages when it should be liable only for back pay. (WSJ) 

So the Supreme Court has agreed to review whether the potential plaintiffs in the class have enough in common to warrant a ‘class action’—that their claims can be fairly decided in a single action.

Just as an aside, and for those of us not up on the ins-and-outs of class actions—this particular type of lawsuit combines multiple claims against a common defendant or defendants, into a single claim. This enables the courts to provide redress for large-scale ‘wrongdoing’ where it might not be possible on a case-by-case basis. We have a very comprehensive FAQ on class actions.

Back to Wal-Mart. Lawyers representing the ‘class’ allege that the retailer victimized its female employees through a ‘centralized corporate culture’ and are, therefore, entitled to be represented in a class.

If the Supreme Court finds against Wal–Mart in its review of the case, and allows the suit to proceed as a class action, the class could involve as many as 1.5 million plaintiffs. The potential pay out could be billions in damages and back-pay. And there’s the rub. 

BTW—this wouldn’t be the first time Wal-Mart has faced a discrimination class action. They were recently sued over workplace discrimination involving Latino employees at a Sam’s Club in Fresno, California, alleging a hostile work environment. The plaintiffs claim they were verbally harassed, including having derogatory words used against them. The lawsuit was filed by the Equal Employment Opportunity Commission (EEOC), which, according to Al Norman, writer with The Huffington Post, “does not file a suit unless it has given up trying to work out a voluntary agreement with a company.”

So, the Supreme Court justices will make a ruling on the class action issue—which will determine how the suit—or suits—proceed. But the arguments likely won’t be heard until the spring, and a ruling not made until the summer of 2011. Not to seem dark in any way, but some plaintiffs could be dead by the time this matter is finally settled. 

And Wal-Mart does have the motivation and the bucks to drag this out. According to a report in the Wichita Business Journal “Wal-Mart Stores Inc. reported a profit of $3.4 billion, or 95 cents per diluted share, on sales of $101.2 billion for the quarter ending Oct. 31. That compares to income of $3.1 billion, or 82 cents per diluted share, on revenue of $98.7 billion for the same quarter last year.” 

Wal-Mart, in addition to being an employer of ill-repute—also seems to be recession proof—on the backs of its employees.

Tags: Discrimination, Wal-Mary

This was posted on Thursday, December 9th, 2010 at 3:03 pm and is filed under Employment . Feel free to respond, or trackback. Read our comments policy.