A key battle in the ongoing war over Wal-Mart is set to play out in San Francisco this afternoon, as three appeals court judges take up the retail behemoth’s plea to toss out a massive sex discrimination lawsuit.

The class action case, brought on behalf of more than 1.5 million women who worked in Wal-Mart stores since 1998, alleges that female employees were regularly passed over for promotions and were paid on average 5% to 15% less than their male counterparts.

Attorneys for the women blame the corporate culture at America’s largest employer for the alleged discrimination, while lawyers for Wal-Mart complain the firm is being unfairly singled out for special treatment.

“The company’s personnel practices were indefensible,” one of the attorneys pressing the discrimination case, Joseph Sellers, said yesterday. “While being extraordinarily attentive to its bottom line and cost containment has undoubtedly contributed to its financial success, it appears to have been unbelievably neglectful, in the past at least, of the welfare of its employees.”

In an interview, an attorney for Wal-Mart, Theodore Boutrous Jr., complained that the class action lawsuit takes a “radical approach” by consolidating the varying claims of women who worked at 3,400 retail stores across the country. “The plaintiffs want to come up with Wal-Mart-only rules,” Mr. Boutrous said as he prepared for today’s arguments. “We simply want the ordinary rules applied.”

In a historic decision in June 2004, Judge Martin Jenkins of San Francisco ruled that the suit could proceed as a class action. In doing so, he overruled the company’s arguments that the 1.5 million-person class was unmanageably large.

Federal anti-discrimination law “contains no special exception for large employers,” Judge Jenkins wrote in his 84-page decision. After noting that the struggles of the civil rights movement gave rise to the legal provisions, the judge observed, “Insulating our nation’s largest employers from allegations that they have engaged in a pattern and practice of gender or racial discrimination – simply because they are large – would seriously undermine those imperatives.”

Today’s arguments before the 9th Circuit come as Wal-Mart finds itself the target of an escalating campaign by unions, environmentalists, and anti-sprawl forces sharply critical of the fast-growing company’s practices. In several states, the company has also come under attack for having large numbers of employees on the government health insurance program for the poor, Medicaid.

For years, the Bentonville, Ark.- based firm sloughed off its critics, but recently Wal-Mart mounted a counteroffensive of sorts, inviting reporters to company headquarters and stepping up advertising that touts the benefits the discount stores deliver to their communities.

Mr. Sellers, a partner with the Washington firm Cohen, Milstein, Hausfeld & Toll, said the lawsuit, which was filed in 2001, was not intended as the first step in laying siege to Wal-Mart. “We did not bring the case as part of a broad campaign against Wal-Mart,” he said. “It was not viewed as an opening salvo.”

“A lot of things happened independently,” said the attorney who is expected to argue the case against Wal-Mart today, Brad Seligman. “My experience has been when you have employer acting badly in one way, it’s not surprising that they’re acting badly in other areas as well,” said Mr. Seligman, who is a founder of a Berkeley, Calif., group that backs lawsuits that could cause significant social change, the Impact Fund.

Mr. Boutrous’s involvement in the case may also be a signal that Wal-Mart recognizes it is facing a battle that goes far beyond the courtroom. As a partner in the Los Angeles-based Gibson, Dunn & Crutcher, Mr. Boutrous is best known for representing press organizations in high-profile cases, such as the Michael Jackson child molestation trial.

Most of today’s court session is expected to focus on the issue of “commonality,” a legal standard that requires that the plaintiffs in class action lawsuits invoke similar claims and legal issues. Wal-Mart contends that because managers at the store level made pay and promotion decisions, any legal claims should be resolved on a store-by-store basis. “Over 90% of stores have no disparity in pay,” Mr. Boutrous said.

Mr. Sellers dismissed that analysis, saying the division-by-division and company-wide numbers show apparent bias. “When you subdivide the workforce into smaller and smaller pieces, that’s a classic employer tactic. You mask the disparities,” he said. Wal-Mart concedes that some managers may have made erroneous or even unlawful decisions, but the company insists none of its policies encouraged such conduct.

The firm’s critics note that Wal-Mart is renowned, even admired, for its conformity and for keeping a close eye on every store. Every bag of potato chips that crosses a Wal-Mart register is recorded at the company’s headquarters within minutes. “This is not a company that is as much of an ostrich as it now claims to be,” Mr. Sellers said.

An amicus brief filed by civil rights groups described Wal-Mart’s assertion that the large class action is unmanageable as a “Goldilocks” defense. “Wal-Mart’s argument is that a class cannot be certified unless it is ‘just right,'” attorneys for the Lawyers’ Committee for Civil Rights, the NAACP Legal Defense Fund, and others, wrote. “Class actions were designed to address exactly this kind of claim.”

In other amicus briefs, business groups such as the U.S. Chamber of Commerce have weighed in to support Wal-Mart.

The appeal is to be heard by Judges Harry Pregerson, Andrew Kleinfeld, and Michael Hawkins. Judge Pregerson, who was appointed to the appeals court by President Carter, is one of the most liberal judges on what most legal authorities consider the most liberal federal appeals court in America. Judge Kleinfeld, an appointee of President George H.W. Bush, is among the circuit’s most conservative jurists.

The panel’s ruling could turn on the views of Judge Hawkins, who was appointed to the bench by President Clinton and formerly served as the U.S. Attorney for Arizona. Whichever side loses can ask a larger, 11-judge appeals court panel or the Supreme Court to take up the case, but there is no guarantee that any further review would be granted.

Some critics of Wal-Mart have pointed to a chain of warehouse stores, Costco Wholesale, as a more humane alternative. About one-sixth of Costco’s employees are unionized and the firm’s retail staff makes about $8 an hour more on average than Wal-Mart’s.

However, the good feeling toward Costco has not rendered the company immune to lawsuits. In fact, Mr. Seligman has a similar employment-related, sex discrimination suit pending against Costco. The case was filed in San Francisco federal court less than two months after Judge Jenkins ruled that the Wal-Mart class action could go forward.