Business Perspectives

Wal-Mart v. Dukes adds clarity to issue of class certification

Some may question whether the rights of women in the workplace took a significant step backward with the recent United States Supreme Court decision in Wal-Mart Stores Inc. v. Dukes on June 20.

From a business perspective, though, the case strikes the right balance by still allowing relief for employees who are subjected to unlawful discrimination, while allowing businesses to realistically defend such claims when the commonality requirements necessary for class certification are not present.

In the case, three Wal-Mart employees filed suit against the company alleging that it discriminated against them on the basis of their gender by denying them equal pay and promotions compared with their male counterparts.

The plaintiffs conceded that Wal-Mart does not have an express corporate policy against the advancement of women. The plaintiffs argued, however, that Wal-Mart had a corporate culture of bias against women, which, combined with Wal-Mart's policy of providing local store managers significant discretion over store employees' pay and promotion, resulted in male employees earning disproportionately higher wages and receiving significantly more promotions than comparable female employees.

The plaintiffs claimed that Wal-Mart's refusal to regulate and supervise its managers' authority amounted to disparate treatment under Title VII of the Civil Rights Act of 1964.

Moreover, because the plaintiffs claimed that this alleged discrimination was common to all of Wal-Mart's female employees, the plaintiffs sought to certify a class of plaintiffs composed of over 1.5 million employees from over 3,400 stores nationwide.

The lower court originally certified the plaintiffs' proposed class and Wal-Mart appealed to the United States Supreme Court for relief. The Supreme Court focused its analysis on whether the plaintiffs' class satisfied the requirement that a class share common questions of law or fact.

For this commonality to exist, the class members must "have suffered the same injury." In a Title VII case, the court provided that the class members' "claims must depend upon a common contention," such that the "determination of (this common contention's) truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke."

The court explained that the party seeking class certification must affirmatively prove its compliance with this rule, and certification is only proper if the court finds, after a rigorous analysis, that these prerequisites are satisfied. Effectively, the court required the plaintiffs to establish by significant proof that Wal-Mart operated under a general policy of discrimination.

The court admitted that Wal-Mart's policy of allowing local managers' discretion over pay and promotion matters could be discriminatory, but under the facts of the case the policy directly opposed such a general policy of discrimination.

Furthermore, the court found that the evidence put on by the plaintiffs was wholly insufficient to establish this commonality because the proposed class involved employees holding different jobs, at different hierarchy levels, for different lengths of time, in different stores, with different supervisors, and in different regions of the country.

Accordingly, the Supreme Court reversed the lower court's decision and decertified the plaintiffs' class, requiring the plaintiffs to pursue their claims on an individual basis.

From a purely legal perspective, Wal-Mart v. Dukes added clarity to the issue of class certification and showed the significance of commonality of claims between members of a class. The case also serves as an important lesson for employers that policies and training prohibiting discrimination can help combat claims of discrimination especially when class certification is at issue.

The case also raises a broader question of whether meaningful programs and training to encourage inclusion and diversity are what is really needed to change actual or perceived corporate culture and thus decrease these claims in the future.