On June 20, 2011 the U.S. Supreme Court rejected the proposed class action lawsuit by over 1.5 million former and current female employees of Wal-Mart.  The lawsuit alleged that the nation’s largest private employer discriminated against women tem in terms of pay and promotions throughout its 3,400 stores.

In Wal–Mart, the plaintiffs alleged that the company engaged in a pattern and practice of gender discrimination by paying women less and offering them fewer promotions.  They alleged that the managers at the stores favored men and that the company was aware of the problem and did nothing to remedy it.  They alleged that Wal-Mart’s corporate culture allowed the discrimination against women and that the corporate culture of bias towards women trickled down to the local managers at the stores.

In 2004, the United States District Court certified the class, allowing the plaintiffs to proceed in one action.  The Ninth Circuit Court of Appeals upheld the decision to allow the class action to go forward, finding that the procedural requirements to certify a class action (numerosity, commonality, typicality, and adequate representation) under Federal Rule of Civil Procedure 23 were met.  In a 5-4 decision, the Supreme Court reversed.

The Court ruled that the proposed class was essentially suing “about literally millions of employment decisions at once.”  Moreover, it stated that the plaintiffs were required to offer “significant proof that Wal-Mart operated under a general policy of discrimination,” but that such evidence was “entirely absent here.” The Court held that the Plaintiffs failed to establish that the “corporate culture” implementing that policy translates such a valid policy into illegal discrimination down at the retail store level.  The Court noted that essentially, the plaintiffs “have little in common but their sex and this lawsuit.”

The dissenters, led by Justice Ginsburg, asserted that “the practice of delegating to supervisors large discretion to make personnel decisions, uncontrolled by formal standards” was enough to present a common question under Rule 23(a). They found that the evidence that the plaintiffs had offered “suggests that gender bias suffused Wal-Mart’s company culture.” Moreover, the minority held that the differences in pay and promotions between women and men workers could only be explained by bias, not “neutral variables.”

It is important to note that the Court’s decision was not a ruling on whether or not Wal-Mart did or did not discriminate.  Rather, the ruling just means that each plaintiff must pursue their claims individually, rather than as a class.  Unfortunately, this means a vast majority will fall by the wayside.

While large companies will now use this and other  recent Supreme Court decisions to avoid class action lawsuits, one optimistic note is that this decision was based on a the interpretation of a federal rule of civil procedure that would not apply in state court. That said, many state courts will rely heavily on the ruling and interpretation of this case.

For more information, or if you need legal assistance, please contact the Wagner Legal Group, P.C. at (310) 857-5293 or fill out our contact form on the website.