Wal-Mart Ruling Gives Companies Chance for Smaller, Easier Cases

By Holly Rosenkrantz and Stephanie Armour

June 20, 2011

Wal-Mart Stores Inc.’s victory in a sex-discrimination lawsuit before the U.S. Supreme Court may lead to smaller class-action cases that companies find easier to defend. “It’s a huge win for employers,” Michael Droke, co-head of the employment law group at Dorsey & Whitney LLP in Seattle, said in an interview. “It has the potential to help employers in defending other cases, such as wage-and-hour claims.”
The Supreme Court today rejected an effort to sue Wal-Mart, the world’s biggest retailer, for discrimination on behalf of as many as a million female workers. The court said  the plaintiffs failed to show their experiences were similar enough or that the company had a corporate policy that led to  gender discrimination against workers at thousands of Wal-Mart and Sam’s Club stores
nationally.
The case was “the most important class-action case in more than a decade” because it found that “mega-class actions such as this one are completely inconsistent with federal law,” the U.S. Chamber of Commerce, the nation’s largest business lobbying group, said in a statement.
The ruling may help companies facing similar suits. Units of Cigna Corp., Goldman Sachs Group Inc., Bayer AG, Toshiba Corp., Publicis Group SA, Deere & Co. and Costco Wholesale Corp. face gender discrimination complaints that seek class-action status. More than 20 companies supported Wal-Mart at the Supreme Court, including Intel Corp., Altria Group Inc., Bank of America Corp., Microsoft Corp. and General Electric Co.

‘Robust Pipeline’

Wal-Mart “has a long history of providing advancement opportunities for our female associates and will continue its efforts to build a robust pipeline of future female leaders,” Gisel Ruiz, executive vice president of the Bentonville, Arkansas-based retailer, said in a statement.
Worker advocacy groups and labor unions agreed on the significance of the ruling, calling on Congress to pass legislation making it easier for women to win sex-bias cases and vowing to pursue claims against Wal-Mart through the federal Equal Employment Opportunity Commission and the courts.
The court “ruled against women by siding with the country’s largest employment discriminator, saying Wal-Mart, essentially, is too big to sue,” the National Association of Women said in an e-mailed statement.
“The court is saying ‘women are paid less than men at Wal-Mart: Apply Here’” said David Sanford, a managing partner at Sanford Wittels & Heisler LLP in Washington who represents employees. Sanford won a $175 million settlement with drugmaker Novartis AG in 2009 over discrimination allegations.

‘Not Off Hook’

“Wal-Mart is not off the hook,” said Brad Seligman, one of two lead attorneys for the workers who sued the company. “There are thousands of claims of discrimination that remain to
be filed.”
Employers will find it easier to defend themselves because the size of class actions will be “substantially” reduced, Elise Bloom, co-head of Proskauer Rose LLP’s class/collective
actions group in New York, said in an interview.
Companies also will find it easier to defend against such suits because plaintiffs will have to show a companywide discrimination practice, according to Paul Lopez, chairman of the litigation group and employment-law group at Tripp Scott PA in Fort Lauderdale, Florida, who represents companies.
“Without that, if there are hundreds of thousands of employees, it will be difficult to obtain class-action certification,” Lopez said in an interview.

Claims Rise                           

Claims of sex-based discrimination rose 33 percent to 29,029 in fiscal year 2010 from 21,796 in fiscal year 1992, according to the Equal Employment Opportunity Commission. That compares with a 38 percent increase in employment-discimination cases of all types in that period.
Of the gender cases resolved in fiscal 2010, more than 60 percent were determined by the EEOC to have insufficient evidence of discrimination. Almost 19 percent of the filings were dropped for administrative purposes.

The combined value of the top 10 class-action settlements in cases not brought by government agencies reached $346 million last year, up from $86 million in 2009, according to a study by Seyfarth Shaw LLP, which represents employers in class actions. Among such suits last year, the largest settlements involved race, age and sex discrimination, the Chicago-based firm said.
The Supreme Court case is Wal-Mart Stores v. Dukes, 10-277.