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VOL. 125 | NO. 81 | Tuesday, April 27, 2010

Court: Wal-Mart to Face Massive Class Action Suit

PAUL ELIAS | Associated Press Writer

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SAN FRANCISCO (AP) — A sharply divided federal appeals court on Monday exposed Wal-Mart Stores Inc. to billions of dollars in legal damages when it ruled a massive class action lawsuit alleging gender discrimination over pay for female workers can go to trial.

In its 6-5 ruling, the 9th Circuit U.S. Court of Appeals said the world's largest private employer will have to face charges that it pays women less than men for the same jobs and that female employees receive fewer promotions and have to wait longer for those promotions than male counterparts.

The retailer, based in Bentonville, Ark., has fiercely fought the lawsuit since it was first filed by six women in federal court in San Francisco in 2001, losing two previous rulings in the trial court and again in the appeals court in 2007.

Wal-Mart successfully convinced the appeals court to revisit its 2007 ruling made by a three-judge panel with a larger 11-judge panel, arguing that women who allege discrimination should file individual lawsuits.

Wal-Mart employs 2.1 million workers in 8,000 stores worldwide and argued that the conventional rules of class action suits should not apply because each outlet operates as an independent business. Since it doesn't have a companywide policy of discrimination, Wal-Mart argued that women alleging gender bias should file individual lawsuits against individual stores.

Finally, the retailer argued that the lawsuit is simply too big to defend.

"Although the size of this class action is large, mere size does not render a case unmanageable," Judge Michael Daly Hawkins wrote for the majority court, which didn't address the merits of the lawsuit, leaving that for the trial court.

Judge Sandra Ikuta wrote a blistering dissent, joined by four of her colleagues.

"No court has ever certified a class like this one, until now. And with good reason," Ikuta wrote. "In this case, six women who have worked in thirteen of Wal-Mart's 3,400 stores seek to represent every woman who has worked in those stores over the course of the last decade — a class estimated in 2001 to include more than 1.5 million women."

The ruling Monday may have trimmed the number of women who stand to collect damages if Wal-Mart is found liable. The appeals court ordered the trial judge to determine whether the lawsuit should date to 1998, as alleged in the complaint, or to 2001 when it was filed.

The appeals court also told the trial judge to reconsider the appropriateness of awarding punitive damages, which are awarded above actual damages to punish the accused for bad behavior.

Nevertheless, the attorneys suing Wal-Mart enjoyed a near-complete legal victory Monday.

"It upheld the heart of the case," said Brad Seligman, the lead lawyer suing Wal-Mart. Seligman said the lawsuit includes newly hired employees and accused Wal-Mart of continuing discriminatory practices.

A Wal-Mart representative said the retailer was preparing a statement.

Unions and other critics have long complained that Wal-Mart's workplace practices needed improvement, especially in the areas of diversity and career advancement.

The discounter responded to the pressure last year at its annual shareholders' meeting by announcing a plan to address the issue of promoting women, creating a "global council" comprised of 14 Wal-Mart female executives.


AP Retail Writer Anne D'Innocenzio in New York contributed to this story.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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