San Francisco, CA. Justice Delayed: U.S. Supreme Court Agrees to Hear The "Mother Of All Wal-Mart Lawsuits.”
It's the biggest legal threat that Wal-Mart has ever faced.
On June 21, 2001, Sprawl-Busters reported that six women had sued Wal-Mart, charging the company with systematically discriminating against hundreds of thousands of female "associates" in Wal-Mart and Sam's Clubs nationwide. The court case became widely known as Dukes V. Wal-Mart, after the lead defendant, Betty Dukes.
This week, at Wal-Mart's request, the U.S. Supreme Court agreed to review one facet of the case -- the issue of what constitutes a 'class' of plaintiffs. Whether the class action status of this case survives will be known by June of 2011, when the Supreme Court is expected to rule -- roughly 10 years after the lawsuit was originally filed.
The case was filed in 2001 in the U.S. District Court for the Northern District of California in San Francisco. Three years later, in June of 2004, a District Court judge ruled that the case could be certified as a class action lawsuit, and would cover all women workers at Wal-Mart from Christmas of 1998, to the present. As many as 1.6 million workers could be included in the class of plaintiffs in this case.
In November of 2004, Wal-Mart appealed that decision to the 9th. Circuit Court in San Francisco. Arguments by both sides of the case were heard in court in August of 2005, and on February 6, 2007, Sprawl-Busters noted that three judges from the 9th. Circuit Court had knocked Wal-Mart back on its heels by upholding the lower court's ruling.
The media called the 2007 decision a "major setback" for the retailer. The Dukes case was turning into the largest gender discrimination case in American history. In September of 1997, Home Depot settled a federal gender discrimination lawsuit that cost the 'home improvement' retailer a staggering $104 million. This case is far larger, and a lot costlier to consider.
For that reason, Wal-Mart immediately announced that it would seek a second hearing before the 9th. Circuit, and would take this case to the U.S. Supreme Court. "We will seek a rehearing of today's decision by a divided three-judge panel," Wal-Mart told The Morning News in Northwest Arkansas.
The 9th. Circuit Court said that the lower court had the discretion to decide that class action status made more sense than "clogging" the federal courts with thousands of individual suits about the same issues. "Although the size of this class action is large, mere size does not render a case unmanageable," the federal court wrote.
Wal-Mart's effort to claim the size of the class was unwieldy for the company was rejected by the court. Wal-Mart also tried to argue that the rules of class action suits should not apply to them, because its 3,400 stores function as independent businesses, and that the company as a whole does not discriminate against women.
Wal-Mart's lead attorney in the case told reporters the ruling was "one step in what is going to be a long process. We are very optimistic about obtaining relief from this ruling as the case progresses."
The Impact Fund of California represents the women who filed the lawsuit. "What this shows is that no amount of PR or spin can avoid the day in court that is coming, and it's time for Wal-Mart to face the music," said the lead attorney for The Impact Fund. "We're confident that the women of Wal-Mart will have their day in court."
On May 1, 2010, Sprawl-Busters reported that Wal-Mart's annual report was at the printers when the courts in California ruled on a 6-5 vote that the huge gender discrimination case, Dukes V. Wal-Mart, could proceed as a class action lawsuit. The Annual Report notes, "If the company is not successful in its appeal of class certification, or an appellate court issues a ruling that allows for the certification of a class or classes with a different size or scope, and if there is a subsequent adverse verdict on the merits from which there is no successful appeal, or in the event of a negotiated settlement of the litigation, the resulting liability could be material to the company's financial condition or results of operations. The plaintiffs also seek punitive damages which, if awarded, could result in the payment of additional amounts material to the company's financial condition or results of operations." In other words, Wal-Mart could lose billions on this one case.
After striking out in the lower courts, Wal-Mart pinned all its hopes on the U.S. Supreme Court. On December 6, 2010, the U.S. Supreme Court voted to hear the Wal-Mart case on the issue of class action standing -- not on the actual merits of the sex discrimination case.
The major media described this litigation as a battle between the corporate giant and its employees. But the insurance companies had their own view as well.
"Corporate America and trial lawyers are anxiously awaiting a decision from the U.S. Supreme Court," said an article in the National Underwriter Property and Casualty Insurance News. A spokesman for the Insurance Information Institute flatly stated: "This could be a dream come true for trial lawyers."
For the insurance industry, the major concern is: Will the Supreme Court make it easier to form large classes for litigation? "It could be detrimental to any corporation subject to any case that may involve claims that can be assembled into a class," said a spokesman for the Institute. "This would lower the bar on what constitutes a class."
The insurance industry is warning underwriters to "batten down the hatches" if this "colossal employment class-action" is allowed to proceed. Arguments in the case will begin this spring.
Wal-Mart issued this terse 4 sentence statement after the Supreme Court decision: "We are pleased that the Supreme Court has granted review in this important case. The current confusion in class action law is harmful for everyone -- employers, employees, businesses of all types and sizes, and the civil justice system. These are exceedingly important issues that reach far beyond this particular case. We look forward to the Court's consideration of the appeal."
What you can do: Wal-Mart is trying to argue that its female employees are too disparate to make up a single class of plaintiffs, that they are spread out over 170 job classifications, and are not being controlled by one corporate policy, but by the actions of individual store managers at several thousand stores.
The reality here is that if the U.S. Supreme Court denies class status, most of these women will never be able to pursue their financial claims individually, because they will not have the money to buy legal help, and they will not have the stamina to spend another ten years fighting Wal-Mart's legal army.
On the other hand, if the Court rules to uphold the class, one insurance industry legal analyst told the Property and Casualty Insurance News, "You're going to open a Pandora's Box for plaintiffs' attorneys to find other cases -- be it environmental, securities or any other type of area -- that may have not been ripe for this type of case before. It will be a whole different story if class status is upheld."
It is very unlikely that this case will ever be tried in a courtroom on its merits. Wal-Mart and the plaintiffs have reportedly been in settlement discussions for many months, although neither side has confirmed that.
Wal-Mart could wind up paying out billions if it loses this class-action lawsuit. The U.S. Supreme Court has given Wal-Mart its one final chance to defeat its own employees. If the retailer loses this bet, it will move to settle the case, pay out its billions in wages, and admit to no wrongdoing. The dark cloud that has been hanging over Wal-Mart will either flood the company in waist-deep settlement costs, or blow away harmlessly.
But for the 1.5 million Wal-Mart workers, the individual stakes are even higher. These women say Wal-Mart discriminated against them, and the U.S. Supreme Court's decision to hear the case is just one more example of justice delayed.
If these lower middle class women do not win class status in the spring, they will have wasted ten years of their lives fighting for gender equity against the America's largest private employer.