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Sex-bias suit faces crucial test

High court to rule if Wal-Mart can halt class action

More than 1 million current and past workers have sued Wal-Mart, accusing it of sex bias. More than 1 million current and past workers have sued Wal-Mart, accusing it of sex bias. (Seth Perlman/ Associated Press/ File 2010)
By Greg Stohr
Bloomberg News / December 7, 2010

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WASHINGTON — The US Supreme Court, which is being urged by numerous companies to consider curbing class actions, has agreed to decide whether Wal-Mart Stores Inc. must face a sex-bias suit that could potentially benefit 1 million workers.

The justices yesterday said they will review a federal appeals court decision that allowed a single suit to cover women who had worked at 4,400 Wal-Mart and Sam’s Club stores since 2001.

Wal-Mart, facing billions of dollars in potential liability, contends the lower court made it too easy for workers with different job histories to band together in a single case.

A decision throwing out the suit, the largest-ever US employment class action, might affect several pending cases. A suit on behalf of more than 700 women against Costco Wholesale Corp. is on hold until the Supreme Court resolves the Wal-Mart case. Tobacco companies, including Altria Group, say the Wal-Mart case may affect their challenge to a Louisiana court order requiring them to spend more than $270 million on a smoking-cessation program.

The lower court ruling “would dramatically broaden the circumstances where classes can be certified in all types of cases against all types of companies,’’ said Wal-Mart’s lawyer, Theodore Boutrous.

Wal-Mart faults the lower courts for allowing a type of class action generally used when plaintiffs are seeking an injunction, rather than damages.

Wal-Mart has not set money aside to pay any damages in the case, according to documents filed with regulators and released in September. The company said it cannot estimate what the amount would be.

The company, the world’s largest retailer and the largest US private employer, had $15 billion in profit and more than $400 billion in sales over the past 12 months.

Shares in the Bentonville, Ark.-based company fell 13 cents to $54.49 yesterday.

Wal-Mart is accused in the nine-year-old suit of paying women less than men for the same jobs and giving female workers fewer promotions. Six women are seeking to serve as representatives of the class, including Betty Dukes, a Wal-Mart greeter in Pittsburg, Calif.

The women say that at the time the suit was filed Wal-Mart’s corporate policies gave local managers too much discretion in hiring and pay decisions. The result was a “tap on the shoulder’’ system that let managers steer opportunities toward their male colleagues, said Joseph Sellers, who represents the women.

Wal-Mart says that any problems were isolated ones and that the claims of women around the country would be too varied to proceed fairly as part of a single case. The workers in the class come from 41 regions and 400 districts and carry 170 job classifications, the company said.

Wal-Mart says the case would be so unwieldy that it would violate procedural rules and the Constitution. The company says it should have a chance to defend itself on a case-by-case basis.

Nineteen companies, including Bank of America Corp. and Microsoft Corp., urged the justices to hear Wal-Mart’s appeal.

The justices will hear arguments early next year, most likely in March or April, and probably rule by July. The case will probably be “the most important business case this term,’’ said Carter Phillips, a Washington lawyer.