Defeat in Wal-Mart Case Does Not Spell the End for Class Action Lawsuits

On June 20, 2011, the U.S. Supreme Court announced a decision in the case Wal-Mart v. Dukes that was quickly hailed in the media as a big win for corporate interests and a defeat for class actions in general. But further review and discussion with class action lawyers show that the case may not have the impact that many thought it would.

The Wal-Mart case itself could certainly be called big. It involved claims on behalf of up to 1.5 million current and former female employees at Wal-Mart, who, according to the plaintiffs in the case, were discriminated against in promotions and pay because they were women.

The case turned on whether the trial court could certify the class — meaning whether the trial court was correct to say that the 1.5 million women who had worked at Wal-Mart since 1998 had enough in common to be represented together at trial.

Female Workers Not Allowed to Bring Wal-Mart Class Action

Pay at Wal-Mart stores is largely up to the manager’s discretion, and the plaintiffs in the case used statistics to show that overall, women received lower pay at the retail giant. However, Justice Scalia, writing for the majority, said that there was not enough of a connection between the 1.5 million women to certify them as a class.

Scalia rejected the statistical analysis offered, and then looked at the facts submitted to the trial court showing specific acts of workplace discrimination. He noted that more than half of the incidents came from just six states, and concluded that even if all the reports of discrimination are true, that doesn’t mean that there is a general policy of discrimination at the company.

Courts Must Look at the Facts of Class Action Cases

Immediately following the decision, many pundits speculated that this defeat would mean fewer class-action cases against large companies in the future. But in the weeks since, at least four other large employment class actions* have been certified by lower courts. The judges in those cases cited the Wal-Mart case but then demonstrated how it did not apply to the facts of the cases before them.

The longer-term takeaway from the Wal-Mart class action case may be the Court’s insistence on looking at the facts of the case in the early stages to determine whether to certify the class. Cases that attempt to use statistics to show discrimination (as this case did) may not do as well, but cases where the people affected all have something specific in common will continue to prove it is possible to bring a class action discrimination lawsuit against a large company.

* Including class actions involving Tyco International Ltd’s SimplexGrinnell (New York underpayment class action), Starbucks Corp. (overtime pay class action), C.R. England Inc. (truck company wage and hour class action) and HCR ManorCare (nursing home wage and hour class action).