Wal-Mart gender-bias suit headed to high court

WASHINGTON (CNN) -- The Supreme Court has agreed to decide whether to certify the largest class-action employment lawsuit in U.S. history, a long-standing dispute against mega-retailer Wal-Mart Stores Inc. over alleged gender bias in pay and promotions.

The case would be among the biggest of the current term, and could establish binding standards over high-stakes liability involving employers large and small.

The justices announced Monday they had accepted the Arkansas-based company's appeal in a case of corporate versus worker rights, and will hold oral arguments next spring. A divided 6-5 ruling by the San Francisco-based 9th U.S. Circuit Court of Appeals earlier this year had allowed the combined, multiparty litigation to move ahead to one trial, where a verdict against the company could result in billions of dollars in damages.

At issue is whether as many as 1.6 million current and former Wal-Mart (WMT, Fortune 500) employees can band together in their claims of discrimination, which they say has occurred over the past decade, at least. The plaintiffs allege women were paid less than, and were given fewer opportunities for promotion than, their male counterparts. They seek back pay and punitive damages against the world's largest retailer.

The high court will decide only whether to handle the original lawsuit as a class action, instead of lower courts potentially being flooded with thousands of individual discrimination claims against the company. A potential ruling by the justices against Wal-Mart permitting class action could put severe pressure on the company to settle the claims out of court.

"We are pleased that the Supreme Court has granted review in this important case. The current confusion in class action law is harmful for everyone -- employers, employees, businesses of all types and sizes, and the civil justice system. These are exceedingly important issues that reach far beyond this particular case. We look forward to the Court's consideration of the appeal," Wal-Mart stated on its website.

The lawsuit alleges the company's "strong, centralized structure fosters or facilitates gender stereotyping and discrimination."

The workers bringing suit also say women make up more than 70% of Wal-Mart's hourly workforce but in the past decade made up less than one-third of its store management.

The current litigation was filed in 2001 by Betty Dukes, a store greeter in Pittsburg, California, along with five of her co-workers.

"It has taken a very long time, and a tremendous amount of work, but it looks like we're finally going to get our day in court," Dukes told CNN earlier this spring. "That's all we've ever asked for."

The federal appeals court had concluded there was enough merit in the claims to proceed to trial on a class-action track. Since the lawsuit was filed, both sides of the dispute have held so-called "discovery" hearings, where preliminary testimony was taken to establish facts.

The high court will not judge the merits of the sweeping claims at this stage, just whether a class-action trial can proceed. The parties have the option of settling the dispute out of court at some point in the future.

The company has protested the size of the class action, which it called "historic" in scope, saying it would be too onerous to litigate. The company has more than 3,400 stores in 41 regions.

Declaring class-action status for the lawsuit raises the financial and judicial stakes considerably, since more individual plaintiffs can now join, creating greater potential liability for the company being sued. In federal courts, such certification must generally follow well-established principles to ensure a lawsuit would not become so large as to be impracticable, and would allow the parties to fairly represent the common interests of the larger class of plaintiffs.

"Wal-Mart tries to project an improved image as a good corporate citizen," said Brad Seligman, a Berkeley, California, lawyer representing the female workers. "But no amount of PR (public relations) is going to work until it addresses the claims of its female employees."

Wal-Mart also has been accused in separate lawsuits of discrimination against African-American truck drivers and workers with disabilities. In 2001 the company settled 13 lawsuits by paying out $6 million.

Beyond this particular suit, most workplace discrimination lawsuits fail to reach a court for resolution, according to data compiled by the federal Equal Employment Opportunity Commission.

In 2003, when the Wal-Mart litigation was in its preliminary court stages, about 27,000 sex discrimination claims nationwide were resolved administratively by the EEOC, little changed from the prior decade. More than 57 percent-- some 15,000 claims -- were ruled administratively to have "no reasonable cause" and those usually were dismissed.

Just over 10% were judged to have merit, resulting in a total of $94.2 million in settlements, or $34,200 on average per case, according to the data, which include all such claims, not just those involving Wal-Mart.

The current case is Dukes v. Wal-Mart Stores, Inc. (10-277). A ruling can be expected by June.