Dukes v Wal-Mart Stores: SCOTUS To Decide Whether to Roll Back Employment Equity Suit

This March, the United States Supreme Court (“SCOTUS”) will consider whether to certify the largest employment discrimination class action in the country’s history. For nearly ten years, Betty Dukes and five other representative plaintiffs have held the “David v. Goliath” title after they brought a lawsuit against Wal-Mart on behalf of all women employed by the giant retailer across the nation and in a range of employment positions. They allege gender bias in the retailer’s corporate pay and promotion policies in violation of equal employment opportunity under Title VII of the 1964 Civil Rights Act, claiming that women were paid less than men in comparable positions and received fewer – and later – in-store promotions.

The overarching issue at the federal district court and the Ninth Circuit Court of Appeals was whether the plaintiffs could be certified as a class action under Rule 23 of the Federal Rules of Civil Procedure. Rule 23(a) in particular states that a district court may certify a class only if:

(1) the class is so numerous that joinder of all members is impracticable,

(2) there are questions of law or fact common to the class [“commonality”],

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class [“typicality”]; and

(4) the representative parties will fairly and adequately protect the interests of the class.

Last April, in Dukes v Wal-Mart Stores, 603 F.3d 571, the Ninth Circuit released a controversial, 6-5 split decision in which the majority affirmed the district court’s certification of the action as a Rule 23(b)(2) class, a result the dissent vociferously opposed.  The tension on the split bench was palpable. In a pithy concurring statement, Judge Susan P. Graber wrote,

If the employer had 500 female employees, I doubt that any of my colleagues would question the certification of such a class. Certification does not become an abuse of discretion merely because the class has 500,000 members.

In his concurring dissent, Chief Judge Alex Kozinski immediately shot back,

Maybe there’d be no difference between 500 employees and 500,000 employees if they all had similar jobs, worked at the same half-billion square foot store and were supervised by the same managers… They have little in common but their sex and this lawsuit.

The Agenda

In accepting certiorari, SCOTUS asked the parties to prepare arguments addressing two main questions:

I. Whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2) – which by its terms is limited to injunctive or corresponding declaratory relief – and, if so, under what circumstances.

II. Whether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a).

Question I pertains to whether the Ninth Circuit erred in ruling that the plaintiffs, who were seeking monetary relief in the form of back pay, could be certified as a class under Rule 23(b)(2), the issue I find to be less scintillating. The more interesting problem is rooted in Question II and, in particular, the Rule 23(a) challenges of establishing commonality and typicality in a proposed class that is both numerous and diverse.

Searching For Common Ground… Among 500,000

Betty Dukes does not have it easy. Her proposed class action is marred by practical challenges in addition to legal ones, including the sheer size of the group, its manageability and the anticipated implementation of the trial itself.

Furthermore, she would have to disprove the dissent’s contention that the plaintiffs had failed to provide “significant proof” that all the members of the proposed class were affected by a company-wide discriminatory policy or practice.

The “significant proof” requirement was itself a disputed point in the Ninth Circuit judgment. While the majority held that the plaintiffs merely had to show a common policy alleged to be discriminatory, the dissent maintained that they needed to adduce “significant proof” that the company policy was discriminatory. The dissent extracted the “significant proof” requirement from General Telephone Co of Southwest v Falcon, 457 US 147 (1982) [Falcon], in which the U.S. Supreme Court wrote, in a footnote,

Significant proof that an employer operated under a general policy of discrimination conceivably could justify a class of both applicants [for employment] and employees if the discrimination manifested itself in hiring and promotion practices in the same general fashion, such as through entirely subjective decision making processes.

Although the dissent’s “significant proof” requirement inference is perceivable, it will certainly be helpful for SCOTUS to clarify the meaning of its statement. It seems difficult to conceive that all plaintiffs attempting to certify a class action based on a general company policy of discrimination – no matter what the size – would be required to provide “significant proof” of policy bias.

As noted by the majority, the common law has traditionally segregated the certification stage from the trial stage, during which “significant proof” of actual discrimination would appear to be more relevant. It is also important to keep in mind that the proposed class in Falcon was much more exacting because the sole plaintiff sought to represent both employees and potential employees (applicants). SCOTUS will have to clarify whether it really intended to place such an evidentiary burden on all future employment class actions.

The dissent also took issue with the evidence presented by the plaintiffs’ expert witnesses. A professor of sociology had concluded from a social framework analysis that Wal-Mart’s centralized organizational culture and weak equal employment policies made those policies and practices vulnerable to gender bias. Wal-Mart and the dissent immediately challenged the expert’s methodology, questioning its scientific validity.

The plaintiffs’ statistician also ran regression analyses across 41 regions, concluding that there were widespread, statistically significant disparities between male and female Wal-Mart employees in terms of pay and promotions. The dissent argued that the store-by-store analysis conducted by the defendant’s expert would have been more appropriate in examining the way company-wide policies actually influenced the practices of individual stores.

Therefore, SCOTUS will be looking to define the relevance of the merits of a claim in class certification hearings and to weigh the specific evidence the plaintiffs adduced in this case.

Would Betty Dukes Succeed in Canada?

If Betty Dukes were to attempt to certify her class action in Ontario, her application would proceed under s. 5(1) of the Class Proceedings Act, 1992, SO 1992, c 6. Would she succeed?

(a) Is There a Reasonable Cause of Action?

I would say Betty Dukes’ claim of employer discrimination is a reasonable cause of action.  Anyone object?

(b) Is There an Identifiable Class?

The proposed class would include all women who were in the past, or at present, employed by Wal-Mart in Canada and subjected to the retailer’s pay and promotion policies. Though far from narrowly defined, this appears to be, at least, an identifiable class that would not be determined based on the merits of the action.

(c) Do the Claims of the Class Members Raise a Common Issue? (Commonality)

Here’s the caveat. According to Hollick v Toronto (City), [2001] 3 SCR 158, an issue will be common only where its resolution is necessary to the resolution of each class member’s claim.  Here, the issue would be whether Wal-Mart’s company-wide pay and promotion policies and practices are discriminatory against its female employees. While its resolution would certainly be substantial to each member’s claim (in fact, it could be decisive), it is likely not necessary to proving individual claims, particularly if those claims are more relevant to the discriminatory practices of specific stores.

(d) Would a Class action Be the “Preferable Procedure,” Considering Judicial Economy, Access to Justice, and Modification of the Defendant’s Behaviour?

In terms of judicial economy, if it is found that Wal-Mart does have company-wide discriminatory policies, then all the class members would be entitled to some form of relief and there would be no need to establish whether each member had individually experienced discriminatory treatment. However, each class member may have been affected by the discriminatory practice in a different way and individual claims would have to be assessed to determine the type of relief required, be it an injunctive remedy or back pay.

That said, I see this more as an administrative rather than a legal challenge. The class action is a means of legal recourse that would likely be extremely costly and inaccessible if pursued by the individual members. Furthermore, if the claim were successful, there is no question that Wal-Mart would be immediately required to rectify its corporate policies.

(e)(i) Would the Plaintiff Representatives Fairly and Adequately Represent the Interests of the Class? (Typicality)

Only one of the six plaintiffs held a Wal-Mart management position and the plaintiffs are not representative of all the geographic regions included in the class. However, if a discriminatory company-wide policy did exist, all the class members would likely have faced similar gender bias, so the plaintiffs could fairly and adequately represent all the members to that extent. Moreover, Ontario does allow automatic class members to opt out of the action, a key difference between Canada and the United States, where courts have traditionally held that members cannot opt out of Rule 23(b)(2) classes.

No Longer Just a Class Action

Would Betty Dukes succeed in certifying her class action in Ontario? It seems unlikely. Her most challenging obstacle would be the issue of commonality, which hinges on the strength of the company-wide discriminatory policy argument. The resolution of the latter might not be necessary to individual class member claims, but its success would be critical to them. Class certification would become increasingly dependent on the merits of the action itself, an approach Canadian courts have cautiously avoided.

And that’s what has happened to the Dukes case. Indeed, the commonality and typicality issues have been so closely tied to the allegation of company-wide gender bias that in determining whether to certify Betty Dukes’ proposed class, SCOTUS will inextricably be – whether expressly stated or not – deciding on the merits of her claim. And, with SCOTUS’ notorious record of reversing Ninth Circuit rulings, it is rather disheartening to predict that Goliath may win this round. Wouldn’t it be a vision to see the U.S. Supreme Court defy all expectations and set a new precedent to drive one home for the 60-year-old, former Wal-Mart greeter, Betty Dukes.

Update: On June 20, 2011, the U.S. Supreme Court unanimously rejected the plaintiffs’ application for class certification. The Court split with respect to whether a class claiming discrimination was required to show that the employer had operated under “a general policy of discrimination.” The majority, led by Justice Scalia, held that it did. The dissent, led by Justice Ginsburg, argued that it did not. The full judgment can be found here.