Wal-Mart faces biggest sex bias case in U.S. history

The 2-1 ruling by the three-judge panel of the U.S. 9th Circuit Court of Appeals took no position on Dukes’s claims, stressing the decision only affirmed a lower court ruling to certify the case as a class action against the world’s largest retailer.

Wal-Mart has been a lightning rod for controversy, accused of underpaying workers and undermining small business with its huge stores, charges that it has roundly denied, pointing to itself as a major source of jobs.

The company said it would appeal the ruling to a larger panel of the 9th Circuit, and the U.S. Supreme Court if necessary.

"This was one step in what is going to be a long process, and we are still at a very early stage in this case," said Ted Boutrous, lead counsel for Wal-Mart’s appeal. "We are very optimistic about our chances for obtaining relief from this ruling as the case progresses."

In a class action, individuals bring a suit on behalf of a larger group that suffered similar harm. In the Wal-Mart case, six other women join Dukes as the plaintiffs.

"Class actions have been for four decades now the critical ingredient in employment discrimination litigation," said William Gould, a Stanford University emeritus professor of law.

"There is very little incentive for the defendants to change their practices unless a finding is made that there is a nexus between the named plaintiffs and the group," Gould said.

VETERAN EMPLOYEE

Dukes, a Wal-Mart employee for nearly 13 years, said she sued the company because of neglect she and fellow female employees felt when openings for positions were advertised within her store.

After working as a cashier for three years, Dukes said she advanced to a customer service representative post, a promotion that some male employee obtained even before probationary periods after they were hired had expired.

"I had seen males go into the position with less than 90 days experience," Dukes said in an interview.

Bentonville, Arkansas-based Wal-Mart had argued it did not discriminate and that class-action status should be dismissed because the company grants its 3,400 U.S. stores a great deal of independence in their management.

In a dissent, 9th Circuit Court Judge Andrew Kleinfeld said the case should not be a certified as a class, since it could enrich lawyers and undeserving plaintiffs while diluting the rewards to any who were actually injured by sex bias.

"Plaintiffs’ only evidence of sex discrimination is that around 2/3 of Wal-Mart employees are female, but only about 1/3 of its managers are female," he wrote.

"Not everybody wants to be a Wal-Mart manager," Kleinfeld added. "Those women who want to be managers may find better opportunities elsewhere."

Donald Gher, chief investment officer of Coldstream Capital Management, which owns Wal-Mart stock, said the decision was a setback for the retailer and would cheer the company’s critics in the U.S. labour movement.

"Clearly this is a big win for the tort lawyers and for the unions who are looking to cases like this to help bolster their ranks," he said.

Shares of Wal-Mart were little changed on the news, and closed 6 cents higher Tuesday at $48.58 on the New York Stock Exchange.

(Additional reporting by Adam Tanner in San Francisco and Nicole Maestri in New York)