Supreme Court Rejects Giant Wal-Mart Class Action Discrimination Suit (7/11)

The Supreme Court recently struck down class certification for approximately 1.5 million women who claimed that Wal-Mart’s personnel policy allowing individual supervisors to use their discretion to make pay and promotion decisions amounted to discrimination based on sex.   The plaintiffs alleged in Wal-Mart Stores v. Dukes, No. 10-277 (June 20, 2011), that the decisions had a disparate impact on women who tended to receive lesser bonuses and fewer promotions than men.  The class included all former and current female employees of the giant retailer Wal-Mart since December 26, 1998, working at some 3,400 stores across the United States.  The Court, however, did not address whether the class of women actually had experienced discrimination.  Rather, it focused on the narrower question of whether the 1.5 million women could be certified as a class and thus sue Wal-Mart in a single case rather than each woman pursuing her claims separately.        The Court first pointed out that a class action suit “is the exception to the usual rule that litigation is conducted on behalf of the individual named parties only” and looked at what it takes to meet the criteria for class certification.  The Court noted that “claims must depend upon a common contention of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.”   It is not sufficient that all of the class members suffered a similar injury under Title VII. The Court further pointed out that the class members wanted “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 (emphasis in decision).”        The only evidence of a general policy of discrimination presented was testimony by a sociologist who asserted that Wal-Mart has a “strong corporate culture” that makes it “vulnerable” to “gender bias.”  The Court rejected the testimony because the expert could not demonstrate statistically how many of Wal-Mart’s employment decisions might be determined by stereotyped thinking.  The Court pointed out that the expert could not calculate whether the number was 0.5% or 95% of employment decisions.  Further, the fact that supervisors used discretion to make decisions also cut against a finding of commonality.  The evidence did not show that the supervisors exercised their discretion in a common way “that pervades the entire company.”  In fact, Wal-Mart has specific policies prohibiting sex discrimination and penalizing denials of equal opportunity.  Accordingly, the Court refused to certify the class.      This case is good news for employers on two fronts.  First, it makes class action discrimination claims more difficult to file.  Discrimination claims typically involve specific facts that support a discrimination charge, such as particular actions by an individual supervisor or comments by coworkers, and this Court found it “unbelievable” that Wal-Mart’s hundreds of supervisors were “exercising their discretion in a common way” to discriminate against 1.5 million women when there was no evidence of some overriding Wal-Mart policy influencing their actions.  The Court did note, however, that a class action might be sustainable if there was evidence of a biased testing procedure or that an organization operates under a general policy of discrimination.        The decision also shows how a policy providing supervisors with decision-making discretion can help protect against lawsuits, as long as it is supported by enforced antidiscrimination policies.  The fact that the supervisors used their discretion and thus acted individually protected Wal-Mart from a class action suit since Wal-Mart also had policies explicitly prohibiting discrimination.  And, while the plaintiffs in this case likely still can file individual claims of discrimination against Wal-Mart, their supervisors’ discretionary decision-making may provide further protection as long as the supervisors can show their nondiscriminatory, business-related, job-related reasons for their promotion and pay decisions.