The U.S. Supreme Court heard oral arguments yesterday in Wal-Mart Stores v. Dukes, a massive lawsuit that has been called the largest employment class action in U.S. history. The class of plaintiffs in this case is estimated to include approximately 1.5 million former and current female Wal-Mart employees seeking monetary relief that could amount to billions of dollars in back pay. Although the case involves alleged sex discrimination, the Court won’t be deciding whether the alleged discrimination occurred but instead will have to determine whether class-action treatment is appropriate.
Wal-Mart’s attorney presented the company’s case first and argued that since the employees’ claims hinge on the company’s delegation of discretion to individual managers throughout the country, the employees can’t meet the cohesion requirements necessary for class-action treatment.
During Wal-Mart’s presentation, Justices Ruth Ginsburg, Sonia Sotomayor, and Elena Kagan seemed somewhat sympathetic to the employees’ case. In fact, Justice Ginsburg wondered if it was Wal-Mart’s responsibility to determine whether gender discrimination was at work (and to stop it if it was) after it kept receiving reports that women were disproportionately passed over for promotion and that there was a pay gap between men and women.
During the employees’ attorney’s presentation, Justice Anthony Kennedy (who is often the swing vote in close cases) noted that the employees’ arguments were inconsistent (stating that the employees’ complaint “faces in two directions”) and that he was “just not sure what [Wal-Mart’s] unlawful policy is.” He said the employees claim that Wal-Mart’s headquarters knew everything that was going on, but then they also say that the supervisors have too much discretion. The employees’ attorney responded by explaining that although managers across the country are provided with the same discretion, the company has a strong corporate culture (“the Wal-Mart way”) and that the managers’ decisions “will be informed by the values the company provides to these managers in training.”
Justice Antonin Scalia also seemed concerned with this line of reasoning and asked whether the individual supervisors are left on their own or whether Wal-Mart’s strong corporate culture tells them what to do. Justice Scalia then asked about Wal-Mart’s policy against sex discrimination, but the employees’ attorney noted that although the company had a written policy, it wasn’t “effectively communicated to the managers.”
In yesterday’s hearing, the justices seemed to be divided on their views of the lawsuit, but most of them seemed skeptical about how back pay would be calculated in such a large class-action suit. For example, Justice Ginsburg brought up the issue of back pay a couple of times and asked the employees’ attorney whether the district judge said that awarding back pay would give some employees a windfall while others would be uncompensated.
This is an important case for employers because many analysts have predicted that the Court’s decision could have a huge impact on class-action lawsuits (including employment discrimination actions) as a whole. Additionally, many have predicted that a decision in favor of the employees would open the door for more similar lawsuits against other employers. We will continue to keep you updated on this case.
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