Wal-Mart, what happens now? Smaller class actions could follow
The Supreme Court issued its opinion last Monday in Wal-Mart Stores, Inc. v. Dukes. As expected, it was a resounding victory for employers. The issue presented to the Court was whether to affirm the Ninth Circuit’s decision to affirm the class certification of over 1.5 million women employed in approximately 3400 Wal-Mart stores across the country. Within each store, the class worked in over 150 job classifications and over 50 different departments. Justice Scalia, writing for the majority, said that the women who brought the case alleging bias in pay and promotions, failed to point to company wide policies that had a common effect on all women covered by the class action. The commonality was not based on clearly discriminatory rules or policies, but rather based on the companies policies on compensation and promotions which were allegedly similar in all stores and afforded the managers a great deal of subjectivity which provided an opportunity for gender bias that affects all class members in a similar fashion and that Wal-Mart’s culture evidenced and allowed gender bias.
The Court unanimously found that holding claims for back pay cannot be certified under FRCP Rule 23 (b) (2) and was sharply divided on the issue of whether the plaintiffs had satisfied the requirement of Rule 23 (a)(2).
The Court did not find that the class certification was consistent with Rule 23 (a ) (2) which states that a party seeking class certification to prove that the class has common “questions of law or fact.” The claims must depend on a common assertions that are capable of a class wide resolution, which means that the determination of the truth or falsity will resolve an issue that is central to the validity each one of the claims in one stroke. In this case, the commonality necessarily overlaps with the plaintiff’s contention that Wal-Mart engages in a pattern or practice of discrimination. The Court found that it would be impossible to say that the examination of the class members’ claims will produce a common answer to the critical discrimination question. The only corporate policy that convincingly established Wal-Mart’s policy of giving local supervisors discretion over employment matters. While such a policy might be the basis of a disparate impact claim under Title VII, just because a claim “can exist” does not mean that every employee in the company who has such a policy has a common claim. In a company the size of Wal-Mart, it is unlikely that all managers would exercise their discretion in a common way without some common direction. The statistical and anecdotal evidence submitted by the claimants fell short.
In addition to the finding that the claims for back pay cannot be certified, the Court stated that a defendant is “entitled to individualized determinations of each employee’s eligibility for back pay.” Once a plaintiff establishes a pattern or practice of discrimination, there must be additional proceedings to determine the scope of relief.
In short, this decision was not a huge surprise. The size of the class and the complexity of the Wal-Mart operation simply made the putative class too unwieldy and too large to meet the commonality requirements for certification. A majority of the Court simply didn’t believe that the class members could possibly be injured in the same way given how many decision makers were involved. Secondly, the majority of the Court didn’t seem to believe that causation can be proven by statistical analysis, something not just relevant in the arena of employment discrimination.
Employers should not sit back and rest easy with this decision. Just because the enormous class action was not certified, doesn’t mean that smaller class actions will similarly fail. Claimant’s counsel plan to file smaller actions. Many groups are upset and concerned about the consequences of steeper hurdles for female employees to challenge and correct pay and other forms of discrimination. There will be numerous theories presented in the coming days and weeks which will speak to the decision. The plaintiff’s bar will likely start cooperating with the EEOC, where there is no class certification requirement. Stay tuned.
About the Author
Ann Mizner McKay is the General Counsel and Senior Vice President at WGA. She manages the legal affairs of the company and also manages the Claims Department.