Wal-Mart Million-Worker Bias Suit Thrown Out by High Court

Wal-Mart Wins Supreme Court Gender-Bias Case
Betty Dukes, center, one of the six named plaintiffs, speaks to the media outside the U.S. Supreme Court in Washington D.C., March 29, 2011. Photographer: Zhang Jun/Xinhua/Photoshot/Newscom

The U.S. Supreme Court, in a ruling that will mean new limits on nationwide class-action suits, ruled that Wal-Mart Stores Inc. can’t be sued for discrimination on behalf of potentially a million female workers.

The justices, dividing 5-4, said the lawyers pressing the case failed to point to a common corporate policy that led to gender discrimination against workers at thousands of Wal-Mart and Sam’s Club stores across the country.

The workers “provide no convincing proof of a companywide discriminatory pay and promotion policy,” Justice Antonin Scalia wrote for the majority. All nine justices voted to overturn an appeals court decision that approved the class action, with four of them saying they would have ordered further proceedings.

Wal-Mart rose 22 cents to $53.04 at 4 p.m. in trading on the New York Stock Exchange. The company, based in Bentonville, Arkansas, said in a statement that the ruling “effectively ends this class-action lawsuit.”

“As the majority made clear, the plaintiffs’ claims were worlds away from showing a companywide pay and promotion policy,” Wal-Mart said.

Limiting Lawsuits

The ruling limits the ability of plaintiffs’ lawyers to win multimillion-dollar damages through a single lawsuit, particularly against employers. Units of Cigna Corp., Goldman Sachs Group Inc., Bayer AG, Toshiba Corp., Publicis Group SA, Deere & Co. and Costco Wholesale Corp. all face gender discrimination complaints that seek class-action status.

More than 20 companies supported Wal-Mart at the Supreme Court, including Intel Corp., Altria Group Inc., Bank of America Corp., Microsoft Corp. and General Electric Co.

Four justices -- Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan -- said they would have returned the case to a lower court and let the workers try to press a class action using a different legal theory.

The women’s lawyers said they would seek to move ahead with claims on behalf of aggrieved workers, either as individuals or as part of smaller groups.

Case Not Over

“This case is not over,” said Brad Seligman, one of two lead attorneys for the workers. “Wal-Mart is not off the hook. There are thousands of claims of discrimination that remain to be filed.”

The case was one of the most closely watched Supreme Court business disputes in years, in part because the justices hadn’t looked at the standards for certifying a class-action suit in 12 years. Billions of dollars were at stake for Wal-Mart, the world’s largest private employer.

“This is without a doubt the most important class-action case in more than a decade,” Robin Conrad, who runs the U.S. Chamber of Commerce’s litigation unit, said in a statement. “Our economy would be better served if businesses could spend more resources creating jobs and fewer resources fighting frivolous litigation.”

Women’s advocates called on Congress to enact new legislation protecting the rights of female workers.

“With this decision, the Supreme Court has assisted Wal-Mart in its efforts to systematically dole out promotions and pay raises on the basis of sex,” said Terry O’Neill, president of the National Organization for Women.

White House Reaction

White House spokesman Jay Carney declined to comment on the case, while saying President Barack Obama supports proposed federal legislation to ensure pay equity for women in the workplace.

Filed in 2001, the suit aimed to cover every woman who worked at the retailer’s Wal-Mart and Sam’s Club’s stores at any point since December 1998, including those not hired until years after the suit was filed.

The women pressing the suit claimed they and colleagues across the country were victimized by Wal-Mart’s practice of letting local managers make subjective decisions about pay and promotions. More than 100 Wal-Mart employees filed sworn statements saying they were paid less and given fewer opportunities for promotion than male colleagues.

Scalia said that neither those anecdotes, nor statistical evidence that workers said showed a gender-based pay disparity, was enough to show a common corporate practice.

“Even if every single one of those anecdotes is true, that would not demonstrate that the entire company operates under a general policy of discrimination,” Scalia wrote.

Appeals Court Ruling

A federal appeals court had let the suit go forward on behalf of women who were working at Wal-Mart at the time the suit was filed.

Ginsburg said she would have resolved the case on narrower grounds. She said the appeals court should have required the workers to meet the standards that normally apply to class actions seeking damages, instead of the looser requirements for plaintiffs seeking an injunction.

“The plaintiffs’ evidence, including class members’ tales of their own experiences, suggests that gender bias suffused Wal-Mart’s company culture,” Ginsburg wrote.

Wal-Mart was represented by Theodore Boutrous Jr. of Gibson, Dunn & Crutcher. The lead attorneys for the plaintiffs are Joseph Sellers of Cohen Milstein Sellers & Toll and Seligman of the Impact Fund, which describes itself as a foundation that handles public interest litigation.

The case is Wal-Mart Stores v. Dukes, 10-277.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE