November 1, 2011

By: Shelly R. Pagac

On June 20, 2011, the United States Supreme Court refused to certify a class action lawsuit against Wal-Mart, which would have comprised approximately 1.5 million members. The three named Plaintiffs seeking to represent the class claimed they had been discriminatorily denied promotions and pay in violation of Title VII because the local supervisors exercised unfettered discretion over pay and promotion matters. Interestingly, their legal theory, which may have doomed their case, was that the claimed discrimination to which they had been subjected was common to every one of Wal-Mart’s female employees. The Supreme Court held because the Plaintiffs provided no convincing proof of a company-wide discriminatory pay and promotion policy, the class could not establish the existence of any common question. Because no common question existed, the Supreme Court refused to certify the class.

How did the Supreme Court reach its conclusion refusing to certify the class? In reaching its decision, the Supreme Court did not focus on the incredible size of the class to demonstrate that joinder of all members was impracticable, which perhaps would have been an easier approach, but focused on the requirement that there must be questions of law or fact common to all members of the proposed class in order for the class to be certified.

In finding there was no commonality within the class, the Court reasoned that the Rule 23 language requiring commonality is easy to misread since any competently crafted class complaint literally raises common questions. Simply asking whether all the plaintiffs work for Wal-Mart, or whether managers have discretion over pay, or whether an unlawful employment practice existed are not sufficient questions to obtain class certification. As the Court explained, commonality requires the plaintiff to demonstrate that the class members have suffered the same injury and not merely that they have all suffered a violation of the same provision of law. “Quite obviously, the mere claim by employees of the same company that they have suffered a Title VII injury, or even a disparate impact Title VII injury, gives no cause to believe that all their claims can productively be litigated at once. Their claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor. That contention, moreover, must be of such a nature that it is capable of class-wide resolution—which means that determination of its truth or falsity will resolve an issue that is essential to the validity of each one of the claims in one stroke.” Id. at 9.

In order to establish a nationwide class, Plaintiffs had to present proof that Wal-Mart operated under a general policy of discrimination. In order to do so, the class relied on three forms of proof: (1) statistical evidence; (2) anecdotal reports of discrimination; and (3) the testimony of a sociologist, Dr. William Bielby.

First, the Court rejected the sociologist’s testimony. The Supreme Court noted that Dr. Bielby could not determine with any specificity how regularly stereotypes play a meaningful role in employment decisions at Wal-Mart. During his deposition, “Dr. Bielby conceded that he could not calculate whether 0.5 percent or 95 percent of the employment decisions at Wal-Mart might be determined by stereotyped thinking.” Id. at 13. Because Bielby had no answer to that question, the Court stated it could “safely disregard what he has to say.” Id. at 14.

Next, the Plaintiffs attempted to rely on statistical analysis in establishing that a common question existed. The plaintiffs presented a regression analysis in which the statistician compared region by region the number of women promoted into management positions with the percentage of women in the available pool of hourly workers. The statistician concluded that there were statistically significant disparities between men and women at Wal-Mart, and these disparities could only be explained by gender discrimination. The Court rejected the impact of these studies, and explained that one named plaintiff’s experience of discrimination was insufficient to infer that discriminatory treatment was typical of the employer’s employment practices. Finally, the Court found respondents’ anecdotal evidence suffered from the same defect in that, just because one individual claimed they had been discriminated against, that did not mean that every female had been discriminated against. Respondents had filed some 120 affidavits reporting incidents of discrimination—about one for every 12,500 class members—relating to only about some 230 out of Wal-Mart’s 3,400 stores. The Court reasoned that even if every single one of these accounts was true, it would not demonstrate that the entire company operated under a general policy of discrimination.

This decision, along with the Supreme Court’s recent decision in AT&T v. Concepcion, in which the Supreme Court upheld AT&T’s arbitration provision in its consumer contracts requiring parties to bring suit in their individual capacities, rather than as a plaintiff or class member in any purported class or representative proceeding, suggests the beginning of a trend of Supreme Court decisions designed to control and rein in the ever-broadening scope of class action litigation in the employment law context and beyond. Both of these decisions can be viewed as critical of class action litigation and may be a signal that the class action heyday is over, or at least is on its way to being controlled.

*This article appeared in the November 11, 2011 edition of Upon Further Review, the Philadelphia Bar Association’s online publication.