Wal-Mart settles same-sex benefits suit for $7.5 million

December 21, 2016

REUTERS/Jessica RinaldiA Wal-Mart employee is seeking preliminary approval of a proposed $7.5 million settlement in a class-action lawsuit alleging the retail giant unlawfully discriminated against gay and lesbian workers by denying benefits to same-sex spouses.

Jacqueline Cote alleged in a 2015 complaint filed in the U.S. District Court for the District of Massachusetts that Wal-Mart Stores Inc. repeatedly refused to provide spousal health insurance for her wife before Jan. 1, 2014, when the nation’s largest private employer began offering benefits for same-sex spouses.

The suit had sought a court declaration that Wal-Mart violated Title VII of the federal Civil Rights Act of 1964, 42 U.S.C.A. § 2000e; the Equal Pay Act, 29 U.S.C.A. § 206(d); and the Massachusetts Fair Employment Practices Law, Mass. Gen. Laws Ann. ch. 151B, § 4.

The proposed settlement calls for Wal-Mart to pay for claims by current and former workers who were unable to obtain health insurance coverage for their same-sex spouses from the company from Jan. 1, 2011, to Dec. 31, 2013.

The parties already have identified more than 1,000 potential settlement class members, and it is expected that hundreds more could be added, according to Cote’s Dec. 2 motion for preliminary approval of the deal.

Under the terms of the settlement, Wal-Mart has agreed to “continue to treat same-sex and opposite-sex spouses equally in the provision of health insurance benefits.”

The agreement also says class counsel’s request for attorney fees will not exceed 25 percent of the $7.5 million settlement amount.

Additionally, Cote is slated to receive a $25,000 service payment for her role as the sole class representative, according to her motion.

In a joint statement the parties issued Dec. 2, Sally Welborn, Wal-Mart senior vice president of global benefits, said the company was happy to resolve the dispute.

“Respect for the individual, diversity and inclusion are among the core values that made Wal-Mart into the company that it is today,” Welborn said. “We will continue to not distinguish between same- and opposite-sex spouses when it comes to the benefits we offer under our health insurance plan.”

Cote also said she is pleased to settle the case.

“It’s a relief to bring this chapter of my life to a close,” she said.

Repeated denials

According to the suit, Cote has worked for Wal-Mart stores in Maine and Massachusetts since 1999. Diana Smithson, whom Cote married in 2004, used to work for the company but lost her health insurance when she resigned in 2008.

Following Smithson’s resignation, Cote repeatedly tried to enroll her wife in Wal-Mart’s insurance benefits program, but the company rejected her on each occasion prior to its 2014 policy change, the suit said.

After Smithson was diagnosed with ovarian cancer in August 2012, she had to undergo chemotherapy and other expensive treatments not covered by Wal-Mart’s benefits plan, according to the suit.

Cote also said Wal-Mart failed to immediately alter its benefits policy to include same-sex spouses after the U.S. Supreme Court’s ruling in United States v. Windsor, 133 S. Ct. 2675 (2013).

In Windsor the high court struck down Section 3 of the Defense of Marriage Act, Pub. L. No. 104-199, which prevented same-sex couples from receiving the same benefits as heterosexual couples.

Cote’s suit had sought compensatory, consequential and punitive damages.

In an answer to the complaint, Wal-Mart said Cote’s claims were barred because she failed to exhaust her administrative remedies before filing suit.

The company also said it acted lawfully and in good faith with respect to Cote and the members of the putative class of workers.

Cote v. Wal-Mart Stores Inc., No. 15-cv-12945, memo supporting settlement approval filed, 2016 WL 7209584 (D. Mass. Dec. 2, 2016).