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David Versus Goliath: Supreme Court Hears Landmark Class Action

All eyes are on the United States Supreme Court in a case that involves millions of female employees facing off against the nation’s largest retailer.  The United States Supreme Court heard arguments in March on the most closely watched case before it this year, and the largest employment class action in history, Wal-Mart Stores, Inc. v. Dukes.  Betty Dukes, along with several other current and former employees of the superstore, filed an action in the District Court for the Northern District of California in 2001 alleging that the chain engaged in discriminatory pay and promotion practices adversely affecting women.  They sought money damages, as well as an injunction ordering Wal-Mart to cease and desist such practices.  A class was certified including between 500,000 and 1.5 million current and former employees, making it one of the largest class actions in United States history.  The class includes all women who have worked for the retail giant since 1998.  It was certified by the District Court and upheld by the en banc Ninth Circuit. 

Specifically, the plaintiffs allege that women employed in Wal-Mart stores are paid less than their male counterparts holding comparable positions, and despite having higher performance ratings and greater seniority.  Additionally, they claim that women receive fewer, and wait longer for, promotions to management-level positions.  In seeking class certification, the plaintiffs claimed that the retailer’s internal structure promotes discrimination and stereotyping on the basis of sex, that such practices are consistent throughout Wal-Mart’s national sphere and that this discrimination affects all women who have ever been employed by the retail giant.  The effect, they claim, is that company-wide men are paid on average five to fifteen percent more than women, or an average of approximately five-thousand dollars more per year.   

For its part, Wal-Mart contends that the case has grave procedural flaws.  It asserts that the named plaintiffs have little in common with one another, let alone the remaining million plus women who make up the class.  It further contends that there is no statistical difference in pay between men and women at ninety percent of its stores, where the plaintiffs claim the relevant employment related decisions are actually made. 

Despite the extensive media hype the case has received, the Court will not decide whether Wal-Mart is guilty of discrimination.  Rather, the Court must decide whether the small group of plaintiffs has satisfied federal class-action rules.  To be certified, a class must meet various requirements.  Namely, it must show that joinder of all class members would be impracticable, that class members share common questions of law or fact, that claims or defenses of the representative parties are typical of the claims and defenses of the class, and that the representative parties will fairly and adequately protect the interests of the class.

In addition to meeting these requirements, the class may be certified only if “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief…is appropriate respecting the class as a whole.”  Class certification under this provision does not extend to cases in which the appropriate final relief relates exclusively or predominately to money damages.  That raises considerable problems for this class because, in addition to seeking injunctive and declaratory relief, the class also sought potentially billions of dollars in back pay.  The Ninth Circuit, however, affirmed the class based upon its application of a new multi-factor predominance test which considers several factors to determine whether monetary damages “predominate” over the injunctive relief. 

Corporate America and its counsel will, no doubt, be on the edge of their seats until the Court reaches a decision, which is expected by the end of June.