the wal-mart discrimination decision: good for big businesses, bad for everyone else

The Wal-Mart decision ended an era of courts driving social progress in the area of discrimination. To see why, it is necessary to understand the details of the case.

This case is complicated. To understand it, one must understand several subsections of Rule 23 of the Federal Rules of Civil Procedure. So, read on, and bear with me. If you follow the explanation below, you will understand more about class action law than most lawyers.

Unlike most Supreme Court cases, this case had nothing to do with the Constitution. Class action law developed during the 20th Century. It is based on Rule 23 of the Federal Rules of Civil Procedure. The implication of that is that this decision could be reversed by legislation.[1]

Rule 23 has numerous sections and sub-sections, but the important sections to this case are sections (a) and (b). Section (a) contains a list of basic requirements that all potential class actions must meet in order to be certified (i.e. in order to become class actions). Section (b) contains three options for which type of class action that the plaintiffs want to bring. In other words, if you were to decide to bring a class action, you would have to satisfy all the requirements listed under Section (a) and you would have to satisfy one of the three sets of requirements under Section (b) of Rule 23.

The plaintiffs in the Wal-Mart case attempted to bring their case under Section (b)(2). That section is basically meant to allow courts to issue orders correcting discrimination. So, for example, if a group of employees could prove that a test required for promotions at a company is discriminatory, a court could ban use of the test at the company under Section (b)(2). If another set of employees demonstrated that management systematically discriminated against a certain group, a court could erect an affirmative action program to correct the discrimination under Section (b)(2).

In the Wal-Mart case, all nine Supreme Court justices agreed that the plaintiffs’ lawsuit could not be certified under Section (b)(2). The plaintiffs sought back-pay in addition to other remedies. The court held that individualized monetary damages were improper under Section (b)(2). That part of the decision was not very controversial.

However, five justices took a very large additional step. They said that the plaintiffs could not even satisfy all of the requirements of Section (a) of Rule 23. In other words, the employees had no ability to join forces in order to sue for discrimination.

The four dissenting[2] justices, led by Ruth Bader Ginsburg, thought that the plaintiffs satisfied Section (a). Had the dissent won, the plaintiffs would have been able to re-file their lawsuit. They could have chosen to remain under Section (b)(2) and seek only an affirmative action program, giving up their request for monetary damages, or they could have sought monetary damages under Section (b)(3), which is designed for that purpose, but has more stringent requirements.

Instead, five justices signed the opinion written by Antonin Scalia. That opinion held that the proposed class could not satisfy Section (a)(2), and therefore, they could not bring any kind of class action. Section (a)(2) requires that a case involves issues of law or fact that are common to all members of the proposed class. All nine justices agreed that plaintiffs must only demonstrate one common question in order to satisfy Section (a)(2).

The majority held that the plaintiffs could not point to a single common question. The majority pointed out that it was undisputed that Wal-Mart had no uniform procedure for making decisions about promotions or pay. Wal-Mart’s policy was to leave those decisions up to the discretion of individual store managers. Thus, said the majority, the discrimination question was unique to each individual plaintiff, and there were no common questions.

The dissent argued that the common question was whether Wal-Mart’s discretionary pay and promotion policy had a discriminatory effect. The plaintiffs produced significant evidence that the policy did result in an unnaturally male-dominated management and systemically higher salaries for male employees at the same level as female employees.

Justice Scalia’s majority got this one wrong. The flaw in the majority’s reasoning was that Justice Scalia did not identify a difference between his analysis of Section (a)(2) and the requirements of Section (b)(3). Section (b)(3) has particularly stringent requirements because only under that section can plaintiffs obtain monetary damages. One of the Section (b)(3) requirements is that common questions must “predominate” over questions that are unique to each plaintiff. In other words, to satisfy Section (b)(3), the questions common to the class must be more central to the determination of the case than any questions that are not common to the class.

In the Wal-Mart case, the majority—by its own admission—focused on the dissimilarities of the proposed class. However, a weighing of the similarities against the dissimilarities would have been a proper consideration under Section (b)(3), not under (a)(2). Under (a)(2), if any substantive common questions are shown, the standard is satisfied. Thus, the majority effectively applied the Section (b)(3) standard, while purportedly conducting a Section (a)(2) analysis.

That distinction sounds technical, but it is not. The consequences are massive, and they will be the subject of my next post.

[1] That is unlikely though. The Federal Rules are a collaborative effort between Congress and the Supreme Court. They are not really meant to be amended, as other legislation is. They are meant to do little more than codify procedures that are already used in court.

[2] You may hear Justice Ginsburg’s opinion in this case referred to as “the concurrence” instead of “the dissent.” Technically, the four justices that signed the opinion written by Justice Ginsburg concurred in part and dissented in part. So, either term can properly be used to describe the opinion.

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2 Responses to the wal-mart discrimination decision: good for big businesses, bad for everyone else

  1. villagebear says:

  2. Pingback: consequences of the wal-mart case | more than twenty cents

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