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Class-Action Suit Against Wal-Mart Was Too Big to Succeed: View

June 20, 2011

June 21 (Bloomberg) -- Everything about Wal-Mart Stores Inc. is big. Total sales, at $422 billion last year, exceeded the gross domestic product of all but 18 countries. Its 4,300 U.S. stores employ more than 1.4 million people, more than any other U.S. company.

So the verdict handed down yesterday by the U.S. Supreme Court in Wal-Mart v. Dukes was suitably outsized; it decided the largest workplace discrimination case in history. The decision, which was unanimous in one part, and split along the familiar 5- 4 ideological lines in another, was the correct one.

The lawsuit was brought on behalf of every woman who worked for Wal-Mart since late December 1998, more than 1.5 million in all. The Supreme Court, which hadn’t reviewed the standards for class-action suits in 12 years, told the women they didn’t have enough in common to sue the company as a monolithic class.

The female plaintiffs claimed that they had been illegally denied pay and promotions despite a company policy against sex discrimination. The suit relied largely on statistics, which seemed damning enough.

Women filled 70 percent of Wal-Mart’s hourly jobs, yet made up only 33 percent of management employees. Women were paid less than men in every region, even when they had higher performance ratings and seniority.

The plaintiffs bolstered their case with affidavits detailing the experiences of 120 individuals. One female worker said she was told to “doll up” if she wanted a promotion.

Wal-Mart devastatingly turned the numbers against the plaintiffs. One brief filed on behalf of the women cited Census Bureau figures showing that U.S. median earnings of women in 2009 were 77 percent of men’s earnings. The company pointed out that women at Wal-Mart earned between 85 percent and 95 percent of what male colleagues earned. They actually did better at Wal- Mart than in the country at large.

As for the affidavits, the company said they represented just one-thousandth of one percent of women employed at the retailer since December 1998.

As Justice Antonin Scalia wrote for the majority, “Without some glue holding together the alleged reasons” for Wal-Mart’s pay and promotion decisions, it was impossible to say that all of the class members suffered the same injury at different stores run by different managers across the nation. Wal-Mart allows local managers wide latitude in wages and promotions.

The plaintiffs can still bring lawsuits individually, and many certainly will. Some may even band together in smaller classes -- if they worked at the same store, for example, and believe they experienced systemic discrimination from the same managers.

In the end, what the women were really trying to prove is that Wal-Mart has a corporate culture that favors men. Some of the briefs filed with the court claimed that promotions were characterized as a “tap on the shoulder,” with local managers having great discretion in deciding whose shoulder to tap. Vacancies were not regularly posted. Employees were discouraged from discussing their compensation, presumably to prevent comparisons.

As Justice Ruth Bader Ginsburg wrote in a partial dissent, such behavior could be a cover for bias against women. It will be up to other courts to make sure Wal-Mart doesn’t use its decentralized management to escape legal responsibility. But those cases should be dealt with on their individual merits -- and unique facts.

This opinion is likely to make litigation harder for other employment class actions that bind together disparate litigants in a single class. But a class of 1.5 million employees faces an appropriately high hurdle. This class didn’t clear it.

For more Wal-Mart news: {WMT US <Equity> CN <GO>} For more Supreme Court stories: {NI SUP BN <GO>} For top legal news: {TOP LAW <GO>} For top retail news: {RTOP <GO>}

--Editors: Paula Dwyer, Francis Wilkinson

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To contact the Bloomberg View editorial board: view@bloomberg.net.


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