U.S. Supreme Court’s Landmark Wal-Mart Decision Focused on Determination of Class Commonality, Not Title VII Claims

Jun 28, 2011


Even though it acknowledged sociological evidence that Wal-Mart’s discretionary management philosophy opened the door to individual supervisor biases against women, the U.S. Supreme Court did not find the evidence sufficient to sustain a class-action approach in its highly publicized January 20, 2011, 5-4 en banc opinion in Wal-Mart Stores, Inc. v. Dukes et al. 

The litigation was initiated by Betty Dukes, a veteran California Wal-Mart employee, who, together with approximately 1.5 million female Wal-Mart employees nationwide, sought judgment against the company for injunctive and declaratory relief, punitive damages and back pay because of Wal-Mart’s alleged discrimination against women in violation of Title VII of the Civil Rights Act of 1964.  Once certified as a Class by the Ninth District Court, the women claimed that local Wal-Mart managers disproportionately exercised their discretion over pay and promotions in favor of men, whom they claimed in turn had an unlawful disparate impact on female employees. 

In workplace controversy and related matters that have come before the U.S. Supreme Court, Justice Chief Justice Roberts has consistently sided with private enterprise.  Davis proved to be no different.

While Supreme Court did not deny the possibility that a Title VII claim could exist in Dukes, it instead focused on the application of Rule 23(a) of the Federal Rules of Civil Procedure, which seeks to ensure that that named plaintiffs are appropriate representatives of the class whose claims they wish to litigate.  Rule 23(a)’s four requirements-numerosity, commonality, typicality and adequate representation are generally regarded as effective in limiting class claims to those fairly encompassed by the named plaintiffs’ claims.

In the Supreme Court’s analysis, the only corporate policy that the plaintiffs’ evidence convincingly established was Wal-Mart’s “policy” of giving local supervisors discretion over employment matters.  However, simply recognizing that a claim “can” exist does not mean that every employee in a company with that policy has a common claim, it was pointed out.  In the Supreme Court’s view, it was unlikely that, in a company of Wal-Mart’s size and geographical scope, all of its managers would exercise their discretion in a common way without some common direction.

“Other than the bare existence of delegated discretion, respondents have identified no ‘specific employment practice’-much less one that ties all their 1.5 million claims together.” the Supreme Court wrote.   “Merely showing that Wal-Mart’s policy of discretion has produced an overall sex-based disparity does not suffice.”

The Supreme Court held that the Ninth District Court had improperly certified the class according to Rule 23(a), as well as Rule 23(b)(2), which was applied to addressed the back pay portion of Davis action.  Rule 23(b)(2) applies to class treatment when “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.”

Because a lack of commonality was determined in Davis, the Supreme Court viewed the class to be constructed of both individuals and class members in their quest for monetary relief.  In its opinion, the Supreme Court implied the case might have been better off being certified under Rule 23(b)(3),  which allows class certification in a much wider set of circumstances, and with greater procedural protections.  In a brief segue to the history of Rule 23(b), the Supreme Court explained that it does not provide an opportunity for class members to opt out, nor is the District Court even required to afford notice of the opportunity to do so.

In the Dissent, Justice Ruth Bader-Ginsburg acknowledged that ” . . . a putative class of this type may be certifiable under Rule 23(b)(3), if the plaintiffs show that common class questions ‘predominate’ over issues affecting individuals . . . (but that) Whether the class the plaintiffs describe meets the specific requirements of Rule 23(b)(3) is not before the Court.”