The Walmart Gender Discrimination Case

[Voronwë the Faithful]

As many may know, the U.S. Supreme Court held oral arguments yesterday in the largest Gender Discrimination case ever, a class action filed against Walmart, the largest retailer in the world, on behalf of between 500,000 and 1,500,000 women. The suit alleges that Walmart has a company-wide policy of discrimination against women resulting in lower pay and less opportunity for advancement. These are serious charges. Needless to say, I am very sympathetic to these allegations, given my professional work, and antipathy towards Walmart in general.

And I think that Walmart should win this appeal.

Now, to be clear, that does not mean that I think that Walmart is not guilty of the charges against it. That is not what this appeal is about. What it is about is whether the class action remedy is appropriate in this case. In general, a class can be certified if the issues of fact and law are sufficiently similar, and the class representatives (in this case six named plaintiffs) adequately represent the class. The main concern that the conservative members of the court seemed to have in the argument was an apparent contradiction in the plaintiffs' Complaint. On the one hand, they claim that Walmart has an overall centralized corporate policy, but on the other hand claims that the discrimination results from individual managers being given too much discretion to make personnel decisions. I don't really have a big problem with that, because I think it is a matter of fact to present to a jury. Interestingly (and not surprisingly, given her prior experience) the justice that I most agree with is Justice Ginsberg, who litigated many discrimination cases on behalf of plaintiffs as a young lawyer. She notes that the plaintiffs proposal to calculate lost back wages based on a statistical formula rather than each individual particular circumstance (which would be impossible in a class action of this size) would not be fair or adequate. I agree, and for that reason, I don't think that the standards for class certification are met; the factual differences of the individual situations are just too different to make class certification viable in this case.

Unfortunately, the ramifications of this is that if Walmart wins this appeal, it could make it more difficult for women and other protected classes to utilize class actions in discrimination cases, which would be a shame. Ginsberg is well aware of that, I am sure. I will be interested to see if she tries to broker a result that prevents that from happening, while still not resulting in a patently unfair class certification. I frankly can not see what such a result would look like, but these can be pretty creative thinkers when they want to be.

Here's one good article on the oral argument, from CNN:

What Wal-Mart case means for women

[axordil]

The thing I find frustrating is WM's use of that corporate "structure" as a shield against accountability. All the decisions come from corporate HQ, including the decision to let store managers discriminate.

[Voronwë the Faithful]

I agree with that, which is a big part of why I don't buy into the Kennedy/Scalia line about the contradiction. If there is a common thread, it is that Walmart management allowed individual supervisors to discriminate unchecked. But that still doesn't mitigate the other problem of how to determine the extent of the harm caused to each individual.

[yovargas]

I find this pretty interesting. I find it difficult to wrap my head around; it's kinda weird and complicated. The "contradiction" part is particularly weird and I'm not sure what they're trying to claim with the "group individualism" idea. One thing I'm curious about is if there's a difference in how things are handled legally depending on the scope. Say if a big company has 3 cases of discrimination brought up in different places in the company vs a big company that has 300 cases of discrimination brought up. Would those be different issues? Is the former a legal look at specific actions and people and the latter a look at the broad culture of the company as a whole? If so, where's the tipping point between the two? Intriguing...

[Voronwë the Faithful]

Yov, a big difference between those two situations would be that with 300 cases it would be easier to point to a pattern throughout the company, which could certainly be used to help prove each individual cases. But with three cases, or 300, it still would be manageable enough to determine the liability to each individual. Here we are talking about a magnitude much greater than that, of at least 500,000 cases.

[yovargas]

But is the "crime" the same between a handful of cases and tons of cases? Is a few specific instances of discrimination a different legal issue than a company wide discrimination issue?

[Voronwë the Faithful]

Not really different, just a matter of degree. Under both federal law and California law (and I would presume most if not all other U.S. jurisdictions as well) individuals are not liable for discrimination, just the employer itself. So for instance if it could be shown that the CEO of Walmart knew that there was a company-wide pattern of discrimination against women, that would not make him any more liable than if there was no pattern that could be shown. However, establishing such a pattern would both make it easier to prove Walmart's own liability in each individual case, and raise it's total potential liability.

The issue here is how Walmart must face that potential liability. If each woman has to litigate their own case separately it is obviously much more costly for them and that is why class actions are available. But unless they can figure out a way to make the damage awards fair (not just to Walmart, but to former female employees, who stand to get short shrift from the proposed statistical methods) I don't see that working here. But as I just said to a friend, I need to read the Ninth Circuit opinion to see how they justified upholding the class certification, and maybe that would change my mind.

[Voronwë the Faithful]

The court ruled today. It unanimously ruled that the plaintiffs could not seek back pay under the portion of FRCP 23, the federal class action rule, that they sued under. However, the four liberal justices dissented from the portion of the ruling that threw out the class action altogether, stating that they would have remanded the case to the lower court to give the plaintiffs a further opportunity to try a different section of Rule 23 for their backpay claim, but the majority scuttled that by ending the class-action case altogether.

I'll probably have more to say once I have the opportunity to read the opinions.

[Inanna]

So, in the end there is no class-action lawsuit against Wal-mart anymore?

[Voronwë the Faithful]

Correct. Of course, that doesn't mean that all of the women that believe that they were discriminated against cannot sue individually.

[anthriel]

http://www.bloomberg.com/news/2011-06-2 ... -view.html

This is an interesting article and it agrees with Sir V that there was an inherent problem with how the class suit was composed, and that problem was big enough to sink the suit by itself. (I paraphrase, of course. )

However, the facts of the case are interesting, too.

The female plaintiffs claimed that they had been illegally denied pay and promotions despite a company policy against sex discrimination. The suit relied largely on statistics, which seemed damning enough.

Women filled 70 percent of Wal-Mart’s hourly jobs, yet made up only 33 percent of management employees. Women were paid less than men in every region, even when they had higher performance ratings and seniority.

Sounds bad. Sounds wrong. Horrible Wal-Mart. And then:

Wal-Mart devastatingly turned the numbers against the plaintiffs. One brief filed on behalf of the women cited Census Bureau figures showing that U.S. median earnings of women in 2009 were 77 percent of men’s earnings. The company pointed out that women at Wal-Mart earned between 85 percent and 95 percent of what male colleagues earned. They actually did better at Wal- Mart than in the country at large.

Boy. Women do better at Wal-Mart than in the country at large? I think this is a bigger problem than this one (really big) company, and a sobering one, at that.

[Voronwë the Faithful]

Yes, gender pay equity continues to be a major problem in this country, not just in Walmart. Although I suspect that Walmart's statistics are skewed to make them look better than they really are. Statistics are so easy to manipulate!

[River]

I've been told it's because women have babies. Having babies has been an excuse for lots of things, though.

[Primula Baggins]

"Male colleagues" could be a key point. If the Walmart attorneys are comparing the wages of men and women at a given pay grade, that sidesteps the question of how many women there are earning that much, and what happens to the ratio of men to women as pay goes up. So maybe female greeters do get 85 to 95% of what male greeters get; it is still also possible for women at Walmart overall to make significantly less than men overall because of a pattern of promotion that could be discriminatory.

[Frelga]

Weasels. Lower median pay across US has nothing to do with the pay at the same company in the same geographical region and position, and with higher performance and seniority, which is what the lawsuit claims.

[Lurker]

I knew Wal-mart was going to win this case! This is the "franchise" corporate mentality now and I am speaking from experience. Store A's policy is different from Store B's or C's, even if the company laid out the ground rules, it is the manager who implements it the way he/she understands it. Its what the company calls empowering the "employee" which in this case is the manager. They would have fared better if the workers of WM Branch A just filed a case againts Wal-Mart A only. I don't know whose idea was this having to file a case in behalf of all the female workers, ain't gonna work with a company this size.

Here in Canada, a bank employee filed a case againts the bank in behalf of all employees for overtime pay. I haven't followed the case but I think it has faced some setbacks as well. You can't just do that, every branch is different and we are talking about years of overtime pay. Heck, good luck even finding the "overtime sign -in sheet" if there is one and I know most offices don't have one. Unless we go back to the "Bundy clock" system, it's your word againts the company.

That is why employees are told not to divulge their pay scale amongst themselves. I know a lot of company discriminates not just by gender but by level education as well for the same position. A new grad with an Ivy league education can earn as much (or even more) as somebody who has been with the company for years who moved up the ranks just because he only has a HS education for the same position.

[axordil]

I saw today in the NYT how the mechanism of discrimination actually works: management positions, by company policy, require relocation. Company policy strongly discourages becoming an assistant manager a store you've worked at. If you want to move up, you pretty much have to move, and women with kids are less inclined to do so than men without kids.

So it's fair on paper and less so in the real world. The sleeping under bridges being forbidden to rich and poor alike comes to mind again.

[Voronwë the Faithful]

I've had a chance to read through the opinions, and not surprisingly, I fully agree with Justice Ginsberg. But my overwhelming sense here is this a case in which the attorneys for the plaintiffs greatly overreached, with a result that caused more long-term harm to the cause of opposing workplace discrimination than was necessary.

[yovargas]

Is this the kind of decision that could directly impact of the kind of discrimination work you do, V-man?

[Voronwë the Faithful]

Not really. I've never done a class action, and I must admit I am suspicious of their validity in most discrimination cases.

I'll say more later when I have more time.