Last week in a 6-5 decision, the Ninth Circuit Court of Appeals certified what could be the largest class action discrimination claim in U.S. history. The lawsuit involves allegations that Wal-Mart pays female workers less than comparable men, and that the world's largest employer promotes fewer women to store management positions.
The certified class consists of between 500,000 and 1 million women nationwide. The potential damages from an adverse verdict could reach billions of dollars in back wages, punitive damages and other relief.
Wal-Mart contended that the allegations involved subjective decisions made at each store, and not claims of overall corporate policies. Therefore, the company claimed that class certification would be inappropriate because the plaintiffs could not demonstrate common facts that led to pay and promotion decisions in each Wal-Mart store.
The Ninth Circuit disagreed, concluding that decentralized decision making could still fall within the commonality of facts prerequisite for class certification. If as alleged, a corporate culture of gender stereotyping existed within Wal-Mart, this could have led to the subjective pay and promotion decisions made at the store level.
Apart from the extraordinary financial risks to Wal-Mart, this decision signals to other large employers that decentralized hiring and promotion decisions made at branch locations will not shield them from class action claims. Even without evidence of overall corporate policies that directly lead to discriminatory actions, corporate culture and the tone set by management with respect to expectations from branch locations can be enough to establish commonality of facts in a class action context.