Supreme Court Halts Class Action Discrimination Lawsuit

Katie Colvin Esq.
June 28, 2011 — 2,300 views  
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If it wasn't storms or tornadoes whooshing through the country on June 20, 2011 - it was a collective sigh of relief by large, nation-wide employers upon learning that the Supreme Court had reversed the class certification in Wal-Mart v. Dukes (No. 10-277). The plaintiff class - seeking damages estimated close to one billion dollars - consisted of approximately 1.5 million hourly and salaried, current and former, female employees of Wal-Mart who claimed sex discrimination in pay and promotions.

In short, the Supreme Court overturned the lower courts when it decided that the plaintiff class fell short of satisfying the "commonality" burden imposed by Federal Rules. Rule 23(a) requires a class seeking certification to prove that it has common "questions of law or fact;" thereby dictating that such claims are capable of class-wide resolution. In other words, there must be a common answer to the common questions presented by the proposed class.

Here, the key inquiry was into the reasons for the alleged adverse employment actions; yet the plaintiff class hoped to sue for millions of employment decisions all at once. The Court reasoned that, absent some sort of "glue holding together the alleged reasons for those decisions, it will be impossible to say that examination of all the class members' claims will produce a common answer to the crucial discrimination question."

The Court also resolved a split amongst Appellate Courts in deciding that individual claims of backpay under Rule 23(b)(2) are not "incidental" to the injunctive or declaratory relief sought. Rather, monetary claims requiring individual proof can only proceed under Rule 23(b)(3), which only permits class certification upon a showing that common questions "predominate" over questions affecting individuals and after notice has been given with "opt out" opportunities made available.

This decision is significant on many levels. While it certainly may serve to dissuade plaintiff's attorneys from filing broad-based, "class-wide" discrimination lawsuits, it also provides proactive, practical guidance to employers:

• Non-Discrimination policies are essential. While practitioners have said it time and again, this case speaks volumes on the importance of a company-wide EEO policy. Because Wal-Mart had an established policy against sex discrimination that included penalties for unequal treatment/opportunities, plaintiffs were hard-pressed to provide the required "significant proof that an employer operated under a general policy of discrimination." Especially where thousands of managers were making millions of pay and promotion decisions throughout 3400 stores. Plaintiffs' attempts at proof through statistics, anecdotal reports, and "expert" testimony by a sociologist simply fell short.

–Implement a policy or revisit your existing policy. If you do not have a policy - get one. When you have an effective policy, ensure it is posted, disseminated and acknowledged by all (either electronically or on paper); retain the acknowledgment; make the investment in training your managers on all aspects of the policy - its intent, application, and mechanics.

• Define your objective pay and promotion criteria. If the Lilly Ledbetter case did not capture your attention - make sure Wal-Mart does. Develop objective, measurable criteria for pay and promotion decisions. Make "defendable" decisions and document supporting facts. Absent factual supporting documentation, defending a pay or promotion decision years after it was made can be virtually impossible.

• Don't keep criteria secret and ensure managers understand and implement the criteria across their teams. Management should receive periodic training on important aspects of their jobs, like performance management. While you are training, remind your managers that the best kept records are factual, concise, and easily transferable to others.

While not even the best-prepared employer can avoid litigation, those who take heed when courts serve-up their preferences for persuasive evidence will be best positioned for an effective defense, potentially (and hopefully) leading to a more swift resolution of employee claims.
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Katie Colvin Esq.

Employment Practices Solutions, Inc.

Katie Colvin, Esq. is an accomplished employment lawyer with unique training, investigation, and counseling skills gained by practicing employment law in-house, at a private law firm, and for the City of Chicago.