On June 20th, the U.S. Supreme Court rejected the Ninth Circuit’s certification of a class in a class action lawsuit brought by current and former employees of Wal-mart against the corporation. (See Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011); Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571 (9th Cir. 2010).) The lawsuit attracted extensive media attention; with over a million employees, Wal-Mart is the largest private employer in the United States. A lot of money was at stake.
In short, the women bringing the suit alleged that they were victimized by Wal-Mart’s practice of letting local managers make subjective decisions about pay and promotions. More than 100 employees filed sworn declarations stating that they were paid less and given fewer opportunities for promotion than male colleagues.
The Supreme Court's opinion is noteworthy both for settling this high-stakes dispute, and because it sets new limits on class action suits, limits that may affect pending gender discrimination complaints against units of companies such as Cigna Corp. (CI), Goldman Sachs Group Inc. (GS), Bayer AG (BAYN), Toshiba Corp. (6502), Publicis Group SA, Deere & Co. (DE) and Costco Wholesale Corp. (COST). Federal Rule of Civil Procedure 23, which governs class certification, sets forth four requirements. These are (1) numerosity -- the class must be so numerous that joinder of all members is impracticable; (2) commonality -- questions of law or fact common to the class; (3) typicality -- claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) adequacy of representation -- the representative, or named, parties must fairly and adequately protect the interests of the class. (Fed. R. Civ. Proc. 23.)
In its opinion, the Supreme Court ("Court") wrote that in order to prove 23(a)(2) commonality, a plaintiff must show significant proof that an employer operated under a general policy of discrimination in order to "bridge the conceptual gap" between an individual’s discrimination claim and the existence of a class of persons who have suffered the same injury. This has the potential to raise the plaintiff’s burden of proof from (A) the plaintiff’s having to prove merely that the alleged injuries were similar to (B) the plaintiff's having to show that the alleged injuries stemmed from the same "general policy" of discrimination.
The Court found that plaintiffs failed to meet that heightened burden of proof. Wal-Mart’s official company policy forbids sex discrimination, and the superstore has penalties for denials of equal opportunity. The Court found that no statistical or anecdotal evidence suggested even an informal "general policy" of sex discrimination.
The Court further found that the Ninth Circuit improperly certified the class members’ claims for backpay. Under Rule 23(b)(2) monetary relief is only available when a single, indivisible remedy would provide relief to each class member. Accordingly, it is usually incidental to injunctive or declaratory relief. Where individuals’ claims would be more fairly and efficiently adjudicated one by one, class certification is denied. (Fed. R. Civ. Proc. 23.) Backpay is a typical remedy in “pattern or practice” discrimination claims, and because it is so situation-specific, backpay tends to be easier to determine on a person-by-person basis than for a large group of people. (Interestingly, this monetary relief rule reflects an application of the basic principles of postmodernism and non-essentialism in an economic context.)
Although the Court denied class certification, the aggrieved women’s lawyers state that they will move ahead with claims on behalf of the female workers, either as individuals or as part of smaller groups.