The Supreme Court of the United States' recent decision in Wal-Mart v. Dukes provides the framework for determining when employment class actions may proceed and guidance on how employers can defend against putative class claims. In Dukes, the plaintiffs alleged gender discrimination because of a supposed "core company culture" facilitating discriminatory promotions and wage increases in violation of Title VII against approximately 1.5 million current and former female Wal-Mart employees from over 3,400 stores across the country. The three named plaintiffs worked in California Wal-Marts, where the U.S. District Court for the Northern District of California and U.S. Court of Appeals for the Ninth Circuit Court initially certified the class. A five-member majority of the Supreme Court refused to certify such a large class because it lacked several key elements of "commonality." Equally important, the Court clarified key class action principles.
Justice Scalia's majority opinion emphasized that certification depends upon a common contention, capable of class-wide resolution, with common answers apt to drive the resolution of the litigation.
Generating a common answer required the plaintiffs to demonstrate that "discrimination was the company's standard operating procedure." The Court, however, found a wide gap between any specific denial of a promotion and unsupported allegations that the company had a policy of discrimination, and required that the ultimate outcome of the case must answer the crucial question of "why was I disfavored?" to proceed as a class action.
The issue as framed by the Court was whether the plaintiffs had provided sufficient evidence of any uniform employment practice that met the test of plausibility. The Court distinguished between the possibility that a discriminatory culture can exist when local management has discretion to promote and increase wages, and the fact that one does exist which ultimately results in discrimination, holding that the former "does not lead to the conclusion that every employee in a company using a system of discretion has such a claim in common." The Court's plausibility analysis is similar to that first established in non-class cases in Ashcroft v. lqbal, and Bell Atlantic Corp. v. Twombly. The Dukes plaintiffs simply lacked commonality because they held numerous jobs varying in responsibility for different lengths of time, working under different supervisors in multiple regions across the country.
The plaintiffs relied primarily on the testimony of a sociologist, Dr. William Bielby, who conducted a highly questionable so-called "social framework analysis" of Wal-Mart's "culture" and personnel practices. Dr. Bielby concluded that the company was supposedly vulnerable to gender discrimination by permitting unconscious bias. The District Court concluded that the Daubert test for admission of expert testimony did not apply at the certification stage of class action proceedings, but the Supreme Court strongly suggested to the contrary. The Court effectively performed a Daubert test of its own, citing scholarly works refuting Bielby's pseudo-scientific conclusions. The Court found Bielby's "testimony [did] nothing to advance [the plaintiffs'] case," because he could not determine what percentage of the employment decisions at Wal-Mart were allegedly the result of stereotyped thinking.
The plaintiffs' statistical evidence was no more helpful. It did not address employment decisions at the store level despite their claims of excess discretion producing disparities at the store level.
The Court also unanimously denied the plaintiffs' request for individual backpay awards, reaffirming that class claims for monetary relief may not be certified under FRCP 23(b)(2), where the monetary relief is not incidental to the injunctive or declaratory relief requested. The plaintiffs' claims were for just such individualized claims for money payments. The critical element of a "(b)(2) class is the indivisible nature of the injunctive or declaratory remedy warranted." Employers should note that Rule 23(b)(3) may nevertheless permit class certification when each individual class member would receive an individualized award.
Dukes is certainly helpful to employers, but it does not by any stretch of the imagination provide complete immunity from employment discrimination or wage and hour class actions when plaintiffs can show commonality and that a class action decision would produce a common answer for all class members. After Dukes, employers should assure that local management discretion is clearly subject to strong Equal Employment Opportunity ("EEO") policies that ban discriminatory exercise of discretion and provide employees with a complaint mechanism for any perceived EEO issues.