In Wal-Mart v. Dukes, the Supreme Court prevented more than a million women from banding together to pursue their case against the discriminatory pay and promotion practices of Wal-Mart management.

The 5-4 majority rewrote the federal rule governing class actions by setting a higher threshold for plaintiffs to show the “commonality” of their claims. The majority also created new hurdles for disparate impact cases, where subjective personnel decisions have led to widespread gender or racial disparities in the workforce, by holding that “proving a … disparity is not enough,” and rejecting plaintiffs’ overwhelming statistical evidence of widespread discrimination.

The majority also elevated the company’s written non-discrimination policy to exalted status – despite a complete lack of evidence that it was followed – and assumed that “most managers in any corporation … would select sex-neutral, performance-based criteria for hiring and promotion.” The 120 affidavits from women being called “Janie Qs’” at executive meetings, being paid less than a just-hired 17-year-old boy because “you aren’t male, so you can’t expect to be paid the same,” or told to “doll up” and “blow the cobwebs off” make-up were dismissed as “prov[ing] nothing at all.”

The consequences for employment discrimination class actions, as well as class actions more generally, are potentially far-reaching.

What’s at stake? 
Fighting sex discrimination in the workplace.

Whether a class consisting of a million or more women employed by a single employer nationwide can be certified in a class action alleging systematic gender-based pay and promotion discrimination in violation of Title VII of the Civil Rights Act of 1964.

Argument date:
March 29, 2011

On March 29, the Supreme Court heard oral arguments in the landmark sex-discrimination lawsuit. Outside the Supreme Court building, activists gathered to show their support for the women who have been harmed by the retail giant’s discriminatory practices.

Decision date:
June 20, 2011

9-0 in parts I and III, in favor of Wal-Mart, with 4 justices dissenting from part II of the opinion.  Justice Scalia delivered the opinion, joined by Chief Justice Roberts and Justices Kennedy, Thomas, and Alito.  Justice Ginsburg concurred in part and dissented in part, joined by Justices Breyer, Sotomayor, and Kagan.

What the Court held:
Wal-Mart is the world’s largest retailer and largest private employer in the United States, with more than 1.4 million employees, about 860,000 of whom are women.  By dismissing the class action filed by Betty Dukes and others, the Corporate Court majority of five justices – Chief Justice Roberts, and Justices Scalia, Kennedy, Thomas, and Alito – not only prevented the women of Wal-Mart from banding together to pursue their case against the discriminatory practices of Wal-Mart management, but they dealt a bigger blow against the fight for equal pay and promotion by women as a whole.

When Congress passed Title VII as part of the Civil Rights Act of 1964 to prohibit discrimination in employment, women working full time were paid approximately 59 percent of what men were paid, on average.  Today, nearly 37 years later, women are paid only 77 percent of what men are paid.  Over an average lifetime of work, this difference will result in a loss of $700,000 for a female high school graduate, $1.2 million for a college graduate and $2 million for a professional school graduate.  Working women and their children also experience higher rates of poverty than men, and have a greater need for public assistance to obtain health care, including those working at Wal-Mart.

The case against Wal-Mart echoes this larger struggle.  As recounted by Justice Ginsburg in dissent, “[t]he plaintiffs’ evidence, including class members’ tales of their own experiences, suggests that gender bias suffused Wal-Mart’s company culture.”  She added: “Women fill 70 percent of the hourly jobs in the retailer’s stores, but make up only ‘33 percent of management employees.’  ‘The higher one looks in the organization, the lower the percentage of women.’ … [W]omen working in the company’s stores ‘are paid less than men in every region’ and … ‘the salary gap widens over time even for men and women hired into the same jobs at the same time.” Our special report details this evidence and more.

Where the three female Supreme Court justices, joined by Justice Breyer, could readily see how pervasive gender bias infused the subjective pay and promotion system created by Wal-Mart management, the all-male majority of justices suggested it does not exist.  In the face of 120 real-world affidavits of women being called “Janie Q’s” and “girls” at executive meetings, being paid less than a just-hired 17-year-old boy because “You aren’t male, so you can’t expect to be paid the same,” and told to “doll-up” and “blow the cob-webs off” her make-up, the pro-corporate majority instead elevated the company’s written non-discrimination policy to saintly status – despite a complete lack of evidence that it was followed – and assumed that “most managers in any corporation … would select sex-neutral, performance-based criteria for hiring and promotion.”  Would Justice O’Connor, whom Justice Alito replaced, and who faced real-world gender discrimination after graduating from Stanford Law School, have made similar assumptions?

Beyond the setbacks this case creates for the hundreds of thousands of women working at Wal-Mart, a large percentage of whom are women of color, the majority’s decision has the potential to devastate the ability of other victims of widespread discrimination to pursue current cases or to bring new ones in the future.  It does so in several ways.

First, the majority rewrites Rule 23 by setting a higher “commonality” threshold for all class-action plaintiffs, not just those proceeding under Rule 23(b)(3), who have to prove that common issues “predominate.”  This will likely bar class plaintiffs seeking injunctive relief under Rule 23(b)(2) that heretofore only needed to meet an “easily satisfied” bar of commonality.  As an example of those who might now be denied a remedy, the dissent cites an earlier case involving African American truck drivers who sought and obtained injunctive relief under Rule 23(b)(2) to force non-discriminatory hiring practices despite differences in “qualification[s] and performance” among members of the class.

Second, although the Court had previously recognized that the “practice of delegating to supervisors large discretion to make personnel decisions, uncontrolled by formal standards, has long been known to have the potential to produce disparate effects,” the majority’s new view is that “proving that [a] discretionary system has produced a … disparity is not enough.”  The majority also rejects plaintiffs’ attempts to establish discrimination through statistical evidence that the disparities in pay and promotion across all of Wal-Mart’s 41 regions “can only be explained by gender discrimination.” Thus, the Court’s ruling could devastate disparate-impact cases where subjective decisions have led over time to widespread gender or racial disparities in the workforce.  It also undermines the incentive for employers to set up objective pay and promotion practices, based on published criteria and clear merit-based evaluations of applicants to posted jobs.  These are very effective at reducing the kind of discrimination that occurred at Wal-Mart, where job postings are non-existent and women have to wait for the “tap on the shoulder” from mostly male managers (that mostly never comes) to be invited to join the management training program and become a salaried employee.

Third, the majority creates other new hurdles by holding that “demonstrating the invalidity of one manager’s use of discretion will do nothing to demonstrate the invalidity of another’s,” and “it is quite unbelievable that all managers would exercise their discretion in a common way without some common direction.”  This suggests that classes of women or minorities suffering the effects of gender or racial discrimination may be unable to proceed absent proof that conscious, intentional discrimination from on high directs the employment decisions made below.  If this proves true, it would have far-reaching insulating effects on subjective employment systems, like Wal-Mart’s, that yield discriminatory effects.

In the end, the majority kept repeating its mantra that plaintiffs identified no “specific employment practice” that tied together the Wal-Mart women’s claims together.  In fact, they had.  It’s called “gender discrimination.”  Somehow, the five conservative justices just couldn’t see it.

Already, Wal-Mart is having real-world impacts.  For example, the Ninth Circuit Court of Appeals placed a gender discrimination claim against Costco on hold pending the Wal-Mart decision.  As in Wal-Mart, the plaintiffs claim that Costco’s mostly male management selects candidates for promotions using a “tap on the shoulder” system in which subjective decision-making results in discriminatory outcomes.  Plaintiffs will now face a far greater hurdle despite statistical evidence that Costco’s promotion of women to Assistant Manager occurs at half the rate that would be expected based on the applicant pool.

In another example, the plaintiffs in a discrimination case against Best Buy agreed to an early settlement, fearing a pro-corporate ruling in Wal-Mart.  The suit alleged that Best Buy denied desirable job assignments, promotions, and transfers to African American, Latino and female employees.  Although the settlement required the company to abide by a consent decree and pay $10 million in legal fees and costs, the nine named plaintiffs split an award of only $200,000.  Wal-Mart could also threaten the viability of pending gender discrimination class actions against Goldman Sachs, Toshiba, and Cigna, and make it more difficult to bring class actions against mortgage lenders accused of defrauding borrowers.  Wal-Mart has also emboldened tobacco companies to file for Supreme Court review of a settlement agreed to under a state class action, arguing that the Court’s interpretation of federal Rule 23 should have constitutional due process implications that would limit state suits.

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