Justices Agree to Review Wal-Mart Sex Bias Class Action

Acting in one of its most closely watched cases this term, the U.S. Supreme Court Dec. 6 granted Wal-Mart Stores Inc.'s petition to review a federal appeals court decision that allowed a massive sex discrimination class action to proceed against the retailer (Wal-Mart Stores Inc. v. Dukes, U.S., No. 10-277, cert. granted 12/6/10).

The justices will review a decision by the full U.S. Court of Appeals for the Ninth Circuit that gave the green light to a class action under Title VII of the 1964 Civil Rights Act potentially affecting more than 1 million female Wal-Mart current and former employees and involving billions of dollars in monetary relief ( 603 F.3d 571, 109 FEP Cases 15 (9th Cir. 2010); 61 BTM 137, 5/4/10).

The court limited review to the first matter raised in Wal-Mart's petition: whether claims for monetary relief can be certified under Rule 23(b)(2) of the Federal Rules of Civil Procedure, which the company said is limited to suits seeking injunctive and declaratory relief, and if so, under what circumstances. The justices also asked the parties to address whether the class certification ordered under Rule 23(b)(2) was “consistent with Rule 23(a)” of the Federal Rules of Civil Procedure, which outlines the basic prerequisites for a class action.

Assuming that plaintiffs satisfy the Rule 23(a) pre-requisites, Rule 23(b)(2) authorizes certification of a class action if a defendant “has acted or refused to act” on grounds applying generally to the class, “thereby making appropriate final injunctive relief or corresponding declaratory relief” for the class as a whole. Rule 23(b)(3) provides a separate route to class certification if the court finds that common questions of law or fact predominate over individual issues and a class action is “superior to other available methods” for “fair and efficient adjudication” of the case.

In a suit originally filed in 2001, the plaintiffs alleged that Wal-Mart discriminates against women in pay, promotions, and other conditions of employment and that the alleged bias is part of the retailer's centralized employment policies applied at all Wal-Mart stores. They sought back pay, injunctive and declaratory relief, and punitive damages.

In its petition for Supreme Court review, Wal-Mart argued that by affirming a district court's certification of the class action, the Ninth Circuit violated the employer's rights under Title VII and the U.S. Constitution as well as Rule 23 (61 BTM 273, 8/31/10). The U.S. Chamber of Commerce, which filed an amicus brief urging review, called the case “the most important class action facing the court in over a decade” and warned that unless the Supreme Court intervened, the Ninth Circuit “will become a haven for bet-the-business class actions.”

Meanwhile, the plaintiffs' class, in a brief opposing review, said the Ninth Circuit correctly decided that they met the criteria for a class action under Rule 23(a) and (b)(2). They emphasized that back pay is an equitable remedy and that the issue of a punitive damages class is still pending in federal district court. Any Supreme Court review at this stage would be premature at best, the plaintiffs argued.

In a Dec. 6 statement, attorney Theodore J. Boutrous Jr., who represents Wal-Mart, said he is gratified by the Supreme Court's decision.

“The current confusion in class action law is harmful for everyone--employers, employees, businesses of all types and sizes, and the civil justice system. These are exceedingly important issues that reach far beyond this particular case. We look forward to the Court's consideration of the appeal,” said Boutrous, who is with Gibson, Dunn & Crutcher in Los Angeles.

Attorneys representing the class said that although they would have preferred that the court deny review, they are heartened that the justices granted a limited review.

Brad Seligman of the Impact Fund in Oakland, Calif., told BNA Dec. 6 that he is confident that the lower court record supports class certification.

The court will hear oral argument sometime in early 2011 and is expected to issue a decision by the end of June 2011.

By Kevin P. McGowan