U.S. Supreme Court Imposes Higher Hurdles In Denying Female Wal-Mart Employees The Opportunity To Proceed As A Class
In Wal-Mart Stores, Inc. v. Dukes, 564 U.S. ___, 2011 U.S. LEXIS 4567 (June 20, 2011), the Supreme Court reversed the lower court’s finding that class certification of 1.5 million Wal-Mart female employees was appropriate. Plaintiffs had claimed that Wal-Mart espoused a corporate culture of bias against women which resulted in all Wal-Mart female employees suffering from a common discriminatory process. The Supreme Court overturned the lower court and held that plaintiffs had not demonstrated a single common question as required by Rule 23(a).
The plaintiffs, Betty Dukes, Christine Kwapnoski and Edith Arana, worked for Wal-Mart at varying locations. Each woman claimed she did not advance in her career at Wal-Mart because of her sex, maintaining that local managers exercised favoritism toward men, which resulted in an unlawful, disparate impact on female employees.
It was undisputed that there was no express corporate policy against the advancement of women. Instead, Wal-Mart operated more than 3,400 stores with a set of policies that allowed local managers broad discretion with respect to pay and promotion. For example, local managers could increase wages of hourly employees with limited corporate oversight and could promote employees using subjective criteria.
In overturning the class certification, the court focused on the “commonality” requirement of Rule 23(a). It explained that this prerequisite requires the plaintiff to demonstrate that the class members have suffered the same injury, stemming from a common contention that is capable of class wide resolution. It is not enough to draft a class complaint that raises common questions as "[a]ny competently crafted class complaint literally raises common 'questions.'" A party must affirmatively demonstrate compliance with this requirement; and, here, plaintiff had not met this burden.
The court found that Wal-Mart’s policy of allowing discretion to be exercised by local supervisors over employment matters was just the opposite of a policy that would meet the commonality requirement for a class action. In particular, the court found that plaintiffs were “su[ing] about literally millions of employment decisions at once.” There was no “glue holding the alleged reasons for all those decisions together,” such that it would be impossible to have the class members’ claims produce a common answer to the crucial question of why the employee was disfavored.
The court also ruled that the plaintiffs’ claims for back-pay were improperly certified under Rule 23(b)(2), as Rule 23(b)(2) applies to class actions for injunctive or declaratory relief. The court explained that individual claims for monetary relief—such as claims for back pay here—may not be brought under Rule 23(b)(2) as this request for monetary relief is not incidental to the injunctive or declaratory relief. Those monetary claims need be made under Rule 23(b)(3).
This decision is significant for many reasons. First, for class actions seeking injunctive or declaratory relief, it provides “teeth” to the commonality requirement of Federal Rule 23. Once thought to be a minor hurdle on the road to class certification, this decision heightens the showing required by the putative plaintiff for purposes of certification. Second, this decision reemphasized the tenet that a plaintiff cannot simply rest on the pleadings. For class certification, a plaintiff “must affirmatively demonstrate compliance with the Rule.” The trial court should look into the merits of the case as necessary. Third, should class action plaintiffs want to pursue individual, monetary damages, they can no longer advance the argument that such a recovery is only secondary. Instead, they will need to overcome the additional obstacles of predominance of common issues and superiority of a class. Fourth, as a corollary, in seeking individualized, monetary damages, plaintiffs will need to not only show predominance and superiority but also that appropriate notice and opt-out for class members are in place; otherwise, they risk denial of certification for failure to comply with the requisites of due process.
This alert was written by Molly Arranz and Sara Zorich.