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Wal-Mart ruling seen as major victory for businesses

Debra Erdley
| Tuesday, June 21, 2011

The Supreme Court's decision to block a major class-action sex discrimination lawsuit against Wal-Mart sets the bar high for such claims against large employers, experts said on Monday.

The 9-0 ruling penned by Justice Antonin Scalia said the Ninth Circuit Court of Appeals erred when it ruled the lawsuit could proceed as a class action with the potential to include up to 1.5 million current and former female Wal-Mart employees. The court split 5-4 over whether the women had grounds to proceed.

The lawsuit, which could have cost the retailer billions of dollars, claimed Wal-Mart promoted a culture that passed over women for pay raises and promotions.

"As the majority made clear, the plaintiffs' claims were worlds away from showing a companywide discriminatory pay and promotion policy," Wal-Mart Executive Vice President Gisel Ruiz said, adding that the company "has a long history of providing advancement opportunities for our female associates."

Attorneys said the decision would:

• Set a higher standard for class certification by requiring "significant proof" that an employer's general policy of discrimination resulted in the creation of a disadvantaged group.

• Increase the cost of litigation by requiring attorneys for those suing for back pay to notify potential plaintiffs before moving forward.

Justice Ruth Bader Ginsberg, who wrote in dissent, said the court's decision set the bar too high for litigants seeking to form a class and "disqualifies the class at the starting gate." Justices Sonia Sotomayor, Stephen Breyer and Elena Kagan joined the dissent.

"It certainly strikes us that this decision makes it much harder for plaintiffs going forward to get class-certified in situations where there is not a specific, clearly identifiable practice that is responsible for the difference between men and women or black and white workers," said Christine Owens, executive director of the national Employment Law Project.

Sam Cordes, a Pittsburgh employment attorney, agreed. But Cordes said the ruling doesn't insulate Wal-Mart from the kinds of claims the lawsuit raised.

"I don't think (Wal-Mart) is too big to be sued. That culture is going to have to be attacked on a lot of different fronts one at a time," he said. "Sometimes, you can die just as effectively from a lot of small cuts as you can from one big wound."

The Wal-Mart case began 10 years ago when Betty Dukes, an employee in California, claimed she had been passed over for promotions in favor of less-qualified men. Several other women filed similar claims.

Their class-action lawsuit claimed hundreds of thousands of women who worked for Wal-Mart were the victims of a corporate culture that made the retail giant "vulnerable to gender bias."

Scalia said that the only corporate policy the women were able to produce was a "policy of giving local supervisors discretion over employment matters."

"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," Scalia wrote. He said "without some glue" holding their assertions together, it would be impossible to determine whether the women were victims of discrimination.

Business and trade groups applauded the decision.

"I think the court correctly noted that the case was unacceptably broad and was simply too expansive to be properly managed. This case was obviously cobbled together with the hopes of extracting a large settlement from a large employer," said David N. Taylor, executive director of the Pennsylvania Manufacturers' Association.

Sue Frietsche of the Women's Law Project said even though the decision did not rule on the substance of the allegations, it was "devastating."

"The whole purpose of allowing plaintiffs to proceed as a class is to pursue justice for individuals who simply don't have the resources or ability to pursue it on their own," Frietsche said.

Jessie Allen, who teaches civil procedure and civil rights law at the University of Pittsburgh Law School, said the Wal-Mart ruling is the most recent in a series of procedural decisions that make it more difficult for discrimination cases to move forward.

"They are gate-keeping decisions about the procedural rules that govern what it takes to get any case into federal court, but together, they tend to keep job discrimination plaintiffs out of the courthouse," she explained.

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