Title VII Class Actions: Has The Ninth Circuit Opened The Floodgates?
In a sharply divided, and likely to be hotly debated, 6-5 ruling, the United States Court of Appeals for the Ninth Circuit (“Ninth Circuit”) upheld, in large part, a federal district court’s decision to certify a broad and diverse nationwide class of female employees who alleged that Wal-Mart discriminated against them and similarly-situated employees because of their sex in its pay and promotional practices in violation of Title VII of the Civil Rights Act of 1964. The class of plaintiffs includes both salaried and hourly female employees in a wide range of positions, who are or were employed at one or more of Wal-Mart’s 3,400 stores across the country since December 26, 1998. Despite the indisputable differences among the class members, including different geographic locations, management structures, job titles, pay levels, and tenure with the company, the Ninth Circuit generally affirmed the district court’s certification of the class and only excluded employees who were no longer employed by Wal-Mart when the lawsuit was filed in 2001. Now that the Ninth Circuit has upheld class certification, the path has been cleared for potentially one million female employees to join the class, unless Wal-Mart successfully appeals the Ninth Circuit’s ruling to the U.S. Supreme Court. The case is Dukes v. Wal-Mart Stores, Inc.
Summary of Decision
The Dukes case arose as follows: in 2001, Betty Dukes and six other female employees of Wal-Mart filed a class action lawsuit alleging that women employed in Wal-Mart stores are paid less than men in comparable positions, despite having higher performance ratings and greater seniority; and that women receive fewer, and wait longer for, promotions to in-store management positions than men. They claimed that the strong, centralized structure at Wal-Mart facilitates gender stereotyping and discrimination throughout Wal-Mart stores.
Wal-Mart vehemently denied these allegations and further argued that class certification is inappropriate because the employees’ claims are highly individualized, as the allegedly discriminatory decisions were made by thousands of different managers working in thousands of different stores throughout the country. Wal-Mart further maintained that the employees’ claims for monetary relief are unique to each individual and such claims will dominate the proceedings.
The district court rejected Wal-Mart’s arguments and certified the class. On appeal, the Ninth Circuit agreed with the district court and likewise concluded that the Plaintiffs offered sufficient evidence to raise a common question for further review by the court of whether Wal-Mart’s female employees nationwide were subjected to a single set of corporate policies (not merely a number of independent discriminatory acts) that may have worked to unlawfully discriminate against them in violation of Title VII. The Court further concluded that evidence of Wal-Mart’s subjective decision-making practices could present a common legal or factual question regarding whether Wal-Mart’s policies or practices are discriminatory.
Practical Implications for EmployersUndoubtedly, the Dukes decision will be scrutinized because of the tremendous size and diversity of the potential class. However, the decision also provides some insight on class certification law in the Ninth Circuit (unless and until Wal-Mart successfully appeals the ruling to the U.S. Supreme Court), including the following:
• More Title VII lawsuits: Employers should be aware of a potential increase in the kind, number, and size of discrimination suits. In fact, one dissenting judge who reviewed the case on appeal (and ruled in favor of Wal-Mart) cautioned against a flood of Title VII lawsuits, and stated “[p]ut simply, the door is now open to Title VII lawsuits targeting national and international companies, regardless of size and diversity, based on nothing more than general and conclusory allegations, a handful of anecdotes, and statistical disparities that bear little relation to the alleged discriminatory decisions.” As the dissenting judge’s opinion alluded, before the Ninth Circuit’s ruling, federal courts generally required a showing of a uniform practice of actual discrimination perpetrated in a manner common to the class. However, here, the anecdotal evidence and controversial expert and statistical testimony were sufficient to obtain class certification.• Decentralized Decision-Making Is Not a Shield Against Class Certification: Employers must note that decentralized, subjective decision-making does not necessarily protect an employer from a class certification ruling. Indeed, the Ninth Circuit ruled that such a decision-making scheme can provide a “ready mechanism for discrimination” and that courts should scrutinize the scheme carefully. While such organization is insufficient on its own to establish a finding of commonality, where such subjectivity is part of a consistent corporate policy and supported by other evidence giving rise to an inference of discrimination, courts will often find that the required element of commonality of claims is satisfied.
• Increased Use of Social Science Experts: Given the outcome in Dukes, it is likely that plaintiff classes will increase their use of social scientists to establish commonality in the class certification stage. Here, the class evidence of corporate practices and policies was largely based on the testimony of one sociologist who employed a “social framework analysis” to examine the distinctive features of Wal-Mart’s policies and practices and evaluate them against factors that create and sustain bias and those that minimize bias. The sociologist’s opinion was based solely on subjective and anecdotal evidence, and it was heavily relied on in the Court’s analysis. An employer facing such testimony should be sure to challenge such testimony.