Supreme Court Tosses Class Suing Wal-Mart

(CN) - Wal-Mart will not have to face a sexual discrimination class action that would have sought billions in damages on behalf of about 1.5 million women who have worked for the world's largest private employer, the Supreme Court ruled Monday.

Several women sued the Bentonville, Ark.-based company in a San Francisco-based District Court in 2001, claiming they received less pay and fewer promotions than men in comparable positions.

A federal judge ruled that the class should encompass "all women employed by Wal-Mart at any time after Dec. 26, 1998," across the company's 3,400 stores.

Wal-Mart argued that the proposed class - an estimated 1.5 million women - was too big to fight, and that employees should file individual lawsuits.

The full 9th Circuit ruled 6-5 in April 2010 to send the case to trial, ultimately narrowing the original seven plaintiffs to just three as representatives of the certified class. In December, the Supreme Court said it would intervene to decide whether class action is an appropriate forum for individual employees' claims.

In disbanding the class on Monday, the justices said that the women failed to prove commonality.

"Commonality requires the plaintiff to demonstrate that the class members 'have suffered the same injury,'" Justice Antonin Scalia wrote for the lead opinion, quoting the court's 1982 decision in General Telephone Co. of Southwest v. Falcon. "This does not mean merely that they have all suffered a violation of the same provision of law. Title VII, for example, can be violated in many ways - by intentional discrimination, or by hiring and promotion criteria that result in disparate impact, and by the use of these practices on the part of many different superiors in a single company. Quite obviously, the mere claim by employees of the same company that they have suffered a Title VII injury, or even a disparate impact Title VII injury, gives no cause to believe that all their claims can productively be litigated at once. Their claims must depend upon a common contention - for example, the assertion of discriminatory bias on the part of the same supervisor. That common contention, moreover, must be of such a nature that it is capable of classwide resolution - which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke."

Scalia pointed out that the plaintiffs failed to identify a real discriminatory corporate policy, and rather cited "Wal-Mart's 'policy' of allowing discretion by local supervisors over employment matters." (Italics in original.)

"On its face, of course, that is just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policy against having uniform employment practices," Scalia wrote. "It is also a very common and presumptively reasonable way of doing business."

The justices noted as well that the plaintiffs' anecdotal evidence is similarly unavailing.

"Here, by contrast, respondents filed some 120 affidavits reporting experiences of discrimination - about 1 for every 12,500 class members - relating to only some 235 out of Wal-Mart's 3,400 stores," Scalia wrote. "More than half of these reports are concentrated in only six States (Alabama, California, Florida, Missouri, Texas, and Wisconsin); half of all States have only one or two anecdotes; and 14 States have no anecdotes about Wal-Mart's operations at all. Even if every single one of these accounts is true, that would not demonstrate that the entire company 'operate[s] under a general policy of discrimination,' which is what respondents must show to certify a companywide class."

Though the plaintiffs defended class certification of their claims for back pay, the justices decided that monetary claims may not be certified where such relief is not incidental to the desired injunctive or declaratory relief.

In a partial dissent on behalf of the court's four left-leaning justices, Justice Ruth Bader Ginsburg took issue with the majority's conclusions about commonality.

Though she agreed with the majority's findings about the back-pay certification, Ginsburg said she would have left it for the lower court to determine if "common class questions 'predominate' over issues affecting individuals."

"The plaintiffs' evidence, including class members' tales of their own experiences, suggests that gender bias suffused Wal-Mart's company culture,' Ginsburg wrote in an 11-page opinion signed by Justices Stephen Breyer, Sonio Sotomayor and Elena Kagan.

"The District Court's identification of a common question, whether Wal-Mart's pay and promotions policies gave rise to unlawful discrimination, was hardly infirm," she added. "The practice of delegating to supervisors large discretion to make personnel decisions, uncontrolled by formal standards, has long been known to have the potential to produce disparate effects. Managers, like all humankind, may be prey to biases of which they are unaware. The risk of discrimination is heightened when those managers are predominantly of one sex, and are steeped in a corporate culture that perpetuates gender stereotypes."

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