Lawyers in $11 billion Wal-Mart case counting on embezzler's testimony

Steve Korris Mar. 13, 2009, 5:57am



SAN FRANCISCO – Retailer Wal-Mart stands strong while other businesses fall, but class action lawyers aim to knock it down with an $11 billion lawsuit.

Their star witness, former Wal-Mart executive vice president Thomas Coughlin, earned their respect by embezzling $411,218 from his employers.

Coughlin spent 27 months in home confinement and remains on probation.

Lawyers at the nonprofit Impact Fund in Berkeley and associates around the nation count on Coughlin to swear that Wal-Mart discriminated against female workers.

Their suit in federal court at San Francisco seeks back pay and punitive damages for at least a million women who have worked for Wal-Mart since 1998.

The suit also seeks court oversight of future hiring and promotion.

U.S. District Judge Martin Jenkins of San Francisco certified a class action in 2004, and the Ninth Circuit appeals court in San Francisco affirmed him in 2007.

Jenkins left the federal bench last year, however, and last month Ninth Circuit judges erased the order that affirmed his decision.

On Feb. 13 the Ninth Circuit granted "en banc" rehearing, meaning that all judges would hear the appeal instead of the customary panel of three.

The Impact Fund's Web site stated on March 10 that the judges would hear it on March 24, but the Ninth Circuit website stated on March 11 that it was not calendared.

Impact Fund lawyers solicit contributions on their Web site.

They sued Wal-Mart in 2001 for Betty Dukes, claiming racial discrimination.

They turned it into a gender discrimination claim 11 days later, with more plaintiffs.

They proposed a class action, arguing that corporate policies and practices harmed every woman at every Wal-Mart.

In 2003 the lawyers deposed Coughlin, who worked 35 years for Wal-Mart and held a seat on its board of directors.

They regarded him as an adversary, unaware that he constantly stole from Wal-Mart.

In 2004 Jenkins certified the class, excluding women with no interest in promotion.

The Ninth Circuit granted Wal-Mart an appeal.

Wal-Mart asked Jenkins to stay discovery pending appeal, and Jenkins granted a stay.

In 2005 Coughlin resigned from Wal-Mart.

In 2006 he pleaded guilty in federal court at Fort Smith, Ark., to charges that he stole from Wal-Mart and dodged income taxes on the proceeds.

Coughlin told prosecutors he paid cash for information about union activities.

He told them he couldn't request reimbursement so he created fake invoices.

He paid $411,218 in restitution.

He agreed that he faced three to five years in prison, but U.S. District Judge Robert Dawson stunned prosecutors by sentencing him to home confinement.

Dawson ruled that in view of Coughlin's poor health, prison would kill him.

Prosecutors appealed, to no avail.

Back in San Francisco, on Feb. 6, 2007, Ninth Circuit judges Harry Pregerson and Michael Hawkins affirmed Jenkins in certifying a class action.

Judge Andrew Kleinfeld dissented.

Wal-Mart moved for en banc rehearing, preserving the stay in district court.

Impact Fund lawyers rushed to Jenkins anyway, asking to modify the stay so they could depose Coughlin before he died.

Jenkins held a hearing a week after the Ninth Circuit affirmed him, and granted the motion two weeks later.

"Should Mr. Coughlin pass away, any testimony relating to his two year tenure as executive vice president of Wal-Mart will be lost," he wrote.

"Thus, the Court finds that the allowance of a second deposition is proper," he wrote.

He wrote that Wal-Mart didn't identify any other person who was a director and an active employee.

Jenkins followed plaintiff lawyers on a line of logic concluding that a manager who steals from Wal-Mart achieves greater credibility than other managers.

"Plaintiffs further argue that Mr. Coughlin's current status as a former employee of Wal-Mart may afford him an opportunity to testify with greater candor than current management employees whom Wal-Mart may offer instead," Jenkins wrote.

At the Ninth District, Wal-Mart's bid for en banc rehearing took a strange turn when the same panel of three judges affirmed Jenkins again for different reasons.

Last January, Wal-Mart again asked for "en banc" rehearing.

Last February, California Gov. Arnold Schwarzenegger appointed Jenkins to a state appellate court.

At federal court, Chief Judge Vaughn Walker assigned himself to the class action.

Wal-Mart lawyer Jaime Byrnes of San Francisco sent Walker a status report in July, advising him that both sides awaited Ninth Circuit action.

Ninth Circuit Chief Judge Alex Kozinski delivered action on Feb. 13, after a majority of active judges voted in favor of en banc rehearing.

"The three-judge panel opinion shall not be cited as precedent by or to any court of the Ninth Circuit," Kozinski wrote.

Kozinski, born in Romania in 1950, has served 24 years at the Ninth Circuit.

He clerked for former Chief Justice Warren Burger of the U.S. Supreme Court.

President Ronald Reagan nominated him for the Ninth Circuit in 1985.

Reagan also nominated Diarnu O'Scannlain, one of 14 judges under Kozinski.

Among the other 13, President Bill Clinton nominated eight.

Clinton nominated Hawkins, who affirmed Jenkins in 2007.

President Jimmy Carter nominated three including Pregerson, who affirmed Jenkins.

President George H. W. Bush nominated two including Kleinfeld, who dissented.

Judge Margaret McKeown, a Clinton nominee, did not participate in the decision to grant en banc rehearing and likely won't join the deliberations.

Neither court records nor a Google search suggests that Coughlin has died.

Online encyclopedia Wikipedia estimates membership in the Dukes class at 1.6 million and values their claims at $11 billion.

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