U.S. Supreme Court Shuts Down Retail Employee Class Action

On June 20, 2011 the United States Supreme Court released its reasons in Wal-Mart Stores Inc. v. Dukes, a landmark decision overturning two lower court decisions to certify an employment discrimination claim against Wal-Mart. 

The representative plaintiffs represented 1.5 million current or former female Wal-Mart employees employed by Wal-Mart from 1998 onwards. They were alleging that the company discriminated against them on the basis of their gender by denying them equal pay or promotions in violation of the U.S. Civil Rights Act. If the plaintiffs had been successful, Wal-Mart could have faced billions of dollars in potential liability.

Although the plaintiffs conceded that Wal-Mart did not have an express corporate policy against the advancement of women, they claimed that Wal-Mart's policy of giving their local managers’ discretion over pay and promotions favoured men over women. 

Each of the three representative plaintiffs had different complaints of discrimination. One plaintiff, Betty Dukes, started as a cashier and received a promotion to customer service manager. After a series of disciplinary violations, she was demoted back to cashier and then to greeter. She claimed that the demotions were in retaliation for invoking Wal-Mart's internal complaint procedures.

Christine Kwapnoski claimed that a male manager yelled at her frequently and screamed at female employees, but not at men.  She claimed that the manager in question "told her to 'doll up', to wear some makeup, and to dress a little better."

The final representative plaintiff, Edith Arana, claimed that she approached her store manager about management training on more than one occasion but was "brushed off." She concluded that that she was being denied an opportunity for advancement because of her gender. She initiated internal complaint procedures, whereupon she was told to apply to the district manager if she thought she was being treated unfairly by her store manager. She decided against that and was eventually fired for failing to comply with Wal-Mart's timekeeping policy.

In refusing to certify the class action, the Court found that the numerous individual claims of discrimination did not meet the commonality requirement for class actions. In effect, each claim required its own analysis. Justice Scalia, writing for the court, stated:

[The] respondents wish to sue for millions of employment decisions at once. 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.

The Court did not close the door on discrimination claims altogether, but certainly signalled that it would be much more difficult to try discrimination claims as a class action unless the plaintiffs show commonality - that there are questions of law or fact common to the class. This could include challenging common testing standards applied to all employees which systemically discriminate against individuals or showing "significant proof" that an employer operated under a general standard of discrimination.

Canadian class action legislation, which is enacted at the provincial level, has a "common issues" requirement, which must be met before a class action can be certified. Therefore, it would be difficult to certify a proposed class action with overly individualized claims.

Retailers and other large employers should take note that they could still be vulnerable to individual claims brought by employees or former employees. Provincial human rights legislation has empowered the courts in certain provinces to award civil damages for cases of discrimination.  Employers should regularly review their internal policies and promotion practices.   

Click here to read the full decision.