It's a little difficult not to think something out of the ordinary is going on when a company faces a lawsuit that could take in excess of $1 billion to settle.
That suit, of course, is the highly publicized gender-discrimination action now pending against Wal-Mart Stores. Actually, the suit was filed two years ago. The new development is that it has been certified as a class action. (Page 6.) That means Wal-Mart won't be able to fight a multi-front war against a host of scattered claimants. Instead, it will face a united front consisting of any current or former female employee who worked for the company after late 1998, or some 1.6 million individuals.
As noted, this is a "highly publicized" event for Wal-Mart. In that, it isn't unique. Wal-Mart, it seems, has become a lightning rod for negatives such as this suit. That's to be expected. Few suits are filed against the impecunious. They are filed against centers of wealth, which Wal-Mart has come to epitomize. After all, Wal-Mart's net sales for the 12 months ended Jan. 31 were a record $256.3 billion, an increase of 11.6% over the prior year's period. That's not just a record for Wal-Mart. The company is moving into uncharted territory. It's the largest in the world, and the largest the world has ever seen. That kind of mass turns a company into a surrogate for business in general; it's assumed that if Wal-Mart can be brought to heel for real or imagined grievances, then lesser companies will fall into line, too.
Nothing of the sort will happen right away, but it could. Wal-Mart vows it will appeal the class-action certification, which a judge took months to render in the first place. Should that fail for Wal-Mart, the company could litigate for years.
There's no way to tell what the merits of the suit might be, but, in summary, what is claimed is that female Wal-Mart workers weren't afforded the same promotion and pay opportunities that went to males. Last week, Wal-Mart issued this statement: "While we cannot comment on the specifics of the litigation, we can say we continue to evaluate our employment practices. For example, earlier this month Wal-Mart announced a new job classification and pay structure for hourly associates. This new pay plan was developed with the assistance of third-party consultants and is designed to ensure internal equity and external competitiveness."
That's far from being a strenuous denial of the suit's allegations. There is speculation that Wal-Mart will end up making a settlement of some sort. Let's entertain that possibility and see how much freight Wal-Mart could carry. At the conclusion of its most recent fiscal year, Wal-Mart's income from continuing operations was $8.9 billion, or $2.03 per share. It wouldn't be a happy day for Wal-Mart, but a settlement of $1 billion, or a multiple of that, won't sink the ship.
Incidentally, other familiar retailers have faced costly sex-discrimination settlements in recent years, including Lucky Stores, $95 million, and Publix Super Markets, $82 million.