Caseflicks

Supreme Court of the United States • 2011

Wal-Mart Stores, Inc. v. Dukes

131 S. Ct. 2541 | 180 L. Ed. 2d 374 | 564 U.S. 338 | 2011 U.S. LEXIS 4567 | 79 U.S.L.W. 4527 | 79 Fed. R. Serv. 3d 1460 | 22 Fla. L. Weekly Fed. S 1167

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Takeaway

In short, this case made commonality a demanding proof-based requirement: a nationwide discrimination class needs evidence of a unifying discriminatory policy or practice, and individualized backpay claims generally cannot ride in a mandatory Rule 23(b)(2) injunction class.

Background

Three current or former female Wal-Mart employees sued under Title VII on behalf of roughly 1.5 million women employed at Wal-Mart stores nationwide since late 1998. They alleged that Wal-Mart’s practice of giving local managers broad, subjective discretion over pay and promotion decisions allowed gender stereotypes to produce companywide disparities favoring men. They sought injunctive and declaratory relief, backpay, and punitive damages.

The plaintiffs supported certification with regional and national statistical analyses, about 120 employee anecdotes, and sociologist William Bielby’s opinion that Wal-Mart’s corporate culture made it vulnerable to gender bias. Wal-Mart’s official policy prohibited sex discrimination, but the plaintiffs argued that the company’s failure to constrain managerial discretion itself created unlawful disparate impact and disparate treatment.

The District Court certified a nationwide class under Rule 23(a) and Rule 23(b)(2). The en banc Ninth Circuit substantially affirmed. It concluded that the proposed class shared a common question about whether Wal-Mart’s corporate policies caused gender discrimination; it held that backpay could be included in a Rule 23(b)(2) class because it did not predominate over requested injunctive and declaratory relief; and it approved a possible sampling approach to determine liability and damages. The Supreme Court reversed.

Issues

Issue #1

Whether the proposed nationwide class satisfied Rule 23(a)(2)’s commonality requirement.

Holding

No. The plaintiffs failed to show a common question capable of generating a common answer central to all class members’ Title VII claims.

Reasoning

Rule 23(a)(2) requires more than a shared legal label or a list of questions phrased at a high level of generality. The class members must share a common contention whose truth or falsity can resolve a central issue for every member “in one stroke.” Because a Title VII claim ordinarily turns on why a particular employment decision was made, plaintiffs seeking to litigate millions of pay and promotion decisions together needed a factual and legal “glue” linking the reasons for those decisions.

A certification court must conduct a rigorous analysis and may need to examine merits-related evidence when that evidence bears on Rule 23’s requirements. Rule 23 is not merely a pleading standard; the party seeking certification bears the burden to prove actual compliance with its prerequisites.

Wal-Mart’s official policy forbade sex discrimination. The plaintiffs therefore needed significant proof that the company nevertheless operated under a general policy of discrimination, or that it used a common biased employment practice affecting the class. Their sociological expert did not provide that proof: he testified only that Wal-Mart’s culture was vulnerable to gender bias and could not say how frequently stereotypes actually influenced employment decisions.

The only companywide policy convincingly shown was Wal-Mart’s delegation of discretionary pay and promotion decisions to local managers. But a policy of local discretion is not itself a uniform discriminatory practice; it is a policy against uniform decisionmaking. Different managers could use different criteria, make decisions for different lawful reasons, or, in some instances, discriminate. Showing that one manager exercised discretion unlawfully would not establish that another did so.

The plaintiffs’ statistical evidence did not bridge that gap. Regional and nationwide disparities could not establish a uniform pattern at every one of Wal-Mart’s thousands of stores, and the evidence did not identify a specific common employment practice beyond delegated discretion. Likewise, approximately 120 anecdotes drawn from a class of 1.5 million women and a limited number of stores were too sparse and geographically concentrated to demonstrate a companywide policy of discrimination.

Issue #2

Whether individualized backpay claims could be certified in a mandatory Rule 23(b)(2) class because they did not predominate over requested injunctive and declaratory relief.

Holding

No. Rule 23(b)(2) does not permit certification of individualized monetary claims such as the requested backpay claims.

Reasoning

Rule 23(b)(2) is designed for cases in which a single, indivisible injunction or declaratory judgment would provide relief to the entire class. It does not authorize class treatment when each member would be entitled to a different monetary award requiring an individualized determination.

The structure of Rule 23 confirms that conclusion. Rule 23(b)(1) and (b)(2) classes are generally mandatory and do not carry the notice and opt-out protections required for Rule 23(b)(3) damages classes. Individual monetary claims belong, at least ordinarily, in Rule 23(b)(3), where the court must find predominance and superiority and class members receive notice and an opportunity to opt out.

The Ninth Circuit’s test—allowing backpay in a (b)(2) class whenever monetary relief does not predominate over equitable relief—had no basis in Rule 23’s text and would evade the protections that Rule 23(b)(3) supplies. A plaintiff could strategically seek an injunction alongside monetary claims and thereby bind absent class members without giving them a meaningful choice whether to pursue their own damages claims.

The predominance approach also created a practical problem. Former employees generally lack a claim for prospective injunctive relief, so a court would have to continually revise the class as employees left Wal-Mart. That difficulty underscored that backpay claims, which do not depend on present employment, should not be certified under Rule 23(b)(2).

Issue #3

Whether the Ninth Circuit could use statistical sampling and extrapolation to award classwide backpay without individualized proceedings.

Holding

No. Wal-Mart was entitled to litigate its statutory defenses to each individual backpay claim, and Rule 23 cannot eliminate that substantive entitlement.

Reasoning

Even after a plaintiff establishes a pattern or practice of discrimination under Title VII, the usual procedure requires further proceedings to determine each person’s entitlement to individual relief. At that stage, the employer may show that a particular employee was denied a raise or promotion for a lawful, nondiscriminatory reason.

The Ninth Circuit’s proposed “Trial by Formula” would have selected a sample of class members, adjudicated their claims, and extrapolated the results to the rest of the class. That procedure would prevent Wal-Mart from presenting individualized defenses to the untested claims.

The Rules Enabling Act prohibits interpreting Rule 23 to abridge, enlarge, or modify substantive rights. Because individualized eligibility and employer defenses would be necessary to determine backpay, the relief was not incidental to a classwide injunction and could not be certified under Rule 23(b)(2).

Dissents

Justice Ginsburg

Reasoning

Justice Ginsburg agreed that the class could not be certified under Rule 23(b)(2), because the requested monetary relief was not merely incidental to prospective equitable relief. She would have left open, however, whether the proposed class could satisfy Rule 23(b)(3)’s separate requirements of predominance and superiority on remand.

She disagreed with the majority’s conclusion that the plaintiffs failed Rule 23(a)(2) commonality at the threshold. In her view, Rule 23(a)(2) asks only whether the class presents at least one genuinely disputed issue of law or fact whose resolution will advance the litigation. The common issue here was whether Wal-Mart’s uniform practice of delegating broad, unstructured pay and promotion discretion to managers, operating within its asserted corporate culture, caused unlawful gender discrimination.

The plaintiffs’ evidence, in Justice Ginsburg’s view, supported treating that issue as common. Wal-Mart used similar promotion and pay systems across its stores, gave supervisors substantial subjective discretion without meaningful standards, maintained a deliberately uniform corporate culture, and allegedly produced statistically significant disparities in pay and advancement. Subjective decisionmaking can be a Title VII employment practice when it creates discriminatory effects, as the Court had recognized in Watson v. Fort Worth Bank & Trust.

Justice Ginsburg maintained that the majority improperly imported Rule 23(b)(3)’s more demanding concerns about dissimilarities, predominance, and the practical superiority of class treatment into Rule 23(a)(2). Individual differences may matter greatly when determining each woman’s eligibility for backpay or damages, but those remedial questions should not erase the shared question whether Wal-Mart’s common policy and practices were discriminatory.