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LAW ALERT: Supreme Court Rules in Favor of Wal-Mart in Sex Discrimination Lawsuit

June 20 2011

Today, the United States Supreme Court ruled in favor of Wal-Mart in its monumental sex discrimination lawsuit brought on behalf of all female employees. The court ruled unanimously that the lawsuit against Wal-Mart Stores Inc. cannot proceed as a class action, reversing a decision by the 9th U.S. Circuit Court of Appeals in San Francisco. The lawsuit could have involved up to 1.6 million women, with Wal-Mart facing potentially billions of dollars in damages. The decision is a victory for many employers snared in the net of class action litigation by employees who are attempting to support their cases by flimsy evidence.

The Court unanimously ruled that the purported class of employees could not prove a “common question of law or fact.” The Court pointed out that “the crux of a Title VII inquiry is the reason for a particular employment decision, and respondents wish to sue for millions of employment decisions at once. Without some glue holding together the alleged reasons for those decisions, it will be impossible to say that examination of all the class members’ claims will produce a common answer to the crucial discrimination question.” The Court found the necessary “glue” to be completely absent from Plaintiffs’ case.

In making this finding the Court looked at the fact that Wal-Mart had a written policy prohibiting discrimination and penalties for those who violated it. The Court felt the Plaintiffs’ evidence from a sociologist, asserting that Wal-Mart’s corporate culture made it vulnerable to gender bias, completely inadequate. The Court’s decision also said that in this type of case there needs to be a common element tying together “literally millions of employment decisions at once.” The majority found the Plaintiffs’ statistical evidence and sociologist’s report amounted to nothing but thin air. Ultimately, commenting on the question of evidence of common elements, the Court found the evidence supporting Plaintiffs’ claims to be “entirely absent here.”

The Court did hold that a corporate policy, such as Wal-Mart’s, of giving local supervisors discretion over employment matters, could support a Title VII disparate-impact claim. However, the justices pointed out that the disparate-impact claim would be challenging a single employment decision by a single supervisor, and did not mean that “every employee in a company with that policy has a common claim.” The Court felt that “in a company of Wal-Mart’s size and geographical scope, it is unlikely that all managers would exercise their discretion in a common way without some common direction.”

This decision brings some much needed relief to employers faced with the ever growing trend of class-action discrimination lawsuits. In addition, the Court’s decision will potentially have a larger impact on Wage & Hour Class Actions, where the Justices have provided employers with a strong decision outlining the evidentiary burden employees have in certifying a matter as a class action.

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 If you have any questions about this Legal Alert or other employment law related questions, please feel free to contact any members of the the  Labor and Employment Group. For additional articles on employment law issues, please visit Weintraub’s law blog at www.thelelawblog.com.