(FORTUNE Magazine) – Calling it the mother of all lawsuits would be an understatement: In late June a federal judge ruled that a sex-discrimination case against Wal-Mart covering 1.6 million women can go forward as a class action, making it the largest civil rights case in history. This isn't bad news just for Wal-Mart--it's bad news for big business. "This is a terrifying situation for any company, no matter what it does rightly or wrongly," says Carolyn Short, a defense attorney not involved in the Wal-Mart case, who represents companies in gender-discrimination suits. "It will be the subject of every board meeting of every major employer in the country." Observers say the plaintiffs' focused approach--providing hard numbers showing a glass ceiling (rather than throwing in other claims like sexual harassment)--offers a roadmap for other possible suits (for more, see "Women vs. Wal-Mart" on fortune.com). Wal-Mart is planning to appeal, and the two sides will appear in court on July 28 for a status hearing. Although the retailer is known for refusing to settle even the smallest lawsuit, legal observers expect that the case will not go to trial. How much would it cost to make this PR nightmare go away? In 1997, Home Depot settled a sex-discrimination suit for $104 million that covered a class of just 25,000 women. Analysts estimate a Wal-Mart settlement could cost the company up to $8 billion. Says Joseph Sellers, a plaintiffs attorney: "I think Wal-Mart is finally taking us seriously."

--Cora Daniels