Tuesday, February 17, 2009

Wal-Mart's Historic Class-Action Suit Revisited

The WSJ Law Blog just posted some interesting news about Wal-Mart. In the financial sector, the WSJ just reported that Wal-Mart's fourth-quarter net income fell 7.4 percent. Still, the bigger news may be that the Ninth Circuit recently agreed to reconsider whether the sexual-discrimination lawsuit against Wal-Mart should proceed as a class-action.

In the 2007 ruling, a 2-1 panel majority held that more than 1.5 million female employees could join the suit against Wal-Mart. Although this class size was "historic," the majority found that "the issues were not unusual."

However, this ruling - along with the concerns of the panel's dissent - will be revisited. Indeed, the dissent made a compelling argument that a class-action suit would deprive Wal-Mart of due process of law because the requirements for class certification - including commonality and typicality - were not satisfied. Specifically, the dissent questioned whether there was evidence of common, company-wide sexual discrimination and claimed that the "only common question Plaintiffs identify with . . . is whether Wal-Mart’s promotion criteria are 'excessively subjective."' Also, the dissent argued that typicality was not satisfied because the Plaintiff's class representatives worked in a range of position levels and had differing discrimination claims.

The dissent's argument merits serious consideration, and a denial of class-action would be a huge win for Wal-Mart. Indeed, with over 2 million women who are currently joined in the suit, Wal-Mart's potential loss is immense. Accordingly, if the suit proceeds as a class-action, Wal-Mart may have no other choice but to settle.