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Wal-Mart Wins! Employers Win! Supreme Court Rules That 1.5 Million Female Employees May Not Sue as a Class

Earlier this week, the Supreme Court in Wal-Mart v. Dukes, a landmark decision hailed by business groups, quashed what would have been the largest class action employment lawsuit in U.S. history, involving approximately 1.5 million female employees of Wal-Mart. The female employees claimed that local managers exercised their discretion over pay and promotions disproportionately in favor of men, which resulted in an unlawful disparate impact on female employees; and that Wal-Mart’s refusal to “cabin” its managers’ authority amounted to disparate treatment, all in violation of Title VII.

Rejecting a lower court’s ruling, the Court held the enormous class could not be certified because Plaintiffs failed to establish there was a specific, company-wide policy or practice of discrimination (i.e., common question of law or fact), as required by the Federal Rules. Justice Antonin Scalia wrote the court’s opinion blocking what he called “one of the most expansive class actions ever” to have been green-lighted by lower courts. Plaintiffs “wish to sue about literally millions of employment decisions at once,” Scalia wrote. “Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question, “Why was I disfavored?”

Even though the class members may still file suits individually, the ruling obviously is good news for Wal-Mart which faced billions of dollars in collective liability from the proposed class. It also is helpful for employers in general since the Court’s ruling makes it clear that a Title VII class action, and any other type of class action for that matter, will not be certified absent clear evidence of a common question of law or fact applicable to all class members.

The decision buttresses what appears to a be a growing reluctance by federal courts to grant class action status where the underlying circumstances of class members vary greatly, even though their legal claims appear to be the same. It also highlights the importance for employers to have appropriate employment policies and practices that are consistently applied across the organization.