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Monday, June 20, 2011

Supreme Court’s Sharply Divided Wal-Mart Decision Limits Women’s Power to Fight Discrimination

Today the Supreme Court handed down its decision in Wal-Mart v. Dukes. At stake was the ability of a large group of women to join together in fighting sex discrimination in the workplace.

The Court decided 9-0 in favor of Wal-Mart that the class could not make its claim for back-pay under the particular Federal Rule of Civil Procedure used by the trial court. However, the Court split 5-4 in favor of Wal-Mart in holding that the class did not meet the basic requirement of “commonality” to form a class at all.

Betty Dukes, a greeter at a northern California Wal-Mart, alleged gender discrimination in a lawsuit filed in 2001. Dukes and other named women plaintiffs sought to certify a class action consisting of female employees who worked for Wal-Mart after December 26, 1998. Their allegations were that Wal-Mart’s employment policies and business culture have resulted in severe discrimination against women for many years.

The question before the Supreme Court was whether class certification was proper, which turned in large part on perceptions of who is to blame for the wide disparity in pay and promotion levels between men and women working for Wal-Mart. Wal-Mart argued that there is no common bond between thousands of pay and promotion decisions made by its managers across the country. Plaintiffs countered that Wal-Mart’s system of granting vast pay and promotion discretion to its upper-level managers, nearly all of whom are men trained by Wal-Mart to embrace and promote the company’s practices, yielded discriminatory results that pervade every region and nearly every store within Wal-Mart’s vast retail empire.

Although the Court unanimously decided the class action vehicle chosen by the plaintiffs (Rule 23(b)(2)) was improper – because plaintiffs sought monetary compensation under a rule designed for injunctive relief – the Court divided 5-4 over the fundamental issue of whether the women of Wal-Mart had enough in common to qualify for a class action under a different section of the rules (Rule 23(b)(3)). Over the forceful objection of four justices, led by Justice Ruth Bader Ginsburg, the Court’s conservative majority made it much more difficult for large businesses to be held accountable for their actions, this time by significantly raising the bar for forming a class, which is the only effective way to fight against widespread injustices committed by large, deep-pocketed corporate interests.

“The plaintiffs’ evidence, including class members’ tales of their own experiences, suggests that gender bias suffused Wal-Mart’s company culture,” wrote Justice Ginsburg in dissent. “Women fill 70 percent of the hourly jobs in the retailer’s stores, but make up only ’33 percent of management employees.’ [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,” she added. Justice Antonin Scalia and the others in the majority managed to ignore this voluminous anecdotal and statistical evidence in finding for Wal-Mart. Our separate Wal-Mart report details much of this evidence.

The new threshold established by the Court’s five conservative justices imported Rule 23(b)(3)’s requirement that common issues “predominate” into the initial determination whether any class-action can proceed. This will have the perverse effect of inhibiting other class actions that rightfully could proceed under Rules 23(b)(1) or (2), where such a requirement previously did not exist. The longstanding rule had been that a common question of law or fact was easily met. No longer. The five conservative justices reinterpreted the rules to require class members to provide “substantial proof” that, in a Title VII claim, a particular policy existed that led to the alleged discrimination. The Court then evaluated the quality of the evidence of discrimination presented by Dukes and rejected the expert analysis of Wal-Mart’s “strong corporate culture” as inconclusive as to cause, the company-wide statistics as irrelevant to regional and store-based decisions, and the numerous anecdotes from all 50 states as insufficient given the size of the whole company. In practice, it seems that Wal-Mart is now too big to discriminate.

Justice Ginsburg countered that, under the well-established rule that corporate practices producing discriminatory results can violate Title VII, Dukes easily met the burden of showing common questions among all female employees of Wal-Mart. “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,” she wrote. “The risk of discrimination is heightened when those managers are predominantly of one sex, and are steeped in a corporate culture that perpetuates gender stereotypes.” The practices and culture, as the district court found, were sufficiently similar for the women of Wal-Mart to pursue justice together.

The Court’s sharply divided decision will make it much more difficult for victims of employment discrimination to fight back. By trying the case as a national class, the women of Wal-Mart would have had better access to evidence of pay disparities, would have been better shielded from retaliation, and would have had better access to legal representation in matters that may only involve a little more than a thousand dollars per person. Employers large and small, who, as Justice Ginsburg illustrated, should be discouraged from using wholly subjective pay and promotion regimes, have been given a great incentive to adopt a near-Wild West approach to human resources.

Fortunately, Congress has the power to overrule the Court’s pro-corporate activism. The Federal Rules are written with authority granted legislation, and new legislation can change the Rules and their interpretation. Congress has acted before when the Supreme Court has hindered enforcement of civil rights laws, such as the Civil Rights Act of 1991, part of which overturned Wards Cove Packing Co. v. Atonio, and the Lily Ledbetter Fair Pay Act of 2009, which overturned Ledbetter v. Goodyear Tire & Rubber Co.

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