U.S. Supreme Court reverses Wal-Mart, Inc. v. Dukes

June 20, 2011 by

On June 20, 2011, the U.S. Supreme Court in Wal-Mart, Inc. v. Dukes reversed a class certification order in a class action lawsuit against Wal-Mart filed on behalf of current and former female employees of Wal-Mart.  As reported earlier on this blog, the trial court had  certified a class representing approximately 1.5 million female employees at Wal-Mart stores throughout the country. The workers sued the nation’s largest private employer for sex discrimination in Wal-Mart’s pay, promotions, and other employment practices, alleging that employer policies delegating authority to make subjective and discretionary employment decisions allowed for widespread discrimination against women in violation of Title VII of the Civil Rights Act of 1964.  The complaint seeks injunctive relief and declaratory relief, punitive damages, and backpay. It did not seek compensatory damages.

A unanimous court held that this class should not have been certified under Rule 23(b)(2), because the plaintiffs sought monetary relief (backpay) that was not merely incidental to any injunctive relief that might  be available.   The 4-person minority would have remanded the question of whether a class should have been certified under Rule 23(b)(3), which requires the court to consider whether common questions predominate and that a notice be sent to class members allowing them to opt out.  Class members are not allowed to opt out of 23(b)(2) classes.

However, the conservative 5 person majority, in an opinion authored by Justice Scalia, held that the Dukes plaintiffs had not offered sufficient evidence to prove the preliminary question in Rule 23(a) to establish a common question of law and fact.  The minority, led by Justice Ginsburg, dissented from this notion and asserted that “the practice of delegating to supervisors large discretion to make personnel decisions, uncontrolled by formal standards” was enough to present a common question under Rule 23(a).

The majority stated that proof of commonality may overlap with the merits of the case, and found that plaintiffs had not provided “significant proof” that Wal-Mart “operated under a general policy of discrimination.”  Instead, the majority opined, plaintiff’s only proof on the issue was a social framework analysis of Wal-Mart’s culture and personnel practices done by a sociologist who said that discretion given to managers made Wal-Mart vulnerable to gender discrimination, but could not say whether .05% or 95% of the employment decisions might be based on stereotyped thinking.  Based on the majority’s assessment of the analysis, it was rejected.  As an aside, the court also noted that a Daubert analysis might apply to expert testimony at the certification stage of class action proceedings.

The majority also considered the statistical and anecdotal evidence submitted by plaintiffs, but said that evidence was not sufficient to show that plaintiff’s theory could be proved on a class wide basis.

The portion of the court’s unanimous opinion may make it difficult (if not impossible) to get claims for monetary relief certified as part of a 23(b)(2) injunctive class.  The majority emphasized that if the monetary claim was for “individualized relief,” those claims could not be certified under 23(b)(2).  Instead, they must be certified under Rule 23(b)(3).

The Court’s decision was not on the merits of the women’s discrimination claims. Each plaintiff and class member can still pursue her claim individually, but that will be a daunting task.

This opinion should not have much applicability outside of the disparate impact discrimination realm, but it is likely that counsel for big corporations will cite this case for the proposition that plaintiffs in any class action have not shown common questions of fact and law.

 

Steve Larson
An experienced trial lawyer who handles both hourly and contingent fee cases, Steve has expertise in class actions, consumer cases, antitrust litigation, securities litigation, corporate disputes, intellectual property disputes, unfair competition claims, employment matters, and disputes involving family wealth. Steve regularly represents individuals and businesses in federal and state court and has obtained class-wide recovery in multiple class actions. A veteran practitioner, Steve's clients value his creative approach to resolving complex litigation matters.

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