On Monday, the U.S. Supreme Court unanimously reversed certification of the largest class action employment discrimination case in U.S. history. This decision calls into question the ability of plaintiffs to pursue class action claims involving large numbers of employees, when such cases call into question individual managers' motivations in making employment decisions.
Wal-Mart v. Dukes involved sex discrimination claims brought against the chain on behalf of up to 1.5 million female employees and applicants. The case alleged that Wal-Mart engaged in systematic discrimination at the store and district levels, as demonstrated by statistical information showing the numbers of female employees hired and promoted for management positions.
Wal-Mart claimed that the case could not be certified as a class action because the plaintiffs could not demonstrate that individual hiring and promotion decisions were based on any common company policies or directives. The lower courts sided with the plaintiffs, holding that the case could be managed as a class action, and that Wal-Mart would not be deprived of its ability to assert defenses to the discrimination claims.
The Supreme Court disagreed, decertifying the class. Every justice decided that at least part of the class action could not proceed, with a 5-4 majority rejecting certification of all aspects of the case. In its decision, the Court concluded that the plaintiffs failed to demonstrate common questions of law and facts central to each employment decision. The plaintiffs never alleged that Wal-Mart had a policy that permitted discrimination on the basis of gender. Instead, they claimed that the company's culture of allowing decentralized hiring and promotion decisions by local managers resulted in a corporate culture vulnerable to gender discrimination. Absent evidence of common direction by the company, anecdotal and statistical evidence of discrimination was not enough to maintain the class action claim.
The Supreme Court did not decide the substantive discrimination claims, and the plaintiffs are free to pursue them individually or in smaller class actions with common regional decision makers. However, the rejection of the class action claim removes the threat to Wal-Mart of a potentially monumental adverse verdict that would have granted relief to the entire class. Plaintiffs and their attorneys may be less inclined to pursue smaller discrimination claims given the comparably smaller relief potentially available.
The Dukes decision is a major victory for large employers concerned over the ability of plaintiffs to use statistical information to file very large class action claims. This decision will also impact class action lawsuits beyond the employment area. In situations where the alleged legal violations involve individual decisions and no overarching corporate guidance or policy, the Supreme Court's decision will make class action certification harder than ever.