Walmart Dodges Bullet on Sex Discrimination

Scale of JusticeWal-Mart may have dodged the bullet for alleged systemic sex discrimination dating back at least a decade.

Last week a federal judge in San Francisco denied class certification in a statewide class action lawsuit filed by five female Wal-Mart employees in California on behalf of 150,000 past and present female workers in that state who  allegedly were denied equal treatment in pay and promotions.

This is the second defeat for plaintiffs seeking to file class action lawsuits against Wal-Mart on a state or regional basis. Wal-Mart won dismissal of a lawsuit in October that sought to represent female Wal-Mart workers in Texas.

 The U.S. Supreme Court last year rejected a 12-year-old class action lawsuit filed by six female employees of Wal-Mart on behalf of  1.6 million past and present female workers around the country. 

What’s left for the plaintiffs?

Class action lawsuits often are the only realistic way of addressing systematic discrimination by corporations because of  the high cost of litigation, the defendant’s “deep pockets,”  and the relatively paltry amount of damages typically available in individual cases.

Underwhelmed

Senior U.S. District Judge Charles R. Breyer ruled the California lawsuit failed to meet the  U.S. Supreme Court’s criteria for a collective legal action, including evidence of a company policy or decisions by higher-ups that affect all workers in the class. He the statistics “still do not reflect significant proof of a general policy of discrimination.”

Judge Breyer concluded the following evidence from the plaintiff’s is “underwhelming”:

  • About three-quarters of the stores paid women, on average, the same hourly rates as men. (Note: of course, this means that a quarter of Wal-Mart stores pay women, on average, a lower hourly rate than men. PGB)
  • Eighty-six female Wal-Mart employees in California described personal experiences of discrimination  – that represents only one woman for every 1,745 members of the proposed statewide class. (It’s unclear what number would be sufficient  for class action status- PGB)
  • The plaintiff’s produced evidence that Wal-Mart’s then-chief executive, Thomas Coughlin, in a 2004 meeting attended by district managers who approve pay and promotional decisions, said the key to success in choosing leaders was “a single focus to get the job done,” and that “men are better at focus.”
  • The plaintiffs said they had evidence of disparities throughout California and biased statements by top managers.

The U.S. Supreme Court ruled unanimously in June 2011 that the original lawsuit against Wal-Mart in 2001 failed to show any company-wide policy or attitude of discrimination  and said there were too many women in too many jobs at Wal-Mart to wrap into one lawsuit. The high court overturned lower court decisions that allowed nationwide class-action status.

Judge Breyer said the California lawsuit “is essentially a scaled-down version of the (nationwide) case with new labels on old arguments.” He said the plaintiffs challenged “the discretionary decisions of hundreds of decision-makers,” which, according to the U.S. Supreme Court, cannot be the basis of a class-action suit.  

Breyer said the remarks attributed to former Wal-Mart CEO Coughlin may have come from an outside consultant and were made after the period covered by the lawsuit.

Breyer, 72, was appointed to the federal bench in 1997 by then-President Bill Clinton.  His brother is U.S. Supreme Court  Justice Stephen Breyer.

Dodged a Bullet?

At one point, Wal-Mart, the nation’s leading retailer, was concerned about potentially serious liability for alleged sex discrimination.

In  2010, the New York Times published an article on a 1995 memorandum issued by Wal-Mart’s then counsel, Akin Gump Strauss Hauer & Feld,  that reported widespread gender disparities in pay and promotion at Wal-Mart and Sam’s Club stores.

The NYT reported the memo said that “women employed by Wal-Mart earned less than men in numerous job categories, with men in salaried jobs earning 19 percent more than women..”

By one measure, the memo states “. . . men were five and a half times as likely as women to be promoted into salaried, management positions.” Furthermore, in 1993, men employed by Wal-Mart as department managers were paid an hourly rate 5.8 percent higher than women in those positions. 

The Memo estimated that Wal-Mart’s potential legal exposure in a class-action sex discrimination suit was $185 million to $740 million for 1993 alone.

The  overall disparities in job assignments, the memo states, were “statistically significant and sufficient to warrant a finding of discrimination unless the company can demonstrate at trial that the statistical disparities are caused by legitimate, nondiscriminatory factors.”

At this point it appears that Wal-Mart has dodged that bullet.

Wal-Mart was “pleased” by California Judge Breyer’s ruling and said it has a had a  “strong policy” against discrimination in place for many years.

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