From Sacramento Bee, 06/23/04

Judge Deals Big Blow to Wal-Mart

By Dale Kasler
STAFF WRITER SACRAMENTO BEE

In a historic and potentially devastating setback for Wal-Mart Stores Inc., a federal judge in San Francisco granted class-action status Tuesday to a massive lawsuit accusing the retailing giant of sex discrimination against female employees.

The ruling means that a small group of women, all of whom are current or former Californians, can represent 1.6 million current and former Wal-Mart workers in an effort to show the company systematically pays women less for comparable work and promotes them less frequently. Without class-action status, the case would be limited to a few individual claims or probably would collapse.

Wal-Mart said it would appeal.

The ruling is so significant that one legal scholar, Lester Brickman, said Wal-Mart probably will try to negotiate an out-of-court settlement if it's unable to get the class-action status thrown out by the appeals court. That's because a case involving 1.6 million plaintiffs could generate a trial verdict so huge that even a company of Wal-Mart's size wouldn't run the risk, said Brickman, a law professor at Yeshiva University in New York.

"You're looking at numbers potentially in the billions," he said. "Even one of the largest companies in the world finds that prospect quite threatening."

Judge Martin Jenkins' ruling had an epic feel to it. The judge invoked the 50th anniversary of the Supreme Court's Brown v. Board of Education ruling outlawing school segregation and wrote, "This anniversary serves as a reminder of the importance of the courts in addressing the denial of equal treatment under the law."

And in at least one respect, the decision broke new ground. It made the Wal-Mart case the largest class-action employment discrimination case in U.S. history, said Elizabeth Lawrence, one of a multitude of lawyers representing the women in the case.

"It's historic in size, it's the largest class ever," added Irma Herrera of Equal Rights Advocates, a San Francisco public-interest law firm that is representing the women. "And we are really excited about the possibilities of making wholesale changes at a very important commercial institution."

But Lawrence said the case is far from over, despite the enormity of the ruling. "Wal-Mart has a reputation for fighting to the bitter end," she said.

Wal-Mart, in a statement released by spokeswoman Mona Williams, said it would appeal the ruling and noted that the merits of the case haven't been decided.

"While we cannot comment on the specifics of the litigation, we can say we continue to evaluate our employment practices," the statement added. "For example, earlier this month Wal-Mart announced a new job classification and pay structure for hourly associates. This new pay plan was developed with the assistance of third-party consultants and is designed to ensure internal equity and external competitiveness."

Jenkins didn't rule on the substance of the case. But the judge said that the plaintiffs provided largely uncontested statistical evidence that "women working in Wal-Mart stores are paid less than men in every region, that pay disparities exist in most job categories, that the salary gap widens over time, that women take longer to enter into management positions, and that the higher one looks in the organization the lower the percentage of women."

Based on data gathered and analyzed by Richard Drogin, a Berkeley statistics consultant, the plaintiffs said the pay gap between men and women ranges from $694 a year for cashiers to $139,663 for regional vice presidents.

The judge also said there was anecdotal evidence supporting the women's case. One female employee, denied a transfer to a store's hardware department, testified that a supervisor told her, "You're a girl, why do you want to be in hardware?" Another quoted a supervisor as saying, "Men are here to make a career, and women aren't. Retail is for housewives who just need to earn extra money."

Christine Kwapnoski, an East Bay Wal-Mart employee who is one of the plaintiffs in the lawsuit, said she makes "a lot less than my male counterparts."

Kwapnoski, a 39-year-old single mother, has worked at the Sam's Club in Concord since 1986. She makes $17 an hour managing the store's bakery and has stayed with the company as the lawsuit has made its way through the courts.

"It makes life a little rough going into work every day," she said.

Kwapnoski is one of seven named plaintiffs - that is, her name is on the lawsuit. All seven are current or former Californians, even though the suit accuses Wal-Mart of a nationwide pattern of behavior. The judge had ruled that the named plaintiffs should be Californians if the case was going to unfold here, according to Lawrence.

Wal-Mart argued that the lawsuit didn't deserve class-action treatment because each of its 3,578 stores is different, and store managers have considerable leeway in making promotions and giving raises.

But the judge said Wal-Mart's "strong, centralized corporate culture," as well as the statistical evidence on pay, showed the class-action status was justified.

He said the class will include women who've worked at a Wal-Mart store since Dec. 26, 1998. The date is tied to the filing of a discrimination claim filed with the federal Equal Employment Opportunity Commission.

The case adds to the political and legal controversies that have become a fact of life for Wal-Mart.

Despite its obvious popularity with shoppers, the nation's largest retailer has been attacked by labor leaders, Democratic elected officials and others for its relatively low pay and benefits, and non-union status. Its image further suffered when federal agents raided several stores and found undocumented immigrants hired by subcontractors were cleaning the stores.

Practically everywhere it goes in California, Wal-Mart must fight at the ballot box or in court for the right to build a new store. Its move into the California grocery business was a major factor behind the Southern California supermarket strike, as labor fought against management's insistence on contract concessions in order to be competitive. The scenario could be repeated when Sacramento-area grocery contracts expire in July.