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University of Pittsburgh

July 7, 2011

Impact of Walmart ruling

unclear, prof says

Jessie Allen

Jessie Allen

The recent U.S. Supreme Court decision that threw out a class action lawsuit on behalf of more than 1 million women against Walmart will have major implications for future employment discrimination suits, but what those implications will be are unknown at this point, according to a Pitt law professor who teaches civil procedure law.

“This is one of those cases that almost surely is going to have a very big impact, but it’s very hard to say what that impact will be,” said Jessie Allen, referring to the June 20 decision rendered in the Wal-Mart Stores Inc. v. Dukes, et al employment discrimination case. (Walmart has changed its corporate name from Wal-Mart since the case initially was filed.)

“A decision like this can be interpreted narrowly or broadly and can be pushed in one direction or another by subsequent cases in the federal courts, and really at all levels.”

The Walmart case was brought on behalf of some 1.5 million women currently or formerly employed by the chain of 3,400 national stores since 1998. The plaintiffs claimed that Walmart’s corporate culture led to gender discrimination by favoring men disproportionately for promotions and raises in violation of Title VII of the Civil Rights Act of 1964, the law that governs employment discrimination. The plaintiffs sought injunctive relief and back pay on behalf of current and former female employees.

Two separate decisions were rendered in the case: a side issue on filing procedure was decided unanimously by the court; the main issue was decided by a 5-4 vote, Allen said.

In the unanimous lesser decision, the court held that respondents’ back pay claims were improperly certified under Rule 23(b)(2), which governs injunctive relief procedures but does not cover claims for monetary relief.

“The unanimous decision has to do with the fact that the lawyers brought the suit under the wrong part of Rule 23,” Allen said.

“So it’s not surprising to me that the decision was 9-0, saying that this individual back-pay business is not fitting well under the class action umbrella that’s aimed at a ‘Thou shalt not’ injunction rather than a ‘this is how much you’re owed’ judgment,” she said.

“The bottom line is that even with that unanimous opinion, the case still could have gone forward. They would have had to try to re-certify as a class under the other [Rule 23] subsection that involves individualized notice and a higher burden for the plaintiffs and which may have been significantly more onerous — but they could have gone forward,” she said, adding that the minority opinion, penned by Justice Ruth Bader Ginsburg, left room open for re-filing.

But by overturning an earlier decision of the Ninth Circuit Court, the 5-4 majority decision, authored by Justice Antonin Scalia, shut down entirely the class action lawsuit, effectively making it more difficult to bring future class action employment discrimination suits in federal court, she maintained.

“The majority’s decision ended the class action case at all levels,” although individuals are free to pursue their own lawsuits against Walmart, Allen said.

“You must understand: Theoretically, this is not a Title VII decision. The court is not interpreting discrimination law; they’re interpreting procedural law,” Allen said.

“A lot of people have a lot of different theories [about] how this is going to go, but it’s totally unclear what it means for future litigation in a lot of different areas,” including Title VII employment discrimination cases and gender and race discrimination cases, she noted.

“There are a couple of different ways to prove discrimination. One has to do with the effects, or impact, of employers’ decisions and the other has to do with the reasons behind those decisions. The court here is basically making it harder to bring class action cases for both of those in a way that is tending to narrow the kinds of claims that can be brought,” Allen said.

There also could be constitutional repercussions from the Walmart decision, she noted.

“Class actions were constructed as a substitute for what we generally think of as the gold standard of justice: individual adjudication, that is, individuals getting their time in court. It’s connected with the rise of antidiscrimination law and in particular civil rights cases, part of a Congressional policy decision to widen the courthouse gates. It’s interesting that this court is narrowing those gates in the context of employment discrimination,” Allen said.

“In the 5-4 split decision, what the majority is saying is the way these 1.5 million women were injured isn’t similar enough to justify a common, or class, action. Whether you put that in terms of the individuals who are class representatives aren’t representative enough, or there isn’t enough ‘commonality’ — the word Justice Scalia uses — that what their claim of injury is, isn’t enough the same. That hasn’t been read into the rules before,” she said.

“Scalia says the reason for the injuries can’t be the same when there are so many plaintiffs — that it can’t be the same, not that it isn’t the same. When [plaintiffs] are not pointing to an affirmative policy of discrimination, but a negative policy of allowing discretion, then in his mind and in the minds of the majority, the results that are produced cannot be seen as a common injury,” Allen said.

Ginsburg’s dissenting opinion strongly disagreed with that conclusion.

“What Justice Ginsburg says in dissent is: If the injury they’re conceiving of is allowing individual managers to use gender-stereotypes to dictate employment decisions through this wide-open discretion, the common reason is that individual managers gender stereotype in a culture that does nothing to combat that, combined with a top-down decision to give total discretion over hiring, firing, promoting and pay decisions that provably results in women earning less, getting less advancement. That’s an impact claim, right?” Allen suggested.

“Scalia virtually says, ‘No it’s not. That’s not enough.’ And in a sense he’s saying, ‘That’s not discrimination.’ He might be saying that even in a smaller setting that kind of discretion, sort of laissez-faire from the top, just can never be discrimination, either in impact or treatment. And that would be a big deal, a really big deal,” she said, adding that only through future cases will it made clear if that will become the standard legal interpretation.

But regardless, Allen said, Scalia’s conclusion opens Pandora’s box: “That leads to the whole problem: Can an employer insulate itself from liability just by giving discretion to individuals?”

Quoting from Scalia’s decision, Allen said, “The policy of allowing discretion by local supervisors is just the opposite of a uniform employment practice that would provide the commonality needed for a class action. … It is also a very common and presumptively reasonable way of doing business.”

“Presumptively reasonable? That seems like a pretty heavy thumb on the scale for a practice that has long been recognized as a familiar mechanism for actually facilitating discrimination. Walmart says, ‘Hire who you want, fire who you want. Pay who you want,’” while washing its hands of the individual decisions, Allen maintained. “The idea that there’s a presumption in favor of such discretion, I’ve never heard that before. Says who?”

While Allen wishes the Walmart class action case would have been allowed to continue, she acknowledges that a decision favoring the plaintiffs hardly would have been a slam dunk.

“I just said the policy of open discretion doesn’t seem presumptively reasonable to me, but neither does it seem to me to be presumptively discriminatory. You are going to have to prove that there’s something about the culture that’s causing the discrimination and that’s not going be easy. It’s very hard to show the impact,” she said.

In addition, previous gender discrimination cases show that the defendants typically will counter with manifold reasons that women don’t do as well as men, reasons ostensibly that are not based on gender discrimination.

“There was a big Supreme Court case over a decade ago against Sears. The [plaintiffs] had tons of proof, but the counter-claims that were made there were that women self-select out, they want to spend more time with their family, they don’t want to travel,” Allen said. “So the company can launch all of those defenses and they’re often successful in terms of being able to defeat the kind of proof that would show that it’s a company’s policy or there’s some kind of laissez-faire atmosphere within a discriminatory culture,” she said.

“In the dissent, Justice Ginsburg talks about how the majority decision changes the proof level in this kind of case,” Allen pointed out. “She says, ‘We’ve held that discretionary employment practices can give rise to Title VII claims, not only when such practices are motivated by discriminatory intent but when they produce results.’”

Ginsburg is maintaining that the evidence presented by the plaintiffs adequately demonstrated that resolving their gender discrimination claims would necessitate examination of particular policies and practices alleged to affect, adversely and globally, women employed at Walmart’s stores, Allen said.

“Then Ginsburg adds, ‘Aware of the problem of subconscious stereotypes and prejudices, we held that the employer’s undisciplined system of subjective decision-making was an employment practice that may be analyzed under the disparate impact approach,’” Allen said.

“The majority opinion, without it being 100 percent certain, virtually says that’s no longer possible,” she said.

“Does that mean that’s no longer possible quantitatively, like this is too big with too many plaintiffs, or that it’s no longer possible conceptually? That ‘presumptively reasonable’ sounds like it’s the latter,” Allen said.

“But again, the great thing about our common law system is the truth is it isn’t either right now. It will become one or the other of those and nobody knows which it will become. A lot will depend on the cases brought and the judges interpreting them and the opinions they write and who’s on the Supreme Court when it comes back up.”

—Peter Hart

Filed under: Feature, Volume 43 Issue 22

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