(June 21, 2011) Yesterday, the U.S. Supreme Court issued its long-awaited ruling in Wal-Mart Stores, Inc. v. Dukes and provided a victory for the nation’s largest retailer and employers nationwide.  The Supreme Court blocked “one of the most expansive class actions ever,” ruling that 1.5 million female employees could not file a class action lawsuit against Wal-Mart. The decision is the most significant business case of the Supreme Court’s term and is wholly welcomed by the business community.

The lawsuit dates back to 2001 and involved employment practices dating back to 1998. Current and former female employees claimed that Wal-Mart discriminated against them on the basis of their sex by denying them equal pay or promotions. The employees alleged that Wal-Mart's strong and uniform corporate culture fostered gender stereotyping and led to adverse treatment of women in all of the retailer's 41 domestic regions. 

The court held that the lawsuit brought by this diverse group of employees was too large and the claims too varied to be certified. A party that wants to certify a class must show commonality of the claims—that there are common questions of law or fact capable of class-wide resolution. 

The class members tried to claim a pattern and practice of discrimination that was nationwide and involved nearly 3,400 individual stores.  Here, the female employees “wish to sue about literally millions of employment decisions at once," Justice Antonin Scalia wrote for the majority.  The court found that there was no “glue” holding together the reasons for individual decisions made by individual managers in these stores across the country. 

While class-certification may be appropriate if there is “significant proof” of a policy of general discrimination, the court said absolutely no such evidence was presented.  In fact, Wal-Mart demonstrated the exact opposite: 

• Wal-Mart had an announced policy forbidding sex-discrimination and imposing penalties for denial of equal employment opportunity.
• Wal-Mart did not have any testing procedure or evaluation method that could be shown to be biased.   
• Wal-Mart had a policy of leaving decision making over employment matters up to the discretion of local supervisors—just the opposite of a uniform employment practice. 

The court noted that:

“In a company of Wal-Mart’s size and geographical scope, it is quite unbelievable that all managers would exercise their discretion in a common way without some common direction. Respondents attempt to make that showing by means of statistical and anecdotal evidence, but their evidence falls well short.”

The class members sought to use testimony of a sociologist who claimed that Wal-Mart’s strong corporate culture made it “vulnerable” to gender bias. The court rejected any notion that this testimony amounted to “significant proof” that Wal-Mart operated under a general policy of discrimination.

Scalia’s opinion was joined by four of the more conservative justices on the court.  The other four members joined part of Scalia’s opinion but dissented from other parts of the court’s holding

The employees were seeking back pay, punitive damages and changes to how Wal-Mart makes its pay and promotion decisions. These employees can no longer continue with their class action lawsuit but can pursue individual claims. The case is Wal-Mart Stores, Inc. v. Dukes (No. 10-277, June 20, 2011).