Supreme Court Justices Question Bias Class Action Against Wal-Mart

By James Vicini | March 29, 2011

Several Supreme Court justices sharply questioned Tuesday whether female employees at Wal-Mart Stores Inc. can proceed with the largest class-action sex-discrimination lawsuit in history that seeks billions of dollars.

At issue in the case is whether a small group of women who began the lawsuit 10 years ago against the world’s largest retailer can represent a huge nationwide class that could total millions of women.

After attorneys for Wal-Mart and for the employees presented arguments, a crowd of protesters that had gathered outside the Supreme Court shouted “fair pay now” and carried signs such as “Stop discounting the women of Wal-Mart” and “The women of Wal-Mart are not worthless.”

Chris Kwapnoski, a 24-year Wal-Mart employee and one of the named plaintiffs in the case, confidently told reporters after the arguments, “We’re not going to lose.”

She recalled being told by a manager to “brush the cobwebs off” and “doll up” if she wanted advancement.

After listening to the attorneys, the top court took the case under advisement, with a ruling expected by late June. The decision could change the legal landscape for workplace and other class-action lawsuits.

During the session, some justices strongly questioned the arguments by the plaintiffs.


Justice Anthony Kennedy, a moderate conservative who often casts the decisive vote on the nine-member court, said, “I’m just not sure what the unlawful policy is.”

Justice Antonin Scalia described as inconsistent the argument by the plaintiffs that Wal-Mart had a strong corporate culture that fostered stereotypes of women while at the same time giving local store managers too much discretion in pay and promotion decisions.

Scalia questioned whether it would be fair to the company for the case to proceed. “Is this really due process?” he asked.

Wal-Mart’s attorney, Theodore Boutrous, who argued the case, said female employees in different jobs and in different stores do not have enough in common to be in a single class-action lawsuit.

“It’s not fair to anyone to bring this in one big class,” he told the justices.

Joseph Sellers, an attorney for the women, argued the class-action lawsuit should be allowed to go to trial for a decision on the merits of the claims. “This is an extraordinary case,” he said.

Betty Dukes, a Wal-Mart employee in Pittsburg, California, for whom the case has been named, attended the arguments, along with Kwapnoski.

“Without a class action, I wouldn’t be able to do anything about the discrimination. Wal-Mart is just too big. A class action gives us a fair shot. That is all we ask for,” Dukes said.

Women’s groups have said a Wal-Mart victory could signal a significant retreat for women’s rights in the workplace.

Businesses said a Wal-Mart defeat could make every large corporation vulnerable to sweeping allegations of employment bias and would water down class-action requirements.

Large class-action lawsuits make it easier for big groups of plaintiffs to sue corporations and they have led to huge payouts by tobacco, oil and food companies.

Companies have sought to limit such lawsuits to individual or small groups of plaintiffs. The Supreme Court, with a conservative majority, has often agreed, dating back to 1997.

Legal experts and financial analysts said even if Wal-Mart loses in the Supreme Court and at trial, the retailer with more than $400 billion in sales and $16 billion in net income last year has enough cash to make a big payout.

Sanford Bernstein analyst Colin McGranahan said he estimates a settlement could cost roughly $1.5 billion. That equates to 26 cents per Wal-Mart share, or less than 0.5 percent of the company’s current share price.

He said Wal-Mart could “easily” fund that through existing liquidity or free cash flow, with less than 1 percent impact on its earnings per share.

The Supreme Court case is Wal-Mart Stores Inc v. Betty Dukes, No. 10-277.

(Additional reporting by Jeremy Pelofsky and Jessica Wohl IN Chicago, (Editing by Christopher Wilson and Philip Barbara)

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