The Supreme Court Rules in Favor of Wal-Mart in Largest Nationwide Class Action in American History
On June 21, 2011, the United States Supreme court threw out the largest sex discrimination lawsuit in American history and gave a very clear message: bringing class action employment discrimination cases will be much more difficult in the future.
In Wal-Mart v. Dukes, et al., plaintiff lawyers sought to bring a nationwide class action against Wal-Mart, the nation’s largest private employer, on behalf of 1.5 million female employees. The class is larger than the active duty personnel in the Army, Navy, Air Force, Marines and Coast Guard combined. Lawyers for the women brought sought in federal court and introduced evidence showing that female employees held two-thirds of the lowest level hourly jobs at Wal-Mart but only one-third of management jobs, and women overall were paid on average $1.16 per hour less than men in the same jobs, though women had higher performance ratings and more seniority. A federal judge, after hearing preliminary testimony, certified the class to proceed to trial and Wal-Mart appealed to the Ninth Circuit Court of Appeals and ultimately the United States Supreme Court.
In a 5-4 decision, Scalia, writing for the majority*, stated that in order to be certified to sue as a single class at a single trial, the Wal-Mart women had to point to a discriminatory policy that affects all of them. In this case, they could not. Scalia wrote, “The crux of a Title VII inquiry is ‘the reason for a particular employment decision,’ and respondents wish to sue for millions of employment decisions at once. Without some glue holding together the alleged reasons for those decisions, it will be impossible to say that examination of all the class members’ claims will produce a common answer to the crucial discrimination question.”
The plaintiffs’ argued that Wal-Mart’s corporate policy which allows local supervisors discretion of employment matters, was the basis for their Title VII disparate-impact claim. It was undisputed that pay and promotion decisions at Wal-Mart are generally committed to local managers’ broad discretion, which is exercised “in a largely subjective manner.” The plaintiffs claimed that this discretion over pay and promotions was exercised disproportionately in favor of men, leading to an unlawful disparate impact on female employees. Further, plaintiffs claimed that because Wal-Mart is aware of this effect, its refusal to restrain its mangers’ authority amounts to disparate treatment.
It was significant to the court that the plaintiffs claimed that the discrimination to which they were subjected was common to all of Wal-Mart’s female employees. The court agreed that such a policy could create such a claim, but this did not mean that every employee in a company with that policy has a common claim. Commonality requires the plaintiff to demonstrate that the class members have suffered the same injury, not just suffered a violation of the same provision of law. Said Scalia, “In a company of Wal-Mart’s size and geographical scope, it is unlikely that all managers would exercise their discretion in a common way, without some common direction.” Here, the plaintiffs held a multitude of different jobs, at different levels of Wal-Mart’s hierarchy, for variable lengths of time, in 3,400 stores across 50 states, with male and female supervisors, subject to a variety of regional policies that all differed. In sum, the majority agreed with the statement that the members of the class “have little in common but their sex and this lawsuit.”
The majority also noted that Wal-Mart has a specific corporate policy against discrimination. Scalia stated, “Wal-Mart’s announced policy forbids sex discrimination, and the company has penalties for denials of equal opportunity.” The plaintiffs’ only evidence of a general discrimination policy was a sociologists’ analysis asserting that Wal-Mart’s corporate culture made it vulnerable to gender bias. The majority, however, found that this evidence did not constitute “significant proof” of a general policy of discrimination since the expert could not estimate what percent of Wal-Mart employment decisions might be determined by stereotypical thinking.
The dissent** agreed that the lower court used the wrong standard in certifying the nationwide class but they would have sent the case back to the lower courts for a second look at whether the class could be certified using a stricter standard.
While the Wal-Mart decision is being called the most significant employment discrimination decision in more than a decade, it is important to note that this decision applies only to federal lawsuits. Many state courts have laws that more generously permit such suits. In fact, the Supreme Court only one week before the Wal-Mart decision, issued a unanimous decision in Smith v. Bayer holding that state law can entertain class actions that are not permitted to proceed in federal court.
*The majority was composed of Scalia, Roberts, Kennedy, Thomas and Alito.
**
The minority was composed of Ginsburg, Breyer, Sotomayor and Kagan.
Amy Groves Lowe
Taylor, Porter, Brooks & Phillips L.L.P.
225.381.0213
amy.groves.lowe@taylorporter.com
