Wal-Mart Faces Massive and Quite Embarrassing Class Action
August 26 2010, 4:58 pm
One of the largest legal battles in history all started when Stephanie Odle, an assistant manager at Wal-Mart subsidiary Sam’s Club, realized she was making over $20,000 less than a male assistant manager at a Sam’s Club where she had previously been employed. Her case became the starting point for a 2001 class action lawsuit alleging that Wal-Mart systemically discriminates against women.
Wal-Mart has been fighting the case for about nine years and recently asked the U.S. Supreme Court to review the case. For Wal-Mart the stakes could hardly be higher. If the company loses it could easily end up paying over one billion dollars in back pay and punitive damages on top of the already massive damage to the retailer’s image.
The current legal issue being sorted out is whether or not the case meets the criteria for a class action. Wal-Mart is arguing that that since each store operates as an independent store the rules of class action lawsuit do not apply because the discrimination problem is not company-wide.
So far Wal-Mart has not been faring well in court. The United States Court of Appeals for the 9th Circuit in San Francisco ruled 6-5 that the lawsuit should proceed as a class action lawsuit. This is the fourth court decision upholding the case’s status as a class action.
Wal-Mart says the women should bring their cases against individual stores, so the cases would be smaller and less unwieldy. Of course there is no established size limit on class action lawsuits, so it is not surprising that this argument has not helped up so far.
Others have argued in favour of Wal-Mart that the immense scope of the case prevents individual women from presenting their own cases and getting their day in court. The Supreme Court will have the final word on the matter, and decide whether or not it meets the current standards for a class action suit.
Either way, it is a lose-lose situation for Wal-mart, and the company is desperately looking for creative class action lawsuit solutions. It is less clear how the case will affect British retailer ASDA, which is owned by the Leeds based Corinth Services Limited, a subsidiary of Wal-Mart.
ASDA has not had the same problems with sex discrimination as Wal-Mart. It is possible, however, that the company’s association with Wal-Mart during a time of intensely anti-Wal-Mart PR could tarnish its image.
Since the lawsuit began Wal-Mart has started hiring more women, and promoting more women to management positions. Due to this response by Wal-Mart, Ms. Odle, said “We’ve already won because they already had to change their policies toward women because of us”.
Whatever decision the Supreme Court makes, it will have a significant impact on how class actions involving large numbers of plaintiffs and still larger companies are handled.
