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Lawyers for Wal-Mart Stores Inc. and a group of women employees are engaged in a courtroom fight that, if the employees win the upcoming round, could result in the largest sex discrimination suit ever. If certified as a class action, the case would include 1.5 million Wal-Mart employees and could theoretically result in compensatory and punitive damages totaling hundreds of billions of dollars, according to lawyers on both sides. “No court has ever certified such a class,” Wal-Mart said in a 60-page brief filed on June 12 in U.S. District Court in San Francisco. “If this court were to certify anything like the requested class it will be in uncharted waters, going where no court has ever gone.” U.S. District Judge Martin J. Jenkins will hold a hearing and is expected to rule on the certification issue on July 25. Seven California women, who all worked at Wal-Mart stores in California, claim in a 2001 suit that Wal-Mart, including its Sam’s Club division, systematically discriminates against its female employees by denying them promotions, access to training and equal pay. The lead plaintiff is Betty Dukes, who worked part time, then full time as a cashier in Wal-Mart’s Pittsburg, Calif., store and then was promoted to customer service manager in 1997. She claims Wal-Mart discriminated against her by passing her over for promotion and then demoting her when she complained. Dukes v. Wal-Mart Stores Inc., No. C-01-2252 MJJ. Wal-Mart is asking that if Jenkins grants certification he immediately allow an appeal to the 9th U.S. Circuit Court of Appeals. Wal-Mart is the world’s largest business, with 3,244 U.S. stores, more than $230 billion in annual revenue and 1.3 million employees. The suit could affect not only wages in the retail industry but also the entire U.S. economy, according to lead plaintiffs’ counsel, Brad Seligman. Seligman said his studies found that “the patterns of discrimination at Wal-Mart are remarkably uniform throughout the country — urban and rural, the deep South and North, every one of 45 regions of Wal-Mart, in every state.” Seligman is executive director of the Impact Fund, a nonprofit group in Berkeley, Calif., that supports litigation on civil and human rights, the environment and poverty. The plaintiffs’ studies claim that some 70 percent of Wal-Mart’s hourly employees are female but women hold fewer than 33 percent of store management jobs, and fewer than 15 percent of store manager positions. Women make up an average of 56 percent of management positions at Wal-Mart’s main competitors, the plaintiffs contend. Wal-Mart’s lead counsel, Nancy L. Abell, a partner in the Los Angeles office of Paul, Hastings, Janofsky & Walker, did not return repeated messages, nor would Wal-Mart’s legal department comment. Mona Williams, vice president of corporate communications, said from company headquarters in Bentonville, Ark., “Our company prohibits discrimination of any kind. While there may be isolated instances of unfairness in any large organization, there is no basis for finding system wide discrimination at Wal-Mart.” More than 100 other women workers from 34 states have added their declarations of alleged discrimination to the plaintiffs’ pleadings. The court has accepted complaints from former employees going back to Dec. 26, 1998. Williams said that for every plaintiff’s claim, she could furnish a female Wal-Mart employee to say the company treats women fairly. COMMONALITY IS KEY Federal courts have long held that a motion for class certification should not involve examination of the merits of the case, most recently in a decision by the 2nd Circuit in Caridad v. Metro-North Commuter R.R., 191 F.3d 283 (1999). In the Caridad case, which involved allegations of sex and race discrimination, the court reaffirmed that plaintiffs seeking class certification must meet each of the requirements of Federal Rule 23 the three so-called “nexus” requirements of commonality, typicality and adequacy in Rule 23(a) and the requirement of manageability under Rule 23(b). Most of Wal-Mart’s brief addresses those four requirements. It argues that the suit lacks commonality because the class of plaintiffs is too broad and diverse: Most of the plaintiffs are, or were, hourly employees who worked at different jobs, at different stores and under different managers. It also says the potential class of employees presents different issues as to why they felt discriminated against. The brief states that Wal-Mart is really nine different businesses ranging from supercenters to neighborhood markets, with different management structures and diverse pay plans. It says none of the seven plaintiffs, for example, worked in the grocery division, listed as one of the nine separate businesses. Wal-Mart also claims there is no typicality because there is no “typical” class representative who shares a common experience with all members of the class. It then argues there is no adequacy because in some cases female supervisors were both the victims and the perpetrators of alleged discrimination. And the Wal-Mart brief claims numerous manageability problems, especially in determining damages: “Plaintiffs here ask for back pay for 1.5 million people. Such an undertaking cannot possibly be manageable.” It adds that a demand for punitive damages presents similar manageability problems and would require examination of each individual’s case. On the other side, the plaintiffs argue that there are questions of law and fact involving Wal-Mart’s policies and practices common throughout the company’s stores, and that these practices cause women at Wal-Mart to be paid less and to be promoted less often than similarly situated male employees. THE ‘SAME’ INTERESTS The seven plaintiffs claim they adequately represent the class because their interests and the interests of the class are the same proving the existence of Wal-Mart’s general practice of gender discrimination in compensation and promotion. And, they argue, typicality is satisfied where the plaintiffs have suffered from the defendant’s general policy of discrimination in compensation and promotions. The plaintiffs also argue that class treatment is manageable and superior to other methods of litigation because, “it would be far more costly for each individual female employee of Wal-Mart separately to seek discovery of Wal-Mart’s policies, obtain data concerning personnel decisions, and have a multitude of different experts analyze such data for each individual case. Moreover, separate lawsuits would require analysis of the same evidence by a multitude of courts and juries.” With commonality such a key issue, Wal-Mart went on to claim in its brief that its store managers are autonomous, and that its own statistical analysis concludes that in four of the stores where plaintiffs worked, women succeeded at a higher, not lower, rate than men in comparable positions. But, Seligman said, Wal-Mart’s own data show that there is commonality and grounds for class certification. He said the data reveal that women in every major job category at stores across the country have been paid less than men with the same seniority in every year since 1997, even though the female employees, on average, have higher performance ratings and less turnover than men. “The judge doesn’t have to decide which statistical model is correct, only that there is a question about statistics that justifies class certification,” Seligman said. Wal-Mart’s defense that every store is autonomous “is so beyond what everyone knows about Wal-Mart that it is incredible — Wal-Mart is uniquely centralized. It is fanatic about control of the stores from the thermostat of every single store, to the music it plays, to its inventory and employee records,” he said. While corporate defense attorney Heather Gatley said the factual claims should deeply concern Wal-Mart’s counsel, she predicted that the plaintiffs will have an uphill battle in getting the case certified as a class action. “Decisions were made by different managers in different locations,” said Gatley, vice chairwoman of the labor and employment practice at Miami’s Steel Hector & Davis, who is not involved in this case. “There is a huge time period, multiple kinds of claims and a huge geographic area. If I were a judge, I would not certify this case.” She predicted that any decision to certify would be overturned on appeal, especially in the current political climate that has Congress looking at ways to restrict class actions. But another attorney, also not involved in the litigation, said numbers and geography alone don’t preclude a class action. Judson Miner, a plaintiffs’ attorney with Chicago’s Miner, Barnhill & Galland, said, “The fact that decisions impact each person differently doesn’t matter. The key is common issues. Does the policy permeate the system? Is there evidence to link the stores together?” Besides the suit’s charges, Wal-Mart is also battling its own reputation as a somewhat ruthless employer and litigator. For example, since 1994, the U.S. Equal Employment Opportunity Commission has filed 16 suits against Wal-Mart for violating the Americans With Disabilities Act, the most against any U.S. company according to a spokesman. The EEOC would not disclose if it has any sex discrimination complaints pending against Wal-Mart. An EEOC spokesman said the agency granted the California plaintiffs the right to sue Wal-Mart shortly after they filed an EEOC complaint. Attorneys said it is not unusual for plaintiffs with a strong case to proceed in court before any EEOC investigation. Win or lose in court, many observers believe that the plaintiffs’ suit could forever change how Wal-Mart deals with its female employees. But Seligman wants to ensure that change. “The single most important thing is winning class certification,” Seligman said. “It’s either seven women or 1.5 million women. If it’s seven, then that is nothing to Wal-Mart.”

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