Court Denies Wal-Mart's Motion to Dismiss Amended Class Claims of Sex Discrimination

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By Kevin P. McGowan  

The U.S. Supreme Court's decision barring a nationwide sex discrimination class action against Wal-Mart Stores Inc. does not mean current and former female employees of the retail giant may not attempt to pursue a regional class suit alleging unlawful bias in pay and promotions, the U.S. District Court for the Northern District of California ruled Sept. 21 (Dukes v. Wal-Mart Stores Inc., N.D. Cal., No. 01-2252, 9/21/12).

Rejecting Wal-Mart's motion to dismiss or strike class claims contained in an amended complaint under Title VII of the 1964 Civil Rights Act, the district court said the Supreme Court's June 2011 decision scuttling a proposed nationwide class action potentially covering 1.5 million female employees does not preclude court consideration of a smaller proposed class action covering current and former employees of Wal-Mart and Sam's Club stores in California.

The Supreme Court ruled five named plaintiffs failed to satisfy the commonality requirement of Federal Rule of Civil Procedure 23(a) and could not pursue class claims for monetary relief under Rule 23(b)(2) ( 131 S. Ct. 2541, 112 FEP Cases 769 (2011); 29 HRR 677, 6/27/11). But the plaintiffs in October 2011 filed their fourth amended complaint, alleging unlawful discrimination against female current and former employees working in four Wal-Mart regions that cover most of California (29 HRR 1186, 11/7/11).

Supreme Court Ruling Not Absolute Bar.

Seeking to dismiss the class claims prior to any new ruling on class certification, Wal-Mart argued the Supreme Court's failure to remand the class claims for further consideration means the high court ruled the named plaintiffs' class allegations do not satisfy Rule 23(a), even if the proposed class numbers 100,000 or so, rather than 1.5 million.

But Judge Charles R. Breyer said the Supreme Court decision does not preclude the plaintiffs from seeking certification of a narrower class action.

“To be sure, the basic theory of plaintiffs' claims has changed little, but for both the pattern or practice and disparate impact claims, the Supreme Court's decision rested not on a total rejection of the plaintiffs' theories, but on the inadequacy of their proof,” Breyer wrote. “Plaintiffs say they can now provide that proof.”

For example, the plaintiffs claimed all California store managers had to attend centralized management training where they were told gender disparity in senior management was attributable to men being “more aggressive” in seeking responsibility and that Wal-Mart's chief executive officer made statements to district managers suggesting men possess traits making them more likely to succeed, the court said.

Although Breyer acknowledged the plaintiffs still must prove every decisionmaker among approximately 400 regional, district, and store managers in California “operated under a common policy or mode of decisionmaking” that resulted in sex discrimination, he said the plaintiffs “have not yet had an opportunity to present their evidence on these issues, which do not fail as a matter of law.”

Wal-Mart cannot show this is the unusual case in which plaintiffs' proposed class claims should be dismissed prior to consideration of a class certification motion, the court said.

Breyer ordered the plaintiffs to submit their class certification motion by Jan. 11, 2013, and scheduled a court hearing on certification for Feb. 15, 2013.

Lawyers Offer Competing Views.

The plaintiffs' attorneys in a Sept. 22 statement hailed the district court's ruling as consistent with the Supreme Court decision and maintained their amended complaint complies with the Rule 23 guidelines set out by the Supreme Court.

“We have maintained all along that the Supreme Court's decision did not preclude us from seeking justice for the women of Wal-Mart through class actions consistent with its new guidelines and standards,” said Brad Seligman of the Impact Fund in Berkeley, Calif., who is the plaintiffs' lead counsel. “Nor did the [Supreme] Court rule on the merits of the case. This [district court] decision vindicates our argument.”

The plaintiffs have amassed “strong new evidence that Wal-Mart has a long and egregious history” of sex discrimination in pay and promotions throughout its California stores, said co-lead counsel Joseph Sellers, who is with Cohen Milstein Sellers & Toll in Washington, D.C.

“We welcome the opportunity to present this evidence to the court,” Sellers said.

Meanwhile, a lawyer representing Wal-Mart said Sept. 24 the district court merely decided to follow the “usual procedure” and allow the plaintiffs to file a class certification motion rather than address the relevant Rule 23 issues on a motion to dismiss.

“The ruling does not address whether the claims meet the demanding class certification standards established by the Supreme Court in this case, but it sets a high bar for plaintiffs to meet and we believe they cannot possibly do so,” said Theodore J. Boutrous Jr., of Gibson Dunn & Crutcher in Los Angeles.

The plaintiffs' purported statewide class covering California store employees is “no more appropriate” than the nationwide class the Supreme Court rejected, Boutrous said.

“As we have said all along, these claims are unsuitable for class treatment because the situations of each individual are so different, and because the claims of these five plaintiffs are not representative of the hundreds of thousands of women who work at Wal-Mart,” Boutrous said. “Wal-Mart has had a strong policy in place against discrimination well before the lawsuit was filed and continues to be a great place for women to work and advance.”

The proposed class would expressly exempt Wal-Mart store managers and pharmacists, but include more than 100,000 female current or former California store employees who were subject to sex discrimination dating back to Dec. 26, 1998, according to the plaintiffs' attorneys.

By Kevin P. McGowan  

Text of the opinion is available at http://op.bna.com/dlrcases.nsf/r?Open=kmgn-8yfm6u.