Fordham Law


Victory for Walmart after Supreme Court halts $1billion sex discrimination law suit

Howard Erichson in The Daily Mail, June 20, 2011

Media Source

The Supreme Court has shot down a billion-dollar sex discrimination lawsuit against Walmart, saying the class action was 'improperly granted'.

The justices overturned a U.S. appeals court ruling that more than a million female employees nationwide could join in the lawsuit accusing Wal-Mart of paying women less and giving them fewer promotions.

The decision - in what would have been the largest sex-discrimination lawsuit in history - will make it much harder to bring large class action sexual discrimination cases in the future.

Win: The Supreme Court has ruled for Wal-Mart in its fight to block a massive sex discrimination lawsuit on behalf of women who work there.

The high court accepted Walmart's main argument that the female employees in different jobs at 3,400 different stores nationwide and with different supervisors do not have enough in common to be lumped together in a single class-action lawsuit.

The Supreme Court only decided whether the 10-year-old lawsuit can proceed to trial as a group, not the merits of the sex-discrimination allegations at the heart of the case.

Walmart, the world's largest retailer and the largest private U.S. employer, has denied the allegations and said it has operated under a policy barring discrimination.

The ruling in the biggest business case of the high court's 2010-11 term could affect other class-action lawsuits against the tobacco industry and Costco Wholesale.

Industry insiders had warned that if the case were allowed to go ahead it would lead to an avalanche of similar class actions against businesses.

Fight: Betty Dukes, the original plaintiff in the case, stands outside the Supreme Court.

Reacting to the decision, legal experts agreed that the decision will have a substantial effect on future sexual discrimination class action cases.

Speaking to Forbes, Howard Erichson a class action law expert at Fordham Law School said: 'This opinion insulates companies a bit from being attacked if discrimination flourishes because they give too much discretion  to individual managers.

'What the court is emphasising is it is really serious about requiring plaintiffs to prove commonality.'

Also speaking to the financial magazine, expert Gerald Maatman said the decision: 'Hands on a platter to companies a method to inoculate themselves.

'The standards have been raised, the requirements have been tightened, and the glue that binds class actions is tighter than ever before,' she added.

It also was the court's most important job-discrimination dispute in more than a decade.

Justice Antonin Scalia concluded for the court majority that the class was not properly certified.

He said there must be significant proof that Walmart operated under a general policy of discrimination. 'That is entirely absent here,' he said, noting that Walmart's official corporate policies forbid sex discrimination.

In blocking what he described as, 'one of the most expansive class actions ever' to have been pushed through by lower courts.

He added the plaintiffs: 'Wish to sue about literally millions of employment decisions at once.

'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.'

One of the plaintiffs lawyers, Brad Seligman, said he was exploring ways to adjust the class action.

He said: 'This case is not over. Walmart is not off the hook. It’s really important that the women of Walmart don’t give it up hope.'

Walmart shares rose after news of the decision, rising 46 cents, almost 1 percent, to $53.28 in morning trading on the New York Stock Exchange.

The court's four other conservatives joined all of Scalia's ruling. The court's four liberals joined part of it, but dissented in part.


Q&A: WHAT IMPACT DOES THE DECISION HAVE?

What was the case about?

The Walmart case was the Supreme Court's first look in 12 years at the standards for certifying a class action.

The court was trying to decide what constitutes a cohesive group or 'class' in court cases. The Justices ruled different Walmart workers from different departments under separate managers could not be counted as one group and therefore could not bring a singular massive 'class action'.

The ruling does not determine the merit of each individual sexual discrimination case listed in the suit.

What are the implications?

The decision is a severe blow for workers rights groups who claim efforts to force change at companies steeped in bias will suffer.

The ruling tightens the definition of what constitutes a 'group' in class action suits, meaning it will be harder to try multiple cases together in such a way.

Who brought the case?

Filed in 2001 by Pittsburg Walmart worker Betty Dukes, the suit aimed to cover every woman who worked at Walmart and Sam's Club's stores at any point since December 1998, including those not hired until years after the suit was filed.

In letting the suit go forward, a federal appeals court said the class would consist of 500,000 women, a number that included only current employees. This rose to 1.5 million.

What happens now?

The litigants can either bring individual cases against Walmart or form smaller class action groupings to fight their discrimination cases.