WAL-MART CLASS-ACTION LAWSUIT RECALLS SIMILAR SUPERMARKET CASES

The granting of class-action status to a sex discrimination lawsuit brought against Wal-Mart Stores, Bentonville, Ark., sounded uncomfortably familiar to some in the supermarket industry, which saw a rash of similar cases brought and settled throughout the 1990s.The cases cost the industry millions, and sparked numerous changes in human resource practices offering women and minorities better opportunity

The granting of class-action status to a sex discrimination lawsuit brought against Wal-Mart Stores, Bentonville, Ark., sounded uncomfortably familiar to some in the supermarket industry, which saw a rash of similar cases brought and settled throughout the 1990s.

The cases cost the industry millions, and sparked numerous changes in human resource practices offering women and minorities better opportunity to advance.

"There's not a better time for women to meet opportunity in the supermarket industry," Jose Tamez, managing partner with San Antonio-based recruiting firm Austin-Michael, told SN. "I think all supermarket companies are making concerted and valid efforts to increase participation with women in senior-level roles."

Tamez added, however, that companies are still challenged to attract women to retail as a career -- and cases like Wal-Mart's don't help the perception of the industry. "It still takes a good push by the retail industry to attract men and women to see retail as a career offering growth and advancement and pay," Tamez told SN. "The crazy thing is, it's all there, more so for women than for men if you're a top performer."

As reported in SN last week, San Francisco federal judge Martin Jenkins cleared the way for the largest discrimination suit against a U.S. company to date when he granted class-action status to the case of Betty Dukes v. Wal-Mart Stores. The suit, brought by a Wal-Mart employee, charges that the mass merchant systematically discriminated against women in promotion and compensation, and fostered a culture that stereotyped females as unwilling to work long hours or relocate. The class in the case includes more than 1.6 million current and former female Wal-Mart employees. Wal-Mart denies the charges and said it would appeal the judge's ruling.

A decade ago, Dublin, Calif.-based Lucky Stores, then a division of American Stores, settled a class-action discrimination claim on behalf of 200,000 employees in December 1993 for $107 million (including contingency settlements and attorney's costs). Other supermarket chains operating stores in the area had suits brought and settled soon after, including Save Mart, Modesto, Calif., ($6.5 million); Albertsons, Boise, Idaho ($29.5 million); and Safeway, Pleasanton, Calif. ($7.5 million).

Litigators later turned to Florida, where in 1997 Lakeland-based Publix Super Markets settled a gender discrimination class-action case for $81.5 million. Then in 1999, Winn-Dixie, Jacksonville, Fla., settled with 50,000 minority and women employees for $33 million.

Most of the settlements included no admission of wrongdoing on the part of the supermarket operators, but highlighted the vulnerability of an industry that historically employed women as cashiers, cake decorators and deli clerks, while men handled stocking jobs and worked as department managers and store managers.

The news of the class-action status against Wal-Mart came just weeks after the company announced broad changes in its human resources policies. At Wal-Mart's annual meeting last month, Lee Scott, chief executive officer, pledged to hire the same percentage of women and minorities that apply for jobs and said executive bonuses would be tied to diversity goals.

There is still room for improvement in the retail industry to hire and promote women, said Joan Toth, executive director of the Network for Executive Women, a Chicago-based support group for women in the retail and consumer product industries. Toth pointed to recent analysis showing that women make up nearly half the U.S. workforce, but secure 15.7% of corporate officer positions among Fortune 500 companies.

The food manufacturing, retailing and wholesaling industries rank below that, with just 14.4% of officer positions held by women.

"Contrast this to buying power: Women represent over 80% of all consumer goods purchased," Toth told SN. "By fostering diversity and awareness and support in our industry, we can help our industry become an 'employer of choice' for women entering the workforce and can retain women as they progress throughout their careers."

Toth added that studies show predominant barriers to success for women include exclusion from informal networks, stereotyping and inhospitable corporate cultures. NEW offers networking opportunities, leadership development and mentoring -- all of which have been proven to reduce turnover for women and minorities, she said.

Observers contacted by SN said they suspect Wal-Mart could eventually settle the suit, which previous settlements suggest could be as high as $1 billion.

"If Wal-Mart thinks it's right, there's going to be a long, drawn-out process of discovery and there won't be any knowledge of what comes of this for years," Jonathan Ziegler, principal in PUPS Investment Management, Santa Barbara, Calif., told SN. "If there is some issue, they'll settle.

"It could be a monumental cost for Wal-Mart and it could change how they go to market," he added. "My suspicion is that they can handle the cost and they will modify the way they handle employees. Their prices might be lower if they didn't have to pay attorneys to fight off these suits."

Others fear copycat suits striking other retailers. "It's a dark day for the mass merchandising industry," Gary Giblen, director of research for C L King Associates, New York, told SN. "I'm afraid the lawsuit industry will be emboldened by any action, and the granting of class-action status is the first step toward that. It raises the likelihood we'll see copycat cases."

Jason Whitmer, analyst, FTN Midwest Research, Cleveland, said most of such suits are settled without a significant financial impact on the companies involved.

"I don't see this being problematic on a grand scale for either Wal-Mart or food retailers in the near term or intermediate term," he said.