Monday, June 20, 2011

U.S. Supreme Court: Wal-Mart Class Action Too Big; No Commonality

In the closely watched case of Wal-Mart Stores, Inc. v. Dukes, et al., the U.S. Supreme Court on Monday torpedoed what would have been the largest class-action lawsuit in American history against the nation's largest private employer.

In a 5-4 decision, the Court held that the proposed class, which would have consisted of approximately 1.5 million current and former female employees of Wal-Mart, who have alleged the presence of a corporate culture of gender and sex discrimination against women, failed to meet the "commonality" requirement for permissible class certification.

"Commonality" is a prerequisite set forth in the Federal Rules of Civil Procedure, which requires that there exist "questions of law or fact common to the class," before a group may properly be certified as a class. One of the tests by which commonality may be established is by setting forth "significant proof" that an employer "operated under a general policy of discrimination."

In short, the majority held that significant proof of a "general policy of discrimination" on behalf of Wal-Mart was entirely absent in this case. The majority noted that not only was plaintiff's sociological expert unable to provide a definitive opinion on this issue, but also that Wal-Mart's corporate policy is to provide each of its local supervisors with discretion over employment matters - a policy that is, by definition, the opposite of having the type of uniform employment practice that is needed to establish commonality for purposes of class certification.

The majority also held that the plaintiffs had failed to identify and challenge a specific employment practice that was alleged to be discriminatory and which was common to all 1.5 million class members.

The Court's decision to deny certification in this case is significant in that it will have a significant impact upon future discrimination claims against large employers, undoubtedly making it harder for plaintiffs to achieve class-status. Class-actions are, in many instances, the only real vehicles by which discriminatory policies or actions by large or multi-national employers can be successfully challenged. As compared to small, individual claims, class-actions with numerous class members often carry with them the prospect of very large verdicts that can quickly change (or destroy) a corporate image and bottom-line. Additionally, the economics of many discrimination claims (such as wage-and-hour claims) are simply not worth an attorney's time or money prosecuting on behalf of a single employee, as the potential recoverable damages often cannot justify the time and expense necessary to prevail through trial. Unfortunately, if class-actions now become harder to certify and maintain following this case, the sad truth is that many instances of discrimination or employment law violations may simply go unchecked or unchallenged.

You can read the Supreme Court's full opinion in Wal-Mart Stores, Inc. v. Dukes, et al. here: http://www.supremecourt.gov/opinions/10pdf/10-277.pdf