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Wal-Mart gives women a lesson: Size does matter

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Every day across America, thousands of employees mark their shift changes by shouting, "Give me a W!" to which thousands more reply, "W!"

They spell out Wal-Mart (NYSE WMT), down to the "squiggly" that separates the syllables.

With its folksy cheer, its quilting contests and its contributions to local causes, the biggest company in the world portrays its stores as just the sort of friendly neighbors you'd expect in small-town USA.

Yet, the very culture that gives Wal-Mart that down-home, local feel shows how centralized the behemoth company is, U.S. District Judge Martin Jenkins of San Francisco ruled last week.

That's one of the reasons Jenkins, who is overseeing complaints of sex discrimination at Wal-Mart, is letting some 1.6 million women form one, humongous group if they want to sue Wal-Mart for discrimination in pay or promotions. He rejected Wal-Mart's argument that, because personnel decisions are local and individualized, anyone complaining about them should sue individually.

"Wal-Mart has carefully constructed and actively fosters a corporate culture," Jenkins wrote, a culture it creates and controls from its Bentonville, Ark., headquarters.

The very leeway Wal-Mart allows its local and regional managers gives them a chance to keep women underpaid and under-promoted, Jenkins found.

Essentially undisputed statistics show that women at Wal- Mart are paid less, the disparities widen over time and "the higher one looks in the organization the lower the percentage of women," he said.

Largest class

So now we have the largest class of plaintiffs in U.S. history suing the largest private employer in U.S. history for what could become the largest sum ever awarded in a civil rights case.

We're talking billions.

The largest class-action bias case in U.S. history was a sex discrimination suit against the U.S. Information Agency and the Voice of America, which ended with a $565 million settlement in 2000 for 1,100 employees.

Bigness brings clout, as Wal-Mart itself has proven. The company, with $259 billion in revenue last year, uses its sheer immensity to force suppliers into lower prices and faster delivery.

It's also big enough to pay out a million-dollar verdict here, a $100,000 settlement there without a droop in the happy- face smile that has become its logo.

"Wal-Mart can ignore individual judgments," says Brad Seligman, executive director of the Impact Fund, a non-profit group acting as co-counsel in the case. No individual lawsuit can force the company to change.

A business issue

Ah, but a really big class-action lawsuit is different.

"Whether there's merit to it or not, it will cost Wal-Mart in money, in lawyers' fees, in bad press, and it will have to have its own PR campaign to battle this," says Carolyn Short, a Philadelphia lawyer at Reed Smith who defends companies in discrimination cases.

This "makes the issues of diversity and gender promotions a business issue, as opposed to just moral and legal issues," she says.

And only with a class action can plaintiffs force a company to change its policies and practices and to submit to court- ordered monitoring. The Coca-Cola Co. (NYSE: KO), for example, is being monitored for four years by a court-appointed task force as part of the 2001 settlement of a race discrimination class action.

"You do not want to have as your business partner the EEOC," says Short, referring to the federal Equal Employment Opportunity Commission, which brings discrimination suits, too.

Attracting critics

Bigness attracts critics.

"Extortionate" is the word Robin Conrad, senior vice president of the U.S. Chamber of Commerce's litigation center, uses for cases that are so big that they force settlements from companies whether they deserve to be punished or not.

"Individual instances of discrimination need to be challenged and reviewed on an individual basis," she said.

Besides, the suit is simply too big to be managed by one court, Wal-Mart argues.

"Insulating our nation's largest companies from allegations (of) discrimination -- simply because they are large -- would seriously undermine" U.S. civil rights law, Jenkins responded.

And so, this is a case alleging a big pattern formed by lots of individual stories. In 113 declarations on file in the case, woman after woman says she was repeatedly passed over for promotion in favor of a less-qualified man and was paid less than male counterparts.

Getting top pay

"In handling payroll" at a Franklin, Tenn., store, Donna Adair says, "I noticed that men frequently earned more money than women associates despite the fact that women were in higher positions and had worked for the company longer."

Gretchen Adams says when she finally received a promotion to deli manager at a Wal-Mart Supercenter in Stillwater, Okla., she was told she was getting top pay for the position at $26,500.

She later learned that a man she was training for the same position in Jasper, Ala., was getting $30,000. The same thing happened when she trained a man in Cape Coral, Fla., and again in Las Vegas.

One woman says she was told men were paid more because they had families to support. Another says she heard her district manager didn't like women in upper management. Others report gender stereotyping in assignments, whether in staffing the sporting goods department or the food counter.

One side of story

True, these declarations give only one side of each story. And, yes, even 113 declarations are few considering some 1.6 million women have worked at Wal-Mart or the company's Sam's Club stores since 1998. And who knows how many of them will join the class action?

Wal-Mart denies it discriminates and says the statistics reflect factors other than gender. It isn't discussing the case in detail.

Regardless, it's a case likely to have repercussions beyond Wal-Mart.

"This is going to be on the agenda of every company," says Short. In board meetings and shareholder gatherings around the country, she says, the question will be, "How can we make sure we're not in that position?"

Short has been advising clients for years on how to take discrimination issues seriously so as to pre-empt lawsuits.

Now, she says, the message will get through, and she expects to see more women promoted and paid better.

She calls the consolidation of the Wal-Mart claims into one case "a baseball bat to the head" of companies not listening before.

Sometimes, it takes a bat. A really big one.

Woolner is a columnist for Bloomberg News.

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