The District Court and the Court of Appeals approved the certification of a class comprising about one and a half million plaintiffs, current and former female employees of petitioner Wal-Mart who allege that the discretion exercised by their local supervisors over pay and promotion matters violates Title VII by discriminating against women. In addition to injunctive and declaratory relief, the plaintiffs sought an award of backpay. The Supreme Court considered whether the certification of the plaintiff class was consistent with Federal Rules of Civil Procedure 23(a) and (b)(2).
The Supreme Court observed that pay and promotion decisions at Wal-Mart were generally committed to local managers’ broad discretion, which was exercised in a largely subjective manner. Local store managers may increase the wages of hourly employees (within limits) with only limited corporate oversight. As for salaried employees, such as store managers and their deputies, higher corporate authorities had discretion to set their pay within pre established ranges.
Promotions worked in a similar fashion. Wal-Mart permitted store managers to apply their own subjective criteria when selecting candidates as “support managers,” which was the first step on the path to management. Promotion to higher office—e.g., assistant manager, co-manager, or store manager—was similarly at the discretion of the employee’s superiors after prescribed objective factors were satisfied.
The named plaintiffs in the lawsuit, representing the 1.5 million members of the certified class, were three current or former Wal-Mart employees who alleged that the company discriminated against them on the basis of their sex by denying them equal pay or promotions, in violation of Title VII of the Civil Rights Act of 1964.
Betty Dukes began working at a Pittsburgh, California, Wal-Mart in 1994. She started as a cashier, but later sought and received a promotion to customer service manager. After a series of disciplinary violations, however, Dukes was demoted back to cashier and then to greeter. Dukes conceded she violated company policy, but contended that the disciplinary actions were in fact retaliation for invoking internal complaint procedures and that male employees had not been disciplined for similar infractions. Christine Kwapnoski worked at Sam’s Club stores in Missouri and California for most of her adult life. She had held a number of positions, including a supervisory position. She claimed that a male manager yelled at her frequently and screamed at female employees, but not at men. The final named plaintiff, Edith Arana, worked at a Wal-Mart store in Duarte, California, from 1995 to 2001. In 2000, she approached the store manager on more than one occasion about management training, but was brushed off. Arana concluded she was being denied opportunity for advancement because of her sex. She initiated internal complaint procedures, whereupon she was told to apply directly to the district manager if she thought her store manager was being unfair. Arana, however, decided against that and never applied for management training again. In 2001, she was fired for failure to comply with Wal-Mart’s timekeeping policy.
The plaintiffs, respondents before the Supreme Court, did not allege that Wal-Mart had any express corporate policy against the advancement of women. Rather, they claimed that their local managers’ discretion over pay and promotions was exercised disproportionately in favor of men, leading to an unlawful disparate impact on female employees. And as Wal-Mart was aware of this effect, its refusal to cabin its managers’ authority amounted to disparate treatment. Their complaint sought injunctive and declaratory relief, punitive damages, and back pay.
Invoking the provisions of class certification, respondents moved the District Court to certify a plaintiff class consisting of ‘all women employed at any Wal-Mart domestic retail store at any time since December 26, 1998, who have been or may be subjected to Wal-Mart’s challenged pay and management track promotions policies and practices.’ The District Court granted respondents’ motion and certified their proposed class. A divided en banc Court of Appeals substantially affirmed the District Court’s certification order. 603 F. 3d 571. The majority concluded that respondents’ evidence of commonality was sufficient to raise the common question 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. It also agreed with the District Court that the named plaintiffs’ claims were sufficiently typical of the class as a whole
to satisfy Rule 23(a)(3), and that they could serve as adequate class representatives.
Finally, the Court of Appeals determined that the action could be manageably tried as a class action because the District Court could adopt the approach the Ninth Circuit approved in Hilao v. Estate of Marcos, 103 F. 3d 767, 782– 787 (1996). There compensatory damages for some 9,541 class members were calculated by selecting 137 claims at random, referring those claims to a special master for valuation, and then extrapolating the validity and value of the untested claims from the sample set.
The Supreme Court observed that class action is an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only. In order to justify a departure from that rule, a class representative must be part of the class and ‘possess the same interest and suffer the same injury’ as the class members. Rule 23(a) ensure that the named plaintiffs are appropriate representatives of the class whose claims they wish to litigate. The Rule’s four requirements—numerosity, commonality, typicality, and adequate representation—effectively limit the class claims to those fairly encompassed by the named plaintiff’s claims.
The Supreme Court observed that the crux of the present case was commonality—the rule requiring a plaintiff to show that “there are questions of law or fact common to the class.” Rule 23(a)(2).
The Supreme Court observed that Rule 23 did not set forth a mere pleading standard. A party seeking class certification must affirmatively demonstrate his compliance with the Rule—that is, he must be prepared to prove that there were in fact sufficiently numerous parties, common questions of law or fact, etc. In the present case, proof of commonality necessarily overlap with respondents’ merits contention that Wal-Mart engage in a pattern or practice of discrimination. Respondents in the present case wish to sue about literally millions of employment decisions at once. Without some glue holding the alleged reasons for all those decisions together, it was held impossible to say that examination of all the class members’ claims for relief would produce a common answer to the crucial question why was I disfavored.
The only evidence of a general policy of discrimination respondents produced was the testimony of Dr. William Bielby, their sociological expert. Relying on social framework analysis, Bielby testified that Wal-Mart had a strong corporate culture, that made it vulnerable to gender bias. He could not determine with any specificity how regularly stereotypes play a meaningful role in employment decisions at Wal-Mart. At his deposition Dr. Bielby conceded that he could not calculate whether 0.5 percent or 95 percent of the employment decisions at Wal-Mart might be determined by stereotyped thinking. The Supreme Court observed that Bielby’s testimony did nothing to advance respondents’ case. Whether 0.5 percent or 95 percent of the employment decisions at Wal-Mart might be determined by stereotyped thinking was the essential question on which respondents’ theory of commonality depend. If Bielby admittedly had no answer to that question, it was safe to disregard his testimony.
The only corporate policy that the plaintiffs’ evidence convincingly established was Wal-Mart’s “policy” of allowing discretion by local supervisors over employment matters. On its face that was just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it was a policy against having uniform employment practices. It was also a very common and presumptively reasonable way of doing business.
The Supreme Court also held that respondents had not identified a common mode of exercising discretion that pervade the entire company—aside from their reliance on Dr. Bielby’s social frameworks analysis that the Court rejected. In a company of Wal-Mart’s size and geographical scope, it was quite unbelievable that all managers would exercise their discretion in a common way without some common direction. Respondents attempted to make that showing by means of statistical and anecdotal evidence, but their evidence also fell short. Referring to the statistical evidence, the Court held that even if they were taken at face value, the studies were insufficient to establish that respondents’ theory could be proved on a classwide basis. A regional pay disparity, for example, might be attributable to only a small set of Wal-Mart stores, and could not by itself establish the uniform, store-by-store disparity upon which the plaintiffs’ theory of commonality depended. Respondents’ anecdotal evidence also suffered from defects, and in addition was too weak to raise any inference that all the individual, discretionary personnel decisions were discriminatory. Because respondents provided no convincing proof of a companywide discriminatory pay and promotion policy, the Supreme Court concluded that they had not established the existence of any common question.
The Supreme Court also concluded that respondents’ claims for back pay were improperly certified under Federal Rule of Civil Procedure 23(b)(2). The Supreme Court also disapproved of the Court of Appeals belief that it was possible to replace such proceedings with Trial by Formula.
The judgment of the Court of Appeals was thus reversed.