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US retailing giant suffers lawsuit setback

Betty Dukes, left, a plaintiff in a class action lawsuit against Wal-Mart Stores Inc, speaks at a news conference on Tuesday in San Francisco. A federal appeals court ruled that Wal-Mart Stores Inc must face a class-action lawsuit that alleges as many as 1.5 million female employees were discriminated against in pay and promotions. PHOTO: AP

Wal-Mart's efforts to block the nation's largest sex discrimination lawsuit suffered a big setback on Tuesday when a federal appeals court in San Francisco ruled that the case should proceed as a class action.

In a 2-1 ruling, the 9th US Circuit Court of Appeals rejected Wal-Mart's argument that the lawsuit, which involves at least 1.5 million current and former women employees, was too unwieldy to handle in a single case.

Legal specialists said the ruling would increase pressure on Wal-Mart Stores to settle the case, in which the retailer is accused of discrimination in pay and promotions. Wal-Mart executives said they would appeal, voicing confidence that the decision would be overturned.

The court ruled on Tuesday that the lawsuit should proceed as a class action -- the largest such civil rights case in history -- because it raised common questions of law and fact, because the six named plaintiffs were typical of the class and because there were so many women that it was impractical to handle the matter in individual cases.

The majority wrote, "Plaintiffs' expert opinions, factual evidence, statistical evidence, and anecdotal evidence present significant proof of a corporate policy of discrimination and support plaintiffs' contention that female employees nationwide were subject to a common pattern and practice of discrimination."

Wal-Mart's lead lawyer, Theodore Boutrous Jr, said that Tuesday's decision was not based on the merits of the case.

"Wal-Mart has a strong anti-discrimination policy," he said.

Arguing that the ruling contained factual and legal errors, Boutrous said Wal-Mart would ask the three-judge panel to reconsider the case and would also ask a full panel of 15 9th Circuit judges to consider it.

Boutrous asserted that Tuesday's decision conflicts with Supreme Court rulings and other Circuit Court rulings.

"We are optimistic about the chances of getting further review," Boutrous said. He asserted that the named plaintiffs were not typical of the class and that the case involved no common questions of law or fact.

He pointed to other appeals of court rulings that rejected class-action status involving thousands of plaintiffs, because such cases could prevent individual hearings to determine liability.

In the majority ruling, Judges Harry Pregerson and Michael Daly Hawkins wrote that due process does not require individualized hearings to determine damages.

A lawyer for the plaintiffs, Joseph Sellers, hailed Tuesday's decision. "This ruling confirms that no company, no matter how big, is exempt from the civil rights law, no matter what Wal-Mart claimed," he said.

Brad Seligman, the plaintiffs' lead lawyer, estimated that the class -- which includes all women who have worked at Wal-Mart at any time since Dec. 21, 1998 -- encompasses more than 2 million.

"Simple math, given the size of the class and the types of disparities we've shown, indicate that the losses to women are in the billions," Seligman said.

He said the ruling showed that "it is time for Wal-Mart to face the music."

But Wal-Mart's chief financial officer, Thomas Schoewe, said: "This decision will have no impact on our fiscal year 2007 financial performance. And does not require the company to take any action that will increase its cost of operations."

Peter Hillman, a partner at Chadbourne & Parke who represents management in employment law cases, said the ruling "obviously puts pressure -- incredible pressure -- on Wal-Mart to consider a settlement." He said the chances were slim that a higher court would agree to hear the case.
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