This morning, the Supreme Court issued its opinion in the Wal-Mart v. Dukes class action lawsuit that alleged discrimination of female employees.
The Court held 9-0 that a class of over one and a half million plaintiffs (current and former female employees of Wal-Mart) was improperly certified. The Court was split 5-4, however, in how it reached this decision. The majority—comprised of Justices Scalia, Roberts, Alito, Thomas, and Kennedy—concluded the class lacked commonality under Federal Rule of Civil Procedure 23(a)(2).
By contrast, Justice Ginsburg, who dissented in part—and was joined by Justices Breyer, Sotomayor, and Kagan—agreed the class action should not have been certified, but she states she would have ruled on a narrower ground than the majority. Although she agrees with the majority that the class should not have been certified under Rule 23(b)(2) (a provision in the Rule that allows requests for injunctive or declaratory relief and does not allow claims for monetary relief where such relief, as in this case, is not incidental to the injunctive or declaratory relief sought), Ginsburg indicates the lower court’s finding of commonality was correct. Instead, she hints that “[a] putative class of this type may be certifiable under Rule 23(b)(3),” and she would remand the case to determine whether the class meets those requirements.
In the case, the plaintiffs alleged that the discretion exercised by their local supervisors over pay and promotion matters violates Title VII by discriminating against women.
The Majority Opinion
Writing for the majority, Justice Antonin Scalia held that, under Federal Rule of Civil Procedure 23, to certify a class, a plaintiff must do more than ask broad questions of the class to satisfy the requirements of the Rule. Instead, a court must perform a rigorous analysis (as stated time and again) and, sometimes, that analysis may require that the court explore the claims of the plaintiffs more than usual. (As the Court stated, “that ‘rigorous analysis’ will entail some overlap with the merits of the plaintiff ’s underlying claim. That cannot be helped.”)
In particular, the plaintiffs did not allege that Wal-Mart had any express corporate policy against the advancement of women; rather, they claimed their local managers’ discretion over pay and promotions was exercised disproportionately in favor of men, leading to an unlawful disparate impact on female employees. The plaintiffs claimed this discrimination was common to all Wal-Mart female employees. Their theory alleged that a strong and uniform “corporate culture” permits bias against women to infect, perhaps subconsciously, the discretionary decision-making of each one of Wal-Mart’s thousands of managers—thereby making every woman at the company the victim of one common discriminatory practice.
The Court stated “the mere claim by employees of the same company that they have suffered a Title VII injury, or even a disparate-impact Title VII injury, gives no cause to believe that all their claims can productively be litigated at once.” Rather, “[t]heir claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor.” Moreover, “[t]hat common contention . . . must be 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.”
Here, the Court noted the crux of a Title VII inquiry is “the reason for a particular employment decision,” and the plaintiffs wished to sue for millions of employment decisions at once. Without some glue holding together the alleged reasons for those decisions, the Court stated, it would be impossible to say that examination of all the class members’ claims would produce a common answer to the crucial discrimination question.
Scalia further dismissed the statistical and anecdotal evidence filed by the plaintiffs, stating “Wal-Mart’s ‘policy’ of allowing discretion by local supervisors over employment matters” was “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.” Scalia also relied on the fact that Wal-Mart has a written policy of non-discrimination.
Justice Ginsburg’s Concurrence and Dissent
Ginsburg took the opposite view. She agreed the class action should not have been certified under Rule 23(b)(2), but she indicates the lower court’s finding of commonality was correct. Moreover, she states a class might be certifiable under Rule 23(b)(3).
She argued Wal-Mart’s non-discrimination policy has a disparate impact: she noted that, at Wal-Mart, women fill approximately 70% of the hourly retail jobs, but only 33% of management positions. The reason, she argues, may be the subjective “tap on the shoulder process” that allows certain subjective standards, influenced by gender bias, to prevail when it comes to selecting employees deemed “management material.” She further wrote, “The practice of delegating to supervisors large discretion to make personnel decisions, uncontrolled by formal standards, has long been known to have the potential to produce disparate effects. Managers, like all humankind, may be prey to biases of which they are unaware. The risk of discrimination is heightened when those managers are predominantly of one sex, and are steeped in a corporate culture that perpetuates gender stereotypes.”
What Does This Mean For Employers?
The Court’s decision in the Wal-Mart v. Dukes class action lawsuit is good news for employers because it sets a new higher standard for defining a class, which will likely make it difficult in the future for other class action claims against large companies based on discrimination to be certified.