One Case Against Wal-Mart

In a case with wide-ranging implications, the jury rules for a pharmacist who claimed gender discrimination and defamation. Wal-Mart says it will appeal

by Emily Keller

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On June 19, Cynthia Haddad and her husband, Bill, walked across Wendell Avenue from the Berkshire Superior Court to the public library in Pittsfield, Mass., to talk. There they waited as a jury in the Park Square courthouse deliberated over the lawsuit Haddad had filed against her former employer Wal-Mart Stores (WMT) for gender discrimination and defamation. As they exited the library hand-in-hand, the sun shone, filling Haddad with an impending sense of closure. "It was the first day of the rest of our lives no matter what the verdict," says the 45-year-old mother of four. "My story was told and I did the fight. My life would go on after that."

Shortly thereafter, Haddad was in tears. The jury awarded her nearly $2 million in punitive and compensatory damages. "It vindicated me," says Haddad. "It started to bring life back into me. Someone listened."

Under Fire

The dispute was over why Haddad had been dismissed by Wal-Mart, after more than 10 years as a pharmacist with the company. Haddad believed she was fired from the Pittsfield store in retaliation for her complaints about being paid less than male pharmacy managers and about the disappearance of controlled drugs from the pharmacy. Wal-Mart contended that Haddad was dismissed for violating company policies and failing to secure the pharmacy. The company also argued that Haddad wasn't entitled to the same pay as the other pharmacy managers, who were in fact male, because she wasn't actually a manager.

Wal-Mart is likely to appeal, and the verdict may be overturned. Spokesman John Simley says the company stands by its decision to terminate Haddad based on violations of company policy and by its contention that Haddad's sex played no role in her treatment. "The facts in this case indicate that Ms. Haddad's termination had absolutely nothing to do with her gender," says Simley. He declined to go into specifics.

Of course, even if Wal-Mart loses, $2 million is barely a blip on the radar for a company that took in more than $355 billion in revenues in its most recent fiscal year. Still, Haddad's victory comes at a difficult time for Wal-Mart, with the company struggling to defend its reputation on a number of fronts. Wal-Mart has come under fire for the wages and benefits that it provides workers and for its impact on small, local retailers. Investors have been unhappy with its stagnant stock (see BusinessWeek.com, 4/30/07, "Wal-Mart's Midlife Crisis"). And it's become a favorite target among the Democratic Presidential candidates, including Barack Obama and John Edwards (see BusinessWeek.com, 11/16/06, "Can Barack Wake Up Wal-Mart").

Potential Impact

Haddad's success may also have ramifications beyond her particular case. Wal-Mart is facing a separate lawsuit, a massive class action over gender discrimination, and one of the lead attorneys in that case says that Haddad's victory may give him the opportunity to broaden his case. The case, Dukes v. Wal-Mart Stores, charges the company with a pattern of gender discrimination in promotion, pay, training, and job assignment on behalf of 1.5 million to 2 million women who have worked at Wal-Mart's retail stores and wholesale clubs since 1998. Joseph Sellers, co-lead counsel for the case, says he may now look at whether to expand the case to include female pharmacists, who are not currently part of the class action. "This case might reflect the tip of the iceberg," he says.

In addition to the Dukes class action, there are more than 75 legal proceedings pending against the company, according to filings with the Securities & Exchange Commission. The majority pertain to complaints about wages and off-the-clock work.

Haddad is an example of how one employee, backed by a team of dogged attorneys, pulled out a legal victory against the giant retailer. She benefited from having a long track record at the company, complete with strong employee evaluations over many years. Even more important, her lawyers, Richard Fradette and David Belfort, were able to track down key witnesses who could put Haddad's treatment in context, especially male pharmacists who formerly or currently worked at Wal-Mart and who had faced markedly different treatment.

When Haddad started working at Wal-Mart in 1993, it was the realization of a life-long dream. She had wanted to become a pharmacist ever since she had developed a crush in the eighth grade on one of the pharmacists in her hometown. She worked for the company on quite good terms for the next 10 years.