Supreme Court Throws Out Suit Against Wal-mart

This month the Supreme Court ruled that as many as 1.5 million female Wal-Mart employees, who claimed that the company discriminated against them based on their gender, would not be able to file an enormous class-action suit. The crux of the suit was that Wal-Mart’s policies and practices had led to numerous discriminatory decisions over pay and promotions.

The court did not decide whether Wal-Mart had discriminated against the women, only that the case could not proceed as a class action. In order to be a class-action, the suit had to satisfy the requirement that, “there are questions of law or fact common to the class.” Even though the suit could not continue as a class-action, the court did rule unanimously that the plaintiffs could pursue their cases individually.

This decision is seen as a major victory for Wal-Mart, as the ruling reversed the 9^th U.S. Circuit Court of Appeals ruling last year. It is predicted that the ruling could affect other class-action suits against tobacco companies and other big box retailers.

While the court ruled that there could be no class-action claim, it was divided on an aspect that could block future class-action suits by workers.

Writing for the majority on the issue, Justice Antonin Scalia wrote that for a case to qualify as class action, there needs to be commonalities linking “literally millions of employment decisions at once.” In the Wal-Mart case, Justice Scalia wrote, that the commonality “is entirely absent,” noting the company’s policies bar gender bias and granted local managers substantial discretion. Justice Scalia wrote that, “[o]n its face, of course, that is just the opposite of a uniform employment practice that would provide the commonality needed for a class action.”

However, in a dissenting opinion, Justice Ruth Bader Ginsburg wrote that the cases of all the company’s female employees are linked. She wrote that, “Wal-Mart’s delegation of discretion over pay and promotions is a policy uniform throughout all stores.” She further wrote that, “[t]he practice of delegating to supervisions large discretion to make personnel decisions, uncontrolled by formal standards, has long been known to have the potential to produce disparate effects.” “Managers, like all humankind, may be prey to biases of which they are unaware.”

More on Business Law