WASHINGTON — The Supreme Court ruled Monday that a wide-ranging class action lawsuit against Wal-Mart goes too far, handing the nation's largest private employer a major legal victory whose fruits will be enjoyed by the business community at large
Justices unanimously ruled that the sex discrimination lawsuit filed on behalf of 1.5 million past and present female Wal-Mart employees failed to meet certain class-action criteria. Instead, individual workers must pursue their complaints on their own.
Beyond Wal-Mart, the justices, by 5-4, essentially defined rules that would constrain future class-action lawsuits.
"The mere claim by employees of the same company that they have suffered a (discrimination) injury ... gives no cause to believe that all their claims can be productively litigated at once," Justice Antonin Scalia wrote for the court.
The court's ruling cheers other major corporations including Hewlett-Packard, Del Monte Foods and Bank of America, which had joined legal briefs on Wal-Mart's behalf. The ruling dismays but doesn't necessarily surprise unions and civil rights groups, which had allied with the Wal-Mart employees.
Scalia and other Republican-appointed justices on the court have issued other rulings that have similarly impeded employment discrimination complaints.
"This is not an isolated case," declared Democratic Sen. Patrick Leahy of Vermont, the chairman of the Senate Judiciary Committee, adding that "an activist majority of the Supreme Court is making it more and more difficult for any American to have their day in court."
All nine justices agreed Monday that the sex discrimination lawsuit against Wal-Mart, initially filed in June 2001, failed to meet class-action criteria for cases in which plaintiffs seek back pay.
The divided court, though, established a higher bar for determining when an individual's lawsuit can be elevated to a class action. The court's majority concluded in part that "dissimilarities" among individuals can undercut a potential class action even if the individuals share common complaints.
"Individual differences should not bar a ... class," Justice Ruth Bader Ginsburg wrote for the dissenters, Justices Elena Kagan, Stephen Breyer and Sonia Sotomayor.
It's this potential impediment to broadening an individual's lawsuit that helps make the case called Wal-Mart Stores v. Dukes so important.
"It makes it even tougher for employees to band together as a class action," noted Suzette Malveaux, an associate professor at the Catholic University of America's Columbus School of Law.
Betty Dukes, an employee at a Wal-Mart store in Pittsburg, Calif., and Edith Arana, who formerly worked at a Wal-Mart store in Duarte, Calif., had claimed they were denied pay raises and promotions. They argued that the Wal-Mart "corporate culture" permitted systematic bias against women.
Women fill 70 percent of the hourly jobs at Wal-Mart but make up only 33 percent of management.
"The ... evidence, including class members' tales of their own experiences, suggests that gender bias suffused Wal-Mart's company culture," Ginsburg wrote, noting that "senior management often refer to female associates as 'little Janie Qs.' "
Dukes, Arana and a third Wal-Mart employee sought back pay and damages. Their attorneys succeeded in broadening their individual cases into a class action, covering all females Wal-Mart employed anytime after Dec. 26, 1998.
The Berkeley, Calif-based Impact Fund, which represents the Wal-Mart workers and describes itself as a "strategic litigation" firm, has similarly used class-action lawsuits against the likes of Taco Bell and Costco. Class-action lawsuits empower attorneys to press for huge settlements.
"Too often the class action device is twisted and abused to force businesses to choose between settling meritless lawsuits or potentially facing financial ruin," Robin Conrad, the executive vice president of the U.S. Chamber of Commerce's National Chamber Litigation Center, declared Monday.
Federal rules require that individuals who seek class-action lawsuits meet certain standards, including the sharing of common questions of law or fact. This means individuals have suffered the same injury and for similar reasons; for instance, if the company has a policy of sex discrimination.
Wal-Mart, Scalia noted by way of contrast, has a written policy prohibiting discrimination. The company also grants managers considerable hiring discretion.
"As the majority made clear, the plaintiffs' claims were worlds away from showing a companywide discriminatory pay and promotion policy," Wal-Mart Executive Vice President Gisel Ruiz said, adding that the company "has a long history of providing advancement opportunities for our female associates."
The decision Monday doesn't end the individual discrimination complaints. Those may still proceed.
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