The US Supreme Court agreed on Monday to examine whether a federal appeals court ruled correctly when it authorized a massive class-action lawsuit accusing Wal-Mart of discriminating against as many as 1.5 million female employees.
If allowed to proceed, the lawsuit would be the largest employment class action in history. Wal-Mart is the largest private employer in the US, with 3,400 stores nationwide.
At issue in the appeal is whether the process established by the lower courts to litigate the case as a single trial complies with limitations set out in the Federal Rules of Civil Procedure.
Under a class-action lawsuit, a small number of individuals are permitted to file a lawsuit that may affect a much larger number of individuals with similar claims. The idea is that the small group can accurately represent the larger “class” of victims because the entire class shares the same injury.
Lawyers for Wal-Mart argue that employment discrimination claims against a nationwide company do not fit with a one-size-fits-all approach. There are substantial differences from region to region, store to store, and supervisor to supervisor in how Wall-Mart employees are hired, promoted, or fired, they argue. Those differences make this case the wrong vehicle for a class-action lawsuit, they say.
“The class certified by the district court was estimated to include over 1.5 million former and current female Wal-Mart employees who held different jobs in different stores under the supervision of different managers,” Theodore Boutrous wrote in his brief urging the Supreme Court to take up the company’s appeal. “The majority decision [by the Ninth US Circuit Court of Appeals] conflicts with every pertinent decision of this court and many decisions of other circuits on numerous important, recurring issues in class-action litigation.”
Mr. Boutrous said the Ninth Circuit decision has created a three-way split among the appeals courts on when and how to authorize class-action lawsuits.
The suit against Wal-Mart charges that women employed by the retail giant are paid less than men in comparable positions, despite higher performance ratings and greater seniority.
In addition, the suit charges that women receive fewer promotions to management positions than men and wait longer than men for promotions.
The disparate treatment and disparate impact on female employees violate Title VII of the Civil Rights Act of 1964, according to the lawsuit.
The suit was filed by six named employees on behalf of all current and former female employees of Wal-Mart since December 1998. It seeks injunctive relief, back pay, and punitive damages. If Wal-Mart loses the suit, the monetary relief could total billions of dollars.
Wal-Mart maintains a corporatewide policy prohibiting gender discrimination, but lawyers for the female employees argue that Wal-Mart has a strong, centralized corporate culture that fosters gender stereotyping. One district manager saw nothing wrong with holding management meetings at Hooters restaurants, according to a brief. A consultant advised management in 1998 that many female employees perceived a “glass ceiling” at the company, lawyers said.
Lawyers for Wal-Mart argued that the appeals court ruling upholding such a large class-action lawsuit raises issues of far-reaching importance for class actions against a range of businesses and industries, from product liability and antitrust, to medical monitoring claims.
They said that if a company is being accused of discriminating against virtually every female employee since 1998, “there is no way fairly and constitutionally to adjudicate the kaleidoscope of inherently individualized claims.”
Brad Seligman, a Berkeley, Calif., lawyer representing the female plaintiffs, said in his brief that class-action certification is appropriate because the alleged discriminatory conduct was uniform and had become standard operating procedure.
“The district court found that Wal-Mart’s policies, administered through a highly centralized system, applied uniformly across all stores and regions,” Mr. Seligman wrote in his brief. “It found statistical patterns of discrimination were consistent across 41 regions and that significant portions of the decision-making process occurred above the store level.”
Seligman added: “Under petitioner’s approach, large companies would never be subject to class actions challenging company-wide pay or promotion practices since personnel policies must, at least to some degree, be implemented by local managers.”
The case, Wal-Mart v. Dukes, will be heard next spring, with a decision expected by late June.