Friday, June 24, 2011

Wal-Mart Class Action: 9-0 or 5-4? – COTW #46

Choosing this Case of the Week was a no-brainer. Even the mainstream media can’t stop buzzing about Wal-Mart v. Dukes (opinion). There appears to be some confusion though… was the Supreme Court unanimous (9-0)? Or was it the “traditional” 5-4 conservative split? [Actually, unanimous decisions are more “traditional” than any 5-4 split… but that’s another matter] The answer is: both!

In Wal-Mart v. Dukes, a handful of women sought to sue Wal-Mart for discrimination… on behalf of a class of some 1.5 million women who worked for the retail titan. Before they’re allowed to do that, the Court must certify the class. For a class to be certified, it must satisfy Federal Rule of Civil Procedure 23, subsection (a) and subsection (b). The Supreme Court agreed on one subsection… but not the other.

How was the Supreme Court unanimous?

I’d like to start with where the Supreme Court was unanimous. Unfortunately, that means taking the subsections out of order and starting with subsection (b). Now, there are multiple ways to satisfy this subsection. One way is under (b)(2):
[T]he 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.
(emphasis added). The Ninth Circuit certified the class using (b)(2). Here, the plaintiffs wanted to sue for back pay (monetary damages) though. Monetary damages are not “injunctive relief,” nor are they “declaratory relief.” The Supreme Court unanimously agreed that the Ninth Circuit was therefore wrong in certifying the class under (b)(2) (although the Court explained that there might be future situations in which monetary damages were incidental to injunctive or declaratory relief and could therefore be included under (b)(2)).

Instead, the class should have been analyzed under (b)(3) which requires, among other things, that a court decide whether “questions of law or fact common to class members predominate over any questions affecting only individual members.” Of course, there’s no reason to make that determination if the class doesn’t satisfy subsection (a), which brings us to…

Where the Supreme Court was Split

The five-Justice majority held that there was no reason to go back and analyze whether the class could be certified under (b)(3), because it didn’t even satisfy (a). Subsection (a) has a few requirements. At issue here, (a) requires that there exist “questions of law or fact common to the class.” Here, the 1.5 million potential claims just didn't have enough in common.

The Court explained that Wal-Mart had no nationwide discriminatory policy, in fact, it has a policy against discrimination. The Plaintiffs' evidence was insufficient to establish commonality:
  • Anecdotal evidence from 120 affidavits isn't enough to bring 1.5 million claims.
  • Statistical evidence of national and regional disparities was insufficient to show "store-by-store" disparity. For example, a regional disparity may be explained by only a handful of discriminatory stores/managers and not a region-wide (let alone nationwide) policy or practice of discrimination.
  • Finally, the majority cast aside "social framework" testimony from a sociologist who explained that Wal-mart's "corporate culture" made them vulnerable to gender bias. He was unable to "calculate whether 0.5 percent or 95 percent of the employment decisions at Wal-Mart might be determined by stereotyped thinking."
That was just not enough for the majority.

The dissent would have sent the case back to the lower courts by stopping after holding that the class should not have been certified under (b)(2). They thought the class might be certifiable under (b)(3). That would require a determination of whether the common questions predominate over the individual ones. The dissent felt that the evidence was strong enough to establish that common questions existed (therefore satisfying subsection (a)) - but whether they predominated (to satisfy subsection (b)(3)) was another issue to be left for another day. The dissent therefore argued that the majority was applying too high a standard under (a).

Posted by Philip Miles, an attorney with McQuaide Blasko in State College, Pennsylvania in the firm's civil litigation and labor and employment law practice groups.