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Archive for July, 2011

WAL-MART PREVAILS IN U.S. SUPREME COURT DECISION DECERTIFYING DISCRIMINATION CLASS ACTION

Posted on: July 18th, 2011 by admin No Comments

A recent United States Supreme Court decision, WAL-MART STORES, INC. v. DUKES ET AL. dealt a significant blow to plaintiffs in a nationwide class action gender discrimination case by denying class action status to Wal-Mart employees.  Even though this Supreme Court decision has given Wal-Mart and other employers a leg up against future class actions alleging wide-spread discrimination, the decision does not prevent these particular (formally putative class member) plaintiffs from pursuing their own individual claims against Wal-Mart. 

 In his opinion, Justice Scalia, joined by the conservative wing of the Court – Justices Roberts, Kennedy, Thomas and Alito, focused on the issue of whether this was a proper class action consistent with the Federal Rules of Civil Procedure, rules 23(a) and (b)(2);

Federal Rule of Civil Procedure 23(a) (Rule 23(a)) sets out four requirements for certification of a class of plaintiffs:

  1. [T]he class is so numerous that joinder of all members is impracticable, 
  2. there are questions of law or fact common to the class, 
  3. the claims or defenses of the representative parties are typical of the claims or defenses of the class, and 
  4. the representative parties will fairly and adequately protect the interests of the class.

Once qualifying for the above threshold inquiry, the proposed class must then satisfy at least one of the three requirements listed in Rule 23(b).  Here, the plaintiffs relied on Rule 23(b)(2), which is applied when “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as whole.” 

The plaintiffs asserted that an award in the form of backpay constituted a proper form of monetary relief under the rule.  However, the Scalia opinion suggested that Rule 23(b)(2) excludes claims for individualized relief, such as back pay. 

The Ninth Circuit Court of Appeals had previously affirmed the California District Court’s decision to certify a plaintiff class consisting of “all women employed at any Wal-Mart domestic retail store at any time since December 26, 1998, who have been or may be subjected to Wal-Mart’s challenged pay and management track promotions policies and practices.”  The three key pieces of evidence relied on by the plaintiffs as proof of a common question of law or fact included: statistical evidence about pay and promotion disparities between men and women, anecdotal reports of discrimination from 120 of Wal-Mart’s female employees, and the testimony of a sociologist who conducted a “social framework analysis” of Wal-Mart’s company culture and concluded that it was susceptible to gender discrimination.  The majority concluded that the plaintiffs’ evidence of commonality was insufficient to raise common questions of law or fact.

In the majority’s view it appeared important to them to stop what they believed was a lowering of the standard of commonality of Rule 23(a), by barring possible class actions filed based on a limited common element.  Rather, the Court states that “[t]heir claims must depend upon a common contention – for example, the assertion of discriminatory bias on the part of the same supervisor.  That common contention…must be of such a nature that it is capable of classwide resolution.”  This decision is controversial and strikes a serious blow to collective actions of this nature making class action certification far more difficult in the discrimination context. 

Justice Scalia rebukes the two lower courts’ findings: “[plaintiffs] have not identified a common mode of exercising discretion that pervades the entire company…In a company of Wal-Mart’s size and geographical scope, it is quite unbelievable that all managers would exercise their discretion in a common way without some common direction.”  

In the decision’s vociferous dissent, Justice Ginsberg expresses her grave concern that this harsh decision could mean plaintiffs would be burdened with establishing proof that their individual claims are sufficiently similar to others to join in a class action under an unfair, higher standard prior to discovery.  Furthermore, critics have raised a serious concern that many discrimination claims of a similar nature are of insufficient value to proceed on their own given the expense of prosecuting such individual claims.     

What does this mean for the plaintiffs named in the case and the approximately 1.5 million other women alleging that they experienced sex discrimination during their employment at Wal-Mart?  Since the decision only addresses the issue of proper class certification, any of individual employees alleging discrimination in the putative class can still pursue an individual claim against the company. 

Many important questions remain unanswered.  Will the narrow scope of this decision as to class certification be expanded or stretched to cover other type collective claims?  Will the Wal-Mart plaintiffs file separate, individual, suits en mass against the company in each state or will many of those claims evaporate due to the high cost of litigation?  Time will tell if the impact of Wal-Mart’s victory in the Supreme Court is as significant as many pundits initially believe.  Stay Tuned!

Bennett & Belfort would like to thank our law school intern Reina Tschoe for her work on this Blog entry.