Tuesday, June 21, 2011

Wal-Mart and the Cookie Jar


Call me a flawed human being if you like, but I wouldn't have felt too sorry for Wal-Mart if it lost its pending discrimination case before the Supreme Court.

Not because I'm anti-capitalist. I simply don't like the way Wal-Mart operates.

Yet alas, I'm bigger than that (no jokes about my girth!), and must agree with the majority decision from the justices yesterday which found in favor of the behemoth department store company. A class-action lawsuit brought on behalf of over one million female employees was, in effect, ruled to be too large to be legally viable.

Apparently in court, size does matter.

Walton's Market

I've never been a fan of Wal-Mart. My first exposure to the company was as a kid, riding with my family through eastern Arkansas along I-40, between Little Rock and Memphis. In a dusty town named Forrest City, a Wal-Mart store could be seen from the interstate. Squat, flat-roofed, and colorless, fronted by a potholed parking lot, the store had all the charm of a warehouse. I remember whenever we drove by, I'd feel sorry for the townspeople who had to shop there. It looked exactly as rudimentary as any store in Arkansas was supposed to look.

Imagine my surprise, then, when Wal-Mart announced they would construct a sprawling concept store called HyperMart here in Arlington, Texas. I was in college, and working at a prestigious clothing store part-time. One of our managers, who was from Mississippi, started talking excitedly about the new Wal-Mart coming to town. Since none of us in the clothing store knew much about Wal-Mart, he informed us it was a popular chain in the Deep South run by a no-nonsense old guy from Arkansas. Not much on aesthetics, but famous for low prices. Which explained the dreary store I'd seen in Forrest City.

After it opened, I visited the HyperMart to see what all the fuss was about. From the street, it looked like an aircraft hangar, with a barrel roof that ran across the entire facade. Inside were rows and rows and rows of checkout counters, with a vast selling floor the size of which I'd never seen before.

After plowing through aisles crowded with dazed shoppers and never being able to get my bearings in the supersized space, I left. And I think I've been back - literally - twice since. It was simply too big, too noisy, too crowded, and too complicated - and this is from a guy who loves New York City.

Over the years, the news about Wal-Mart has evolved, from the praise of people like my former manager to questionable business practices the company has developed in its quest to dominate American retailing. Old Sam Walton, the founder, initially built up a patriotic clientele by emphasizing how so much of their merchandise was made in the USA. After he died, his heirs practically stampeded over his grave in their rush to China, where most of their merchandise is now made. In the meantime, through their ruthless penny-pinching, Wal-Mart has almost single-handedly created the phenomenon we now call off-shoring, which has eradicated hundreds of thousands of jobs in the United States.

Wall-Mart also perfected the merchandising sleight-of-hand known in the trade as loss-leaders. They hold a supplier's feet to the fire to extract a ridiculously low price on a limited number of products, then they feature those artificially-low-priced products prominently in their advertising and on their sales floor. This gives the illusion to unsuspecting shoppers that wow, if Products X and Z are this inexpensive, everything else in this store must be, too!

Meanwhile, mom-and-pop stores and less greedy competitors across the country fell into bankruptcy as legions of customers became cheerleaders for Wal-Mart. At one point, if Wal-Mart had been its own country, it would have been China's fifth-biggest trading partner. It was untouchable. Retail gold, and Wall Street's darling.

Well, I could go on and on about the domino effect Wal-Mart has had in North American culture. And about how other national retailers have tried to ride Wal-Mart's coattails. And about how retail unions have vilified Wal-Mart for refusing to let its employees unionize. And about how civil rights advocates blame Wal-Mart for unsafe conditions for impoverished workers - including children - in China.

Loss Leaders from the Plaintiffs' Attorneys?

But this isn't about how bad a corporate citizen Wal-Mart can be.

Yesterday, the Supreme Court handed Wal-Mart what some business experts claim is a victory for capitalism. And in a way, it very well may be. And that wouldn't be a bad thing, would it?

Yes, Wal-Mart may be a bottom-feeding blood-sucking retailing vulture. Yes, Wal-Mart's Darwinian culture, thriving on a "survival of the fittest" mindset, may be capitalism's gift to the theory of evolution. Yes, the "People of Wal-Mart" are real shoppers.  And yes, if you want to insist that you really do save more money at Wal-Mart than anyplace else, you have that right.

But the Supreme Court has also now used this discrimination case involving Wal-Mart to send the following messages about doing business in the United States:

1. Even if Wal-Mart did, as a corporation, participate in employment bias against women, lumping a bunch of similar claims together and calling it a class-action lawsuit is more laziness on the part of the lawyers than a desire for legal equity. They figured that one massive lawsuit could win them a lot more money in the same amount of time an individual lawsuit might. They were wrong. Remember, there are worse things in life than Wal-Mart, and trial lawyers are one of those things.

2. One of the reasons the Supreme Court sided with Wal-Mart involved the company's claim that stores are relatively autonomous when it comes to local personnel decisions.  Perhaps from the start, Wal-Mart didn't want the added expense and logistical headaches of a centralized human resources department responsible for all of their millions of employees around the globe, so being able to deflect a class-action lawsuit like this is simply icing on the cake.

But even if Wal-Mart did have a centralized HR office, might the bureaucracy necessitatedy by a department that size actually contribute to what plaintiffs claimed were unfair employment policies? Too, if they're insinuating that Wal-Mart needs to micromanage HR from their corporate offices, they might want to consider their very employment. Judging by some of the cavalier attitudes of Wal-Mart's employees, the job they got from a neighborly local manager might never have been offered by a stickler corporate type at headquarters.

3. Disparities in pay between men and women doesn't automatically prove worker bias based on gender.  Just because Mary earns $8 an hour and John earns $14 doesn't mean Mary is being gypped.  A disproportionate number of female employees at Wal-Mart may actually choose lower-paying, part-time positions, which naturally aren't going to pay the same wages as full-time management positions.  If there is discrimination over who gets promoted to management, or some other apples-to-apples scenario, then maybe plaintiffs will have a case.

But slapping together the complaints of 1.6 million female employees and painting a broad brush of gender bias makes a farce out of the judicial process. If there was a fire in all of the smoke detected by these trial lawyers, they should have gotten together and bundled the cases into similar suits.  In the short run, it would have meant more work for them, but then again, the trial lawyers didn't seem as concerned about the plaintiffs as they were the bucket of cash they hoped awaited them at the Supreme Court. None other than liberal justice Ruth Bader Ginsburg admonished the lawyers for irresponsibly constructing a sloppy case.

Even in Winning, Wal-Mart Might Lose

Even though Wal-Mart "won," however, they may have taken a beating in the court of public opinion. A lot of liberals already refuse to shop at Wal-Mart because of the civil rights abuses already littering the company's past in China. And now, a lot more women, the predominant shopping class in the United States, may decide to drive their SUVs into other retailers' parking lots since the media has pretty much spun this story as a setback for womens' rights.

Wal-Mart employees who've rebuffed organized labor's attempts at unionizing them in the past may now give the teamsters the benefit of the doubt, possibly spelling labor troubles for Wal-Mart's future. And if all these discrimination cases individually are legitimate, filed by disgruntled female employees from across the country, shouldn't Wal-Mart have been more proactive in trying to mediate these disputes in their stores? I mean, 1.6 million plaintiffs is a lot of people. Who really believes that many people are blatantly lying about their same employer to the courts?

Of course, Wal-Mart's success hasn't been built so much on providing a dazzling retail experience as it has capitalizing on the American consumer's desire to buy stuff cheaply. So even though some of their customers may act on their principles and abandon the giant retailer, there are still those areas of the country where Wal-Mart has become the only shopping option, and there are still plenty of people who love a bargain, even if the price our country's paying for "low prices" at Wal-Mart isn't something we can afford in the long run.

But that's an argument for another day.

For now, at least, Wal-Mart's executives at their rural Arkansas headquarters can breathe a sigh of relief with the Supreme Court's verdict.  It remains to be seen if the trial lawyers will actually backtrack, categorize the claims their plaintiffs have made, and file more suits against the retailer. Wal-Mart isn't even the only major corporation currently facing gender-bias class-action lawsuits.  Costco, a competitor of Wal-Mart's, Toshiba, and Goldman Sachs have cases warming up in the judicial wings.

I'm not anti-woman, nor am I anti-justice.  It's not a bad thing for the Supreme Court to hold trial lawyers to a legal standard which requires them to specify charges and narrow the spectrum of evidence so a court of law can responsibly determine guilt or innocence.  Remember, this decision has nothing to do with determing whether Wal-Mart has committed gender bias.  The trial lawyers thought they could score a spectacular haul by glossing over legal protocol.  And they got caught with their hands in the cookie jar.

Let's not forget that plaintiffs and defandants remain the key players in our courts of law.

Not lawyers themselves.

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