Appellate Law, Class Action, Publications

Does Dukes Spell "Doom" for Employment Discrimination Class Action Lawsuits?

September 1, 2011

In June 2011, the United States Supreme Court vacated one of the most expansive class action lawsuits ever. In Wal-Mart Stores v. Dukes, 131 S.Ct. 2541 (2011), Betty Dukes and two other class representatives sought to defend the Ninth Circuit Court of Appeals’ decision that allowed a class of 1.5 million women to allege that Wal-Mart discriminated against their advancement. Specifically, Dukes alleged, on behalf of 1.5 million present and former female Wal-Mart employees, that her pay and promotion was not consistent with the pay and promotion of her male counterparts.

The Supreme Court held that there was no common question holding Dukes' allegations together with the other 1.5 million women. But, first, the background story: Betty Dukes began working at a Pittsburgh, California, Wal-Mart in 1994. She was a cashier, but then moved up to customer service manager. After disciplinary violations, she was demoted to greeter. She contended that her demotion was retaliation for her invocation of complaint procedures and that male employees were not similarly disciplined. She also claimed that she was paid less than male greeters.

The Supreme Court's analysis of whether Dukes and her fellow class representatives had suffered the same injury started from the position that "the mere claim by employees of the same company that they have suffered a Title VII injury, or even a disparate-impact Title VII injury, gives no cause to believe that all their claims can productively be litigated at once." In other words, it was Dukes' burden to show that determination of the truth or validity of her claim would be central to the truth or validity of each of her class member's claims.

In disparate treatment Title VII discrimination cases, "the crux of the inquiry is 'the reason for a particular employment decision.'" To sustain the class claims, Dukes had two methods of proof available. First, Dukes could show that Wal-Mart used a biased-testing procedure to evaluate pay and promotion decisions. But, Wal-Mart did not have a biased-testing procedure to evaluate promotion decisions. In fact, Wal-Mart allowed discretionary decision-making, which the court held was the opposite of a common standard. So, Dukes had to alternatively prove that there was "significant proof" that Wal-Mart "operated under a general policy of discrimination." To do so, Dukes offered expert testimony that there was a strong corporate culture that made Wal-Mart vulnerable to gender-biased decision-making. But, the expert could not say whether .5 percent or 95 percent of the employment decisions at Wal-Mart might be determined by stereotyped thinking. The Supreme Court held that this was not significant evidence of a pattern or practice of discrimination.

Dukes also offered 120 affidavits reporting experiences of discrimination, which amounted to 1 for every 12,500 class members. However, the Supreme Court concluded that even if every one of those allegations of discrimination were true, that did not demonstrate that Wal-Mart's 3,400 stores throughout the nation operated under a general policy of discrimination.

This, of course, raises the question: Are pay and promotion class actions doomed? The answer, unfortunately for employers, is maybe not. In Dukes, the Supreme Court cited favorably its prior decision in Teamsters v. United States, 431 U.S. 324 (1977). InTeamsters, a class action was permitted in which 40 anecdotes of discrimination amounted to one account for every eight members of the class. Moreover, the anecdotes were from individuals spread throughout the company who worked at operation centers that employed the largest numbers of class members. In that case, statistical extrapolation was allowed to present a substantial basis for the notion that the company operated under a general policy of discrimination.

Moreover, the Supreme Court did not issue an edict in Dukes that company-wide discrimination class action cases are per se inappropriate. What the court did establish is that the plaintiffs will be held to a stricter evidentiary standard before class certification will be affirmed. That said, it is not clear where the line will be drawn as to what statistical analysis equates to substantial evidence of company-wide discrimination and what statistical analysis does not meet the standard. For now, proof by one out of eight class members of discrimination is sufficient, but it is not known whether proof of discrimination by 1 out of 100, or 1 out of 50, or 1 out of 20 class members will be adequate to warrant certification of a class.

In any event, Dukes provides a clear roadmap of how to defeat employment-discrimination class action complaints. Accordingly, employers should be sure to have clear and explicit pay and promotion policies establishing either that pay and promotion decisions are due to the discretion of individual store managers or establishing a non-biased testing procedure that is not subject to favoritism on the basis of sex, race or nationality. Although Dukes may not spell “doom” for employment-discrimination class action suits, using the foregoing procedures should help employers avoid the potential for individual and class pay and promotion discrimination suits.

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