U.S. Supreme Court Shields Wal-Mart from Gender-Bias Class Action Lawsuit

In the most important job-bias case in a decade, Wal-Mart Stores Inc. v. Dukes, the U.S. Supreme Court has dismissed a class action lawsuit of 1.5 million female employees suing Wal-Mart Stores Inc. for gender-based employment discrimination. The lawsuit was first filed in 2001 and aimed to cover every woman who worked at any of the 3,400 Wal-Mart and Sam's Club stores nationwide since 1998. While this historic ruling does not absolve Wal-Mart of its sex-discrimination allegations, it has clearly made class-action discrimination claims much harder to pursue and has altered the power balance between employers and employees. Had the case proceeded and the workers won, Wal-Mart could have faced billions of dollars in back pay and punitive damages as the world's largest employer. However, the Court's ruling has largely eliminated the monetary threat facing big employers and is likely to significantly impact other gender class-action suits, such as the pending case against Costco Wholesale Corp. The decision is the latest in a series of corporate-friendly Supreme Court rulings under Chief Justice John G. Roberts, Jr. The conservative high court majority has been continuously guarding businesses from class actions, including in AT& T Mobility v. Concepcion, an April case regarding a California class action suit against AT&T Inc.

Although all justices agreed that the employees did not have the right to group damages, there was ultimately a 5-4 split based on whether the case should be allowed to continue as a class action. The conservative majority led by Justice Antonin Scalia claimed that the lawsuit brought by the diverse group of class members was too large and the claims too varied to be certified under the federal court rule - Rule 23. Justices Roberts, Anthony Kennedy, Clarence Thomas, and Samuel Alito joined Scalia in holding that a party who wants to certify a class must show that there are common questions of law or fact capable of class-wide resolution. Scalia wrote that the workers provided "no convincing proof of a companywide discriminatory pay and promotion policy." Employees can file a class action lawsuit only if there is "significant proof" of a "specific employment practice" that unlawfully discriminates.

Meanwhile, the dissenting justices-Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan-stressed that that there was substantial evidence of discrimination for the case to go to trial. Leading the dissent opinion, Ginsburg wrote that according to the lower court, promotions at Wal-Mart were made by a "tap on the shoulder" process, with vacancies not regularly posted and managers choosing whom to promote on the basis of their own subjective impressions. The employees presented statistics showing pay and promotion differences along gender lines at Wal-Mart. For example, while women held about 70% of hourly jobs, only 33% of management jobs were held by women. However, Scalia claimed that there were no facts under which the women of Wal-Mart could have been discriminated against in the first place because Wal-Mart had a written policy banning gender discrimination.

It is believed that the new strategy of the workers' legal team will be to regroup into smaller, more focused class action lawsuits targeting specific regions or stores, or to proceed with the filing of separate individual lawsuits.

As a result of this case, it may be increasingly difficult for plaintiffs to sue large corporations by way of class action lawsuits for business wide discrimination, where the corporations have written non-discrimination policies, and provide area managers with the exclusive authority to make hiring and compensation decisions.