U.S. Supreme Court

Supreme Court Rules Against Wal-Mart Employees Seeking Huge Class Action

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The U.S. Supreme Court has ruled against Wal-Mart employees who had sought to combine their claims against the retailer in a huge federal class action.

The plaintiffs contend Wal-Mart was biased against women because of the discretion given local supervisors in pay and promotions throughout its 3,400 stores. The class action could have included up to 1.5 million current and former employees.

The court held in a 5-4 opinion that the class action should not have been certified under a federal rule requiring common questions of law or fact in class actions. The court was unanimous, however, in finding that the class action should not have been certified under a different rule dealing with injunctive relief. Justice Antonin Scalia wrote the majority opinion (PDF).

Rule 23(a)(2) of the Federal Rules of Civil Procedure requires plaintiffs seeking class action status to show that there are “questions of law or fact common to the class.” That doesn’t mean that plaintiffs need only show that they have all suffered a violation of the same law, Scalia wrote in his opinion.

“Their claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor,” Scalia said. “That common contention, moreover, must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.”

In the Wal-Mart suit, there is no allegation of a general policy of discrimination, or a biased testing procedure. Instead, the plaintiffs are attacking Wal-Mart’s policy of allowing local discretion in pay and promotions—in other words, a policy against having uniform employment practices.

“Here respondents wish to sue about literally millions of employment decisions at once,” Scalia said. “Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question why was I disfavored.”

Scalia’s opinion also found that the plaintiffs’ claims for back pay could not be certified under Federal Rule of Civil Procedure 23(b)(2), a provision allowing injunctive or declaratory relief. The rule allows class actions when a single injunction or declaratory judgment would provide relief to each member of the class, and does not allow claims for individualized relief, he said.

Justice Ruth Bader Ginsburg dissented in an opinion joined by Justices Stephen G. Breyer, Elena Kagan and Sonia Sotomayor. Ginsburg agreed with Scalia’s analysis of Rule 23(b)(2), but disagreed on Rule 23(a)(2).

Ginsburg noted findings that women fill 70 percent of the hourly jobs in Wal-Mart’s stores but make up only 33 percent of management employees. “The District Court’s identification of a common question, whether Wal-Mart’s pay and promotions policies gave rise to unlawful discrimination, was hardly infirm,” Ginsburg wrote. “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 case is Wal-Mart Stores Inc. v. Dukes.

Prior coverage:

ABAJournal.com: “Tort Reform Advocate Makes Stock Bet on Wal-Mart Win in Supreme Court”

ABA Journal: “Corporate Giant Wal-Mart Faces a Huge Class Action by Female Workers”

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