Aaron Bernstein in Businessweek:
Corporate America could find it a whole lot easier to fight off employment class actions if Wal-Mart Stores Inc. (WMT ) prevails in a sex discrimination case to be heard soon by the U.S. Ninth Circuit Court of Appeals. Indeed, a Wal-Mart victory could tilt the playing field for virtually all of these kinds of suits, which have plagued Boeing (BA ), Coca-Cola (KO ), and dozens of other large employers over the years.This seems very optimisitic to me, but I'm no lawyer. Later on, we find that:
The thrust of Wal-Mart's appeal is that the district judge ran roughshod over the company's constitutional rights to due process and to a jury trial. Despite the company's reputation for micromanaging down to the penny, it argued that pay and promotion decisions are made almost entirely by local store managers. So the judge should have ignored the plaintiffs' statistics showing large nationwide disparities in the way female employees are paid and promoted. Instead, it should hear only store-level suits.This is an excellent strategy for WM to take, since the plaintiffs themselves had to assert that discrimination occured because WM gave too much control to store managers:
Central to the plaintiffs' case is the contention that Wal-Mart is a heavily decentralized company, in which managers are given wide latitude to make hiring, pay and promotion decisions. This, the lawyers argue, is a bad thing, because it leaves too much discretion in the hands of store managers, who can thus be influenced by their own negative stereotypes. Under this scenario, decentralization in management, which has been one of the core productivity-boosting principles of American business in the last two decades, becomes something that companies must avoid or limit.See older posts on George's Employment Blawg for some more info, and an older article about the data used to buttress both sides. And via Point of Law, we find a law.com article that thinks the Dukes case could be very bad news:
Dukes v. Wal-Mart Stores, Inc., may be a sign of things to come. Employment class actions are on the upswing, say labor and employment lawyers at four large firms. Costco Wholesale Corp. and Sav-On Drug Stores, Inc., are among the other large companies facing high-profile class actions....The effects of the class certification in Dukes v. Wal-Mart may be far-reaching, says Emory University labor and employment law professor Charles Shanor. Wal-Mart argued that its 3,200 U.S. retail stores made wage and promotional decisions independently of one another, so any discrimination claims deserved to be treated store-by-store, case-by-case, rather than through a class action. But the district court disagreed, allowing the plaintiffs' claims to proceed based on an overall statistical picture that showed female employees were disproportionately paid and promoted less than their male colleagues.
"I'd tell [GCs at large companies] to watch Wal-Mart, because it will have a huge impact on your flexibility in decentralizing employment decision-making," says Shanor. Wal-Mart has appealed the certification; at press time the 9th U.S. Circuit Court of Appeals had not yet ruled on the appeal.
Because of the unprecedented size of the class in the Wal-Mart suit, it's easy to forget that the content of the case itself -- alleged gender discrimination in a large corporation's employment practices -- has ramifications, too. In certifying the class, the court was concerned that promotion and salary decisions were characterized by "excessive subjectivity" -- a phrase that could turn out to be fraught with peril for many other companies. "At the end of the day, the evaluation of performance necessarily entails subjective judgment, unless there's a completely formulaic description of duties and expected results," says associate GC Reginald Govan of the Federal Home Loan Mortgage Corporation, based in Maclean, Va. In August Wal-Mart rival Costco was hit with a suit, also seeking class action status, that echoes the claims of the Wal-Mart action.
Posted by Kevin on March, 17 2005 at 12:21 PM
