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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, women workers at Wal-Mart are consistently underpaid compared with male employees and are promoted to management posts at a much lower rate. Today, U.S. District Judge Martin Jenkins will hear arguments in San Francisco to determine whether Dukes v. Wal-Mart, 01-2252, should proceed as a class action. The specter of the giant class means the stakes for Wal-Mart are huge — the company’s lawyers have estimated that damages could run into the billions of dollars. But the size and scope of the proposed class also provides Wal-Mart’s 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 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. Wal-Mart spokeswoman Mona Williams declined to discuss details of the suit, other than to say that the company has a very good case. A coalition of six plaintiffs firms, led by Berkeley nonprofit The Impact Fund, is bringing the suit. Brad Seligman, the 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,” Seligman says. While million-member-plus classes are common in product liability suits, they’re 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, Northern 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, Calif.’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 across 3,244 Wal-Mart and Sam’s Club stores throughout the country. According to the suit, the number of stores is irrelevant, since Wal-Mart’s highly centralized operations 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. As a result, say plaintiffs, women received only one-third of promotions to management positions despite comprising two-thirds of Wal-Mart’s hourly workforce. And women managers throughout Wal-Mart stores earned an average of $14,500 less than their male counterparts in 2001. According to Wal-Mart, however, this 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,” Wal-Mart’s brief says. “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.” While Wednesday’s hearing is to determine only the appropriateness of class certification and not the underlying merits of the case, both sides 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 the 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 Wal-Mart’s Williams regarding the Dukes case. Since Dukes was filed in 2001, Wal-Mart has cycled through three different law firms. The company first tapped Seyfarth Shaw, then brought in Jones Day, and is currently relying on Paul Hastings for its defense. Williams, along with attorneys at the various firms, 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 has been extremely expensive, exceeding a million dollars, says The Impact Fund’s Seligman. And while The Impact Fund has traditionally helped fund 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 Bentonville, Ark., hometown. 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 both involved in the suit and not, dismiss such contentions as scare tactics, insisting 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?” asks Lieff Cabraser Heimann & Bernstein partner Kelly Dermody. “That doesn’t make any sense.”

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