The Supreme Court holds that the largest potential class action employment lawsuit was improperly certified as a class action.

In Dukes, the Supreme Court was tasked to address whether the most expansive gender discrimination case was properly certified as a class action in accordance with the Federal Rules of Civil Procedure. There, the class plaintiffs were current or former employees of Wal-Mart who sought damages on behalf of themselves and a nationwide class of 1.5 million female employees because they asserted that Wal-Mart discriminated against female employees with respect to its pay and promotion decisions. Specifically, the plaintiffs asserted that Wal-Mart's policy of allowing its local managers to have discretion over pay and promotions had a disparate impact on all female employees at the company and requested "to litigate the Title VII claims of all female employees at Wal-Mart's stores in a nationwide class action." In support of their request to certify the nationwide class, the plaintiffs relied on statistical evidence about pay and promotion disparities between men and women at the company, anecdotal reports of discrimination by 120 female employees and the testimony of a sociologist, who performed a "social framework analysis" and concluded that the company was "vulnerable" to gender discrimination. Based on the evidence presented to it, the district court certified the nationwide class, and a divided en banc Court of Appeals affirmed the decision, which held that the "evidence of commonality was sufficient to 'raise the common question whether Wal-Mart's female employees nationwide were subjected to a single set of corporate policies (not merely a number of independent discriminatory acts) that may have worked to unlawfully discriminate against them in violation of Title VII.'" The Supreme Court, however, held that class certification was improper. First, the Court noted that the crux of the case is commonality, which requires the plaintiff to demonstrate that the class members "have suffered the same injury." In this case, however, the Court noted that the plaintiffs "wish to sue about literally millions of employment decisions at once [and] [w]ithout some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members' claims for relief will produce a common answer to the crucial question why was I disfavored." In evaluating the plaintiffs' class claims, the Supreme Court noted that there is a conceptual gap between an individual's claim that he or she has been denied a promotion or higher pay on discrimination and the existence of a class of persons who have suffered the same injury as that individual, such that the individual's claim and the class share common questions of law or fact. While the Court noted that there are two ways to bridge the conceptual gap, both were inapplicable to this case. First, the Supreme Court stated that the conceptual gap could be bridged in cases where an employer "used a biased testing procedure" to evaluate applicants, such that a class on behalf of the applicants who might have been prejudiced by the test could satisfy the commonality requirement. This was not applicable to this case, however, because "[t]he whole point of [Wal-Mart] permitting discretionary decisionmaking is to avoid evaluating employees under a common standard." Second, the Court stated that the gap could be bridged if there was "significant proof that Wal-Mart operated under a general policy of discrimination." However, the Court determined that the "significant proof" is "entirely absent here." In so holding, the Court reasoned that the only evidence of a "general policy of discrimination" was the testimony of plaintiffs' sociologist, who could not determine with any specificity how stereotypes played a meaningful role in employment decisions at Wal-Mart. Indeed, the Supreme Court expressly noted that "demonstrating the invalidity of one manager's discretion will do nothing to demonstrate the invalidity of another's [and] [a] party seeking to certify a nationwide class will be unable to show that all the employees' Title VII claims will in fact depend on the answers to common questions." Based on the foregoing, the Supreme Court held that plaintiffs failed to establish the existence of a common question to support class certification.

Case Law Alert - 4th Qtr 2011