On June 20, 2011, the Supreme Court of the United States issued a much-anticipated ruling in the Wal-Mart Stores, Inc. v. Dukes class action case. Handing a significant victory to Wal-Mart (and to large employers generally), the Court held that a sex discrimination lawsuit brought by several plaintiffs on behalf of 1.5 million current and former female Wal-Mart employees nationwide could not be heard as a single class action case by a federal court. The Supreme Court also held that the plaintiffs' claims for backpay could not be certified.

Background

The plaintiffs alleged that Wal-Mart violated Title VII of the Civil Rights Act of 1964 by paying female employees less than male employees, and by offering female workers fewer opportunities for advancement. The plaintiffs claimed that local Wal-Mart managers in stores across the country were improperly allowed to exercise discretion over pay and promotion decisions in a manner that discriminated against women.

The decade-old case was initially filed by the plaintiffs in 2001 in a federal District Court in the Northern District of California. The plaintiffs sought class action status, which the District Court granted in 2004. It was the largest civil rights class ever certified. Wal-Mart appealed the decision to the Ninth Circuit Court of Appeals, where a three-judge panel upheld the lower court's certification of the class. Wal-Mart then sought a rehearing by an en banc panel of the Ninth Circuit. The rehearing was granted, and a divided en banc panel upheld the class certification. Wal-Mart appealed the case to the Supreme Court in 2010.

The Supreme Court's Opinion

In an opinion delivered by Justice Scalia, the Supreme Court yesterday overturned the Ninth Circuit's decision. In a divided 5-4 opinion, the Court found that certification of the Dukes case as a class action was inconsistent with Rule 23(a) of the Federal Rules of Civil Procedure, and was therefore improper. The Court also unanimously held that the plaintiffs' claims for backpay had been improperly certified under Rule 23(b)(2) of the Federal Rules of Civil Procedure.

In order for a lawsuit to be certified as a class action, certain procedural criteria must be met. One of those criteria, Rule23(a), requires that plaintiffs show there are "questions of law or fact common to the class." Put another way, plaintiffs must demonstrate that all of the potential members of the class have enough in common with each other to merit combining their claims into a single case.

Meeting this "commonality" requirement can be a difficult hurdle for plaintiffs to clear, especially in cases involving large classes with many members. In order to prove commonality, the Supreme Court wrote, plaintiffs must show that they have all "suffered the same injury." The Court further noted that suffering the same injury "does not mean merely that [the plaintiffs] have all suffered a violation of the same provision of the law." Rather, "[t]heir claims must depend upon a common contention for example, the assertion of discriminatory bias on the part of the same supervisor."

After reviewing the facts, the Supreme Court concluded that the Dukes plaintiffs had failed to establish commonality among the 1.5 million-members of the proposed class. The Court found that, although the plaintiffs alleged that local Wal-Mart managers treated female employees in a disparate manner from their male counterparts, they had identified no "common mode of exercising discretion that pervades the entire company." The plaintiffs had not provided "convincing proof of a companywide discriminatory pay and promotion policy." (Emphasis added.) Because the plaintiffs failed to present any common question of law or fact sufficient to meet Rule 23(a)'s commonality requirement, the Supreme Court held that the Dukes case should not have been certified to proceed as a class action by the Ninth Circuit.

In addition to seeking certification as a class under Rule 23(a), the plaintiffs also sought monetary relief from the Court in the form of backpay under Rule 23(b)(2) of the Federal Rules of Civil Procedure. On this issue, the Court unanimously held that claims for individualized relief, such as backpay, were not authorized under Rule 23(b)(2).

What the Dukes Case Means for Employers

The Supreme Court's decision in the Dukes case creates a high standard of proof for class certification in employment discrimination lawsuits, making it more difficult for employees to obtain class action status in large, national employment discrimination lawsuits alleging widespread violations of Title VII.

Although it may now be more difficult for employees to obtain class certification in such cases, employers are certainly not immune to class action lawsuits in the employment context -- particularly where employees can demonstrate the existence of a distinct discriminatory pattern, practice, or policy that violates Title VII. Employers can protect themselves by ensuring that they implement, maintain, and uniformly enforce appropriate discrimination and harassment policies.