From The Recorder, 06/24/04 

A federal judge gave a green light to the historic Wal-Mart sex discrimination class action on Tuesday, a decision that could potentially funnel tens of millions of dollars in attorneys fees to the lean nonprofit law firms on the plaintiffs' legal team.

But while the plaintiffs' lawyers celebrated U.S. District Judge Martin Jenkins' class certification ruling, they and other experts noted that it would likely face an almost immediate challenge. In a statement, Wal-Mart spokeswoman Mona Williams said the retailer plans to appeal.

On Tuesday, Jenkins issued an 84-page order that made Dukes v. Wal-Mart Stores, 01-02252, the largest gender discrimination class action case in history. The case alleges that the nation's largest employer paid women less and promoted them less often than male workers. The class may include up to 1.6 million former and current employees who worked at Wal-Mart after December 1998.
Jenkins' order didn't weigh the case's merits. However, the judge noted that Dukes' record-breaking scope doesn't give Wal-Mart a free pass when it comes to the 1964 Civil Rights Act.

"This act forbids gender- and race-based discrimination in the American workplace ... Insulating our nation's largest employers from allegations that they have engaged in a pattern and practice of gender or racial discrimination -- simply because they are large -- would seriously undermine these imperatives," Jenkins wrote, noting that his ruling comes during the 50th anniversary of Brown v. Board of Education.

Wal-Mart downplayed the importance of Jenkins' decision. "Let's keep in mind that today's ruling has absolutely nothing to do with the merits of the case. Judge Jenkins is simply saying he thinks it meets the legal requirements necessary to move forward as a class action," spokeswoman Williams said.

The plaintiffs however, were jubilant about the ruling and cautiously optimistic about the future of the case.

"The court said that there is no exception to Title VII for employers," said Jocelyn Larkin, who is litigation counsel for the Impact Fund, one of the nonprofit law firms working on the case.

The legal skirmishes aren't over yet. Under a relatively new rule, Wal-Mart can appeal the certification within 10 days to the Ninth Circuit U.S. Court of Appeals. The court then would have discretion over whether to take up the case.

The publicity about the case may prompt the Ninth Circuit to take it up, mused Barry Goldstein, a class action expert at Goldstein, Demchak, Baller, Borgen & Dardarian in Oakland. Any decision made by the Ninth Circuit would probably be appealed to the U.S. Supreme Court, he added.

An eventual victory could fund years of public interest litigation. The nonprofits on the legal team are Impact Fund, an 11-year-old Berkeley-based nonprofit started by ex-Saperstein, Mayeda & Goldstein partner Brad Seligman; Equal Rights Advocates, a 30-year-old San Francisco firm focused on gender discrimination; and Baltimore-based Public Justice Center, a 19-year-old public interest law firm.

The private firm roster includes San Francisco's Davis, Cowell & Bowe; Santa Fe, N.M., firms Merrit Bennett and Tinkler & Firth; and Cohen, Milstein, Hausfeld & Toll, the Washington, D.C., firm that sued Swiss banks on behalf of Holocaust survivors.

While many experts stressed that the plaintiffs still face a long, hard road, that road probably doesn't end in a trial.

Most class actions settle after the class certification. Employers do so because the cost of litigating and the risk of losing are too great, said civil defense attorney Gilmore Diekmann Jr. of Seyfarth Shaw in San Francisco.

Todd Roberts, a Ropers, Majeski, Kohn & Bentley partner who defends employers and has represented carriers who defend employment class action cases, agreed. "There is a substantial amount of money that is invested by both sides," said Roberts. "The cases are extremely costly to get from the pleading stage to the trial stage."

While several experts declined to speculate about the size of potential attorneys fees or any settlement award, the plaintiffs' legal team could be poised to reap a huge windfall in attorneys fees.

Certainly a big cash infusion from the Wal-Mart case would have a major impact on the nonprofits, one observer said.

"I think it would be extraordinary," said Goldstein, a former colleague of Impact Fund founder Seligman and Larkin. He compared the prospective Wal-Mart fee award to when pharmaceutical heiress Ruth Lilly unexpectedly bequeathed $100 million to Poetry Magazine.

"Obviously ERA and the Impact fund have done a lot on a shoestring," Goldstein said.

The nonprofits themselves said it was too early to talk about settlements -- key legal battles have not been fought yet. Any money from a settlement or judgment would be plowed back into the organization to fund more litigation and outreach projects.

"That's what public interests groups do," said Irma Herrera, executive director of the Equal Rights Advocates, which has a budget of $1.6 million. "We take attorneys fees and invest them in future cases."

Like Impact Fund and the Public Justice Center, ERA is funded through a combination of attorneys fees, contributions, grants and donations.

The Public Justice Center has a budget of "just over $1 million," says legal director Debra Gardner. The Impact Fund's 2003 annual report shows it had $1.6 million in revenue.

One prominent public interest attorney who declined to speak on the record noted that even if the plaintiffs reaped huge fees from the Wal-Mart case, the money might not trickle down to the nonprofits.

When nonprofit law firms staff large legal cases, their work is usually funded by well-heeled firms, foundations or loans. If the nonprofit law firms involved in the Wal-Mart case have to pay back their benefactors first, they may not see much of any fee award, the lawyer said. The lawyer also noted that while most class actions settle, Wal-Mart is known for not settling cases.