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Huge Wal-Mart sex discrimination case fails

June 20, 2011

The US Supreme Court has rejected a gender discrimination class action filed on behalf of as many as 1.5 million female Wal-Mart employees.  The Supreme Court’s opinion in Wal-Mart Stores v. Dukes can be found here.  The Court held that there were insufficient common questions of law or fact — in the Court’s term the “glue holding together the alleged reasons for the decisions” about female employees’ hiring, firing, and promotion that were challenged in the case — to permit the case to proceed as a class action.

The case involved a large class of female employees who asserted claims against Wal-Mart for gender discrimination.  The trial court certified the class, holding that class treatment was proper.  The Ninth Circuit affirmed.  The Supreme Court, however, disagreed, and held that class treatment was not appropriate.

The Court’s reasoning was as follows:

[I]n resolving an individual’s Title VII claim, the crux of the inquiry is “the reason for a particular employment decision.”  Here respondents wish to sue about literally millions of employment decisions at once. Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question why was I disfavored. . . .

The Court held that plaintiffs could show that common link in one of two ways:  (1) by showing each plaintiff was evaluated through the same, biased, test procedure; or (2) by showing that the employer “operated under a general policy of discrimination.”  But the Court also held that plaintiffs proved neither.  As to the second prong, the Court stated:

The second manner of bridging the gap requires “significant proof” that Wal-Mart “operated under a general policy of discrimination.” That is entirely absent here. Wal-Mart’s announced policy forbids sex discrimination, and . . . the company imposes penalties for denials of equal employment opportunity. . . .

The Court also rejected plaintiffs’ expert testimony to the effect that “Wal-Mart has a ‘strong corporate culture,’ that makes it ‘vulnerable’ to ‘gender bias.’”  (Indeed, the Court indicated that testimony may not have been suitably based in science to be admissible at all.)

As to the first prong, the Court held there was no evidence of biased evaluation:

The only corporate policy that the plaintiffs’ evidence convincingly establishes is Wal-Mart’s “policy” of allowing discretion by local supervisors over employment matters.  On its face, of course, that is just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policy against having uniform employment practices.

The Court concluded

In sum, . . . the members of the class held a multitude of different jobs, at different levels of Wal-Mart’s hierarchy, for variable lengths of time, in 3,400 stores, sprinkled across 50 states, with a kaleidoscope of supervisors (male and female), subject to a variety of regional policies that all differed.  Some thrived while others did poorly. They have little in common but their sex and this lawsuit.  [Internal quotes omitted.]

Thus, the Court held, plaintiffs had not, and could not, proceed as a class.

The decision was unanimous — in the sense that each Justice agreed that the plaintiffs had not shown what they needed to show to prove that class treatment was proper.  However, four Justices (Ginsburg, Sotomayor, Kagan — notably all three female Justices — and Breyer) dissented from the conclusion that plaintiffs never could show commonality.  Those four would have returned the case to the trial court and let plaintiffs try again.

This is the second significant blow the Court has dealt this term to class actions.  Whether two cases constitutes a trend towards permitting fewer class actions in the federal courts remains to be seen.

Employers — particularly employers smaller than Wal-Mart —  should note that the Dukes case does not prohibit individual discrimination suits from going forward.  Employers should continue to be proactive battling discrimination in the workforce, to protect against legal exposure, but more importantly to promote employee productivity, morale, and loyalty — each of which suffers significantly in a discriminatory environment.

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