Bench Memos

Wal-Mart v. Dukes Decision Rejects Wild Class-Action Theory

The Supreme Court handed down its decision today overturning the certification of a class in what would have been the largest employment-discrimination class-action suit in our nation’s history. 

Looks like Ted Frank was right to invest in Wal-Mart stock. But betting against the 9th Circuit is almost always a good idea: The Court has overturned 84 percent of the cases it has taken from the 9th Circuit so far this year, and that’s not counting today’s decisions yet. Besides, the arguments against Wal-Mart in this case employed a legal theory so radical, even Justice Ginsburg couldn’t fully swallow it.

This case was a brilliant move by class-action lawyers who, ever in search of bigger classes of plaintiffs and defendants with deeper pockets, set their sights on Wal-Mart, the nation’s largest private employer. They managed to create a class that consists of all women employed in one of Wal-Mart’s four brands of stores over more than a decade: some 1.5 million women. The problem is that there isn’t a massive problem of discrimination at Wal-Mart stores, so the lawyers needed to come up with a theory that didn’t rely on finding actual discrimination in individual cases. Their theory is that Wal-Mart violated the law because — even though it had a clear anti-discrimination policy — its employees may have been given enough discretion that they secretly ignored the policy and disadvantaged women in hiring and promotion because of surrounding cultural assumptions. But to take this case as a class action, the Court couldn’t even look at the individual cases, and would just have to rely on general statistics. And even those statistics don’t show a pattern of discrimination over all stores in the whole country — in 90 percent of stores there was no real difference between male and female salaries.

If a theory like this can fly, then the due process guaranteed by the Fifth Amendment doesn’t mean much.

It’s like finding that 10 percent of McDonalds’ stores across the country ignored company policy and didn’t throw out their expired meat and then — without even having to prove that anyone got sick because of the meat rather than, say, the flu — suing the whole company on behalf of everyone who ordered a Big Mac over a ten-year period. The kicker is that anyone who really did get food poisoning wouldn’t be able to bring their own lawsuit later to get real damages, and would be stuck with whatever their small percentage of the settlement in the larger suit was. Someone hospitalized with salmonella would get the same award as someone who never even felt queasy.

Certifying this class would have been a lose-lose-lose-win situation. The store would lose, the people who have legitimate lawsuits would lose, the integrity of our legal system would lose, and the lawyers would be the only ones who win. But they would win big.

Thankfully, the Court is still well to the right of the Ninth Circuit (a fairly low bar). That’s good news for Wal-Mart and for Ted Frank, but even better news for the rule of law.

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