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Wal-Mart has racked up an impressive list of achievements in its 41 years in business, becoming the world’s top retailer and the country’s largest private employer. Now, the company is facing another, less welcome distinction as it fends off what could become the largest employment discrimination class action in the nation’s history. The suit accuses Wal-Mart of discriminating against women and seeks to establish a class of nearly 1.6 million current and former female employees of the company. According to the suit, female workers at Wal-Mart are consistently underpaid compared with male employees and are promoted to management posts at a much lower rate. The specter of the giant class means the stakes for Wal-Mart are huge, with the company’s lawyers estimating that damages could run into the billions of dollars. But the size and scope of the proposed class in Dukes v. Wal-Mart also provides the lawyers with a big target as they try to shoot down a class they contend is overly broad and unwieldy. “No court has ever certified a class like the one proposed here,” reads part of Wal-Mart’s opposition to class certification. “This court should not be the first.” Nancy Abell, a partner at Paul, Hastings, Janofsky & Walker who is representing Wal-Mart, referred inquiries to the company. Mona Williams, a company spokeswoman, declined to discuss details of the suit other than to say that Wal-Mart has a very good case. The lawsuit is being waged by a collection of six plaintiffs firms and led by The Impact Fund, a nonprofit group in Berkeley. Brad Seligman, an attorney and executive director of The Impact Fund, says the size of the proposed class is merely a reflection of the scale of the defendant. “What makes this class large is because Wal-Mart is so large,” he says. While classes that number in excess of a million members are common in product liability suits, they are virtually unheard of in employment discrimination cases, where distinct practices at various work sites can make it difficult to satisfy commonality and typicality requirements. In 1996, U.S. District Judge Susan Illston certified a 25,000-member class in a discrimination case involving the female employees of Home Depot’s western division. “There’s no reason why there has to be some sort of artificial geographic boundary to these cases,” says David Borgen, a partner at Oakland’s Goldstein, Demchak, Baller, Borgen & Dardarian who represented the plaintiffs in the Home Depot case. In asking the court to certify Dukes as a class action, the plaintiffs must show that the same discriminatory practices occurred throughout 3,244 Wal-Mart and Sam’s Club stores throughout the country. According to the suit, the precise number of stores is irrelevant since Wal-Mart’s highly centralized operations allegedly mean that the facts are the same everywhere. “Wal-Mart’s corporate headquarters in Bentonville, Ark., monitors and controls — perhaps to an extent never before seen in corporate America — the minute details of operations at its far-flung stores, down to the temperature it sets for each store’s heating and cooling system and the music played in each store,” reads the plaintiffs motion for class certification. While the company may not have an overt policy discriminating against women, the suit alleges that Wal-Mart’s policy giving field managers the discretion to set compensation and promotions is responsible for a discriminatory system. Instead of posting job openings, the company allowed field managers to use an informal “tap-on-the-shoulder” system to select future managers, according to the suit. As a result, the plaintiffs allege, women received only one-third of promotions to management positions despite comprising two-thirds of Wal-Mart’s hourly workforce. In addition, female managers throughout Wal-Mart stores earned an average of $14,500 less than their male counterparts in 2001, the suit alleges. According to Wal-Mart, however, store-by-store managerial discretion is exactly the reason why the case is not fit for class certification. “Managers employ distinct criteria in making their individualized decisions,” attorneys argue in Wal-Mart’s brief. “Thus, if a discriminatory decision has been made at a particular store, the decision was made by the individual store manager. And that fact alone destroys commonality.” As part of the debate over the issue of class certification, both sides in the litigation have armed themselves to the hilt with statistical data and expert reports. Along with their motions on the class certification issue, each side has filed more than 100 witness declarations. Wal-Mart is no stranger to class actions. According to the company’s 2002 annual report, it was a defendant in 33 wage-and-hour class actions last year. “We take all of the cases seriously, but clearly the scope of this one makes it a top priority for us right now,” says Williams, the company spokeswoman, referring to the Dukes case. Since the case was filed in June 2001, Wal-Mart has cycled through three law firms. At the outset, the company was represented by Gilmore Diekmann Jr., a veteran employment lawyer who works in Seyfarth Shaw’s San Francisco office. Soon after, Wal-Mart brought in Jones Day, which it selected as lead counsel after interviewing several firms. The team was led by John Strauch, a Cleveland-based partner and coordinator of the firm’s litigation group. Seyfarth Shaw formally withdrew from the litigation in April 2002. In December, Abell, the Paul, Hastings partner, entered the fray and stepped into the lead counsel role, after which Jones Day filed a motion to withdraw. Williams, along with attorneys at the various firms, have declined to comment on the change of counsel. Meanwhile, the plaintiffs have assembled a bicoastal team of law firms that includes Washington, D.C.’s Cohen, Milstein, Hausfeld & Toll and San Francisco’s Davis, Cowell & Bowe, among others. The costs of taking depositions throughout the country and retaining experts and technology to analyze the data have so far exceeded $1 million, according to Seligman, at The Impact Fund. While The Impact Fund has traditionally helped finance litigation undertaken by other lawyers, Seligman has taken the lead role in Dukes, arguing motions and writing briefs. In 2001, the plaintiffs won a key victory, defeating a motion to have the case transferred to Wal-Mart’s hometown in Arkansas. But the fate of the suit clearly hinges on class certification. According to some lawyers, a decision regarding class certification may come down to the practical considerations of manageability. “The bigger the class, the more you can tell the judge, ‘Do you really want this problem?,’” says Fred Alvarez, an employment law partner at Wilson Sonsini Goodrich & Rosati. Indeed, in its briefs, Wal-Mart contends that determining damages for a class spread throughout its 3,000-plus stores would prove extremely messy, requiring thousands of mini-trials. “Due process would require a determination as to whether each individual store had an unexplained wage disparity favoring men,” reads Wal-Mart’s court filing. But plaintiffs attorneys, including some who are involved in the suit and others who are not, dismiss such contentions as scare tactics. They insist that damages could easily be determined through a formula based on Wal-Mart’s payroll data. “If you assert that at some point a company gets too big to be appropriate for a class action suit, are you relegating employees that are working for large corporations to lose their rights to bring claims in a class context?” says Kelly Dermody, a partner at Lieff Cabraser Heimann & Bernstein in San Francisco. “That doesn’t make any sense.” Alexei Oreskovic covers employment law issues for The Recorder . His e-mail address is [email protected] Susan Beck, a San Francisco-based reporter for The American Lawyer magazine, which is affiliated with The Recorder , contributed to this article.

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