• Our Million Dollar Question
  • May 23, 2012 | Author: Paula Parisi
  • Law Firm: Cole, Scott & Kissane, P.A. - Miami Office
  • On June 20, 2011, the United States Supreme Court (hereinafter “Supreme Court”) decided what has been deemed as one of the largest class action lawsuits ever filed.  Specifically, a class of 1.5 million female, Wal-Mart employees alleged that they suffered sexual discrimination in the workplace.  The claims were brought under Title VII on the basis that Wal-Mart’s local supervisors adversely exercised discretion over the plaintiffs which resulted in unequal pay and a lack of promotion.  Due to the purported harm, the employees sought backpay, punitive damages, injunctive and declaratory relief from Wal-Mart.

    In this case, three named plaintiffs, Betty Dukes, Christine Kwapnoski, and Edith Arana, represented the remainder of the class members.  They claimed that the decisions made by their local supervisors, pertaining to compensation and promotional matters, unequally favored their male co-workers and had a disparate impact on the female employees.  It was further alleged that disparate treatment occurred because Wal-Mart had knowledge of these practices but refused to correct them.  Under this theory, all of Wal-Mart’s female employees, throughout the nation, suffered from the subjective decision-making of their respective supervisors at the local stores.

    The federal trial court certified the class of “all women employed at any Wal-Mart domestic retail store at any time since December 26, 1998” and the appellate court approved the certification.  The question before the Supreme Court, among other issues, was whether the certification was appropriate under the controlling law and factual circumstances.

    As stated by the Supreme Court, class certification is governed by Rule 23 of the Federal Rules of Civil Procedure. Under the rule, a key factor is establishing “commonality” in the questions of law or fact pertaining to the class.  In this context, the plaintiffs must establish an equal injury amongst the class members, based upon a common contention, in which the relief sought provides a remedy to the entire class.  The court further explained that certification depends more upon the ability for a class to provide common answers as opposed to the mere raising of common questions.

    In Title VII claims, such as the subject action, an essential question is the reason for the adverse employment decision.  According to the opinion, the plaintiffs sought to sue for “literally millions of employment decisions at once.”  However, without a close relation amongst all of the individual employment decisions, the relief sought cannot yield a common answer.

    To establish commonality in general, plaintiffs must bridge the gap between an individual employee’s claim and the existence of class members who suffered the same injury as the employee.  As a first method, this may be accomplished by showing a discriminatory testing or evaluation process exercised by the company as a whole.  Second, this may be establish by showing significant proof that the employer held a general policy of discrimination. The latter method applied to the plaintiffs in this case.

    Here, the Supreme Court found that the plaintiffs failed to meet this standard.  Specifically, the employees submitted testimonial evidence from a sociological expert supporting the position that the employer had a “strong corporate culture” that led to sex discrimination. However, the only widespread policy this established was that the employer “allow[ed] discretion by local supervisors over employment matters.”  The court further stated that on the surface, this was directly in contrast to a uniform practice by Wal-Mart for commonality purposes.  Further, the court found that, if anything, the policy would be one that forbids the existence of such discriminatory practices.

    It is worth noting that the court clarified that grounds for a Title VII claim could potentially be based upon a disparate impact resulting from the discretion exercised by supervisors in an “undisciplined system” yielding the same effect as intentional discrimination.  However, in cases such as this one in which the supervisors are allowed to determine how their decisions are made, coupled with a corporate policy against discrimination, it is more likely that the majority of supervisors make nondiscriminatory decisions for promotion and compensation matters. In addition, supervisors may subjectively rely on lawful criteria, such as an employees test scores and educational advancement, without any intent to discriminate; but nonetheless, resulting in disparity overall.  Given these factors, the subjective discrimination of one supervisor is not necessarily attributable to another.

    The opinion also states that the plaintiffs failed to identify “a common mode of exercising discretion that pervades the entire company.”  Significantly, the court found that “in a company of Wal-Mart’s size and geographical scope, it is quite unbelievable that all managers would exercise their discretion in a common way without some common direction.”  Also of importance is Wal-Mart geographical structure of roughly 3,400 stores with anywhere from 80 to 500 employees at each location.  Based on these circumstances, it can be inferred that plaintiffs’ challenge in establishing commonality was made difficult by the enormous size and geographic nature of the employer.

    In short, the plaintiffs put forth statistical evidence that was insufficient.  The evidence was comprised of the findings of a statistician and labor economist.  According to the statistician, Wal-Mart had “significant disparities” between the male and female employees that could only be the result of sex discrimination.  The economist found that the employer promoted a lower percentage of female employees in comparison to other competing businesses.  However, the court determined that even if these disparities were indeed true at the national level, they failed to show that the employer had a policy to discriminate at the regional districts or local stores.

    Moreover, even if the statistical evidence showed that every one of the 3,400 local stores had discriminatory pay and promotional patterns, commonality would still be absent.  In particular, the availability of qualified female employees may greatly vary from store to store.  In addition, without a uniform policy in place, the promotional criteria used by each supervisor were subjective and therefore, varies from store-to-store.  These factors fail to establish a commonality of issues.

    The court further stated that identifying a particular employment practice is “necessary when a class of plaintiffs is sought to be certified.”  However, besides the mere “existence of delegated discretion, [the plaintiffs] have identified ‘no specific employment practice’ - much less one that ties all their 1.5 million claims together.”

    The anecdotal evidence also failed to establish a wide-spread policy of discrimination.  Specifically, the employees filed 120 affidavits attesting to discriminatory harm.  Importantly, the Supreme Court found that this merely represented a ratio of 1 to 12,500 class employees and only involved 235 Wal-Mart stores.  The majority of the affidavits pertained to only six states.  Additionally, half of all states were represented in only two or less affidavits and 14 states were uninvolved.  Nonetheless, even if the evidence was deemed true, it could not support certification of the voluminous class members.

    An interesting take on the case is Justice Ginsburg’s observation that the court’s ruling requires anecdotal evidence in discrimination claims to be commensurate with the number of employees; or 1.5 million in this case. The majority opinion denied the assertion by confirming that generally, plaintiffs are free to dictate the scope of their anecdotal evidence.  However, “when the claim is that a company operates under a general policy of discrimination, a few anecdotes selected from literally millions of employment decisions prove nothing at all.”  Based on this analysis, in a 5-4 ruling, the Supreme Court reversed the appellate court’s affirmance of the class certification.

    As a practical matter, an inference may reasonably be made that the ruling works to limit the size of classes in future discrimination cases.  Although the court does not directly state a correlation between large class sizes and difficulty in certification, the ruling suggests that certification may have been more likely to achieve had the plaintiffs selected significantly less employees for class membership.  The plaintiffs may also have fared better by narrowing their class to a smaller geographical region.  In other words, plaintiffs who seek to certify a voluminous, wide-spread class do so at their own peril.