Employers Win As Supreme Court Says No To Wal-Mart Class Action

The Supreme Court has issued its decision in the Wal-Mart v. Dukes case and it is a victory for employers.  Justice Scalia authored the Court’s opinion reversing the Ninth Circuit decision that the plaintiffs met the commonality requirement of Rule 23(a).  The Court explained that commonality:

[R]equires the plaintiff to demonstrate that the class members ‘have suffered the same injury,’ Falcon, supra, at 157. This does not mean merely that they have all suffered a violation of the same provision of law. Title VII, for example, can be violated in many ways—by intentional discrimination, or by hiring and promotion criteria that result in disparate impact, and by the use of these practices on the part of many different superiors in a single company. Quite obviously, 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. Their claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor.

The Court rejected the argument that Wal-Mart's alleged policy of giving local managers discretion over pay and promotion decisions created common issues of law and fact:

In a company of Wal-Mart's size and geographical scope, it is quite unbelievable that all managers would exercise their discretion in a common way without some common direction.  Respondents attempt to make that showing by means of statistical and anecdotal evidence, but their evidence falls well short.

Of equal significance, the Court held that the monetary relief that the plaintiffs sought was not authorized under Rule 23(b)(2):

Rule 23(b)(2) applies only when a single injunction or declaratory judgment would provide relief to each member of the class. It does not authorize class certification when each individual class member would be entitled to a different injunction or declaratory judgment against the defendant.  Similarly, it does not authorize class certification when each class member would be entitled to an individualized award of monetary damages.

Thus, the Court held that the only monetary relief available would be when it was intertwined with a particular injunction, meaning that individualized awards of back pay are not generally available in a Rule 23(b)(2) class. 

The decision was 5-4 as to the commonality issue with Justices Roberts, Kennedy, Thomas and Alito joining Justice Scalia and Justices Breyer, Sotomayor and Kagan joining in Justice Ginsburg’s partial dissent.  All Justices were in agreement as to the issue of the availability of monetary relief in a 23(b)(2) class.

Obviously, this decision will be the subject of a great deal of analysis and scholarship in the future but for now, employers can breathe a sigh of relief as the immediate implications of the decision are all positive.