The U.S. Supreme Court’s decision barring certification of what would have been the largest job discrimination class action in history has spurred a debate among legal experts about the role of class actions not only as a tool for seeking monetary relief, but also as an instrument of systematic change.

“Discrimination in the workplace, on the basis of both race and gender, is widespread and has a devastating impact on [workers’] ability to advance and compete,” said Cyrus Mehri, founding partner of Mehri & Scalet in Washington. “That is what is at stake going forward. What kind of cases can be prosecuted in light of Wal-Mart?”

But some experts say the ruling in Wal-Mart Stores v. Dukes — particularly the unanimous portion of the opinion holding that individualized claims such as backpay cannot be certified under Rule 23(b)(2) of the Federal Rules of Civil Procedure — reflects the limits the procedural rules place on class actions, which are designed to give plaintiffs who suffer nearly identical injuries the ability to seek redress in one action.

“It’s not what Rule 23 was meant for,” said Andrew Pincus, a partner in the Washington office of Mayer Brown, of the Wal-Mart employees’ claims of gender bias in pay and promotion decisions.

The fact that part was unanimous “really shows you how far off the reservation this was,” he added.

New ‘glue test’ standard

The plaintiffs in the case charged that Wal-Mart, the nation’s largest private employer, discriminated against them on the basis of their sex by denying them equal pay or promotions, in violation of Title VII.

The company opposed class certification for the roughly 1.5 million claimants, alleging that the plaintiffs failed to meet the Rule 23 requirement that claims be cohesive, common, typical and adequate to represent all members of the class. Pay and promotion decisions, the company argued, were made at the discretion of individual managers, not under a company-wide policy.

Both the U.S. District Court and the 9th U.S. Circuit Court of Appeals disagreed, allowing the case to proceed as a class.

The Supreme Court took up the case and reversed.

On the issue of certification under Rule 23(b)(2), which covers injunctive or declaratory relief, the court was unanimous that the Wal-Mart plaintiffs didn’t qualify. Back pay awards, the court held, are so individualized in nature as to require the procedural protections placed on classes seeking monetary relief under Rule 23(b)(3).

“[Rule] (b)(3) requires the judge to make findings about predominance and superiority before allowing the class,” where Rule (b)(2) does not, the court noted. “Similarly, (b)(2) does not require that class members be given notice and opt-out rights. … In the context of a class action predominantly for money damages we have held that absence of notice and opt-out violates due process.”

But the court split 5-4 on the issue of whether Rule 23(b)(3) relief was available. Writing for the majority, Justice Antonin Scalia found that the claims by the plaintiffs – whose positions ranged from hourly store greeters to salaried company executives – did not possess the requisite commonality to proceed as a class action, since managers were given discretion in making pay and promotion decisions.

“Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question why was I disfavored,” Scalia wrote, adding the emphasis.

Writing in a dissent joined by Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan, Justice Ruth Bader Ginsburg disagreed with the majority’s approach, saying that she would have remanded the Rule 23(b)(3) question back to the lower courts.

Noting the voluminous evidentiary record proffered by the plaintiffs, Ginsburg wrote: “The plaintiffs’ evidence, including class members’ tales of their own experiences, suggests that gender bias suffused Wal-Mart’s company culture,” Ginsburg wrote.
Mehri said the majority’s new “glue standard” will result in smaller classes and more claims being brought individually. But while plaintiffs may still be able to get relief this way, he said, it may work to defeat a major purpose of class actions.

“You have to get a class certified to bring about change in corporate policies as well as remedies and compensation,” Mehri said.
Suzette Malveaux, associate professor at the Catholic University Columbus School of Law, said the new standard, coupled with the court’s examination of the voluminous record, will make any attempt to certify a class action in such a fact-driven scenario nearly impossible.

“Given all the evidence put forward here, it is very difficult to determine when a plaintiff will ever be able to put forth enough evidence to challenge a company the size of Wal-Mart,” said Malveaux, speaking to reporters at a press briefing in Washington hosted by the American Constitution Society for Law and Policy.

But Pincus said that the ruling reflects the reality that class actions are meant as a faster and more cost-effective means of settling disputes involving claims that can be defended en masse. Defending individual pay and promotion claims as a class would be prohibitively expensive for businesses, Pincus said.

“Just think about— even for Wal-Mart — the cost of defending that case,” he said. “It would have been unbelievable.”

Size matters

Mehri said the case may have never reached the court had the plaintiffs’ attorneys taken a more conservative approach.

“This was a very ambitious case,” Mehri said. “[Some] strategic decisions were made in seeking [such a large] certification. It provides a lesson to practitioners. Keep more focused and seek smaller classes. Be geographically strategic. There are a lot of ways to be less ambitions going forward.”

Mehri also said it is important to note that, despite the court majority’s examination of the evidence, Wal-Mart is not off the hook.

“It doesn’t in any way exonerate Wal-Mart from claims of discrimination,” Mehri said.

Lawmakers signaled that a congressional response could be forthcoming in the weeks ahead.

“[The] decision is a reminder that much work remains in order to achieve equal pay for men and women, and I will continue to work with my colleagues to strengthen our anti-discrimination laws and ensure that victims of discrimination have access to justice and corporations are held accountable,” said Sen. Tom Harkin, D-Iowa, who chairs the Senate Health, Education, Labor and Pensions Committee, in a statement.

Rep. Rosa DeLauro, D-Conn., said she plans to explore legislation on the House side that would preserve the availability of class actions to address gender discrimination, as well as push for passage of the Paycheck Fairness Act, which would expand damages under the Equal Pay Act.

That measure was reintroduced this congressional session after being defeated in the Senate last session.

DeLauro called the ruling “a blow not only to the employees who filed this lawsuit, and have been fighting for equal pay for over 10 years, but to the millions of women across the country facing workplace discrimination every day.”

Harkin compared the ruling to the 2007 decision in Ledbetter v. Goodyear Tire and Rubber Co., which found that an unequal pay claim was time barred. Congress went on to pass the Ledbetter Fair Pay Act, the first law signed into law by President Barack Obama, which restarts the statute of limitations on unequal pay claims with the issuance of each paycheck received by a plaintiff.