United States: Wal-Mart v. Dukes: Supreme Court Reverses Class Action Certification Of Largest Labor Law Class Action In History Holding Sex Discrimination Claims Lacked Commonality

Last Updated: April 16 2012
Article by Michael J. Hassen

Class Action Treatment of Sex Discrimination in Promotion Claim Against Wal-Mart not Proper because Commonality Requirement not Met and because Rule 23(b)(2) Class Inappropriate given Monetary Relief Sought Supreme Court Holds

Plaintiffs filed a putative labor law class action against Wal-Mart Stores, alleging systematic discrimination against women in pay and promotion in violation of Title VII. Wal-Mart v. Dukes, 564 U.S. ___ (June 20, 2011) [Slip Opn., at 1]. The class action sought injunctive and declaratory relief, but also sought monetary damages in the form of backpay. Id. The theory underlying the class action against Wal-Mart was not that the company had "any express corporate policy against the advancement of women" but, rather, that Wal-Mart's local managers "[exercised] discretion over pay and promotion...disproportionately in favor of men, leading to an unlawful disparate impact on female employees." Id., at 4. As the Supreme Court explained, "The basic theory of the[] case is that a strong and uniform 'corporate culture' permits bias against women to infect, perhaps subconsciously, the discretionary decisionmaking of each one of Wal-Mart's thousands of managers – thereby making every woman at the company the victim of one common discriminatory practice." Id. The district court certified a nationwide class action against Wal-Mart consisting of approximately 1.5 million current and former female employees, id., at 1. The Ninth Circuit affirmed the class action certification order, id. The Supreme Court granted certiorari and reversed.

By way of background, the Supreme Court noted that Wal-Mart is the largest private employer in the United States, operating 4 types of retail stores (Discount Stores, Neighborhood Markets, Sam's Clubs and Superstores) that are "divided into seven nationwide divisions, which in turn comprise 41 regions of 80 to 85 stores apiece," each with 40-53 separate departments and anywhere 80-500 employees. Wal-Mart, at 1-2. Decisions regarding pay and promotion "are generally committed to local managers' broad discretion, which is exercised ' in a largely subjective manner.'" Id., at 2, quoting 222 F.R.D. 137, 145 (N.D. Cal. 2004). With respect to the individual named plaintiffs, Betty Dukes began working for Wal-Mart in 1994 and was eventually promoted to customer service manager before being demoted all the way down to greeter due to "a series of disciplinary violations." Id., at 3. Dukes admitted that she violated company policy, but claimed that her demotions were "retaliation for invoking internal complaint procedures and that male employees have not been disciplined for similar infractions." Id. Christine Kwapnoski worked at Sam's Club "for most of her adult life" and held various positions, "including a supervisory position," but she claimed that her male manager yelled at her and other female employees (but not at men) and told her to dress better, wear makeup and "doll up." Id. Edith Arana worked at Wal-Mart from 1995-2001, and in 2000 repeatedly asked her store manager about management training "but was brushed off." Id. She followed internal complaint procedures and was advised to bypass her store manager and apply directly to the district manager for management training, but she elected not to do so. Id. Arana was fired in 2001 for failing to comply with the company's timekeeping policy. Id.

The district court granted plaintiffs' motion for class action certification of a nationwide class consisting of "All women employed at any Wal-Mart domestic retail store at any time since December 26, 1998, who have been or may be subjected to Wal-Mart's challenged pay and management track promotions policies and practices." Wal-Mart, at 5, quoting 222 F.R.D. at 141-42. To establish the commonality required by Rule 23(a)(2), plaintiffs' motion relied upon three forms of evidence: "statistical evidence about pay and promotion disparities between men and women at the company, anecdotal reports of discrimination from about 120 of Wal-Mart's female employees, and the testimony of sociologist, Dr. William Bielby, who conducted a 'social framework analysis' of Wal-Mart's 'culture' and personnel practices, and concluded that the company was 'vulnerable' to gender discrimination." Id., at 5-6, quoting 603 F.3d 571, 601 (9th Cir. 2010) (en banc). Wal-Mart's efforts to strike much of this evidence failed, and the company introduced "its own countervailing statistical and other proof in an effort to defeat Rule 23(a)'s requirements of commonality, typicality, and adequate representation." Id., at 6. Wal-Mart also objected to class action certification of a Rule 23(b)(2) class because of the substantial monetary component of the case. Id. A divided Ninth Circuit affirmed. Id.

The Supreme Court reversed, explaining "The crux of this case is commonality – the rule requiring a plaintiff to show that 'there are questions of law or fact common to the class.'" Wal-Mart, at 8. But the High Court noted that "[this] language is easy to misread, since '[a]ny competently crafted class complaint literally raises common "questions."'" Id., at 8-9 (citation omitted). Thus, simply asking generic questions is insufficient to establish commonality:

For example: Do all of us plaintiffs indeed work for Wal-Mart? Do our managers have discretion over pay? Is that an unlawful employment practice? What remedies should we get? Reciting these questions is not sufficient to obtain class certification. Commonality requires the plaintiff to demonstrate that the class members 'have suffered the same injury,' .... This does not mean merely that they have all suffered a violation of the same provision of law.... Their claims must depend upon a common contention – for example, the assertion of discriminatory bias on the part of the same supervisor. That common contention, moreover, must be of such a nature that it is capable of classwide resolution – which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.

Id., at 9. Thus, "droves" of common "questions" does not establish commonality "but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation." Id., at 9-10 (citation omitted).

Importantly, the Supreme Court reiterated that a determination of whether an action is suitable for class action treatment "frequently" requires consideration of "the merits of the plaintiff's underlying claim." Wal-Mart, at 10 (italics added). That would be true in this case because "in resolving an individual's Title VII claim, the crux of the inquiry is 'the reason for a particular employment decision,'" id. (citation omitted). Accordingly, "proof of commonality necessarily overlaps with [plaintiffs'] merits contention that Wal-Mart engages in a pattern or practice of discrimination." Id. The flaw in the district court's analysis was in failing to appreciate that plaintiffs were seeking to address "literally millions of employment decisions at once." Id., at 11. "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." Id.

To establish suitability for class action treatment, plaintiffs were required to come forward with "'significant proof' that Wal-Mart 'operated under a general policy of discrimination.'" Wal-Mart, at 13. But the only evidence plaintiffs produced in this regard was the sociological opinion of Dr. Bielby, who admitted that he had no idea "how regularly stereotypes play a meaningful role in employment decisions at Wal-Mart" and "that he could not calculate whether 0.5 percent or 95 percent of the employment decisions at Wal-Mart might be determined by stereotyped thinking." Id. Based on this admission, the Supreme Court concluded that "we can safely disregard what he has to say." Id., at 14. Stripped to its essence, "The only corporate policy that the plaintiffs' evidence convincingly establishes is Wal-Mart's 'policy' of allowing discretion by local supervisors over employment matters," which of course "is just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policy against having uniform employment practices." Id. Moreover, in this case "demonstrating the invalidity of one manager's use of discretion will do nothing to demonstrate the invalidity of another's." Id., at 15.

In short, the High Court concluded that plaintiffs "have not identified a common mode of exercising discretion that pervades the entire company" other than the rejected Dr. Bielby opinion. Wal-Mart, at 15. The anecdotal evidence was also insufficient because it represented such a small percentage of the class and didn't even cover each state. Id., at 17-19. At bottom, the Court agreed with the conclusion of Chief Judge Kozinski that members of the class "'have little in common but their sex and this lawsuit.'" Id., at 19 (citation omitted). The Court additionally concluded that certification under Rule 23(b)(2) was inappropriate. Id., at 20-27. Accordingly, it reversed the class certification order. Id., at 27.

NOTE: Justice Ginsburg wrote a concurring and dissenting opinion, joined by Justice Breyer, Sotomayor and Kagan, concluding that while the putative class action should not have been certified under Rule 23(b)(2) because the class action complaint sought "monetary relief that is not merely incidental to any injunctive or declaratory relief that might be available," the majority opinion erred in holding that plaintiffs could not demonstrate commonality under Rule 23(a)(2). See Wal-Mart, at 1 (Ginsburg, J., concurring and dissenting).

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