June 2011

In a blow to group claims of gender discrimination and class actions more generally, the Supreme Court has rejected a class-action lawsuit brought by female employees of Wal-Mart who claim they suffered discriminatory pay and promotion practices resulting from the company’s alleged corporate culture of discrimination. The massive lawsuit could have involved up to 1.6 million women, with Wal-Mart, the nation’s largest retailer, facing potentially billions of dollars in damages. Much of the press so far has focused on the parts of the Supreme Court’s ruling that are unanimous. The justices all agreed that the lower courts should not have allowed the case to move forward under a provision of the Federal Rules of Civil Procedure (Rule 23(b)(2)) that allows litigants to proceed as a class when they are seeking primarily non-monetary relief, for example, an injunction against discriminatory hiring practices or a declaration from the court that a certain policy is discriminatory. But the conservative majority , led by Justice Antonin Scalia, went further than that, shutting the courthouse doors to the women’s class action altogether. Justice Ruth Bader Ginsburg, joined by Justices Stephen G. Breyer, Sonia Sotomayor and Elena Kagan, dissented from the majority’s ruling on this point, arguing that the female employees should have been given the opportunity to try to make their case under another part of the class-action rules. When it comes to gender equality questions, the court would always be wise to listen to the voice of Justice Ginsburg. Then-attorney Ginsburg , after all, won several landmark gender-equality cases in the Supreme Court before she became a judge herself and has been a fierce defender in the Supreme Court of the Constitution’s guarantee of equal citizenship and equal treatment of the sexes. Her Wal-Mart opinion noted substantial evidence that “gender bias suffused Wal-Mart’s corporate culture.” For example, Justice Ginsburg noted in her partial dissent that women fill 70 percent of the hourly jobs at Wal-Mart but only 33 percent of management positions and that “senior management often refer to female associates as ‘little Janie Qs.’” By leaving pay and promotion decisions in the hands of “a nearly all male managerial workforce” using “arbitrary and subjective criteria,” the company, as Justice Ginsburg observed, arguably does little to prevent biases and stereotypes from tainting such decisions. For instance, the company requires, “as a condition of promotion to management jobs, that employees be willing to relocate.” But as Justice Ginsburg noted in her opinion, citing a federal Labor Department report, “[a]bsent instruction otherwise, there is a risk that managers will act on the familiar assumption that women, because of their services to husband and children, are less mobile than men.” “The practice of delegating to supervisors large discretion to make personnel decisions, uncontrolled by formal standards, has long been known to have the potential to produce disparate effects,” Ginsburg wrote. “Managers, like all humankind, may be prey to biases of which they are unaware.” These are pretty powerful claims of a widespread, discriminatory corporate culture that Justice Scalia and his fellow conservative justices in the majority brushed aside. But however strong this evidence of discrimination may or may not be, it is important to recognize that the Supreme Court’s ruling today was not about whether Wal-Mart was guilty of discriminating against its female employees — this ruling was solely about whether the courthouse doors would remain open to the class action filed by Wal-Mart’s female employees, who had banded together to seek a company-wide solution to a company-wide problem. While Justice Ginsburg and the three other justices who joined her opinion would have allowed the female employees to pursue their claims under a more appropriate class-action rule, the five-justice majority closed the courthouse door to the class altogether, leaving individual lawsuits as the only potential avenue of redress. In this respect, the Wal-Mart case represents a disturbing trend in this year’s Supreme Court Term. Justice Scalia also authored the pro-corporate, anti-consumer ruling in AT&T v. Concepcion . In that case, a sharply divided Supreme Court tossed out the Concepcions lawsuit against AT&T on behalf of themselves and all others who were charged $30.32 in sales tax for a supposedly free mobile phone. If successful, the class action could have yielded millions of dollars for all of AT&T’s customers who allegedly had been improperly charged. However, because Justice Scalia’s majority opinion enforced an arbitration agreement containing a provision banning class actions, the Concepcions were faced with fighting just for their own $30, an amount over which it’s hardly worth the time and expense of pressing a legal claim against a corporate giant like AT&T. The Supreme Court in Concepcion blessed a contract provision that basically allows corporations to get away with wrongdoing so long as they do it on an individually small scale, making individual claims too small to pursue. This is a big deal. Class actions are crucial for victims of discrimination or other corporate misconduct who may not have the means to bring their own individual lawsuits — including many of the Wal-Mart employees who earn modest wages. Joining individual claims together also allows for a fuller picture of widespread patterns of discrimination or fraud, and provides a greater opportunity to fundamentally change a corporate culture of discrimination. The million-and-a-half women of Wal-Mart allege that they experienced discrimination because of the corporate culture and practices of America’s largest retailer. The experiences of these plaintiffs may be diverse in many ways, but as Justice Ginsburg explained, these female employees have in common their claims of pay and promotion discrimination. Should they be penalized simply because Wal-Mart is a massive company and its corporate practices occur on a massive scale? We’ve all heard about corporate bailouts for banks that are “too big to fail.” By limiting class actions that claim widespread corporate misconduct, the Supreme Court could be turning corporations into entities that are too big to be held accountable.