On June 20, the U.S. Supreme Court released its opinion in Wal-Mart Stores, Inc. v. Duke, et. al. and by a 5-4 decision threw out a mammoth employment discrimination class action against Walmart that had sought billions of dollars on behalf of as many as 1.5 million female workers who had been employed by the company. The case is important to franchisors because the logic used by the Court to determine that class action status was not appropriate is similar to arguments that franchisors make in cases brought against them by franchisees seeking class certification.
The Court found that the suit had failed to satisfy a requirement of class action rules that there be questions of law or fact common to the class, in effect saying that the fact that the plaintiffs shared a common grievance was not enough to satisfy the standard for commonality of the class. In his opinion, Justice Scalia noted that statistics showing pay and promotion gaps between male and female workers were insufficient to show common issues among the plaintiffs because discrimination was not the only possible explanation. Because there were “literally millions of employment decisions” being made by managers of Walmart employees, it was ruled that the plaintiffs failed to point to “some glue holding the alleged reasons for all those decisions together.” The decision is seen as limiting the ability of potential plaintiffs (such as franchisees) to band together in large class actions, although the Court did not address the part of class action rules that is not primarily concerned with monetary claims. The Court did not rule upon whether Walmart had in fact discriminated against the women, but only that they could not proceed as a class. A lawyer for Walmart called the decision “an extremely important victory not just for Walmart but for all companies who do business in the United States, large and small, and their employees, too.”