Employment Law

Supreme Court Raises Bar for Class Actions

(Creative Commons)

In a ruling that will make it more difficult for employees to mount massive class action lawsuits against employers, the U.S. Supreme Court has reversed class certification previously granted to 1.5 million female Wal-Mart employees alleging sex discrimination against the retail chain.

Overturning a 9th U.S. Circuit Court of Appeals opinion, the Court found that the class did not meet the requirements of Rule 23 of the Federal Rules of Civil Procedure — a prerequisite for Title VII class actions, as well as others such as those involving race or disability discrimination claims.

To sue as a group, the women needed to show, among other things, that their individual situations possessed common facts (Fed. R. Civ. P. 23(a)(2)). Because Title VII can be violated in many ways, the Court said, the workers could not show that commonality. “The crux of a Title VII inquiry is ‘the reason for a particular employment decision,’” the Court said. “Without some glue holding together the alleged reasons for those decisions, it will be impossible to say that examination of all the class members’ claims will produce a common answer to the crucial discrimination question.”

The employees also sought relief under the wrong rule, the Court found. They argued that Rule 23(b)(2) allowed them to seek back pay as a class. This provision, however, applies “only when a single, indivisible remedy would provide relief to each class member,” the Court said. Monetary claims belong under Rule 23(b)(3), which would allow Wal-Mart to evaluate (and challenge) each employee’s eligibility for back pay individually.

Justice Ruth Bader Ginsburg agreed that the requirements for relief had not been met, but dissented from the majority’s opinion on the first question. Justices Stephen G. Breyer, Sonia Sotomayor and Elena Kagan joined her dissent. The majority’s opinion “disqualifies the class at the starting gate,” she said. Rule 23(a)(2) requires that the class possess common questions of law or fact; it “does not require that all questions of law or fact raised in the litigation be common,” she said. (Wal-Mart Stores, Inc. v. Dukes et al., No. 10–277, 2011 WL 2437013 (U.S. June 20, 2011))