| WASHINGTON, March 29
WASHINGTON, March 29 The largest class-action
sex-discrimination lawsuit ever is being argued before the U.S.
Supreme Court on Tuesday, pitting Wal-Mart Stores Inc (WMT.N)
against female employees who seek billions of dollars.
The justices will decide whether the small group of women
who began the case 10 years ago can represent a huge nationwide
class that may include millions of current and former employees
who accuse the world's largest retailer of discrimination.
However, the nation's high court will not be deciding
whether Wal-Mart engaged in intentional sex discrimination in
pay and promotions at 3,400 U.S. stores since the end of 1998.
An eventual Supreme Court ruling, expected by late June, is
likely to uphold or undo the class certification, a decision
that could determine whether the lawsuit proceeds to trial.
Here are some scenarios of what could happen next:
SUPREME COURT UPHOLDS LAWSUIT'S CLASS-ACTION STATUS
In a defeat for Wal-Mart, the case would go back to the
federal judge in San Francisco, who has already proposed a
In the first stage, a judge or a jury would decide whether
Wal-Mart should be found liable for a pattern of intentional
The second phase would decide possible remedies such as
punitive damages; back pay, which makes up the difference
between actual pay and the amount if there had been no
discrimination; and injunctive relief, such as requiring
Wal-Mart to change its pay and promotion systems.
Alexandra Lahav, a University of Connecticut law professor,
wrote in a recent law review article that the case does not
threaten a ruinous verdict for Wal-Mart.
Wal-Mart's attorney, Theodore Boutrous, has told the
Supreme Court in legal documents the class involved potentially
millions of women with claims for billions of dollars in back
pay and possible punitive damages.
Attorneys for the women did not give a total figure, but
said individual claims for back pay would be small, an average
of $1,100 per year for hourly workers.
Chris Graja, an Argus Research analyst who follows
Wal-Mart, has said the case will keep the retailer in the
The lawsuit "remains a major financial risk for Wal-Mart
but we believe the potential expenses have been well reported
on Wall Street and in the media," he wrote in a February report
when Wal-Mart issued its fourth-quarter results.
"The company continues to contest the claims and the legal
proceedings related to those claims very aggressively. The
recent settlement of another group of suits suggests that the
company is well aware of the importance of being a good citizen
and trying to look forward," Graja said.
R.J. Hottovy, equity analyst at the Chicago-based
Morningstar Inc investment research company, said Wal-Mart has
plenty of cash if it needed to make a payout.
"It would take a seismic ruling against the company to have
an impact on the valuation," he said. "When you're dealing with
the largest company out there, a lawsuit would have to be one
of the larger payouts to really have a material impact on the
fundamentals of the business."
He calculated that even in the unlikely event that there is
eventually a $25 billion award against Wal-Mart, that would not
dramatically affect Morningstar's valuation of the firm.
SUPREME COURT REJECTS LAWSUIT'S CLASS-ACTION STATUS
The Supreme Court could reverse the appeals court's ruling
and send the case back with instructions to decertify the
class, as Wal-Mart has requested.
But the case would not be over. Individual plaintiffs who
brought the lawsuit, such as Betty Dukes, a Wal-Mart greeter at
a store in Pittsburg, California, could pursue their claims.
Depending on how the court rules, the plaintiffs might be
allowed to collectively pursue their claims for an injunction
changing employment practices, but not for money damages.
Or the court could rule the case was wrongly certified as a
class action under a provision mainly used in lawsuits seeking
relief such as an injunction. The court could tell the judge to
consider if it can be certified under another part of the law
dealing mainly with money damages.
Lurking in the background is a possible settlement.
Boutrous, the attorney arguing Wal-Mart's case, declined to
speculate on a possible settlement if the company loses before
the Supreme Court. An attorney for the plaintiffs also declined
comment on any settlement.
Asked if there could be a deal, equity analyst Hottovy
said, "That's always a possibility, especially in a case like
this where instead of dragging it out over a long period of
time it may be in Wal-Mart's favor to propose a settlement."
Wal-Mart's corporate supporters have said huge class-action
lawsuits put inappropriate pressure on defendants to settle.
But attorneys for the female employees disagreed. "With
over $400 billion in sales and $14 billion in profits last
year, that is an argument that could not be credibly made,"
they said in a brief filed with the court last year.
(Additional reporting by Jessica Wohl in Chicago, Editing by