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Wal-Mart class action suit narrowed to California

After Supreme Court defeat, plaintiffs limit class to Calif.

Wal-Mart class action suit narrowed to California

SAN FRANCISCO—Plaintiffs in the gender discrimination case against Wal-Mart Stores Inc., which was refiled last week on behalf of an estimated 90,000 current and former female workers only in California, may be no more successful this time around, observers say.

The U.S. Supreme Court in June ruled against a proposed class of some 1.5 million members nationwide in Betty Dukes et. al. vs. Wal-Mart Stores Inc. The majority ruled that the “respondents have not identified a common mode of exercising discretion that pervades the entire company.”

Observers say the latest litigation runs up against this same issue, albeit on a statewide rather than a national basis.

The suit, originally filed in 2001, alleged that Bentonville, Ark.-based Wal-Mart promoted and paid female employees less than men despite female workers' higher performance ratings and seniority.

The San Francisco federal court, where the revamped case was filed last week, is the same court that granted national case class action status in 2004 to the original suit.

“The Supreme Court did not rule on the merits of the action, but only ruled that the class as certified could not proceed,” according to the revised suit. “It did not preclude prosecution of a class that was consistent with its newly announced guidelines and standards.”

Accordingly, it said, the revised complaint alleges claims on behalf of current and former female employees “who have been subjected to gender discrimination as a result of specific policies and practices in Wal-Mart's regions located in whole or in part in California.”

The suit alleges that “Wal-Mart has had a significantly lower percentage of female managers in its California regions compared to its largest competitors” and that female employees “have been much less likely than their male counterparts to receive promotion to management-track positions.”

The suit also states that “senior management officials, senior people division officials and outside consultants have warned Wal-Mart that women are not sufficiently represented in management positions, that women are paid less than male employees in the same jobs, and that Wal-Mart lags” competitors “in the promotion of women to management positions.”

The suit alleges that managers “rely on discriminatory stereotypes and biased views about women in making pay and promotion decisions” in California.

Among other things, it seeks class certification; unspecified damages including back pay, lost compensation and job benefits; punitive damages; and an injunction against engaging in unlawful practices.

Commenting on the litigation, co-lead counsel Joseph M. Sellers, a partner with Cohen Milstein Sellers & Toll P.L.C. in Washington, said the case relies on evidence that was not part of the original action.

“This California case relies upon new information and statistical analyses, not before the Supreme Court, that show a consistent pattern of discrimination in pay and promotions throughout the Wal-Mart regions in California,” he said.

A Wal-Mart spokesman said the company has long held that the plaintiffs' claims are unsuitable for class action treatment “because the situations of each of the individuals are so different.” The latest proposed class is “no more appropriate than the class that the Supreme Court rejected,” he said.

While Wal-Mart “continues to believe anyone treated unfairly should have their day in court,” it is a “great place to work” and the retailer is ready to defend its record, the spokesman said.

Theodore J. Boutrous Jr., a partner with Gibson, Dunn & Crutcher L.L.P. in Los Angeles, who represents Wal-Mart, said in a statement, “The Supreme Court rejected these very same class action theories when it reversed the plaintiffs lawyers' last effort in June. The plaintiffs' lawyers do not come close to meeting the standards for obtaining class certification and their arguments still rely on the same incorrect and discredited theories that the Supreme Court repudiated. These lawyers seem more intent on alleging classes for their publicity value than their legal virtue.”

Mark W. Batten, a partner with Proskauer Rose L.L.P. in Boston who is not involved in the case, said he doubts this litigation will be more successful than the previous suit.

“One of the things the Supreme Court really keyed in on in its decision originally is that the decision-making that the plaintiffs want to challenge is so decentralized that each store manager was making his or her own decisions for reasons that would have to be evaluated individually,” Mr. Batten said.

While the original litigation encompassed the entire country, “the same kinds of problems” arise by focusing only on California, Mr. Batten said. Store managers' motivations “may have varied from totally permissible to totally illegal, and there's just no way to evaluate that on a group basis. So I think the plaintiffs have not really improved their chance” of success.

Kevin M. McGinty, a member of law firm Mintz Levin Cohn Ferris Glovsky & Popeo P.C. in Boston, also said he is not sure how the filing “gets them around the Supreme Court” decision. Reducing the class to just California “doesn't eliminate the problem that arises from being unable to look at individual qualification and performance issues, and use those to make judgments about whether someone was fairly or unfairly treated.”

Richard Samp, chief counsel of the Washington Legal Foundation, said, “They would still have the obligation of demonstrating that there are common issues of fact and law, and it's not realistic to think that there was any statewide policy of discrimination” that would apply on a classwide basis.

Gerald L. Maatman Jr., a partner with Seyfarth Shaw L.L.P. in Chicago, said it is difficult to estimate the chances of this new litigation's success.

“It depends on statistical proof, which people who aren't parties to the case haven't seen,” he said. “There's going to be kind of a different playing field on which the parties are going to battle,” with a different set of numbers, he said.