The United States Supreme Court issued an important ruling yesterday that will affect employment lawsuits across the country – and will greatly impact settlement discussions. The Court ruled that a large group of women (estimated between 500,000 and 1.5 million – see my blog “What is With the Walmart Class Action?”) could not bring a “class action” against Wal-Mart. The Wall Street Journal and the New York Times reported that the decision is a victory for business but criticized by labor and consumer groups. However, all seem to believe the decision is momentous. So, what does it mean?
Generally, lawsuits are brought by individual persons. Class actions are exceptions. A class representative must be part of the class and suffer the same injury to justify allowing a class action. The district court had permitted the class to be certified on the basis that the claims shared enough “commonality” to raise the question of whether Wal-Mart’s had a single set of corporate policies that may have unlawfully discriminated against female employees.
Yesterday the United States Supreme Court in a 5-4 decision reversed the district court, ruling that questions of law or fact were not common to the class. According to Justice Scalia’s opinion for the majority, “Here respondents wish to sue about literally millions of employment decisions at once. Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question why was I disfavored.”
The dissent disagreed, stating that the district court’s finding of commonality should not be reversed absent an error or law or an abuse of discretion. In other words, the trial court’s finding should be affirmed unless there is something really wrong with it. The district court’s findings provided that women fill 70% of the retail positions and only 33% of management positions, women are paid less than men in almost every region, the salary gap widens over time, the systems for promoting employees were sufficiently similar to raise issues common to all class members, and Wal-Mart’s gender bias permeated the corporate culture.
So, is that the end of it? Hardly. Businesses think the decision will curb unmeritorious class actions. Plaintiffs’ attorneys think it will deter legitimate claims because individuals will have difficulty obtaining counsel to fight large corporations. The attorneys for the plaintiffs said they will regroup, initiate individual claims, and determine how to bring class actions perhaps by regions. Let’s hope they all think about settlement too.