Walmart should have listened to it's outside counsel 

Legal documents leaked to the New York Times recently indicate that lawyers advised Wal-Mart that they faced potential sex discrimination liability as early as 1993. While Wal-Mart calls these papers “flawed” and “stale,” as with all communication the question isn’t a matter of what the papers said, but how the recipient reacted.

Law firm Akin Gump informed company officials that Wal-Mart faced liability between $185M and $740M for sex discrimination suits in 1993 alone. Seventeen years later, lawyers on behalf of women bringing a class action discrimination suit against Wal-Mart hope to subpoena these warning documents as proof that Wal-Mart had notice that its gender practices are not well-received among employees.

The times quotes Wal-Mart spokesman David Tovar insisting that Wal-Mart has always been fair to employees: “We are proud of our work to promote diversity at Wal-Mart and are continually recognized for our efforts.”

Tovar’s attitude indicates that Wal-Mart officials felt their employment practices were above dispute and saw no reason to change in response to Akin Gump’s 1993 memo. The discrimination memo pointed specifically to disparities in salaries and job placement based on candidates’ gender. Indeed, the memo warned Wal-Mart that the disparities were “statistically significant and sufficient to warrant  finding of discrimination unless the company can demonstrate at trial that the statistical disparities are caused by legitimate, nondiscriminatory factors.”

Evidence laws preclude plaintiffs’ lawyers in the current class action suit to subpoena this document. Yet the existence of the memo is an important fact that will not be excluded from evidence. Even if lawyers cannot review the details of the 1993 memo’s advice, they can certainly take into account the fact that Wal-Mart officials had notice that in the realm of gender equality something was awry.

Lawyers may also consider whether Wal-Mart changed its behavior in response to this notice of discrimination liability. Tovar acknowledges that Wal-Mart has paid a great deal of attention to gender diversity—in the past five years. What happened to the previous twelve years between receiving the discrimination memo and changing company policy?

Speaking on Wal-Mart’s behalf, Tovar points at once to the “flawed” nature of the discrimination memo and to Wal-Mart’s response to this private indictment of discrimination. Wal-Mart did not see fit to react to a memo that merely “deliberately mimicked the type of statistical analysis done by plaintiffs’ lawyers in class action suits.”

Yet despite having received the discrimination memo seventeen years ago, only in the past five years, according to Tovar, has Wal-Mart told its managers to promote more women and minorities. The Times reports that now women hold 45.8 percent of assistant store manager positions, up from 39.7 percent five years ago.

Further, the very purpose of consulting lawyers is to mimic the analysis an opposing lawyer would conduct in a suit against the company. No company can monitor its own behavior well, except to gain perspective through deliberately employing an objective analysis that parallels unfriendly methods preferred by opposition.

Conflicting details remain to be argued in court—an example being the inherent tension between Tovar’s insistence that Wal-Mart’s “state of the art” hiring techniques make gender discrimination impossible, even while 65 percent of Wal-Mart’s overall work force was female in 2001, as compared with 33 percent of its managers. Facts of discrimination lie to statistics, while facts of behavior are clear.

Wal-Mart’s behavioral response to the discrimination memo suggests that managers’ first instinct was to ignore the warning and chalk indictments up to unfriendly statistical methods. Only when discrimination suits grew rampant in the early years of this decade did Wal-Mart decide to implement a method for ensuring that company disdain for sex discrimination would be well-documented.

Wal-Mart should have reacted a bit faster to the notice that they were in fact discriminating, rather than waiting to react as the threat of discrimination suits that arose. The outcome in the gender-discrimination class action suit now facing Wal-Mart will turn not only on the question of statistics, but also on whether Wal-Mart knowingly discriminated in the 12 years between 1993 and 2005, when Tovar claims the company finally found fit to implement anti-discrimination practices.

Kathryn Ciano is a law student in Virginia

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