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The Huge Class Action Sex Discrimination Suit Against Wal-Mart:
Should It Proceed as a Class Action, or Be Decertified?

Monday, Aug. 09, 2004

Earlier this summer, a federal district court in San Francisco certified a sex discrimination class action suit against Wal-Mart. (When a court "certifies" a class action, it allows the case to proceed with a class of plaintiffs, according to class action rules - as opposed to with a number of individual plaintiffs.)

The class is claiming that Wal-Mart discriminated against women in the way it recruited and promoted managers. The issue of whether this is true has not yet been determined. Wal-Mart has claimed that its experts will show that there is no evidence of discrimination against women in stores, and the court noted that Wal-Mart will have a chance to prove this at trial.

If it is allowed to go forward, Dukes v. Wal-Mart would be the largest employment discrimination case in the history of the United States. The lawyers for the class claim that approximately 1.5 million women are potential members of the class.

Last week, Wal-Mart petitioned the Ninth Circuit Court of Appeals, asking it to step in and decertify the case. It is highly usual for an appellate court to get involved in a lawsuit before there is a final judgment in a trial. But Wal-Mart will try to persuade the Ninth Circuit that Dukes is a very unusual case, and that is why the class action should be stopped before it goes too far.

In this column, I will explain two reasons why the Dukes suit is indeed unusual--but I with argue that neither justifies the Ninth Circuit's stepping in and stopping the case.

The First Reason the Dukes Case Is Unusual: Sheer Size of Plaintiff Class

The first thing that makes Dukes unusual is its size. As Judge Martin Jenkins, the judge who certified the class noted, there has never been an employment discrimination class action with anything close to 1.5 million members in it.

Critics of Judge Jenkins's decisions, such as the Wall Street Journal, have cited the size of the class. And Wal-Mart relies on it too. But size alone does not a legal argument make.

After all, there have been class actions with almost as many members as the Dukes suit. The consumer class-actions against Microsoft may have had at least a million members. And the Holocaust-era slave labor suits encompassed a class of at least 500,000 members.

But should a class action be relatively small? Not necessarily. One of the virtues of a class action is that it allows a court to handle to claims of many people in one, efficient action.

Wal-Mart argues, however, that this particular class action won't work. It predicts that the case will raise individual factual questions regarding the recruitment and promotion (or lack thereof) of each of the 1.5 million women employees who are suing. And it projects that for each, the reason she did not move up the company ladder may be individual.

Is Wal-Mart suggesting, then, that large employment discrimination suits, by their nature, cannot be handled on a class-wide basis? Presumably not. Courts have been handling them that way for years.

Just last month, for example, a federal court in Seattle approved a settlement in a class action brought on behalf of 29,000 female employees of Boeing who claimed that they had been denied the opportunity to work overtime and to move into better-paying positions.

Of course, there is a difference between 29,000 and 1.5 million, but it is not clear whether the difference makes any legal sense.

The difference is money: Boeing settled for $72.5 million. Wal-Mart, if it lost the suit or settled, would have to pay much more.

The Class Action Test: Was the Court Right to Hold the Wal-Mart Suit Passed It?

So what is Wal-Mart's real argument - if not that a large employment discrimination suit cannot be a class action? Wal-Mart seems to be arguing that this suit simply cannot be tried on a class-wide basis.

Every federal class action, to be certified, must meet a four-part test: First, the proposed class must be so numerous that the various members simply can't be joined into an aggregate suit. That's plainly the case here.

Second, there must exist significant legal and factual issues which are common to all the class. That's where the key issue lies here. The plaintiffs say the cases have lots of common issues; Wal-Mart disagrees.

Third, the claims of the named class representatives must be typical of the class. That seems to be true here - although Wal-Mart may argue that the claims of the class are so diverse, it's useless to try to claim a class representative's situation is "typical."

Fourth, the interests of the class representatives must not conflict with those of the class members. There seems to be no such conflict here.

In sum, only one factor here - commonality - cuts in favor of defeating class certification. But Wal-Mart says this factor is so powerful, it should be enough.

The Second Reason the Dukes Case Is Unusual: Autonomous Corporate Culture

In arguing against commonality of issues, Wal-Mart points out that each of its stores is run autonomously. The corporate culture, it says, is that the exercise of discretion and the use of individual initiative are prized.

For these reasons, Wal-Mart says there will be a large divergence in the facts as to why women were not moving forward into management positions as fast as the plaintiffs' lawyers thought they should. Yet if class action status continues, the jury would be able to use evidence of discrimination against some women, in some stores, to find that discrimination occurred against all members of the class, at all stores.

Wal-Mart argues that is unfair: Given store-by-store autonomy, the failure of one autonomous store manager should not be used to tar the entire corporation.

Presumably, Wal-Mart might support 3400 suits--one for each store. But it will not support a single trial for the whole class and all 3400 stores at which class members were employed.

The Argument That Commonality Exists: The Culture Of Autonomy Is Common

The plaintiffs - in urging that class certification continue -- turned Wal-Mart's strategy against it.

The plaintiffs don't dispute that Wal-Mart has the autonomous culture it claims to have. But they say that that common culture is part of the problem - and, indeed, it is one of the very commonalities that justify having all the plaintiffs' claims proceed together, in the same class action.

The plaintiffs point out that in some areas of its operation, Wal-Mart's Arkansas home office exercised tight control. For instance, operating expenses and profits of every store were closely monitored.

But when it came to personnel decisions, the company opted for a "hands off" policy. Rather than promulgating a corporate policy designed to guarantee that discrimination does not occur, Wal-Mart did nothing. It allowed its managers to promote - or not promote - and recruit - or not recruit -- as they wished.

The plaintiffs say that it is no surprise that, without any corporate anti-discrimination policy, discrimination occurred. Men were more heavily recruited, they say; men were more likely promoted.

Judge Jenkins held that the decision to have no corporate-wide policy about promotions was itself a corporate policy - and, indeed, a common one.

The plaintiffs claim that they can prove that Wal-Mart's "hands-off" policy produced lower rates of promotion for women than in comparable corporations. Judge Jenkins held that if the plaintiffs can prove their claim (again, the merits have not yet been decided), it would not be unreasonable for a jury to conclude that the policy was the common factor that injured the whole class.

A Fundamental Argument About Corporate Management Style and Discrimination

In the end, the question whether Wal-Mart can persuade the Ninth Circuit that 1.5 million people is too many for a single class is of limited interest. Exactly how many class members is too many is not a very interesting question - especially since hundred-thousand-member classes doubtless will persist.

But the Dukes case is very interesting nonetheless - due to the plaintiffs' underlying argument. They are arguing, in effect, that Wal-Mart had a duty to limit the discretion of its managers -- on the grounds that individual managers, if left alone, would tend to act in sexist ways.

They are not just arguing that Wal-Mart has a duty to prevent discrimination it knows about - a duty that is already well-established in the law. Nor are they just arguing that Wal-Mart has a duty to try to discover discrimination in the workplace. They are arguing that certain kinds of corporate management styles, even if they are not sexist on their face, are too risky to permit -- since they are more likely to allow sexism to occur than other management styles are.

Doubtless, Wal-Mart is going to fight the Dukes case with everything it has -- and not just because 1.5 million is a big number. It will fight the case because, at its heart, the Dukes case is an assault on the Wal-Mart corporate culture.

Wal-Mart's explosive growth has been attributed to unique way of doing business. It will be interesting to see whether the "Wal-Mart way" will survive the Dukes class action.

Anthony J. Sebok, a FindLaw columnist, is a Professor at Brooklyn Law School. His other columns on tort issues may be found in the archive of his columns on this site.

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