Should Wal-Mart's Sex-Bias Suit Move Forward?

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NEW YORK ( TheStreet) -- Wal-Mart's ( WMT) gender-bias suit being heard by the U.S. Supreme Court today could establish a significant precedent for U.S. companies.

The high court began hearing oral arguments on Tuesday regarding decade-long complaints from more than 1 million former female Wal-Mart employees who claim that managers at the discount giant made sexist decisions about promotions and pay. The hearing will focus on whether or not the lawsuit should advance not the allegations of the class action.
Protestors rally outside the Supreme Court in Washington, in support of the plaintiffs in a case of women employees against Wal-Mart.

At least by the comments of justices today, the Court would appear to be favoring Wal-Mart. During the hearing, some justices, including Antonin Scalia, Anthony Kennedy and Samuel Alito, suggested that they were troubled by lower court decisions allowing the class-action lawsuit to proceed.

In 2004, a federal trial judge in San Francisco allowed the class action to go forward. The decision was upheld last year in the Ninth Circuit U.S. Court of Appeals.

"I'm getting whipsawed here," Justice Scalia said, according to reports.

Justice Kennedy said he was unsure "what the unlawful policy is" that Wal-Mart engaged in to deprive women of pay increases and promotions comparable to men.

Lawyer Joseph Scalla, who is representing the women, said that lower courts were persuaded by statistical and other evidence revealed so far. "The decisions are informed by the values the company provides," Sellers said according to reports.

Justice Scalia scoffed at the notion of using statistics rather than individualized proof. "We should use that at jury trials, too," he said according to several reports.

But Justice Ruth Bader Ginsburg seemed to support the women's argument, saying companies have a responsibility to make sure women are treated fairly in local workplaces.

Wal-Mart claims the class action, the largest employment discrimination class-action suit in American history, has gotten out of control. The No. 1 retailer denies the allegations and says the women involved have worked at thousands of stores and make claims involving many different issues. As a result, Wal-Mart insists the case is too big to hear en masse. If Wal-Mart is defeated the class action could cost billions of dollars in back pay and potential damages.

Allowing the lawsuit, according to Wal-Mart, would also prevent the company from denying claims made by each individual woman.

The company released a statement following the oral arguments: "We were pleased to be able to show the court that Walmart had a strong non-discrimination policy in place well before the lawsuit was filed, and to illustrate the other flaws in the plaintiffs' theories," said Gisel Ruiz, Executive Vice President, People, Walmart U.S. "Walmart is working hard every day to ensure more women are represented in our management ranks. We continue to have strong anti-discrimination policies in place, a strong record of advancement of women and we are always looking to be better."

Other companies including Bank of America ( BAC), Microsoft ( MSFT) and General Electric ( GE) have filed court papers in support of Wal-Mart. These companies contest that allowing the lawsuit to move forward will open the floodgates to employment, antitrust and product-liability suits.

The U.S. Chambers of Commerce also sided with Wal-Mart saying in a filing: "Employment cases are just the tip of the iceberg." If the suit is allowed to move forward, according to the Chamber, it "would bury American businesses in abusive class-action lawsuits to the detriment of consumers, the U.S. economy and the judicial system itself."

Regardless of the end result, the case has put the spotlight on Wal-Mart, leaving the retailer to once again defend its sullied image.

On top of this, Wal-Mart's U.S. business has been flailing. The discounter reported its seventh consecutive quarter of declining same-store sales in February as it attempts to reverse the merchandising mistakes it made under its "Project Impact" initiative.

This lawsuit surely won't help drive shoppers back to the big-box stores.

Given this, do you think the Supreme Court should allow the massive sex-discrimination suit to move forward? Take TheStreet's poll and see what other readers are saying....

Should the U.S. Supreme Court allow Wal-Mart's sex-bias lawsuit to move forward?

Yes -- The case is legitimate and deserves to go to trial.
No -- The suit is too broad and should be stuck down by the Supreme Court. .

--Written by Jeanine Poggi in New York.

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