Northern Exposure

Wal-Mart Employee Class Action in USA – Lessons for Canadian Employers?

By Donna Gallant

When the Ninth Circuit Court of Appeals (San Francisco) affirmed an order certifying the largest employment discrimination class action ever in the United States, Wal-Mart was left facing a class of up to 1.5 million members. Employers were left wondering just how big and powerful these opponents might get.

On December 6, 2010, the U.S. Supreme Court agreed to a review. U.S. employers are hoping the Supreme Court’s decision will put more restrictions on employment class actions. Canadian employers will want to stay tuned. Class actions south of the border can inspire similar litigation in Canada.

About Dukes v. Wal-Mart
The claim in this case is that Wal-Mart discriminates against female employees with respect to promotions and pay in violation of Title VII of the Civil Rights Act of 1964. They contend that companywide policies and procedures foster gender stereotyping and discrimination. This makes discrimination common to all the women who have worked in any of Wal-Mart’s 3,400 stores across the United States over the past decade, say the claimants.

At this stage, the case is about whether the claim can proceed as a class action, not the merits of the discrimination allegations. As in Canada, the representative claimants must show that there are common issues — issues of fact or law that are shared by all class members.

What is troubling to U.S. employers, aside from the sheer size of the class involved, is the seemingly low threshold of evidence that was necessary to establish a common issue:

  • To prove gender discrimination, the workers filing suit submitted 120 anecdotes, describing events that occurred sometime in the past decade at only 235 out of 3,400 stores:
  • They also relied on a statistical study based on a regional analysis (not a store-level analysis) comparing the percentage of women promoted into management positions with the percentage of women in the available pool of hourly workers.
  • There also was a comparison of the earnings of women and men in each region.

Wal-Mart objected, stating that a regional analysis couldn’t possibly demonstrate a general policy of discrimination throughout 3,400 individual stores. For example, the company pointed out that more than 90 percent of its stores showed no statistical difference in the hourly pay rates between men and women associates.

Comparison with Canadian class actions

This blog has recently looked at the three most significant overtime class actions in Canada (Overtime class-action news). Of them, the largest proposed class is estimated to include 31,000 members (Fresco v. Canadian Imperial Bank of Commerce). This is a fraction of the size of the Wal-Mart group. So far, Fresco has lost her bid for certification. The courts have found that the instances of overtime relied on by Fresco occur on an individual basis and that there was no evidence of systemic wrongdoing.

Wal-Mart’s position is similar regarding promotions and pay rates in the United States. It wants to look at individual employee claims. Title VII itself provides that if a defendant-employer can prove that an adverse employment action against an individual employee was for any reason other than discrimination on account of race, color, religion, sex, etc., a court shall not order the payment of back pay to the employee.

The Ninth Circuit alluded to a trial plan where (assuming companywide policies or practices were found to be discriminatory) Wal-Mart would be permitted to defend only a sample group of claims. Following that, the company’s success rate would be applied to the class as a whole. According to Wal-Mart and others, this would deprive the company of a substantive right granted under Title VII to defend itself against each alleged incident of discrimination.

Those who support the class action argue that the class size simply reflects Wal-Mart’s unique size and centralized management structure. They argue that Wal-Mart’s defense is, in essence, that it is too big to be held accountable. For others, the myriad of jobs, work locations, store managers, and periods of employment involved mean class members have little in common, other than their gender. They say that certification of such a gargantuan class will deprive Wal-Mart of the right to properly defend itself.

Such uncertainty may be less likely to arise in Canada. Here, criteria for when a class action is appropriate are generally well-defined in statutes. One common criterion is that the class-action process must be an efficient and effective way to resolve the dispute.

How will the U.S. Supreme Court view things? We’ll keep you posted.

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