For the past couple years, it seemed we couldn't avoid hearing or reading coverage on the unprecedented employment discrimination class action filed against Wal-Mart. It has now been more than ten years since the case was filed. Based on recent news, one cannot help but wonder whether the suit will be resolved before yet another ten years of litigation have passed.
The general background facts include: in 2001, the action was filed in California federal district court with the named plaintiffs seeking to represent approximately 1.6 million past and present female Wal-Mart employees at the company's 3,400 stores nationwide. The plaintiffs claimed that Wal-Mart discriminated against women in pay and promotion decisions. Namely, the discretion given by Wal-Mart to local managers over pay and promotion decisions was alleged to have disproportionately favored men, thus having a disparate impact on women. The plaintiffs did not allege that Wal-Mart had any express corporate policy against the advancement of women. However, they did contend that Wal-Mart's alleged failure to rein in the discretion of its managers amounted to disparate treatment of women. The district court ruled in favor of class certification, finding Wal-Mart "acted or refused to act on grounds that apply generally to the class." Wal-Mart appealed to the Ninth Circuit, which affirmed the district court's class certification [pdf]. Wal-Mart petitioned the Ninth Circuit for rehearing en banc and, in April, 2010, the en banc court again affirmed [pdf] the district court's class certification. Wal-Mart appealed to the U.S. Supreme Court. On June 20, 2011, the Supreme Court found in Wal-Mart's favor [pdf], ruling the class action could not proceed as then framed. Among other technical reasons, the Supreme Court found that plaintiffs had failed to establish that Wal-Mart operated "under a general policy of discrimination." Wal-Mart's "policy" of handing discretion to local managers could not establish commonality because, given the size and geographical scope of Wal-Mart, and absent some common policy or direction, it was unlikely that all managers would exercise their discretion in a common way. Because plaintiffs failed to demonstrate the 1.6 million female employees had much in common other than "their sex and this lawsuit", the Supreme Court found the action was not properly litigated as a class action. The case was remanded back to the California district court where it was first filed back in 2001.
As to be expected, just last week the plaintiffs filed a Fourth Amended Complaint in the district court. The complaint has been updated with the intent of bringing the scope of the class, as it is defined in the complaint, into accordance with the commonality guidelines set out by the U.S. Supreme Court. The complaint thus substantially narrows the class. No longer framed as a nationwide class action, the named plaintiffs now only purport to represent women working in California's 220 Wal-Mart and Sam's Club stores between 1998 and through at least June 2004 if not later (Sam's Club being a division of Wal-Mart). This class is estimated to be about 90,000 female employees -- a significant decrease from the initial 1.6 million class yet a size that we can expect Wal-Mart will continue to argue is unmanageable large.
The plaintiffs continue to allege that, as to female employees working in its California stores, Wal-Mart "maintained a pattern or practice of sex discrimination in compensation and promotion and that its compensation and promotion policies and practices had a disparate impact not justified by business necessity on its female employees." Plaintiffs' counsel has gone on record [pdf] stating the complaint was amended to not only narrow the class but also to add allegations based on newly discovered information and statistical analyses showing a consistent pattern of discrimination in pay and promotions through California. For instance, the amended complaint alleges that in January 2004, the then-CEO of Wal-Mart, Thomas Coughlin, told Wal-Mart's district managers at a meeting that the key to success was a "single focus to get the job done . . . [and] women tend to be better at information processing. Men are better at single-focus objective." He then allegedly instructed the managers to create a "culture of execution" and "culture of results" as they picked their “future leaders.” This, of course, is meant to establish a "general policy of discrimination" that was orally communicated from the top down to district managers. The suit, as before, seeks back pay and punitive damages for the class members as well as injunctive relief.
Plaintiffs' counsel is expected to file similar lawsuits around the country. Stay tuned. Wal-Mart has stated it does not believe that plaintiffs have cured the defects found by the Supreme Court. We anticipate it is likely that class certification issues in this case will again be presented to the Ninth Circuit, in which case, we may get further clarification on standards for class certification.