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June 21, 2011

Supreme Court Reverses Certification of Nationwide Class of Wal-Mart Employees

In Wal-Mart v. Dukes, No. 10-277 (June 20, 2011), the Supreme Court of the United States considered whether plaintiffs could proceed as representatives of a nationwide class of female current and former employees suing Wal-Mart for discrimination.  Reversing the decision of the Ninth Circuit Court of Appeals, the Supreme Court held that the “class” should not have been certified. 

In Dukes, three current or former Wal-Mart employees brought a lawsuit alleging that the company discriminated against them on the basis of their sex by denying them equal pay and promotions, in violation of Title VII.  The plaintiffs claimed that the discrimination that they suffered is common to all Wal-Mart female employees, with Wal-Mart’s “corporate culture” permitting bias against women to infect, even subconsciously, the discretionary decisionmaking of Wal-Mart’s many thousands of managers.  The plaintiffs sought to litigate their claims on behalf of all Wal-Mart female employees as part of a nationwide class action of more than 1.5 million potential class members.  
  
Under the Federal Rules of Civil Procedure, a plaintiff who wishes to litigate on a class basis must show that “there are questions of law or fact common to the class.”  F.R.C.P. 23(a)(2).  Put simply, a plaintiff must demonstrate that the putative class members have suffered the same injury.  The Supreme Court noted that claims must depend upon a common contention such as, for example, discrimination on the part of the same supervisor. 

The Court identified two ways in which a plaintiff may be able to demonstrate a common injury.  First, the use of a biased testing procedure for employees and applicants may satisfy the “commonality and typicality” requirements of the federal rules.  Second, proof of a general policy of discrimination could justify a class of applicants and employees if the discrimination manifested itself in hiring and promotion practices. 

The Court found that the plaintiffs had not established either manner of demonstrating a common injury.  First, it was undisputed that Wal-Mart did not have a testing procedure or evaluation method that could be charged with bias.  Second, the Court found that there did not exist “significant proof” that Wal-Mart operated under a general policy of discrimination.  To the contrary, the only corporate policy that was established was Wal-Mart’s “policy” of allowing discretion by local supervisors over employment matters.  The Court found that investing local management with discretion to make employment decisions did not raise an inference of discriminatory conduct and such discretion was not the type of policy that could be challenged on a class-wide basis.  As the Court stated, “when the claim is that a company operates under a general policy of discrimination, a few anecdotes selected from literally millions of employment decisions prove nothing at all.”  In sum, the Court found that there was not any “glue” that could hold all of the alleged discriminatory decisions together, such that a class action would have been the proper method for adjudicating the claims. 

The Court also ruled that the plaintiffs’ claims for backpay were improperly certified under Federal Rule of Civil Procedure 23(b)(2), indicating that Wal-Mart is entitled to individualized determinations of each employee’s eligibility for backpay. 

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The Supreme Court’s decision in Dukes will make it more difficult for class action lawsuits to proceed in discrimination actions, especially against larger companies that may have varied and decentralized job practices.  The Supreme Court has now made it clear that only workers who have a truly common claim may proceed as a class.  We are available to discuss the Dukes decision.  If you should have any questions regarding this case, please contact us.