Wal-Mart Wins: Supreme Court Rules in Sex Discrimination Suit

June 20, 2011, 10:48 AM

WASHINGTON, June 20, 2011 -- The Supreme Court today stopped one of the largest employment discrimination class action suits in history from going forward.

The case originally was brought by six female Wal-Mart employees who said they had been paid less than men in comparable positions despite having higher performance ratings and greater seniority.

A lower court had allowed the case, which had grown into a challenge involving hundreds of thousands of female employees and potentially billions of dollars, to go forward, but the Supreme Court reversed that decision.

The court was unanimous that the case should not have been certified the way it was, but a conservative majority of the court went much further, ruling that the case should never have been certified at all. The decision on that main point will make it significantly more difficult for similar employment discrimination class action suits to be brought in the future.

Justice Antonin Scalia, writing for himself and the other conservative justices, ruled that the women failed to prove a common practice or policy of discrimination at Wal-Mart that would allow them to band together and bring the suit.

Plaintiffs had claimed they could prove Wal-Mart discriminated against all women employees by statistics, by alleging that the company's corporate culture was suffused with gender stereotypes, and by pointing to the company's practice of allowing local managers wide discretion in hiring and promoting, which supposedly allowed those stereotypes to impact the lives of women employees.

"In a company of Wal-Mart's size and scope," Scalia wrote, "it is quite unbelievable that all managers would exercise their discretion in a common way without some common direction."

"Here [the female plaintiffs] wish to sue about literally millions of employment decisions at once," Scalia wrote.

"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," he wrote.

Justice Ruth Bader Ginsburg, joined by the three other liberal members of the Court, wrote in her dissent that on the main issue of whether the women had enough in common to bring the case, the majority had made an error in disqualifying the class "at the starting gate."

"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, striking at the heart of the women's case.

"Managers, like all humankind, may be prey to biases of which they are unaware," she wrote. "The risk of discrimination is heightened when those managers are predominately of one sex, and are steeped in a corporate culture that perpetuates gender stereotypes."

Michael Selmi, an expert of class action law suits at the George Washington University School of Law, called the decision "the most significant restriction in 30 years."

"Today's ruling could mean not necessarily the end of class actions but a significant and very important restriction on the ability to bring employment class actions," he said.

Wal-Mart lawyers were pleased with the decision and believe it will bring the case to an end.

"Under today's ruling -- the way we read it -- no class can be certified in this case. The court found that there was no issue common to the class," said Theodore J. Boutrous Jr. of Gibson, Dunn and Crutcher.

He said that the decision will be "very helpful in bringing back sanity to class action law."

But lawyers for the women vowed to fight on.

"I don't think it closes the door entirely, but it is going to raise the hurdle significantly to bring these kinds of cases," said Joseph Sellers of Cohen Milstein, who argued the case in court on behalf of the female employees.

Another lawyer, Brad Seligman, said that the team would study the opinion to see if there is a way to go back to the lower court and reformulate the class into smaller class sizes to go forward.

"The Supreme Court has not ruled that Wal-Mart did not discriminate," Seligman said. "We are examining a range of possibilities. The most important thing, we want women of Wal-Mart to know is that there are avenues to go forward, including claims with the Equal Opportunity Commission and filing individualized claims."

Betty Dukes, one of the original plaintiffs, said she was disappointed but undaunted.

"We still are determined to go forward and present our case in court and I believe we will prevail there," she said.

Marcia Greenberger of the National Women's Law center called the ruling the "worst case scenario." She said that while the lawyers involved in the Wal-Mart case might find a way to keep their case moving forward, "other women across the country -- not covered by this case -- are left with far fewer rights and many more hurdles today than they had yesterday."

The five male justices made it much harder for individuals to come together and bring a case because the Court raised the level of proof, requiring more examples of discrimination, she said.

But Robin Conrad, the executive vice president of the U.S. Chamber of Commerce's National Chamber Litigation Center, disagreed, saying the decision is "without a doubt the most important class action case in more than a decade" because it will help protect businesses from frivolous lawsuits.

"Too often the class action device is twisted and abused to force businesses to choose between settling meritless lawsuits or potentially facing financial ruin," she wrote. "Our economy would be better served if businesses could spend more resources creating jobs and fewer resources fighting frivolous litigation."

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