Supreme Court Provides Win for Employers in Wal-Mart Discrimination Lawsuit

Today, the U.S. Supreme Court ruled in favor of Wal-Mart, the nation’s largest private employer, in a massive lawsuit that has been called the largest employment class action in U.S. history. The class of plaintiffs in Wal-Mart Stores v. Dukes included approximately 1.5 million former and current female Wal-Mart employees seeking injunctive, declaratory, and monetary relief that could have amounted to billions of dollars in back pay.

Although the case involved alleged sex discrimination, the Court wasn’t asked to decide whether the alleged discrimination occurred. Rather, the Court’s decision was limited to whether the suit could be handled as one massive class-action case. In what could be called a unanimous division, the justices all held that the case shouldn’t proceed as a class action; however, they were divided in their reasoning why.

When examining the federal rules of civil procedure, the majority opinion (written by Justice Antonin Scalia) analyzed the “commonality” rule (i.e., plaintiffs in a class-action lawsuit must show that “there are questions of law or fact common to the class”). The majority opinion concluded that since the plaintiffs didn’t provide convincing proof that Wal-Mart had a companywide discriminatory pay and promotion policy, there wasn’t a common question to justify the class certification. The Court noted that Wal-Mart forbids sex discrimination and imposes penalties for equal employment opportunity denials, and the only evidence of a “general policy of discrimination” that the plaintiffs provided was a sociology expert’s testimony, which the Court rejected.

Though four of the justices disagreed with that analysis, all nine justices agreed that the plaintiffs’ back-pay claims were improperly certified under Federal Rule of Civil Procedure 23(b)(2). The Court held that monetary relief claims may not be certified under that provision when the “monetary relief is not incidental to the injunctive or declaratory relief.” (The Court noted that such individualized monetary claims fall under Rule 23(b)(3).)

It’s important to remember that the plaintiffs’ discrimination claims against Wal-Mart won’t necessarily go away because of the Supreme Court’s decision today. They just can’t file their claims in such a gigantic class-action lawsuit.

This was an important case for employers because many analysts predicted that the Court’s decision could have a huge impact on class-action lawsuits (including employment discrimination actions) and that a decision in favor of the employees would open the door for more similar lawsuits against other employers. After the Court’s decision, this door may remain closed, and many analysts are predicting that since the Court tightened the rules regarding class-action lawsuits, there may not be as many enormous class-action suits.

We asked Burton Fishman, a Washington, D.C., attorney with Fortney & Scott, LLC, who contributes to Federal Employment Law Insider for his input. According to Fishman, “Clearly, plaintiffs’ counsel are going to have to devote more effort in articulating common, unifying facts and laws that bind the class together. They are also going to have to craft ‘cleaner’  classes — ones that don’t try to mask the monetary nature of the damages behind a façade of injunctive relief.”

He also noted: “Just as challenging is determining the degree to which plaintiffs can rely on statistical evidence of discrimination in the absence of a common, identifiable act, deed, or event that caused the discrimination.”

Keep up with the latest Supreme Court decisions and changes to federal employment laws and regulations with the Federal Employment Law Insider.