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Wal-Mart Disparity Memo Stays Under Wraps

SAN FRANCISCO (CN) - Wal-Mart did not waive confidentiality over a legal memo that describes stark gender disparities in pay and promotion at the company, a federal judge ruled.

The attempt to remove attorney-client privilege from the memo is the most recent turn in the Betty Dukes-led 2001 federal class action that claims Wal-Mart paid women less and offered them fewer promotions than it offered men in comparable positions.

After the U.S. Supreme Court famously disbanded a massive class of such workers in 2011, the Northern District of California is currently weighing a bid to certify a more narrow class.

This group wants to open, read and use information from a package that they received, containing a 1995 memorandum created by Wal-Mart's outside counsel Akin Gump Strauss Haller & Feld at the direction of Wal-Mart's in-house counsel.

The New York Times reported that the memo was allegedly made available to it "by someone not involved in the lawsuit who said that Wal-Mart had not done enough to address the issues it raised."

Though The New York Times did not publish the memo, it reported several findings on June 3 and 4, 2010, including that "women employed by Wal-Mart earned less than men in numerous job categories, with men in salaried jobs earning 19 percent more than women." The memo also said men were more likely to be promoted to management positions at Wal-Mart, and that male department managers earned 5.8 percent more per hour than women in the same position earned, the Times reported.

Because Wal-Mart "would find it difficult to fashion a persuasive explanation for disproportionate employment patterns," the article quotes an estimate from the memo that says Wal-Mart's potential legal exposure in a gender discrimination class action was "$185 million to $740 million for 1993 alone."

The memo also indicated that overall disparities in job assignments were "statistically significant and sufficient to warrant a finding of discrimination unless the company can demonstrate at trial that the statistical disparities are caused by legitimate, nondiscriminatory practices," according to the Times.

When the newspaper contacted Wal-Mart for comment, spokesman David Tobar said the memo was "confidential and privileged," "stale," and "deeply flawed." Pointing out that the memo was 15 years old, he claimed that it bore "no relevance to our strong employment practices and diversity programs." He also criticized Akin Gump's methodology, saying the law firm "deliberately mimicked the type of statistical analysis done by plaintiffs' lawyers in class-action [sic] cases," and that the law firm still did not find significant disparities in the hourly wages of men and women.

Wal-Mart claimed that it told managers to promote more women and minorities, tied bonuses to achieving diversity goals, and said it "received repeated recognition or its performance on diversity in recent years from groups representing women and minorities."

Plaintiff counsel Joseph Sellers said he found the memo on his desk eight months later. It came in envelope addressed to him with no return address. The cover page purportedly bears Akin Gump's letterhead; it is addressed to multiple people at Wal-Mart; and it is marked "Privileged and Confidential/ Attorney Client Privilege." Sellers allegedly did not read any more of the document, opting to give it to his firm's human resources director who locked it in her office, where it remains. Akin Gump notified Wal-Mart two days later that it had the document and that it was locked away.


Wal-Mart claims that it "tightly controlled distribution of and access to the Privileged Memorandum," that the five original copies were numbered on the cover. The memo was allegedly distributed only to "a very limited set of outside counsel, select in-house attorneys, and certain executive level Wal-Mart employees," who were told not to forward it, the retailer claims.

The company also insists that "sensitive documents associated with the [current case] that Wal-Mart considered to be privileged or confidential were maintained in a locked storage area within the Wal-Mart Legal Department accessible only to authorized personnel" and that electronic copies "were protected by the Legal Department's separate firewall."

"Wal-Mart maintains that it did not authorize the Memo's disclosure to the New York Times," according to court documents.

In the present motion, the plaintiff class argued that the "public disclosure of the memo's contents [in the New York Times] has resulted in the loss of any privileged status that the document previously had and" ask the court should allow them to "view and use the document."

Wal-Mart countered that the memo "was and remains protected by the attorney-client privilege and it may not be retained by plaintiffs' counsel."

U.S. Magistrate Jacqueline Corley agreed with Wal-Mart, finding Tuesday that "the disclosures to the New York Times and plaintiffs were unauthorized and involuntary and thus did not waive Wal-Mart's attorney-client privilege in the memo."

The judge compared the dispute to that of In re Dayco Corp. Derivative Sec. Litig., in which the plaintiffs moved to produce a defendant's diary after reading its contents in a newspaper. Neither the defendants nor their lawyers had authorized the disclosure to the newspaper.

"Absent any indication that [defendant] or Dayco officials voluntarily gave the diary to the [newspaper], publication of excerpts of same should not be considered as a waiver of privilege," Corley wrote. "The record supports the same finding here: Wal-Mart did not voluntarily disclose the memo to the New York Times or plaintiffs."

The court also rejected the plaintiffs' argument that Wal-Mart did not show that it took sufficient steps to maintain confidentiality.

"Wal-Mart has submitted evidence under penalty of perjury establishing its extensive efforts to maintain the memo's confidentiality," Breyer wrote. "Indeed, when Sellers found the Memo on his desk, he did not read past the top of the first page because the Memo was so distinctively marked as confidential and attorney-client privileged."

Corley also chided the plaintiffs for misplaced reliance on Federal Election Commission v. Christian Coal. That case said privilege is waived if an attorney or client communicates privileged information to a third party after the privilege is in existence, which is different from the present case, where the memo was disclosed by an unknown party, according to the ruling.

"Because Wal-Mart did not authorize these disclosures, the disclosures did not waive Wal-Mart's attorney-client privilege in the memo," Corley wrote.

Corley did not find significance in Wal-Mart's disclosure to the New York Times of Akin Gump's methodology, or that the firm did not find hourly wage disparities by gender waived privilege over the entire memo. He disagreed that allowing Wal-Mart to selectively disclose portions of the memo would be unfair.

"The court finds no unfairness to plaintiffs here," the ruling states. "Wal-Mart has not attempted to use any portion of the memo in this litigation. As long as the initial disclosures of privileged communications are and remain extrajudicial, there is no legal prejudice that warrants a broad court-imposed subject matter waiver."

The judge concluded that "neither the unauthorized disclosures of the memo to the New York Times and plaintiffs' attorneys, nor Wal-Mart's subsequent comments to the New York Times, waived Wal-Mart's privilege over the memo."

He ordered the plaintiffs to deliver their copy of the memo to Wal-Mart within 10 days.

Brad Seligman of Impact Fund in Berkeley, Calif., is the lead class counsel.

Wal-Mart's lead attorney is Jaime Dodge Byrnes of Gibson, Dunn & Crutcher in San Francisco.

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