Wal-Mart

Wal-Mart’s P.R. war

Activists against the behemoth think this is their year: Two new national campaigns, a critical upcoming documentary and more stores thwarted. But can they force America's largest private employer to change its ways?

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Wal-Mart's P.R. war

Firing whistleblowers. Discriminating against women (and, most recently, black truck drivers). Violating child labor laws. Locking workers into stores overnight. Mooching off taxpayers. Disregarding local zoning laws. Mistreating immigrant janitors. Abusing young Bangladeshi women. Paying poverty-level wages in the United States. Destroying small-town America. If you read any newspapers — or even watch “The Daily Show” — you can probably guess which company has been grabbing headlines for these and countless other charges and offenses.

It’s Wal-Mart, of course. The largest and most profitable retailer in the world — and in the United States, with 1.3 million workers, the largest private employer — is becoming nearly as infamous as Enron or the Triangle Shirtwaist Factory. The bad publicity may be well deserved, but it’s also the calculated result of a coordinated effort by company critics, what Wal-Mart CEO Lee Scott recently called “one of the most organized, most sophisticated, most expensive corporate campaigns ever launched against a single company.”

Years of citizen outrage — on a slow, under-the-radar boil — has this year exploded in a highly visible public education effort, backed by a powerful and in many ways united set of forces: two new national efforts, hundreds of community groups, unions, women’s rights groups, environmental activists and mad-as-hell individuals. What’s more, this November will mark the launch of a documentary film about the company, directed by Robert Greenwald (“Outfoxed“). Greenwald says he expects his movie, which will be promoted in a grass-roots manner suited to its subject — through screenings at house parties, union halls and churches — to contribute to an anti-Wal-Mart “echo chamber.”

The aim, the activists agree, is to change the company’s entire business model. What Wal-Mart’s abuses have in common, they say, is a disregard for the public interest in a single-minded pursuit of the bottom line. Low labor costs and a disregard for the law have been central to the company’s way of doing business. A Wal-Mart that paid its employees generously, offered decent worker healthcare and was considerate of its community neighbors — the critics’ major demands — would not be Wal-Mart: It would be, essentially, a bunch of stores. Other than unionized workers, it is possible that no one has ever put such concerted pressure on a single American company, let alone one so large, to so fundamentally change its operations.

This Wal-Mart moment has been decades in the making. In the retailer’s early years, beginning with its 1961 founding in Arkansas, unions mostly ignored its expansion. After all, many of the stores were in the South, where restrictive laws — and a tradition of labor exploitation as extreme sport, dating back, of course, to slavery — have historically kept unions weak. (Sam Walton’s original five-and-dime store, in Bentonville, Ark., sits on a town square overlooking a monument to fallen Confederates.)

Nationally, much of the retail industry, then as now, was not organized. But when Wal-Mart, in the late 1980s, began opening its Supercenters — supersized supermarkets, open 24 hours, with a full line of groceries — the unions took notice because these new entities competed with unionized supermarkets, threatening their own members’ decent and hard-won standard of living. With its low-wage model, Wal-Mart began, through competitive pressure, to exert downward pressure on the entire grocery industry.

The union that represents grocery workers, the United Food and Commercial Workers International Union, did try to organize Wal-Mart workers. But because of a combination of factors — the union’s own ineptness, the weakness of the larger labor movement, the uselessness of the government bodies that are supposed to enforce labor laws, the effectiveness of Wal-Mart’s union-busting, the company’s willingness to deploy illegal tactics when legal ones fail, and the sheer difficulty of facing down an opponent as large and determined as Wal-Mart — the effort did not work, and not a single Wal-Mart worker in the United States belongs to a union. This year, the UFCW, having decided to give up for now on organizing the workers, decided instead to try to pressure Wal-Mart from the outside by taking its case to the public. In April, the union launched a new public relations campaign called Wake Up Wal-Mart.

“Wal-Mart has to respond to the American people,” says Wake Up Wal-Mart’s campaign director, Paul Blank, “because the American people are the customers.” Wake Up Wal-Mart’s intent is to hurt the company’s sales by persuading customers to stop shopping there. Recognizing that so many low-income Americans desperately need Wal-Mart’s low prices, Wake Up Wal-Mart’s message is not strident or purist: The group is simply urging people to reduce their Wal-Mart shopping as much as they can. Focus group and survey research suggests this is, for many Americans, a reasonable request, and one that they will be inclined to take seriously when they learn more about the company’s practices.

Blank, along with two other Wake Up Wal-Mart activists, emerged from the youthful enthusiasm of the Howard Dean presidential campaign, which used the Internet creatively and made activists of people who’d never before believed in the political process. (Another member of the Wake Up Wal-Mart team comes from the Draft Wesley Clark campaign, the Internet-based group that raised large sums of money for Clark before he’d even agreed to run in the 2004 presidential campaign.)

Wake Up Wal-Mart uses similar approaches. People can sign up on the campaign’s Web site to “adopt” a local Wal-Mart and join local activities focusing on that store. They are then, MoveOn.org style, called upon by e-mail to participate in person, by attending pickets, throwing informational house parties, pressuring legislators or whatever the local groups deem strategic.

In a similar spirit, also launched this year, Wal-Mart Watch, initiated by the Service Employees International Union, is funded by a combination of labor, foundations and individual donors. Probably because it is not run by one union but is meant to coordinate — and provide information to — a vast coalition of Wal-Mart foes, the company seems more alarmed by Wal-Mart Watch, devoting an entire Web site to refuting its criticisms and attacking the group by name. Like Wake Up Wal-Mart, Wal-Mart Watch’s staff has its share of Democratic political pros. There are petty turf wars and rivalries between the two groups, but what’s striking is how potentially complementary they are.

While Wake Up Wal-Mart will probably be most effective in mobilizing union members, Wal-Mart Watch — which hired four new people in the past two weeks — may, because it is not solely a union project, reach a public “far beyond the organized-labor world,” says spokeswoman Tracy Sefl. “We’re able to develop strange bedfellows — more moderate and conservative politicians, evangelicals” and investors. The latter may prove increasingly important: Wal-Mart’s stock has been underperforming for some time, a fact many analysts attribute to what they call “headline risk,” which is Wall Street-speak for bad press. That lagging stock price may become a critical pressure point for activists pressuring Wal-Mart to change its ways.

Another important thread in recent anti-Wal-Mart history is that for years, communities all over the nation have been fighting to stop Wal-Mart from opening new stores. Their reasons include their likelihood of worsening sprawl and traffic, the company’s tendency to destroy downtowns by shuttering local mom and pop stores, its threat to union jobs and research showing that a new Wal-Mart actually increases countywide poverty rates. Wal-Mart Watch was founded in part to coordinate these disparate community efforts, to connect people fighting Wal-Mart in Vermont with people doing the same in Montana. Local battles have increased recently, and company officials admit that they’ve become an obstacle to Wal-Mart’s growth. In the past year, Wal-Mart Supercenters have been emphatically rejected by communities as diverse as Upland, Calif., and Biloxi, Miss.

Wal-Mart has nearly saturated rural America, to the point where many of its stores are, in the graphic parlance of the retail industry, “cannibalizing” one another. To continue to grow, Wal-Mart must move into urban America, where it has been meeting especially intense opposition; cities have stronger unions and less space for big stores.

City dwellers are also more likely to be offended by Wal-Mart, sometimes for social justice reasons, as in the massive sex discrimination lawsuit, Dukes vs. Wal-Mart, the largest civil rights class action in history, which charged the retailer with discrimination in pay, promotions and training. Urban residents also often oppose Wal-Mart out of concern over low wages, or for snobbish reasons: Wal-Mart sells ugly, cheap stuff, brings more poor folks to the neighborhood to shop and doesn’t belong in a cosmopolitan environment. It’s also, compared with the lonely exurbs, or rural America, relatively easy to organize and inform people who live in cities: They have plenty of civic institutions and consume media avidly. To win them over, Wal-Mart may have to make changes.

Madeline Janis-Aparicio is the head of Citizens for a Better Inglewood and the Los Angeles Alliance for a New Economy, groups that last year blocked Wal-Mart’s entry into Inglewood, Calif., a small city outside Los Angeles, by voter referendum despite Wal-Mart’s determination. The company spent $1.5 million on the campaign. Now, she is fighting a renewed effort by the company to come to Inglewood. To Janis-Aparicio, the battle against Wal-Mart is not just about Inglewood. Striking at the company’s growth is part of a strategy to get Wal-Mart to change: “We’re not going to stop Wal-Mart in its tracks.”

There are several reasons anti-Wal-Mart sentiment has so much resonance now. One has to do with the state of the labor movement. Workers are losing their benefits at the negotiating table while unions spend heavily on candidates, like John Kerry, who lose elections. Labor is desperate to stop losing, but its leadership hasn’t agreed on what sort of change is needed — indeed, right now, the AFL-CIO is in the process of splitting up. In this context, the future is murky, but Wal-Mart is a clear common enemy, and one that can help labor find the allies among the general public that it badly needs. Another reason for the explosion in organized anti-Wal-Mart sentiment is that it is George W. Bush’s second term, and some people clearly feel that corporate interests in this administration are running amok.

The anti-corporate campaign, like those being waged against Wal-Mart, is a particularly contemporary form of activism. At its best, it is a flashy, media-savvy effort to tarnish a particular company’s reputation, in hopes of provoking it to change its ways. This method of activism began emerging in the 1980s, when activists worldwide boycotted Nestlé for marketing infant formula in third-world countries, where unsafe drinking water makes breast-feeding the better choice. It became more popular in the 1990s, including the ongoing campaign to hold Coca-Cola accountable for its alleged complicity in the assassination of Colombian trade union leaders, as well as alleged abuses in India. It reflects the increasing importance of corporate image-making — and thus, for critics, image-tarnishing — but also an increasingly common despair about the ability to control corporate behavior through government regulation.

It is no accident that the anti-corporate campaign emerged in the anti-government Reagan era. Perceiving the major political parties as thoroughly bought off by corporate interests, activists saw their only recourse as appealing directly to the corporations and to their consumers. In President Reagan himself, corporate interests found a true friend, but even more important, for the first time, business was successfully organized as a political force, one that could lobby more forcefully than ever for its own interests.

The anti-corporate campaign has had some successes: For example, many apparel companies targeted for abusing workers’ rights overseas have had to modestly improve their suppliers’ sweatshop factory conditions. Still, such small victories are a bit sad compared with the effectiveness of past strategies by Americans to curb harmful corporate behavior through strong unions, government regulation and vibrant social movements. In the history of the anti-corporate campaign, what’s refreshing about the anti-Wal-Mart forces is their ambition in targeting not just one or two problems but a company’s entire modus operandi.

What’s also unusual about this campaign is that it’s successfully engaging policy and politicians. At the state and local level, the anti-Wal-Mart forces are working to pass legislation obligating Wal-Mart to reimburse governments for the costs it inflicts on taxpayers — in Medicaid, county programs for the poor, public emergency room costs — by declining to provide its workers adequate healthcare. (Wal-Mart costs taxpayers an estimated $2.7 billion in welfare every year.)

Wake Up Wal-Mart worked with Sens. Ted Kennedy and Jon Corzine on a federal bill on this issue, which was introduced in June; unlike that one, however, several bills at the state and local level have attracted bipartisan support and have a prayer of becoming law. Republicans, after all, generally don’t like to see tax dollars wasted. The Maryland Legislature passed one such healthcare bill recently, thanks to lobbying by both Wal-Mart Watch and Wake Up Wal-Mart, and is expected to override the governor’s veto in January.

The ambitions of the anti-Wal-Mart forces may, in this era of modest, single-issue goals, inspire some eye rolling among the knowing, especially in Washington, where both Wake Up Wal-Mart and Wal-Mart Watch are based. Indeed, we live in an era of painfully small-scale do-good impulses, best characterized by Julie Delpy’s winsome character in last year’s Richard Linklater movie “Before Sunset.” Sitting in a cafe with her long-lost lover (played by Ethan Hawke), she explains that she used to believe in changing the world through revolutions, politics and big ideas, but now she doesn’t think any of those can work, so she works for a nongovernmental organization that distributes pencils to impoverished third-world schoolchildren (just pencils). I’d guess that every moviegoer familiar with the fragmented, microspecific world of nonprofit organizations cringed and nodded with recognition at this scene, but it was also a funny — and sad — reminder of a generation’s dearth of politics.

It is precisely the willingness of the anti-Wal-Mart activists to rise above this nobly ineffective, pencil-sized universe and engage with a bigger picture, and with politics, that makes their campaign so promising. It is a campaign against greed itself, and the current direction of our economy, in which corporations can do as they please regardless of the human cost. It is this breadth of purpose that invites so many different kinds of alliances and activists. And since the last presidential election, plenty of socially conscious people are looking for something effective to do, something big, comparable to fighting President Bush. As Sefl points out, “So many of the same values” are at stake in the Wal-Mart fight. “And that is an element of our success right now.” In the court of public opinion, the advocates may be making a dent: A poll conducted by Westhill Partners for Wal-Mart Watch and released on July 22 found that Wal-Mart’s approval rating had, just since spring, plummeted from 59 percent to 50 percent.

Because they’ve rarely been tried, it’s not clear that any of these strategies will work. Much stands in the way of the would-be Wal-Mart reformers — including the company’s formidable P.R. machine and its ability to buy off politicians. (These days, Wal-Mart’s ads seem to showcase the company as a great employer and community partner even more than a shopping destination.)

What’s more, Americans are desperate to catch a financial break somewhere. Since breaks are not forthcoming on the job, or from the government — through, say, universal healthcare or free college tuition — many will continue to look for relief in the aisles of Wal-Mart. When you’re struggling to make ends meet, a $2.50 bra and a $30 microwave look pretty good. It may be that without more progressive people in government, and a more collective ethos in our society as a whole, activists may not be able to force Wal-Mart into fundamental changes.

Still, the momentum is unstoppable at present, and Wal-Mart’s foes are hunkering down and building institutions that can sustain a long fight. Despite the political orientation of the troops and the “war room”-style strategizing, Sefl says, Wal-Mart Watch’s headquarters is “not your typical campaign office. It has the feel of something that’s going to be there for a while.”

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Wal-Mart’s shame grows worse

The executive at the heart of the company's scandal made a fortune advising other businesses on corporate ethics

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Wal-Mart's shame grows worseEduardo Castro-Wright(Credit: Reuters/Sarah Conard)

Bloomberg is reporting that Eduardo Castro-Wright, the Wal-Mart executive fingered by the New York Times as the man at the heart of a huge international bribery scandal, has stepped down from his position as a member of the board of directors at MetLife.

One has to pity poor Bloomberg reporter Andrew Frye, squelched by the constraints of his employer’s by-the-book writing guidelines from expressing his natural aghast incredulity at Castro-Wright’s well-compensated sinecure as “a member of MetLife’s Governance and Corporate Responsibility Committee.”

MetLife’s governance committee “oversees the management and mitigation of risks related to failure to comply with required or appropriate corporate governance standards,” the insurer said last month in a proxy statement. Castro-Wright, who also served on the compensation and investment committees, was paid $259,124 for his work at the insurer last year, including $145,000 in cash and $112,502 in stock awards, the filing shows.

Fox-guarding-hen-house clichés don’t come close to expressing the hypocrisy that rewards misbehavior with such largesse. Right about here, someone should be shrieking: This is what’s wrong with corporate America! This is why we shouldn’t be allowing the CEO class to influence government policy. This is why the fact that Wall Street hates Obama should be considered a badge of honor!

Yes, yes, I know, we’re not supposed to convict the innocent until proven guilty, but I defy anyone to read the Times’ masterful piece of investigative reporting and not come away convinced that Castro-Wright built his successful career at Wal-Mart by bribing government officials in Mexico to speed the approval process for building new Wal-Mart stores. In fact, the very news that Castro-Wright was forced to resign from the MetLife board is an eye-opening admission. Normal American corporate governance practice allows disgraced CEOs to keep milking the board-of-directors gravy train for years after their dishonor is exposed.

It is amusingly enraging now to go back and look at the hype the business press poured on Castro-Wright as he ascended the ladder.

From Fortune, in 2006:

Eduardo Castro-Wright, the new CEO of Wal-Mart Stores USA, turned Wal-Mart’s publicly traded Mexican subsidiary, Wal-Mex, into the country’s best retailer and a jewel of Wal-Mart’s $56 billion international arm.

To make that happen, Castro-Wright’s team slashed prices and expenses, squeezed suppliers to get products into stores faster, and used smaller store formats (dubbed Bodega Aurrerá). He also showed a knack for public relations, defusing criticism by emphasizing jobs and low prices when merchants protested the construction of a Wal-Mex store near an archaeological site.

A “knack for public relations” — a.k.a.: alleged repeated violations of the Foreign Corrupt Practices Act. (A law, by the way, that Wal-Mart attempted to water down via heavy lobbying.)

From the New York Times, 2012:

In September 2005, a senior Wal-Mart lawyer received an alarming e-mail from a former executive at the company’s largest foreign subsidiary, Wal-Mart de Mexico. In the e-mail and follow-up conversations, the former executive described how Wal-Mart de Mexico had orchestrated a campaign of bribery to win market dominance. In its rush to build stores, he said, the company had paid bribes to obtain permits in virtually every corner of the country….

Wal-Mart dispatched investigators to Mexico City, and within days they unearthed evidence of widespread bribery… [But] neither American nor Mexican law enforcement officials were notified. None of Wal-Mart de Mexico’s leaders were disciplined. Indeed, its chief executive, Eduardo Castro-Wright, identified by the former executive as the driving force behind years of bribery, was promoted to vice chairman of Wal-Mart in 2008.

Not only was he promoted, but he received cushy directorships at companies like MetLife, where his responsibilities included overseeing corporate governance.

On second thought, maybe it is isn’t necessary for Bloomberg’s Andrew Frye to have the opportunity to go all apoplectic on Castro-Wright. The facts pretty much speak for themselves. In the United States, the rewards for bribing your way to success include getting paid a quarter of a million a year to advise other corporations on how to behave responsibly.

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Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

The insane wealth of Walmart’s founding family

Just six members of Walmart's Walton clan are worth as much as the bottom 30 percent of all Americans

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The insane wealth of Walmart's founding familyJim, Alice and Rob Walton

There’s been a constant stream of headlines about the widening gap between rich and poor for months now, but this is pretty remarkable: Just six members of the Walton family, heirs to the Walmart fortune, possess wealth equal to that of the entire bottom 30 percent of Americans.

That’s according to a new analysis by Sylvia Allegretto, a labor economist at the University of California at Berkeley’s Center on Wage and Employment Dynamics.

The calculation is based on data from 2007, the most recent round of the Federal Reserve Board’s Survey of Consumer Finances, which measures the net worth of Americans. (The extensive survey is performed once every three years, and the 2010 edition is expected to be released next year.)

Allegretto then compared those numbers to the net worth of the six members of the Walton clan as reported on the Forbes 400 list in 2007. They are all children or children-in-law of the founders of Walmart. Their total net worth that year: $69.7 billion.

That’s equal to the wealth of the poorest 30 percent of all Americans, according to Allegretto’s calculations.

One of those Waltons, by the way, is Alice, whose effort to create a world-class museum in Arkansas by purchasing hundreds of millions of dollars of art was recently profiled in the New Yorker. More information on the other Waltons is available at Forbes.

(Via Doug Henwood)

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Justin Elliott

Justin Elliott is a reporter for ProPublica. You can follow him on Twitter @ElliottJustin

Lessons from the swipe fee war

Regular Americans can still win small legislative victories, as long as they're on the same side as Wal-Mart

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Lessons from the swipe fee war

For the average American, the most significant aspect of the recent congressional war over “swipe fees” (i.e. the money merchants pay banks when customers use debit cards) has little to do with the specific issue at hand. After all, while retailers managed to wage what Bloomberg News called a “surprise victorious assault” on the all-powerful banking industry, there’s no guarantee swipe-fee savings will be passed onto consumers. In many cases, the fees will simply be pocketed by retailers, with customers seeing no benefit whatsoever. And even the savings that are passed onto consumers will likely be small after the Federal Reserve this week capitulated to Wall Street’s demands.

That’s not to say the win wasn’t at least a potentially modest victory for regular non-rich Americans. If even a few retailers make it slightly less expensive to buy necessities because the banks lost, it’s good news. But that brings us to the skirmish’s real groundbreaking revelation: The battle proves that consumers in this new Gilded Age can still win small economic concessions from their government, as long as it’s not a people-versus-a united Corporate America fight. Indeed, in our money-dominated political system, it’s only when Regular America happens to find itself in the middle of a battle dividing Corporate America — and only if our interests align with a powerful set of corporations — that we can be heard.

Bloomberg’s must-read story about the backroom wrangling over the swipe fees perfectly captures this reality. The piece begins with a standard homage to the old populist democratic ideal, quoting a Regular American cafe owner giddily declaring victory over the Wall Street behemoth. To buttress the faux David-versus-Goliath narrative, the article then quotes Illinois Sen. Dick Durbin (D) pulling an unconvincing “Mr. Smith Goes to Washington” impression by insisting that he’s just pushing to end the swipe fees because they “are not fair to small business.”

Soon, though, the true story comes out: the one about how the real power behind the push to end swipe fees is not Mom and Pop at the General Store, but some of the biggest multinational retailers in the world — small-business-eating godzillas like Target, Best Buy, Wal-Mart and Home Depot — armed with some of the most powerful lobbying firms in Washington.

Bloomberg, not surprisingly, fails to mention this truism: Despite the saccharine rhetoric to the contrary, executives from huge corporation don’t altruistically deploy political and financial muscle on behalf of customers — as is their fiduciary responsibility, they deploy it in search of cold, hard profit for shareholders. But frankly, that fact doesn’t have to be explicitly stated — after a few throwaway lines about “small businesses,” the story makes clear that the swipe-fee fight was actually all about “how far the richest interest groups” are willing to “go when a single decision puts billions of dollars up for grabs.”

Ultimately, the retail giants marshal campaign contributions and harness populist rhetoric against banks to wage and win a tenacious fight that professional D.C. prognosticators said they would almost certainly lose. This war is so tenacious, in fact, that Durbin describes it as “one of the most heated debates and exchanges that many of us in the Senate have seen in our time.”

In that quote, the Illinois Democrat reveals a disturbing truth about economic policymaking. The only “heated” debates over money — that is, genuine fights rather than staged exercises designed to appease party activists — are those that pit one set of corporate-backed politicians against another. Otherwise, there’s no fight at all.

After all, many of the anti-bank populist arguments that the giant retailers used to win the swipe fee battle had previously been voiced when Congress prepared to authorize the Wall Street bailout of 2008. Even though such populism had more natural traction in the aftermath of the bank collapse than it does today, those same claims were ignored. After all, they were made merely by public interest organizations, grassroots groups and regular Americans — not by a set of multinational corporations. Just a few years later, the same anti-Wall Street discourse, now backed by millions of corporate dollars, won the day in Congress.

This dynamic defines most legislative issues. For example, the passage of “free” trade deals, which are vehemently opposed by labor unions, consumer groups environmental organizations and most Americans, tends to be slowed only when an influential set of corporations raises an objection (like when the auto industry temporarily stalled the Korea Free Trade Agreement). Likewise, while consumers have long demanded less expensive medications, it was only when large corporations trying to cut costs began advocating for generic drugs that Congress started to seriously consider challenging the pharmaceutical industry’s patents. And it is only now that the powerful natural gas industry stands to profit from a national move away from coal that we may finally see minimal legislation promoting a lower-carbon-emission policy.

The list of similar examples is endless, but the paradigm is the same. If change is possible at all right now, it is primarily possible at fleeting moments when the corporate state is divided against itself.

For the most part, that’s really depressing. But, as evidenced by the swipe fee fight, at least it leaves open the possibility that those moments still arise every once in a while, and still offer the chance for (albeit marginal) economic victories for working people. If there’s a larger organizing strategy to be gleaned from that reality — and I think there is — it is that activists should now be aggressively focused on opportunities to exploit, expand and multiply those instances to divide and conquer. Unless there’s a much larger structural shift in our politics, those moments represent some of the last small hopes for change.

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David Sirota

David Sirota is a best-selling author of the new book "Back to Our Future: How the 1980s Explain the World We Live In Now." He hosts the morning show on AM760 in Colorado. E-mail him at ds@davidsirota.com, follow him on Twitter @davidsirota or visit his website at www.davidsirota.com.

Wal-Mart ruling makes discrimination easier

By redefining the requirements for a class action suit, the Supreme Court deals a blow to women and minorities

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Wal-Mart ruling makes discrimination easierIn this March 29, 2011 photo, Carol Rosenblatt of Washington, right, and others, take part in rally outside the Supreme Court in Washington, in support of the plaintiffs in a case of women employees against Wal-Mart

On Monday, the Supreme Court sounded the death knell for Dukes v. Wal-Mart, the class action lawsuit accusing Wal-Mart of paying and promoting women less than similarly- or less-qualified men. To protect corporations from having to do more to prevent gender discrimination than pop a few politically correct paragraphs into the employee handbook, the Supreme Court resorted to a belabored procedural argument that incentivizes corporations to do as little as possible to prevent discrimination. The five-justice majority did not rule on whether or not Wal-Mart actually discriminates against women — they didn’t let the case get that far. Instead, they shut it down by changing the rules of engagement.

One of the plaintiff’s central arguments was that Wal-Mart has a policy of leaving promotion and pay decisions to the discretion of individual managers, and that these managers have made discriminatory decisions. If the women suing Wal-Mart had prevailed, every American employer would have been on notice that it is not enough to sit on their corporate hands and allow gender discrimination to take its natural course in this way. Instead they would have had to make it their business to ensure that their managers treated women fairly. But the Court didn’t want that, as the majority feels that “allowing discretion by local supervisors” is “a very common and presumptively reasonable way of doing business.” (In his opinion for the majority Justice Scalia also announces, without citing any evidence, that most managers work carefully to avoid discrimination in their pay and promotion decisions when left to their own devices. That makes it all the more puzzling why the higher one gets in the corporate hierarchy in the U.S., the fewer women there are.)

So the Supreme Court looked to procedure. To bring a case as a class action in federal court, the plaintiffs have to get permission from the judge to proceed as a class. This makes sense: You wouldn’t want someone to be able to file a lawsuit on your behalf without an objective outsider considering whether the lawsuit was in your interest and whether the person filing it would represent you well. To protect you from becoming part of a class action that doesn’t benefit you, plaintiffs have to persuade a judge that they satisfy the requirements of what is known as Federal Rule of Civil Procedure 23 before their lawsuit can proceed as a class action.

One of Rule 23′s prerequisites is that “[o]ne or more members of a class may sue … as representative parties on behalf of all members only if there are questions of law or fact common to the class.” The Wal-Mart plaintiffs clearly alleged common questions of law or fact, including statistical evidence that Wal-Mart pays and promotes men more than women; Wal-Mart’s policy of leaving decisions regarding promotion and (within certain ranges) pay up to individual managers; evidence that Wal-Mart has a uniform corporate culture across its stores; and evidence that Wal-Mart’s culture fosters discrimination against women. These are precisely the kind of “common questions of law or fact” that courts routinely accept as satisfying the Rule 23 “commonality” prerequisite.

The Court used this previously clear “common questions of law or fact” requirement to thwart the Wal-Mart women by redefining the requirement beyond recognition. According to Justice Scalia, “common questions of law or fact” now means that plaintiffs must “demonstrate that the class members have suffered the same injury.” In no universe that I have visited do these two phrases require the same thing.

It’s not clear just how far the Court will take this bizarre new rule. Does “same injury” mean that the plaintiffs must show that every single class member was denied the exact same promotion? Or that each one was underpaid by the same amount? Scalia writes that it does mean that suffering “a violation of the same provision of law” won’t suffice as suffering the “same injury.” This is a remarkable and counterintuitive holding: After this ruling, a group cannot sue their joint employer for violating the same legal right for each one of them. Instead they have to prove that the legal violation harmed them in the same way. This is completely backward: Courts exist to redress violations of the law, regardless of whether those violations cause their victims to suffer in the same or different ways. It is thanks to this procedural backflip that Wal-Mart and other employers can now delegate their way out of being responsible for discrimination in their workplaces.

Arguably before Monday’s Dukes v. Wal-Mart decision, American employers were subject to legal liability if they delegated so much discretion to individual managers that those managers created a pattern of discriminating against women — at least, the four Justices in the minority, who dissented from the part of the decision that redefined sufficient commonality for class action suits, believe that this was the law. Now employers have every incentive to take their hands off the reins and let managers make pay and promotion decisions based on whatever criteria they choose. This is a major loss for women, minorities, senior citizens, the disabled and any other group that tends to get the short end of the stick in the workplace. The procedural manipulations required to reach this point have caused a major loss for any group of people that seeks to redress a legal violation through a class action: Now each individual will have to pay for legal representation alone and probably forgo evidence of violations against similarly situated people. Goliath has won, and it is every David for himself.

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Piper Hoffman is an employment lawyer who blogs at piperhoffman.com.

The Supreme Court sides with Wal-Mart

Why the court ruled against a group of female employees and what it means for the the rights of workers everywhere

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The Supreme Court sides with Wal-MartThe WalMart Supercenter signage is seen in Springfield, Ill., Monday, May 16, 2011. Wal-Mart Stores Inc. is reporting Tuesday, May 17, a 3 percent increase in first-quarter net income, beating Wall Street expectations because of robust international business and cost controls. (AP Photo/Seth Perlman)(Credit: AP)

The Supreme Court has rejected an effort on behalf of potentially a million female workers to sue Wal-Mart for discrimination, throwing out the biggest class-action discrimination case in history.

The case, Wal-Mart vs. Dukes, dates back a decade and Monday’s decision will have ramifications for many years going forward relating to the issues of gender-bias and workers’ ability to bring large class-action law suits against big employers.

Case history: In 2001, Betty Dukes, a “greeter” at a northern California Wal-Mart, filed suit for gender discrimination and sought to certify a class-action consisting of any and all female employees who worked for Wal-Mart after December 26, 1998 — approximately 1.5 million women.

The suit alleged that the policies and culture at Wal-Mart discriminate against women (including pay and opportunities for promotion). In particular, Dukes and the women who joined her pointed to Wal-Mart’s practice of letting local managers subjectively decide on pay and promotions as almost uniformly leading to discrimination.

Nan Aaron, the president of the Alliance for Justice, pointed to a just few individual examples of discrimination raised by female Wal-Mart employees seeking the class certification (via the Huffington Post):

When a woman with a master’s degree who had worked at Wal-Mart for five years asked her department manager why she was paid less than a 17-year-old boy who had just been hired, she was informed, “You just don’t have the right equipment… You aren’t male, so you can’t expect to be paid the same.” Another female employee was informed that a male employee got a bigger raise then she did because he had “a family to support.” Another was told that men would always be paid more than women at Wal-Mart because “God made Adam first, so women would always be second to men.”

The district court approved and a federal appeals court upheld the certification of the class-action. Wal-Mart, in its appeal, argued that a class of potentially 1.5 million was simply too big. (In response, the plaintiffs noted that Wal-Mart is the largest employer in the Unites States and that any class-action brought by its employees would have to involve a very big class).

As a report from the Alliance for Justice put it:

[Wal-Mart] maintains that the large number of its stores, managers, and employees means that pay and promotion decisions turn[ed] on decisions made by individual store managers and cannot support the commonality among class members that is required for class certification.

Plaintiffs counter with a powerful narrative that shows how sex discrimination at Wal-Mart was the inevitable byproduct of a strong and centralized corporate system that originated in the company’s Home Office in Bentonville, Arkansas, and permeated each of the company’s stores in the United States.

The Supreme Court decision: The decision Monday hinged not on whether Wal-Mart enacted discriminatory policies, but on whether there were sufficient grounds to treat the women as a class. Despite the plaintiffs’ arguments, and the decisions in district court and the federal appeals court, the Supreme Court ruled in favor of Wal-Mart.

The workers “provide no convincing proof of a company-wide discriminatory pay and promotion policy,” Justice Antonin Scalia wrote for the court.

The justices unanimously agreed on disqualifying the class, but Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan all indicated that they do see a common issue among all the plaintiffs’ complaints but don’t believe the case could proceed to achieve monetary damages for the women workers. They suggested that the case return to a lower court and proceed — still as a class-action — as one that would not seek money damages.

But the court also voted 5 to 4 that the case can’t proceed as any type of class action. It is this decision that could set a precedent for class-actions against large corporations

The ramifications: For the plaintiffs in the Dukes case, the decision is huge blow. The individuals seeking damages for discrimination could now file individually, but even if individual filings were successful, they would not challenge the pervading discrimination pointed to in the Dukes case.  Ginsburg wrote in her decision: “Women fill 70% of the hourly jobs in the retailer’s stores, but make up only 33% of the management employees… The higher one looks in the organization, the lower the percentage of women.” Individual damages claims will not address this.

The ramifications for U.S. workers may be more troubling. In decertifying this class, the Supreme Court has set a difficult standard for any future large-scale class actions. The Supreme Court’s decision is another in a long line of rulings by the Roberts Court that side with corporate interests, a trend Dan Manatt noted on the HuffPo last year. And, crucially, the decision could undermine class actions as a vital means to challenge pervasive biases in big companies.

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Natasha Lennard covers the Occupy movement for Salon. A British-born, Brooklyn-based journalist, she has been covering Occupy Wall Street since before the first sleeping bag was unrolled in Zuccotti Park. One of the first journalists arrested at an Occupy action, she has managed to enrage Andrew Breitbart, Rush Limbaugh and Glenn Beck. You can follow her on Twitter (@natashalennard), and email her any Occupy updates/videos/ideas to natasha.lennard@gmail.com

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